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5,500 jobs and 
reduce services 

Amtrak, the US public sector train operator, la to 
axe about 5,500 jobs and shed 21 per cent of its pas- 
senger service in an effort to eliminate a projected 
SSOQm deficit is the current tax year. Amtrak said 
most of the cuts would be in the frequency of ser- 
vices, bat same intercity routes would be elimi- 
nated. Thomas Downs, Amtrak president, said the 
rising deficit and shrinking: ticket sales meant the 
system could no longer afford to maintain its ser- 
vice to 540 cities across the US. Page 22 

Bid battle looms for UK utility: UK 

engineering and property group T rafalgar House is 
considering a bid for Northern Electric which could 
prove the first hostile hid for a privatised UK utfi- 
tty. Page 23; Lex, Page 22; Editorial Comment, 
Page 21; Trafalgar House stalks N Electric, Page 31 


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Euro Disney said that 
from April it would cat the entrance price to its 
lossmaking theme paik outside Paris, adding that 
visitor numbers had risen this year. The news 
boosted its shares on the Paris bourse. Page 24; 
World stocks. Page 50 

Smaller Efia *can survive’: The European Free 
Trade Association, which win lose three of its seven 
members and two-thirds of its population to the 
European Union next month, can survive in trun- 
cated form, ministers of the four remaining nations 
decided. Page 22 


A co nt rov e rs i al 
accounting proposal under which US companies 
would have had to deduct the cost of stock options 
from their profits was dropped yesterday by the 
Financial Accounting Standards Board. 

Page 26 

Figures fuel UK rata faars: Official fig ures 
that show inflatio n and earnings edging upward 
have fuelled fears that UK interest rates may have 
to rise further. Page 7 


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The British Athletic Fed- 
eration confirmed a four- 
year ban on former Com- 
monwealth 800 metres 
rnxmer Diane Modahl, 
who tested positive for 
drugs in Li^>an in June. 
Her urine was said to 
fif mta iTi high levels of the 
male hormone testoster- 
d&e. The BAF rejected 
her arg ument that the " 
sample had been mishan- 
dM at a Lisbon laboratory , but last night Mrs 
Modahl said she would appeal against the decision. 



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pay price for trade barriers; 

Japan’s trade banters cost the country's consumers 
between $75bn and SlOObn a year at prevailing 
exchange rates in 1969, a study by three Japanese 
economists said. Page 5 

Indian minister quits: India's minister for civil 
supplies quit over a sugar import scandal. AJL Ant- 
ony resigned after it emerged that an official report 
on the scandal had named him along with other 
se nior officials. Elections catch up with India’s 
slow rrforms, Page 4 

Fokfcer shares faD: Fokker shares lost more 
than is per cent after the Dutch aircraft maker con- 
trolled by Germany's Deutsche Aerospace said it 
would make scarcely any progress towards cutting 
losses this year. Page 24 

GE Capital, financial services arm of General 
Electric of the US, has made its first entry into Ger- 
man consumer finance by faking control of Service 
Bank, the finance arm of store group KaufhoL 
Page 23 

Two killed In eviction row; Two Portuguese 
officials were shot dead when they tried to evict a 
tenant from a house near the port city of Set&baL 
The tenant later surrendered. 

Hissing lawyer’s body found: A Kurdish 
lawyer who disappeared in the Turkish capital, 
Ankara, was found shot dead. A former official of a 
banned pro-Kurdish party, Falk Candan was the 
third Kurdish lawyer this year to have been mur- 
dered mysteriously in Istanbul and Ankara. 

Ctibsa dam project starts: Chinese premier Li 
Peng broke the ground for the Three Gorges dam 
that wifi cut the Yangtze river. The project wifi 
involve relocating more than lm people to make 
way for a huge inland lake. 

Mercedes th rea te n s to sue: German carmaker 
Mercedes-Benz threatened to sue Greece for shut- 
ting its main Athens office and putting a sign out- 
side branding the company a tax evader. 


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THURSDAY DECEMBER 15 1994 


DSS23A 


IRA ‘must renounce weapons’ to join peace talks 


By David Owen, John Murray Brown 
and St e w art DaJby in Belfast 

The British gOTO mm gnt is duter mrnnri to 
ensure that IRA weapons are “no longer 

available for use In terrorist attacks” 
before Sinn Fein, the IRA's political 
wing, can enter talks on Northern 
Ireland's future. 

Speaking on the eve of talks in Belfast 
between the government and loyalist 
representatives, Mr Major said he would 
not insist on the surrender of IRA weap- 
ons. 

“I am not pedantic about whether 
those weapons are surrendered or 


whether those weapons are decommis- 
sioned, destroyed with some form of ver- 
ification - 1 don’t mind,” he said. 

What was significant was that a politi- 
cal party should not be able to "go back 
to a nice little stockpile of weapons if 
something went against them and start 
using them again.” Mr Major added. 

The prime minister made the disclo- 
sure as he unveiled a £75m package of 
private investment in the province in 

the textiles, telecommunications and 
automotive products sectors. 

The package was the highlight of a 
buoyant Belfast International Invest- 
ment conference, overshadowing a walk- 


investment conference... 
Editorial Comments 


Pago 21 


out by Sinn F6in representatives. The 
prime minister told the 300 delegates at 
Ulster's biggest business event since the 
troubles began 25 years ago that a “vir- 
tuous circle” was fa»Wng shape. “Peace 
is giving rise to prosperity, prosperity in 
turn will consolidate peace,” he said. 

ERA weapons are top of the govern- 
ment’s agenda in its pr eliminar y dia- 
logue with Sum F&in, which will resume 
□ext week when the two sides attempt 


to draw up a more detailed agenda for 

Pages discussions. 

Setting out the province’s stall to 
potential investors. Mr Major announced 
a new government work programme for 
the long-term unemployed. He said the 
programme would help 1,000 long-term 
jobless in the province over two years 
ami would be expanded "substantially’’ 
if successful. 

The programme is understood to be 
the first stage of a two-pronged govern- 
ment initiative. The Northern Ireland 
Office’s department of economic devel- 
opment is thought to be working on 
proposals to focus its aid effort more 


dearly on areas of high unemployment, 
including politically sensitive west Bel- 
fast 

After receiving a warm welcome from 
shoppers at Portadown Mr Major dis- 
missed Si™ Fein's walkout from yester- 
day's conference, saying: ”1 think they 
have shot themselves in the foot rather 
badly.” 

Politico] reaction to his speech was 
mixed. Ms Maijorie Mowlam, shadow 

Northern Ireland secretary, welcomed 

the new investment but she said the 
government’s jobs programme would 
“only take care of i.ooo and leave 52.000 
with no hope at all”. 


Forces gather outside Chechen capital ■ President insists separatists must fight on 

Russians poised to take Grozny 


By John Lloyd and Save LaVina 
in Grozny 

The Russian army was poised to 
take the Chechen capital of 
Grozny last night 

Its forward tank division was 
drawn up an a ridge overlooking 
the suburbs, and the town shook 
to a heavy bombardment of its 
northern, outskirts. 

As the deadline given by Rus- 
sian president Boris Yeltsin for 
the surrender of the Chechen 
leadership was due to expire, 
there were reports in the capital 
that the commanders of the Rus- 
sian army's northern division 
were preparing to take the city. 

Before dawn yesterday, Gen- 
eral Dzhokar Dudayev, the Che- 
chen president, told his belea- 
guered rebel nation in a 
television address: “This is a war 
for hfe or death. All our citizens 
must know that we have to 
defend our country and our fife." 

Ms Tamisha heard 

the president’s broadcast in the 
military hospital, where she 
works as a ward sister and as an 
organiser of a move m en t called 
the National Patriotic Society of 
Mothers and Sisters. 

Later, she went up in (be hospi- 
tal minibus to collect other 
nurses from the village of Pervo- 
maisit, in the Grozny suburbs. As 
she readied it, die saw lines of 
Russian tanks drawn up on a 
ridge above the town. As she 
stopped, two fighter aircraft cir- 
cled overhead, then dived 
towards her, firing rockets. 

Emerging foam cover, she saw 
that a reporter from the local 
television station and a Chechen 
fighter, had been hit She and her 
colleagues loaded them into the 
bus and bumped back to the mili- 
tary hospital. Rebind her, a bom- 
bardment began. 

The three Russian divisions 
which invaded Chechnya on Sun- 
day are now to the north, east 
and west of the city. The western 
group, which came through 
heavy opposition in the neigh- 
bouring republic of Ingushetia, 
had last night halted in the town 
of Davydenko, 30 mites west of 
Grozny. The eastern group has 
also advanced slowly from Dages- 


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Chechen separatists surround aRnssbm helicopter which was forced to land yesterday in fighting 40km west of Grozny 


Russian democrats at odds 
on Chechnya Page 2 

tan, and is said by the Chechen 
■mili tary to be near the town of 
Gndermes In the east 

The closest division and the 
one which has sustained the 
heaviest fighting has advanced 
dose to the suburbs of Grozny. 
Supported by fighter aircraft, it 
was last night conducting an 
artillery and rocket attack on the 
outlying areas of the city, the fire 
dearly audible in the centre. 

Peace talks that had gone on 
since Monday in the city of Vladi- 
kavkaz across the Chechen bor- 
der broke up yesterday with no 
agreement - as both rides had 
expected. 


According to Mr Usman 
Imayev, the Chechen procurator, 
the negotiations broke down 
when the Chechen delegation led 
by Mr Taimaz Abubakarov, the 
finance minister, refused to 
recognise the sovereignty of Rus- 
sia over Chechnya, which 
declared its independence in 
November 1991. 

Back in the cold, badly 
equipped hospital, doctors picked 
the shrapnel out of Mr Gilanl 
Chasigov’s legs. Pulling up his 
jeans, making light of it, the tele- 
vision reporter said: “I saved my 
film, m put it on the air tonight 
if there is power. Watch it and 
you'll see they're firing at any- 
one, women, people in the 
streets, vehicles with white flags 
and ‘first aid’ written on them." 

On the main road out of 


Grozny to the west, at one of the 
many po in ts where Chechen men 
g at her with nothing more than 
automatic rifles, a member of the 
Confederation of Causasian Peo- 
ples bad heard of Gen Dudayev’s 
appeal as he went to his post 
Withholding his name but giving 
bis rank as lieutenant, he said he 
was from Dagestan, the neigh- 


bouring republic to Chechnya's 
east - a lone piece of evidence of 
a volunteer. 

“I came in a week ago,” he 
said. “Why? because I believe 
that the Caucasian people live in 
one home. I already fought in 
Abkhazia against the Georgians, 
1 win fight here against the Rus- 
sians. This is our common war. 


Politician 
Tapie is 
declared 
bankrupt 

By David Buchan in Paris 


The political career of Mr 
Bernard ’ftipie, the populist radi- 
cal. appeared to have boor, 
brought to an end last night by a 
decision of the Paris commercial 
court to put personal companies 
of the former tycoon into liquida- 
tion. 

Under French taw. people 
declared bankrupt arc banned 
from holding office for fire years. 
Mr Tapie had been mentioned os 
a lcftwing candidate for the presi- 
dency to fill part of the void left 
by Mr Jacques Defers’ decision 
not to run as the Socialist candi- 
date. He had also shown every 
intention of running for mayor of 
Marseilles next year. 

Mr Tapie, who has been fight- 
ing a series of tax, football brib- 
ery and corporate investigations 
by appealing against every court 
ruling against him, said last 
night that he would appeal 
against yesterday’s decision. But 
it is likely to remove any presi- 
dential or mayoral hopes he may 
have entertained. It was unclear 
last night whether the ruling 
would allow him to continue as a 
French national deputy and a 
Euro-MP. 

The Paris court yesterday ruled 
that two of Mr Tapie's compa- 
nies, personally underwritten by 
Mr Tapie and his wife, Domini- 
que, should be liquidated because 
their “liabilities far exceeded 
their assets” of his Paris mansion 
and his Marseilles yacht 

A lawyer for Credit Lyonnais, 

Continued on Page 22 


Credit Suisse top contender 
for stake in Budapest Bank 


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By Nicholas Denton in London 

■ 

Credit Suisse, part of the CS 
Holding financial services group, 
has emerged as the top contender 
to take a controlling stake in 
Budapest Bank, a Hungarian 
state-owned bank. 

If completed, the deal would be 
Credit Suisse's first foreign 
acquisition in rnmiwamtel bank- 
ing and involve the largest si ngle 
investment by a western bank in 
eastern Europe. It would also 
encourage other western hanks 
to follow suit 

A of the Hungarian 

finance minister, the privatisa- 
tion wnrnrriagiongr and the man- 
aging director of Budapest Bank, 
Mr Lajos Bokros, will make the 
decision. The committee is 
believed to fevour Credit Suisse 
over two other bidders, ING Bank, 
of the Netherlands and Allied 
Irish of Ireland. 

Credit Suisse confirmed it 
had put in an offer but said it 



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was unaware it had been pre- 
ferred. “We have an i n t e rest in 
the bank. Whether it is the bid 
that is going to foe government 
we don’t know,” a spokesman 
said. 

The Hungarian authorities 
would only confirm that there 
were three bidders. 

Credit Suisse still has to con- 
duct a “due diligence” evaluation 
of Budapest Bank and to agree 
terms with the Hungarians. 

But g o vernment officials have, 
through their advisers Salomon 
Brothers, said they will consider 
the sale of the majority stake 
that Credit Suisse would demand. 
The investor would pay about 

$100m for its stake, taking Buda- 
pest Bank’s capital over the 8 per 
cent of assets target set by the 
Basle-based Bank for Interna- 
tional Settlements. 

Credit Suisse recently opened a 
branch in Moscow and the move 
to Hungary would allow it to pur- 
sue its strategy of seeking “home 


CONTENTS 


.22 


markets” outside Switzerland. 

Credit Suisse’s expansion into 
eastern Europe will allow CS 
Holding to offer a foil range of 
ffnanrfai services in foe r^fon. 
Credit Suisse would be following 
CS First Boston, foe subsidiary of 
CS Holding, which has become 
the i parting international invest- 
ment bank in the region with 
offices in Moscow. Budapest, 
Prague and Warsaw. 

The bid for Budapest Bank 
comes after the collapse of talks 
with Creditanstalt Bankverein of 
Austria, which would have 
brought its east European com- 
mercial banking operations to its 
a proposed alliance with Credit 
Suisse. 

Budapest Bank is only the 
third large commercial hank fo 
the region to be offered to west- 
ern investors. ING Bank took 25J9 
per cent in Bank Slaskl white 
BayerUche Landesbank took 25 
per cent in Magyar Kulkereske- 
delmi Bank of Hungary. 


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© THE FINANCIAL TIMES LIMITED 1994 No 32^50 Week No 50 f LONDON - PARIS - FRANKFURT - NEW YORK - TOKYO 


OLSWANG 


Solicitors 


90 Long Acre 
London WC2E 9TT 

Telephone 0171-208 8888 
Facsimile 0171-208 8800 
DX 37972 Kingsway 


From 19 December 1994 the new name and office of 

Simon Oiswang & Co 


* 


* 








FINANCIAL TIMES THURSDAY DECEMBER IS 1994 



NEWS: EUROPE 


Nato sees big force for Bosnia pullout 


General George Jonlwan, 
Nato's senior military com- 
mander, bas said be may need 
iq) to 45,000 troops backed by 
three aircraft carriers and as 
many as 70 extra aircraft to 
cover a possible withdrawal of 
United Nations troops from 
Bosnia, alliance ofOdsls stud 
yesterday, Reuter reports from 
Brussels. 

The officials, who asked not 
to be identified, stressed that 
Nato defence ministers, meet- 
ing in Brussels, had not 
approved any final plan to 
cover a withdrawal of UN 
peacekeepers from Bosnia if 
the world body ordered such a 
move. However, they told Ren- 
ters that Gen Jonlwan, Nato's 


Supreme Allied Commander in 
Europe, had outlined "worst 
case" needs for a massive alli- 
ance force in a letter to mem- 
bers countries last Friday. 

US officials have said pri- 
vately that Washington could 
provide at least half of such a 
force to bring oat perhaps all 
of the 23,000 UN forces in Bos- 
nia. 

Gen Jonlwan wrote that at 
least seven to nine brigade; of 
troops - representing 30,000 to 
45,000 troops - could be 
required, including mechan- 
ised infantry, light armour, 
engineering battalions and at 
least three sophisticated com- 
munications battalions. 

The officials added that Gen 


UN relief workers yesterday woe making a push to get aid 
through to Sarajevo, after Bosnian Serb leaders appeared to 
soften their position, writes Laura SQber In Belgrade. A 
spokesman said two convoys, carrying 239 tonnes of food, were 
heading for Sarajevo, and 13 more were planned for other parts of 
Bosnia. 

Recent Bosnian Serb restrictions have virtually halted the 
delivery of humanitarian aid. But relief workers were hoping to 
take advantage after Serbs allowed the passage of a convoy to the 
Bosnian capital Their efforts coincided with signals from 
Bosnian Serb leaders that they will rejoin the peace process if the 
international mediators negotiate directly with them rather than 
with President Slobodan Milosevic of Serbia. 


Jon] wan’s letter also called for 
three aircraft carriers along 
with up to 70 additional air- 
craft and both attack and 
reconnaissance helicopters if 


UN troops had to be removed 
in a hostile environment 
One of the officials said it 
was likely that only one of the 
three aircraft carriers would 


be supplied by the US, suggest- 
ing that Britain and France 
might supply the others if they 
were required. 

Western diplomats, who also 
asked not to be identified, said 
the operation could cost up to 
$270m to begin and 5100m per 
month once under way. They 
said it could require up to 
6,000 trades and Jeeps, i£00 
armoured vehicles and 180 
helicopters. 

While alliance defence min- 
isters discussed the potential 
pull-out at the start of a 
two-day meeting yesterday, US 
officials told journalists ear- 
lier that momentum was grow- 
ing rapidly among Nato coun- 
tries to keep UN peacekeeping 


troops in Bosnia despite wide- 
spread harassment from Bos- 
nian Serb forces. 

The Note officials said that 
alliance military officers 
stressed to defence ministers 
at yesterday's meeting that 
western political leaders had 
to give qiwM* guidelines for the 
scope of any .withdrawal if it 
wore ordered by the UN. "For 
example, do we pull out of all 
of Bosnia or just part of Bos- 
nia?* one official. 

They said that Gen Jonlwan 
suggested that the commander 
of such a protection forte 
should have control over ports 
hi Croatia in case they were 
needed for troop ships to carry 
UN forces. 


Belgacom rows cloud sell-off prospect 


Decorative marble is causing trouble at 
Belgacom, Belgium’s state telephone 
monopoly. The embattled company was 
also forced yesterday to deny local 
newspaper reports that its entire board 
was about to be replaced ahead of a 
planned privatisation. 

The marble was hauled away from 
Belgacom-towers, the company's new 
headquarters, but officials denied that 
the decision was a matter of taste. "The 
decorations were removed for acoustic 
and structural reasons, " a spokes- 
woman said yesterday, an operation 
which added to the Bfrl.Gbn (£31.6m) 
cost of preparing Belgacom-towers for 
occupation. 

News of the expensive refurbishment 
has not gone down well with a sceptical 
public. Belgium’s biggest state-owned 
enterprise is reputed to be one of 
Europe's least efficient public telephone 
monopolies. Furthermore, internal rows 
have frightened off potential investors, 
delaying a long talked of privatisation. 


The Belgian company runs risk of being 
overtaken in the race to develop global 
telecommunications, writes Emma Tucker 


A sell-off is unlikely before 1996 and 
so for details are sketchy. 

The government plans to sell only 
part of the operation to a private inves- 
tor while retaining control of at least 50 
per cent No timetable has been set and 
the government bas not specified which 
sections of the company it intends to 
selL 

But if (t foils to act, the company 
risks being overtaken by the rapid 
development of global telecommunica- 
tions. In particular 1998 sees the obliga- 
tory deregulation of Europe's telephone 
monopolies under EU law, a date being 
eagerly watched by privatised telecoms 
operators eager to capture new mar- 
kets. 


Yesterday Mr Elio di Rupo, communi- 
cations minister, did not deny reports 
that Belgacom's board and chief execu- 
tive would be dismissed soon. He 
merely said such repents were ■ “prema- 
ture”. 

Belgium’s francophone Le Soir news- 
paper said Mr Bessel Kok, chief execu- 
tive, and Mr Benoit Remiche, chairman, 
would be dismissed with large pay-offs. 
The two men have been at loggerheads 
over the running of the company and 
have fallen out publicly. 

Mr Peter Drummond, a consultant 
working closely with Mr Kok, was 
forced to resign after it emerged that he 
was being paid by both Belgacom and 
PA Consulting group, advising Belga- 


com on setting up a mobile phene ven- 
ture. The row bas further delayed prog- 
ress towards privatisa t ion by creating 
even greater rifts within, top manage- 
ment, already split along party lines. 
Yesterday Belgacom said it had spent 
BFri^hn on adapting its new buffdfng. 
including the addition of two outside 
lifts, a staff canteen, conference rooms 
and a teleboutique. 

"Belgacom has rigorously respected 
the budgets approved by the board for 
the refurbishment work which has been 
necessary for the instalment of about 
3,000 employees who, for a long time 
now, have been owed a decent place to 
work," it said in a statement. 

Belgacom's internal rows have also 
produced tensions at a regional leveL 
Mr Luc van den Brands, minister presi- 
dent of Flanders, the Dutch-speaking 
semi-independent region of Belgium, 
has said he would like to the region to 
be able to establish its own telecommu- 
nications service. 


Strasbourg barbs make chancellor sore 


By Lionel Barber 
bi Strasbourg 

Chancellor Helmut Kohl, a 
staunch advocate of greater 
powers for the European par- 
liament, yesterday scolded the 
Strasbourg assembly for critici- 
sing Germany's six-month 
presidency of the European 
Union. 

MEPs bad no right to belittle 
tiie results of the recent Euro- 
pean Council summit in Essen 
which bad marked an historic 


step toward integrating the for- 
mer communist countries of 
eastern Europe into the EU, he 
said. 

He noted pointedly that 
barely a fifth of the 567 mem- 
bers were present in the cham- 
ber "If people could see this 
empty room, they would be 
horrified.’’ 

Many MEPs appeared taken 
aback by Mr Kohl's touchiness. 
Mr Gijs de Vries, the Liberal 
leader, said the chancellor had 
obviously been too long in 


power. 

“He's suffering from the 
Thatcher-Lubbers complex. It 
seems to happen to everyone 
who has been in power for 
more than 10 years.” 

In the debate on tbe Essen 
summit, MEPs piled up com- 
plaints about the delay in con- 
cluding a convention to govern 
Europol the Hague-based pan- 
European police network, as 
well as the failure to cut high 
unemployment, tackle poverty, 
and stem the refugees from ex- 


Yugoslavia. 

In particular, the Socialists, 
the single largest group, called 
for an analysis of the effect on 
the EU budget and common 
agricultural policy of enlarge- 
ment to include tbe form-inten- 
sive countries of eastern 
Europe such as Poland and 
Hungary. 

Greek representatives spoke 
up, still rankled by the way 
Germany effectively, took over 
the Greek presidency earlier 
this year by seizing control of 


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the EU accession negotiations 
with Austria, Finland, Sweden 
and Norway. 

Mr Kohl is an irrepressible 
optimist about Europe, but his 
view that Essen had achieved a 
broad consensus on employ- 
ment, the financing of 
trans- European infras tru c ture 
networks, and a balanced 
policy toward eastern Europe 
and the Mediterranean was 
widely shared by EU govern; 
' merits. 

Britain was especially 
delighted with the Ecu300m 
(£233m) aid programme for 
Northern Ireland, the strong 
commitment to future labour 
market flexibility, and the 
Council's decision to abandon 
efforts to force through an 
EU-wide Co, carbon energy 
tax. 

The chancellor was clearly 
upset by criticism about the 
delay in setting up Europol. a 
project to which he attaches 
the utmost importance. “Why 
criticise me? Go back home 
and speak to your own repre- 
sentatives. They are rejecting 
Europol,” he said. 

France, which takes over tbe 
rotating EU presidency in Jan- 
uary, has blocked a Europol 
agreement, though at Essen it 
offered a commitment to wrap 
up a convention before the 
next European summit in 
Cannes in June. 

Germany would tike the 
European parliament to gain 
greater powers of co-decision 
on legislation agreed at the 
1996 inter- gove rn m en 1 confer- 
ence to review Maastricht The 
fla unt s t government in France 
is likely to be for less co-opera- 
tive during its presidency. 


Russian 
democrats 
at odds on 
Chechnya 

By John Thomh lB in Moscow 


The crisis in Chechnya has 
sharply divided Russian soci- 
ety. It is also splitting tbe par- 
liamentary democratic move- 
ment which appears tom 
between principle and political 
advantage. 

There is little argument 
among politicians about 
whether Chechnya is anything 
other than an integral part of 
Russia which must be brought 
back into the fold; the differ- 
ences emerge over how this 
can be best achieved. 

In the Duma, the lower 
house of parliament, a curious 
affiance of communists and lib- 
erals has opposed armed inter- 
vention. Conversely, Mr Vladi- 
mir Zhirinovsky’s 

ultra-nationalist Liberal Demo- 
cratic party has unusually 
found Itself sharing the same 
platform as the radical pro-re- 
form December 12 Union, 
headed by Mr Boris Fyodorov, 
the former finance minister, in 
support of force. This may 
prove only a temporary reori- 
entation of parliamentary 
forces which will quickly dis- 
solve when the Duma returns 
to routine politics, such as the 
1995 budget 

But a more permanent 
change appears to be over- 
taking the Duma’s biggest fac- 
tion, Russia's Democratic 
Choice, led by Mr Yegor Gai- 
dar, the former prime minister, 
which has broadly supported 
President Boris Yeltsin's poli- 
cies. Mr Gaidar has been one of 
the most vocal advocates of a 
peaceful solution to the Che- 
chen prob lem But his stand 
has alienated Mr Yeltsin, jeop- 
ardising Russia's Choice’s 
standing in the Duma. 

“Until this crisis Gaidar still 
had one foot in Yeltsin’s camp 
and one foot out That has now 
changed and Russia's Choice 
will have radically to rethink 
its outlook,” says one political 
analyst 

Mr Gaidar bas come under 
attack within his own faction, 
too. Mr Andrei Kozyrev, the 
foreign minister, has quit the 
party over its stance on Chech- 
nya. Mr Oleg Boiko, chairman 
of its executive committee, has 
also criticised the leadership. 

Russia's Choice yesterday 
issued a statement papering 
over the differences, stressing 
the distinction between per- 
sonal and party views. But few 
observers doubt that tensions 
could resurface if unrest drags 
on in the Caucasus. 


Bossi’s League 
backs away 
from Berlusconi 


By Robert Gfraham In Rome 

1 

The populist Northern League 
of Mr Umberto Bossi yesterday 
marched one further step away 
from its allies in Italy's right- 

wing coalition government. 

The League voted with the 
opposition in tbe chamber of 
deputies to approve the forma- 
tion of a new parliamentary 
commission covering radio and 
television. This was against 
the express wishes of the 

League’s government allies - 
the Forza Italia movement of 
premier Silvio Berlusconi, the 
neo-fascist MS I/National Affi- 
ance of Mr Gianfranco Fini and 
the small Christian Democratic 
Centre (CCD). 

It was the first occasion dur- 
ing this parliament that the 
League bas formally aligned 
with the opposition, with the 
clear intention of politically 
discrediting Mr Berlusconi. 
Some opposition members 
immediately saw this as the 
beginnings of the formation of 
a new parliamentary majority. 

However, Mr Walter Vel- 
troni, a deputy for the former 
communist Party of the Demo- 
cratic Left (PDS) and editor of 
the daily L’Unltd, was more 
cautious: “This vote does not 
prove the existence of a new 
majority, rather it expresses 
the degree of concern in parlia- 
ment over the problems of 
information awn the media.” 

The vote was only a day 
after Mr Berlusconi had been 
interrogated by Milan magis- 
trates about corruption during 
the time he ran bis Fmmvest 
business empire, and came 
when the future of the coali- 
tion was increasingly in doubt 

However, the significance of 
the vote lay not merely in the 
tuning. The motion to set up 
the new commission was 
moved by Ms Irene Pivetti, the 
League speaker of the House. 
She has become a key figure in 
the growing political instabil- 
ity and has established close 
links with President Oscar 
Luigi Scaffaro. Mr Berlusconi's 
supporters regard her as no 
longer impartial and deter- 
mined to undermine the credi- 
bility of the coattton to prepare 
the way for a new government 
of national unity. 

Forza Italia deputies issued a 
note accusing Ms Pivetti: “This 
is a complete expropriation of 
parliamentary procedure by 
Pivetti, creating a new com- 
mission and effectively de-le- 
gimitiaing the work of three 
existing commissions.* 

Government domination of 
these commissions had enabled 
Mr Berlusconi and bis allies to 
take over management and edi- 
torial control erf the RAL the 
state broadcasting organisa- 
tion. Such a situation in turn 
exacerbated the conflict of 
interest between Mr Berlus- 
coni’s role as prime minister 
and bis ownership of three 
commercial television rfiannrik 
through Finlnvest 

The problem of the control of 
television was further compli- 
cated by a constitutional court 
decision ruling last week that a 
1990 law granting Mr Berlus- 
coni three national nnmmerrial 
channels was unconstitutional. 
As a result Finlnvest may well 
have to divest one, if not two, 
of its channels by the end of 
1996. 

Despite the background of 
genuine public interest behind 
the formation of the conunis- 


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Sion, Ms Pivetti's move was 
intended to embarrass the gov- 
ernment and the League's 
switch of support intended as a 
signal of its ability to change 
sides. It followed the tabling, of 
a motion by Mr Bossi in effect 
censoring a wide swathe, of 

government activity, including 
Mr Berlusconi's handling of his 
dispute with the judiciary. The 
Leagues cannot play this spad- 
ing role much longer without 
formally changing sides. 

Without the League, Mr Ber- 
lusconi would have no other 
ally to make up a working 
majority in parliament Until . 
now Mr Bossi has been content . 
to conduct guerrilla warfare 
without bringing down the - 
government This is because be 
wants both to see the 1995bud- 
get through parliament and + 1 ' 
avoid early elections. 

A budget ineffectually deal- 
ing with Italy's public sector 
deficit will go through parlia- 
ment next week. Tbe League’s 
iiawfte would then be freed to ... - 
carry out Mr Bossi’s long- 
threatened verified - a parlia- 
mentary test of whether the 
coalition has any interest In, 
and chance of, survival - and 
to see what other coalition 
could form a government 
The new affiance of the type 
Forged yesterday is the most 
obvious regrouping of the . 
forces in parliament However, 
the PDS is far from united on . 
doing a deal with Mr BossL - 
For his part, the League 
leader is unsure alL his troops .. . 
would back a centre-left affi- 
ance that would inevitably 
leave the PDS as the dominant 
parliament ary player. For this 
reason Mr Bossi has said a ' 
coalition could be forged solely 
as a government of national 
salvation, one that excluded 

the neo-fascists. 

Mr Berlusconi in the coming 
days will do his best to dis- 
credit Mr Bossi and woo away 
the 40-odd League deputies . . . 
who are disenchanted, with the 
League leader's behaviour. He 
will also resort to the populist J. 
tactic of insisting that he atone w 
has been given a mandate to 
govern by the electorate in the 
March elections. . And if the 
League’s .departure from ' the 
coalition becomes unavoidable, 
he will make Mr Bossi appear 
the person responsible for 
destabilising the government 
and the country. . . 


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FINANCIAL times 


THURSDAY DECEMBER 


IS 1994 



INTERNATIONAL 


Australia aims to check surging growth 


By Nikki Tail in Sydney 

The Australian government 
was aiming for “more 
acceptable" annual growth 
levels of between 4 per cent 
and 4.5 per cent and would 
review fiscal policy when it 
conducted its mid-year 
budgetary renew la January, 
Mr Ralph Willis, treasurer, said 
yesterday. 

His comments came within 
hours of the decision by the 
Reserve Bank of Australia to 
raise the country's official cash 
rate by a further one 
percentage point to 7.5 per cent 


Taiwan 

shifts 

China 

focus 


By Laura Tyson in Taipei 

Taiwan yesterday announced a 
cabinet reshuffle in which the 
most significant move was 
seen as shifting emphasis from 
politics to economics in 
delicate relations with China. 

The moves were also seen as 
an effort by President Lee 
Teng-hui to strengthen his 
position in advance of 
presidential elections slated 
for early 1996 and subtly to 
raise Taiwan's level of 
representation at international 
economic meetings. The last 
big cabinet reshuffle took 
place in early 1993. 

Mr Vincent Slew, economic 
planning minister, will head 
the Mainland Affairs Council, 
the agency which shapes 
China policy. Mr Slew has 
advocated opening direct 
shipping and air links with 
China, long banned by the 
ruling Nationalist party but 
supported by Taiwanese 
business interests. 

Bis successor as chairman of 
the Council far Economic 
Planning and Development 
will be Hr Hsn Li-teh, who 
will remain deputy premier. 

Mr Hsu will represent 
Taiwan at next year’s Asia 
Pacific Economic Co-operation 
forum. President Lee is barred 
by China's objections from 
attending the annual trade 
summit of the region's leaders. 
China views Taiwan as a 
rebel-held province and 
thwarts its attempts to join 
international organisations. 

On Tuesday, Mr Stew said 
Taiwan should consider 
setting up “offshore” shipping 
centres through which direct 
sea trade with China could be 
conducted. “We should 
actively review the current 
indirect trade and investment 
policy and make some 
appropriate relaxations. . . 
under conditions of national 
security, we should consider 
setting up a shipping centre 
outside national boundaries," 
he said. 

All cross-strait trade must 
now by law be routed through 
a third location such as Hong 
Kong. Earlier, similar 
proposals have suggested that 
one of Taiwan's harbours be 
designated as the centre for 
direct shipping with China. 

However, Mr Slew cautioned 
yesterday against reading too 
much into his appointment “I 
will not only focus on 
economic issues and there will 
be no major policy change. . . 
don't expect too much from 
me," be was quoted as saying. 


when markets opened 
yesterday, in an effort to 
check the nation's surging 
economy. 

This is the third rise in four 
months - the previous 
increases of 75 and 100 basis 
points were in August and 
October respectively. 

Recent figures have shown 
that Australia’s non-farm 
sector grew by 7J3 per cent in 
the year to the September 
quarter, and {dr Willis said this 
momentum had continued. 
“It’s clear the economy is 
growing very strongly in the 
December quarter." 


"Clearly, in these cir- 
cumstances we need to give 
further consideration to fiscal 
policy. . . we will do that in 
the context of the mid-year 
review,” he said. 

Although Mr Willis stressed 
that no decisions have been 
taken, many observers believe 
the government is preparing 
the ground for tax increases In 
the new year. These could 
mean a fight to the Senate, 
parliament's upper house, 
where the government lacks a 
majority, and will be hard to 
sell to the electorate! 

In the meantime, many 


private sector economists 
suggested that yesterday's rate 
rise would not be the last move 
on the monetary front for a 

while. "Hie overwhelming 

strength of the economy 
suggests to us that there is 
another 100 bads rate rise to 
occur in the next few months," 
Bankers Trust said. The 
Australian dollar seemed to 
reflect this view, finishing in 
local markets at US$0 lT 774, its 
highest dosing level for three 
years. 

The powerful Australian 
Council of Trade Unions sent a 
shot across the government’s 


bows when Mr Martin 
Ferguson, Actu president, 
called for less reliance on 
interest rate rises to slow the 
economy and more emphasis 
on taxing the “top end of 
town”. 

He added that any additional 
tax burden on the lowest paid 
could "seriously put at risk" 
the accord between the union 
movement and the 
government Under this, the 
unions pledge to seek wage 
deals which keep Australia's 
inflation rate in line 
with that of its trading 
partners. 


Offend cakmte, % 



Japan plans to ease rules on funds 


By Gerard Baker in Tokyo 

In a belated attempt to revive flagging 
interest in the nation's investment 
trust business, Japan’s ministry of 
finance has announced it plans to 
sweep away most of the tight restric- 
tions that are currently stifling 
demand for such funds. 

Many of the rules governing fond 
management and distribution of profits 
will go in the widest ranging shake-up 
of the investment trust sector for 


decades. The changes are likely to take 
effect before the end of the year. 

The most significant of the changes 
will he the lifting of a ban on investing 
in derivatives. At presort, trusts are 
permitted to invest in derivative 
instruments, such as futures and 
options, only for the limited purpose of 
risk-hedging. 

In a farther effort to create a more 
investor-friendly environment, the 
trusts will have to disclose their foods’ 
performance in greater detail, includ- 


ing publication of monthly perfor- 
mance data. More transparent report- 
ing will also be required to enable bet- 
ter comparison between trusts. 

The Japanese equity market has 
fallen from its highs of the late 1980s 
and savers have shied away from 
investment trusts. The ministry of 
finance estimates that net assets of 
equity-based investment trusts have 
fallen from more than Y45,OOObn 
(£287bn) in 1989 to less than Y19,OO0tm 
at the end of October this year. 


Other principal reforms are: 

■ Investment trusts will be allowed to 
invest in any foreign market. 

■ Restrictions on the safe of foreign 
Investment trusts in Japan will be 


■ The ban an mergers between invest 
meat trust companies and investment 
advisory companies will be lifted. 

■ “Churning’’, excessive buying and 
selling of equities to increase brokers* 
commission income, will be banned. 
See Capital Markets 


School bullying haunts celebrations 


T he Christmas lights 
have gone up to add 
cheer to the Japanese 
year-end but, for from being in 
celebratory mood, the country 
is gripped by concerns about 
babying in its state schools. 

On Tuesday the nation, 
already deeply disturbed by 
the suicide last month of a 13- 
year-old schoolboy who was 
the victim of bullying by class- 
mates, was shocked by a sec- 
ond young suicide of the same 
age, who had also been tor- 
mented by his peers. 

The public outcry over the 
increasingly cold-blooded bul- 
lying that is taking place in 
Japanese schools has led the 
government to set up a special 
cabinet council to look Into the 
causes of and possible solu- 
tions to school bullying. 

Mr Tomiichi Mura yam a, 
prime minister, has called on 
his ministers to review the 
educational counselling system 
to determine whether it was 
functioning properly. 

Bullymg is by no means a 
new feature of fife at Japanese 
schools nor a phenomenon 
peculiar to Japan. But the 
number of incidents which are 
thought to have been responsi- 
ble for the deaths of teenagers 
and the apparently more 
vicious nature of the bullying 
has alarmed the public and 
raised questions about the 
country's educational system. 

In its gTinuai white papa 1 cm 
education released on Tuesday, 
the ministry of education cites 
that 12 per cent of elementary 
schools, 33 per rant of junior 
high schools and 24 per cent of 
senior high schools reported 
bullying in fiscal IMS. 

While the figures show that 
incidents have been on the 
decline at elementary and 
senior high schools, the min- 
istry notes that there has been 
a rise in incidents of bullying 
at junior high schools. 

Mr Kazuhiro Mochizuki. a 
former headmaster of a junior 
high school who is now an edu- 
cational consultant, believes 
that the strong tendency in 
junior high schools to judge 
students according to their 
academic achievements is 
largely to blame for the bully- 


Michiyo Nakamoto on questions raised about the educational system 



Aiming high: hat 12 pa- cent of Japan’s elementary schools and 33 per cent of junior high schools reported bollying in 1992 


mg groups which have 
sprouted throughout Japanese 
state schools. 

“There is a lot of confusion 
in junior high schools over 
how best to get students into 
high schools. In the shadow of 
all the confusion over aca- 
demic counselling, 1 believe 70 
to 80 per cent of the children 
have an inferiority complex 
and these are the ones who 
form groups and try to vent 
their frustration by bullying 
others," he says. In most cases 
victims are gentle children 
who have an average or above 
average academic record. 

At the same time, the 
emphasis at schools has shifted 
so much towards academic 
work that moral instruction 
and non-academic activities 
have been neglected. 

Many critics of Japan's edu- 
cational system who share Mr 
Mochiznki’s concerns about 
the weight given to academic 
achievement blame the system 
for creating an environment in 
which children feel they can- 
not rely on their teachers. 

"Teachers are preoccupied 


with conferences and other 
matters and have less and less 
time to spend with the chfl- 
fl ren. That is why the children 

do not trust their teachers and 
do not tell them that they are 

hwfng bullied,’’ ""tag Mr Tnarta 
Nada, a psychologist and 
writer. “If personal relation- 
ships are weak, there wifi be 
bullying not only at schools 
but at the workplace as weli," 
he adds. 

In many cases where bully- 
ing has led to the suicide of 
young students, the school 
authorities, inctarffag the vic- 
tims' teachers, claim not to 
have noticed the bullying. 

Although same schools have 
set up special counselling facil- 
ities, children who are bullied 
by their peers tend to keep the 
reality hidden from grown-ups. 

This is in part out of fear of 
retaliation from offenders but 
also because they are not 
always taken seriously by 
adults. In both of the latest 
suicide cases, the parents 
of the victims had suspected 
bullying for some time, but 
the school authorities did not 


take any significant steps to 
try to stop the aggression. 

In a society where group har- 
mony and conformity are val- 
ued over individuality and self- 
assertiveness, it is often not 
only difficult for the victim of 
group aggression to seek help 
but humiliating as weH 


A nother aspect that has 
raised concerns in 
Japan is the growing 
tendency for bullies to extort 
huge sums of money from their 
victims. In the case of Kiyoferu 
Okochi, who committed suicide 
last month, one of the most 
sh pricing revelations was that 
his tormentors had forced him 
to give th em a total of mare 
than Ylm (£6,380) over a period 
of about two years, according 
to a letter he left. 

The money, which Kiyoteru 
stole from his parents and bor- 
rowed from relatives, was 
spent by the bullies at game 
arcades and on everything 
from clothes to food and alco- 
hol. 

“Many children today cannot 
play without money." laments 


Mr Mochizuki. The problem 
reflects a deeper social disor- 
der, he believes. 

"Bullying is occurring in 
public schools which cannot 
reject any of the children who 
live in the local communities. 
In many of these ramimnmtifig. 
people who have lived side by 
side for more than tan years do 
not even talk to each other and 
it's everyone for himself. In 
such an environment how can 
you expect childr en to develop 
a sense of concern for others?" 
Mr Mochizuki asks. 

"The government cannot 
hope to solve this problem 
with peremptory measures like 
setting up councils but will 
have to look at it from the per- 
spective of local communities 
and of the educational system 
as a whole ” he points out 

Japan has always prided 
itself on its social harmony. 
But ironically, as the country 
tries to dpAne a new relation- 
ship for itself with the rest of 
the world, it is having to 
reflect on the effects of deter- 
iorating relationships among 
its own people at home. 


lMT^NATlONA^IEW^DjGEST 

Japan company 

failures decline 

«BSS5S5555«SSISSS 

SSL-’C n£K iSuSft 5K 

due to U» tot 

SToct cent, though the October figure was Oso maswtr 

MffiasgSgM s. 

i hiring indus try were almost stable - a 03 per 
I In another piece of moderately good news 
department store sales fell by (Wiper rent \m. Nm* Q* 
smallest decline in the 33 consecutive months durmg which 

have f&lleu- WSOAsm Dctwksns^ Tokyo 

Pakistan move on violence 

! Pakistan’s ruling and opposition parties temporarily put aside 

1 their squabbling yesterday to agree on 5^°5 ce 5 1 f d jfSflSJS 
to end violence In Karachi which has killed at P^opte 

in two weeks. The National Assembly unanimously decided to 
set up a committee to investigate the causes ami propose 
remedies to solve the ethnic, sectarian and political violence 

, in Pakistan’s commercial capital. 

The rare bipartisan accord came as a Moslem Shia lender 
! warned of a bloodbath in Karachi unless the government acted 
in the wake of Tuesday's killing oT three Shias to separate 
shootings. The violence has gained in intensity since army 
troops ended two^radkt-half years of law enforcement duties m 
> the port city recently. Rearer, Islamabad 

China group in HK wound up 

A British businessman yesterday won the right in Hong Kong 
to have a Chinese state company wound up for failure to pay, 
its debts of w «m- in what is believed to be the first such case 
erf its kind in Hong Ko ng involving a mainland company, Mr 
! Richard G osling 's Zone Heath Associates successfully applied 
to the Hong Kong High Court to have It recognise a London 
High Court judgment a gainst China Tianjin Interna tional Ec o- 
nomic and Technical Co-operation Corporation (UTEBTCQ, 
one of the Tianjin municipal government’s leading enterprises. 
Wilde Sapte, Mr Gosling's solicitors, said an offi cial reco ver-; 
would he a ppointed to investigate the affairs of dTETTCC in 
Hong Kong. Simon HoQxrtan, Bang Kong 

HK$4.5bn rail projects planned 

The Hong Kong government is phoning three railway projects 
costing a total HE$L5bn (£372m) and to be completed by 2001, 
according to Mr Haider Banna, transport secretary. He added 
that China has been informed of the plana and has. yet to 
approve them. The projects include a rail link between. West- 
ern Kowloon reclamation, the north-western New Territories 
and the border with China at Lowu; a subway extension fine 
to Junk Bay in eastern Kowloon peninsula and a line between 
the new bousing estates in Maanshan to Tai Wai in the New 
Territories, no AFX and Heater, Bong Kxmg 

Bahrain police arrest protesters 

Bahrain police used teaxgas to disperse small groups of dem- 
onstrators two nights running this week and arrested some of 
them. Witnesses said yesterday that tear gas was used on 
Monday and Tuesday nights against demonstrators in c e n t ra l 
Manama and at Qadim, a village about fifan to the west at the 
capital. The cause of the demonstrations was not known. 
Residents said Judging by the authorities’ actions at previous 
such incidents in the small Golf island state, most of those 
arrested would be released soon after questioning The resi- 
dents variously estimated the numbers involved at between 50 
and 100 in each location. Ratter. Dubai ' 

S Korea to reform oil sector 

South Korea’s trade, industry and energy ministry unveiled a 
draft plan to reform its heavily controlled oil industry by 
liberalising prices, distribution and both export and imports of 
oil products. Under the plan, oil refiners, distributors and 
petrol stations would be allowed to set their own prices for oO 
products including petrol, paraffin, gas oU and diesel off The 
timing has not yet been decided. Talks are still under way 
with related government offices," a ministry official said. Blit 
Seoul media predicted prices of oil products would be deregu- 
lated from the second half of next year. Reuter. Seoul 

Soros pledges R20m to SA 

Mr George Soros, the . financ ier, yesterday pledged R2Qan 
(£3.6m) start-up capital and a guarantee facility for a. further 
R200m to provide housing for the poor in South Africa. With 
matching funds from the government, his Soros Foundations 
are to establish a National Urban Reconstruction and Housing 
Agency (Nurcha) which would “will promote delivery in the 
short term and will take financial risks which «»> xmlock 
private capital. ” Our Foreign Staff 


Rabin presses 


Tokyo on funds Liberalisation moves are seen as an irrelevance by most disaffected rural voters, writes Stefan Wagstyi 

M _ f | 1 hree days after his party that the state elections were index of leading shares closed ger is next year when the pollt- tadta. # the two Mowm* nr m, 


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Elections catch up with India’s slow reforms ■ 


for new bank 


T hree days after his party 
suffered a serious defeat 
in state elections, Mr 
P V Narasimha Rao, the Indian 
prime minister, has yet to utter 
a word in public: In his usual 
quiet way, the 73-year-old vet- 
eran is taking stock of the 
mood of the party and the 
country before making a move. 

Mr Rao has at least one 
crumb of comfort bad as the 
results were for the ruling Con- 
gress (I) party, the prime min- 
ister’s own job does not seem 
at risk. Even though the par 
ty*s worst performance was in 
Mr Rao’s home state Andhra 
Pradesh, a brief flurry of sug- 
gestions that he should quit 
has blown away. 

But Mr Rao's critics in the 
party want changes - and 
want them soon, in time to 
influence another round of 
elections in five more states in 
February, as well as the next 
general election which is due 
by mid-1996. As Mr Narain 
Dutt Tiwari, Congress party 
chief in the northern state of 
Uttar Pradesh, says: “We sim- 
ply cannot win any elections 
with our present image.” While 
Mr Tiwari is a known oppo- 
nent of Mr Rao. many Con- 
gress members echo privately 
what Mr Tiwari has said in 
public. 

Mr Rao’s supporters counter 


By Wiffiam Dawkins in Tokyo 

Mr Yitzhak Rabin, the Israeli 
prime minister, yesterday 
asked Japan to contribute 
$300m-S400m (£l92m-£256m) of 
capital for the planned Middle 
East development bank. 

Mr Rabin, who is at the end 
of a three-day tour, the first 
official visit to Japan by an 
Israeli leader, requested the 
contribution in talks with Mr 
Masayoshi Takemura. finance 
mini ster. Mr Takemura was 
unable to give any indication 
of further assistance from 
Japan, which has already 
pledged S200m over the next 
two years for the improvement 
of Palestinian self-rule areas. 

Mr Rabin is keen to see wide 
backing for the hank, which is 
to fund regional infrastructure 
projects along the lines of the 
European Bank for Reconstruc- 
tion and Development. 

Last month's Middle East 
and North Africa economic 
summit in Casablanca agreed 
to study the establishment of 
such a bank, probably with 
capital of Siobn, of which 
Israel has indicated it might 
provide S500m. 


Israel wants the US - a sup- 
porter of the scheme - to pro- 
vide 60 per cent of the capital 
along with Europe and Japan, 
with the remainder coining 
from Middle East countries. 

In a separate meeting with 
Mr Yohei Kona the Japanese 
foreign minister, Mr Rabin 
voiced concern over the grow- 
ing strength of Islamic funda- 
mentalism and alleged official 
Iranian support for terrorist 
organisations. 

His comments come at a sen- 
sitive time, as the Japanese 
government is considering 
whether to disburse an over- 
due second tranche of an offi- 
cial soft loan for a dam in Iran. 
Mr Kono was reported to have 
made no reply. 

Reuter adds from Jerusalem: 
Mr Hikmat al-Masri, a leading 
organiser against British man- 
datory rule of Palestine before 
1948 and against Israeli occupa- 
tion later, has died, aged 83. his 
family said yesterday. Mr 
Masri. a member or one of the 
most prominent West Bank 
families and a co-founder in 
1964 of the Palestine Liberation 
Organisation* died on Tuesday 
in his native city of Nablus. 


that the state elections were 
fought mainly over local issues 
and warn against over-reacting 
in Delhi. But even they con- 
cede that adjustments may be 
necessary, particularly in the 
presentation of the govern- 
ment's economic programme. 

The prime minister’s oppo- 
nents believe that the pro-mar- 
ket reforms Mr Rao has pur- 
sued for the past three years 
have insufficient appeal to the 
great mass of rural Indians, 
who constitute 75 per cent of 
the total electorate. As for as 
these formers and labourers 
are concerned, liberalisation of 
foreign trade and investment is 
an Irrelevance. The biggest 
economic change they have 
witnessed since reform started 
in 1991 has been a 90 per cent 
increase in the prices of food 
and fuel, which have been 
pushed up by government sub- 
sidy cuts. 

Mr Rao's critics say the 
reforms are therefore seen as 
“anti-poor" and most be given 
"a human face". A few are 
even demanding the resigna- 
tion of Mr Manmohan Singh, 
the finance minister. 

The mere suggestion that Mr 
Singh might be forced to resign 
or to launch a drastic overhaul 
of economic policy has sent the 
stock market tumbling. The 
Bombay Stock Exchange's 


index of leading shares closed 
up 31.42 points yesterday at 
3.861.47 after five consecutive 
fells. It is still down 5J> per 
cent on a week ago. 

This may be an over-reac- 
tion. A few grumbles about Mr 
Singh do not constitute an 
attempt to dislodge him. Mr 
Rao has stood by him in diffi- 
cult times - notably last 
December when he declined Mr 
Singh’s resignation after par- 
liamentary criticism of *hg way 
the nnarrap miniriw handled 

the 1992 Bombay securities 
market scandal 

Moreover, even if Mr Singh 
were to go, there is broad 
cross-party consensus about 

the need for economic liberalis- 
ation. So although there may 
be arguments over presenta- 
tion. the direction of pro-mar- 
ket reforms is not at risk. 

But what could be threat- 
ened is the fiscal discipline 
which has underpinned liberal- 
isation. In his first two years. 
Mr Singh squeezed public 
spending, cutting the fiscal 
deficit from 8.4 per cent of 
gross domestic product to 5.7 
per cent in 1992-93. But in the 
year to March 1994 it returned 
to 7.3 per cent as spending cuts 
slowed. This year’s generous 
target of 6 per cent seems 
attainable because of a recov- 
ery in tax payments. The dan- 


ger is next year when the polit- 
ical pressures to spend in 
advance of the general election 
may be irresistible. The 1995-96 
budget, due in February at the 
time of the next round of state 
elections, wifi be crucial 

Apart from the economy, the 
Congress party Is considering 
three issues which may have 
lost votes tills week - corrup- 
tion, caste and the handling of 
the 1992 destruction of the 
Ayodhya mosque. 

Opinion polls showed that 
many voters were angry at cor- 
ruption in government Mostly 
they were concerned about cor- 
ruption at the local level such 
as bribes paid to petty nfflriain 

and commissions collected by 
district politicians. But Mr Rao 
Is under attack in Delhi over 
corruption in the centra] gov- 
ernment. Opposition parties 
have repeatedly urged him to 
dis m iss two ministers who 
were named in the parliamen- 
tary report into the Bombay 
securities scandal - Mr B. 

Shankaranand. the health min- 
ister, and Mr Rameshwar Tha- 
kur, the junior finance minis- 
ter. 

Also, the prime minister is 
under pressure in parliament 
to explain how the gover nment 
mishandled a sugar shortage 
earlier this year. Government 
unports of sugar were delayed 


BSE 30 Index 

4.700 - — 

4^00 ~ 

4.300 : — 

4,100 -^i 1 

3.90oHl-. 

3.700 flr-V 

■ 3,300 t T i 


1994 


for weeks while prices rose to 
the benefit of private produc- 
ers and importers. 

Mr AK Antony. mir>i^ ?r f Qr 
civil supplies, resigned yester- 
day, saying he bore moral 
responsibility for the sugar 
scandaL An official report 
named him and other s»niw 
officials in imports donic 

However, there are fears 
within Congress that even if 
the party acts on its economic 
record mid corruption, it will 
still foil to rebuild support it 
has lost among India's lower 
castes and Moslems. Once the 
bedrock of Congress party sup- 
port, these communities have 
been fickle in recent years and 
deserted Congress in droves in 


the two biggest of the four .. 
states in which elections have - - 
just been held - Andhra Prad- 
esh and Karnataka. Mnaigma 
have been ali enat ed by Mr ’. 
Rao’s failure to rebuild the - 
Ayodhya mosque after it was 
pulled down by wimtawt Hin- 
dus. It is hard to see how Mr 
Rao can win back their support . 
without angering much 
larger Hindu oommunity. 

With caste-based. -communi- 
ties he feces a similar problem 
of matching competing 
de mand s. Once Congress won 
favour with the poor with mod 
est hand-outs of subsidies and 
public works projects. But as 
the lower castes have become ; 
more politically active so theft* 
demands have grown. The 
result is that politicians? 
become embroiled in increath 
fogly bitter arguments about - 

s harin g out the pie of patron:' r: - 
age. 

As Mr Singh has said, only 
tocre aaed economic growth can-- ^ 
provide the mtarK to satisfy * 
these Competing daman da. - 
Until now he h£ persuaded 
the Congress party to wait 
patiently for his policies, to' 
tidiver growth. He says India - 
wul see the benefits in" the late 
1990s. After these elections ft is 
not dear that b i g -party opt 
kasues are prepared to wait 
that long. 


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FINANCLAX TIMES THURSDAY DECEMBER 15 1994 



ADVERTISEMENT 


ITALIAN PACKAGING MACHINERY INDUSTRY 

The Italian packaging machinery industry: a w 


satisfying market demands , 


providing personalised solutions 


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THE REASONS OF A LEADERSHIP 






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Italian packaging machin e 
are in use in over 150 coun- 
tries, mostly, in European 
markets, the U.S. and Japan, 
as well as in Uk newly indus- 
trialised countries of Asia. 
Also of special importance is 
the use of Italian maHinw; in 
countries striving to improve 
their living standards, from 
the CIS to the other nations of 
East and Central Europe, as 
well as China, Latin America 
and the more developed in- 
dustrial regions of Africa. 
Today one out of four packag- 
ing machines on the interna- 
tional market is made in Italy. 


A successful tradition. 
The reasons for this success 
can be traced within its histor- 
ical and geographical roots. 
The first businesses were 
formed in Bologna at the be- 
ginning of the 19th century. 
As true pioneers, the first in- 
dustries were well ahead of 
their time in identifying two 
fundamental of the 

market: the strategic import- 
ance of packaging in the mar- 
ket of products of large con- 
sumption; and the need to 
adapt packaging machines to 
fit the particular requirements 
of each customer. 


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ITALIAN PACKAGING MACHINERY: 
NON STOP GROWTH. 


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“We can look at the future 
very optimistically”, said Mr. 
Giancario De Martis, presi- 
dent of UCIMA (the associa- 
tion representing Italian pac- 
kaging machinery manufac- 
turers). 

In 1993 over 300 companies 
producing packaging machin- 
ery in Italy registered a 
growth in export of 33% com- 
pared- to the previous year, 
and the impact of sales on 
turnover increased from 
69.3% to Sl%. 

“While other countries such as 
Gomany, France, and ■ Swit- 
zerland reported u decrease in 
terms of turnover - said Mr. 
De Martis - the Italian pack- 
aging machinery industry 
seems to be launched towards 
a continuous growth. With no 
doubt the readjustment of 
lira has been helpful, but the 
most important role in such a 
success has certainly been 
played by the pursuit ofa poli- 
cy of high technology and cus- 
tomer satisfaction”. 


A “memorable overtaking" of 
the competitors was then 
achieved in Japan where Ita- 
lian machineries represent 
35% of the total of foreign 
machineries sold there. 


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An in-depth look. Export 
in 1993 represented 31.9% of 
the total production of Italian 
packaging machinery and in 
the same year balance of trade 
registered over 1.3 billion dol- 
lars (about 70.7% of the total 
turnover). 

* l \ ' ' : 10 * ■ Obviously the EC is the prim- 
* ^ ary market for Italian packag- 

-. ing machinery export with a 
. - share of 39.2% and with a 
growth rate m 1993 of 20.4% 
compared to 1992. 

The German market remains 
the most important 
(+ 13.1%), followed by the 
U.S., France, UK, and 
Spain. 

Export also increased in the 
Eastern European- market 
(particularly in Poland and 
CIS) in Latin America (par- 
ticularly Mexico, Argentina, 
Chile and Brazil), China and 
South East Asia. 




retort 


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A strategic develop- 
ment. The strong position of 
;.-.e I talian packa g in g machin- 
ery industry is now going to be 
consolidated with an outreach 
visibility plan that UCIMA 
(the association representing 
Italian packa g in g machinery 
manufacturers) is imple- 
menting. 

The core of this plan is. the 
creation of the Italian Packag- 
ing Points in Hong Kong and 
Mexico City (and so, at the 
gateways to the most strategic 
markets: the Far East and La- 
tin America). 

These “IPPs” will support all 
the initiatives of Italian pack- 
aging industry (Le. the “Ita- 
lian Packaging and Process 
Machinery Exhibition 1 ’ that 
will be held in Beijing in 
March 1995), and, most of all, 
will manage all the communi- 
cation to the Far East and 
Central-Southern America. 
“The Far East and Latin 
America, - declared Mr. De 
Martis - thanks to the de- 
velopment they achieved in 
the last years win be the big 
“chances" for Italian packag- 
ing machinery industry". 

The Italian manufacturers of 
packaging machinery have al- 
ready achieved good results, 
much more valuable consid- 
ering the fact that, in many 
cases, there was no advantage 
coming from the devaluation 
of the Lira. 

“So, - declared Mr. De Mar- 
tis, the consolidation of the 
Italian packaging machinery 
industry in these “relatively" 
emerging markets, represents 
the last frontier to worldwide 
leadership”. 


* 






A 


Trade balance with major partners 
(value in million U.S. dollars) 



% 


-C" 


■‘i- - ■* 

9 V 



Italian Export 

to: % Balance ’93 

Germany 

172 

10.30% 

97 

U.SA 

160 

9.59% 

139 

France 

153 

9.17% 

136 

United Kingdom 127 

7.61% 

116 

Spain 

72 

4.31% 

67 

•Japan 

. 65 

3.89% 

59 

Switzerland 
| ■ 

50 

3.00% 

■ 

20 

Netherland 

23 

1.38% 

10 

Austria 

18 

1.08% 

- 10 

Sweden 

14 

0.84% 

2 

Other countries 

815 

48.83% 

797 

Total 

1669 

100.00% 

1449 


.1 


£ Ucima-The Italian Packaging 
Machinery Manufacturers’ Association 
- Economic Stuc&es Bureau 


Customisation. On the 

basis of this tradition, the Ita- 
lian-packaging machinery' 
firms offer a complete range 
of products on the world mar- 
ket. The systems and the 
machines they plan arc tailor- 
made to fit specific customer 
needs, using innovative tech- 
nology and new materials at 
every level of the production 
process. Furthermore, the 
highest levels of service are 
guaranteed by a continuous 
and stable contact between 
producers and customers. 


Non-stop research. The 
major part of the people 
working in the Italian pack- 
aging machinery sector is em- 
ployed in research, develop- 
ment and maintenance. 


They work on two fronts. On 
one side they develop an in- 
creasing number of complete 
and automatised lines. On the 
other side they create user- 
friendly machinery which re- 
quires less maintenance and 
can be integrated into the us- 
ers already-existing produc- 
tion and inspection systems. 
According to a survey carried 
out by the Harvard Business 
School, Italian packaging 
machinery is an “happy com- 
bination of artistry and tech- 
nology". 


Competition and com- 
petitiveness. The Italian 
packaging machinery sector is 
mainly composed of small 
and medium sized com- 
panies. So competition is very 


strong and represents a con- 
tinuous stimulation for ihc 
improvement and innovation 
in products and services, cus- 
tomer orientation, flexibility 
and good quality- price ratio. 
This b the basis for the com- 
petitiveness of the sector on 
the worldwide market. 

Such a simple and, at the 
same time, sophisticated 
structure quickly became a 

strong success factor when Ita- 
lian entrepreneurs begun to 
cross over the frontiers. 
Export has become so impor- 
tant that Italian packaging 
machinery industry is going to 
achieve a position of leader- 
ship on worldwide market 


The trend of the Italian industry of packaging machinery (value in 
million U.S. dollars) 



1992 

1993 

A % 93/92 

Turnover 

1,621 

i 

1.824 

+ 12.5 

i 

Export 

1.123 

1,494 

+ 33.0 ; 

Deliveries on the 
Internal market 

498 

330 

-33.6 j 

i 

i 

import 

178 

203 

+ 14.3 ! 

Domestic 

consumption 

676 

534 

-21.0 i 

1 

t 

Trade balance 

945 

1.290 

+ 36.5 * 

Import / Domestic 
consumption 

26.3 

38.1 

1 

1 

\ 

Export / Turnover 

69.3 

81.9 

1 


Source: UCIMA-The Italian Packaging Machinery Manufacturers Association - 
Economic Studies Bureau 



PACKAGING 


- r - •* 



CALL ITALY FIRST 


Whenever packaging becomes a problem, calling Italian industries 
and experts becomes a must! Italian manufacturers are indeed at the 
top in tenms of technology, quality, efficiency and ability to offer a 
personalized solution. One fourth of packaging machinery in the world 
is Italian made because its industry stands out internationally for its 
ability to meet the specialized need of manufacturers all over the 
world. The highest technologies and the ingenuity of craftmanship 
make Italian industries the ideal partners in finding the best packaging 
solutions. Yes, the world over! 

■ 

Ask for free catalogue containing all details of Italian machinery producers to the following addresses: 


UCIMA 

The Italian Packaging Machinery 
Manufedurens' Association 

Central Office 
Corso Sempione, 4 
20145 Milano 
Tel. (+■ 39/2) 33611557 
Fax{+39/2) 3450647 


ITALIAN PACKAGING POINTS 

Latin American Office 
Mexico City 

c/o GCI Alonso y Asodados 
Lancaster 1 7 - Col Mm - Mexico D.F. 06600 
Tel. (+525) 5251640/44 - 51 11394 
Fax (+525) 2088476-5140955 



Far East Office 

Hong Kong 
c/o GCI Hong Kong 

33 rd Floor - Manulife Tower - 1 69. Electric Road 
North Point Hong Kong 
Tei. (+852)5106888 
Fax (+852)5107541 


UCIMA-THE ITALIAN PACKAGING MACHINERY 
MANUFACTURERS' ASSOCIATION 


-<< 


• • 


» . j. 


r 











%| , ,1 


FIN ANC1AJL TIMES 


TH U R.SD A Y DECEMBER 15-1994- 



NEWS: THE AMERICAS 


US growth fails to fuel consumer prices 


By Mchaal Prows* in Wa shingto n 


US consumer price inflation remains 
subdued despite further evidence of 
robust economic growth, official fig- 
ures indicated yesterday. 

The Labour Department said con- 
sumer prices rose 0.3 per cent last 
month and by 2.7 per cent in the year 
to November - in line with market 
projections. The “core" consumer 
price index, which excludes the vola- 
tile food and energy components and 


thus provides a better guide to under- 
lying trends, rose only 0.1 per cent 
last month and by 2JB per cent on an 
annual comparison. 

Over the past three months core 
consumer prices have been even bet- 
ter behaved, rising at a annualised 
rate of only 24 per cent 

The encouraging inflat ion figures 
were not expected to dissuade the 
Federal Reserve from pushing 
short-term interest rates higher in 
coming months, although they 


reduced the pressure for an increase 
next week. 

Separate- figures from the Federal 
Reserve yesterday indicated the econ- 
omy is rapidly absorbing spare pro- 
ductive capacity. Industrial produc- 
tion rose 04 per cent last month, 
bringing the gain in the past year to 
5.7 per cent 

Manufacturing output rose 04 per 
cent last month and by 6.7 per cent on 
an annual basis. The rate of capacity 
u tilisation in manufacturing rose to 


81.4 per cent, well above the long-run 
average. Production gains were 
broadly based with output of con- 
sumer goods, business equipment and 
construction supplies rising 04 per 
cent, 0.7 per cent and 04 per cent 
respective l y last month. 

figures yesterday also showed a 
small increase in the current account 
deficit to *4L7bn (£26.7bn) in the third 
quarter from (374bn in the second 
period. 

While agreeing that imm ediate 


p r ospect s for economic growth and 
tirfiation are esceQent, many US fore- 
casters are voicing reservations about 
the outlook for 1995 and beyond. 

“The US faces a period of substan- 
dard growth next year,” warned Mr 
David Resler, chief economist at 
Nomura Securities in New York. He 
said higher interest rates could result 
in a negative quarter next year and 
predicted that annualised growth 
would slew to 14 per cent in the sec- 
ond half of 1995 . 


Collor gets written back into Brazilian soap 


Critics and reformers see ex-president’s acquittal on corruption charges as setback, writes Angus Foster 


T he case oF Mr Fernando 
Collor. the jet setting 
Brazilian president who 
resigned in IS92 amid corrup- 
tion allegations, has often been 
likened to one of the country’s 
novelets, or TV soap operas. 
With the Supreme Court's deci- 
sion on Monday to throw out 
the charges, Mr Conor has just 
been written back into the 
script 

The court's decision greatly 
increases Mr Conor’s chances 
of staging a political comeback 
and running again for public 
office. If successful, he would 
provide a reminder to Brazil's 
Congress and judicial systems 
of how much remains to be 
done for the country's political 
process to be modernised and 
corruption weeded out. 

Senator Dirceu Cameiro, 
who two years ago served 
notice on Mr Collor that 
impeachment proceedings were 
under way, raid the court rul- 
ing was a serious setback in 
the country's attempts to 
tackle impunity. “Brazil has 
always suffered from an inabil- 
ity to punish the powerfuL 
After several years of progress, 
this ruling is very worrying,” 
he said. 

Mr Collor resigned just 
before Congress completed the 
impeachment proceedings 
against him. He faced a stogie 
charge of “passive corruption" 
which alleged he and his cam- 
paign treasurer Mr Paulo Cesar 
Farias had swapped political 
influence for political gain. 
Although Mr Farias was given 
a seven years’ prison sentence 
for setting up false bank 
accounts through which funds 
were channelled, the court 
decided there was insufficient 
evidence to link Mr Collor to 









UrVW 


Collon Ids acquittal on corr upti on charges may be first step to a political comeback 


Mr Farias’ activities. 

Mr Collor has consistently 
claimed he was the victim of a 
political plot The court’s deci- 
sion will allow him to maintain 
the claim, even though the 
majority of Brazilians remain 
convinced Mr Collor did use 
the president's office for per- 
sonal financial gain. In an 
opinion- poll conducted before 
the trial, 60 per cent of people 


asked said they thought he 
should go to jail for his 
actions, although nearly 90 per 
cent thought he. would not 
have to. 

Mr Alexandre Banos, a polit- 
ical consultant, said: “If you 
belong to the elites, like Mr 
Collor does, you get judged by 
your peers and get off while 
people from; outside the; Elites 
like PiC Farias get gunlsfrpd." 


Armed with the court's ruling 
Mr Conor may appeal against a 
separate Senate ban on his 

hnlrtbig public nffiffA nr>m the 

year 2000. Even If the appeal 
fails, Mr Collor would stffl be 
young enough to co mp ete to 
the 2002 presidential and 
gubernatorial elections. 
According to rumours to the 


capital Brasilia, Mr Cotier 
plans to visit New York to 

“ \ m I* 


meet his younger brother, 
Pedro, who first triggered the 
corruption scandal with a 
series of allegations in a maga- 
zine interview. The two 
brothers have not talked since, 
but Pedro is extremely HI with 
cancer. Fernando, who has 
always been an expert at politi- 
cal marketing, may want to 
use the reconciliation as part 
of a wider reconstruction of his 
image in the Brazdinn media. 

“The 70 per cent at the elec- 
torate who lack a decent edu- 
cation will love it, because it is 
straight but of a novela," says 
Mr Luiz Pedone, a political sci- 
entist at Brasilia University. 
He adds that -Mr Conor's cur- 
rent high unpopularity will 
fade with people’s memories. 
Although Brazil may never be 
ready to elect Mr Collor as 
president again, hue could eas- 
ily win the governorship or a 
senate seat to his home state; 
Alagoas. 

Critics say Mr Conor’s 
acquittal farther undermines 
the reputation of Brazil's pros- 
ecution system, which has 
never been highly respected. 
Attorney General and prosecu- 
tor Aristides Junquiera was 
widely felt to have mounted a 
poor case. Important evidence 
for his argument, based on 
taped phone calls and com- 
puter discs, was ruled to be 
inadmissible because it had 
been, seized without a court 
order as the constitution 
requires. 

Politicians said thatr.the 
Supreme Court, by rejecting 
Congress's ruling thateMt-Col- 
lor was guilty, was “dFrorced" 
from society. One of the eight 
judges who heard the case 
replied: “WeJisten to toe tew, 
not piublic-^rfon.” ^ ' . 


WORLD TRADE 


Japan trade 


■ 

Gatt deal sparks violence 


barriers cost 


consumers 


‘$75bn a year’ 


By Guy de Jonquferes, 
Business Editor 


Japan's trade barriers cost 
Japanese consumers between 
(75bn and (lOObn at prevailing 
exchange rates in 1989 - or 
between 24 per cent and 34 
per cent of gross national 
product - according to a 
study* by three Japanese 
economists. 

Without the barriers, 
Japanese imports of the most 
highly protected products, 
such as food, cosmetics and 
chemicals, would have doubled 
and each Japanese consumer 
would have been about (890 a 
year better off at 1989 
exchange rates, the study says. 

Complete trade liberalisation 
would have resulted In a foil in 
domestic production of more 
than 20 per cent in certain 
sectors. Including wheat, 
oilseeds, leaf tobacco, canned 
fruit and vegetables, and 
cosmetics. 

However, the authors say 
removal of import barriers 
would have only a small 
impact on Japan’s trade 
surplus, because a reallocation 
of resources and 
macro-economic forces would 
cause its exports to rise almost 
as fast as imports. 

Liberalisation would also 
result in the loss of 180,000 
jobs. Although roughly 10 per 
cent of employment in the 

protected sectors, this is only 
04 per cent of total Japanese 
employment 

Furthermore, the cost to the 
Japanese economy of 
preserving each job was about 
(84,000 a year in 1989, almost 
three times the earnings of an 
average salaried worker in 
Japan. 

The estimates are much 
higher than those in similar 
previous analyses because the 
study is the first to try to 
calculate the impact of 
non-tariff barriers. 

These are a far more 
important form of protection 
than tariffs in Japan and raise 
prices by more than 400 per 


cent to some cases, the study 
says. 

ft says that although Japan 
has liberalised some trade 
barriers since 1989, the 
restrictive effect of remaining 
protection appears to have 
increased in the past five 
years. 

The study is based on a 
comparison between the unit 
values on a cif (carriage, 
insurance, freight) basis of 
imports landed at Japanese 
ports and of Japanese producer 
prices for more than 40 
categories of goods. 

It puts the unit value 
differential for all products 
surveyed at 178 per cent, and 
at 281 per cent for food and 
beverages. The highest 
differentials for individual 
products are 737 per cent for 
rice, 718 per cent for tea and 
roasted coffee and 682 per cent 
for cosmetics and toiletries. . 

In most cases, the study 
says, the differentials are 
largely caused by non-tariff 
barriers such as import quotas, 
preferential . government 
procurement, price support 
programmes and restrictions 
on domestic sales. 

However, it finds that a 607 
per cent differential for radio 
and television sets is mainly 
due to the superior quality and 
technological sophistication of 
Japanese-produced products 
compared with imports. 

Most of the value of the 
differentials is pocketed by 
Japanese producers. After 
allowing for the losses to 

producers, importers, 
distributors and government 
revenue, trade liberalisation 
would have benefited the 
Japanese economy by at least 
(I7.4bn in 1989, the study 
estimates. 

• Measuring the costs of 
protection in Japan; by Yoho 
SazanamL Shujiro Urata and 
Htroki EausaL $11.95 to OS and 
Canada, $15.99 in other 
countries. Institute for 
International Economics, 
Washington DC Tet (202) 328 
9 m 



Demonstrators dash with in the Philippines yesterday during a vote on the Uruguay 

Round trade treaty by senators. The senate ratified the accord as pr ote st e rs tried to storm the 
building. Anti-Gait senators said they would challenge the c onsti t u t i onality of the pact, arguing 
the economy would be devastated by the massive inflow of imports the new trade accord would 
allow. Eighteen out of 23 senators voted to fa vour iff the Philippines joining the new Wold Trade 
Organisation, two votes more than needed to ratify a treaty. Ftenur 


‘Lack of investment hits 


Europe’s biotech sector’ 


By Dantef Green 


Europe’s biotechnology 
industry is falling behind its 
competitors in the US because 
of lack of investment and 
unhelpful regulation, accord- 
ing to Professor Horst Schlmn- 
berger, head of Biotech- 
nology Co-ordination at Bayer, 
the German nboTniraia . com- 


pany. 

Mr Schlumberger said that if 
the current level of investment 
in Europe was not reversed, 
scientific talent would be 
unable to renew itself He told 
delegates at the second day of 
a Financial Times biotechnol- 
ogy conference to London that 
the consequence would he an 
erosion of the competitive 
strength of Europe's research- 
dependent industries. 

"Europe win become a net 
importer, not a producer and 
exporter of products of modem 
biotechnology," he said. 

His argument was countered 
by Mr Jurgen Drews, president 
of international research and 


. development at Roche, the 
Swiss drugs company. 

Mr Drews said that Euro- 
pean governments spent more 
than the US on funding haste 
research, which forms the 
foundation for the next aeries 
of medical advances. This 
meant that the present US lead 
to biotechnology could be 
“eroded over the long term”, 
said Mr Drews. 

In a lively debate, Mr 
Schlumberger said this was 

like baring a modem luxury 

limousine parked outside one’s 
home, but the regulatory con- 
straints hi Europe meant- “its 
fuel is of low quality and it 
cannot fulfil its potential." 

In an earlier session, Mr Carl 
Mdbamn, brad of the Wash- 
ington-based Biotechnology 
Industry Organisation, said 
that Mr Newt Gingrich, Repub- 
lican speaker of the House of 
Repre s ent a tives, had stated his 
intention to dismantle the 
Food and Drug Administration 
(FDA). 

The FDA controls which 


drugs are approved to safe to 
the - US, the world’s biggest 
medicines market The FDA 
has been criticised in the phar- 
maceuticals industry and 
among conservative politicians 
for its slowness and bureau- 


cracy. 

“Many in the biotechnology 
industry hope it [the dismantl- 
ing] comes true,” said Mr Feld- 
baom. 

But Mr Feldbamn, a former 
chief-of-staff for Republican 
senator Alien Specter, advised 
caution. He said there was only 
a small window of opportunity 
for substantive legislation 
before politicians’ attention 
turned to the 1996 presidential 
elections. In his opening 
address, Mr Drews forecast 
that gene therapy, which uses 
DNA as a medicine, would take 
the place of many conventional 
drugs. 

He held out a vision of a 
drug which need only be taken 
once a year rather than d a2y 
for diseases such as Parkin- 
son's and Alzheimer's. 


But the biggest casualty iff 
the court’s decision is likely to 
be the confidence of those 
seeking to modernise Brazil’s 
political system. Mr Conor’s 
removal firom office was seen 
as the most important example 
of progress, under way since 
the country’s return to derooo- 
racy in 1985. “It now seemsthe 
optim i s m that we had started 
to tackle corruption was false,” 
according to says Mr Pedone. 

The tide of pessimism trig- 
gered by the ruling may hide 
an important lesson, that tack- 
ling corruption will take many 
years rather than one ousted 
president Observers say that 
while Brazilian corruption is 
no worse than to many coun- 
tries^ what makes Brazil’s ver- 
sion so corrosive is that the 
country's institutions, still 

maturing after the years of 
military rede, allow a sense of 
impunity to prevail. 

They point to the case of 
Senate president Mr Humberto 
Lucena who has been barred 
from office by the Supreme 
Court for illegally using the 
senate printing press to print 
calenders distributed free in 
his election campaign. The 
Senate immediately granted 
Mr Lucena an amnesty for the 
offence and he remains to 
office. 

They also point out that out- 
going President Samar Franco, 
who called on Brazilians to 
“reach their own conclusions” 
about fiie court’s capabilities, 
last month overlooked several 
qualified jurists for a Supreme 
Court nomination and instead 
appointed a friend, Mr Mauri- 
do Cornea. Mr Correa, while 
Justice minister, is best remem- 
bered for getting drank at this 
year's Carnival - — - - 


US probe 
into EU 


banana 


trade 


By Canute Jaroes in Kingston 


The US trade representative is 
investigating complaints from 
US banana producers that the 
European Union import 
regime, which favours banana 
suppliers to the African, 
Caribbean and Pacific (ACP) 
group of countries, is discrimi- 
natory. 

Washington will hold talks 
with several Caribbean 
banana e x porters in January 
over pr efe re nti al access to the 
European market “The US 
trade r epr e sent a t ive has told 
us that the investigation will 
focus on the trade practices of 
the EU, and is not directed 
against the Caribbean export- 
ers,’* said Mr John. Compton, 
the prime minister of St Lucia, 
the leading exporter in the 
Windward Islands. The inves- 
tigation followed complaints 
from Otiquita Brands Interna- 
tional, a US company produc- 
ing bananas In Latin America, 
and. the Hawaiian Banana 
Industry Association. 

The charge was filed under 
Section 301 of the US trade 
act, and was supported by 
claims that the EU*s import 
regime, implemented In July 
1993, discriminated against 
frait from Latin America. The 
import regime gives special 
access to exporters in the ACP 
group, about 70 former Euro- 
pean colonies which have a 
trade treaty with the EU. 

In a reversal iff policy, the 
US government said last week 
that it will not object to a Gen- 
eral Agreement on Tariffs and 
Trade waiver for the LomO 
Convention, the trade and aid 
treaty between the EU and the 
ACP countries. This has 
reduced the threat to the 
ACFs preferential access to 
the EU market 

Officials from other Carib- 
bean exporting countries said 
that the US trade representa- 
tive’s statement allowed the 
region's producers to “buy 
some time" but that the dan- 
ger to the preferential EU mar- 
ket bad not been removed. 

The Caribbean Community 
(Caricom) said the investiga- 
tion posed a threat to the 
Caribbean industry on which 
many island economies 
depend. 



m * * ■■■ m 

Drive to make * 


— - dt. rf. 


p9 l 


cuts in 


•J 


:• :,n 


- * * . . 


p - 


I- 


fizzles out 


. . "i. 



By George Graham 
In Washington 


A high-powered commission 
set up to reform entitlement 
spending and taxation fizzled 
out yesterday, unable to agree 
oil a set of concrete proposals 
to bring the US government’s 
fin annas fato balance in the 

next century. 

The bipartisan commission, 
.chaired by Democratic Senator 
Bob Kerrey and retiring 
f tepiihiiran Senator Jack Dan* 
forth, agreed to August on an 
interim report painting a stark 
picture of spending on entitle- 
ments such as social security 
jangimre or Medicare and Med- 
icaid health programmes. They 
forecast that such spending 
would rise from 47 per cent of 
the budget to 1993 to eat up all 
government revenues by 2030. 

But Mr Kerrey and Mr Dan- 
forth were unable yesterday to 
win support for thefr propos- 
als, which included an increase 
in the social security retire- 
ment age to 70, reduced sub- 
sidies tor Medicare health ben-, 
efits for the elderly, and means 
testing for benefit payments. 

Commission members shied 
away from voting for tough 
cuts in such politically sensi- 


tive p rogrammes to what con- 
gressman Alex McMillan of 
North Carolina called "the cur- 
rent rush to provide more free, 
lunches which is now abroad 
to the land’ 1 . . _ 








• • ■»* :v-t> 


Senator Dale Bumpers, 
another commission member, 
said the political clim a te was 
not yet right "We all Tfaow 
that the problem is not unsofr 
able, it- is just potiticaBy unpal- 
atable to do it* 






Economists and . Federal 
Reserve officials had hoped 

that the Kerrey-Danforth com- 
mission might provide political 
cover for a Congress which has 
always been unwilling to toodi 
entitlement spending such as 
social security, Medicare or 
veterans’ benefits, which hare 
large and politically vocal con-, 
stituencies. 


Toy a # 




v j K , 




Relatively modest changes to 

benefits and eligibility coold, if 
launched now and phared in 
gradually, have curbed the 
growth of entitlement spending 
in the next century. 


P) , 

.^triiuicu 




at 


In the wake of last month's 
sweeping Republican election 
victory. Congress is expected 
to pass a constitutional amend- 
ment requiring a balanced fed-' 
eral budget within seven years. 




Tax evaders may 


rcri«4 


end up in prison 


■ ■ _ ■ ■ • 


*«. - 


l '«- 1 




i *■' ^ 


By E dw a rd Ortabar 
In G uatemala City 


Guatemalan tax evaders may 
end up in prison fix' not paying 
their taxes after Compress 
passed reforms to the penal 
code which will criminalise tax 
evasion for the first time. 

The reforms which come into 
effect on February 1, allow for 
substantial fines and prison 
sentences of up to six years for 
tax evaders and for corrupt 
officials who accept payoffs. 

It also gives the government 
the right to dose businesses 
temporarily. 

The reformswtH provide' the “ 


coercive 'means to. improve tax 
collection following the 
a p p r o va l at the end of Novem- 
ber by congress of a number Of 
tax reforms intended to 
increase the tax burden from 7 
per cent of GDP this year to 84 
per cent in 1995. 

Despite pressure from the 
private sector, the right-wing 
parties which dominate (ton • 


: i 

« ■ ■ »■ 






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grass approved an increase for 
the top bracket of income tax 


. i .: 


imposed a L5:perTOrit tax on- . ; 
company assets and agreed to49' 
increase safes fax from 7 per 
cqnt to 10 per cart by January 


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1. 


WORLD TRADE NEWS DIGEST 






BAT to invest in 





L.J. » 


Turkish venture 


.-7--^ iar Cl 1 


I.\’ -i : 


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BAT Industries and Turkey’s state tobacco company, Tekd, 
are to form a joint venture managed by the UK group to make 
cigarettes m Tnrkey. BAT will invest a substantial sum to 
turn Tekel’s plant at Akhlsar into a modem facility capable of 
supplying a large share of the market, according to a memo- 
randum of agreement signed by the two. The joint venture will 
make several Tfekel brands and a range of BAT’S international 
brands such as Kent, Lucky Strike and Pall MalL In common 
with other mtenmtiaaal companies, BAT has been pushing 
into countries opening their markets to foreign investment, ft 
has, for example, completed deals in five former Soviet bloc 
countries. When investment to the five countries is completed 
to five years, BATs annual manufacturing capacity will rise 
by lOObn. cigarettes from 540bn now. Roderick Oram, Consumer 
Industries Editor 


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MEPs endorse Gatt trade pact 




The European Parliament yesterday voted overwhetodn^y in 
favour of the General Agreement on T a ri ffs and Trade global 
pact, boosting prospects that the accord will be ratified by 
member states of the European Union an by the end 

of this month. MEPs voted 325 to favour, 62 against, with 12 
abste ntions . The Strasbourg assembly showed broad cross 
party support for the Gatt agreement, despite criticism from a 
protectionist force ■ led by Sir James Goldsmith, the 
Anglo-French businessman elected as an MEP to this year’s 
elections. Lionel Barber, Brussels 


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Taiwan eyes Chinese market 


Taiwan’s motorcycle manufacturers, the world's second big- 
gest, expect to export more motorcycles to China to meet 
smgtog demand there. “We plan to export half of our annual 
production next year, and most of this to mainland (Rhina.” 
said Mr Wang Shuangcbing, president of Kwang Yang Motor, 
S l eadiD f motorcycle maker, which expects safes of 
700400 motorcycles m 1995, up from 500.000 this year. Taiwan’s 
motorcyde safes rrached L49m in 1993, ranking second only to 
Japan. Of these 1993 safes, 204 per cent were exported! catsbt 

S j* y «j» 3? P« «°t °t th. Um boM in mm. 
jJteOTcycte exporte to China accounted for 69 per cent of 

mrjh. were tSlo otboat 
Asian and some European countries. Reuter. Taipei 


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Canada and US in timber deal 


SSLlS 80011 annwmee a new “consultative' 

Potential disputes over softwood tim- 
ber. Under the bilateral pact, Canadian softwood construction 

ESnS wU1 1104 attn «* import penalties and 

too US timber industry will be able to examine hsm 

rSuK ?“ ar * ued seare that some 

Canadian provinces charge low royalties and rive thtrfr nm. 

ducer saf 1 advantage in the US marS? 

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FINANCIAL TIMES THURSDAY DECEMBER 15 1994 




Latest g overnment figures indicate that inflation and average earnings are edging upwards 

Rapid growth fuels interest rate rise fears 




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By GBTtan Tertt 
and Phffip Coggan 

Pears that OK interest rates may have 
to rise farther were fuelled yesterday 
by signs that recent rapid economic 
growth is creating new inflationary 
pressures. 

Official figures showed that infla- 
tion and average earnings are edging 
up. Meanwhile unemployment is fell- 
ing at an accelerating rate. sng gpqHrp g 
that with fewer people out of work, 
wage demands may rise. 

Mr Kenneth Clarke, the chancellor, 
yesterday played down the inflatinn- 
ary dangers by stressing that the 


overall economic picture was 
"extremely good”, with plenty of 
spare capacity. 

"(Inflation) is not a risk for the 
economy at the moment.” he told 
MPs. 

However, the Treasury yesterday 
said the inflation data provided a fur- 
ther demonstration of the pressures 
that had prompted the 'A point rise in 
interest rates this month horn 5.75 
per cent to 635 per cent 

“We have probably seen the trough 
cf low inflation far now," an official 
said, pointing out that the Treasury 
forecast assumed inflation would rise 
to 5L5 per cent by late next year. 


The Central Statistical Office yes- 
terday said the retail prices index rose 
by 2 l 6 per cent in the year to Novem- 
ber, up from 2.4 per cent in October. 

The government’s targeted inflation 
measure, which excludes mortgage 
interest payments, rose by 2.3 per 
cent in the year to November, from 2 
per cent in September and October. 

The increase was boosted by 
unusual factors such as a sharp rise 
in milk prices after the recent reform 
or the Milk Marketing Board. But 
price rises also occurred in the cloth- 
ing and household goods sectors 
which had seen severe discounting 
earlier in the year. 


The increase in inflation surprised 
the City, and analysts warned that 
the Budget measures and recent inter- 
est rate rise could push the index 
higher next year. The CSO said the 
Budget's tax changes - including the 
additional measures announced by Mr 
Clarke to replace higher value-added 
tax on ftiel - would add 0.79 percent- 
age points to the annual headline 
inflation rate over the next few 
months. 

Meanwhile, the underlying rate of 
average earnings growth edged up to 
4 per cent in October, from 3.75 per 
cent in September. The Department of 
Employment said overtime and bonus 


payments, rather than higher pay set- 
tlements. had led to the rise. 

Nevertheless, Mr Michael Portillo, 
employment secretary, expressed con- 
cern. "Companies must keep a firm 
grip on pay if competitiveness is to be 
maintained, enabling the maximum 
number of jobs to be created.” be said. 

However, the use in average earn- 
ings has yet to have an effect on UK 
manufacturing competitiveness, since 
productivity is outstripping wages 
growth. In the three months to Octo- 
ber. manufacturing unit labour costs 
were 1.7 per cent lower than in the 
same period of 1993. the sharpest fall 
since records began in 1970. 


‘No plan for’ 
broadening of 
value added tax 


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I.AT to invest 

furkish \ 


Toyota 
production 
may be 
restrained 


By John Griffiths 

Weaker than expected new car 
demand in Europe means 
Toyota will not use the full 
capacity of its Burnastou plant 
near Derby next year, the 
Japanese car company said 
yekerday. 

It Is planning to produce 

90.000 cars next year, instead 
of the frill capacity of 100,000, 
compared with a projected 

65.000 in 1994. 

“However, as we have seen 
this year - which started 
strongly then slowed more 
recently, the market is 
changeable and production 
levels may be amended 
accordingly", said Hr 
Y nkihls a Hlrano, managing 
director of Toyota UK. 
Toyota’s announcement, the 
failure of Nissan this year to 
meet earlier output projections 
for its plaint at Washington. 
Tyne and Wear, and relatively 
slow growth in output of 
Honda's production plant at 
Swindon In Wiltshire, indicate 
that other European car 
makers’ fears that Europe’s 
motorists would buy as many 
cars as the Japanese 
"transplants" cared to produce 
may have been overstated. 
Nissan is expected to produce 
around 200,000 cars this year, 
compared with earlier 
forecasts of 230,000-240,000. 

For 1993 it had projected 
output of 270,000 but at the 
end of that year halved 
production rates to bring 
output in line with demand. 


Government welcomes employment data 


By PhHIp Coggan 

Mr Michael Portillo, the UK 
employment secretary, yester- 
day welcomed signs that the 
figures measuring employment 
were moving in the right direc- 
tion. 

Unemployment had been fail- 
ing steadily since December 
1992 but the figures for the 
workforce in employment, 
compiled from a survey of 
employers, had previously 
been showing declines. 

Yesterday’s Department of 
Employment figures showed 
that employment rose by 
146,000 in the third quarter, the 
largest quarterly increase since 
1989. This brought the measure 
into fine with the Labour Force 
Survey, which produces statis- 
tics on the basis of interview s 
with individuals, and which 
has been recording steady 
employment increases. 

The LFS, which is conducted 
on a slightly different time- 
scale from the employers’ sur- 
vey, found an increase in 


employment of 64.000 between 

the spring and the summer. 

Mr Portillo said he felt the 
employers' survey followed the 
LFS with about a six-month 
lag. which mainly reflected the 
delays between the establish- 
ment of new businesses and 
the reporting, via the Inland 
Revenue, of job creation to the 
Department of Employment 

The main increase in 
employment was a rise of 
126,000 in the services sector, 
according to the employers' 
survey, while self-employment 
rose by 40,000. About 52,000 of 
the services increase came 
from the banking, insurance 
and financial services sector. 
Employment in the manufac- 
turing sector rase by just 2,000 
in the third quarter, but this 
gain was wiped out in October. 

The number of people out of 
work and Maiming- benefit fell 
by a seasonally adjusted 43,400 
in November to 2,470,600, or 
&8 per cent of the workforce. 
This was the lowest total since 
September 1991; unemploy- 


T ory Euro-rebels 
in new challenge 
over referendum 


J1 

V. 



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reducing 1993’s total 
production to 246,000. 

Honda, which fa preparing 
production of a second car at 
100,000 units a year capacity 
plant at Swindon, built 29.300 
Aceord models in the first nine 
months of this year. 

Mr ffirano rejected speculation 
that Toyota has decided to 
delay outline plans to double 
the capacity of the Burnaston 
feeflity. 

“As we have said from the 
outset, we will monitor the 
market as it develops to 
determine when to move to 
phase two and 200,000 cars a 
year,” he said. 

He would not elaborate on 
whether Toyota would seek to 
achieve the higher volume 
with the single model it 
currently builds at Burnaston, 
the Carina E, or whether the 
Carina would be joined by a 
second model, such as the 
smaller Corolla. 

However, he confirmed that 
from the middle of next year 
Burnaston would start 
building estate versions of the 
Carina. 

These account for 12-15 per 
cent of the Carina's sales in 
Europe and are currently 
imported from Japan. 

The company said 
Bumaston-bmlt cars had now 
reached 80 per cent 
“local "European content, some 
six months earlier than 
originally planned. 


By . James BTrtz . . 

The conservative party's 
Euro-rebels yesterday 
launched a new challenge to 
the government by setting out 
plans for a private member’s 
biB to hold a referendum on 
the UK’s future in Europe. 

The bill, proposed by Mrs 
Teresa Gorman, the MP for 
BiBericay, would require the 
government to hold a 
referendum on Britain’s 
membership of the European 
Union before the EU's 
Inter-Governmental 
Conference in 1996. 

Private member's bills have 
rarely found their way onto the 
statute book because of 
co-ordinated opposition to the 
proposed legislation from 
government whips. 

But Mrs Gorman's bill, 
which could be debated within 
eight weeks, may create new 
embarrassment for Mr John 
Major’s government amid signs 
that it will gain cross-party 
support from Euro-sceptics. 

In recent weeks, Mr Major 
has raised speculation he will 
call a referendum on the next 
stage of European integration 
by refusing to rule out the 
possibility of holding one. 

However, pro-European 
members of the cabinet, 
including Mr Kenneth Clarke, 
the chancellor, and Mr Michae l 
Heseltine, the trade secretary, 
have leaded sceptically to the 
idea of a referendum, saying 
that the agenda of the 1GC in 
1996 is still undecided. 

One of the nine Eurosceptic 
MPs who recently lost the Tory 
whip after voting against the 
government said the bill would 
“flush out" the different 
opinions of ministers. 


Mr Tom King, a former 
Conservative defence secre- 
tary, was yesterday appointed 
chairman of a cross-party par- 
liamentary committee set up 
to monitor tbe security ser- 
vices. 

The committee, set up under 
the Intelligence Services Act, 
establishes a measure of par- 
liamentary control for the first 
time over the three security 
services - BQ5, the domestic 
intelligence service, MX6, its 
overseas equivalent, and 
GCHQ, the electronic monitor- 
ing centre at Cheltenham. 

The committee will scrutin- 
ise the expenditure, adminis- 
tration and policy of the secu- 
rity services, but not their 
operational planning or activi- 
ties. 

The committee, appointed by 
Mr John Major after consulta- 
tion with Hfr Tony Blair, the 
Labour leader, comprises five 
Conservatives, three Labour 
MPs and a Liberal Democrat. 

The bill proposes a 
consultative referendum - 
which would not be binding on 
the government - by the end 
of March 1996. 

Voters would be asked to 
endorse one of three possible 
outcomes; that the United 
Kingdom “remain in the 
Union, but only so long as it 
remains an economic 
organisation of member 
states"; that it adhere to a 
federal organisation with a 
common currency; or that it 
“withdraw altogether from the 
liman." 

The bill would need the 
backing of 100 MPS at second 
reading to make any political 
progress. 


1 


UK government moves on 
animal welfare legislation 


* _ 

» _ . 




By Deborah Hargreaves 

Mr William Waldegrave, the 
agriculture minister, intro- 
duced new UK legislation yes- 
terday to improve the welfare 
of live animals in transit to the 
continent following the failure 
of European Union agriculture 
ministers to agree controls on 
the trade. 

The new national measures, 
which come into force on Janu- 
ary 23, make it a cr iminal 
offence to breach journey {dans 
that must accompany animals 
on trips longer than 15 hours. 

“We cannot do nothing 
because Europe cannot agree. 
■' That's why we are now press- 
ing ahead with our own mea- 
sures to fill the gap" said Mr 
Waldegrave, after ministers 
abandoned, plans on Tuesday 
to agree rules which could 


be enforced across the EU. 

But the Royal Society for the 
Prevention of Cruelty to Ani- 
mals said yesterday the new 
legislation did little to remove 
its opposition to the cross- 
channel trade. “It still leaves 
millions of animals In the 
larch with long journey 
times," an official said. 

The R5PCA wants the EU to 
introduce a maximum journey 
time of eight hours, but Mr 
Waldegrave’s new legislation 
states only that animals should 
be fed. and watered after 15 
hours. The RSPCA’s opposition 
to the transport of live animals 
has persuaded Britain's ferry 
companies to ban the carriage 
of livestock for slaughter. 

The ferries said yesterday 
they were still studying the 
new legislation, but had so far 
found little in it to encourage 


them to frhang p their minds. 
“The issue is about what hap- 
pens to animals an the other 
side of the continent and 
whether this ran be enforced 
over there,” said an official at 
P&O. 

Mr Waldegrave said he had 
agreements from French, 
Dutch and Spanish authorities 
to proride information towards 
the prosecution of offenders. 
But the RSPCA believes it 
would be impossible to enforce 
the measures on the continent. 
“With no inspectors or agency 
to enforce it, it looks like it 
will be left to us to police this 
code,” an official said. 

The new rules mean that ani- 
mal hauliers must file a jour- 
ney plan for all trips cf over 15 
hours. If they fail to stick to 
the plan, they could face prison 
or fines of up to £5,000. 


meat has now fallen by 501.000 
since its peak in December 
1992. Last month, unemploy- 
ment fell among men and 
women in every region. 

Following a revised fall of 
48.400 in October (the previous 
estimate was 45.800), the unem- 
ployment total has now 
dropped by an average of 3LS00 
over the last six months. How- 
ever. the Department of 
Employment still estimates the 
trend is for a monthly decline 
of 25.000. 

Unadjusted, the number of 
unemployed people fell 32,031 
to 2,423,013. or 8.6 per cent of 
tbe workforce. 

The LFS shows that growth 
in full-time employment out- 
stripped that of part-time jobs 
between the spring and the 
summer. In many previous 
quarters part-time work has 
predominated. Tbe survey also 
finds that the number or dis- 
couraged workers - those who 
were not seeking work because 
they believed no jobs were 
available - dropped by 14,000 


Unemployment 



3.9^ 




8.7*-, 


South-east 
Greater London 
East fcfteSands 
South* west 
East Angfia 
UK 







a 3*t 


7.a a o 



between the summers of 1993 
and 1994. 

Meanwhile, the stock of 
unfilled vacancies at job- 
centres rose by a seasonally 
adjusted 3,400 in November to 


1S0.600. the highest level since 
June 1990. More people - 
174,200 - were placed in jobs 
by employment centres than in 
any month since the series 
began in 1980. 


By Pater Monman, 

Economics Editor 

Mr Kenneth Clarke, the UK 
chancellor, said yesterday that 
he did not intend to use the 
lower 8 per cent value added 
tax rate, that now applies to 
domestic fuel and power, to 
broaden the VAT base in the 
UK tax system. 

“I have no intention of build- 
ing on tbe lower rate", he told 
tbe cross-party Commons trea- 
sury and civil service commit- 
tee. 

He said he did not choose to 
have the lower 3 per cent VAT 
rate; that was forced on the 
government by last week's 
Commons defeat of its plans to 
lift VAT on fuel to 17.5 per 
cent, and he did not plan to 
rush back into broadening the 
VAT base*. Ho bad not, lor 
example, considered levying 
VAT on newspapers or maga- 
zines when preparing his 
recent Budget. 

Giving evidence on a wide 
range of issues, the chancellor 
said: 

• he hoped that followuig the 
supply side reforms of recent 
years, the UK economy could 
sustain growth at a faster 
annual rate than 2 per cent to 
2Ji per cent without running 
the risks of inflation. 

• that he had acted promptly 
last week to plug the hole in 
his Budget caused by the VAT 
revolt because it was danger- 
ous for a nation to borrow 
heavily in financial markets. 

• that political consider- 
ations had reinforced his deci- 
sion last week to raise base 
rates to 6.25 per cent from 5.75 
per cent. However, the rate rise 


had been justified on economic 
grounds. 

Mr Clarke stressed that he 
was pleased with the present 
monetary regime in which 
there was more openness over 
policy and the governor of the 
Bank of England played a more 
prominent role than previ- 
ously. But in a cryptic remark, 
he hinted that the rate rise 
might be reversible if condi- 
tions warranted, ft was "possi- 
bly one of the few reversible 
decisions 1 have taken", he 
said. 

Mr Clarke was upbeat about 
the state of tlu* UK economy. 
Britain as an industrial nation 
was “now quite spectacularly 
good” compared with 15 years 
ago. He cited Mr Jacques 
Delors. the outgoing president 
uf the European Union com- 
mission. as having said that 
the UK would be only one of 
three F.V countries to meet the 
economic convergence criteria 
of tin; Maastricht Treaty m 
1996. The UK would meet them 
tusily. while Germany would 
need “good luck and a fallow- 
ing wind”. 

This meant that Britain wa» 
on course for the “ideal sitiu 
tion" of being able In decide if 
it wanted tn enter the third 
and final stage of tvoGunuc 
and monetary union with a 
single currency ami European 
central bank. 

His main ami was !u keep 
Emu as a “genuinely open 
option” far the UK. 

He was less forthcoming 
about future taxation policy 
and refused hi he trapped into 
naming the conditions in 
which he would or would not 
cut taxes iu a future Budget. 



Beyond the usual. 



NEV YOKK. LONDON. PARIS. LUXEMBOURG. FRANKFURT, ZURICH, GENEVA, SINGAPORE, HONG KONG. TOK^O 









FINANCIAL TIMES THURSDAY DECEMBER IS .994. 



NEWS: UK 


Politics dominates investment conference 



By John Murray Brown 
in Belfast 

Politics was never far from 
delegates' minds during yester- 
day's Belfast International 
Investment Conference. 

Even the walkout by Sinn 
Fein, the IRA’s political wing, 
although a clear disappoint- 
ment to the government, failed 
to overshadow proceedings. 

In the end, the event 
attracted prominent members 
or parties from across Ulster's 
political spectrum, which could 
augur weU for the prospects of 
the round table talks which it 
is hoped will eventually be 
convened on the future of the 
province. 

The sheer buoyancy of the 
mood and the enthusiasm of 
the welcome given to the 
prime minister John Major and 

US commerce secretary Ron 
Brown suggest the peace pro- 
cess is building to a point 
where it is increasingly diffi- 
cult for the main players, 
including Sinn Fdin, to contem- 
plate staying outside. 

The conference comes at a 
vital time after long delays in 
forming a new Irish govern- 
ment which has raised ques- 
tions about the the nature of 
Sinn FGin’s relationship with 
the new Irish coalition part- 
ners, and cast doubt over the 
progress on the framework 
document, which the two par- 
ties envisage as the basis of 
all-party talks on the constitu- 


tional arrangements for the 
province. 

More than anything, the con- 
ference has demonstrated Mr 
Major’s personal commitment 
to maintain the momentum of 
the peace process. It has also 
served to underline the practi- 
cal benefits that will flow from 
a durable settlement 

In outlining a plan for a jobs 
creation scheme, Mr Major 
seemed keen to counter criti- 
cism by Sinn F£Ln that their 
supporters in the deprived 
areas of Catholic West Belfast 
wen being ignored by the con- 
ference. 

The programme will do 
much to underscore the gov- 
ernment's commitment to 
address the long term struc- 
tural problems of the economy, 
widely seen as having inflamed 
community relations. 

Attention now turns to the 
talks with the paramilitaries 
with exploratory session due to 
get under way with the loyal- 
ists In Belfast today. On Mon- 
day, British officials win meet 
with Sinn Fein for the second 
time, when both sides are 
expected to draft a more 
detailed agenda to govern 
future exchanges. 

However, observers do not 
expect the talks to broach any 
of the contentious issues until 
at least February. Mr Major 
yesterday again stressed to 
address the issue of the IRA' 
large stockpile of weapons and 
explosives, before the other 


political parties would counte- 
nance entering fUH all party 
negotiations involving paramil- 
itary representatives. 

For the future, Much will 
depend on the outcome of the 
search for a new coalition in 
Dublin. Last night, a new 
three-party coalition seemed 
about to be announced led by 
Fine Gael. a broadly conserva- 
tive party, with Labour and the 
Democratic Left, replacing the 
Fianna Fail-Labour coalition 
which collapsed last month 
over a judicial appointment 
scandal. Traditionally, Fine 
Gael has been more sympa- 
thetic than Fianna F&il to 
Ulster unionists, while Down- 
ing Street is keen to see that 
Fianna Fail, a vital player in 
Dublin's contribution to the 
peace process thus far should 
not be isolated following Its 
move to the opposition 
benches. 

In exchanges in Dublin’s 
FOrum for peace and Reconcili- 
ation, last weds, Sinn Ffin is 
said to have expressed visible 
disapproval for Fine Gael's pre- 
sentation on the problems of 
the province. 

One concern is that Sinn 
F6in may feel increasingly iso- 
lated from politicians in Dub- 
lin, which may strengthen the 
position of hardline republi- 
cans opposed to the ceasefire. 

Equally, Sinn F€in has poor 
relations with Democratic Left, 
the successors to the Official 
IRA, from which the Provi- 


■ 

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■ 

. v * v. ..fl'yji 



Bomb disposal officers check Belfast’s much-bombed and now refurbished venue, the Europe Hotel 


sional ISA split in the 1970s to 
pursue the aimed struggle. 

But the recent political crisis 
has left so much bad fading 


between the parties that many 
observers believe Fianna Ffiil 
deputies will be in no mood to 
cooperate with a Fine Gael-led 


coalition even on Issues as 
close to their heart as the set- 
tlement of the Northern 
Ireland conflict 






Mr 


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There he is. Fourth row, second from 
the left The one with the moustache. 
Obvious really. 

Maybe not The unsavoury-looking 
character you’re looking at is more 
likely to be your average neighbour- 
hood slob with a grubby vest and a 
weekend’s stubble on his chin. 

And the real refugee could just as 
easily be the clean-cut fellow on his left 

You see, refugees are just like you 
and me. 

Except for one thing. 


Everything they once had has been 
left behind Home, family, possessions, 
all gone. They have nothing. 

And nothing is all theyTl ever have 
unless we all extend a helping hand. 

We know you can’t give them back 
the things that others have taken away. 




(U1[M IU 

United Nations High Commissioner for Refugees 


We’re not even asking for money 
(though every cent certainly helps) . 

But we are asking that you keep an 
open mind. And a smile of welcome. 

It may not seem much. But to a 
refugee it can mean everything. 

UNHCR is a strictly humanitarian 
organization funded only by voluntary 
contributions. Currently it is responsible 
for more than 19 million refugees 
around the world. 

UNHCR Public Information 

P.O. Bax 2500 

1211 Geneva 2, Switzerland 


INT 


UK NEWS DIGEST 

Post Office 
shows big rise 
in profits 

nvifeftin’A Prwt Office yesterday reported half-yearly pre-tax 

t s x&iES&SSsssz 

try Ptist Office pre-tmt profits rose to Eissn m 

to! Smber 25, from £59m for the same . 

This puts the Post Office on course 
levy of £226m, taken from its post-tax profits for the 
1994-95. without a stamp price rise. However, Mr Michael 

ttstm!’ chairman, refused to rule out a price nsefor 
of 1995. The results showed a rise of im rnthe number of 
letters delivered a day, taking the : Dgw« to Mm. - 
Mr Heron continued to insist that dedine was in 
unless the government gives the Post Office 1 

dal freedom to run the Mail, 

which accounts for most of the industry s turnover and prof- 
its. 

He government last month backed away from its plan to 

privatise the Post Office, fearing that tirnrt 
of about 10 Tory MPs would lead to defeat in the Commons. 
Mr Michael Hesefttoe, trade and industry secretory, has yetto 
decide the fixture status of the industry within the public 

sector. 

Papers ‘victory* on lottery 

Britain’s n a tio nal newspapers went to the High Court ycster- 
day and persuaded a judge to lift an im unctio n pr eventing 
p ublicat i o n' of th e rgpy of the winner of last weekend s £175® 
flfflbSSm) lottery winner. Then they decided not to publish ft. 

Bf We said we would respect the winner’s anonymity on the 
front page. To go on that would be sheer hypocrisy, said 
Mr Stuart Higgins, editor of The Sun. The paper had gone to 
court because Camelot, the lottery organiser, “has -no legal 
right to tell us how to do our job”, he said. 

The Sun said it would decide the issue on a case by case 
b asis, if Myra Hindley, the Moors murderer, or Prince Edward 
won the National Lottery, The Son would know where its duty 
lay. 

At The Sun's rival, the Daily Mirror, editor Mr Colin Mylar 
sign said he hart no Tnfenrinn of waihHghing the winner’s name. 
11 m Dally Mirror’s attitude was praised by Sir John Wood, the 
High Court judge who heard yesterday's appeal against the 
injunction. ■ 

“We went , to court to protect the right to print or not as 
opposed to being dictated to by Camelot," said Mr Myler. 
“What, for example, if the Quam wins the lottery?" 

Move on Maxwell creditprs 

Creditors of Maxwell Communication Corporation could 
receive dividend payments, from March or April next year 
following a legal victory by the MCC Ikpndatora. ■_ 
Liquidators of Bishopsg&te Investment Management, the 
main Maxwell pension fund managers, were yesterday refused 
leave to go to toe House of Lords to contest an appeal court 
decision that BIM did not have a prior claim to the first £235m 
of MCC assets. 

The decision means Price Waterhouse, the MCC liquidators, 
hopes to return to the High Court early in the. new year for 
rulings that win decide the mechanics of chstributingthe 
assets: - . r ■■ rr ■ ■ j 

The MCC liquidators have so Ear recovered more than £68Qm 
from asset sates, of which £500m is thought to bemnulalde for 
distribution. 

Power station behind schedule 

■ ■ ■ a ■ 

Nuclear Electric, the state-owned generator, is 20 days behind 
schedule in its programme to start up Sizewell B in Suffolk, 
Britain’s first pressurised water reactor nuclear power station. 

Work on commissioning the £2jOShn plant is proving name 
complex than expected and the reactor Is unlikely to start 
generating electricity unto the end of the month. 

Engineers still hope to achieve full power by the end of 
February in line with a commitment given to the government 
when the project was given the go-ahead. 

All stages in commissioning are being closely monitored by 
the Nuclear Installations Inspectorate, the UK nuclear safety 
watchdog. Construction of Sizewell B began in 1987 and was 
completed within budget earlier this year. 

Progress on plans for a £3.5bn twin reactor Sizewell C 
station await the outcome of the government’s current nuclear 
review. 

Synthetic fibre grant blocked 

The European Commission has blocked a £750,000 government 
grant to Carpets International, formerly Abingdon Carpets, to 
produce synthetic fibres at Crumlin, Gwent 
The company had hoped for assistance from the Regional 
Development Grant Scheme. But the Commission said there 
was too much capacity in the sector. 

A Commission statement pointed out that such cuts are a 
key condition of granting aid to the synthetic fibres industry 
under a code last updated in 1992. 


Voters ready to 
pass verdict on 
troubled Tories 


By Paid Cheeseright 

The electors of Dudley West 
today will give the new Labour 
party of Mr Tony Blair the first 
indication of how successful it 
has been in trying to convince 
longstanding Conservative vot- 
ers that it is the most reliable 
guardian of their interests. 

The result of the by-election 
in the West Midlands constitu- 
ency will indicate how deep Is 
the loyalty of voters who 
turned towards the Conserva- 
tives between 1979 and 1987, 
when the Conservative major- 
ity increased from 1139 to to 
10,224. 

Opinion polls during the 
campaign have suggested that 
the Conservative share of the 
vote could drop from 4&8 per 
cent recorded at the 1992 g^. 
eral election, to around 20 per 
cent 

But Conservative and 
Labour officials have 
responded cautiously to the 
polls, one side anxious to keep 
up morale, the other to 
dampen wild expectation of a 
landslide. Both sides agree that 
their ability to bring out the 
vote, at an unfriendly Hwm 0 f 

the year for a by-election, is 
crucial. 7 


The constituency is one of 
the more prosperous In the. 
Midlands with owner-occupa- 
tion rates in line with the leafy 
dormitory towns of south east 
England. It was 54th on 
Labour’s list of seats necessary 
to win the last general elec- 
tion. In the event. Dr John 
Blackburn, whose in 

October caused the by-election, 
held it with a majority of 5,789. 

The campaign attracted the 
participation of more senior 
HNfflibers of the Labour Party 
than senior members of the 
gove rnment TTiey played their 
part in the usual by-election 
rituals: canvassing, personal 

appearances in the hope of 
attracting 1 television cameras 

political argument by 
Press conference. 

Generally the conduct of the 
rituals has been well-man* 
jterea. Both Conservatives and 
Labour claim to have spent 
tneir time arguing the national 
issues of the day. 

But Dudley West has been 
Joshed into the shade by, for 
we government embarrassing 
events at Westminster - the 
disclosure of internal Conser- 
vative discontent, the VAT 
JUS-?* E uro row, and the 

™ni-budget 



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Austria's biggest ever computer 
contract goes to Siemens Nixdorf. 


Siemens Nixdorf has been awarded the 
contract for the Austrian Labour Mar- 
ket Service (AMS) as the single source 
partner and prime contractor for an 
extensive outsourcing project. By 1997, 
according to the project, 114 provin- 
cial and regional offices and 31 employ- 
ment information centers nationwide 
will have changed over to a new 
dient-server system and will be integra- 
ted in an online Ethernet network. 

At 2.1 billion schillings (around US$ 200 
million}, this is the largest IT contract 
ever awarded by the Austrian Republic, 
and represents a major order for 
Siemens Nixdorf 's UNIX computers - 
a total of 220 RM400 and RM600 high- 
power computers are to be installed 
as local servers for 5,200 PCs, 3,400 
printers and fully integrated self service 


terminals. With just a few keystrokes, 
the job seeker can access all the data in 
the computer system, not only details 
of job vacancies and training and re- 
training opportunities nationwide, but 
also background information on the 
economic state of the local job market or 
the state of the local housing market. 
This facility will soon cover the whole 
of Europe. The Siemens Nixdorf solu- 
tion isopen forconnection to the" Eures" 
work placement system. Just how 
effectively Siemens Nixdorf solutions 
are working for employment author- 
ities is demonstrated by similar 
facilities already operating in seven 
European countries, where the national 
average period of unemployment 
has decreased by two days, with com- 
mensurate savings on state unemploy- 
ment benefits. 




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erdict on 


Madrid:The nationwide flight 
information network from Siemens 
Nixdorf is cleared for take-off. 


* 'V. •• . v '- 









ou bled I° r ^ 


Siemens Nixdorf has landed a contract 
with AENA (AeropuertosTSIadonales y 


in the central AENA service points con- 
nected with all airports. Efficient, fast 
and easy to operate with Windows - 


Navegacioh Aerea), implementing the these were the features that convinced 
largest flight-safety communications AENA. It is planned to extend the 
system in Spain based on X.400 standards solution by additional commercial and 
- at nine airports so far. * administrative appli- 

Maior exoansion of ~ A£ cations and to integrate 

it into other airport 


Brussels: X-Fire-CS on permanent 
emergency assignment for the 


* 


Ministry of 






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Major expansion of ^ M £ 
the network is en- 
visaged for next 
year. Airports are , 
able to communicate 

fw .t> 

with each other within jjj 
seconds via E-mail. £*£ 

Data on flight cancel la- ^ 
tions, delays, earlier W 
. arrival times or modified 
flight routes are exchanged ’ ~ 
from computer to computer 
to allow rapid response ■ a*** 

on the ground. High- 
speed computers pro- ^ j 

vide supersonic speed ^ 

forthecommmunica- 
tion channels: nine Pentium PCs as ser- 
vers for the local networks at the air- 
ports and two RM computers installed 
as network and back-up computers 



networks such 
as SfTA and AFTN. 
To achieve this, 
Siemens Nixdorf 
will install new 
Pentium computers 
as well as 17 RM400 
systems in the second 
and third phases 
IB of the venture. 



Fast reliable and compatible - Siemens 
Nixdorfs new open systems policy has 
the Belgian Ministry of Internal Affairs 
convinced. To enhance the exchange of 
information via the "National Infor- 
mation Network for Fire and Rescue 
Services" (RINSIS), the Ministry placed 
an order for RM computer technology 
on an open UNIX system basis. In 
future the system will link the Govern- 
ment's coordination center with 450 
workstations at regional and local emer- 
gency call reception points, fire services, 
and civil defence and rescue organiza- 
tions throughout Belgium - nationally 
via Bemilcom,the Belgian military net- 
work, via X.25, and locally via Ethernet 
With the combined power from RM 
computers and workstations and the 
X-Fire-CS solution intervention man- 
agement and control system, when an 


emergency occurs, RINSIS can be used 
to immediately activate the required 
countermeasures, and for total coor- 
dination of emergency measures on 
the spot. What sort of emergency is 
involved? Fire, flood, road accident or 
chemical spillage? Are there casual- 
ties? What is the best strategy to deal 
with the disaster and rescue and shel- 
ter the victims? All these questions can 
be quickly clarified with X-Fire-CS, en- 
suring that the right emergency re- 
sources arrive at the scene of the event, 
fully informed and with the right equip- 
ment RM computers form the corner- 
stone of the network. They provide all 
the networked workstations with all 
the required data - quickly, and ex- 
tremely reliably, thanks to special fail- 
safe facilities. They ensure that with 
RINSIS, the data processing operation 
runs flawlessly and without panic. 


» m » ■■ 4 a 

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i%tr* 


FINANCIAL TIMES 


THURSDAY DECEMBER 


15 1994 


SIEMENS 

NIXDORF 


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* .V 


Bonn 


•Tefe 




Munich: Siemens Nixdorf makes service 

for BMW customers just a matter of a quick pit stop. 


-• ci - 


After Europe and the USA, It's Asia's 
turn to get the benefits of Siemens 
Nixdorf IT and Siemens automation 
technology for BMW service without 
delays. In Japan and China DIS 

mation diagnosis and 

This system combines 
with T1S, the technical in- 
formation system from ‘ m 

Siemens Nixdorf, to provide a solution 
for efficient service support TiS acts as 
an electronic maintenance manual with 
a CO-ROM data medium that not only 
reduces the volume of paper gener- 
ated to a minimum, but also gives BMW 
service technicians, within seconds, 
all the information they require -from 
details of the correct specialized tool 
to be used right through to complete in- 
structions on repair and installation. 
The two systems can be integrated 
into a single comprehensive retailer in- 
formation system - with other Siemens 
Nixdorf components such as the Elec- 
tronic Parts Catalog (EPC) with data 
stored and ready for queries on every 


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mm 










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imaginable component, 

just by inputting the || 

chassis number. In fu- 

ture, there will also be 

business management 

software pack- 

aaes to provide £ 2 «s • - " 

su .pp° rt for ^ f££ 

order proces- 
sing and dispo- 
sition. The in- 
troduction of this UNIX solution in for rapid BMW customer service will 


SWffi 


Japan and China will mean that. 


be: integrated information and duto- 


by the end of 1994, there will be around mation technology from Siemens 
2,500 DIS,TIS and EPC systems in and Siemens Nixdorf. 
operation worldwide. So that in more . <• 

than 100 countries the magic formula 




London: British Ministry of Agriculture 

opts for RM computers 

and no longer stands alone. J* ^ 


A 


! J SI 


led by the RM systems 
satisfies MAFF's current 


f f, ; V - v .. -* •* • 


The British Ministry of Agriculture, satisfies MAFF's current * 
Fisheries and Food (MAFF) has adop- data requirements, in rela- 
ted RM computers as the center and tion to agricultural support 
cornerstone of an all-new c(ient-ser- in line with EC policies, 

ver architecture, doing away with its for- 
mer island solution. Under its multi-mil- 
lion major contract with MAFR Siemens 
Nixdorf has linked previously isolated 
hardware and software systems from 
different manufacturers and networked 

these with 4,000 Siemens Nixdorf PCs jz -■■■. 

and 40 RM600 UNIX servers, to create 

a state-of-the-art multivendor environ- '‘5?!?^^;. 

ment with a client-server architecture 

incorporating the best systems from 

Siemens Nixdorf and other suppliers. 

From today's 4,000 workstations at 
Head Office and in the regions, the 
solution is to be progressively expan- 
ded connecting MAFF with all its dis- 

trict offices. Communications 
run via a wide area network 



■t.* - ‘ 




Basel: 

No more speed 
limits for payment 
transactions at 
the Swiss Bank 
Corporation. 


Payment transactions were grinding 
to a halt because of the millions of 
documents involved -transfer orders, 
cheques, direct debit orders - in spite 
of home banking, self service termin- 
als and other alternative routes. The 
Swiss Banking Corporation (SBC), the 
third largest financial institution in 
Switzerland, decided it was time to 
tackle the problem - with a state-of- . 
the-art solution from Siemens Nixdorf 
as prime contractor and system inte- 
. grator. Siemens Nixdorf worked 

with Bernard Schifer GmbH 
to give SBC a document- 
based automatid pay- 
W .&. ment transaction 
^jF % system, interbank 

and in dealings 
% with the Post 
• ~M- Office. Siemens 
'A Nixdorf instal- 














-i 






(WAN), accessible to all com- J £ 
puters via open X.400 and X.500 ^ 

interfaces. The network can be 
used, for example, to send E-mail 
messages from Head Office to remote 
locations, thanks to a user interface, 
which provides a standard presenta- 
tion for all the different programs, from 
word processing through to document 
production and management. The 
combined power of these computers. 


.as- Office. Siemens 
Nixdorf instai- 
0 led, integrated 
%' andnetwork- 
ed RM6 °° 

fPW', computers, 

Rj H PCs, scanners 

and form read- 

wmmBggmw ers ^° r state- 

jfl|M of-the-art Open 

Imaging Processing 

System (OIPS)- digital 

document processing. 
And now tiiere's no speed 

limit for payment transactions- the 

documents are scanned and digital- 
ized using the OCR system, and the da- 
ta is forwarded to the UNIX compu- 
ters for processing and archiving. The 
information can be called up from each 
workstation in the client-server archi- 
tect re, and further processed by spe- 
cial programs, with total reliability ac- 
cording to the "zero error" principle. 
The result? Efficiency gains of 50% 
and investment protection into the 
future, thanks to the flexible and open- ’ 
ended nature of the solution. Less 
paper, less input in processing and ar- 
chiving documents - that's how the 

Open Imaging Processing System 

from Siemens Nixdorf helps the Swiss 
Bank Corporation to enhance its 
payment transaction processing oper- 
ations. 









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FINANCIAL TIMES THURSDAY DECEMBER 15 1994 




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Basel: 

No more spw 


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ths Swiss Bank 

Corporation. 


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Bonn: Telekom now communicating with Siemens Nixdorf "OfficeWorld". 


Now that Telekom has been reorgan- 
ized as a private company, its office 
organization is also being completely 
restructured. Paper mountains and 
cumbersome card indexes will soon 
be a thing of the past The trend is to- 
wards the electronic desk. Soon every- 
thing will be handled from the PC: 
preparing texts, processing forms, fil- 
ing documents, sending faxes, using 
electronic mail. All this is made possible 
because of the multi-functional office 
communications software OCIS- 
PC, which Siemens Nixdorf has 
tailored to suit the individual 
needs of the postal corpora- 
tion as part of the TIBIS 
project (Telekom Integrat- 
ing Office Information 
System). In a number j 
of pilot phases, Jk $8 *£ 

OCIS-PC has prov- Jp 

ior to any rivc^^flBg 






sr^ 



~ client PCs at the 176 

mnwmiH jinn Telekom sites to access the 
fmsmmgmr central services of currently 
just under 180 RM600 servers. 
mht As database and applications 
servers using such applications 
^ as centralized filing, electronic mail 
. and address management, the 
RM systems are continuously on call 
for every PC.To enhance inter-depart- 
mental communication from PC to PC 
and from PC to RM server, Telekom 
is also considering introducing Work- 
Party, the workgroup solution for 
comprehensive workflow management 




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Furth: Quelle has ordered 
the European UNIX best seller. 


The biggest European mail-order com- 
pany has discovered the ideal source 
for global communication: Quelle is 
now doing business with the largest 
European computer company, with 
the aim of implementing MAC, the inter- 
national "Merchandising and Com- 
munication" network. What's the reason 
behind this decision? Quelle imports 
approx. 45% of rts 55,000- item product 
range from foreign countries. There are 
27 purchasing agencies from Portugal 
to Japan, from China to Indonesia, and 
all of them have to be in touch with the 
headquarters in Furth, communicating, 
consulting on decision-making and 
receiving instructions.The aim of MAC 
is to reduce communication costs 
through modern data transfer and to 
harmonize all merchandising proced- 
ures worldwide. The intention is also 
to create a standard management tool 
by integrating all purchasing agencies 
into a global procurement system. 

To achieve this goal, the MAC network 
has been undergoing constant im- 
provement and expansion since 1992 
- from document processing to elec- 
tronic mail transfer. All information, 
ranging from offers to order confirma- 
tions, can be sent to each purchasing 
agency. There, ft is reconciled and har- 
monized with the main office in Furth 
at the push of a button via the inter- 
national infonet Using the MAC net- 
work, Quelle can also distribute faxes 


directly from the UNIX system - with- 
out the need for special hardware such 
as fax cards. An example shows how 
this can reduce costs: a fax query from 
the Furth headquarters to a client in 
Hongkong is first sent to the local pur- 
chasing agency- saving costs by using 
the X.25 computer network - and 
from there via the telephone system 
directly to the client at the local calling 
rate. For Quelle, the use of Siemens 
Nixdorf's global marketing and service 
network marks a major step ahead 
in the implementation of its world 
wide communication 
network. 


?>:■■■■■ V.K- 1- 


r. ... 







right across the organization. Like 
OCIS-PC and other Telekom programs, 
WorkParty runs under ComfoDesk, 
the standard user interface. By the year 
2000, more than 100,000 workstations 
at 176 sites are to be equipped with 
OCIS-PC and networked. When it has 
been extended with innovative appli- 
cations such as computer-assisted tele- 
phone calls, and management infor- 
mation and workflow monitoring sys- 
tems, Siemens Nixdorf's OfficeWorld 
solution will be not only one of the 
biggest but also one of the most ad- 
vanced in the world. 




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Memmingen: 

Metzeler Schaum gears up for lean 
management with R/3 LIVE. 


Extreme pressure on costs and prices, 
customer orders for smaller and 
smaller quantities, with increasingly 
rigorous quality requirements in ever 
shorter delivery times - these are the 
challenges faced by Metzeler Schaum, 
along with many other companies. 
Metzeler is restructuring its operation 
according to the lean management 
principle, to make the company faster 
and more flexible, and to increase 
profitability. This inevitably demanded 
new EDP systems with greater flexibil- 
ity as the backbone of a more efficient 
organizational structure. And it was 
Siemens Nixdorf that got the contract, 
to implement the R/3 LIVE concept. 
This was because the R/3 LIVE concept 
enables Metzeler to meet another of its 
requirements - long-term cooperation 
with a reliable partner.The goal at 
the company's plant in Memmingen, 
which manufactures moulded and 
block foam-rubber, for vehicles and 


furniture, for example, was to progres- 
sively replace the old system with a 
flexible client-server architecture and a 
fast network. Standard software specifi- 
cally designed for medium-sized busi- 
nesses was installed, meeting at least 
80% of all requirements and providing 
easy and convenient data query facili- 
ties. EDP and specialized staff from 
Metzeler worked in close cooperation 
with Siemens Nixdorf specialists.The 
central priority was to redesign the 
company's business processes, focus- 
ing mainly on core business. The 
result is a powerful, flexible systems 
architecture consisting of a host hold- 
ing ail Metzeler s customer data, an 
RM600 computer acting as the server 
forthe R/3 modules - accounting, stock 
management, sales and distribution, 
PPC and human resources - and 
Siemens Nixdorf PCs, taking office com- 
munications right into the workplace. 
The old system is scheduled to finally 
shut down at the end of 1995. 











SIEMENS 

NIXDORF 


FINANCIAL TIMES 


THURSDAY DECEMBER IS 1994 


Rotterdam: Thyssen De Reus brings 
COMETintothe open environment 


Thyssen De Reus B.V. (Netherlands), 
an international company which also 
has factories in Germany, England and 
Belgium develops, produces, installs 
and services elevators. 

Besides the manufacture 
of elevators for personnel 
and special elevators, it 
specializes in the manu- 
facture of elevators and 
stairlifts for disabled and 
elderly people. Thyssen 
De Reus has committed 
itself to the latest distrib- 
uted information proces- 
sing via client-server tech- 
nology for development 
Siemens Nixdorf was 
commissioned to make 
the progressive transition 
from the old system to 
the new, by porting the 
COMET software library 
to an RM600 UNIX system, 
complete with all mod- 
ules. This was the ideal 
transition solution - the 
investment in COMET 
software is protected, un- 
til the final transition to 
the latest client-server soft- 
ware is completed. In the meantime, 
Thyssen De Reus staff can continue to 


work on the tried and tested COMET 
system they know so well. But it was 
never this efficient. The addition of RM 
power and the processing speed of 
the UNIX operation system means that 

the entire order 
processing oper-. 
ation is now con- 
siderably more 
efficient. The 
RM600 plays a 
very important 
role in the future 
automation net- 
work of Thyssen 
De Reus.To en- 
sure the network 
can grow and 
expand, Thyssen 
De Reus Nether- 
lands has com- 
plemented it with 
the service power 
and training of 
Siemens Nixdorf. 



Bocholt: BEW exploits new sources 
of energy- from R/3 LIVE to SICAD. 


Siemens Nixdorf is putting energy into 
a completely new IT organization for 
BEW; the Bocholt power and water 
supply company - a project which must 
be completed by 1998. With 70,000 
subscribers, BEW is the largest energy 
supplier in West Munsterland 


in terms of hardware and software. 
The solution consists of a range of 
software packages, such as R/3 LIVE, 
the complete business management 
solution custom-made by Siemens 
Nixdorf for the power industry's spe- 
cific requirements - from order entry 
to accounting, in addition, SICAD and 







(Germany). A BS2000-c!ient for many 
years, BEW now plans to install state- 
of-the-art standard applications and 
move over to an open client-server 
architecture. This is a very ambitious 
project requiring all the expertise of 
Siemens Nixdorf as a system integra- 
tor and developer of sector-specrfic 
applications for the power industry. 
The challenge is to combine RISC 
multiuser systems, workstations and 
PCs into a sophisticated client-server 
environment for distributed processing. 


SINCAL, Siemens Nixdorf 's software 
applications for the power industry, 
support BEW with sewer documenta- 
tion, calculations, analysis and plan- 
ning functions for networks.1997 will 
mark the arrival of the OCIS office so- 
lution, turning workstations into elec- 
tronic desks, and the ARC1S archive 
system, which can reduce mountains 
of files to CD format. Once the project 
is completed in 1998, BEW will have 
in place its IT organization for the 21st 
century. 


Johannesburg: Allianz uses RM 
power to enter the world of U N IX. 

be increased to several thousand 
workstations. To do this, Allianz merely 


For Allianz South Africa, an alliance 
with Europe's No. 1 in UNIX multiuser 
systems was its best insurance policy 
for entry into the open systems environ- 
ment The insurance giant was plan- 
ning to invest in new UNIX-based appli- 
cations software, and was looking for 
the best hardware platform. It compar- 
ed products from a range of manu- 
facturers before arriving at the right so- 
lution: a multiprocessor RM600 was to 
replace the previous system based 
on proprietary computer architecture. 
The Siemens Nixdorf UNIX system is 
on the network with all the PCs. The 
result? A fast client-server link, connec- 
ting all Allianz departments, with all 
the advantages of an open and totally 
expandable system. From today’s 250 
concurrent workstations, with com- 
prehensive file, print, application and 
communications services provided 
by the RM600, the system capacity can 


has to add memory or processor to 
arrive at the next RM computer cate- 
gory. The operating system is the base 
for new UNIX applications Universe • : 
and InsSure from software produced 
BCS, for all its core business. Allianz . . 
is also insured against the need for fur- 
ther staff training in the future, since 
Siemens Nixdorf has already turned 
Allianz employees into experts in 
working with open systems. And just 
in case a problem does arise, the 
Siemens Nixdorf service package also 
includes ongoing support, with Tele- . 
service, for example, providing prob- 
lem solutions between one computer 
and another. Allianz Manager Richard 
Roos is very happy with the way things 
have gone. "With RM60Q and Siemens 
Nixdorf as our partner, our transition to - 
the world of open systems has been 
extremely successful". 











Vienna: Magna, component supplier 
for the car industry, gives 

the green light for RM investments. 



The Canadian car parts supplier Magna 
gives priority to new RM computers: 
five RM600 UNIX systems are to replace 
Quattro computers for COMET data 
processing. One computer has been 
installed at each of the European Magna 
branches in Weiz in Austria, Heiligen- 
stadt, Prague, and two at the Salzgrtter 
branch. Together with 120 PCs and 
40 terminals, they act as a boost to the 
COMET client-server-operation, from 
financial accounting and wages and 
salaries, to time management Also in- 
tegrated in the solution is special 
trade software with the FORS supplier 
package for all tasks from order entry 
to statistics - with data communi- 
cation links to the automotive industry 
available for order processing. Thanks 
to CROSS BASIC, Magna can continue 
to rely on COMET. CROSS BASIC is the 


migration tool that facilitates the seam- 
less transfer of the business software 
library from legacy to open systems — 
without interruptions, restrictions or 

waiting-time for the user. At the same 

time, productivity is increased by as 

much as 20%, thanks to the latest UNIX 
computer technology. Today, for 
the largest independent supplier to the 
car industry, it's business as usual 
with COMET. And without a hitch. But 
thanks to RM, the operation is faster 
and more efficient, with unlimited 
power and connectivity. 

■ 

For further information, please 
contact 

Siemens Nixdorf 

Informationssysteme AG 
UK 41, Otto-Hahn-Ring 6 

D-81739 Munchen 
Telefax: +49/89/63648749 















13 


financial, times Thursday December 15 1994 



FINANCIAL TIMES SURVEY 


Charities Investment and Finance 


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O ne of the less noticed 
accompaniments to the 
frenzy leading up to 
list month's launch of the 
National Lottery mas a com- 
plaint to the Advertising Stan- 
dards Authority by the Insti- 
tute of Charity Fundraising 
Managers. 

The institute objected to the 
ggtgnt to which advertisements 
promoting the lottery had 
linked the purchase of tfckrtg 
with notions of doing charita- 
ble good. “Every time you play 
the National Lottery, someone 
else gets a better chance. ** they 
read. 

Charity fundraisers fear that 
the public, induced by the pos- 
sibility, however remote, of 
winning a fortune, win buy lot- 
tery tickets in preference to 
alternative forms of charitable 
support Yet when prizes, tax, 
profits and. allocations to other 
causes are accounted for, char- 


Survey by 
Alan Pike 


With contributions by 
Bethan Hutton and Norma Cohan 


■' ,l andSei 


»-i - 


■- oj? tranj- 

: " V items 


J * ’ 


_ I 
■ ■ 

",V 


ities will receive only 5.6p for 
every £1 lottery ticket pur- 
chased. 

Even so, the sums raised for 
charity will be substantial — an 
estimated £100m in the first 
year, perhaps rising eventually 
to three times this level. Unfor- 
tunately, however, estimates of 
possible losses commissioned 
by the voluntary sector point 
to broadly similar figures of 
between £190m and £270m a 
year. 

Finance directors of charities 
will be watching anxiously for 
signs of the lottery reducing 
their income. Even if fears 
about its impact prove to have 
been exaggerated, however, it 
is clear that the lottery will be 
no substitute for charities pur- 
suing sound, efficient invest- 
ment management and fund- 
raising policies. 

The stimulus of recent 
changes in charity law, as well 
as pressure for the best 
possible return on 
investments, is encouraging a 
growing number of smaller 
charities to join big ones in 


Thursday December 15 1994 


As smaller charities follow large ones in seeking 
professional financial advice, all wonder how much 
they may lose as a result of the National Lottery 

Sector seeks new 
sources of income 


seeking professional 
investment advice. 

Although small by 
pension-fund standards, the 
charities sector is a well 
established specialist activity 
for fund managers. A number 
of tiie biggest operators have 
several decades’ experience of 
handling charity assets, and in 
some cases now have 
approaching S2tm of charity 
funds under management. 
Most have teams of charity 
specialists, and often offer 
facilities such as telephone 
helplines, which can make 
investment issues less 
intimidating for inexperienced 
trustees. 

Charities can, depending on 
the size of their investments, 
choose between common 
investment funds or individual 
portfolio management. Big 
London investment managers 
are likely to seek minimum 
investments of £lm-£2m to 
justify individual managurngw^ 
but are willing to accept 
charily accounts as small as 
£1,000 for common investment 
ftmds. 

About £2bn is currently held, 
in common investment funds, 
and this form of investment is 
being stimulated by a phased 


process under which the 
official custodian, a public 
official, is returning to smaller 
charities money that had been 
held on their behalf. 

Fund managers remain 

concerned about the restrictive 
impact of the 1961 Trustee 
Investments Act, under which 
Charities must irmfrrtatTi a 50-50 
split between wider-range 
investments in equities and 
narrower-range gilts. Earlier 
this year, the government 
introduced some changes, 
largely, to extend opportunities 
for investment in Europe, but 
it did not relax the 50-50 
requirement 

Ministers have rejected a call 
from a government-appointed 
task force on charity 
deregulation to abolish the 
requirement The Treasury is, 
however, currently reviewing 
the position. As an alternative 
to scrapping the 5050 rale, the 
task force proposed a revised 
division, charities to 

invest up to 90 per cent of their 
funds in the wider-range 
category. TUs is supported by 
Mr Martyn Beasley, head of 
the charities division at 
Fleming Investment 
Management 

“The government could 


ALSO IN TUB 4-PAGE SURVEY 

□ Inv estment ma na ge ment capital growth matters, too. - 

□ The Trustee Investments Act: the amendments and after. 

□ Pubfic finance: wffl private-sector competition mean less? 

□ Rmdraising: income from legacies has fallen. 

□ Telephone fundraisers: a new code of con du c t 

□ Conumaiity found a tions: a US idea taking root in the UK. 

□ ProfSe: Stuart Etherington, new cfirector of the NCVO. 

□ The National Lottery: Irish precedent casts a shadow. 


change the 50-50 division 
quickly by Order in Council, 
and should do so," be says. 
“There are other questions, 
like definitions of appropriate 
- investments, that could then 
be considered over a longer 
period. If a charity had 
invested £2m on a 50-50 split 
when the act was introduced in 
1961, its wider-range Elm 
would have been worth £l5m 
in absolute terms by the end of 
last year, and its narrower 
range £706,000. In real terms, 
the wider range would be 
worth £1.4m and the narrower 
£65.000. That seems to make 
the case for a 90 per cent split 
in favour of the wider range.” 

Mr Bensley and some of his 
fellow fund managers would 
like the Charity Commission, 
still largely occupied with 
matters of charity law and 
accounting, to give more 
attention to investment issues. 
He has proposed the 
establishment of a panel of 
practitioners to advise the 
commission on investment 
questions. 

Questions about charity 
investment lock into a wide: 
debate about the financing of 
Britain’s voluntary sector and, 
more broadly, its future. 
Financial support from 
individual and corporate 
donors has remained generally 
flat for several years. Public 
funding. on which 
somecharities rely for much of 
their income, is tight, and the 
future holds fresh uncertain- 
ties. The Scottish Office, for 
example, has turned down pro- 
posals that new councils be 
required to retain existing lev- 
els of voluntary-sector funding 
when local government in 



Scotland is reorganised. 

Last month’s Budget brought 
no relief on the issue of 
unrecoverable VAT paid by 
charities, although Mr Mike 
Fountain, partner in charge of 
VAT at Coopers & Ly brand, 
chartered accountants, says 
that, because charities face a 
more complex VAT regime 
than the average business, 
same pay the tax unnecessarily 
on items such as building 
purchases, rent equipment for 
research and advertising. 

Given the difficulties, 


therefore, in stimulating big 
increases in traditional sources 
of income, the voluntary sector 
is beginning to look to 
alternatives. 

A local investment fund was 
launched last week by 
Business in the Community 
with £2m from the private 
sector, including £500,000 from 
National Westminster Bank, 
and a Elm grant from the 
Department of the 
Environment. The fund will 
provide loans of between 
£25,000 and £250,000 to launch 


community enterprises, 
helping voluntary 
organisations to overcome 
their frequent difficulties in 
raising loans on the 
conventional financial 
markets. Elaborations of this 
idea, including a fully fledged 
charity bank, arc emerging 
from work on the future of 
charities being undertaken by 
Demos, the think-tank. 

Demos’s work is part of a 
flurry of examination about to 
burst upon charities. The 
National Council for Voluntary 


Organisations is setting up a 
Commission on the Voluntary 
Sector, to stimulate thinking 
about future priorities. The 
Central Statistical Office has 
commissioned a survey of the 
sector’s sources of funding, 
expenditure and assets. A 
study of the financial 
governance of charities is 
about to begin, financed by the 
Charities Aid Foundation, the 
Chartered institute of 
Management Accountants and 
the Institute of Chartered 
Accountants in England and 
Wales. 

So, during the next two 
years, there will at least be a 
how of new source material to 
fuel the debate about the 
future of the voluntary sector. 
It is a debate about absolute 
fundamentals. Changes in 
welfare service provision and 
government funding may be 
pushing some big chanties to 
the point where they will look 
more like NHS trust hospitals, 
local-authority social sen ices 
departments ur private-sector 
residential care companies 
than the conventional public 
image of voluntary 
organisations. 

If lids happens, it will leave 
a growing amount of 
traditional, campaigning 
charitable .stock tn bo Liken up 
at local level. Hut small local 
voluntary organisations tend 
to face greater financial 
problems than their bigger 
counterparts, particularly 
when It comes to meeting cure 
costs - donors prefer 
supporting specific 
programmes to paying 
electricity bills. As a result, 
staff of under-resourced 
smaller organisations often 
spend as much time 
fundraising in order to survive 
os on providing services. 

Charity’s share of the 
National Lottery proceeds 
might be better spent on 
tackling the sector's 
infrastructure problems - for 
example, by financing 
top-quality management and 
staff training which would be 
available to the sector as a 
whole - rather than simply 
generating another lottery 
among 700,000 voluntary 
organisations that will be 
scrambling for a share of the 
prize. 





THE EQUITIES INVESTMENT 
FUND FOR CHARITIES 


Charifund is a wider range investment for recognised charities to invest 
in a broad spread of shares and can pay out its quarterly income 
distributions without deduction of tax. 

The fund aims to provide a growing income for charities at an 
above-average level while at the same time protecting their capital from 
the erosive effect of inflation. Since the fund was formed in 1960 it has 
grown to over £480 million by end of November 1994. 

Any charity recognised by the Inland Revenue may invest. 
A share exchange scheme, with favourable terms, is available. 

Trustees should be aware that the price of units and the income 
from them can go down as well as up, and that past performance is no 
guarantee of the future. 

To: The M&G Group, M&G House, Victoria Road, Chelmsford CM1 1FB. 

Return this coupon or telephone Customer Services on (0245) 390 390 during business 
hours for details of Charifund and the M&G Share Exchange Scheme. 


INITIALS 


SURNAME 


ADDRESS 


POST 

CODE 


TELEPHONE 

NUMBER 


NCATPX 


M&G also provide a segregated investment management 
service for charities with funds of £15m or more. Please tick this 
box if you are interested. 

We never make your name and address avaSatole to unconnected organi 
occasionally tall ybu about other produetsor services offered by CiM or companies which are 
ten of i ‘ '* J ' "" - 


ns. Naturally we will 


members oi the M&G Group. Tick the box Q If you would prefer not to receive this information 

The Share Exchange Scheme is operated by M&G FiiiariCteJ Services limited — Member of IMRO. 
Segregated frrwstment management is provided by M&G Investment Management Unrated - a member 
of IMRO. Charifund is managed by Charities Investment Managers Limited (CIM) - Regulated by the 
Personal Investment Authority - which has issued this advartisamenL 



THE M&G GROUP 



Queen Charlotte* r and CMw 
Hospiid, founded in Jem iyn Sheet, 
London, in 1739, in take are of 
'exposed and deserted yotutg children 
and poor umwn labouring with dnld \ 



Marykbone Crkka Chib, guardum 
if dte rules if cricket since 1787. 
Few people realise that the first rules 
cflawtt tennis were aba drawn up 
byMCC . 



The Zoological Society if London, 
the inspiration of Sir Stanford 
Raffles, who also founded the colony 
of Singapore. The Zoological Society 
nuts fctfJt London Zoo and 
Wripsrwde Wild Animal fork. 



H'db Cathedral, the earliest entirely 
Gothic cathedral in Europe, situated 
ht England's Smallest dry. IKth 
nearly 300 statues, she West From 
is considered the finest gallery of 
medieval sadotwt in existence. 


Results 
that stand the 
test of time. 

In a world that seems obsessed with instant 
results, it is worth remembering the staying 
power of the best in the field. 

We manage the investment funds for 

■ 

some of Britain’s oldest and best known charities, 
including the four shown alongside. As one of 
the country’s longest established independent 
management groups, we can offer you continuity 
and reliability in a changing world. 

We are traditionalists with an eye to the 
future, and we are single minded — our staff are 
entirely dedicated to the business of investment 
management. 

Please contact Mark Toller 
on 071-410-4100. 

H 

HENDERSON 

Investments for Charities 

Htedoson Investments for Chanties is a division oi Henderson Financial Management Limited 
3 Finsbury Avenue, London EC2M 2 PA, A member of IMRO. 




























I — m f \ .a -iiWUMUt i 








financial times 


THURSDAY 


DECEMBER 15 Wfrt 



_.-» l- 1 -" ' *.■ 





CHARITIES INVESTMENT AND FINANCE 


Investment management: Bethan Hutton on routes to market exposure 



Common tn » — tm . n t fund mlo ,MI “*■ ** ** 


1S94 


r 


1**'. 




• ■/. ■■ ■■ 
■ i - SU.#*wv- - - 


nr. 


Income units 


Capital growth matters, too 



• i j. . 

■ " V -£2 


Finding the right home for 
one’s money Is a difficult 
enough process for the average 
individual, but it is doubly 
nerve-racking for charity trust- 
ees who are responsible for the 
proper management of other 
people's money. 

Putting it safely on deposit 
at the hank may rest easiest on 
a trustee's mind, but more 
charities are realising that in 
fact investments further along 
the risk scale can be the most 
responsible choice, to provide 
some capital growth as well as 
income. 

Once a decision has been 
made that at least some of a 
charity’s funds need to be 
invested In stocks and shares, 
the next choice is between col- 
lective funds, such as unit 
trusts or specialised common 
Investment funds (Cifs) for 
charities, and segregated man- 
agement, where fund managers 
construct an individual portfo- 
lio of investments to meet a 
charity's specific needs. 

The choice may be dictated 
by the size of funds available. 
A charity with less than 
£50,000 will not be able to 
afford the personal touch of 
segregated management, while 
large national charities with 
£l0m or more to their names 
will be welcomed by any segre- 
gated fund manager. Between 
those extremes, either option 
may be possible, if you 
research the market thor- 
oughly. 

The big-name London man- 


agers tend to steer any charity 
with less than £2m towards 
collective investment vehicles, 
as their fee levels make segre- 
gated management of smaller 
amounts uneconomic. But 
charities with more modest 
funds to look after do have an 
alternative. 

Some of the medium-sized 
stockbrokers and fund manag- 
ers, particularly outside Lon- 
don, accept much smaller 
funds for segregated manage- 
ment at fees comparable with 
the charges on collective 
funds. This may be an appro- 
priate choice if a charity has 
specific investment needs, such 
as ethical constraints or per- 


vide overseas exposure, as 
direct Investment would be too 
expensive with small amounts 
- but the OK portfolio will usu- 
ally consist of direct sharehold- 
mgs, 

IF collective funds seem like 
a more appropriate solution, 
then charities can choose Grom 
a wide range of unit trusts, or 
a smaller number of common 
Investment funds designed spe- 
cifically for charities. 

According to the WM Com- 
pany, which produces compar- 
ative performance statistics for 
charity funds, there are cur- 
rently only nine equity-based 
common Investment funds and 
nine fixed-interest funds on the 


There is a wide range of unit trusts, and 
a smaller number of common investment 
funds designed specifically for charities 


haps a temporary need for 
higher- than-uiroal income from 
its assets. 

Manchester-based stockbro- 
ker Henry Cooke, Luoisden, for 
example, offers charities a full 
individual portfolio manage- 
ment service with no minimum 
investment amount, though 

the minimum fee of £1.500 a 
year would deter any fund 
with less than about £100,000. 
The standard annual Charge is 
an all-inclusive 0.7 per cent 

Most managers still use col- 
lective funds for part of the 
portfolio - for example, to pro- 


market Those not shown in 
the table are funds launched 
within the past year by For- 
eign & Colonial and Klein wort 
Benson, which do not yet have 
a long enough performance 
record to be included. 

Shona McLeod, of WM 
Company, says more 
management groups would 
have launched common 
investment funds by now, if it 
were not for the considerable 
bureaucratic obstacles which 
have to be overcome to set up 
a fund. But demand for Cifs is 
growing fast so managers who 


can offer them are attracting 
steady streams of new money. 

One important factor in the 
growing demand for Clis is the 
steady process of divestment 
being carried out by the official 
custodian for charities. Small 
charities whose assets were 
managed by the official 
custodian are gradually having 
their money returned to them, 
and are having to find other 
homes for it Most have only 
modest sums to deal with, so 
the most obvious choice is a 
Cif, particularly if they are 
constrained by the Trustee 
Investment Act 

The choice of manager - 
whether yon opt for the 
collective or segregated route - 

is wide, from the famous (Sty 
nam es to smaltor regional or 
specialist firms. Even among 
managers of similar size ana 
reputation, there can be 
considerable differences in 
investment approach and 
charging structure. So how 
should a charity go about 
finding the right manager for 
its particular needs? 

Michael Rimmer, of 
Schraders, says; ‘'Historically, 
a lot of introductions have 
been effected by word of 
mouth. The charity world is 
still comparatively small and 
self-contained - trustees talk 
to one another.” This is 
particularly the case with 
medium-sized and smaller 
charities. 

However, a word-of-mouth 
recommendation does not 


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: • 



necessarily hand the fund 
manager a new client on a 
plate. More often, it speeds the 
manager into a short list, from 
which the final selection is 
made on more objective 
grounds of cost, performance 
and so on. 

But there are signs that the 
informality of that process 


may be changing. Increasingly, 
charities - particularly the 
larger ones - are turning to 
independent consultants for 
advice on choosing an 
investment manager. 

Some people in the industry 
see the chanty fund 
management business 
following' the example of 


pension funds over the past 
few years. Consultants have 
become central to the pension 
fund manager selection 
process, and an emphasis on 
performance statistics has 
concentrated a very high 
percentage of funds in the 
hands of a very small number 
of managers. 


The charity sector is more 
diverse, with more very smaB 
organisations, than 
pension sector, so 
concentration of funds is 
unlikely to go quite so far; but 
trustees’ growing awareness of 
their responsibilities is 
creating a trend in that 
direction. 


Norma Cohen discusses the changes to the Trustee Investments Act 


‘Distorted’ returns criticised 


The Trustee Investments Act 
of 1961 was, by all accounts, 
drafted with the best of inten- 
tions. 

Trustees of charities were to 
ensure that donations were 
invested prudently, and that 
scarce assets were not wasted 
on high-risk ventures, or used 
to line the pockets of those 
who managed the money. 

But now, charitable organi- 
sations say, recent modifica- 
tions to the act simply do not 
go far enough. The act is hav- 
ing the unfortunate effect of 
pushing charitable investment 
into relatively lower yielding 
securities, depriving them of 
badly needed investment 
returns at a time of shrinking 
donations. 

Moreover, it encourages cer- 
tain distortions in investment 
which a "prudent man” would 
never choose of his own 
accord. 

As a result, there is gro win g 
pressure from charities and 
those who invest on their 
behalf to alter the Trustee 
Investments Act so that funds 
may be managed in a more 
sensible fashion. 

In 1961, the terms of the act 
called for those who managed 


charity assets to place 50 per 
cent of funds into "narrow” 
investments and the remainder 
into “wider assets”. Narrow 
assets meant government 
stocks and cash, while wider 
assets meant certain UK equi- 
ties- One criterion for equity 
investment specified that char- 
ities could only buy shares 
which bad paid dividends for 
at least the five previous years. 

Mr Martyn Becsley, head of 
Fleming Investment Manage- 
ment’s charity division, notes 
that the criteria have served 
charities badly. A £2m sum 
invested in 1961 would have 
earned £14m on the equities 
portion and just £700,000 on the 
50 per cent of assets invested 
narrowly, by the end of Last 
year. 

In 1992, amendments to the 
Charities Act brought some 
improvements. The category of 
narrower investments was 
broadened to include govern- 
ment bonds of European Union 
member states and unit trusts 
which invest in gilt* 

Meanwhile, the category of 
wider investments was broad- 
ened to include the shares of 
companies based in the EU. 
Investment in companies out- 


side the EU can only be made 
through recognised unit trusts. 

Mr Beasley points out that 
even this broadening of defini- 
tions distorts Investment “As 
a charity, you still cannot 
invest directly in shares of the 
US or of Japan, although you 
can invest directly into Greece 
or Iceland.” He describes the 
effect of the rules as “crackers, 
just crackers.” 

However, changes to the 
act’s section 24 authorised the 
creation of common invest- 
ment funds (Cifs) and common 
deposit funds (CDFs), and 
these allowed professional 
investment managers to skirt 
some of the Act’s more restric- 
tive aspects. 

Apart from the rules creat- 
ing these categories of pooled 
fund, other amendments to the 
act place greater emphasis on 
the fiduciary duties of trustees 
and make them personally lia- 
ble for carrying out those 
duties. The effect of these legis- 
lative changes has been to cre- 
ate a surge in pooled funds 
offered to charities by leading 
UK fund management compa- 
nies. 

For example, concern about 
trustees' duties under the act 


prompted Bnzzacott Invest- 
ment Management, a firm of 
chartered accountants which 
also manages funds for chari- 
ties, to turn over £6(hn of client 
funds to Mercury Asset Man- 
agement for investment 
through its pooled fimds. The 
1992 amendments also bar 
those who audit charity funds 
from managing them as welL 
However, the act is anoma- 
lous in that regulation of these 
pools falls to the Charities 
Commission, a body which 
may be well aware of the needs 
of charities but knows rela- 
tively little of the complexities 


Will competition with the private sector lead to less public funding? 


Businesslike but not a business 


When shouldn’t a 


charity be a charity? 


A charily should be demanding when it comes 
to judging its investment manager. Investment 
excellence is vital in achieving the optimum 
combination of income and capital growth. 


Newton currently manage assets in excess of 
£8 billion and are the top performing Pension 
Fund Manager for the five-year |>criods ending 
December 1 992 and 1993*. That investment 
management experience mid expertise is used 
in the benefit of over thirty charities in a broad 
range of fields. 


Please call Cuy Hudson on 0171 332 9000. 
Alternatively, you can write to him at Newton 
Investment Management Limited, 71 Queen 
Victoria Street, London KC4V 41)11. 


N E 


V T O N 


^Kunrm Krminriul linw Hunrw of pension fund imnlmonL Issued by 
Vnton ImHnictil .Mn my pt nc nl limifaxL, a mend kt of IMHO. I'nsi 
performance is no piidf to the future- Tlie value of your investments 
urn! (hr income from them may go down m> well os up and you may not 
get hark the full amount invested. 


of investment For example, it 
recently dithered for seven 
months over whether it would 
be proper for the UK’s largest 
charity, the Weflcome Trust, to 
invest in venture capital 
through limited partnerships. 

Investment in partnerships 
could have been deemed to 
constitute trading, an activity 
from which charities are ban- 
ned, the commission feared. 

Investment professionals 
note that self-regulatory bodies 
in the financial services indus- 
try are probably better placed 
than the Charities Commission 
to consider issues of this sort. 

Thus, alterations in the regu- 
lation of pooled tends is one of 
the goals of a charities and vol- 
untary organisations task 
force. “The burden of regula- 
tion as it currently stands can, 
for smaller organisations, be so 
onerous and costly that it 
threatens to stifle the enthusi- 
asm of volunteers and some- 
times even the existence of the 
organisations themselves,” 
according to a Flemings’ 
update on the charity invest- 
ment regulations. 

Instead of the Charities Com- 
mission, one of the self-regula- 
tory bodies for the financial 
services industry should be 
charged with overseeing the 
regulation of pooled fimds. It is 
being argued. 

The task force, whose mem- 
bers Include representatives of 
the Home Office and the Trea- 
sury, as well as charitable 
organisations and fund manag- 
ers, produced a report earlier 
this year setting out 189 pro- 
posed changes to the regular 
tion of charities. It is under- 
stood that the Treasury is 
considering the case for 
reform, although no legislation 


The Women’s Royal Voluntary 
Service this week became the 
first voluntary organisation to 
win the prestigious national 
category of the National Train- 
ing Awards. 

Announcing its success, the 
charity said that it had 
“beaten off stiff competition 
from the commercial sector” 
to gain the award. Competi- 
tion from the commercial sec- 
tor was also part of the stimu- 
lus for the WEVS’s investment 
in training — voluntary organi- 
sations and private companies 
are both seeking to take over 
welfare services under con- 
tract to public authorities, and 
this is forcing charities to 
examine the quality and effi- 
ciency of their services. 

The WRVS is Britain’s larg- 
est voluntary organisation. 
With 140,000 volunteers - one 
in 200 of the adult population 
- it is bigger than the Army. 
Its volunteers, who* in spite of 
the charity’s name, include 
men, are familiar figures run- 
ning hospital shops, delivering 
meals on wheels and assisting 
at emergencies. The financial 
environment in which such 
voluntary activity takes place, 
however, has changed dramat- 
ically during the 1990s. 

Managers of National Hea lt h 
Service trust hospitals, under 
pressure to generate ex tra 
money from non-medical activ- 
ities, today view hospital 
shops as potential sources of 
income. In some big hospitals. 



WRVS volunteers cfiscuss plans to 
r ef urbish theft- hospital shop 


afraid of commercial competi- 
tion. “We do not have the big 
wage bills of commercial 
organisations, we are not 
taxed on profits and we do not 
need to pay dividends. So. pro- 
vided we are well organised, 
we should be able to withstand 
competition.” 

But the success of the volun- 
tary sector in winning and 
keeping public contracts 
depends on a further, more 
imponderable, question - wDl 


volunteers continue to give 
time to charities tint are In 
businesslike competition with 
the private sector to provide 
publicly financed services? 

Hr Burton believes they 
wiD. “Bring efficient Is not the 
same as being commercial. 
Our volunteers are concer ne d 
to ensure that they are able to 
offer tin proper quality of car- 
ing service that people 
require. We are Improving our 
training facilities to make the 
work of volunteers increas- 
ingly valuable and s a ti sf yi n g.” 

Another important question 
is whether charities, with 
their tradition of volantary 
effort, will be adequately 
rewarded under public sector 
contracts. Warnings from a 
number of local authorities 
last monO, that their commit- 
nity care budgets had run low 
only two-thirds of the way 
through the financial year, 
have revived charity manag- 
ers’ concerns in this area. 

A survey by the National 
Council for Voluntary Organi- 
sations last month showed 
that charities received £672m 
in local authority grants and 
fees in 1993-94, an increase of 
£84m on the previous year. 


The growth reflects the effects 
of increased contracting with 
the voluntary sector aa & 
result of last year’s commu- 
nity care reforms. 

The NCVO says, however. 

that; Jq spi te of the additional 
£84m, charities are still sub- 
sidising community care ser- 
vices; and that the . 1993-94 T 
increase in spending on care * ' 
s e rvices was accompanied by a 
£7m reduction in local author- 

ftyfundtog for the voluntary 
sector to other sectors such as 
education. 

Charity managers are partic- 
ularly worried by suggestions 
in the surrey that same coun- 
cils might expect them to sub- 
sidise community care ser- 
vices, although loral authority 
leaders deny that there is any 
concerted policy of frying to 
do this. A total of 38 per cent 
of councils taking part said 
the willingness of voluntary 
organisations to subsidise con- 
tract prices with income from 
other sources, such as dona- 
tions, would be a very Impor- 
tant factor in encouraging 
them to use charities rather 
than private-sector providers; 
a further 42 per cent regarded 
it as fairly important 


mm 


. 


• -■ 1 f 






. .. 


■ • »•** 


is considered likely far at least 
two years. 

In particular, the group Is 
seeking deregulation of 
investment powers. Currently, 
charity trustees cannot 
lawfully designate the 
management of their 
investments to a professional 
manager or appoint a nominee 
company unless their own 
trust deal specifically permits 
them to do so. 

Also, as Ear as the scope for 
investment discretion Is 
concerned, the task force had 
recommended that the concept 
of “wider" and “narrower” 
investments be scrapped 
altogether. Privately, this 
suggestion has been rejected 
by government ministers, but 
the group is still urging that 
the category for wider 
investments be broadened to 
cover 90 per cent of the fimds 
under management 

The task force is also urging 
that the choice of permitted 
investments should be 
considerably broadened. 


this has led to commercial 
retailers or facilities manage- 
ment companies taking over 
shop activities that were once 
left to volunteers. Last year’s 
community care reforms, 
designed to shift funding from 
residential care to support in 
people’s own homes, are turn- 
ing meals on wheels and home 
help services into more busi- 
nesslike activities which, in 
some areas, are attracting the 
interest of the private sector. 

In the face of this more com- 
petitive market, the WRVS is 
restructuring and modernising 
under Mr Gerry Burton, a 
chartered accountant brought 
in as the charity’s first 
full-time chief executive. He 
inherited an organisation 
which, among a series of other 
activities, runs 1*100 shops in 
800 hospitals and delivers 15m 
meals on wheels a year. 

"Our hospital shops turn 
over £21m, and we donate £3m 
a year back to the hospitals,” 
be says. “But to the current 
climate of income gener ati on, 
hospital managers are asking 
if a better r et urn on shops Is 
possible, so we are responding 
positively by improving shop 
design and product mix.” 

It is a similar story with 
meals on wheels. Some local 
authorities have entered into 
contracts with frozen food 
companies to deliver meals on 
a weekly, rather than dally, 
basis. Mr Barton has reacted 
by moving the WRVS and its 
balk-buying power into the 
frozen food market - it won 
the National Training Award 
for a food hygiene training 
course for 66,000 volunteers. 
But, the WRVS says, it can 
offer a more humane sendee 
than commercial competitors 
by arranging for its volunteers 
to maintain contact with 
housebound people between 
weekly food deHverfes. 

Hr Barton says he Is not 


FT 


. i'-< . . 




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THE UNIT TRUST 


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FINANCIAL TIMES THURSDAY DECEMBER! 5 19S* 



Profile: Stuart Etherington, the new director of the NCVO 

Aiming for a sectoral ‘CBI’ 


Influential figures in the 
voluntary sector feel that it 
has been badly left behind in 
the current public and political 
debate over the future of wel- 
fare services. 

That may be about to 
change. Mr Stuart Etherington 
became director of the 
National Council for Voluntary 
Organisations, the sector's 
umbrella body, last month 
with a mandate to clarify its 
role and raise its profile. 

Although Mr Etherington 
comes from a charity back- 
ground, his appointment to one 
of the sector's top posts repre- 
sents a break with tradition - 
the NCVO employed head- 
hunters and considered candi- 
dates with a wide variety of 

experience before selecting 
him. This reflected a recogni- 
tion by its council of the need 
for clear leadership during the 
watershed that charities are 
facing. 

“It is not good enough for 
the voluntary sector to have its 
position formed by other peo- 
ple's agendas, whether of the 
left or the right,” says Mr Eth- 
erington. "The sector must 
speak Tor itself.” 

He has a vision of turning 
the NCVO - which, in spite of 
a long and successful tradition 
of research and innovation, 
carries minimal political influ- 
ence - into a voluntary sector 
CBL 

Doubters say that, since not 
all the NCVO's member chari- 
ties share common interests, it 
would be difficult for a central 
organisation to speak with a 
strong, clear voice on sensitive 
issues. But neither do all CBI 
affiliates share common inter- 
ests; and there is, the new 
director points out, a greater 
spirit of co-operation in the 
voluntary sector, even among 
“competitor” charities, than in 
industry. 

Mr Etherington, a qualified 
social worker recruited from 
the Royal National Institute 
for Deaf People (ENID), where 
he had been chief executive for 
three years, is part of a new 
managerial tradition that is 
gradually developing in the 
voluntary sector. A London 
Business School MBA, he is 
proud of the businesslike inno- 
vations - like running cus- 
tomer and staff satisfaction 
surveys - that he introduced 



Stuart EUtarington: *the sector must speak for Hself 


at the RNTD. 

The charity flourished under 
his leadership, with staff dou- 
bling to 850 in three years. 
Growth was fuelled by the fact 
that the RNID has made a 
clear choice in favour of deliv- 
ering services under contract 
to public bodies - probably the 
most sensitive single issue to 
face the voluntary sector in 
recent years. 

Etherington acknowledges 
that the question of whether 
charities should put their ener- 
gies into providing contract 
services to health and local 
authorities, and if so on what 
terms, raises difficult ques- 
tions. 

“Do you use charitable funds 
to subsidise market entry? At a 
time when there is pressure on 
public finance, are contracts 
likely to be set at levels which 
are adequate enough to enable 
charities to fully recover their 
overheads? To what extent can 
charities continue to innovate 
with new forms of services if 
they are bound by contracts? 
“All these are issues to which 
we must give attention. But 


the biggest potential downside 
is the danger that charities wiD 
lose legacy income, from which 
many meat their core costs, if 
benefactors believe they are 
simply agencies delivering 
public services.” 

Etherington had practical 
experience of this difficulty 
while at the RNID. Some peo- 
ple told hnn “this place is run 
just like a business” - -and 
used this as an argument for 
refusing to donate money 
rather than as a tribute to the 
charity's efficiency. 

If tiie government wants 
charities to take on public ser- 
vices, he says, it must ensure 
that contract fees are suffi- 
ciently high to meet overhead 
costs. “But at the moment it is 
going the other way - residen- 
tial home fees, for example, are 
being squeezed down.” 

The NCVO is setting up a 
high-level commission on the 
future of the voluntary sector, 
intended to stimulate new 
thinking about its rale and pri- 
orities. In the shorter term, Mr 
Etherington intends to con- 
vene a panel of charity chief 


executives in the spring to 
thrash out a set of im m edia te 
strategic priorities. “There is 
not enough strategic thmlring 
It is difficult because the vol- 
untary sector is so fragmented, 
but we must try to get better 
at establishing our priorities." 

His own include “putting 
quality and all the things that 
relate to it high on the agenda" 

- his efforts at the RNID to 
ensure that both its . staff and 
those who use its services 
shared common objectives is 
an illustration of this. 

“I detect a growing public 
anxiety about charity effi- 
ciency” he says. “Still tighter 
regulation would not be the 
answer - that would push, 
smaller charities over the edge 

- so the solution must be 
through self-regulation and the 
setting of quality standards. 

“But we must remember that 
tiie sector has real strengths. 
The private sector is curraotly 
much occupied with issues like 
corporate governance, the 
social responsibility of busi- 
ness and the management of 
knowledge workers - these are 
all subjects where the volun- 
tary sector has something to 
teach others.” 

At last month’s Charities Aid 
Foundation conference Mr Eth- 
erington, in Ins first big speech 
as NCVO director, called for 
the voluntary sector - in spite 
of its legendary diversity - to 
identify common ground. 

“That common ground is 
surely our purpose, and that 
purpose has an almost lyrical 
simplicity: we are driven by 
our stakeholders, not share- 
holders. We are motivated not 
by parly pdtttics but by our 
beneficiaries. We are value 
driven, not money driven.” 

The language will have reas- 
sured voluntary sector tradi- 
tionalists, who fear that the 
arrival of Mr Etherington, with 
Ms business school Ideas, 
could lead to a further blurring 
of the edges between the pub- 
lic, private and voluntary sec- 
tors. He now feces the task of 
convincing 1 those traditional- 
ists that, white the voluntary 
sector may be value-driven 
rather than money driven, 
there is no virtue in amateur- 
ism for its own sake. It is not a 
business, but success still 
depends on efficiency, probity 
and high quality services! 



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The CAFs new headq uart ers 
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The £5 25m protect Is be^g 
funded by liberty Property ' r 

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Rouse Kant work started TSs 
month cm the bunding, wb&fj 
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two-thirds of the buBc&tgK-Tne 
extra space wilt sflow tHStAF 
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untU needed. . . i.rT v 


Many charity leaders fear the effects of the National Lottery 

Irish precedent casts a 


r - _ 



The National Lottery 
launched last month anrid crit- 
icism that charities are 
unlikely to receive any alloca- 
tion of the proceeds until late 


Leaders of many charities, 
however, remain more worried 
about the lottery's possible 
effect on the voluntary sector's 
overall long-term finances 
than delays In the d istr i buti on 
of fluids. 

Charities will gain an esti- 
mated £ioom share of the first 
year’s lottery proceeds; Mr 
David Sieff, c hairma n of the 
National Lottery Charities 
Board, has pointed out that a 
distribution of fids size would 
make the board bigger than 
any existing UK grant-making 
foundation. Yet the voluntary 
sector is not rejoicing: 

There are fears that many 
people will come to regard lot- 
tery tickets as their standard 
form of charitable support, 
and will be less inclined to 
respond to other ftmdrafeing 
appeals - even though chari- 
ties win receive only a small 


The Maflonal Lottery revenue (a (fritted rougMy as Mows: prize money (50 
per cent), beneficiaries (28), tec (12), rente r s ' commission (5). operating 
costs and profit (5). Qraups of beneficiaries riesgrated by the government to 
receive eqiad shares of funds arse the arts councils sxi sports councte of 
England, Scotland, Wales and Northern Ireland, the National Lottery Charffies 
Board, the National Heritage Memorial Find, and the MSentara Fund. 


share of total lottery revenue. 
To compensate for this, many 
voluntary-sector leaders 
beBeve charities should get a 
greater proportion of the over- 
all lottery distribution. 

Sncb fattrp were intensi- 
fied by the reduction in pods 
betting duty In last month’s 
Budget. This will produce a 
gain for sport and the arts - 
which will both share in the 
lottery - of an estimated 
£ 100 m a year. But there was 
no response in the Budget to 
the voluntary sector's lobby- 
ing for improved tax reliefs to 
encourage charitable giving,' 
Or help with the annual £330m 
bill for unrecoverable VAT 
paid by charities. 

The Irish voluntary sector 
bad similar 'concerns to those 
being expressed In the US 


when a state lottery was intro- 
duced In 1987. Research on the 
lottery’s impact during Its 
seven years of operation in the 
republic remains open to vary- 

Jfig Int p rpr ^i iHfifw, 

An assessment commis- 
sioned by the Irish- national 
lottery organisers in 1992 con- 
cluded that, while the lottery’s 
absence would increase the 
potential ftmdr aM ng base for 
voluntary organisations, it 
was not clear mat their actual 
income would go up once the 
loss of lottery disbursements 
was taken into account How- 
ever, a survey of- a sample of 
Irish charities last year found 
that 87 per cent of those that 
had been affected by the tot- 
tery regarded its impact as 



Whatever effect the UK's lot- 


tery subsequently has on 
ities’ own fundraising aftafe: 
there will be no dbartafcjf 
applications for a stare or foe 
proceeds. 

The National Lottery Chari- 
ties Board will handle 
requests from both 
charities and other 
tfofis set up for rlufr tfa frfc - 
benevolent and phUani&T«e£i: 
cam **- This means that about 
700,000 organisations*; frton 
national charities. . to sawE 
local groups, could all 
for funds. The board is 
tag an estimates of_150,GDtt- 
25QJBQ0 agpUcatious & yeter.V^ . 

Separate committees of foe: 
board will be set, njr. for' 
England, Scotland, Wales. - 
Northern Ireland, - with 
allocation of Arab lgaged an - 
population weighted^ I: take 
account of. levoixV of 
deprivation. Consultations are 
under way to csfehtofr local 
advisory panels, which wS} fo* 
respond to variation^ between n 
tiie- English regions, - and 
devise methods of funding 
UK-wide organisations. 



Tw o new 
charity funds. 

All wrapped up with 
Foreign & Colonial 


perfor 


li *■ 


r 


* '*=2:. 




;; V; r r 

r > \ 




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We do our best work for 
charity by wearing suits and 

sitting down all day 


M 


Foreign & Colonial, investment specialists to 
the charities sector, introduce two new funds 
designed specifically For smaller charities: 

The Common Fund for Income and The 
Common Fund for Growth. Each offers the 
following benefits: 

• Greater investment flexibility 

• Minimum investment £2,500 

• Quarterly dividends paid free of tax* 

• Simple ad min Ur ration 

Both are pooled funds and are managed by 
the same successful investment team that 
already manages £900 million on behalf of 
charities. 

Foreign & Colonial’s chancy performance 
record is excellent. Over the past three years, we 
have achieved an annualised return 2 % ahead of 
the industry benchmark, the WM Company 
Universe average charitv fund return. * 


It is this performance, together with our 
services and understanding of the charities 
sector, that makes us one of the country’s 
foremost charity fund managers. 

To find out more about how the Foreign & 
Colonial Common Investment Funds could give 
your charity a welcome boost, please contact 
Nicola Teman on the telephone number below. 

* B«ctl ament Km IcgplatKa 

* CaDipurbon: Facefefe & CofcmJ flnritiei Fends* ucc ij pe munsc The WM 
OampsiT Unittnc of VwoanmninoA Channel fex'ptoporcy). Avon? total 
perami do Jltr December 


Our methods of helping charities may differ from the exhaustive (and exhausting) efforts of 
the people above, but our objective remains die same; to increase the funds available for 

charitable causes. 

Thanks to the marathon efforts of our specialist charity team (albeit sitting at their desks) we 
are one of the largest investors of charity money, with £1.4 billion under management. In 
feet, the trustees of ninety-five firnds, large and small, rely on our experienoTaml expertise 
to achieve their particular investment objectives. We tailor their portfolios individually to get 
the correct balance of long term capital growth and a rising stream of income. 

■ ■ 

For further information on how we can help your charity 

please contact Rufus Warner on 071-256 7500. • 

t 

You will be better off with us in the long run. 


0171-628 8000 


IXH 

HffiB 







C o I o n i 1 


CHARITIES 


Foreign & Colonial Mu^gemenr Led, Prjmrax: Sam London KZA 2NY. 

Ijsucd *nd ipinvicd by Fafdgn & Colonial Ma m fl c mcnf Lad. a member of IMftCL Pag pcifam jiicg is no guide to die Future. 

The wine of iwemoo and income derived from litem eon go down » well is up and, on wlc. hhgtoo may noc gpt back die (nil Mount revested. 



MORGAN GRENFELL 
ASSET MANAGEMENT 


* 


by Morgan <W«H taWMWM Mrogcnrcnt LMud, , M«pn Gwfcll A«. M mm 

M ft*, Grau. Cmku EC 2 M INB. <-ampmy. 

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FINANCIAL TIMES THURSDAY DECEMBER Z 5 1 994 



17 


MANAGEMENT: MARKETING AND ADVERTISING 


A . shake-129 in the way 
television and press adver- 
tising is bought and sold 
across the US is likely fol- 
lowing last week’s announcement 
Oat Saatdn .& .Saatcht's UK media- 
buying company Zenith is (Tossing 
the Atlantic. 

Prom January, Zenith w31 be try- 
ing to persuade US advertisers to 
act more like Europeans - consoli- 
dating their vast advertising bud- 
gets and placing responsibility for 
the purchasing of airtime and press 
space with madia specialists, away 
from the “creative” side of the 
advertising business. 

Zenith, already well established 
across Europe, will instantly 
become the US's single biggest 
media buyer, with billings of about 
$2bn (£L2bn). This will be achieved 
by bringing together the media-buy- 
ing functions of the Saatchi group’s 
three US advertising networks - 
Saatchi & Saatcln Advertising, 
Bates USA and Campbell Iflthun 
Esty. . 

Further ahead. Zenith's intention 
is to attract third-party custom, 
from outside the three networks, as 
it has done, for example, in the UK 
- where more than half its business 
comes from non-Saatchi group 
advertising agency dients. 

UntO now the US market has 
largely operated along traditional 
“foil-service’* agency lines. 

This has been partly because of 
the fragmentary nature of the US 
media - it is easier to function as a 
specialist buyer when there is a 
single national market, dominated 
by a handful of media owners, as is 
the case in most European coun- 
tries. 

But John Perriss, Zenith chair- 
man, argues that it is the complex- 
ity of the US scene which justifies 
the media specialist's existence. The 
primary advantage to advertisers of 


Diane Summers on the advantages 
entralised media buying in a 
fragmented US market 

Clout of a 
specialist 






Specialist media buyers 

Share of advertising expenditure 


i 


centralised buying with one special- 
ist agency is the price reduction 
obtained by mairing purchases 

from media owners. 

Perriss argues that his business is 
about more than just crude pricing. 
“It is about the complex new 
environment The average home in 
the OS now has 38 TV channels." 

Zenith’s function will be to advise 
advertisers on the optimum hut of 
channels to deliver the required 
audience at the lowest cost, and to 
guide than on sew media opportu- 
nities, as well as providing clout in 
price negotiations with network 
owners, says Perriss. 

Zenith is emphasising its invest- 
ment in state-of-the-art information 
technology: all 250 employees in its 
eight, offices wQl be link ed by PCs 
capable of working in multimedia 
formats, so that advertisements and 
programme clips can be viewed 
white negotiations with media own- 
ers are taking place. 

The Saatchi group has not been 
the only organisation to invest in 
specialist media buying in the US. 
Last month, for example, the US 


advertising group Interpublic 
announced it was buying Western 
International Media, the country’s 
largest independent buyer, although 
it said it had no plans to combine 
the media operations of Its constitu- 
ent agencies, which include 
McCann-Ertekson, Unfeia and Lowe. 
Other individual agencies have 
been establishing arm's-length 
media outfits. 

C lients have also started 
“unbundling" buying 

from the creative side of 
their advertising purchasing, for 
which two or three agencies could 
be used. Indeed, it is movement 
from clients which has finally per- 
suaded the Saatchi group to press 
ahead with Zenith's entry into the 
US: Procter & Gamble took its net- 
work TV baying away from the US 
Saatchi agency, while Bates lost TV 
buying for Mars - in both cases the 
work went to agency DMB&B. 

The move to specialist media buy- 
ing in the US will undoubtedly be 
good for clients, says Neil Blackley, 
media analyst with Goldman Sachs. 



But be wonders whether it will turn 
out to be the “start of a slippery 
slope" for the advertising agencies 
and their investors. The moment 
that “unbundling" begins, agency 
remuneration comes under intense 
scrutiny and margins are eroded. 

If an advertiser is paying the tra- 
ditional 15 per cent commission to 
an agency, and can suddenly get 
media buying for 3-4 per cent as the 
market becomes more competitive, 
that leaves the "creative” side of 
the job costing n per cent Blackley 
says the advertiser may decide that 
looks too steep, and commission 
may be cut to say 8 per cent 

This erosion of margins and can- 
mbalisation of existing business has 


been the pattern in Europe. 

The real advantage to Zenith will 
come when it starts to pull in third- 
party business and win new clients 
among those advertisers who are In 
the process of media consolidation. 
Blackley says: "The first person 
into the market - as we've seen 
with Murdoch and his price cutting 
on newspapers in the UK - takes 
the major benefit If they can dem- 
onstrate they're getting a real 
advantage for their clients, then 
they’re going to start winning more 
than their fair shore of consolida- 
tion business and their third-party 
hillings will go up. It's bound to 
create a response from other agen- 
cies." 


Cashing in the Kwanzaa way 


VM LOcKWa VcSL A 
gEUEF S<£ "fm THAT 

Doesn't have a 

iSEASCW Cf- Cm W1UL 



A new breed of December 
shopper is bitting shops in 
the US, searching for gifts 
and cards for Kwanzaa, as opposed 
to Christmas or Bairnkkah. 

The popularity of Kwanzaa, cre- 
ated in 1966 by pan-African studies 
professor Bon Karenga as a black 
American alternative to Christinas, 
has snowballed in recent years. 
Kwanzaa, which means “harvest" 
in Swahili, is a seven-day celebra- 
tion that includes Hasting, fondly 
dinners, candle-lighting ceremonies 
and group discussion on topics 
such as unity and co-operative eco- 
nomies. About 5m Americans now 
celebrate the holiday, which begins 
on December 26. Retailers have 
started to cater specifically 
Kwanzaa shoppers. 


Book stores do a brisk business 
In Kwanzaa publications. Because 
the holiday is relatively new, many 
participants are still unsure of the 
traditions, so books explaining 
Kwanzaa customs are popular. 

Kwanzaa cards are also In 
demand. The greeting card maker 
Hallmark, for instance, retails 16 
versions of cards for the holiday. 
“It’s a growing market, especially 
in urban centres,” says Rashena 
Lindsay, marketing coordinator 
for the group. “We may offer a new 
line of Kwanzaa gift bags and 
w ra p p in g paper next year * 

A number of stores sell Kwanzaa 
decorations and ceremonial items, 
such as seven-place candelabras - 
participants light one candle each 
day. Flower shops, wbicb once car- 


ried decorative corn husks and 
gourds only for the American 
Thanksgiving Day holiday, now 
offer them in December. 

But Kwanzaa gifts are tricky to 
pitch. The holiday is supposed to 
reject the commercialism of Christ- 
mas, and Kwanzaa presents were 
meant to be simple, homespun 
Hems such as candles. However, 
stores say that an increasing num- 
ber of shoppers are looking for 
Kwanzaa presents. The chain store 
Learningsuuth, for instance, says 
its African stone game is a best- 
seller during the holidays. “We get 
quite a few people looking for 
Kwanzaa presents,” says EDie Hen- 
drte, who rims the VUrmya Folk 
Art store fn Cambridge, Massachu- 
setts. "They buy things like bas- 


kets, jewellery, blankets, anything 
that comes from Africa.” 

The success of Kwanzaa is an 
enigma to some, who thought a hol- 
iday promoting group discussions 
on abstract subjects would not 
become popular. But many black 
Americans are looking to African 
themes to cultivate a sense of pride 
in their heritage. 

And Kwanzaa has become more 
flexible with the years. Some 
Americans have started to bend the 
strict gift-giving rules. 

The result may not be the anti- 
commercial alternative to Christ- 
mas that the holiday’s founders 
had in mind, but for the retail mar- 
ket it is a lucrative bonus. 

Victoria Griffith 


Publishing to 
a prescription 

Virginia Matthews reports on a 
new chapter in brand loyalty 


E arly next year. Boots The 
Chemist will become Boots 
the publisher when the 
Nottingham -based cold-cream to 
com plaster giant dips into the 
glamorous world of women’s 
magazine publishing. 

The Boots Magazine, which 
begins life as a quarterly, win 
"aim to apply Boots brand values 
to a publication, rather than to a 
product," says Michael Potter, 
managing director of Redwood 
Publishing, drafted in by Boots to 
handle the new venture. 

While Boots has no direct 
publishing experience, it already 
has a potential readership in the 
27m customers who use the store 
each month - the core of them 

women aged between 23 and 40. 

According to tite company's own 
research, a large proportion are 
looking for advice and information 
on anything from glossier hair to 
staving off heart disease. 

White the new title will 
inevitably contain information un 
and advertising for Roots 
products, it is not intended simply 
to be a marketing platform for the 
company, but a readable glossy 
magazine - "a genuine health and 
beauty title", says the company. 

The magazine will nut only 
carry advertising for rivals, 
among them cosmetics anil 
pharmaceuticals companies, but it 
will also have a cover j>rice of JWp. 

Although distribution or the 
250,000 print run will initially lie 
restricted to SOU of the chain's 
bigger branches, the intention is 
that it could one day earn a place 
on newsstands. 

A decade ago, so-called 
customer magazines were thinly 
disguised company puffshects. 
about as welcome to credit card or 
bank customers as the bills they 
invariably accompanied. 

But today, as everyone from 
supermarkets to car makers seek 
to build customer loyalty by 
adding publishing to their 
portfolios, the quality of the 
magazines continues to improve. 

Last month, J. Sainsbury’s 
monthly title, The Magazine, with 
a cover price of 95p for more than 
200 pages of good eating and 
aspiration al lifestyles, earned the 
Magazine of the Year award from 
Media Week magazine, against 
stiff competition from more 


traditional publishers. 

This glussy title, whose previous 
contributors lave included 
Michael Palin anil Beryl 
Cambridge, las in IS months 
achieved a £15,UCV) circulation. 

making it the UK's 
seventh-biggest selling consumer 
magazine. 

While distribution thus far 
remains limited to Sainsburv'* 
own retail outlets, few industry 
observers would dismiss it os just 
another company magazine. 

"One of our aims in bunching 
our magazine IS months ago was 
to enhance the company's image 
with its customers, and this has 
certainly been achieved." says the 
company. 

Accurding tu the Association of 
Publishing Agencies, which 
represents contract publishers 
such as Redwood I which has 
contracts with the A A. Mjrks A 
Spencer and American Express*, 
there are now .it least liu 
customer magazines m Britain, 
ranging from airlines and 
department stores to computer 
firms aiui buildup: societies They 
are pnnL'irilv communications 
vehicles. 

Barclay card, for instance, will 
launch its first customer magazine 
at the end uf .laniurv. The title, 
yet to be named, will be sent fnv 
in all card customers, making it 
one nf Britain's largest customer 
magazines with a circulation of 
3m. 

The mag: urine will inevitably he 
an advertising platform for the 
card giant, as well as for 
third-party advertisers keen to 
establish a presence with 
Barelaycnrd's affluent audience. 

The real v.Utie uf such a 
customer magazine, says Neil 
O'Brien, whose company. The 
Publishing Team, also produces 
Open Door (the Alliance and 
Leicester magazine!, is as a 
loyalty builder. 

"The magazine won’t make a fat 
profit for BarcluycanL and all 
the costs will come out of 
the marketing budget," he 
says. 

"But if it generates loyalty to 
Barelaycard, and acts ;is a genuine 
communications forum between 
the company and its customers, 
then it will he a wise invest- 
ment." 


COMPANY NOTICES 


Glover International Sales, Inc. 

a LLS- Viipin islands corporanorv, is available to arrange leases of 
U-S- maniilhcnircd wklcbody aircraft cn be used pr o J omm antly 
ixicsidc the U.S. If ip centred, please contact the company ac 

Glover Ihfenatioml Saks, Inc. 
c Jo CITCO Sl Thomas Inc 
5 Kronprmdscns Gade 
Charlotte Amalie* St. Thomas 
U JS. Virgin Islands 


Gramm ercy International Sales, Inc. 

a U.S. Virgin blonds corporation, b available to arrange leases of 
US. manufactured witfcbody aircraft to be used predominantly 
outside the U£L - If interested, please concoct the company an 

Grammercy International Sales, Inc. 
c fa CTTOO Sc. Thomas Inc. 

5 fCronprindsetis Gdc 
Charlotte Amalie, Sc. Thomas 
UJS. Virgin Inlands 


Lafayette International Sales, Inc. 

a U.S. Virgin Islands corporation, is available ro arrange leases of 
UJS. manufac cured wulcbody aircraft to be used predominantly 
outside the UJS. If interested, please contact the company ac 


Inc. 


c/a CITCO St. Thomas Inc. 

5 Krunprindscns Gade 
Charlotte Amalie, St Thomas 
UJS. Virgin Islands 


Oriole International Sales, Inc. 

a U.S. Virgin Islands corporation, is available to arrange leases of 
US. manufactured widebody nireraft to be used predominantly 
outside the US- If interested, please contact the company ac 

Oriole International Sales, Inc. 
c/o CITCO Sc. Thomas Inc. ’ 

5 Kronprindsens Gade 
Charlotte Amalie, Sc. Thomas 
US. Virgin Islands 


Shannon International Sales, Inc. 

a U.S. Virgin Islands corporation, b available to anangu leases of 
US. manufactured widebody aircraft to be used predcminnnriy 
outside the US. If interested, please contact the company at 

Shannon International Sales, Inc. 

'c/o CITCO Sr. Thomas Inc. 

5 Krooprindsens Cade 
Charlotte Amnlic, Sl Thomas 
US. Vugin'Islands 


Pelham International Sales, Inc. 

a US. Virgin Islands corporation, is Available to Arrange leases of 
US. manufactured widebody aircraft to he used predominantly, 
outside the US. If interested, plcrtsc contact the company an 

P elham International Sales, Ino- 

c/o CITCO Sl Thomas Inc. 

5 KronprindsenS Gade 
Chnrlutcc Amalie, Sl Thomas 
US. Virgin Islands 


To Advertise Your Legal Notices 

Please contact Tina VcGorman on 
r44 71 S73 4842 Fax: 4 44 71 873 3064 


Of 0* 




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Powerline 



NOTICES 


IM TUB HIGH rntlttT OP nisnrE 




KNllfS MATTER OF 
USX RroULGBOUFUMZTGO 
AN D 

IN THE MATTER OF 
THE COMPANIES ACT 1*5 

NOTICE IS HEREBY GIVEN tel Ae (Mr 
oflhoUCbidafliBiittianeen Drana) 
<»cd 16 November 2994 ' ‘ ' 


Qjnod Qwnpo mj by £7 t SQ4JDOO wi xrgbiesod 


the 


■of I 

1994. 


DATED Mi 280 diy of November 1994, 


EC4R 9SA 
te£llVL0/l898 


AD AdmdaemBnt bookings are 
axcpJcd subject fo ovr curraar Terms 
and Q onriitinnft, copiea of wfaiefa are 
available by writing to The 


Prxxfaictioc Director, The Ptmncai 
Times, One Southwark Bridge; 
London SEIWL 
TeL +44 71 873 3000 
Rue +4471 873 3064 



^rriF i 

INDE 



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ROUND 

TRIP 


; X £ C U " 1 0 H 2 N i Y 


THE 


DAVID 

T HOMA S 

PRIZE 


David Thomas was a Financial Times journalist killed on assignment in 
Kuwait in April 1991. Before joining the FT he had worked for, among 
others, the Trades Union Congress. 

His life was characterised by original and radical thinking coupled 
with a search for new subjects and orthodoxies to challenge. 

In his memory a prize has been established to provide an annual study/ 
travel grant to enable the recipient to take a career break to explore a 
theme in the fields of industrial policy, third world development or the 
environment. 

The theme for the 1995 prize, worth not less than £3,000, is: 

DOES FREE TRADE THREATEN THE ENVIRONMENT? 


Applicants, aged under 35, of any nationality, should submit up to l OCX) 
words in English on this subject, together with a brief c.v. and a proposal 
outlining how the award would be used to explore this theme further. 

The award winner will be required to write a 1500 to 2000 word 
essay at the end of the study period. The essay will be considered for 
publication in the FT. 

CLOSING DATE JANUARY 6 1995 


Applications to: 

Robin Pauley, Managing Editor 
The Financial Times (L) 
Number One Southwark Bridge 
London SE1 9HL 


4 


I 


l 

























FINANCIAL TIMES THURSDAY DECEMBER (S <*» 


TECHNOLOGY 


Michael Undemann looks at a transport system 
that will be propelled by magnetic attraction 

Whispers from 


Croats' ab cBort through Trans rapid magnetic fewHatfon raBW 


V - < 


V.V 


■ ■ Ikl ■ 

.* f. ■ 


.♦ ■ ■, 1. ■ ■ V" 

■ * ■ ■ . 

■ «« * « ■ 


the runway 


F or the past 10 years a 90- 
tonne machine has been 
tearing around an elevated 
concrete track in 
north-west Germany, reaching 
speeds of up to 450kph but making 
none or the noise made by aircraft 
travelling at that speed. It is the 
Transrapid high-speed train, also 
known as the whispering arrow. 

Now. after years of debate, the 
German government has approved 
plans to build a 284km track 
between Berlin and Hamburg, Ger- 
many's two biggest cities, in a move 

that is expected to take passengers 
away from those airlin es flying the 
route. 

The Transrapid will be the 
world's first long-distance transport 
system propelled by magnetic levi- 
tation. a technology that Thyssen, 
the German conglomerate, has been 
developing. Instead of conventional 
engines, the Transrapid is propelled 
by magnetic fields. It has no wheels 
and rather than run on conven- 
tional railway tracks it clutches a 
concrete runway rather like the 
runner on a cur tain rail 
The technology dates from the 
1920s when Hermann Kemper, an 
electronic engineer who ran a meal 
packing business near the present 


32km test site in Emsland, began 
poring over papers about the theory 
of magnetic levitation. 

Kemper developed a model in his 
cellar where objects were fired 
along runways by passing mains 
electricity through electromagnets 
mounted on the objects and on the 
runway. 

In 1934 he registered his patents 
and tried unsuccessfully to per- 
suade Siemens, the electronics com- 
pany, to take up his ideas. 

What was missing, according to 
Hans Georg Raschbichler, an engi- 
neer from Thyssen HenschsL the 
locomotive builder, was the means 
to produce and transport large 
amounts of electricity at split-sec- 
ond intervals. “They didn't have the 
sort of high-tech electronics which 
exist today," he says in his office in 
Munich. 

Now that large amounts of elec- 
tricity can he passed around a grid 
and engineers nan regulate the 
lQmm gap between the runway and 
the vehicle, two key bits of technol- 
ogy are available which mean that 
Kemper's model can become a real 
ity. 

The Transrapid operates on differ- 
ent principles from the maglev tech- 
nology used elsewhere in the world. 


Conventional magnetic levitation 
works by using the repellent force 
of superconductive magnets of 
opposite polarities. In the Trans- 
rapid, propulsion comes from the 
force of magnetic attraction. 

By passing electrical current 
through a stator pack, the station- 
ary part of an electric motor which 
is laid out on the underside of a 
concrete runway, a wandering mag- 
netic field is created. This magnetic 
field - called wandering because it 
moves down the runway - is 
attracted or excited by levitation 
magnets mounted an the underside 
of the Transrapid, so propelling the 
vehicle forward. 


- 



♦ 4 ■ r. r 


Direction of train 


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-u«- .-I * — 


Magnetic 


wandering 

dong 

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Magnetic 
AM oft 


T he Transrapid picks up speed 
proportional to the increase 
in electrical current; the 
opposite happens when the fre- 
quency is reduced. If there is a 
power failure, batteries on board 
the Transrapid are used to power 
the eddy current braking system 
and to guide the vehicle to an emer- 
gency stop on the runway. 

The vehicle glides about 10mm 
above the concrete nmway, a gap 
which is measured by a computer- 
ised sensor, if it becomes smaller, 
the computer orders more electric- 


ity, less If it becomes bigger. The 
process is repeated thousands of 
times, keeping the gap constant and 
e nabling the magnet to pull the 
Transrapid. 

Raschbichler heads a team of 
engineers at Thyssen Henschel 
which ran the Transrapid 07, the 
seventh prototype, op to a maxi- 
mum speed of 450 kph last year. 
They are now putting it through 
500,000km of tests before it can be 
licensed to operate. 

Tests have shown that the vehicle 
uses less energy and is quieter than 
the French TGV (Train & Grande 
Vitesse) or the German Intercity 
Express (ICE), the two high-speed 
trains which are its main competi- 
tors. Stand 25m away from a Trans- 
rapid passing at SOOkph, and the 
maximum noise level recorded is 87 
decibels - less than a freight train 
travelling at lOOkmh. Tests by inde- 
pendent en gineer s recorded about 
100 decibels for a TGV travelling at 
the same speed. 


Because the Transrapid glides 
above a concrete runway it does not 
need to overcome the resistance 
between track and wheels which 
traditional railway technology still 
has to grapple with. That means, 
according to Thyssen Henschel, 
that the Transrapid uses around 30 
per cent less energy than a 
high-speed train travelling at the 
same speed. 

The government hopes that by 
2004 a runway - similar to the pres- 
ent test track - will be built and 
that more than 14m passengers a 
year will be hurtling between Ger- 
many's two biggest cities. A journey 
that now takes more than three 
hours by train will take just 55 min- 
utes by Transrapid. 

The DM5.6hn (£&3bn) needed to 
finance the runway and infrastruc- 
ture win be put up by the federal 
government, and Thyssen has cre- 
ated a company together with Luft- 
hansa, the national airline, and 
Deutsche Bahn, the state railway, 


S ea transport gave way decades 
ago to roads, rail and air as 
the fastest way to move goods 
around the world. However, a 
consortium of Japanese ship 
builders is developing a high-speed 
cargo ship that may bring sea 
transport back into fashi on. 

The seven-company consortium. 
Technological Research Association 
of Techno-Superliner, has been 
working on the ship since 1989. The 
goal is to make the transport of 
time-sensitive goods by sea a 
serious alternative to road, 
rail and air. 

Hie techno-superliner, with a 
cruising range of about 930km. will 
carry 1,000 tonnes of cargo over, 
rather than through, the waves at 
speeds of at least 50 knots. This 
compares with 35.5 knots achieved 
in a trial run earlier this month by 
a car ferry, and the previous 30J5 


Cargo vessels take to the air 

A group of ship-builders in Japan is focusing on speed, writes Robert Patton 


knots record held by a Finnish 
vesseL 

The developers are testing 
designs that lift the hull out of the 
water, reducing water resistance. 
Propulsion and steering systems 
will use movable water jets since 
there will be no conventional hull 
to support propeller and rudder. 

The consortium, which includes 
Mitsubishi, Kawasaki and 
Sumitomo, is testing two designs 
that lift the hull: the hydrofoil and 
the air cushion. The hydrofoil uses 
the same principle that keeps 
conventional aircraft aloft "Wings” 
beneath the water’s surface produce 


lift which keeps most of the craft 
out of the water and free of its 
resistance to motion. 

The air cushion type uses large 
Cans to create a "cushion” of air 
under the ship. The hull shape 
includes skirts that surround the 
air cushion and contain it The 
result is that the craft skims over 
the air cushion fastpari of ploughing 
through the water like conventional 
cargo ships. 

Neither of the designs is new, but 
they have not been used 
successfully to build vessels as 
large and as stable as the 
techno-superliner will have to be. 


Experimental vessels of both 
types have been built and have 
been in sea trials since July. The 
Hayate (Japanese for "swift wind") 
is the hydrofoil version. A one-sixth 
size scale version has reached 
speeds of 41 kph in tests. But the 
most advanced model is the air 
cushion ship Ffishn (meaning 
“flight”). 

The 70m Hisho, built to 
approximately half-scale, has 
recorded speeds up to 54 knots. The 
captain and crew reported good 
manoeuvrability and seaworthiness 
in high waves. Hfaho, they say, can 
safely weather 3m waves. 


In sea trials between July and 
September, the air-cushion ship was 
put through its paces off the coast 
of the Goto islands in Nagasaki 
prefecture and since then has sailed 
the length of the Japanese 
archipelago. Although the 
experimental vessel is not equipped 
for cargo handling, the weight of 
cargo is simulated using a centrally 
located water tank. 

In two test runs, with cargoes of 
100 and 200 tonnes, the 
experimental ship attained so knobs. 
Next year, Hlsho will be used to 
conduct safety trials. 

The vessel will move goods in 12 


which have to find DM4J5bn to oper- 
ate the service. 

The Japanese are working on sim- 
ilar technology but opted in the 
early 1970s for an electrodynanuc 
levitation system - where magnets 
repel rather than attract each other. 
The different system also creates a 
10cm gap, rather than 10mm, 
between the vehicle and the nmway 
which the Japanese say is better 
suited to deal with earthquake 
risks. 

The Transrapid technology cre- 
ates magnetic fields of about 40 
ampe - no bigger than those cre- 
ated by an electric razor - while the 
Japanese have to grapple with big 
magnetic fields of up to 700,000 
amps. About four times as much 
electricity is needed to control the 
movement of the Japanese train 
across such big magnetic fields and 
Thyssen says they are so powerful 
it is thought people wearing pace- 
makers will not be able to use the 
trains. 


hours or less from Tokyo to 
Hokkaido in the north or Kyushu in 
the south or even to neighbouring 
Asian countries in just a day dr 
two, the developers say. 

The companies have spent T75fan 
(£475m) on the techno-superUner 
project over the past six years, hut 
about double that amount will be 
needed to build a full-scale, 127m 
version of Hisho. That is twice the 
cost of a conventional ferry of the 
same size. 

Fuel consumption is 10 times that 
of conventional, slower craft ami 
Hisho requires special cargo 
handling equipment to minimise 
the time spent in port But onoe 
those problems have been solved, 
Hisho’s 200,000 hp engines will 
power a cargo ship capable of 
carrying 100, 10-tonne, 20m cargo 
containers toand from any port in 
or near Japan. 


British 
science 
sells well 


I nternational investment in 
UK science amounts to an 
"invisible expert" worth 
about £i.4bn a year, the House 
of Lords science committee says 

today. , ^ . 

In 1992-93, the last year for 
which figures are available, 
overseas companies paid El.ibn 
for industrial research and 
development in the UK. In addi- 
tion, universities received 
£l35m in research grants and 
contracts -and £l30m in fee 
income from science students. 

The Lords found that overseas 
funding of British science rose 
sharply during the 1980s and 
reached a peak of £1.6bn in 
1990-91. t Ml . 

The decline over the following 
two years was partly due to 
'‘increased competition from 
other countries, particularly 
Pacific Rim countries which are 
rapidly building up their R&D 
facilities”, says Lord Walton of 
Detchant, committee chairman. 

International investment does 
not normally feature in science 
policy discussions, and the 
Lords Found it difficult to gather 
reliable evidence for their 
inquiry. In particular, they 
foiled to come up with a corre- 
sponding figure for UK spending 
on science abroad, though. Lord 
Walton says, "our feeling is that 
investment coming in from over- 
seas is greater than the amount 
going out". 

The Lords found the issue to 
be controversial. "There are 
those who say that by locating 
R&D facilities in the UK, mak- 
ing research contracts with Brit- 
ish universities, and placing 
sponsored professors and 
research students in leading 
departments, foreign countries 
and companies are engaged in 
’overseas exploitation of UK 
brains'.” 

The report rejects that argu- 
ment and concludes that foreign 
investment in UK science should 
he encouraged, with more pro- 
grammes to encourage scientific 
links with Asian countries in 
particular. 'The future of Brit- 
ish science lies in free trade, not 
protectionism,” it says. 

Clive Cookson 

International Investment in UK 
Science, HUSO. £12.95. 






PEOPLE 


Coutts calls Post to account 






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Not many US investment 
bankers are more anglicised 
than Lehman Brothers’ Her- 
scbel Post (right). An Oxford 
Rhodes scholar and deputy 
chairman of the London Stock 
Exchange, Post has been given 
the ultimate establishment job 
- chief operating officer of 
Coutts, the frock-coated bank- 
ers to Britain's royal family. 

Not that Post currently chief 
operating officer of Lehman 
Brothers in London, will be 
donning _a_ frock-coat himself. 
He is joining a new manage- 
ment team being pot in place 
by Coutts’ parent. National 
Westminster Bank, and frock- 
coats are no longer de rzgeur. 
After years of leaving Coutts to 
its own devices. NatWest is 
intent on turning it into a 
truly global private bank. 

Post, 55, who joined Lehman 
Brothers after spells with JJP. 
Morgan and Euroclear, win be 
the effective number two to 
NatWesfs David Went, 47, who 

Bodies politic 

The Confederation, of British 
Industry's determination to 
take tourism seriously 
received a further boost this 
week when four new members 
joined its tourism action 
group. This brings the mem- 
bership of the group, which 
aims to boost tourism's stand- 
ing in the UK, to 22. 

The most prominent of the 
four new members is Denis 
Ttmniciiffe, managing director 
of London Underground, 
which frequently receives bet- 
ter reviews from foreign visi- 
tors than it does from the capi- 
tal's regular users. 

The other members are Row- 
land Hardwick, managing 
director of English Country 
Cottages, whose ravishing bro- 
chures boast some of the best 
UK self-catering accommoda- 
tion; Neil Chalmers, director 
of the Natural History 
Museum; and Henry Head, md 
of Norfolk Lavender, which 
grows lavender and whose 
funs are a tourist attraction 
in their awn right. 

The action group is chaired 
by Sir John Egan, chief execu- 
tive of airports group BAA. 
Michael Skapmker 

■ Nigel Whittaker, executive 
director of Kingfisher and 
fthalrman of the CBTs distribu- 
tive trades panel, is to switch 
retailing horses. After nearly 
seven years on the CBI panel, 
he is now to take up the post 


i;«u 


* 


% 




was installed as chief executive 
of the Coutts Group in June. 
Traditionally, Coutts & Co, 
which accounts for roughly 
half the group, and Coutts' 
overseas businesses have been 
run independently. 

However, NatWest has set up 
a new management team to 
pull the two parts of the busi- 
ness together. Post will be 
“responsible for all issues 


turn of chairman of the British 
Retail Con s ort ium . 

His replacement at the CBI is 
AJastair Eperon. director of 
corporate affairs at Boots, and 
a previous chief executive of 
McAvoy Bayley. the public 
relations firm. 

Whittaker's new job as non- 
executive chairman is largely 
an honorary one. However, it 
may have help to improve the 
BRC’s links with the CBI's 
panel. James May, the director 
general of the BRC, has admit- 
ted in public that he remains 
distinctly unconvinced by the 
accuracy of the CBI distribu- 
tive trade survey. Whittaker, 
however, is - naturally enoug h 
- a great fan of the survey he 
has presided over for the past 
seven years. Gillian Tett 

■ John Keeton, a director of 
Rathbone Trust Company, has 
been appointed ftbahro an of 
the ASSOCIATION OF 
CORPORATE TRUSTEES. 

■ Duncan Slater, former 
British High Commissioner to 
Malaysia, has been appointed 
chairman of The Research 
Institute for the Study of 
CONFLICT AND TERRORISM. 

■ David Haydock, md of Roger 
Haydock & Co, has been 
elected chairman of the 
TIMBER RESEARCH & 
DEVELOPMENT 
ASSOCIATION. 

■ Paul Barry, md EC Harris 
International, has been elected 
cha irman of the BRITISH 
CONSULTANTS BUREAU. 


relating to Coutts’ global 
operations" and will oversee 
the investment management 
side. 

Coutts has also recruited 
Lorraine Trainer, 42, the for- 
mer director of human 
resources at the London Stock 
Exchange, to be director of 
human resources and organisa- 
tional development, and Rich- 
ard Wise, 37, joins from Mer- 
cury Asset Management to he 
Coutts' chief financial officer. 

The new appointments just 
about complete the clear-out of 
Coutts' old top management 
team which began three years 
ago when fan Farnsworth, a 
NatWest general manager, 
took over from Julian Robards 
as managing director, though 
it is understood that Coutts is 
still looking for a new market- 
ing director. Virtually all the 
top positions at Coutts are now 
held by either NatWest person- 
nel or outsiders drafted in. Wil- 
liam Haa 


John War die 


John Wardle, an important 
figure in Midland*; le g a l and 
corporate circles for over 20 
years, has died after becoming 
ill last week. His medical con- 
dition had been fragile since a 
stroke in 1974. 

He spent his career at Edge 
& Ellison, solicitors, finishing 
as senior partner having 
helped to build the firm up into 
one of the leading regional 
legal practices. But at the same 
time he was in demand as a 
company director. 

He served with quoted com- 
panies like Forward Group, 
Hampson Industries and Metal- 
rax and unquoted companies 
like J.W. Norton Services, Sav- 
iUe Barkers Newsagents and 
Turbine Blading Group. As a 

chairman he specialised in 
chatty, idiosyncratic state- 
ments. Paul Ckeeseright 

m Stephanie Monk, group 
personnel director who also 
chairs the Equal Opportunities 
Panel of CBI Employment 
Policy Committee, has been 
appointed to the board of 
GRANADA GROUP. 

■ Graham Hawksworth, 
formerly TJK general manager 
of the Lexus division of Toyota 
(GB), has been appointed md of 
JACK BARCLAY, folio wing 
the death of Victor Barclay. 

■ Jon Marx, md of European 

Packaging; has been appointed 

to the board of LOW & BONAR. 


Non-executive 

directors 

■ Keith Humphreys, chairman 
andmd of Rhone Poulenc Ltd, 
at HICKSON 
INTERNATIONAL. 

■ Victor Scherrer, formerly 
ceo of the European baked 
foods division of Grand 
Metropolitan and latterly 
president of the ANIA (French 
Association of Food and Drinks 
Industries) and vice-chairman 
of CNPF (Confederation of 
French Industries and 
Services), at SIDLAW CROUP. 

■ Brian Hardy, director of 
finance at Bramah Castrol, at 

j STOREHOUSE; he will become 
| chairman of the board’s audit 
committee on the retirement of 
Margaret Downes next year. 

■ Charles Sleigh as chairman 
at INVESTORS CAPITAL 
TRUST; Sir Robin Duthie, Sir 
Charles Fraser and Roger 
Inglis are resigning on the 
company ceasing to be a 
subsidiary of the British Asset 
Trust. 

■ Niven Dunca n as deputy 
chairman of EASTERN 
GROUP. 

■ Matthys Roux has retired - 
from ROTHMANS 
INTERNATIONAL. 

■ Alan Carter, a former 
national vice-chairman and 
European representative of the 
British Gear Mam i fa ftfurg r ci 1 
Association, at PMC GROUP 
(HOLDINGS). 

■ Peter Harrop, chairman of 
K a l a m azoo, as chairman at 
PIN ACL. 

■ John Walkley. head of 
expatriate compensation 
development at Shell, at 
EMPLOYMENT CONDITIONS 
ABROAD. 

■ James Stanford haa resigned 
from AEROSPACE 
ENGINEERING. 

■ Chris Morley at 
CAMBRIDGE WATER 
COMPANY; Lard de Ramsey 
has resigned. 

■ George Simpson (below), 
chief executive of Lucas 
Industries, at ICL 



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FINANCIAL TIMES THURSDAY DECEMBER 15 1994 




Cinema/Nigel Andrews 


Tall tales of manor’ d wealth 



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rmcess Caraboo^ the tale 
of a beaotUOl vagrant 
gill (Phoebe Cafes) who 
is adopted by early 19th 
century T2ii gi«h high 
society in the belief that she is a 
foreign princess, shows that people 
will befieve anything if it comes in 
a charismatic wrapping. ' 

They may even believe that this 
medtatt-joDy if maddeningly erratic 
movie is based cm a real story. So 
contends co-screenwriter John 
WeBs. Bat I have teen to that well 
before, or tumbled down it. As a 
bumble theatre reviewer I once fell 
for Wells's claim that his play The 
Projector (Stratford East, 1970s) was 
an authentic “lost" isth century 
comedy. Result egg on my face and 
the near-termination of a promising 
critical career. 

Let os just say that even if Cam- 
boo is true it cannot have been true 
Hke this. English society never con- 
sisted, we hazard, of Jim Broadbent 
ami Wendy Hughes living, however 
entertainingly, in manur'd wealth 
with a set of strange furniture (sea- 
sheE-upholstered settees a special- 
ity) and a Greek butler portrayed 
with tortured vowel sounds »rn 
expressive moustache by Kevin 
Kline (very fanny). 

No ill-nourished vagrant ever 
looked, like . Phoebe Cates (aka Mis 
Kline), who resembles a well-fed 
graduate of Hollywood High School 
seeking further doughnuts. And no 
surviving picture of the Prince 
Regent suggests that he resembled 
John Sessions wearing Mikado cast- 
offs. Sessions’s look of camp, gob- 
stopper-cheeked naughtiness also 


PRINCESS CARABOO (PG) 
Mkhael Austin 

NEVER ENDING STORY HI 

(U) 

Peter MacDonald 

THE PAGEMASTER (PG) 
Joe Johnstone and Maurice 
Hunt 

THE NUTCRACKER (U) 
EmHe Ardoftno 

CHASING THE DEER (PG) 

Graham Hofloway 

ONLY THE STRONG (15) 
Sheldon Lettich 


cranes closer than ever before to 
suggesting he may be the illegiti- 
mate scq of Freddie Jones. 

The movie trips along with its 
strange, rambling comic gait, never 
quite aflrttng op to the sum of Its 
parts, fru&tily though these are 
played. Add Stephen Rea <loves- 
trock journo), the Reverend John 
Wells (more gobstopper cheefcs) and 
professor John Uthgow, English-ac- 
cented again after A Good Man hi 
Africa, and you have a surging ros- 
ter of multi-style talent seeking a 
central meeting place. But director/ 
co-writer Michael Austin stands 
around Hke a dazed traffic police- 
man. Moods collide (satire, force. 


mystery, romance); characters honk 
and criss-cross; and if there was 
ever a true story behind Cbrahoo, 
its bones are slowly broken under 
the weight Of incidental tr affic 

* 

We expect what Mark Twain would 
call “stretchers" at Christinas time. 
This is the season when we gather 
round the fire to listen to tall takw 
and to be struck about the head by 
flying chestnuts. 

. The Pugemaster and Never Ending 
Story m are variations on the same 
chestnut A little boy is buried into 
make-believe land, where a dose of 
educative fantasy strengthens him 
for the real-life battles back home. 
Alas, the fantasy scenarios In both 
films are dull gnnugh to put the 
hero into a coma before he even 
contemplates the return journey. 

In The Pagemaster Macaulay 
CuMn fan i? an d knocks bis on 

a library’s marble floor, thereby 
precipitating dreams about ani- 
mated books. The voices of Whoopi 
Goldberg, Patrick Stewart, Leonard 
Nlmoy and others prattle behind 
the dancing veUum-bound shapes as 
Cutidn lives through cartoon 
digests of Moby Dick, Treasure 
Island, Dr JekyU And Mr Hyde and 
Gulliver’s Travels. These are wit- 
lessly slogged through in a 66-min- 
ute fil m that seems Hke 66 hours. 

CuQdn himsrif is Showing grave 
signs of wear. Since Home Alone the 
boy has acted like a dazed demi-an- 
gei who has lost radio contact with 
Planet Earth. The instant-access 
mugging that had such charm in 
SLA. - “Macaulay, smile", “Mac- 
aulay, scream,” “Macaulay, hit the 


burglars!” - has lost its verve. We 
know that Master C could never 
actually “act". But now he seems to 
have lost that peerless in-bom tal- 
ent, so post-modem in one so pre- 
pubescent for parodying acting 

Another boy thespian adrift in 
Imaginative hyper-space is Jason 
James Richter in The Never Ending 
Story SI. What to say about a 
movie with tedium sewn into its 
very title? Young Bastien. our hero, 
is now a Los Angeles schoolboy 
apparently living on the same 
doughnut diet as Phoebe Cates. Per- 
secuted by bullies, the plump- 
cheeked lad takes refuge in a 
library, where on opening the epon- 
ymous folklore tome he is magfoked 
back into the land of “Fantasia”. 
Luck-dragons; princesses; Tony 
Robinson as a gnome; and mile on 
mile of Christmas grotto decor. 

We would like to say that all plot 

resemblances between this film and 
The Pagemaster are coincidental. 
Perhaps so. But the shared library 
settings hint at a Western cinema 
suddenly becoming alarmingly ped- 
agogic about reading: Note foe post- 
ers of famous film stars urging 
“Bead" on the walls of the Never- 
Ending library and the parade of 
nudging book titles on the shelves 
of The Pagemaster. 

But Hollywood never quite man- 
ages to heave Itself up into high 
culture. Among the books flaunting 
their spines at Master CuDdn are 
Ten Little Indians and The Haunt- 
ing : giveaway-lowbrow titles, which 
also happen to be the titles by 
which the movies not the novels 
were' known. Popular cine ma may 




.r-cheeked naughtiness: John Sessions wearing Mikado cast-offs and 
search of doughnuts in ’Princess Caraboo’ 


be making one of its periodic bids to 
turn flxun poacher to gamekeeper, 
but apparently it can still only 
recognise stolen game. 

In a week of bizarre cross-referen- 
cing, on we need now is another 
film starring Master Culkin, hinting 
at Hollywood's affair with high cul- 
ture and containing a plot poised 
between fantasy and reality. 

Abracadabra: The Nutcracker. 
George Balanchine’s version of the 
Tchaikovsky ballet has been filmed, 
with Macaulay as Drosse Lawyer's 
nephew. This riot of sound and col- 
our, directed by Emile Ardolino 
( Dirty Dancing), was created some 
time ago. This explains why Culkin 
is in angelic prime, capering 


through his role with all the 
hammy wonder be brought to Home 
Alone. (He actually was a ballet stu- 
dent before being captured by Tin- 
seltown). 

Lovely sets; luscious music; 
worth a Christmas outing. We wish 
we could speak thus of Chasing The 
Deer. The good news is that this 
British Rim was heroically financed 
by small investors: a literal army of 
them, who having handed over 
their wallets then kitted themselves 
out in 1740s battle dress to {day 
extras in Graham Holloway's mini- 
epic about the Jacobite wars. 

Now the bad news. The combat 
scenes play like one or those Mont) 1 
Python battle sketches In which 


obscure women’s guilds, having 
selected a patch of mud, used to hit 
each other over the bead with hand- 
ings. Between battles, the screen is 
cleared for the acton to stand in 
uncertain lighting mouthing self-de- 
struct dialogue. iSnmpIo conversa- 
tion- stopper: “Then there is the 
episcopalian dimension . . ") Ten 
points (or financial initiative, one 
and a half for creative result. 

Only The Strong wilt appeal to 
only the barmy. Ninety minutes of 
the Brazilian martial art called 
capoeira, which to the untrained 
eye looks like breakdancing with 
violence. Sheldon l-otttch direct**. 
Someone called Mark Daca*co» 
stars. Avoid. 


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N ot cmiy does the playwright 
Tony Knshner on the 
most difficult thanes of the 
era we live in, he also Hnka 
than together. In his new 90-mtnnte 
Skoal (T Tanking About die Longstand- 
ing Problems of Virtue and Happiness), 
as in his widelynacclaimed two-part 
Angels in America, he somehow yokes 
the collapse of Soviet communism to 
the new prominence of homosexuality 
and a great deal else besides. And he 
manages to show the full seriousness of 
the situation he is presenting while 
relieving it with hum o u r and a range of 
different characters. The sheer scope of 
his ambition is refreshing. 

Yet to my mind Knrfmer is a light- 
weight For all -its massive historical, 
political, socio-economic, psychosexnal 
and metaphysical range, I never felt 
that Angels in America was any larger 
in spirit than a soap opera, albeit vivid 
and touching and entertaining. (My 
reaction did not change even when I 
had seen productions an both sides of 
the Atlantic). 

Slavs! is not soap-o pera but satire. 
It does not fBt between di spar ate narra- 
tive threads, as did Angels m America, 
and it has a less gossipy concern with 
what will happen next to whom. But 
here again his characters have both the 
vitality and the shallowness . of 
cartoons, and here again he intercon- 
nects them in a way that rings hollow. 
We see that he has assembled them 
to illustrate strategically the contrast- 
ing symptoms of the Sate off Things 
Today. 

Thus the alcoholic and nihilistic 
Katberina SBsafina Gleb, a warden of 
the Pan-Soviet archive (guarding the 
bottled brains of Lenin and other ex- 
oomrades) in 1985 (Act Two), is here the 
lesbian girlfriend of sochdist Doctor 
BanfHa. Bezhukhovna Bonch-Bruevich, 
who in 1962 (Act Three) reveals the 
disastrous medical effects of Russian 
nuclear and chemical pollution upon 
Siberia and elsewhere. Lesbians, alco- 
holism, Leninism, socialism, pollution, 
medicine, the past, the future: yes, what 
a nexus! And how perverse that, for all 
the vehemence Knshner gives these 
characters, he cannot give either of 
them much substance. 

Sla ws! begins with the frfad of hilari- 
ous stroke that we expect to find not in 
a play but in TV satire. Two Muscovite 
street-cleaners - brushing away the 



Peter Mayes (left) as the old Bolshevik AHtediUuvianovich Prelapsarianov, with Peter Bayliss 

Theatre/AIastair Macaulay 

Tony Kushner’s ‘Slavs!’ 


Muir 


snow as they talk - are talking to each 
other. In lengthy and perfect sentences, 
of what political conclusions to draw 
from studying history from Marx and 
Engels. Peculiar, however, is the way 
K nshner keeps this joke going through- 
out the play. 

It would be hard to make a better 
case for this British premiere of the 
play than is bong mads at the Hamp- 
stead Theatre, where Matthew Lloyd 
directs a generally superb cast Design, 
by Ultz, is economical and effective. 
LLoyd keeps Kushner’s satiric tone 
keenly to the fore while stressing 
humanity where he can. 


Imelda Staunton's performance is 
more real than the words she speaks. 
She shows ns the quiet, caring, troubled 
•mmd and nervous s y s te m of the lesbian 
Doctor Bonch-Bruevich. A wonderful 
actress. Annette Badland is just as fine 
as Mrs Sbastlivyi Dandk, blasting with 
great sincerity through an oration that 
starts forcefully and nltmhg in Intensity 
from there. 

Paul Jesson is excellent as Ippolite 
IppopoKtovich Popahtipov, a Soviet offi- 
cial who has the misfortune to be in 
love with the same woman as Dr 
Bonch-Bruevich. Peter Copley and Rich- 
ard Mayes are first-rate as Aleksii Ante- 


dilluvianovlch Prelapsarianov (the 
world’s oldest Bolshevik) and Serge 
Esmereldovich Upgobkin. Ron Cook has 
to play Yegor Tremens Rodent, the kind 
of weak character whom Knshner needs 
in his plays so that every more right- 
thinking character can worst him in 
argument Only Aisling O’Sullivan lets 
the side down as the alcoholic lesbian 
Katherina Gleb. Presence and force, 
sure, but no coherent detail. (I never 
believed in her alcoholism.) A cast like 
this should reach the West End; a play 
like Slavs! should not 

At the H am pst e ad Theatre, NW3. 


O n Sunday. Andris 
Schiff played Bach, 
Bartdk and Beethoven 
at the Barbican - in that order. 
The second half was reserved 
for the “Hammerklavier” 
Sonata; earlier, Baitok's piano 
sonata snapped at the heels of 
Bach's Fourth Partita. 

The Partita was exquisitely 
performed. I used to find 
SchifTs Bach over-jewelled 
sometimes, but nowadays he 
strikes a lovely balance 
between grace and rigorous 
clarity. His Overture here was 
resplendent, the Aria deeply 
meditated, the final Gigue a 
dazzling tour de force: alto- 
gether a delight to hear. 

With Schiff the dance-move- 
ments in the Partitas sound 


Recital 

Andras 

Schiff 

more like contrapuntal charac- 
ter-pieces, individuated by 
expression rather than by 
strongly contrasted rhythms. 
At the risk of gilding the lily, I 
thinfc he might remember the 
dance a little more often. In 
foe Bart 6k sonata there was no 
sense of a stamping-dance in 
the first movement, nor much 
popular lilt in foe lost SchifTs 
keyboard style in Bach (digital, 
linear, parsimonious with the 
pedal) was carried over to Bar- 


t6k. and the result - in a piece 
partly inspired by Stravinsky's 
Rite - felt brittle ami bloodless, 
fleet without thrast. 

In foe grand first movement 
of the “Hammerklavier”, it 
seemed that the breadth of 
SchifTs musical intelligence 
again risked compromise by 
light fingers and a hint of 
nervy tautness. By the A&igio. 
however, he had found his best 
stride: still light and under- 
pedalled, but soberly penetrat- 
ing and perfectly sustained. 
The audience was held rapt. 
The concluding fugue, much of 
it taken at heroically reckless 
speed, was cogent and trium- 
phant. 

David Murray 


Arts Council bales out the beleaguered 


L ower ticket prices for 
performances of con- 
temporary opera at 
Co vent Garden; finan- 
cial life-lines for the belea- 
guered regional orchestras and 
theatres; mare English touring 
by the National Theatre and 
the RSC; and no grant for 
KOSH, the dance company: 
there are the main decisions 
from the Arts Cornell of 
England yesterday as it 
announced the carve up of its 
1995-96 grant 

The council unexpectedly 
received an extra £5.1m to the 
Budget a rise of 2.75 per cent 
to £19Llm. It had been told to 
plan nm s tandstill funding and 
had passed the same message 
to its clients. In the event, that 
is just what the majority of 
grant-aided arts companies 
can expect next yean fr o z en 
subsidy. The additional money 
has been used to ensure that 
few, if any, companies go 
under before lottery funding 
starts to come through in 
April. 

The five regional orchestras 
and 16 theatres, including 
those in Farnham, Birming- 


ham, Salisbury, Harrogate and 
Cheltenham, were facing wor- 
ryingly high deficits. The 
council has decided to give the 
orchestras an additional 
£450,000 between them (on 
condition that they match this 
sum by their own efforts) 
while the theatres will share 
£565,000. The money comes 
with the understanding that 
they must sort themselves ont 
financially once and for alL 

Some national companies 
have been given special treat- 
ment. Hard pressed ENO is 
getting £300,000 more, at 
£11. 955m, to invest in new pro- 
ductions, while Opera North Is 
baded out with £200,000 more, 
to £4 -834m. English National 
Ballet is near breaking point 
and has had its grant raised by 
£300,000 to £3Jm while North- 
ern Ballet Theatre gets 
£125,000 extra at £l.225m. 

High seat prices at Covent 
Garden are a perpetual worry. 
The council cannot afford to 
increase its across the board 
subsidy but is advancing 
another £300,000. making 
£8.8m, to ensnre that the 
Royal Opera can reduce prices 


to help fill seats for contempo- 
rary opera. 

The London orchestras face 
a difficult future: two, the ISO 
and the LPO, are on frozen 
grants while the KPO and the 
Philharmonia must make do 
with just £20,000 more each to 
help their regional work in 
Nottingham and Bedford. The 
KOSH loses its grant for artis- 
tic reasons, but can apply for 
touring money. In contrast 
DV8, the Place and Dance 
Umbrella get sizeable lifts in 
subsidy, while Royal Ballet 
receives £100,000 more, at just 
over £6m, to be invested in 
choreography- 

The secretory general of the 
council, Mary Allen, said yes- 
terday “I sincerely hope that 
no one now goes to the wall.” 
Prior consultation suggests 
that most companies are 
happy. And with the council 
lottery fond grow in g to £9m in 
jnst three weeks, the assump- 
tion is that any arts company 
in a parlous state will have 
put in a well argued bid for 
some of this cash. 

Antony Thomcroft 



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■ AMSTERDAM 

CONCERTS 

Hat Concertgebouw Tel: (020) 671 
8345 

• Phffifpe Herreweghe: wHh the 
Fretberger Barockorchestra and the 
CoOegium Vocals Gent conducts 
Bach at 8.15 pm; Dec 20. 22 

■ BARCELONA 


Deutsche Oper Tet (030) 3 41 92 
49 ' 

• Siegfried: by Wagner. Conductor 
Horst Stein, production by Gfitz 
Friedrich at 5.30 pm; Dec 27 
S taateoper (Inter den Linden Tel: 
(030) 2 00 4762 

• Die Varurtefiung des Lukuflus: by 
Paul Dessau. Conductor Hirscri, 
production by Berghaus at 8 pm; 
Dec 15, 18 (3 pm) 

• Die Zauberflflte: by Mozart 
Conductor Daniel Barenboim, 
production by August Everdlng at 7 
pm; Dec 20, 23, 25. 28 

• Domrfischen: by Tchaikovsky. 
Conducted by Stotee, 
choreographed by Nureyev at 7 pm; 
Dec 26, 27 

• La Traviata: by Verdi. Conducted 
by Rizzi, production by Kirst hi 
Kalian at 7 pm; Dec 17 . 

■ BRUSSELS 


Qgar.The London Symphony 
Orchestra with mezzo-soprano Arne 
Sofle Von Otter conducted by Sir 
Cofin Daws at 7.30 pm; Dec 15 
Festival Hall Tel: (071) 928 88X 
• International Series: The London 
Philharmonic conducted by Bernard 
Haitink plays Berlioz (Overture, 
Benvenuto Cellini), Havel (Mother 
Goose) and Vaughan WdEams 
(Symphony No-5) at 7.30 pm; Dec 
15 


at 7.30 pm; Dec 16, 19 
• The Sleeping Beauty: a new 
production of Tchaikovsky's ballet. 
Produced by Anthony Dowell, set 
designed by Maria Bjomson at 7.30 
pm; Dec 20 £2 pm) , 21, 22, 28 



I y 




m ..*# 






.> 

i.-.: 


■ • i 



FundacM “la Caeca” Tet (93) 404 
60 73 . 

• The Austrian Vision: a selection 
of 17 -Austrian tirtists from three 
generations foal represent the 
different models and main aesthetic 
posMoos adopted by Austrian artists 
over ihe last 20 years; to Jan 22 




BERLIN 


P habm onle Tet(03€) 2548 8132 
• Berlbi PhHhannoni& Orchestra; 
conducted by Claudio Abbadd and 
wife soloist Maurizfo Potfini plays 
Brahms and Mimsotgsty at 8 pm; . 
Dec 15. 16, 19. 20, 21, 30 ' 


PNBiannonlque de Bruxelles Tab 

(02) 507 &4 34 

• Andres Schiff: pianist, plays 
Bach, Reger, Handel and Brahms at 
■8 pm; Dec 19. 

• Royal Concertgebouw Orchestra: 
wife pianist Evgeny Kissin and 
conducted fay Sr Georg Son, plays 
Beethoven, Sartok and Koddly at 8 

pm; Dec 17 

■ 

■ LONDON 

CONCERTS 

Barbican Tel: (D71) 638 8891 

• Royal Philharmonic Orchestra: 
Christmas concert wife conductor 
Owiain Arwei Hughes at 7.30 pm; 
Dec 20,28 

• The Dream of Gerontfus: by 


English National Opera Tet (071) 
632 8300 

• Figaro's Wedcfing: in house debut 
for conductor Derrick Inouye at 7 
pm; Dec 15, 17 

-• Khovanshchina: new production 
of Mussorgsky's opera. Director 
Francesca ZambeHo at 830 prrr, 

Dec 16 

Festival Has Tefc (071) 928 8800 

• The Nutcracker by Tchaikovsky. 
English National Ballet and its 
Orchestra choreographed by Ben 
Stevenson at 7.30 pm; from Dec 21 
to Jan 2 (Not Sun) 

Royal Opera House Tet 071 340 
4000 

• Ashton Remembered: celebration . 
of the Royal Ballet founder . 
choreographer Fradriek Ashton. 
Includes pieces by Mendelssohn, 
Off en bach, Massenet and Walton at 
7.30 pm; Dec 15, 17 02 pm) 

• Cinderella: music by Prokofiev. 

'Created by Fredrick Ashton in 1948, 
this was fee first fuH-tertgth ballet by 
an English choreographer at 7.30 
pm; Dec 23 (2 pm) , 26 (2 pm) , 27, 
30 

• La Traviata: by Vercfi. A new 
production by Richard Eyre. Georg 
Solti conducts for the first Ifc© 
performances, then Phiffipe Augufe. 
in Italian with Engfish ststities 


Barbican Tefc (071) 638 8891 
• New England: World premiere of 
Richard Nelson's new play. No 
performance 12-1 5th Dec., 
otherwise at 7.15 pm; to Dec 29 
(Not Sun) 

National, Lyttelton Tefc (071) 928 


• Out of a House Walked a Man: 
by Daniil Kharms. A Royal National 
Theatre and Theatre de Compflcite 
co-production of a collection of 
musical scenes by the Russian 
absurdist writer at 7.30 pm; Dec 23, 
26, 27 

• The ChHdren’s Hour by LffHan 
Heilman, directed by Howard Davies 
to 7.30 pm; Dec 15, 16, 17 (2.15 
pm) , 19, 28, 29 (2.15 pm) . 30 

■ MUNICH 


Metropolitan Tel: (212) 362 6000 

• Die Redermaus: by J. Strauss. 
Sung in German with English 
dialogue at 8 pm; Dec 22, 29 

• Don Giovanni: by Mozart, sung in 
Italian to 8 pm; Dec 16, 20, 24 (1.30 
pm) 

• Madama Butterfly: by Puccini to 
8 pm; Dec 17, 21, 27, 30 

• Peter Grimes: by Britten. English 
to 8 pm; Dec 15, 19, 23, 28 

• Rigoietto: by Verdi to 8 pm; Dec 
17 

■ PARIS 


parts by Tchaikovsky. Performed by 
the Kirov company, St Petersburg. 
Sun mat only at 3 pm; to Dec 18 
(Not Mon) 

■ WASHINGTON 


Champs Bysdes Tel: (1) 47 23 37 
21/47 20 08 24 
• French National O r c h e s tr a : 
Jeffrey Tate conducts Beethoven 
Symphonies Noe. 2 and 3 to 8 pm; 
Dec 15, 17 


Kennedy Centre Tel: (202) 467 
4600 

• National Symphony Orchestra: 
perform Handel’s Messiah. With 
conductor Peter Bay, soprano 
Janice Chandler and mezzo-soprano 
Stephanie Blythe to 8.30 pm; Dec 
16, 17, 18, 19 


KunsthaUe der Hypo-^Cteturstiftung 
• Paris-Belle Epoqus: An evocation 
of the period from 1880 to 1910, 
with paintings, drawings, posters, 
photographs, glass arid fomrtwe: 
from Dec 16 to Feb 26 

■ NEW YORK 


Whitney Museum 
• Franz KUne: Black and White 
1950-81: major Abstract 
Ex pressionist works Iran fee last 
decade of the artist's Ilfs; from Dec 
16 to Mar 12 
OPERA/BALLET 


Louvre Tefc (1) 42 60 39 26 

• British Art in French Public 
Collections: paintings by 
Gainsborough, Reynolds, Constable, 
Lawrence and Turner. Closed Tue.; 
to Dec 19 

OPERA/BALLET 

Champa Elys£es Tel: (1) 47 23 37 
21/47 20 08 24 

• Casse-noisette: Tchaikovsky's 
ballet performed by the Kirov ballet 
company, St Petersberg at 880 
pm; Dec 22. 23, 25, 26, 27, 28, 29, 
30 

• La Fontaine de BakcNsaral!; ballet 
by the Kirov company, St. 

Petersberg to 8.3D pm; Dec 20, 21 

■ TURIN 

OPERA/BALLET 

Teatro Regio Tel: 011 8815 241 

• Lo Schiacelanoci: ballet in ferae 


Gallery Tefc(2021 737 4215 

• Italian Renaissance Architecture: 
Brunelleschi, Sangaflo, Michelangelo, 
the Cathedrals of Florence, Pavia 
and St Peter's; from Dec 18 to Mar 
19 

Sadder Tel: (202) 357 2700 

• Paintings from Shiraz: the arte of 
the Persian book created in the city 
of Shiraz during the 14th -10th 
century; from Dec 24 to Sep 24 
OPERA/BALLET 

Kennedy Centre Tel: (202) 467 
4600 

• The Nutcracker music by 
Tchaikovsky. Presented by the 
Jeffrey Ballet, choreographed by 
Robert Jeffrey. No show Dec. 12th, 
mats to 2pm otherwise to 8 pm; to 
Dec 17 


Gunston II Tefc (703) 416 4808 
• An Evening wife Tom Stoppard: a 
series of feres one-act plays by fee 
British playwright presented by the 
Washington Shakespeare Company 
to 8 pnr. to Dec 17 


WORLD SERVICE 

BBC for Europe can be 
received in western Europe 
on Medium Wave 648 kHZ 
(463m) 

EUROPEAN CABLE 
AND SATELLITE 
BUSINESS TV 
(Central European Time) 

MONDAY TO FRIDAY 
NBC/Super Channel: FT 
Business Today 1330; FT 
Business Tonight 1730, 
2230 

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

Euronews: FT Reports 
0745, 1315, 1545, 1815, 
2345 

WEDNESDAY 
NBC/Super Channel: FT 
Reports 1230 

FRIDAY 

NBC/Super Channel: FT 
Reports 1230 
Sky News: FT Reports 
0230,2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 
Sky News: FT Reports 
0430.1730; 
















20 


FIN ANCIAJL TIMES THURSDAY DECEMBER .5 .994 


Breaking up is 
hard to do 



BOOK 
REVIEW 


So you thought 
that Canada 
was a stable, 
peaceful place 
where civility 
and compro- 
mise were the 
order of the 
day? Think 
again, advises Mr T .arisin g 
LamonL 

In this provocative book, Mr 
Lament raises the spectre of 
bloody riots on the streets of 
Montreal, disaffected aborigi- 
nals blowing up one of North 
America's biggest hydro- 
electric projects, and Quebec 
gunboats intercepting US tank- 
ers on the St Lawrence River - 
all within the next seven or 
sight yeare. 

The unrest would be the pre- 
cursor to the ineluctable disin- 
tegration of the world’s second 
biggest country. Much of what 
is now English-spe aking Can- 
ada would end up as part of 
the US, leaving a newly-inde- 
pendent Quebec as a lonely - 
and increasingly impoverished 
- outpost of French language 
and culture. 

Mr Lamont, a former corre- 
spondent for Time magazine 
and a frequent visitor to Can- 
ada. suggests that foreigners 
have for too long looked at 
Canada from the wrong angle. 

Instead of puzzling over why 
such a nation apparently 
blessed with such rich natural 
and human resources should 
want to tear itself apart, the 
real question is how Canada 
has managed to stay in one 
piece for 127 years. 

Mr Lamont says the chasm 
between Canada's French and 
English is as deep as between 
Ireland's Catholics and Protes- 
tants. Bat be identifies many 
other tensions that threaten to 
tear apart the national fabric. 

The 5m inhabitants of the 
prairie provinces of Alberta. 
Saskatchewan and Manitoba 
"carry on their shoulders a 
chip the size of Labrador. They 
have all the goodies, but some- 
how the benefits always seem 
to land in the laps of rapacious 
easterners.” 

The 10 provinces are forever 
trying to wrest powers from 
the federal government in Ott- 
awa. Aboriginal communities 
have become increasingly mili- 
tant 

The pervasive influence of 
ITS television is weakening 


BREAKUP — The Coming 
End of Canada and 
the Stakes for America 
By Ijmang Lamont 
W. W. Norton and Co, 
H9.93fS29.99. 267 pages 


Canada's fragile indigenous 
culture. Meanwhile, immigrant 
groups are encouraged by a 
policy of "multi-cultural ism” to 
make the preservation of their 
own identities a higher priority 
than a united country. 

Economic forces are also 
melting the glue that has held 
Canada together. The 1989 free 
trade agreement with the US 
has focused Canadian business 
on markets and competitors to 
the south - a trend exacer- 
bated by internal trade barri- 
ers between the provinces. 

Towering debt and budget 
deficits channel a growing pro- 
portion of government reve- 
nues to foreign creditors, limit- 
ing the ability of Ottawa and 
the provinces to meet their 
own citizens' demands. 

"At its birth as a British 
do mini on in 1867, " Mr Lamont 
concludes, "Canada's existence 
was predicated on its fear of 
annexation by the United 
States; its pride and security in 
belonging to the mightiest 
empir e since Rome's; and the 
need for a protected economy 
to ward off its omnipotent 
southern neighbour. As none 
of these reasons apply any lon- 
ger, and having no new ideo- 
logical underpinnings to help 
validate its national purpose, 
Canada is becoming increas- 
ingly vulnerable to fissure." 

In the second section of 
Breakup, Mr Lamont makes 
"an informed surmise of what 
could happen in the worst cir- 
cumstances” as the fissures 
widen. He postulates a 
last-ditch National Commission 
to Rebuild Canada in 1996, the 
failure of which leads to Que- 
bec’s stormy unfiate-al declara- 
tion of independence four 
years later. The four Atlantic 
provinces, cut off from the rest 
of Canada by the secession, 
would have little choice but to 
seek a future with the US. The 
much richer western provinces 
would also tighten their 
already-close links with the US 
north west 

Mr Lamont* s disquieting sce- 
nario may well come to pass. 


The success of regional parties 
from Quebec and western Can- 
ada in last year's general elec- 
tion is a reminder that the cen- 
tre is an unrewarding place to 
be in politics when grievances 
fill the air. 

Quebeckers elected a sepa- 
ratist government in Septem- 
ber. Earlier this month, it 
un veiled plans to draw up a 
new constitution early in the 
New Year as a prelude to an 
Independence referendum. The 
province's aboriginal commu- 
nities have vowed to resist the 
drive towards sovereignty. 
Many western Canadians wish 
Quebec good riddance. Can it 
be long before even hotter 
heads come to the fore? 

Don't write Canada off just 
yet Mr Lamont researched 
much of his book at a time 
when, even by recent Canadian 
standards, the national mood 
was unusually grumpy. 

The recession was at its 
deepest. Voters had rejected 
the Charlottetown Accord, an 
effort by politicians to write a 
constitution that would accom- 
modate the demands of Quebec 
as well as, in Mr Lamont’s 
words, every other special 
interest group except 
left-handed dentists. 

Although almost every page 
of Mr Lamont’s book contains 
a good reason for Canada to 
break up, it also gives some 
cause for hope. 

He notes, for instance, that 
Quebeckers are "still essen- 
tially a cautious people used to 
walking on ice in winter. 
That . . . suggests' that they will 
not make the final leap to inde- 
pendence-” Recent opinion 
polls indicate that only about 
40 per cent of Quebeckers sup- 
port independence. 

The economy is enjoying a 
robust recovery and the mood 
in the country at large has 
mellowed appreciably since Mr 
Jean Chretien’s Liberals took 
office just over a year ago. 

Moreover, for all their com- 
plaints, most Canadians would 
rather see their country sur- 
vive than be shattered apart or 
absorbed by their southern 
neighbour. It is still possible 
that Canada will muddle 
through in a typically Cana- 
dian way - not united but also 
not irrevocably split 

Bernard Simon 


T he British govern- 
ment’s defeat over 
VAT on domestic 
energy is of more than 
just temporary political inter- 
est For it brings to the surface 
bow very maddteii the public 
is on the whole subject of 
spending and taxes. Opinion, 
poll after opinion poll shows 
that voters seem to want more 
publicly provided, or financed, 
services. Yet they rear up 
against any attempts to pay for 
these services by spreading the 
tax net more widely. 

An idea of the public mood 
emerges from one poll in 
which nearly 50 per cent 
replied that taxes on high 
incomes were too low, or 
“much too low". Only 6 per 
cent thought that taxes on 
middle incomes were too low 
and hardly anyone thought 
that of taxes on low incomes. 
Yet the overwhelming majority 
of those polled regarded them- 
selves as either middle or low 
income. Less than 3 per cent 
regarded themselves as receiv- 
ing Ugh incomes. On this evi- 
dence, there are just too few 
rich to soak. 

Bat the real drawbacks of 
allocating resources through 
competitive elections rather 
than competitive markets go 
beyond these contradictions. 
They can be summed up in the 
jargon phrase "full line sup- 
ply”. When a buyer makes pur- 
chases in a supermarket, he or 
she can decide on how much 
he or she wishes to speed and 
on what items. But when it 
comes to public goods like 
defence, every citizen has to 
have the same amount Worse 
than that: the voter has to 
decide between two or three 
bundles of vague policies cov- 
ering all issues, none of which 
may express his or her prefer- 
ences, but which he or she has 
to take or leave as a whole. 

Despite the drawbacks, some 
services are better financed 
collectively than by relying on 
the private marketplace alone. 
One way of introducing a little 
more coherence might be by 
some form of hypothecated or 
earmarked taxes, designated 
for specific public services. 
There can, but need not, be a 
close connection between the 
nature of the tax and the ser- 
vice for which it pays. 

A historical example of an 
earmarked tax was "Ship 
Money”, levied on English sea- 
ports and coastal regions to 
finan ce the Royal Navy. When 
Charles 1 revived the tax in 
1634-38, he started a chain of 
events which contributed to 
the English civil war, his own 
beheading and a period of 
republican government. But 
that was because the levies 


Economic Viewpoint 

■ ■■■ ■■ ■ 

Time to know what 

■ ■ ■ , 

you pay for 


By Samuel Britten 


UK govensiiieiit revenue* and expenditure 

General ^vemmentexpemfiturt* 



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Sqatf TjjOpjy/FTiKriftRiy 


were extended to inland 
regions and Parliament was 
not consulted. Earmarked 
taxes tha t are carefully and 
sensitively applied may still be 
a Lesser evil than today’s habit 
of patting all official revenues 
into a pool to be allocated at 
the government's discretion. 

Earmarked taxes have began 
to receive support from (Effer- 
ent parts of the political spec- 
trum, for instance the UK left- 
of-centre think-tank. Demos, 
and the free-market Institute 
for Economic Affairs. Hypothe- 
cated taxes are already fre- 
quent in the US, where they 
axe said to finance about half 
of local spending. Many of the 
uses which Demos envisages 
for earmarking are primarily 
local: for example, expenditure 
on the London Underground, 
city nursery places, or a town’s 
bid for the Olympics. For such 
applications to work effectively 
in the UK, councils would have 
to acquire sources of revenue 
sufficient to finance their own 
budgets. 

Meanwhile, there is quite a 
lot than can be done at a 
national level. Earmarked 
taxes cannot remove all the 
defects of state provision. They 
cannot enable -different voters 
to have different mffitary bud- 


gets or different sized health 
services to suit their individual 
preferences. But they can at 
least make sure that the sec- . 
vices come with a price teg and 
that expenditure is re p rese n ts- ' 
five of what the middle of the 
road taxpayer is prepared to 
firairag. 

An example is public expen- 
diture on health. This was run- 
ning in the UK in 1993-94 (the 
last year for which a functional 
breakdown of public spending 
was available) at almost £44ba 
- slightly more than the yield 
of VAT. Why not then earmark 
the proceeds of VAT for the 
National Health Service and let . 
voters put their money where 

British tax attitudes 

Views on taxes, borne by*. 
W. " ■ '• HBb' -'jieM*' 1 . -’ 


their mouths are? If they desire 
ever more NHS expenditure, 
they should be ready to see the 
VAT rate creep up from 17V4 to 
18, 19, 20 per cent and however 
much more it takes. Eventu- 
ally even the belligerent uni- 
formed nurses who turn up at 
every televised election brains 
trust with. their demands for 
"more, more, more” will begin 
to be heard more critically. 

. Finance . ministries, have 
opposed hypothecated taxation 
mainly because it reduces their 
own power. They can however 
call in aid weU-known abuses 
of hypothecation. There have 
been raids on .-supposedly 
hypothecated revenues. The 





of 


Much too high 3U5 aj , SOX 

JbaMgfer; ■ \tai 

About right 34.7 640 . 

Too low- 40 ^ ■ an ! 
Much too iow &» 0L1 0T 

DorrtknowT ' 2.7 . . 20 - 



nrt dfitiftcflbte 


• # ♦ 

* t. r 


Ncnnsw 



UK Road Fund usedto _ be • 

diverted to finance exg^ifore g 

of no benefit to motorists, to • 
opposite distortion roises when 
general revenues aredi varied 
to top up hypothecated taxes. 

Until 19® UK National Insur- 
ance contributions were sup- 
“Seated Hr an Exchequer . 

contribution. . . 

Another danger is tokenlan, 

such as the extra IP the 
income tax which the- 

Democrats wanted to gjendan 
education in the 1992 election. 
Without having to bear a 
known tax for existing educa- 
tional expenditure, voters are 
not in a good position to judge 
whether they want to spend 

more or less. - - 
The greatest obstacle to. w 
cessful earmarking is made., 
quate public knowledge- In -. 
most countries half or moreof 
social security taros are anraa- 
on employere. Employees still 
have to pay in the end, 
these taxes are passed backjn 
lower wages or passed forward 
in higher trices. As a result, 
contributions cannot be used 
to put a price tag on increases 
in social expenditure, such as 
pgwfiinns or sickness benefit 

E armarking is indeed 
easier for indirect 
taxes on goods and J 
services. But some - - 
progress is still possible on the . 
direct side. Income tax plus 
employee national insurance 
contributions amounted in the 
UK in 1993-94 to nearly £90bs. 

This was slightly less than the 
hill for social security. Why 
not than earmark the whole of . 
these personal tax receipts for 
a Redistribution Fund, from .. . 
which all benefits, whether 
contributory or not. would be 
paid? Gradually the. gross 
totals of both tax and benefits 
could be reduced as Inland 
Revenue computerisation . 
allowed some optional netting. . 
off in household taxes and ben- 
efits; and an. approach could be 
TTiaite to a negative income tax. 

A study of earmarking by 
Mar garet Wilkinson in . the . 
November, issue of - Fiscal - 
Studies" concludes that the 
snags are bo great that ear^ 
marking is, except on a very 
small scale, a snare and a delu- 
sion. She ends: “Governments . 
must weigh the alternatives;, 
and. determine priorities with 
full knowledge rathe complexk . . 

ties that are involve and then 
be accountable to tbe'etoctor- 
ate for .them." But tt ta tsare-.' 
dsaty thin unrealistic 
for omniscience by govern^ 
meats which convinces some J . 
of us that there must be a bet- w. . 
ter way. 







Call 0800 700 444 to apply for the American Express Card. 


LETTERS TO THE EDITOR 

^ _ _ ■ _ * 

Number One Southwark Bridge, London SE1 9HL 

Fax 071 873 5938. Letters transmitted should be clearly typed and not hand written. Please set fox for finest resolution 

■ • ■ 

6 ■ 

Monetary framework needs more clarity 


From Mr Malcolm Bruce MP. 

Sir, I very much welcome the 
call in your leader article 
(December 13) for a new target 
range for UK inflation. Indeed I 
made a similar proposal in our 
party’s alternative Budget two 
weeks ago, suggesting that the 
inflation target be reduced to 
0-3 per cent 

The present inflation target 
is something of a muddle, with 
a target rage of 1-28 per cent 
within a broader target of 1-4 
per cent There is now a need 
to reinforce the credibility of 
the monetary framework by 


making the inflation target 
dearer and singular, and by 
addressing some of the other 
defects which you identify. 
This includes the narrowness 
of the 1-2.5 per cent range, 
which Is in practical and opera- 
tional terms for too restrictive. 

Additionally, there is no 
explicit target beyond 1997, 

thnu gh thp Bank Of Btt gianrf is 

apparently working on an 
assumption of 0-2 per cent. 
This is a significant weakness 
given that monetary policy 
works with long lags, so. that it 
is vital to know well in 


advance where one is steering 
for. As you note, it is also par- 
ticularly important to make 
the infla tion targets clear 
beyond 1997, as this will cover 
the post-eledion period, possi- 
bly with a non-Cansenrative 
government in office. This 
would be absolutely the wrong 
time to have any confusion 


about the nature of the UK’s 
commitment to low inflation. 

I believe that the introduc- 


tion of inflation .targets has 
been a promising evolution in 
UK monetary policy. There is 
now a need, however, to make 


the monetary framework - 
dearer and less open to future 
abuse and confiision. . 4 

This should serve, as you . 
suggest, to build a cross-party . 
consensus around low infla- ■ : . ■ 
tton, which could not only 
reduce the price of long-term 
British government borrowing; 
but could lock the UK into per- 
manently low levels of /infla- 
tion. 

Malcolm Bruce, - - 

Liberal .Democrat Treasury .. 
spokesman. 

House of Commons, 

London SW1A QAA 


Answer lies 


Hard to catch a Eurostar 


in question 

Prom At- Mark Griffith. 

Sir, Lord Pl umb is right 
(Letters, December 8} when, 
commenting an a survey of the 
attitudes to the European 
Union in the UK and Germany, 
he says that how questions are 
framed in polls on the EU can 
affect the result However, this 
usually works for, not a gainst, 
the EU lobby. 

Several countries would not 
be in the association if referen- 
dum questions had been 
worded with Yes for staying 
out and No for going in. Pro- 
Union politicians are quick 
annugh to use what he «>ii« 
"popular bewilderment” when 
it suits them. 

Confused voters choosing the 
friendly, positive-sounding Yes 
are called bold and intelligent 
when they vote for the in- 
stitution that gives Lord 
numb purpose, the European 
Union. 

Mark Griffith, 

MTI-Eimgarian Naas 
Agency, 

Budapest 

Bungary 


From Dr Caroline Jackson 
MEiP. 

Sir, Your Business Travel 
section reported (*Th time for 
Eurostar”, December 12) that a 
passmger arriving less than 20 
minirtMtt before the departure 
of the Eurostar train from 
Waterloo was barred access on 
the grounds that security 
checks could not be carried 
out 

The arrangements surround- 
ing the existing Eurostar ser- 
vice are so bizarre and haphaz- 
ard that I begin to wonder 
whether 11 is not being run by 
a group of fifth columnists in 
the pay of the ferry companies. 
I arrived 10 minutes before the 
Waterloo-Brussels departure 
the other day and was waved 
through with no security 
checks on my baggage what- 
ever. When I had phoned 
Eurostar the previous day - 
with great difficulty because 
the line was constantly 
engaged - I was told that the 
train was very fun In fact, it 
was virtually empty, both 
ways. 

Meanwhile, at the Gare du 
Midi in Brussels, the ttel gfanc 


still insist on static passport 
checks and their station is like 


UK requires reserves of i 
veranoe. Not everybody, 
dally business travellers 
plan weeks or even da: 
advance. I tried for a tick 
the next day's Eurosti 
Swindon and Didcot, 
impo r t a nt London feeder 
tions, and was told that 
could not sell me one be 
they did not have the r 
sary computer w pi q i m f-n 
Didcot they believe that il 


be two years before they get it. 
I was advised to try Reading, 
Bath or Bristol. 


I have just rung Eurostar 
again - to get a recorded 
announcement that the nffiro 
is closed because of a fire drill 
No alternative arrangement for 
booking tickets seems to be in 
place. 

Do they want passengers at 
ah? 


Caroline Jackson, 

MEP for Wiltshire North and 
Bath, 


IS Bath Road, Swindon. 
Wiltshire SNl 4BA 


Current dividend trend has d amag ing effects 


From Mr Martin Simons. 

Sir, The extraordinary rise in 
dividends declared, by UK elec- 
tricity generators and distribu- 
tors, coupled with buy-backs of 
shares "which enhance returns 
for shareholders" (Company 
News, This Week; "Buy-backs 
set to enhance returns for 
shareholders", December 12) is 
a national disgrace. 

The necessary profits and 
cash flows for the distribution 
bonanza have been, and con- 


tinue to be, generated by duop- 
oly suppliers using their mus- 
cle by overcharging private 
and industrial customers. The 
latter suffer from unnecessary 
cost pressure which inhibits 
investment and job creation. 

The electricity industry con- 
tinues to shed labour and past 
inefficiencies are now used to 
justify electrifying pay 
increases for directors. When 
will some influential spark 
realise that short-term electric- 


ity profit optimisation Is doing 
im m ens e damage, especially to 
energy-intensive sectors such 
as chemicals, glass, cement 
and heavy engineering? 

Are French, German and 
Japanese electricity companies 
paying such high dividends 
and buying back shares? No, 
because they have some sense* 
not least for the common weal! 
Martin Smons, 

24 Granard Avenue, 

London SW15 SHJ 


Rise in duty 
no answer 


From Mr Hugh Morison. . . . 

Sir, Many commentators and v . . 
City opinion-formers seem to ' ' 
have welcomed the chancel- 
tor’s decision to raise excise ~ 
duties on spirits and other' . 
products, on the grounds that - 
this would close the gap teft fn~ . 
his Budget by the vote ■ 

raising VAT on fuel from 8 Jo ■ 

17ir per cent . 

The evidence of the past few - ' 
years suggests, however, that ' 
Kenneth Clarke, the rhanrwt 
lor, will foj] tn. his objective; in ’ 
the last year that followed an 
increase, in excise j duty . 
(1992-93) the chcuoLcellor’s; ' 
receipts from excise duty on - - 
spirits fell by £80m. In the fol- 
lowing year, after Mr Clarke . 
rod his predecessor had frozen ^ ... . 
the rate of duty on spirits. 
Treasury receipts actually- ' 
grewby£46m. 

This clear evidence of dimin- 
ishing returns points to the . . 

likelihood that last . week’s 4. 
per cent rise will once again 
lead to a drop in revenue 
receipts. 

Not only will tbp chancel- - 
tor’s action damage an. impor- 
tant UK industry; not only will 
i t w eaken the industry’s 
attempts to overcame discrimi- 
natory tax treatment in Europe 
rod beyond; he has done afi '.\.. 

“js in a desperate attempt to > 
raise revenue which will not . V 
materialise. - - 

The chancellor trill fluid that 
this particular crock of gold is 
at the end of a very distant 
rainbow. • .- - 

























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ThEre is a danger that the success 
of this week’s investment confer- 
ence in Northern Ireland will be 
measured in pounds arwi pence. 
1 The long list of aid pledges 
recorded over the past for days 
are welcome injections to the 
region, that will be easily spent 
Yet the biggest obstacle to eco- 
nomic success in Ulster bas never 
been a shortage of public funds. 
Rather, it has been a lack of confi- 
dence in the future, bora of the 
Troubles, and shared by residents 
and foreign investors alike. Over- 
coming that Lack of faith would be 
Ibe trne peace dividend. On that 
score alone, the conference may 
have made a lasting contribution 
to the region’s future. 

Delegates heard mngh of the tax 
and other incentives aimed at 
attracting inward investors to the 
province. But there are more fun- 
damental attractions to a peaceful 
Northern Ireland. P rop er ty prices 
are the lowest in the UK. as are 
labour costs, and the workforce is 
well-educated. A few investors 
have already begun to exploit 
these benefits. But there win need 
to be many more if the economy is 
to rid itself of the distortions cre- 
ated by the last 25 years. 

Economic activity is heavily 
skewed towards agriculture, 
decftrring industries and the pub- 
lic sector. None of these offers a 
very promising launch pad for 
peacetime growth. The prime min- 
ister, Mr John Major, lias rightly 
promised that security expendi- 
ture savings wUL not be lost to the 
region altogether, but ploughed 
back into health and education 
spending. Altering the composi- 
tion of .public spending to favour 


■ 

te ache rs and doctors over police- 
man may create more public jobs 
than it destroys. Yet the long-term 
atm of subsidies from the centre - 
currently around half of the 
region's budget, or quarter of GDP 
- must now be to give people a 
better opportunity to fend for 
themselves in the private sector. 

Over a third of the workforce is 
currently employed by the govern- 
ment Even this degree of public 
job creation has not prevented the 
region from having the highest 
unemployment rate in the UK, 
with over half of the total being 

long-term unemployment Jobles- 
sness afflicts Catholics particu- 
larly. Seme 43 per cent of 2050 
year old Catholic men are cur- 
rently without work, compared to 
a 26 per cent non^mpkjymect rate 
among Protestants. 

Mr Major announced further 
measures to tackle the problem in 
yesterday’s speech. But there is a 
strung case tor doing more. Those 
at the periphery of the UK have 
long resented being used as 
guinea pigs for potentially 
unpopular new government poli- 
cies. Using Northern Ireland as a 
testing ground for ambitious 
employment policies which went 
beyond the timid measures 
announced in last month's budget 
would make a welcome change. 
With luck, enhanced inward 
Investment flows, tighter trans- 
port and other links with the 
south, and a better tourism trade 
will eventually provide Jobs for 
the unemployed to go to. This 
week's conference may make 
employers take a look. The trick 
will be giving them the confidence 
to stay. 


India on trial 


Indians are not doomed to be poor. 
They are poor because of foolish 
policies. Unfortunately, the likely 
response to the defeats suffered by 
the Congress party in state elec 1 
turns will be precisely the wrong 
mii tijfe of caution with profli- 
gacy. The prime minister deserves 
credit for initiating reform, but 
has failed to persuade the elector- 
ate of its benefits. Indeed be has 
barely tried. 

India’s politics has become a 
struggle over the redistribution of 
poverty. This can be seen in the 
resistance to reform of the labour 
market. In the opposition to priva- 
tisation of public enterprises; in 
the continued pressure for protec- 
tion from imports, in the danamAt 
for affirmative action for “back- 
ward” castes, in the failure to 
charge property for electricity and 
irrigation, in pressures for more 
public spending on food and fertil- 
iser subsidies and in the wide- 
spread exemptions from taxation. 

The hriUiantly executed 
response to India’s economic crisis 
of 1991 offered the country a 
chance to break out of the zero- 
sum trap into which politics had 
led. Unfortunately, reform has not 
gone for or fast enough. In addi- 
tion, fiscal stabilisation more or 
less stopped after 199^48. The fis- 
cal deficit is expected to be 6 per 
cent of gross domestic product 
this year and may rise sharply 
again next year, in response to the 
electoral defeats. Yet even this 
year’s level is almost certainly 
unsustainable in the long run. 

The pity of it an is that the 
reform agenda is beneficial to 


huge chunks of the electorate. The 
elimination of controls has 
already reduced corruption and, 
zealously pursued, could reduce it 
further. The beneficiaries of indus- 
trial protection, overemployment 
in piddle enterprises and the fail- 
ure to allow plant closures are a 
small minority of the labour force. 
Equally, trade liberalisation 
should favour agricultural output. 
While subsidised power, water and 
fertilisers do benefit many fann- 
ers, the big gamers among them 
are certainly not the rural poor: 

The danger now is that reform 
will stand stiU, while fiscal stabi- 
lisation starts to go backwards. If 
so, the economic momentum built 
lip over the last three years, 
though probably big enough to 
produce growth at 5-6 per cent, 
may well prove insufficient for 
anything more. It could even 
reverse The tragedy is that India 
desperately needs - and could 
achieve - an east Asian level of 
economic performance. 

While India was capable of fiscal 
stability, in the ISSQs and 1970s, its 
economy was shackled by con- 
trols. Now that controls are being 
lifted, it cannot sustain fiscal sta- 
bility. Worse, after these elections, 
Mr Rao's instinct will be to go 
slow on reform and backslide on 
stabilisation. It is a politically 
attractive strategy, but the wrong 
one. The only sold platform for 
political success and even stability 
lies in the promise of a better life 
for afi. India’s hope lies in the 
achievement of East Asian 
growth, not in the false allure of 
Latin American populism. 


High wire act 


The announcement yesterday by 
Trafalgar House, the conglomer- 
ate, that it may bid for Northern 
Electric, one of the UK regional 
electricity companies (recs), may 
mark the start of the biggest shak- 
e-up in electricity supply and dis- 
tribution since the 1990 privatisa- 
tion. The bid partly reflects the 
industry’s growing financial 
heal th, and is likely to be followed 
by others. But extensive consoli- 
dation will present regulators with 
tough problems, as they struggle 
to promote greater competition. 

News of the possible bid has 
emerged as the industry enters a 
new lap of its journey towards lib- 
eralisation. The government's 
“golden share" in the 12 recs. pre- 
venting takeover, expires at the 
end of March. New price controls 
will start to bite in April, and the 
market will be opened np to frill 

competition in 1998. Meanwhile 
Offer, the industry regulator, is 
trying to incxe^e competition in 

generation. 

Despite all this uncertainty. 
Trafalgar House Is right that there 
are attractions in taking over a 
rec. Even after recent cost-cutting; 
there are more jobs to be shed. If 
tecs merge with each other - or 
with regional water companies, 
another long-touted possible part 
nership - there could be large 
savings to administration and bHl- 
ing. Bidders win also be attracted 
by the tecs' cash and future cash 
flow, although valuation is compli- 
cated by the present uncertainty 
over the value of the National 
Grid, in which recs hold shares. 


It is less clear that Trafalgar 
House is the company to maxim- 
ise the value of a rec; its record is 
indifferent, and its new manage- 
ment team unproven in its present 
configuration. The mooted bid, 
which may be partly motivated by 
the desire to extract tax gains 
from combining the two compa- 
nies, also raises tough regulatory 
questions. Offer would be hard- 
pressed to ensure that the pec’s 
profits are adequately ring-fenced 
from Trafalgar House’s other 
activities. The regulator has 
already been forced to grapple 
with such problems, as the recs 
. have d i v e rs ifi ed beyond electricity 
supply and distribution, but they 
would be compounded if a rec 
were subsumed- within a much 
larger group. 

The bid would not, on its own, 
raise questions for competition 
policy. But it sets the scene for a 
consolidation of the Industry 
which, could do so. The recs enjoy, 
in essence, regional natural 
monopolies in electricity distribu- 
tion, while facin g growing compe- 
tition in supply from each other 
and from new artrants, including 
generators. However, the industry 
is still a long way from the regula- 
tor’s dream of a fully competitive 
market In electricity supply. 
While a degree of consolidation 
among suppliers would not.neces- 
sarily harm competition, such 
moves would need careful assess- 
ment by competition authorities, 
to ensure that the benefits of pri- 
vatisation and liberalisation are 
not undenzdned. 


LKtf’ c> 


FBNANCXAX. TIMES THURSDAY DECEMBER 1 5 1994 


FINANCIAL TIMES 

Number One Southwark Bridge, London SE1 9HL 

Tel; 071-873 3000 Telex: 9221S6 Fax: 071-407 5700 

a , — ■ / 

Thursday December 15 1994 


C orporate might is not 
something about which 
senior executives at 
Allianz, Europe’s larg- 
est insurance company, 
like to boast. They chuckle at the 
difficulty visitors have finding the 
group’s Munich headquarters, with 
its anonymous postwar facade and 
small nameplate. 

But this public image is increas- 
ingly deceptive. The company 
recently paid an estimated DM6.4bn 
<$4.ibn) to buy the direct insurance 
operations of Swiss Re, the world’s 
second largest reinsurance com- 
pany. 

The deal will increase Allianz’s 
premium income by about 20 per 
cent, from DM65J5bn last year. It 
will also take the company within 
striking distance of becoming the 
world's largest insurance company, 
toppling Nippon Life which had pre- 
mium income equivalent to about 
DMSObn last year. 

For Allianz’s 52-year-old chair- 
man, Mr Henning Schulte-Noelle, 
the prospect of global domination is 
not yet something to brag about "I 
haven't really thought about that,” 
he says. “It is not really a strategic 
objective." 

One reason may be that Allianz is 
likely to be forced by anti-trust 
authorities to dispose of part of the 
Swiss Re package - the Ventinte/ 
Magdeburger insurance group. Half 
the latter’s annual premium income 
of about DM7bn comes from Ger- 
many’s second largest private 
hwaTth insurer, Veremigte Kranken, 
and Allianz already has a majority 
holding in the market leader, Deut- 
sche Krankenversicherung. 

Mr Schulte-Noelle expects a deri- 
sion by the authorities “pretty 
soon" but says a forced disposal 
“bas been a possibility we have had 
to keep in mind since the very 
beginning”. Both German and for- 
eign companies have expressed 
interest in buying Vereinte. 

Another reason Allianz prefers 
not to boast about its size is that 
rapid international growth in the 
past decade bas left it with some 
headaches. 

One is Fireman's Fund, the US 
insurer Allianz acquired four years 
ago for f&3bn which has performed 
below the industry average. Mr 
Schulte-Noelle defends the pur- 
chase. made under his predecessor, 
Mr Wolfgang Schieren. “We feel 
that Fireman’s Fund was a good 
buy for us. The results have much 
improved over the years and the 
progress achieved would be even 
more visible with a market turn." 

A second problem is Deutsche 
Versicherungs, the former state 
insurance monopoly in east Ger- 
many that Allianz acquired in 1990. 
The acquisition has so far cost the 
company DM2bn, and has yet to be 
profitable, despite rapid premium 
increases and a substantial restruct- 
uring to turn the operation into a 


Deceptive image 

of anonymity 

Henning Schulte-Noelle, Allianz chairman, explains the 
insurer’s strategy to Andrew Fisher and Ralph Atkins 


Allianz: heading for global domination 


Affianz share price 
Rdaitttt to Dax Max ftwbosacfl 


(Sobol insurers by total premiums, 1993 

COMPANY COUNTRY So 

NbPonLA Japan S7 J 


- * % . . 
■ ■■ 

J".*-- 

-■■V. . 


Fa ■ 


:-A 


. 'Cjl 


«£ .AI 



Dft-fcHLda 

Simtomolife 


Germany 

Japan 


403 

301 


UAP 


em 


Prudent* {US) 
Mttttptior life 


24.1 

133 


US 

franc* 


because insurance markets are 
essentially local markets. If you 
want to get a share of the cake von 
have to be a local competitor. ” 

Similarly, he docs not expect any 
immediate upset to traditional dis- 
tribution channels. Under the new 
EU rules, he expects to see no less 
reliance on trained sales agents tied 
to selling Allianz products. "There 
is no authority any more checking 
products in advance and saying 
’don't worry, this is a product that 
we have looked into and which you 
can trust' . . . Deregulation will 
rather strengthen the roll 1 of the 
captive sales organisation, such as 
we have, in coming years." 

Thus Mr Schulte-Noelle does not 
expect direct telephone selling tech- 
niques, pioneered in the l : K by 
Royal Bank of Scotland's Direct 
Line, to make substantial inroads 
into the German market. Soliciting 
customers by phone is anyway for- 
bidden by the German courts. 

That should give Allianz the 
opportunity of build on the success 
It and other German insurers hare 
had in pushing up rates on motor 
and industrial policies. As the spate 
of car thefts that so disrupted the 
motor sector in recent years has 
become less alarming, underwriting 
results have been boosted further. 


MfeuiUs 

UuMCtlR* 


COTum 


PMhMtf (UK) 


***■ 

UK 

SWM3T 

NoCte 


I n turn, ;in improved perfor- 
maun 1 in the German market 
should help ameliorate inves- 
tors’ fears about the 
short-term casts of ;w aggros 
Rive interoarinnal acquisition strat- 
egy. Although Allianz shares have 
performed below the market aver- 
age this year. Mr Schulte- Noclle 
says they have provided an annual 
average i»ost-tax return ui 17 per 
cent over io years agniitrf to per 
cent fur the Dax index of leading 
shares listed ui Frankfurt To make 
the shares more attractive for 
smaller investors, the company 
intends to divide its shares - cur- 
rently worth DMC.-lL’fl each, mtn 
smaller units. 

There reuum questions about the 
impact of Allianz's international 
strategy on the value of us shares. 
"There is a risk.” says Nomura 
Equity Research, “that the Allianz 
earnings curve over the medium 
term will be unspectacular.” 

Last year. Allianz boosted pre-tax 
profits by 25 per cent to DM2bu. hut 
this year's performance has been 
more sedate. Mr Schulte-N'oclle says 
total underwriting losses this year 
will be below DMlbu after DM l. Him 
in 19K1. Investment earnings will be 
affected by the downturn on bond 
markets. 

Shareholders may thus take same 
comfort from the group's disinclina- 
tion to talk about becoming the 
world’s biggest insurer. Mr Schulte- 
Noelle is setting his sights on qual- 
ity rather than size - “the world's 
best, that is the objective I would 
prefer' 1 . 


Homing Scftulte-Noefe, 


modern insurance business. 

Mr Schulte-Noelle expects Deut- 
sche Versicherungs to move into 
profit in 1995, with a much reduced 
underwriting loss. However, the 
company has not yet built op the 
investment portfolio needed to pro- 
vide the sort of income that bolsters 
results elsewhere in the group. In 
the tong run, he expects to prove 
that the east German venture has 
enhanced shareholder value. 

When Mr Schulte-Noelle took 
over the top job at Allianz in 1991, 
premium income had doubled in the 
previous five years. He admits there 
were good reasons for railing a halt 
to ftnther acquisitions to allow a 
period of consolidation. 

But, he says, Allianz could not 
ignore the opportunity offered by 
the Swiss Re deaL The company 
had long wanted to expand in Swit- 
zerland. With Swiss Re, It acquired 
insurance companies Elvia in Zur- 
ich and Lloyd Adriatico in Italy, as 
well as Vereinte/Magdehurger. 

The search for growth opportuni- 
ties continues, says Mr Schulte- 
Noelle. He wants to increase the 
company's share of the life market 
in the UK, where it owns Condnfi 


Tokyo lutanre & Fra 




<U 

fra* ICW 


Insurance. He is also targeting the 
emerging markets of Asia and east- 
ern Europe. 

A forced disposal of Vereinte 
might be used to create other 
expansion opportunities says Mr 
Schulte-Noelle. If it has to be sold, 
he will seek a deal that fits with 
Allianz's long-term strategy - and 
not just maximise sale proceeds. 
“Price is of course the single most 
important criterion, but it could 
also be of importance to ns that the 
buyer of Vereinte may have to offer 
something in terms of helping us in 
other markets.” 

But the Allianz chairman dis- 
misses suggestions that the com- 
pany would attempt to foil foreign 
companies entering the German 
market. Mr Schulte-Noelle says Alli- 
anz has already taken steps to 
defend itself from fiercer competi- 
tion at home as the European Union 
deregulates the insurance market 

Germany will be among those 
affected most by EU directives 
which since July have allowed 
Europe’s insurance companies to 
sell policies anywhere in the Union 
on the basis of regulations in their 
home stale. Local controls on the 


wording of policies and on rates 
have also been removed. 

In response, Allianz has reorgan- 
ised the non-life side of its liuslness 
into divisions serving three con- 
sumer groups - personal customers, 
small and medium- sized commercial 
business, and large industrial cli- 
ents. The company is also preparing 
to adapt its products rapidly in 
response to changing demands. But 
Allianz is "not going to play mar- 
keting gimmicks just for sake of 
coming up with something new". 

For instance, Mr Schulte-Noelle 
does not expect unit trust-linked life 
policies to become more popular, as 
in the UK. Germany’s history, he 
says, means most customers put 
caution to the fore. "This may 
change because private wealth built 
up after the war is now being trans- 
ferred to a new generation and peo- 
ple have more money to play with." 

But for all the preparations Alli- 
anz has made to hold on to its home 
market share, Mr Schulte-Noelle 
does not foresee EU directives lard- 
ing to a sudden influx of products 
designed in other countries. "I don't 
see any major development of cross- 
border selling of personal tines 


The looking glass view of Europe 


a Almost everything 
that happens in the 
European Union is 
public knowledge 
within an hour or 
two. The European 

PFRcnvjT Commission in 
L Bru5sels is one of 
— . ISXl . — the most open pub- 
lic services in the world and we all 
like it that way. It is therefore sur- 
prising to find that, recently, some 
commentators seem to see Europe 
not through the looking glass but 
through the distorting minor. This 
applies particularly to what “Brus- 
sels” is alleged to be imposing on 
the European citizen. 

A few facts. First, all significant 
decisions in the EU, with the excep- 
tion of those relating to competition 
(for example state aids), are taken 
not by bureaucrats but by UK min- 
isters and their colleagues in the 
Council of Minis ters. The Commis- 
sion proposes, the Council and the 
parliament decide. Recent Treaty 
changes have increased the parlia- 
ment's control over the Commis- 
sion. This is a genuinely democratic 
system. 

The budget in the EU is fixed by 


the Council and the parliament. 
About 97.5 per cent of public expen- 
diture in the EU is national expen- 
diture by the member states. The 
Community budget represents 
about 2JS per cent It is subject to 
fixed limi ts on all main types of 
expenditure. That is why last year 
the Commission kept about 1,000 
posts vacant because there was no 
money. When we underspend the 
budget, there is usually silence in 
the media. In 1994 we shall under- 
spend the budget on agriculture by 
about £2. Thu. 

Second, the European Commis- 
sion is a lean machine. We could 
have taken a different, centralising 
approach and established a huge 
bureaucracy in Brussels to adminis- 
ter directly all grants and schemes. 
I am glad that this approach was 
not followed. There are many mil- 
lion national civil servants in the 
member states but less than 15,000 
officials on the operating budget of 
the European Commission (about 
one fifth are required because we 
work in nine languages). 

It follows that, although the Com- 
mission has the final responsibility 
for the execution of the budget. 


most of the operations, probably 
about 80 per cent, are in fact carried 
out in the member states. De facto, 
surveillance and control are shared 
between the member states and the 
Commission. Not many people seem 
to know, however, that when the 
accounts are settled each year the 
Commission disallows - that is, 
does not charge to the European 
taxpayer - irregular payments. For 

Hie parliament’s 
control over the 
Commission has 
Increased. That is 
genuine democracy 


1939 accounts we disallowed £630m, 
for 1990 accounts £770m and we 
expect to disallow a further sub- 
stantial sum for 1991. 

The Audit Court has recently crit- 
icised some elements of financial 
administration in the Commission. I 
will place a small bet that most 
commentators have not read the 484 
pages of tiie report, nor the Com- 
mission's replies. I state emphati- 


cally that the Commission has no 
dispute with the Audit Court It is 
the court's duty to seek to improve 
financial management and ours to 
respond. Where we think that it is 
right we shall act and the member 
states should do so too. 

However, this has also been the 
open season for wild statements 
about fraud in the Union. What we 
do know is that the effort against 
fraud and the rate of detection have 
increased, both the European par- 
liament and. the Commission giving 
this a high priority. What we do not 
know is whether fraud bas 
increased or decreased, although it 
is very likely that it is decreasing 
because of the measures taken. In 
any event many of the figures 
quoted have no basis in fact 

Finally, back to basics. It seems 
to be the time to emphasise that the 
European Union: 

• has been the centrepiece of UK 
foreign and economic policy for 
very good reasons since this com- 
munity of friendly, democratic 
states has increased prosperity for 
its member states while strictly 
respecting their national diversity; 

• has certain competences strictly 


defined by the Treaty, which cannot 
be changed except by unanimity; 

• has sharply reduced its legisla- 
tive action, the volume of proposals 
put to the Council and parliament 
having fallen like a stone since 1990 
to a very low level now; 

• is the world's biggest trader, pro- 
viding the largest market for Brit- 
ish goods (Britain exports more to 
the Netherlands and Belgium than 
to the USk 

• is in a period of soundly-based 
growth, likely to outpace the US 
and Japan in 1995 and 1996. though 
more action is needed on jobs; 

• has been a real force for liberali- 
sing western Europe for the free 
movement of goods, services and 
capital to the benefit of the con- 
sumer and of business, the internal 
market sweeping away tons of 
national red tape and bureaucracy. 

This is the picture in the looking 
glass. 

David Williamson 


77zi? author is secretary -general of 
the European Commission 


On the 
Wild side 

■ So “Wild" Bill Buford, editor of 
the London-based quarterly 
publication Qranta. is defecting to 
the New Yorker magazine as its 
literary and fiction editor. Judging 
by the sounds of lamentation md 
rending OT garments emanating 
from British literary circles 
yesterday, anyone would have 
thought the chancellor had slapped 
top-rate VAT an books. 

ft was 15 years ago that the 
flamboyant American took on 
Granta, then an ailing Cambridge 
undergraduate periodical, and 
turned it into a vital forum for the 
best in new writing, from fiction to 
reportage and travel writing, with a 
circulation of 95,000. 

Described by one former 
colleague as "an exasperating 
genius", Buford is very much the 
band&oin editor - wielding; his 
contri buto rs would say, a machete 
rather than a more delicate 
instrument His own book. Among 
the Thugs, by the way, is a study of 
British football hooligans - not a 
c onfe ssion ofhis professional modus 
vwendi. 

In latter years, though. Grants 
had lost some of its ability to 
surprise and many of its regular 
contributors - Salman Rushdie, 
Martin Amis, Banff Kuneishi and 
j uifan Barnes - are now established 
columnists on the more lucrative 
New Yorker. “He’s following the 


market really,” is how Kureishi 
puts it 

While Grants without Buford is 
hard enough to imagine. Buford 
with, a boss is a yet more 
challe nging concept. But no doubt 
Tina Brown, the New Yorker’s 
fierce British editor, will know 
when to put the boot in. 


Bottoms up 

■ Long live the beerage. Sir Paul 
Nicholson, the deer-s talking 
chairman of Vaux, the Sunderland 
brewer and hotelier, has just 
become the third generation of his 
family to chair the Brewers and 
Licensed Retailers Association. 

G randfather was chairman of the 
association for six years in the 1920s 
and 1930s, and father for a year in 
the 1960s. 

But despite his pedigree - 
Harrow, Cambridge and the 
Coldstream Guards - Sir Paul likes 
to give the impression that his 
family are strictly tradespeople and 
not hereditary owners of what he 
likes to refer to as his “booze and 
snooze business”. Bit bard to 
believe - given that begot the 
chairman’s job at 38 and has been 
doing it for nearly 20 years. 

True, Sir Paul's grandfather 
started at Vaux as a humble 
accountant in 1896, and the family 
now owns less than 1 per cent of 
the firm. Then again when grandad 
wanted to catch the night sleeper to 
London he could get it to halt at the 
bottom of his drive. 



no longer be needing it - he was 
defeated earlier this year in the 
country's first multi-party election 
since independence in 1964. 

So New State House in. the capital 
Lilongwe has been put on the 
market It “occupies a magnificent 
setting amongst vast beautiful 
landscaped (sic) comprising 
immaculate grassed gardens 
complete with a summer pavilion, 
terrazzo pavings and exotic flora”, 
and comes with a banqueting hall 
capable of seating 600 guests. All 
interested entrepreneurs are invited 
to write to Box 30228. Lilongwe. 

Sounds like a suitable retirement 
home for another elderly gentleman 
- the one who used to run Lonrho. 


The shareholders want to spend 
your wages’ 

Not even Sir Paul, the new 
president of the Northeast Chamber 
of Commerce, can command that 
sort of service these days. 


FoHy bizarre 

■ For sale: presidential palace, one 
previous elderly owner. Malawi's 
new government fa looking for 
someone to rent or buy one of 
Africa's most remarkable follies - a 
300-room palace, commissioned by 
the country’s former leader, 
Hastings Kamuzu Banda. 

The erstwhile life president, 
whose autocratic style won him the 
ntekTOwne "One Man Banda", will 


Tasty profit 


■ Enow your beer - a venture 
capitalist's view. No doubt there are 
all sorts of good financial reasons 
why Phil Goodwin, 3i's man in 
Manchester, fa putting £13m of 
equity into the £ 35 . 5 m management 

buy-out of Presspart from BTR. 

But Goodwin's latest investment 
has also been guided by his taste 
buds. Apparently, Presspart has 
cracked the secret of how to make 
the widget which puts the fizz in 
beer cans out of metal rather than 
plastic. 

Apart from making it easier to 
recycle empty cans, the all-metal 
device functions at normal draught 
beer d rinking temperatures so 
imbibers can taste the hops better. 
“I really don't like canned draught 


beer that’s been over-chilled in the 
fridge to make the widget work. 1 * 
opines Goodwin. Nice to find a 
venture capitalist who knows about 
more than champagne. 


Baby on board 

■ Remember the South African 
Airways TV commercial which 
showed a passenger giving birth 
prematurely? Apart from an 
attempt to symbolise the birth of 
the new South Africa, delivered 
with the subtlety of a wildebeest 
skipping down the aisle of a 747, the 
heroic air hostesses bring the young 
passenger into the world without a 
drop of goo staining their 
impeccably pressed uniforms. 

Now TWA has set the record 
straight On-hoard labour fa a far 
messier business - judging by an 
unscheduled arrival on a recent 
TWA flight from New York to 
Orlando. 

Fortunately, a doctor and two 
paramedics on the flight came to 
the rescue of the cabin staff Even 
so, they still needed a straw to clear 
fluid from the baby’s lungs and 
shoe-laces to tie the umbilical cord, 

according to TWA’s version of 
events. 

However, when it comes to 
toe-curling sentimentality there is 
not much difference between the 
new South Africa and TWA. The 
lucky parents honoured the airport 
where TWA made an unscheduled 
landing by naming their child 
Dulles. Pass the side bag, please. 









22 


liiTfc.. 



Bowens 


A WORLD LEADER 
IN PHOTOGRAPHIC 


INTERNATIONAL 


LIGHTING 



FINANCIAL TIMES 


▲Nixrci 


Thursday December 15 1994 


Global Provider of 
Structured Networking Solutions 
Tel: 01753 6S6884 


Troubled US train operator slashes services as ticket sales fall 


Amtrak axes 5,500 jobs in bid 


to cut projected $200m deficit 


By Our Foreign staff 
and agencies 


Amtrak, the US public sector 
train operator, is cutting about 
5,500 jobs and shutting down 21 
per cent of its passenger service 
in an effort to eliminate a proj- 
ected 3200m deficit this fiscal 


Amtrak ydd most of the cots 
would be in' the frequency of 
train services, but some routes 
would be eliminated, including 
services between Chicago and 
Milwaukee, Chicago and Grand 
Rapids and San Jos£ to Sacra- 


mento and Roseville, California. 

Mr Thomas Downs, Amtrak 
president, said the system could 
no longer afford to maintain its 
service to 540 cities across the US 
as a result of a rising deficit and 
shrinking ticket sales. 

Amtrak admitted earlier this 
year that it was losing $33 on 
every ticket sold. 

Its efficiency record has deteri- 
orated and Last year saw the 
worst accident in the network's 
history when 47 people died in a 
crash on the Los Angeles to 
Miami route. 

Amtrak lost $76Jm in fiscal 


1994, the fifth straight year it has 
been in the red. Passenger num- 
bers fell about 300.000 from the 
year before. 

The rail system has always 
depended heavily on federal sub- 
sidies, this year worth $952m. 

The cuts announced yesterday 
are expected to save $173m in the 
current fiscal year, and more 
than $36Qm in 1996 and annually 
thereafter. 

In addition to the three routes 
being scrapped, other services 
wQDL be cut back, including trains 
from St Louis to Kansas City, 
Birmingham to Mobile, Alabama, 


and New York to MontreaL 

Amtrak, which operates its ser- 
vices on track owned by the pri- 
vate sector, said it was planning 
further cuts in the frequency of 
services, which it will announce 
later. 

Mr Downs said: Th the past we 
have tried to he every place all 
the time.” But “rail passenger 
services can’t afford that any- 
more ... in a rapidly rfumgrrig 
transportation environment”. 

Decisions on what services to 
cut and reduce were made 
“strictly on what made economic 
sense”, he said. 


Scalfaro stays in Rome to handle 


growing crisis facing government 


By Robert Graham to Rome 


President Oscar Luigi Scalfaro 
last night cancelled all immedi- 
ate engagements outside Rome to 
handle the deepening crisis toe- 
ing the Berlusconi government 

The worsening plight of the 
rightwing coalition of Mr Silvio 
Berlusconi was underlined yes- 
terday when the populist North- 
ern League snubbed its partners 
mid voted with the opposition to 
defeat the government on a vote 
to create a special parliamentary 
commission for broadcasting. 

Mr Scalfaro alone has the 
authority to dissolve parliament 
or ask a new person to form a 
government He will play a key 
role both in dete rmining the 
length of the seven-month old 


Berlusconi government and its 
successor. 

Financial markets also 
reflected this nervousness, even 
though the 1995 budget looked 
set to pass speedily through, par- 
liament The lira was hovering 
around its historic low against 
the D-Mark of Ll.042. 

Hie damaging conflict between 
the Italian government and the 
judiciary was heightened by 
Milan magistrates' interrogation 
of Mr Berlusconi. This view was 
echoed by politicians and in 
newspaper editorials yesterday 
following Mr Berlusconi's defiant 
statement attacking the magis- 
trates after he had been ques- 
tioned by them on Tuesday. 

Mr Berlusconi took the magis- 
trates to task for interrogating a 


serving prime minister when, he 
claimed, they had no documen- 
tary evidence to incriminate him. 
He also accused them of seeking 
to make the most of his being 
questioned by them creating “a 
spectacle of justice or, rather, 
creating injustice oat of a specta- 
cle”. 

The Milan magistrates, con- 
ducting a corruption investiga- 
tion and who questioned him for 
over seven hours about his run- 
ning of his Fininvest business 
empire, decided to observe an 
uncustomary uncharacteristic 
silence. They appeared anxious 
to avoid any suggestion that they 
were prejudicing their case 

For once, virtually nothing has 
been leaked to the media about 
what the magistrates wanted to 


find out from Mr Berlusconi. 

Most commentators focused on 
the length of time Mr Berlusconi 
was obliged to spend at the Milan 
Palace of Justice. A spokesman, 
for Mr Berlusconi said only two 
hours were strictly interrogation 
- the bulk was taken up with 
obtaining an agreed verbal 
record. 

Tbe legal procedure will now 
follow one of three paths. Tbe 
magistrates can demand to ques- 
tion Mr Berlusconi again on the 
grounds that new evidence has 
emerged, or recommend that he 
be charged and sent for trial or 
drop tbe enquiry. A decision is 
unlikely before the end of the 
month. 


Bossi’s League backs off. Page 2 


Bankrupt | Efta will survive loss of its 


Continued from Page 1 


the troubled state bank which 
has been pursuing Mr Tapie for 
the FFrl^hn ($23Qm) be owes it, 
said the decision might cost the 
bank FFrlbn, apparently because 
the state had first call on Mr 
Tapie for unpaid tax. The ruling 
also blocks Credit Lyonnais’ 
planned auction today of Mr 
Tapie ’s 17th-century Paris man- 
sion. Its future will be decided by 
a court-appointed liquidator. 

Mr Tapie stffl faces other court 
cases concerning the tote of his 
industrial holdings, chiefly a 
health food chain and several 
makers of weighing machines. 

In the 1980s Mr Tapie amassed 
what appeared to be a consider- 
able sum of money from buying 
and reselling companies in finan- 
cial difficulty. 

As his business career, which 
included ownership of 
Olympique-Marseille football 
team, soured, he turned to poli- 
tics. He was minister for cities in 
the last Socialist government, 
and won 12 per emit of the vote 
in the last European parliament 
elections. 


members to EU, say minis ters 


By Frances WIBams in Geneva 


The European Free Trade 
Association (Efta), which next 
month will lose three of its seven 
members and two-thirds of Its 
population to the European 
Union, can survive in truncated 
form, ministers of the four 
remaining nations decided yester- 
day. 

The association, set up in I960, 
was effectively reprieved by Nor- 
way’s rejection of EU member- 
ship in last month’s referendum. 
It win nevertheless be a shadow 
of its former self after Austria, 
Finland and Sweden join the EU 
on January L 

The Efta population will shrink 
from 33m to just 11m, consisting 
of two small nations - Switzer- 
land and Norway - and two tiny 
ones, Iceland and Liechtenstein. 
Norway and Iceland will con- 
tinue to be members of the Euro- 
pean Economic Area, which ties 
them into tbe EU single market. 


while Uecfatepstein hopes to join 
the EEA shortly. Swiss voters 
rejected the EEA in a referendum 
two years ago. 

Efta ministers, meeting in 
Geneva, also agreed that the Efta 
court and the Brussels-based Efta 
surveillance authority set op to 
oversee operation of the EEA will 
be retained an a smaller scale. 

Surprisingly, however, they 
showed little enthusiasm in 
encouraging Slovenia’s interest 
in joining the association. Minis- 
ters decided first to restart nego- 
tiations an a free trade accord 
with Slovenia which were inter- 
rupted when almost complete 
because of uncertainties over 
Etta's future existence. 

Consideration of possible Slove- 
nian membership, which would 
require further free trade negoti- 
ations, has been deferred until 
early next year. 

Efta already has free trade 
agreements with half a dozen for- 
mer communist states as well as 


Israel and Turkey, and these will 
continue. There had been hopes 
that Efta could find a new role as 
a “halfway house” for central 
and east European nations pre- 
paring to join the EU. 

But Mr Ejartan Johannsson, 
Efta’s Icelandic secretary-general, 
said this week that apart from 
Slovenia, whose attempts at forg- 
ing EU ties are being blocked by 
Italy over a property dispute, 
these countries had shown little 
interest in Efta. 

“They are focused firmly on 
the EU and seem .to think we 
would only be a diversion," he 
said. 

A final decision on the future 
sire and structure of the Efta sec- 
retariat in Geneva will be made 
by mid-January and put into 
effect by the middle of next year. 

But with finances heavily con- 
strained, many - and perhaps the 
majority - of the 270 staff in 
Geneva and Brussels look set to 
lose their jobs. 


FT WEATHER GUIDE 


Europe today 


Central and north-western Europe will be cairn 
and chilly with patchy snow near the Baltics 
and freezing temperatures during the day. 
France wiD be cold with some fog, while Spain 
wffl be mfld with temperatures as high as 20C 
along the south-eastern coast 
After yesterday's light snowfall, the Alps win 
have a dry sped with moderate temperatures. 
Ran. accom pan ied by milder air, will spread 
across the British Isles. 

The southern Balkans wiH have showers, 
sometimes with thunder. The Carpathians, 
Turkey, and southern Russia will have 
widespread snow. Cold air, with freezing 
temperatures, win be drawn to Greece. ’Except 
lor the Norwegian seaboard, Scandinavia win 
remain cold and frosty but sunny. 


Unsettled conditions wiN spread from Turkey to 
Cyprus and the Middle-East on Friday. The Low 
Countries and France wiH warm up on Friday, 
whfie Scandinavia and central Europe will turn 
rhUder on Saturday. Eastern Europe wiH remain 
cold with light to moderate daytime frost 
stretching from Poland to the Balkans and more 
severe frost over ce n tral Russia. 



TODAY’S TaMPERATUHES 


Situation gt 12 GMT. Temperaiuroa maxfrnvn for day. Forecasts by Mateo Consul of tfie Nerhartands 


Maximum D a Pn g 


Abu Dhabi 


Algiers 


Athens 
Atlanta 
B. Aina 
BJhit 
B angkok 


(Sir 

far 

fair 

doudy 

tfiurxj 

doudy 

stawer 

shewer 

shower 

fair 


26 Belgrade 

31 Beran 

15 Bermuda 
4 Bogota 
74 Bombay 

16 Brussels 

32 Budapest 
8 CJiagan 

33 Cam 

15 Cape Town 


sun 

rahi 

doudy 

sui 

shower 

doudy 

sun 

fab- 

fair 

fair 

tab 

fair 


-1 Oaxaca 
8 Cardiff 


0 Chicago 
22 Cologne 
21 Dakar 
32 Dallas 

2 Delhi 

3 Dubai 
2 Dublin 

20 D ubr ovnfc 
28 Edn&ugti 


rain 

far 

rain 

fair 

doudy 

doudy 

sun 

fair 

rdn 

Ur 

rain 


30 Faro 
10 Frankfurt 

18 Geneva 
2 Gibraltar 
1 Glasgow 
28 Hambug 
16 Hottntf 
23 Hong Kong 
25 HonoMu 

10 Is&nbuf 

11 Jakarta 
8 Jersey 


rah 

fair 

doudy 

doudy 

doudy 


No other airline flies to more cities in 
Eastern Europe. 


Kuwait 
L Angeles 


doudy 

fair 

fefr 

fair 

fair 



Lufthansa 


Lima 

Lisbon 

London 

Lux-boug 


doudy 

fair 

doudy 

fair 

lair 


far 


18 Madrid 
-1 Majorca 
2 Malta 
18 Manchester 
9 Mania 
0 M elbo urn e 
-4 MaxJcoCtty 

22 Mart 
28 Man 

t Montreal 
30 Moscow 

7 Munich 
28 Nairobi 
18 Naples 
18 Nassau 

23 New York 

24 Nice 
17 Nicosia 

8 Oslo 
-2 Paris 
2 Perth 


21 Praqus 


sun 

fair 

shower 


ram 

doudy 

Mr 


4 A r ^-- 

u rongoon 

17 Reytyavk 

18 Rio 

8 Rome 
31 S. Frsoo 
28 Seoul 
22 Sfri gapu t e 
25 Stockholm 


fa k 31 
war 1 


lair 31 

fefr 14 


sun 12 
cloudy -2 
doudy 32 
fair -2 
lay i 


snow 

Mr 


-8 Sydney 
-9 lander 


doudy 

fok 


Hr 

doudy 


-9 Tangier 
-1 Tel Aviv 
24 Tttcyo 
12 Toronto 
27 Vancouver 
6 Venice 
14 Vienna 
14 Warsaw 
-6 Wa sh ington 

2 W a& igt on 
32 




doudy 

fair 

fat 


THE LEX COLUMN 


Electric shock 


Trafalgar House has sent a dock 
through the electricity sector. At the 
minimum, news that it may hid for 
Northern Electric will force all 12 
regional electricity companies to pay 
greater attention to shamlmWer value. 
The move could also trigger consolida- 
tion of the industry. 

Northern is vulnerable because it 
has done relatively little to cut costs. 
So a more aggressive management 
may be able to squeeze greater value 
from its assets. But whether Northern 
falls will depend mi how much Trafal- 
gar is prepared to pay. Shareholders 
are unlikely to be interested in an 
offer of less than £8 a share in cash 
plus whatever net proceeds Northern 
receives from demrar gin g its stake in 
the National Grid - worth perhaps a 
further £2 a share. 

Northern’s best defence will be to 
improve earning per share by gearing 
up its balance sheet through large div- 
idends or share buy-backs. With a sta- 
ble monopoly franchise, the company 
could manage gearing of over 50 per 
cent Though Northern has already 
bought back 10 per cant oE its equity, 
it is still ungeared. 

The alternative defence - seeking a 
white todghfr - could be futile. Other 
companies, notably Scottish Power, 
are thought to have looked at North- 
ern. But why would they become 
embroiled in a bidding war with 
Trafalgar when they have 11 other 
tecs to choose from? 

Such thinking paints to copycat bids 
or mergers rather than counterbids. 
For bidders outside the industry, the 
logic of buying a rec would be that 
they could manage it better - unless, 
like Trafalgar, they can also use up 
tax losses. For other electricity compa- 
nies, the logic is different merging 
two recs could eliminate duplication 
in head offices, customer services and 
billing systems. That could save up to 
£50m a year, though not an the bene- 
fits would go to shareholders. The 
industry’s regulator has said that cus- 
tomers must receive their cut 

While intr&rec mergers could make 
sense, it would be a mistake if they 
were embarked on for defensive rea- 
sons. Shareholders would not be 
pleased if two fearful recs joined 
forces as a way of avoiding tough deci- 
sions on costcutting. It would be bet- 
ter to remain independent cut costs 
and gear up balance sheets. 


FT-SE Index; 2980.6 {+34.2} 


Yield 


Wyear bfliid yield ndwa 3 moath money pS} 


3— 


enters the picture. 

assets, virtually no debt and serious 
misgivings about the More of Hong 
Kong. Underwriting a TraMgjff ja»* 
vertifeJe issue could anableji to chan- 
nel more cash into the UK and gain 
control of Trafalgar, following coaver- 
sinn. without paying other Mar^oM. 
era a premium, Trafalgar will need to 
convince investors that this is no* the 
pnw* plan or it could derail any old. 


Yield curves 


-3 ~i 


'UK 


rteo at - «2 v a< 


World bond markets are in the 
th roes of “curve compression . m toe 
past few weeks there has been a, swift 
flattening of yield curves, with 
long-term interest rates dropping as 
short and medium-term rates have 


Trafalgar House 

If Trafalgar House bids for North- 
ern, modi will be made of potential 


synergies: in particular, how a cyclical 
engineering ^ construction business 
benefits from acquiring dependable 
utility profits. But the issues dominat- 
ing the debate are likely to be tax. and 
the motives of Trafalgar’s largest 
shareholder, Hongkong Land, which 
would underwrite any funding. 

Since Hongkong Land bought into 
Trafalgar in 1992, shareholders have 
suffered asset write-downs and two 
rights issues. Those that remained 
have done so because they expect a 
sharp recovery over the next 
three years - hence Trafalgar’s pro- 
spective price-earnings ratio of 
over 20. 

With such a high P/e, virtually any 
acquisition would enhance earnings in 
the short run. But given that North- 
ern's earnings profile is dull, profits 
growth will be less spectacular. Tax 
could answer such concerns. North- 
ern's profits and the impending Grid 
demerger will create substantial tax 
liabilities. Trafalgar has written off 
dose to £200m of Advance C o rpo ra tion 
Tax, due to the recent profits collapse. 
This ACT could be revived as a mean- 
ingful asset 

How would an offer be funded? The 
most obvious options - a big rights 
issue or borrowing that leads to gear- 
ing over 100 per cent - are unappeal- 
ing. An offer of convertible preference 
shares would be a logical altemative. 
If they are non-redeemable, they 
would count as equity rather than 
debt, even under the latest accounting 
standards, so protecting Trafalgar 
from high gearing. They would also 
postpone eamings dilution and offer a 
slightly lower risk investment for 
institutional investors. 

But that is where Hongkong Land 


The trigger for tbe flatt enin g, the 
most rapid since the early 1980s, is tire 
tough monetary stance being taken fay 
the US Federal Reserve. Investors are 
expecting further US rate rises of up. 
to 75 h a n d* points within three months 
with pnpthw 50 points coming shortly . 
a tw ar a rd a . The Fed should be given- 
credit for its recent monetary recti- 
tude, but markets may be getting 
ahead of themselves. 

A flattening yield curve usually 
i n d icates a slowing economy and the 
imminent approach of peak Interest 
rates. These conditions are not ful- 
filled in the US. First, the economy is 
s teaming and weakness is not 
likely to show itself until next spring. 
Second, it is uncertain that the Fed 
will move in the way markets expect: 
after afl, it has already tightened more 
aggressively than most expected ear- 
lier in the year. 

The UK and the economies of Aus- 
tralia a«d New Zealand follow. the US- 
economic cycle more closely than 
those of continental Europe. It is thus 
understandable that yield curves have- 
taken their cue from the US, even If 
the same objections xamain. In the 
UK, for example, a burst of consumer 
spending In the run-up to Christmas 
could make the beginning ct a down- 
turn look remote and interest rates 
have a long way to go before they 


There is still less reason for the 
curve compression which has taken 
place in Germany, where the economy 
lags the US by at lea#. 18 months. 
Here, the next move jifrutes could as 
wall be down as u^|£ ft is the 
move is unlikely taveotne until the 
second half of next in Germany, 
as in other bond nttoate. the flatten- 
ing of yield curves fools premature. 


GENESIS CHILE FUND 


LIMITED 


PRELIMINARY RESULTS 

for die year ended 30ch September 1994 


1994 

US$ 


1993 

USS 


Total net assets 


413,483,282 


241,948.714 


Net asset value per 
Pararipating Share 

Eamings per Participating Share 

Dividend per Partiripating Share 

Record Date: 

Payment Date: 


49.76 


29.24 


0.49 


0.64 


0.48 


0.60 


11th January 1995 
20th January 1995 


ANOTHER STRONG YEAR 

Net asset value per Participating Share rose by 70.2% in 1994. Since launch 
on 7ch November 1989, five year cumulative return to 3 1st October 1994 
has exceeded 592%, excluding dividends. 


CONTINUED OPPORTUNITY , " 

After relatively subdued growth in 1994, the Chilean economy is likely to 
accelerate into 1995, helped by strong natural resource prices, Inflows of 
long-term industrial investment, and a rising domestic savings rate. 


Chilean companies continue to expand aggressively into neighbouring 

countries, and there is, in addition, further potential from new listings of 

medium-sized companies and greater access to the consumer, service and 
infrastructure sectors. 


.GENESIS 


INVESTMENT MANAGEMENT LIMITED 


21 Knightsbridge, London SW1X 7LY Telephone 071-235 5040 &cwmk 07 1-235 8065 


Umed onbtbalt trt Qcncw Chile FonJ Limited by Genus Inrarmcnt Morageutmt Lam red a 

Tfcc vuluc of Jure can fall a, »dl jg rt*. pajj p«fonwm« ** «W hctionrily a euhk'co dttfaniK. 




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Euro Disney cuts 
entry price by 20% 

gnro Disney shares rose after it said that fwm 
April it would cat about 20 per cent off the price of 
tickets into its loss-making thenw* park outside 
Parts. Page 2A 

Sprint and Tefmex to form alQance 

City Sprint, the US telttoammuzucaticms group, is to 
form an alliance with TelGfanos de Mexico (Tel- 
mex), the country's telephone monopoly, to provide 
services throughout North America. Page 26 

Pentium PC sales stfii strong says Intel 

Sales of personal computers based on Inters flawed 
Pentium microprocessor chip continued to be 
robust, in spite of negative publicity and the deci- 
sion by IBM to halt sales, US retailers said. Page 26 




£.?. War*?,:' 

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Morgan wakes profits warning 

JJP- Morgan and Co Inc said its fourth-quarter earn- 
. ings will be lower than the third quarter's 6327m or 
$L63a share, mainly due to “substantially reduced" 
trading revenues. 

Accor read/ tor talks on unit sale 

Accor, the French hotel and restaurant group, said 
it hoped to negotiate the sale of a majority stoke in 
its restaurant concession business to Charterhouse, 
the UK investment fund this month. Page 24 

HK watchdog seeks liquidation of MKI 

Hong Kang’s Securities and F u tures Commission 
(SFC), the colony’s corporate watchdog, has applied 
to the Hong Kong Supreme Court to have mwt Cor- 
poration, an investment company, wound up. Page 
28 

Temteco plays key piece In sell-off game 

Tenneco's decision to Boat its Albright & Wilson 
chemicals subsidiary on the London Stock 
Exchange early next year is probably one of the last 
big pieces to be moved in the restructuring chess 
game. Page 26 

VhtooLogic to play with NEC 

VideoLogic, the small multimedia company, has 
signed a development agreement expected to be 
worth millions of dollars with NEC, the Japanese 
electronics group, after a breakthrough which could 
revolutionise the computer games business. Page 33 

MR fails to dispel retail gloom 

MFI, the furniture retailer and m a n u facturer, failed 
to dispel gloom in the retail sector yesterday when 
it reported interim profits at the bottom end of 
expectations thanks to a squeeze on gross margins. 
Page 29 

Restructuring leaves Manweb lower 

Mr John Roberts, chief executive of Manweb, said 
the ele ctricit y distributor had no plans to merge 
with. other regional companies. Page 30 



tfr 


III i: FUND 


TED 


a*'!* 


- 


- - * > ' -7- 1 


> ■ 


t 


Companies In this Issue 

- 

ABN Arvo 

28 Homby 

33 

Accor 

24 HmgwHotets 

24 

AkerVerdal 

6 ING Sank 

1 

ASanz 

21 bttsi 

28, 28 

Afiad Irish 

1 Kaufhof 

23 

Amar. Gen. HospiL 

24 Kaye Aluminium 

34 

Amp ol 

28 London Bectridty 

32 

Amtrak 

22 MR 

23,33 

Archer 

33 Man (ED&F) 

33 

Astuten do ZkK 

24 Manweb 

32 

BAT 

6 Memory 

34 

BTR 

34 Mercury Asset Mangt 

33 

Baggeridge Brick 

34 Mice 

34 

Banesto 

24 Morgan Stanley 

33 

Bank Przemyslowo 

24 NEC 

28, 33 

Belgacom 

1 National Mutual 

28 

Bogod 

34 Northern Bactric 

31,22 

Bolton 

34 PhaneLink 

34 

Brant Water 

33 Ptarmigan inti 

34 

British Petroleum 

23 Queens Moat Houses 

34 

Bufmar (HP) 

32 Randoms! 

34 

Caftex Australia 

28 RMne-PoiJenc 

28 

Cedal 

28 Robert Wiseman 

32 

Charterhouse 

24 SHK Hong Kong bids 

23 

Chemring 

32 SaatcN &SaafccH 

24 

Chubb Security 

34 Saga Petroleum 

26 

Close Brothers 

34 Santa Cruz Operafn 

34 

Compco 

34 Scottish Radio 

33 

Coutfs & Co 

18 Service Bank 

23 

Cretit Suisse 

1 Southend Property 

34 

Ctockfords 

33 Southern Water 

33 

Cummins Engine 

24 Sprint 

28 

Dante Business 

34 Standard Chartered 

24 

Deutsche Aerospace 

23 Stirling 

33 

Dunedin SmaRer 

34 Stoddard Sekers 

32 

Disiedfri Wartdwtde 

34 Sunsefl Inti 

34 

EBRD 

24 TBI 

34 

English China Clays - 

34 Tadiren 

28 

Enichem 

28 Tebnex 

26 

Elto Disney 

24 Temeco 

28 

Fwey 

34 UneteyOSza) 

34 

Fokker 

23 Trafalgar House 

31,22 

Fujitsu 

28 Tribune Newspapers 

34 

GE Capital 

23 VMeoLogic 

33 

Gartmore Micro Index 

34 Vtstonwara 

34 

General Electric 

23 Warburg (SG) 

33 

Grainger Trust 

34 WSrafflfi Diesel 

24 

Hfckson 

24 Widney 

34 


Market Statistics 


. _ x 


;? > 


-.-v» 


J -.W %“ 


$Amuai repots sente 

42^43 

.Foreign exchange 

46 

Banchnnfc Gout bonds 

30 

eats prices 

30 

Bond Muss srel aptan 

30 

Lifts equity options 

41 

Band prices and ytate 

30 

tendon share sente 

42*43 

Commoffifies prices 

40 

tendon tadl options 

«f 

DMdemto announced, UK 

31 

Kanegsd funds sondes 

4^45 

9tS curacy rates 

46 

Moaey martets 

46 

Eurobond prices 

30 

New HI tend issues 

30 

fixed Merest Indices 

30 

New Yirt share sente 

48,49 

FT-A World ireflew Back Pane 

Recent Issues, UK 

4! 

FT Gold Mk« Index 

41 

SborMann ht rate 

48 

FT7TSMA InU bend sw 

30 

(JS interest rates 

30 

FT-SE Actuaries MSces 

41 

Vltorid Stock Itariots 

47 

Chief price 

changes yesterday 



MoPrf 
Hater tar 
Sud Qiemte 

von 


645 4 S 

728-3 + 11-4 

345 -4 10 

307.5 + 105 

GOO - 25 

221.5 - as 


Rxvtioa 


4- 12 

407 + 12 

770 + IB 

650 + 24 


G1H Em 


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516 - 13 


Dm Chan 

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PBnr 

saw 


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603 

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16 

16 

60 

26 

40 

22 






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ftesvtaG 296 
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BfoOmf 115 
516 
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343 

SodhoraMoa 1 570 


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16 

18 

17 

10 


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643 + 55 

51 4. lift 

121 ■ + 15 


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+ 100 
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TMof(aa) 


405 

350 

184 

127 

28 

378 

107 


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IS 

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50 

4 

11 

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23 


FINANCIAL TIMES 


COMPANIES & MARKETS 


©THE FINANCIAL TIMES LIMITED !9« 


Thursday December 15 1994 


vita 

HWOALDMDeM 



21 St CENTURY 


MATERIALS AND 


TECHNOLOGY 


TOD AY 


BRITISH VITA PLC 


Shares jump after Trafalgar House puts Northern Electric in its takeover sights 

Bid fever in UK electricity sector 


By Michael Smith and 
David Wighton In London 

The first hostile bid for a 
privatised UK utility loomed yes- 
terday after Trafalgar House; the 
engineering and property con- 
glomerate, announced it was con- 
sidering making an offer for 
Northern Electric, a regional 
electricity distributor. 

Trafalgar disclosed its potential 
bid after intervention from the 
UK Takeover Panel following a 
substantial rise in Northern’s 
share price daring the last few 
days. Shares in Northern, which 
is based in Newcastle upon Tyne, 
rose lOOp to £10.10, valuing the 
company at £1.25bn ($2bn). 
Trafalgar's shares rose lp to 72p. 

Earlier plans by Tratolgar to 
bid as early as today appear to 


have been shelved. Trafalgar was 
said to be considering its position 
but a bid still seems likely. 

Some analysts believe Trafal- 
gar's emergence as a predator 
makes restructuring in the sector 
inevitable with some companies 
seeking mergers to avoid the pos- 
sibility of an unwelcome bid from 
outside the sector. 

Shares in the 12 regional elec- 
tricity companies trees) in 
England and Wales rose by an 
average of 5 per cent yesterday. 
At the dose, they were valued at 
a combined ElT.lbn. 

Any attempted takeover would 
be politically contentious. The 
opposition Labour party is likely 
to charge that the regional com- 
panies are attractive to predators 
because regulation is too slack. 

The government owns a 


“gulden share” in each of the 12 
recs which prevents any bidder 
from buying more than 15 per 
cent of a company’s shares. How- 
ever, this expires at the end of 
March aT| d some analysts believe 
the government may be per- 
suaded to allow a bid before then 

Northern is likely strongly to 
resist a bid which its executives 
believe has no industrial logic 
and is motivated by a desire to 
gain access to the company’s 
potential cash pQe. 

Northern said it had received 
no proposals from Trafalgar and 
advised shareholders to take no 
action. “The board of Northern 
Electric has demonstrated its 
ability to deliver value to share- 
holders and customers ami has a 
clear strategy to continue to do 
so as an independent company.” 


Some electricity analysts were 
puzzled by Trafalgar's motives. 
“There is no synergy apart from 
finances”, said one. 

Some shareholders also 
expressed doubts about the move 
arguing that it had more to do 
with the strategic interests of 
Hongkong Land, which owns 25 
per cent of the shares, than with 
the interests of Trafalgar itself. 
Hongkong Land is a subsidiary of 
Jardine Matheson, the Hong 
Kong conglomerate which is try- 
ing to reduce its dependence on 
the colony ahead of the hand- 
over to China in 1997. By funding 
the acquisition of Northern Elec- 
tric, Jardine would channel Hong 
Kong cash into a UK business 
providing reliable profits. 

Hongkong Land has effective 
control of Trafalgar after engi- 


neering its f inancial rescue over 
the last two years. 

The world’s fourth largest engi- 
neering and construction con- 
tractor. Trafalgar House also 
owns the Cunard shipping tine, 
the Ritz hotel in London, and a 
large property portfolio. 

Trafalgar House has 4,500 
employees in Northern's region 
which it believes will help its 
case. Trafalgar also makes power 
station equipment and is keen to 
use Northern's expertise to buy 

into utilities outride the UK. 

It is thought that Swiss Bank 
Corporation, Trafalgar’s financial 
adviser, has been buying North- 
ern shares in the market. 
Editorial Comment, Page 21; 

Lex, Page 22; 

Industry on alert. Page 31 
London shares. Page 41 


Fokker shares slide after 
warning of another loss 


iFO 


80 


Not praMalosMS (FI m) 

100 


By Ronald van de Krol 
In Amsterdam 

Shares in Fokker, the Dutch 
aircraft maker controlled by 
Deutsche Aerospace of Germany, 
fell more than 15 per cent yester- 
day after it said it would make 
virtually no progress in cutting 
losses this year. 

The profit forecast, which ran 
counter to a prediction in August 
that losses would narrow in 1994, 
sent Fokker’s shares tannhlmg to 
dose at FI 1250 compared with 
FI 14JS0 on Tuesday. 

Fokker blamed the revised out- 
look an the steep drop In the dol- 
lar in the second half of 1994 and 
a further dadina in the doILar-de- 
nnminated selling price erf new 


aircraft. It expects its losses in 
1994 to be about equal to the 
record FI 460m ($ 261 m) net loss 
posted in 1993. 

The company said it would 
continue to aim at returning to 
profitability In 1996, in line with 
its existing target But to adiieve 
this, it said it would need to 
reduce its cost base further, hold- 
ing out the possibility of addi- 
tional job losses. 

A decision on what measures 
were needed to pare costs is 
expected to be taken in the first 
quarter of 1995. 

Dasa, which acquired a 51 per 
cent stake in Fokker in 1993, 
recently injected FI 600m into the 
Dutch company to shore up its 
balance shut The Dutch govern- 


ment also lent indirect support 
by approving a FI 400m sale and 
lease-back of Fokker 's technology 
to Rabobank, the Dutch co-opera- 
tive bank. 

Fokker, which has been major- 
ity-owned by Dasa since early 
1993, has carried out three 
rounds of restructuring in the 
past three years. These have 
reduced the workforce to fewer 
than 10,000 people, from more 
than 13,000 in 1990. 

The company said the aviation 
market’s malaise was more a 
problem of falling prices than 
stagnant orders. 

Most of Fokker’s costs are 
incurred in guilders, one of the 
strangest European currencies, 
while its aircraft are sold in dol- 




1060 91 S2 93 M* 


500 


lars. This creates additional pres- 
sure that is not faced by US com- 
panies such as Boeing and 
McDonnell Douglas, a company 
spokesman said. 

In spite of its downwardly-re- 
vised profit forecast, Fokker said 


it detected signs of an emerging 
market recovery. “Discussions on 
the acquisition of new aircraft 
are being held with a number of 
airlines, several of which have 
requirements for large quanti- 
ties.’’ it said. 


BP unveils ambitious performance targets 


By Robert Cofrine in London 

British Petroleum has announced 
that it wants to boost profits by 
50 per cent within two years, and 
cut its debt by about fSbn, with- 
out any help from higher 03 
prices. 

Mr David Simon, chief execu- 
tive, unveiled the performance 
targets, the first since a board- 
room coup plunged the company 
into crisis 2% years ago, at a pre- 
sentation to City of London ana- 
lysts and institutional sharehold- 
ers yesterday. 

He said BP had established a 
track record in meeting the key 


financial targets it had set for 
itself at the time of the crisis. 
The company was now healthy 
enough move on to a new set of 
goals. BP's strategic emphasis 
over the next two years will be 
on “improved profitability, disci- 
plined growth and a strong bal- 
ance sheet”. 

BP’s profits in the first nine 
months of this year were $1.59bn. 
It wants to increase annual 
replacement cost earnings to 
$3hn a year within two years, a 
substantial increase in the $2bn 
target set in 1992. 

Mr Simon said this was possi- 
ble even if oft prices remain 


around the present, relatively 
low, level of $16 a barrel for the 
b enchmar k Brent Blend. He con- 
ceded that a fall to the $12-£L4 a 
barrel seen earlier this year 
would force BP to reconsider the 
timing of its targets. 

Higher product volumes, new 
technology, cost reductions, 
improved organisational struc- 
tures and lower interest charges 
would all contribute to the 
planned ea rning s unprovenienL 

The importance of a strong bal- 
ance sheet meant BP wanted to 
reduce its debt of $l0.8bn to 
about $8bn by 1996. 

That would bring down gearing 


from about 60 pa- cent to 3035 
per cent, a figure more in line 
with BP’s peers in the interna- 
tional oil industry. BP’s debt 
reached a peak of $16bn at the 
time of the 1992 crisis. 

The company expected to 
increase its capital spending to 
about $4Jibn next year, from less 
than $4bn in 1994. 

Mr Simon said improved pro- 
ductivity meant the company 
could maintain itself on an 
annual capital expenditure of 
$3.5bn. The additional $lbn 
would be devoted to growth of 
gristing or new projects. 

Mr Simon, who is to take over 


as chairman next July, declined 
to comment on possible increases 
to BP's dividend, except to say 
that increases could “only be jus- 
tified on the basis of sustained 
performance improvement". He 
also denied that the company 
would use its strong firee 
cash flow to buy back its 
shares. 

Mr John Browne, head of 
exploration and production, who 
will take over from Mr Simon 
next year, also annnmwpd that 
BP had succeeded in replacing its 
1994 production. It expects to 
expand production by 2 per cent 
during the next three years. 


Kaufhof 
bank deal 
for GE 
Capital 

By John Guppar, Banking 
EdRor, In London 


GE Capital, the financial 
services subsidiary of General 
Electric of the US, has made its 
entry Into consumer finance in 
Germany by taking control of 
Service Bank, the finance arm of 
the Kaufhof store group. 

GE Capital is thought to have 
paid about DM75m (3503ml for 
an 80 per cent stake In Service 
Bank. The move is a sign of the 
growing competition to provide 
financial prod acts such as credit 
and debit cants from non-Ger- 
man companies. 

It will use the bank's network 
of 36 branches in Kaufhof stores 
and 200 automated teller 
machines to sell a range of finan- 
cial products. Outside the I'S, GE 
Capital’s strongest consumer 
operations ore in the UK and 
Scandinavia. 

German ronsnmeri have tradi- 
tionally not used credit cards. 

National Westminster Bank 
last year set up a German com- 
pany to offer domestic retailers 
finance for in-store cards. GE 
Capital said it intended to use 
Service Bank to offer other 
financial services outside the 
Kaulhof stores. 

GE Capital Is thought to have 
paid about twice book value for 
its 80 per cent stake. The remain- 
ing 20 per cent will be split 
equally between Kaufhof Hold- 
ing. and the Metro and Kaufhof 
Gronp, the largest European 
retailing group. 

Mr Christopher Mackenzie, 
president of GE Capital Europe, 
said the purchase was “a slightly 
different way" of competing with 
banks. “It is not just a card 
Issuer, but a bank that has gut 
outlets in stores, which Is won- 
derful,” he said. 

Mr Mackenzie said that GE 
Capital, which provides finance 
in the UK for cards in stores 
soefa as Hamids, Debenhams and 
Bartons, was “looking at 
expanding into credit cards” and 
its outlets would not be confined 
to Kaufhof stores. 

As well as signalling competi- 
tion in German finance, the par- 
chase is evidence of pressures 
facing European banks from 
other financial services provid- 
ers. GE Capital currently pro- 
cesses 80m retail card accounts 
around the world. 

Service Bank, which has assets 
of DM760m, issues the Tesss 
debit card of the Metro gronp. 
Metro has more than 2,000 stores 
in 11 countries, including ASKO 
stores, and serves an estimated 
20m shoppers a day. 


SHK stake could be springboard for port expansion 

Li’s ship 
comes in 


at a new 
HK berth 


By Simon Hofberton 
h Hong Kong 

Mr Li Ka-shmg, the Hong Kong 
tycoon who maife his money in 
the stock and property markets 
of the colony, has made another 
timely investment He already 
stands to malm a quick profit of 
up to 60 per cent but has also put 
himself In the position to 
strengthen his hold on Hong 
Kong’s oontatoer port. 

Mr Li has em erged as a leading 
aharahnMer in SHE Bong Kong 
Industries, a listed investment 
rrumpany which yesterday said it 
would return HK$970m 
(USS125m) to shareholders by 
way of a special dividend of 
HK50.60 a shar e. Mr Li, who 
began to acquire SHE’S shares in 
earnest a month ago, now balds 
about 23 per cent of its equity. 

Analysts estimate that most of 
his stake was acquired for far 
less tl»n HKy a share, suggest- 
ing that he may have earned in 
the region of 60 per cent on his 
investment. Yesterday, SHK’s 
share price was HKSL32. 

Analysts said the SHK deal 
c onfir ms Mr Li’s reputation in 
the Hong Kong market as an 
investor with uncommon fore- 
sight Others also think that bis 
windfall gam erf 60 cents a share 
is but the icing on the cake. 

SHK’s main asset is an U per 
cent interest in SeaLand Orient 
Terminals, the smallest operator 
at H«ng Kong’s Kwai Chung con- 
tainer port - the largest to the 
world. Mr Li is the dominant 
owner of the port through Hong- 
kong International' Terminals 
(HIT), a wholly-owned subsidiary 
of Hutchison Whampoa. One of 



HIT’S container terminals is next 
door to SeaLand’s Terminal 3. 

SeaLand also owns 50 per cent 
of Aria Terminals which operates 
what is said to he the world’s 
largest freight warehouse. 

“I still think the wiri game Is 
SeaLand," said Mr Archie Hart at 
Crosby Securities, a local broker- 
age. He believes that Mr U may 
be prepared to hid for that com- 
pany once the surplus cash has 
been returned to shareholders. 

Hong Kong's port is operating 
at full capacity, and Mr Hart 
believes that a deal between HIT 
and SeaLand might increase the 


efficiency of HIT’S already formi- 
dably efficient operation. Mr Li 
instead might seek to acquire 
Sea Land ’s terminal in exchange 
for HIT’S right to own a piece of 
the yetto-be-budlt Terminal 9. 

This is still the subject of UK- 
Chinese wrangling, mainly 
because of the involvement of 
Hongkong Land, a Jardine group 
company, in the principal consor- 
tium selected to operate Termi- 
nal 9. Analysts believe that Ur 
Li, a senior adviser to the Chi- 
nese government, might be able 
to persuade it of the wisdom of 
snch a solution. 



f i • * r 


1 . i ; : 3 ~ _ 




Many happy 
returns 
to all our 
customers 


Today, OMLX, The London Securities and 
Derivatives Exchange b 5 years old. And as has 

been rhe best to date, there’s plenty to celebrate. 

Our volume of trades in futures and options has 
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<HlLX 


THE LONDON 

SecnriCies & Derivatives 

EXCHANGE 

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Telephone 071 263 0678 . Fac 071 815 8508 


.v 


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5 


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24 


FINANCIAL TIMES 


THURSDAY DECEMBER 15 1994 


INTERNATIONAL COMI 


Euro Disney cuts entry price by 20% 


By David Buchan in Paris 

Euro Disney shares yesterday 
rose alter it said that from 
April it would cut by about 20 
per cent the price of tickets 
into its loss-making theme 
park outside Baris. 

Mr Philippe Bourguignon, 
chairman, said the reduction 
was the culmination of other 
cuts in operating costs and 
hotel rates over the past 13 
months and would “get us out 
of the negative spiral in which 
high costs led to high rates and 
lower attendance". 

News of the price cut pushed 
Euro Disney shares up 25 
centimes to FFr9.60 in Paris. 


Hungary 
agrees to sell 
hotels stake 

By Virginia Marsh In Budapest 

Hungary's privatisation 
authorities yesterday backed 
down and agreed to sell a 51 
per cent stake in the country’s 
last state-owned hotel chain to 
American General Hospitality, 
a privately-held OS hotel man- 
agement group. 

AGH won the right to negoti- 
ate for HungarHotels last 
month but talks broke down 
between the company and the 
privatisation body after a last 
minute price increase and 
political pressure to hand over 
the group to the cash-strapped 
social security fund. 

The deal, which is due to be 
signed by mid-January, is only 
the second large privatisation 
to have come up since the new 
socialist-led government took 
office in July and has been 
viewed as a indication of the 
new administration's commit- 
ment to privatisation. 

The State Property Agency 
agreed to sell 51 per cent of the 
c hain minus one hotel for 
$57.5m, AGffs original bid for 
the whole 15-hotel group. The 
remaining hotel, which has a 
book value of $9m, is to be sold 
off with the proceeds going to 
the SPA, Mr Ferenc Bart ha, 
government privatisation com- 
missioner said. Hie said AGH 
had agreed to invest S19.5m in 
the chain over the next three 
years and not to sell off any of 
the hotels during that time. 
The SPA'S remaining 31 per 
cent stake would be floated on 
the Budapest stock exchange. 


although the company forecast 
said that, given its timing , the 
pricing move would have little 
effect on results for the year 
ending September 1995. It said 
its goal was still to break even 
In 1995-96. 

Mr Xavier de Mezrac, finan- 
cial director, said Euro Disney 
could expect a l per cent to 2 
per cent increase in visitors for 
every 1 per cent cut in the 
price of entry. But he gave so 
forecast of likely increase in 
attendance, except to say he 
was confident the park would 
at least attract the extra 
700,000 visitors needed to com- 
pensate for Iowa* priced tick- 
ets. 


The new price cut will bring 
the cost of an adult entry 
ticket down from FFr225- 
FFr250 to FFr195 during the 
April to September peak sea- 
son, and from FFrt7&FFr225 to 
FFr150 for October to March 
off-peak season, excluding 
Christmas. 

Turnover would fall by 3 per 
cent to 5 per cent if the price 
cut foiled to attract more cus- 
tomers because entry receipts 
formed only part of total 
income, said Mr Mezrac. He 
described this as the worst 
case scenario. 

Mr Bourguignon said the last 
quarter of this year had seen a 
rise in attendance over the 


level in the same period of last 
year. 

In the year to September 30, 
Euro Disney reduced its loss to 
FFrl .Sbn (9332m) from 
FFr5.3bn a year earlier, 
although attendance foil from 
9.8m to &£m visitors over file 
same period. 

Euro Disney said yesterday 
it had signed an agreement 
with a division of the Louis 
Vuitton • Moet Hennessy 
(LVMH) French luxury goods 
group to develop housing at 
the resort. 

In addition, it was negotia- 
ting with a cinema operator to 
build a 12-screen cinema com- 
plex in the park. 


Asturiana de Zinc shares to be 
sold at discount to market price 


By Kenneth Gooding, 

Mining Correspondent 

The sale of shares in Asturiana 
de Zinc, the world’s fourth- 
largest zinc producer, by its 
parent, La Corporation Ban- 
esto, the Spanish banking and 
industrial holding group, is to 
go ahead but at a discount to 
the market price. 

Banesto yesterday priced the 
Asturiana shares at Ptal,515 
each compared with Tuesday’s 
close of Ptal,550. The group 
previously indicated it hoped 
to sell at Ptal,60Q a share. 

The sale will raise about 
$109m for Banesto and reduce 


its holding in Asturiana from 
&L3S per cent to 39 per cent 

Analysts said Banesto did 
well to get the Asturiana sale 
away, given present weak mar- 
ket conditions which in the 
past two weeks have forced 
two other mining companies - 
Samax and Union Mintere - to 
shelve share offers. 

Banesto, whose parent Banco 
Espanol de Credito. was 
acquired for $2bn earlier this 
year by Banco Santander, sold 
23 per cent of Asturiana in Sep- 
tember to a group of interna- 
tional investors for $82_6m or 
Ptal^OO a share. 

Asturiana is the subject of a 


financial restructuring which 
includes the placement of 
shares to Banesto to compen- 
sate for the cancellation of 
PtaI5.24bn <gll5m) in loans 
that the zinc company has out- 
standing from Banesto. 

The latest offer is open to 
institutional investors and to 
Asturiana shareholders who 
are entitled to one share for 
every 15 held. 

Asturiana operates the 
world’s largest zinc smelter in 
Spain, with an annual capacity 
of 320,000 tonnes. This year it 
will produce about 250,000 
tonnes of zinc but this could 
rise to 300,000 tonnes in 1995. 


Standard Chartered bank to 
reduce workforce by 10% 


By Jotai Gapper, 

Banking Editor 

Standard Chartered, the 
UK-based international bank, 
yesterday said it was to cut 
staff by about 3,000 - 10 per 
cent of its workforce - in the 
medium-term to reduce costs. 

The bank, which experienced 
a 7 per cent rise in operating 
expenses in the first half, said 
it had shed about 1,000 of these 
jobs this year through restruct- 
uring and voluntary severance 
schemes. 

It is thought to have shed a 
number of jobs in India and 


Kenya this year, althnngh cuts 
are likely to affect operations 
around the world. The bank 
said it could not set a precise 
timetable for reaching its 3,000 
target 

Standard Chartered said it 
believed its plans were in line 
with other banks. US banks 
have been imposing cost-cut- 
ting programmes recently, 
with Chemical Banking 
recently announcing plans to 
cut 3,700 jobs. 

Standard Chartered’s cost/in- 
come ratio in the six months to 
August 10 was 63.8 per cent 
The bank has set a medium- 


term target of reducing the 
ratio to 60 per cent and wants 
to cut the ratio eventually to 
about 55 per cent 

The bank has been trying to 
reduce costs by moving some 
back office processing from 
high wage centres such as 
Hong Kong Into China and 
other lower cost areas, as well 
as centralising processing. 

The cuts were disclosed in 
Hong Kong and Standard said 
it could give no further details. 
However, it is likely to shed 
same peripheral operations in 
countries where it has rela- 
tively small market shares. 


r 




Announcement 

Western Areas Gold Mining 
Company Limited 

Registration No. 59/03209/06 
(Incorporated in the Republic of South Africa) 

(" Western Areas - ) 


South Deep Exploration 
Company Limited 

Registration No. 86/03931/06 
(Incorporated in the Republic of South Africa) 
(•South DeepT) 


Merging of the mining operations of Western Areas and South Deep 


On 26 July 1994 a joint cautionary announcement was made advising shareholders that discussions were taking 
place with a view to combining the mining interests of Western Areas and South Deep. 

Shareholders are now advised that agreement has been reached in principle between Western Areas and South Deep 
for their respective mining operations to be merged. The merger will be effected by Western Areas acquiring South 
Deep's entire mining operation as a going concern, with effect from 1 January 1995, for the issue of 36 262 720 new 
ordinary Western Areas shares (‘Western Areas consideration shares”) which will not rank for the W&tern Areas 
interim dividend declared today. The purchase consideration translates into an effective merger ratio of 92 Western 
Areas shares for every 100 South Deep shares held. 

The directors of Western Areas and South Deep are unanimous in their opinion that the merger will create an 
entity which is best suited to optimally exploit the mining areas of the two companies. The complementary and 
integrated nature of the two operations is such that it is considered desirable that the operations are combined 
»nH owned by, and managed for the benefit of the shareholders of both Western Areas and South Deep. 

The merger will give rise to economies of scale and operational synergies and will offer management greater 
flexibility to mine on a more selective basis to suit prevailing market conditions. 

The Commissioner for Inland Revenue ("dR") has ruled that the merged company will be treated as one mining 
operation for tax purposes. This will result in financial synergies, which, together with the operational synergies 
that wiD flow from the merger; will accrue to both sets of shareholders. 

An agreement between Western Areas and South Deep will be signed containing the terms and conditions of the 
acquisition by Western Areas of South Deep’s mining operation and will be subject to the following conditions 
precedent: 

• the Director-General Mineral and Energy Affairs (“DGMEA”) placing a value on South Deepb mining 
property in terms of section 37 of the Income Thx Act 1962 which is acceptable to the directors of Western 
Areas and South Deep 

• such approvals as may be necessary from the Johannesburg Stock Exchange (“JSE") in respect of the 
proposed transactions and the granting of a listing for the Western Areas consideration shares 

■ approval by both sets of shareholders in general meeting of the necessary resolutions required to implement 
the merger. 

Standard Merchant Bank Limited has provided a letter stating that on the basis of its relative valuation of the 
respective companies, the merger ratio is fair and reasonable to the shareholders of Western Areas and South Deep. 

Dispensation has been granted by the Securities Regulation Panel (“SRP”) to the relevant parties from making 
an offer; in accordance with the provisions of its rules, to the minorities of Western Areas, on the basis that a 
special resolution is required to be passed at a general meeting of shareholders of Western Areas to increase its 
authorised share capital to enable the merger to be implemented. In terms of Rule 8.7 of the Securities Regulation 
Code ("Code"), a majority of independent shareholders of Western Areas may, by resolution, waive the minority offer 
and the SRP has ruled that the above mentioned special resolution more than adequately protects the interests 
of independent shareholders. 

In addition, the SRP has ruled that it is not opposed to the proposed method by which the merger is to be effected 
because the interests of all South Deep shareholders are adequately protected. 

It is the intention of the directors of South Deep, whose only asset after the merger will be its interest in Western 
Areas, to recommend to shareholders that the Western Areas consideration shares be distributed in specie to share- 
holders pursuant to a capital reduction and a members’ voluntary winding-up of the company The distribution 
will however be subject to, inter various rulings and dispensations from the CIR and the JSE. 

A further announcement is likely to be made in January 1995, after the DGMEA has valued the South Deep mining 
property to provide additional information on the merger and the date of the general meetings necessary for 
shareholders to approve the resolutions required to implement the merger. This announcement will also include 
the effects of the merger on the earnings per share and the net asset values per share of the respective companies. 
A circular will be posted to shareholders outlining, inter alia, the prospects for the merged entity and the details 
and funding requirement for the exploitation of South Deep's existing mining area 

Johannesburg 
15 December 1994 


V 


Companies 

f Incorporated in (he Republic of Sooth Africa) 

Dividend 

number 

Gents 
per sham 

The Rnodfrateia Estates GoM Ming 

Company, Witwatenrand, Limbed 

RegUntioa Nol 01/00251/06 

119 

95 

Western Areas Gold Mining Company Limited 
Registration No. 59ft320W06 

46 

90 

Last date for registration 

Registers dose (dales inclusive) from 

ID 

Currency conversion date (for payments from London) 
Date of payment 


6 January 1995 

7 January 1995 
13 January 1995 
16 January 1995 
31 January 1995 


i 


















26 


FINANCIAL TIMES THURSDAY DECEMBER IS 1994 



INTERNATIONAL COMPANIES AND FINANCE 


Stock options 
ruling spares 
company profits 


By Richard Waters 
in New York 

A controversial accounting 
proposal that would have 
required US companies to 
deduct the cost of stock 
options from their profits was 
dropped yesterday. 

Members of the Financial 
Accounting Standards Board, 
which sets standards for the 
profession, voted by live to 
two not to force companies to 
make the charges against earn- 
ings. 

The plan had come under 
fire in corporate and account- 
ing circles. 

Critics had complained of the 
difficulty of measuring the true 
cost of options, as well as the 
effect the deductions would 
have had on the profits of some 
companies, particularly small, 
fast-growing ones. 

The FASB’s vote follows 
an angry 18-month debate 
over the issue. The regulators 
had contended that share 
options issued to a company's 
directors and staff were similar 
to other forms of compensation 
benefit, and that their 


costs should be deducted 
from a company's profits. 

Yesterday, Mr Dennis Beree- 
ford, the board ^hajrman^ said: 
“The board remains convinced 
that employee options have 
value and are compensation. 
However, in the firm! analysis, 
the board decided that there 
simply isn't enough support for 
the basic notion of requiring 
expense recognition.” 

Instead, the FASB said it 
would allow companies the 
choice of taking a charge 
against profits, or simply dis- 
closing in a note the effect on 
profits that would have 
resulted from adopting the 
FASB guidelines for valuing 
options. 

The board said it “expects to 
encourage, rather than 
require”, companies to use the 
first choice. 

The board added that it had 
yet to decide whether to issue 
a new accounting standard 
without farther public com- 
ment, or whether to go 
through a new consultative 
process. The decision is likely 
to be made in the second quar- 
ter of next year. 


Pentium pc | Yenneco plays key piece in sell-off game 


Sprint and Telmex 
to form alliance 


By Ted Bardacke In Mexico 

City Sprint, the US 
telecommunications group, is 
to form an anianrp whh Tel£- 
fonos de Mexico (Telmex). the 
country’s telephone monopoly, 
to provide services throughout 
North America. 

The deal cancels the previ- 
ous accord between Sprint and 
Grupo lusacell, a leading Mexi- 
can cellular telecoms company, 
to provide long-distance tele- 
phone services when Mexico’s 
market is opened up to compe- 
tition from January 1997. 

Sprint and Telmex did not 
release financial details of 
their deal, saying the accord 
would not create a new entity. 
Instead, the two companies 
have promised to exchange 


products and services, includ- 
ing software platforms and 
other intellectual property. 

Sprint said its allian ce with 
Telmex would help it create a 
seamless North American tele- 
coms network. Sprint is 
already aligned with Call-Net, 
a Canadian long-distance car- 
rier, and operates four cross- 
border fibre optic connections 
with Telmex between the US 
and Mexico. 

Telmex said the affiance was 
an important step as it pre- 
pares to lose its monopoly in 
the Mexican market, which is 
valued at about $7bn a year. 

lusacell, 42 per cent of which 
is owned by Bell Atlantic, 
blamed delays by the Mexican 
government for the failure of 
its own accord with Sprint. 


sales strong 
despite flaw, 
says Intel 

By Louise Kehoe 
in San Francisco 

Sales of personal computers 
based an Intel’s flawed Pen- 
trum microprocessor chip con- 
tinued to be robust, in spite of 
negative publicity and the 
decision by IBM to halt sales, 
US retailers said. 

Although customers are ask- 
ing questions about the chip 
flaw, they continued to pur- 
chase Pentium PCs in rising 
numbers, Intel said. “We have 
talked to the leading retailers 
and they are reporting no 
slowdown in sales.” 

In spite of floods of calls to 
PC manufacturers and inters 
“hot lines”, there have been 
no further reports of PC users 
being directly hit by the flaw. 

“We’ve sold more Pentium- 
based PCs than any company 
in the US market, and ... we 
had not received one call from 
a customer complaining of any 
errors related to a flaw,” said 
Mr Ted Waftt, chair man and 
chief executive of Gateway 
2000, a leading mail order PC 
supplier. 

“If this had been a problem 
with real world applications, 
we would have beard from our 
customers.” 

Several leading PC manufac- 
turers said they would con- 
tinue to sell Pentium PCs, in 
spite of IBM’s contention that 
the flaw can cause frequent 
errors in mathematical calcu- 
lations used in spreadsheet 
and similar applications. 

Microsoft and Lotos Devel- 
opment, two of the leading 
suppliers of spreadsheet pro- 
grams, said they would pro- 
vide customers with a soft- 
ware “patch” that avoids use 
of the flawed portion of the 
Pentium chips. 

Microsoft said it believed 
customers could continue to 
use and purchase Pentium- 
based PCs with confidence. 
"Microsoft fs continuing to 
purchase new Pentium 
systems for its own use," it 
said. 

Other PC manufacturers 
expressing continued confi- 
dence in the Pentium chip 
include Hewlett-Packard, Dell, 
Packard Bell, Tandy, 
Advanced Logic Research and 
Acer. 


writes 


T enneco’s decision to 
float Its Albright & Wil- 
son chemicals . subsid- 
iary on the London Stock 
Exc hang e early next year is 
probably one of the last big 
pieces to be moved in the 
restructuring chess game. 

The flotation will bring in 
some usefiil cash - it is expec- 
ted to raise some £600m 
l$937.3m) - but the loss of such 
a company, and others during 
Tenmeco’s three-year restruct- 
uring; presents a a rfiallangiv 
how will Termeco plug the 
resultant profits and sales gap? 

However, the move to divest 
a significant OK-based subsid- 
iary when the company is pur- 
suing a global expansion strat- 
egy shows Termeco intends to 
be highly selective about its 
international investments. 

Mr Dana Mead, Tenneco 
c hairman, is determined to 
focus the conglome ra t e on just 
three main businesses - pack- 
aging, car parts and natural 
gas - and shed extraneous 
companies seen as either too 
cyclical or lacking in the 
growth potential he is aiming 
for. 

Albright & Wilson is a rem- 
nant of Tenneco’s ambitious 
diversification programme of 
the 1980s and early 1970s. Dur- 
ing that period, the Houston- 
based oil pipeline company 
transformed itself into a indus- 
trial conglomerate, acquiring 
companies that did everything 
from underwriting life insur- 


ance to manufacturing motor 
components. 

Mhny of the businesses that 
Tenneco acquired were highly 
cyclical, and some proved 
downright unprofitable, leav- 
ing the parent company strug- 
gling under high debt loads 
and small returns for most of 
the 1980s. 

When Albright & Wilson 
Joined the Tenneco stable in 
1978, it was one of several 
chemical companies in the 
group’s portfolio. The others 
have since ■ been sold, hut 
Albright & Wilson remained, 
its marketability diminished in 
part by a long-running reces- 
sion in the chemicals industry. 

The company is a world, 
leader in the production of' 
phosphate-based products used 
in agriculture and for such 
diverse purposes as putting the 
bubbles in shampoo and 
adding zip to carbonated 
drinks. 

Mr Mead's decision to sell 
the UK subsidiary has a lot to 
do with the cyclical nature of 
the chemicals industry - he 
must convince Wall Street that 
Tenneco is becoming less vul- 
nerable to economic cycles. 

At the same time, Albright & 
Wilson’s profitability is benefit- 
ing from worldwide recovery 
in rfipmieais prices this year, a 
factor that should help to cre- 
ate an eager audience for its 
Dotation. 

Tenneco has worked hard to 
reduce Albright & Wilson’s 


Tenneco 

ft- - 

Share pfco $J 



40F-- — - 


W % m ■ 

I I I’l I » 1 ,1 H i * « I ! ■!•* ' 1 


30 


operating costs and help its 
Charleston, South Carolina, 
specialty chemicals unit 
recover from a devastating 
plant explosion in I99L 

That year, Albright & Wilson 
posted a 970m operating loss 
after taking a 379m restructur- 
ing charge. For the first nine 
months of this year, it recorded 
operating profits of 953m on 
revenue of 9715m. 

That compares with Ten- 
neco’s consoli dated nine-month 
net income of 9376m this year, 
on sales of $10-07bn. 

Mr Robin Paul, Albright & 
Wilson manag in g director, told 
a group of Tenneco managers 
recently his company had the 
potential to achieve 20 per emit 
annual profits growth based on 
expansion through joint ven- 
tures in Mexico, Morocco, 

fThiria , and the Pacific T thn. 


1984 88 


Mr Mead, however, Is betting 
that gening the company and 
reinvesting the proreeds will 
bring in even higher returns 
for Tenneco. 

Such a move, however, puts 
even more pressure on Mr 
Mead to replace lost income 
from the Albright & Wilson 
sale and the spin-off of 55 per 
cent of Case Corporation, the 
farm and construction equip- 
ment supplier. 

Those two disposals will net 
Tenneco more than 9l.5bn in 
cash but will cost it around 
$2L8bn in lost revenues and 
about 9123m in lost operating 
profits. 

Mr Mead underscored Ms 
commitment to Tenneco 's 
remaining “core” businesses 
this week by announcing be 
would use 9500m of that money 
to repurchase about 7 JS per 


font of Tenneco’s stock. 

The share repurchase is a 
quick way to boost share 
value, but will not satisfy Wall 
Sheet, which is reserving opin- 
ion on Tenneco's future until, 
as one analyst puts it, “we 
know what the company is 
going to look like”. 

In the past two months Ten- 
neco has announced a series of 
small acquisitions and rein- 
vestments in its core business, 
amounting to about 9250m. 

With the proceeds expected 
from the Albright & Wilson flo- 
tation, Tenneco would once 
a gain have ammunition for a 
large acquisition. However, Mr 
Mead has discouraged those 
expectations, pointing out that 
a series of smaller-scale pur- 
chases or investments focused 
on international growth is 
more likely. 


Saga Petroleum to sign 
$ 1 . 26 bn revolving credit 


By Karen Fossil in Oslo 

Saga Petroleum, Norway's 
largest independent oil pro- 
ducer, will today sign a seven- 
year $1.26bn revolving credit 
facility In London. It will cover 
the group’s borrowing require- 
ments until 2000, and allow it 
to expand through acquisitions 
in Norway and abroad. 

The facility, initially for 
9850m, was over-subscribed by 
9410m and is priced at Libor 
plus 0.3 per cent It replaces a 
9750m loan wMch haul a 
shorter duration and stiff er 
terms. 

The loan's arrangers include 
ABN Amro Bank, Barclays 
Syndications and Deutsche 


Rank London, with Norwegian 
co-arrangers Christiania Bank 
and Den norske Bank. 

Saga said the loan covers 
existing debt of NKr8bn 
(98733m). 

The company Is planning a 
listing on the New York Stock 
Exchange in the spring of 1995, 
and plans to acquire reserves 
or companies both at home and 

ahmad 

Saga has operational respon- 
sibility for the North Sea 
Snorre field, which produces 
210,000 barrels a day. Also, in 
June, the group's North Sea 
Tordis field was brought 
on stream and currently 
produces 72,000 barrels a 
day. 


Rhone-Poulenc unit in cash call 


By Patrick MeCurry 
in S3o Paulo 

Rhodia-Ster, a Brazilian joint 
venture controlled by the 
French chemicals group 
Rhdne-Foulemc. is set to raise 
between 9135m and $159m in a 
global initial public offering. It 
will be the first time in at least 
15 years that a foreign com- 
pany has floated part of a Bra- 
zilian subsidiary. 

The company, which makes 
polyester-based products such 
as flexible packaging and 
returnable bottles, is offering 
117.7m voting shares - 23 per 
rent of its capital - in three 
equal parts to the US, Euro- 
pean and Brazilian markets. 

Mr Edsan Vaz Musa, chair- 


man of Rbdne-Poulenc's Brazil- 
ian subsidiary Rhodia, said the 
proceeds would largely be used 
to pay for Rhodia’s capitalisa- 
tion of Rhodia-Ster, formed in 
May with Stnasa, a Brazilian 
chemicals group. Sinasa’s Cel- 
bras subsidiary ran up debts of 
around 92QQm to pay for expan- 
sion of its polyester resins and 
returnable bottles production. 

The pricing was being finali- 
sed in Paris yesterday by the 
company and global co-ordina- 
tor, Paribas Capital Markets. 

The global depositary shares 
win be listed on the US Portal 
system and the Luxemboui^ 
stock exchange. Shares will 
also be listed on the Brazilian 
stock market 

The offering was due to be 


laiyyfliefl at least two months 
ago, but was delayed after a 
judgment by the Brazilian 
monopolies commission, which 
insisted on rfonng fts to the joint 
venture to prevent a monopoly 
in polyester and acrylic fibres. 

Rhodia-Ster then agreed to 
sell off part of its polyester and 
acrylic business, but this will 
not significantly affect the 
company’s growth prospects. 

The company, which has 
planned i n vestments of 9435m 
to the end of the decade, says 
polyester, demand is growing 
by 9.4 per cent a year in Latin 
America. 

Paribas Capital Markets said 
the issue had been oversub- 
scribed in spite of difficult mar- 
ket conditions. 


AB of these secunite having boon sold this afrertteefrtt appear as a matter of nacotrionfy. 


1 8,000,000 Shares 



MOTOROLA 


Common Stock 

(par value $3 per share) 


3,600,000 Shares 


77*s portion of tfw ofiemg was offered outside the Untad States by the mtespiBtf 


Goldman Sachs International 


Merrill Lynch International Limited 


NatWest Securities Limited 
Daiwa Europe Limited 
Swiss Bank Corporation 


ABN AMRO Bank N.V. 


Credit Lyonnais Securities 

Dresdner Bank 


S.G.Warburg Securities 


14,400,000 Shares 


Thmparttonof the Qttonnff was offerotl in too Untod States tythsuntiostgnBtL 


Goldman, Sachs & Co. 

NatWest Securities Limited 
Dean Witter Reynolds Inc. 
Montgomery Securities 
Smith Barney Inc. 


Bear, Steams & Co. Inc. 
Ham brech t & Quist 

Incorporated 

J.P. Morgan Securities Inc. 


Merrill Lynch & Co. 

Cowen & Company 
Lehman Brothers 
Salomon Brothers Inc 


Wertheim Schroder & Co. 

Incorporated 


December 1994 


NOTICE OF REDKMPTT01V 

MORTGAGE FUNDING 
CORPORATION NO. 1 Pl£ 

Class A-l Mortgage Backed Floating Rate 
NotesDue March 2020 

NOTICE IS HEREBY GIVEN to Bankers TYurter Company United (die 
"Tram**) and to the holders of the Gate A-l Mortgage Backed Floating Rale 
Nottfl Doe March SOSO (the ii CLu» A-l Notes”) of Morfgpy Funding C o rpo ra tion 
No. I FL£ (the “Iwucr^) that, pimaimT to the Trust Deed dated 31st March, 
IMS (the ‘Trust Deed"), between the lamer and die Trustee, and the A^ncy 
Ay een at dated Slat March, 1988 (the "Agency Agrremem."), between the 
bsoertmd MocgmGiiaran^TriBlCiMBpaiiyQfNeirYimfdie^PEh^BlPkjbg 
Agent") and others, the hater has dc ter mnr d that in aoeonfance with the 
redatpikni pn maons set oat in the Terms and ComEtum of the Ghaa A-l 
Notes, Available Capital Foods as defined in the Terms and Conditions in 
the amount of £2,000,000 wiO be utilised on 30th December, 1994 
(the > Redemption Date") to redeem a like amount of Oasa A-l Notes. The 
Class A-I Notes selected by drawing in lots of £100,000 for redemption on 
the Redemption Dale at a redemption price (the Redemption Price*) 
equal to their principal amount, together with accrued interest thereon 
ore as follows: 

OUTSTANDING CLASS A-I NOTES OF £100,000 EACH 
BEARING THE DISTINCTIVE SERIAL NUMBERS SET OUT BELOW 

Bearer Note. 

125 359 517 564 567 578 . 63 1 644 670 

801 846 1071 1098 1153 1390 1500 1531 1643 

1645 1728 

The dan A-l Notes may he surrendered for redemption at the specified 
office of any of the Paying Agents, which are Bsfa&offi: 


Mdtsm Guaranty Trent Company 
of New York 
PO Box 161 

60 Victoria Embankment 
London EC4Y 0JP 

Union de Banquet Sahara 
(Luxembourg) S-A. 

36-38 Grand-nit 
L-2011 Luxembourg 


Bfitmui Gimranty Tkiut Conmanr 
of New York 
Avenue des Arts 35 
B -1040 Brands 

First Trust of New York 
National Association 
100 Wall Street . . 

Suite 1600 
New York, New York 10005 

In respect of Bearer Class A-l Notes, the Redemption Price will be paid upon 
presentation and surrender, on or after the Redemption Date, d" such Notes 
tog ether with dt uiwiatured coupons and talons oppertairaDg therrto. Such 
payment will be made (i) in starting at the specified office of tfcePaying Agent in 
London or (H) at the spcriSed office of any Paying Agent fisted above by sterfing 
cheque drawn oil, m-at the option of the bolder by transfer to a Aerimg account 
im ria t an edbythepayywWLaTiM Clearing tamefa of a hank in London. On 
or after the Redemption Date intern shall cease to a cc iu e on the A-l 
Notes which are the oobjeet of das Notice of Redemptum. 

MORTGAGE FUNDING CORPORATION NO.I PLC 

By: Morgan Guaranty Trust Company 

os Principal Paying Agem 

Dated: I5th December, 1994 __ 

NOTICE 

VitblnUng at 31% of gran redanpoui proce e ds of any payme nt node 
within the Dinted Steles is rap rii cd by the Internal Revenue Code of 1986 
and amended by the Energy PoEcj Aa at 1992 unlaw die paying agency has 
the correct texpa yw id«Mg»aliMiniHto(anBalaeHaityoraifbyBridtnlifaihin 

Form W>9 or exemption ce rtifi cate or etpavalen! J presenting your A-l 
Notes to the Paying Agent in New York. 



The Kingdom of Belgium 

US9400.000.000 
Floating rate notes due 
December 1999 

In accordance urith the 
provisions of the nates, nod ae 
is hereby gioen that the me 
of /merest has been fixed 
at 6.8125% for the interest 
determination period 15 
Decanter 1994 to 15 Jane 
1995. lousiest payable an 
IS Jane 1995 will amoam to 
USS3.444.10 per USS 100.000 
note. 

Morgan Guaranty 
Trust Company 


JPMorgan 


BANQUE PARIBAS 

US$200,000,000 
Undated Boating rate 
securities 

In accordance urith die 
prooisions of the securities, 
notice is hereby given that for 
the three month interest period 
bom IS December 1994 
to 15 March 1995 the securities 
to ill carry an interest rate of 
6.75% per annum. Interest due 
on IS March 1995 will amount 
to USS 16.88 per US$1,000 
security. 

Agent Morgan Guaranty 
Trust Company 

JPMorgan 


INVEST IN CHAMPAGNE 


UK 


Near THE EUROPORT 
PARIS CHAMPAGNE 




Aqenea de Dduetoppefrwnt Econonrique 
BP 533 - 1 51010 Ch&hmsMame Cede* 
Phone (33) 2621 1 133 Fax (3D 26604797 



BANQUE PARIBAS 

US$400,000, 000 
Undated subordinated 
floating rate securities 
At accordance urith the 
prooisions of the securities, 
notice is hereby gjaen that 
for the interest period bom 
IS December I994to 1 5 March 
1995 the securities w Blam y 
an interest me of 6JX25X per 
amuim Interest payable oatae 
15 March 1995 per USS 1,000 
security uriO amount to 
US$16.41 and per US$10,000 
security uriU amount ra 
USS 164.06. 

Agent Morgan Guaranty 
Trust Company 

JPMorgan 


Lehman Brothers 
Holdings PLC 

flMpijhHMid dc E teg Un J FmnJv wta 
Skdmvm Lcfcaun Bvtffcm HeUrtpPLCf 

US. $175,000,000 

Gua ra nteed Floating Rate 
Notes due 1995 

Gumntenl#i toftarmem cffnmcipd 
a$td merest BnamhcJaiiaira eruf 
irrnocabhhy 

Lehman Brother* HokHogrlnc 
fffiufluimnl to the Suk* qf Deiawm 

HpUnydib) 

In accordance with the Terms a 
Cooditwo* of the Notts, notice 
hn*by green. chat for the Inter 
nriod from December L5. EW4 
Much 15, 1995 die Notts u 
«iy» Interest Rate of 7.1875 
per annual. The amount pavai 
an Much 15. 1995 will be U 
#17.97 for Notes in denominate 
°njjs.sLOoa 


G“ttnberlS,im 


DO YOU WANT TO KNOW A SECRET? 

The LOS. Gam Seminar wft show you hew Aa mortals REALLY work. The anaro 
tracing techniques of t» taganday W-O. Gam car tersasa yoi- prate ad coraaki you 
loeses. Haw? Thrfs lt>0 SKTSt FSng 061 474 OOBOteboc* you- FREE ptoca. 


US. $100,000,000 


GW 


a 


Great Western Financial 
Corporation 

Floating Rate Notes Due 1995 


Interest Rate 

interest Period 

interest Amount per 
U.S. S5O000 Note due 
15th March 1995 


6.5625% per annum 

■iSth December 1994 
15th March 1995 


U.S. SS20.31 



CS First Boston 

Agent 


t 


* 


4 











4 



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.IpMiTS 


FINANCIAL TIMES THURSDAY DECEMBER 15 1994 * 







© PFANDBRIEF 

>V £ 


SOLID VALUE FROM THE GROUND UP 


% e last thing many investors want is to get adventurous about current fads and exotic markets. 

■ 

If safety, yield, a stable currency and long-term value are your priorities, consider Germany's Pfandbrief 

system. Pfandbriefe in Germany are bonds issued to refinance mortgages or public loans, a time-tested 
idea that dates back more than two centuries. In line with the Mortgage Bank Act of 1900, these bonds - 



which are secured by mortgages or by 


public-sector loans - can only be 
issued by specially authorized 
banks which are fully liable for 
each issue. They must carry 
backing of separate funds with 
at least matching yields and 
maturities. And all Pfandbrief 
issues are monitored by a state- 
appointed trustee. 


The bottom line on safety? No 
investor has ever failed to receive 


100 % repayment on a German Pfandbrief held 

■ ■ 

to maturity. The legal framework surrounding Pfandbriefe has an unsurpassed record for endurance, 






r .■ j * ? 



offering investors a fixed-interest D-Mark instrument of quality - plus yields generally 

■ 

higher than German Treasury bonds (Bunds). Sound reasons why Pfandbriefe, 

m m 

at nearly DM 1 trillion at year-end 1993, amounted to 40 % of Germany's entire 

■ 

bond market. 

i 

THE SYSTEM IS UNBEATABLE IN THE LONG RUN. 


I German Pfandbriefe are officially 
quoted on German stock ex- 
changes. Issuers actively maintain 
a well-functioning secondary 
market. 



* • 


GERMANY'S MORTGAGE BANKS 

depfa-bank; wiesbaden 

BAYERISCHE VEREINSBANK AG, MUNCHEN 
HYPO-BANK, MUNCHEN 

DEUTSCHE HYPOTHEKENBANK FRANKFURT AG, FRANKFURT 
RHEINHYP, FRANKFURT 

DEUTSCHE GENOSSENSCHAFTSrHYPOTHEKENBANK AG. HAMBURG 
FRANKFURTER HYPOTHEKENBANK AG, FRANKFURT 
DEUTSCHE CENTRALBODENKREDIT -AG, KOLN 
BAYERISCHE HANDELSBANfC AG, MUNCHEN 


WESTHYP, DORTMUND 
BERUN HYP, BERUN 

SODDEUTSCHE BODENCREDITBANK AG, MUNCHEN 

MUNCHENER HYPOTHEKENBANK EG, MUNCHEN 

HAMBURGHYP, HAMBURG 

WORTTEMBERGER HYPO, STUTTGART 

NURNBERGHYP, NURNBERG 

HYPOTHEKENBANK IN ESSEN AG, ESSEN 

DEUTSCHE HYPOTHEKENBANK {ACT.- GES.}, HANNOVER 


BRAUNSCHWEIG- HANNOVERSCHE 
HYPOTHEKENBANK AG, HANNOVER 
ALLGEMEINE HYPOTHEKEN BANK AG, FRANKFURT 
RHEINBODEN HYPOTHEKENBANK AG, KOLN 
LUBECKER HYPOTHEKENBANK AG, LUBECK 
NORDHYPO BANK, HAMBURG 
BFG- HYPOTHEKENBANK AG, FRANKFURT 
Wl-BANK, MUNSTER 
HYPOTHEKENBANK IN BERUN AG, BERUN 




















FINANCIAL TIMES THURSDAY DECEMBER 15 1994 


The First National Bank of Chicago acted as 
financial advisor and placement agent in 
connection with this transaction. 


FIRST CHICAGO 

The First National Bank of Chicago 



November 1994 




Wall Street Finance and Securities 
Public Company limited 

(MCMpanoai m TfaAmd isfdi fentaad Vbixj) 

Notice 

to the holders of the outstanding 
US455,000,000 

3.75 percent. Convertible Bonds due 2004 

of 




Pobfic Company Limited 
(the •Bonds 11 and die "Company* respectively) 

NOTICE IS HEREBY GIVEN to the hoUen of the Bonds that, as a result 
of a righa offer to existing Shareholders at the ratio of one new share ar a 
ittbacripciioa price of Baht 20.00 per ihare for one existing shnci the 
con\tnion price of die Bonds has been adjusted from Babe 530.00 do 
Baht 27926 effective 30 th November* 1994 . 


V| Banker? Trust Principal Paying & 


LA Company, London 
15 th December, 1994 


c *?o 
orxif 
h \mj r 

City of Stockholm 

USt325.000.000 
Floating rate notes 1999 

[Mice is hereby fpoen that the 
n otes u rtU bearinterestal 
6*375% per annum from S 
December 894 to IS March 1995. 
Interest payableon 1 5 Mar ch 
1995 ariUamomnotSSEJH per 
(JSSIOOQ note, USSB&38 per 
USSKKQOQ note and US$l t 59375 
per USS 100,000 note- 

Agent Morgan Guaranty 
Trust Company 

JP Morgan 



T 





This advertisement appears as a matter of record only. 


Yen 2JXXiJOOOflOO 

“BC 

CAISSE NATIONALE DE CREDIT PROFESSIONNEL S. A./ 
NATIONALE KAS VOOR BEROEPSKREDIET N.V. 
(Incorporated with limited liability in Belgium) 


Due November 2004 


RRkRand Bank pic 


U.S. $150,000,000 



UJS. $300,000,000 

unoaxoa rrosung hi m rTunsry 
C^dtat Notes 
(Sartos^ 

For Ski she months bom December 
15 . 1004 ft) June 15 . 1005 the 
N otes m i cony an Interest rata of 
7 . 0375 % par annum. On Jim 15 , 



Formosa Plastics Corporation, U.S.A. 


US. 33,557.85 wflf bo payable mt 
U.S. Siaooo and U.& $100,000 
respectively for Onfon No. 17. 


BylbaGm 


Saft,HJL 


Roating Rate Notes due 1999 

In accordance with the provisions of the Notes, notice Is hereby 
given that far the six month Interest Period from December 1 5* 1 004 
to June 15. 1995 die Notes wlU carry an Interest Rate of 8.4375% 
per annum. The Interest payable on the relevant interest payment 
dale, June 15, 1995 wil be U-S. S21.328.13 per U -S. $500,000 
principal amount. 

By: The Chase M anh a tta n Bank, NJL 

London* Agent Bank qchase 

December 15, 1994 


Australian groups 
to set up joint 
petroleum venture 


NDdri Taft hi Sytkwy 

Caltex Australia and' Ampol, 
which is part of the Pioneer 
International building materi- 
als group, agreed yesterday to 
pool their respective petroleum 
refining and marketing 
operations Into a new company 
to he owned equally. 

If the merger wins necessary 
regulatory approval, the joint 
venture company will be the 
leader of the country’s petro- 
leum refining-marketing sec- 
tor. with estimated assets of 
AfS.lbn (US*2.4bn), total 
annual sales of almost Atffcn, 
and 28 per cent market share. 

At present, Ampol and Cal- 
tex Australia - which is 75 per 
cent owned by the US-based 
Caltex group, whose owners 
are Chevron and Texaco - are 
the two smallest companies in 
the five-player industry. The 
current market leader is Shell 
Australia, with Mobil and HP 
being the other competitors. 

Caltex and Ampol said they 
saw big cost-savings Grom the 
deal, allowing them, better to 
compete in Australia's down- 
stream oil industry where 
returns have been extremely 
low recently. 

' They calculated that there 
could be a A$500m addition to 


shareholder value “in the 
long-term” - although they 
acknowledged that this figure 
Incorporated asset sale pro- 
ceeds as well as bottom-line 
cost savings. 

They said about a quarter of 
the combined operations' work- 
force, or about TOO jobs; would 
be shed. It win have two refi- 
neries at Kumell, in New 
South Wales, and Lytton, in 
Queensland. 

Under the deal, there will be 
a AffSflm “value m^j ndnwnt" 
in favour of Pioneer - which 
Mr John Schubert, managing - 
director, described as “essen- 
tially a cash payment” - to 
reflect the difference in earn- 
ings of the two businesses. Pio- 
neer expects to book an abnor- 
mal profit of A$200m in its 
199^/95 accounts as a result of 
the deal 

Inter-company loans to the 
merged group's operations will 
be refinanced externally, a 
move which Mr Schubert said 
could cut Pioneer’s balance 
sheet debt to A$llGm from 
about A$85ten. 

A pro forma balance sheet 
for the merged business, as at 
end-June, shows net debt 
standing at A$L24bn, and a net 
debt to equity ratio of 109 per 
cent 


HK watchdog seeks 
liquidation of MK1 


By Smon Hofberton 
hi Hong Kong 

Hong Kong’s Securities and 
Futures Commissi on (SFC), the 
colony’s corporate watchdog, 
has applied to the Hong Kong 
Supreme Court to have MK2 
Corporation, an investment 
company, wound 19 . 

The petition - the first of its 
kind by the SFC - follows an 
investigation of the company's 
affairs under a section of the 
SFC’s enabling legislation 
where it suspects a company or 
its officers may be involved in 
fraudulent activity, misfea- 
sance or other misconduct. 

MKTs shares were suspended 
in June after the SFC ques- 
tioned it about its recent share 
price performance and a num- 
ber of statements it had made 
concerning future prospects. 
These included a mobile tele- 
phone deal in China and apian 
to site a super-computer in 


Inner Mongolia to analyse seis- 
mic data in Ana. 

The decision came days after 
Mr Yao Mingwei _was 
appointed chairman. Mr Yao is 
the son of the late Mr Yao 
Yilfn, a former Chinese vice- 
premier. He replaced Mr 
Rhimdkar Khalid Ahmed HOS- 
sein who had himself only 
replaced Mr David Tang, a 
company director, as chairman 
in September. 

MKTs founder and main 
shareholder is Mr Arthur Lai, 
an gitreprenenr, who sold his 
stockbroking b usiness to Stan- 
dard Chartered in the wake of 
the 1987 stock market crash. 

The SFC said that its appli- 
cation to have MKI wound up 
was based an its belief “that 
the affairs of MKT have been 
conducted in a manner 
unfairly prejudicial to its 
shareholders”. 

The High Court will bear the 
application on January 1L 


Life insurer looks to 
raise at least A$500m 


National Mutual, the second 
largest life insurer in Austra- 
lia, said yesterday that A$500m 
(US$387Am) was the minimum 
“meaningful" amount- of new 
capital which the group would 
Be looking to raise either via a 
public offering or the sale of a 
tranche of equity to a “strate- 
gic” investor. 

Mr Geoff Tomlinson, manag- 
ing director, said the mutual 
insurer was entertaming both 
options and also considering a 
combination of the two. 

However, the insurer was 
unclear about the timing of 
any capital raising, suggesting 
only that it might occur in 1935 
or 1999. 

The c omm ents came as 
National Mutual reported a 
sharp fen in pre-tax earnings 
for the year to endrSeptember, 
to A$584m, compared with 
A$L71bn previously. 

Premium was hi ghr 


at A$2.7bn from A$L56bn, but 
the totaL investment result fell 
to A$851m from A$3.18hn, leav- 
ing total inflow at Af3-55bn 
against A$4.74hn. 

The total investment result 
includes interest income, 
which was said to be about 
A$880m, and both realised and 
unrealised gams which 
showed an overall A$30m loss. 

National Mutual declined to 
specify the portion, 

hut said investment conditions 
had been difficult because of 
unfavourable band market con- 
ditions and a sluggish property 
market 

The lower investment gains 
helped reduce the t ax charge to 
A$30m foam Af279m. Barninga 
credited to policyholders fen to 
A$348m from AgLltibn. Group 
profit after charges stood at 
A$206m, compared with 
A$227m. Statutory reserves 
rose hy A$135m to A$L46fan. 




NEC, Fujitsu to 
replace faulty 
Pentium chips 

NEC*. Japan’s dominant personal computer 
supplier, and Fujitsu, Its largest computer 
wgn nMnw r haro agreed to replace faulty 
fixtol Pentium microprocessors free of charge^ 
wri tes Ahn fanft In London. Some 150,8® 
Pentium-based marimtes ham been sold in 

Ja pan to d&tfe. 

Thdr decision comes as Intel, the world’s 
largest semiconductor manufacturer, and 
International Business Machmcs (DBM), argue 


over who should bear toe cost of replacing the 
faulty part which mw cause mathematical 
errors in certain conditions. NEC said it 
believed it had a social responsibility to 
replace the flawed microprocessor. • 
trm* has already stopped shipping Pentium- 
based computers and hag said it will replace 
the faulty chip in the 100,000 Pentium 
mqrtiteiw ft hag shipped 80 far. It w31 Ddt, 
however, pay for labour costs involved. 

NEC said Its research showed the probabil- 
ity of toe error in calculations was very low. 

Fnichem sells stake in 
microfibres unit 


'sjboc 


•uTM 1 


*• 


» * . 


T?.nteh«n r the Italian 
. ; I state-controlled che m i- 
s^pfcokw ■ cals group, has taken a 

' »r further step towards 
the reduction of its 
,! looming debt by agree- 
ing to sell tts majority 
stake in Alcantara, a 
microfibres manufac- 
turer, to Toray, the 
quoted Japanese chem- 

* icals and fibres com- 

- -j. - v » pany, writes Andrew 
? : 4 Han ill Milan. Bnlchem 

"i r - did not release finan- 
cial details of the sale yesterday, but ft is 
understood that the disposal of the 51 per emit 
stake in Alcantara should realise some L20(Sm 
( yiygm) 

Earlier this year, the partial flotation, of 
EVC, Enichem’s plastics joint venture with ICI 
of the UK, helped reduce debt by some LSOObn. 

With the help of a L3J)0Gbn capital injection 
from EN3, its state-owned parent company, 
Rntahem hopes to halve debt by the end of the 
year to L4JiO(lbn. from L9,000bn a year 
earlier. 

Israeli electronics maker 
postpones equity issue 

Tadiran, the Israeli electronics company, has 
postponed an international equity issue due to 
“market conditions in both the Israeli and 
international markets”, writes Richard Lapper 
in London. The company, one of a number of 
Israeli businesses spring capital an mterna- 
tfanal markets, had been planning to raise up 
to $80m in an issue lead managed by Merrill 
lynch. 

The price of the company’s shares, which, 
trade only In New York, is currently at S1&5Q, 
having fallen $3.50 since the issue was 
gnwmiiiffaH aqfHar ftfa year. 

Tadiran also said a special interim dividend, 
which depended on the global offering bang 
done, will not be paid. "Plans far a future 
offering wifi, be armnimreri as events warrant,” 
the nnmp gny said. It also said ft would report 
by Jammy 3 whether its shares would be 
liked in Tel Aviv. 

Cedel to become a bank 
next month 

Od el, tiie international clearing and setfle- 
.ment company, will become a bank next 
mouth following a vote by shareholders, it 
announced yesterday. The granting of a bank- 
ing licence by Luxembourg authorities was 
dependent an shareholder approval far CedeTs 
application, writes Rkhard Lapper. 

Cedel also announced that it had been 
granted an A1+ credit rating - the highest 
short-term rating possible - by 1BCA, the Lon- 
dan-based credit rating agency. 

Cedel, whose shareholders comprise nearly 
100 of the international banks, is one of the 
world's biggest clearing, settifiment and depos- 
itary organisations, with a 24 per cent share of 
the market for clearing international traded 


Its move to achieve haw king status was 
promp te d by the Basle agreement on interna- 
tional bank capital adequacy rules, which 
require deposits against unsettled trades held 
at a corporation such as Cedel to carry a 100 
per cent risk weighting. 

By contrast settlement deposits at Euro- 
dear, a rival settlement organisation which 


has a banking licence through MansAnGra- 
anty, canya 20 per cent 
bus making it much cheaper* use for Inter- 
national securities dealing and settlem en t 

ABN Amro to Issue 
Kclbn bond 

ABN Amro, the Ne t he rl a nd s* larg ert tanHiy 
group, said it was issuing a Kclbn ($22 An)due 
DeSber IS 1397, APDJ itnm, Am**- 

The issue price of the bond, which car 
ries an 11 per cert coupon, at 

99.70 r gtyi PR flQ yidd ■ trf .11*133 per 

The Amsterdam-based group said it was 

_ _ m * jv. AiniMinp niiT- rnfrf vT 




would also likdy place some of toe proceeds of 
the bond with corporate borrowers who are 

locking for Czechknruna. said. . ^ - 

The bank also said that early redemption of 
the bond was not possible and that the issue 
was restricted to outside the US and theUK. 
In the Netherlands, the bonds are not offered 
to private investor* Payment of toe bond fe 
due on December 15 1994L The brad might be 
listed on a stock exc han ge in the fiitmrebut 
ABN Amr o said tills bsd not yst been deetdod. 

Australian groups buy 
Kobe’ mine stake 

Three Australian waning groups have bought 
the 10 per interest in the Boddingtou gold 
mine. In Western Australia, previousl y held b y 
Kobe Alumina Associates, for an aggregate 
Af dftam Kobe Alumina is a unit of Kobe Steel 
and Nissho Iwai Alumina, writes Nikki Taft. 

The three companies are Acacia Resources, 
the fanner -Sfen Australia mining and miner- 
als business which was floated on the stock 
market as an independent company earlier 
this year; Poseidon Gold, part of the Nor-; 
mandy Poseidon group; and Newcrest Mining 
All three were existing joint venture partners 

in fiw* wiiwn. 

Japan grants trading 
licence to UK broker 

Japan’s ftmme* ministry yesterday Issued a 
licence for a Tokyo branch of a British securi- 
ties subsidiary to operate in Japanese finan c i a l 
markets, writes Gerard Baker in Tokyo. 

Instlne t Japan, which will begin trading 
early next year,, is capitalised at £5m 
($7.8m)and currently employs 13 people. The 
company is wbaDyawned by the London-based 
broker Thamesway Investment Services, 
which, is in turn part of the Reuters group of 

ftiranrinl rwnp flrptoi ' 

Aithnng h toe licence permits Instinet to 
trade both equities and fixed interest securi- 
ties, the company said it intended to concen- 
trate on toe stock m arket, where its focus will 
be exclusively an institutional sales. The Japa- 
nese equity market is currsntly suffering from 
acute lack of demand and excess supply. Insti- 
net plans to gmntanMnttts domestic Japanese 
bustoe8s hy selfing othffl: Asian and European 
equities in Totyo. 

The company's arrival in Tokyo brings the 
total of foreign brokers operating in Japan to 
66 brandies of 49 securities companies, the 
ministry said. 

ABB confirms Indian 


purchase 


ABB Asea Brown Boveri, the world’s largest 
power engineering combine, yesterday con- 
firmed that it is buying control of a toss- 
making Indian boilermaker for Rs52Qm 
($l6.6toj in a move which will greatly Increase 
its capacity to meet demand for building 
power plants, writes Station Wagstyl in New 
Delhi. 

ABB is taking a 76 per emit stake in ACC- 
Babcock (ABL), a former private cosqany 
which came under government control after it 
accumulated losses and sought legal protec- 
tion from bankruptcy. 

The remaining 24 per cent of the equity will 
stay in the hands of the g o v e rn m ent and of 
minority shareholders. 

The government's Board of Industrial and. 
Financial Reconstruction, the body which 
nurses ailing companies, has approved the 
deal.' 

While : the purchase price is modest, - 
reflecting ABL's poor recent financial record, 
the inv e stment marks an increase in ABKs. 
commitment to India h acaqs^ the European 
company will take on ABL's 5,200 staff, dote 
bhng its total payroll in the country to 10,000: 

Also, ABB plans to modernise ABL'S equip- 
ment and introduce new technology. . 

ABB said the acquisition, would allow the. 
group to serve the growing Indian market for 
industrial and power station boilers. 

ABL’s products would complement ABB’s 
existing output of turbines and generators. 


■v- 


* • ••■£:* . Vkv:-: 

... iOi, tW.-sV. •: ... > 




The Chase Manhattan Corporation 
U.S. $400,000,000 

Floating Rate Subordinated Notes due 2009 
For the three months I4ch December, 1994 to I4di March, 1995 
the Notts will cany an Inrmsr tare of 6-5% per annum with a 
coupon amount of U.S. 5162-50 per U-S. 510.000 Notes, payable 
on Hth March, 1995- 


E 


Bankers Trust 
Company, London 


Agent Bank 



Roating Rate Notes 
due December 1999 

Notice to the Holders 


Notice is hereby given that the 
Notes wil cany an intoraSMBta of 
050% per annum tor the period 
15.12.1994 to 15.03.1995. 

• ITL 105.250 

per Ifi. 5.000.000 nommgi 

• m. ldBZ.500 

per m. 50,000, 000 nominal 

Luembout). December 75, 1994 


IS YEARS OF HISTOBICAL PRICES POJR 
CASH, FUTURES, OPTIONS AM) 


SDYBAXSOFTIJNMmrDtLaiFORMA'nGN 



TU:H4 (PI 718*24083 


SCOTLAND INTERNATIONAL 
FINANCE B.V. 

US$50,000,000 

14%% Guaranteed Fixed/Floating 
Rate Notes 1996 

For the six months from 16th December 1994 
to 15th June 1995 indurive the Notes will cany 
an interest rate of 7-25% per annum 

The relevant* interest payment date will be 

16th June 1995. 

Coupon 15 will be for USD36.65- 

AGENT BANK; BARCLAYS BANK PLC 
BGSS DEPOSITORY SERVICES 
8 ANGEL GOON; TH9DGMORTON STREET 
LONDON EC2R7HT 


Ss?^ far* 






4 : 7 - 


v-Msi u ? 

■V V . 4- + < J •• 




». •; : v: + JJ •- + •. \ .y 


In accordance wBh the Tenro and Conditions of 
the Notes, notice Is hereby given that for the Interest 
Period from 15th December 1994 to 15th June 1995, 
the Notes wffl bear a Rale of Interest of 7.12S% per 

Wares! payable on 15th June 

^ 836(121 pw US $ 10,000 Note and 
US $ 9 , 005^1 per US $ 250,000 Note. 

AGENT BANK: CHARTERHOUSE BANK UMTTBO 

A Mamfeor The SacuriOas and Future* Aumortty 





DM300,000,000 

Plaatiiw Rate Notes One December 1999 (Gw “NoteH"> 
Netica eh*rtb y * rv B n lherih« feJeof IntsrwtferfeablB rarfB Bri od D ecenAar 
15, 1994 k, March 15. 1995 ha bren bad «* 5k 75* and that ibe BUM 
payAl a an the relevant bitaratf Povmecl Date March 15, 1993, again# 
Coupon Na 1 wS be DM14A9 hi iwpetfflf DM1,000 nomlnol of toq Note* 
«nd wffl b* DM146.90 in rwpedef DM10,000 nenwud of *w notto. 


De c e m ber 75, 7 994. landbn „ 


CmBANdO 


U.S. $500,000,000 


oSTktATs “ *• 

“tiSS jl , SL a S?-S2KS!'.N?- 33 k, 


Detmohor lS r 1994, tendon ■ ~ 

cm BANK* 



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People’s Republic of China has chosen the Alenia’s “Marco Polo” project to send the country flying into the future. Within this perspective, 

Alenia is producing air traffic control systems, radars and communication equipment, some of which are currently operating and others soon 

* 

will be installed in 27 Chinese airports. The “Marco Polo” project will ensure the complete safety of air traffic over China, which is expected 


to increase dramatically over the next few years. There is high regard for Alenia’s technological heritage 


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this is why the company and its products have been recognized by more than 80 countries across the world 



Alenia 

A FINMECCANICA COMPANY 


i 


1 






























30 


FIN ANCIAL TIMES 


THURSDAY DECEMBER 


15 1994 



INTERNATIONAL CAPITAL MARKETS 


McDonald’s targets short-dated eurodollars 


By Graham Bowiey 

McDonald's, the US fast-food 
group, became the latest high- 
profile US corporate borrower 
to target the short-dated area 
of the eurodollar market 
yesterday. 

Elsewhere, Pakistan made a 
successful debut in the euro- 
bond market, Argentina 


INTERNATIONAL 

BONDS 


launched its first offering In 
the French franc sector and 
Jordan announced that it bad 
awarded the mandate For a 
$50m eurobond, marking its 
return to world capital mar , 
kets. 

The European Bank for 
Reconstruction and Develop- 
ment announced that it 
intended to barrow up to a net 
Ecu9Q0m next year in medium 
to long-term debt This follows 
a net Ecu9l0m borrowed this 
year, at an average after-swap 


funding cost of 38 basis points 
below Libor. 

McDonald's launched a 
$200m issue of two-year bonds, 
offering a coupon of 8 per cent 
and priced to yield 18 basis 
points over US Treasury bonds. 

The bonds were sold to retail 
investors in Switzerland and 
the Benelux countries, lead 
manager Morgan Stanley- 
said. 

This continues the trend of 
recent weeks which has seen 
US companies such as Walt 
Disney, PepsiCo and Heinz tak- 
ing advantage of the strong 
demand from continental Euro- 
pean retail investors for short- 
dated dollar offerings. 

Dealers estimate that find- 
ing costs in the two-year euro- 
dollar sector are currently 
around 15 basis points lower 
than in the US domestic bond 
market 

Pakistan made its eurobond 
market debut with the launch 
of a $150m offering of five-year 
bonds, which is expected to be 
be priced today at around 380 


to 385 basis points over US 
Treasuries. 

Dealers expressed disap- 
pointment that the offering 
was not S2O0uz as initially 
rumoured. However, lead 
manager Bear Steams said the 
issue established a liquid 
benchmark, which Is held by 
institutional investors, 


in the secondary market 

A syndicate official said that 
although Pakistan had no 
immediate plans to tap the 
eurobond market again, the 
offering would pave the . way 
for issuance from the country's 
pr ivate sector. 

Argentina made its debut in 
the French franc sector with 
the launch of a FFrlbn offering 


of three-year hands, which is 
expected to be priced today at 
around 250 basis points over 
French government bonds. 

ANZ and Paribas are 
rumoured to have won the 
mandat** to feed manage Jor- 
dan’s return to world markets, 
with an issue of seven-year 
bonds by the state-owned Tele- 
communications Corporation. 


«nri which will trade well 


NEW INTERNATIONAL BOND ISSUES 


Domjreer 

US DOLLARS 

McOondds Oorp. 

tatamiB topM of Prifaten 

CBFO 

Anowti 

m. 

200 

,160 

100 

Goupon 

% 

aoo 

«• 

12301 

Price 

AMS? R 

W« 

99LSQR 

MWwtti 

Jan. 1997 
Dec.1999 
Dac.1997 

Peei 

% 

aisft 

OTQR 

1.125R 

Spread Beoknamr 
top 

+tami'K-98l l&r^n Starty & QX*m. 

taXWI Syi) Beer Steams hitemafooto 
+500(744 Lehman Bratfiem WL 

YEN 

Gakura Finance Cspnanfe1)*t 

30bn 


10QX» 

Mar2005 

undbcl 

SNnn FteJ Steonvn Bros. 

Sakoia Rnanoe CavvnArt(b2}At 

20bn 

M 

1QQ.00 

MargpQS 

unflacL 

NonuW Salon FbvtaiL 

fflBlCH HRANCS 

flaptibec cf Argemtee 

Ibn 

W 

wr 

JUlISSS 

azsw 

f06O|»M-977SoaM GMtoato 

AUSTRALIAN DOLLARS 

New Stti-WaJea Tnsray Corp.* 

100 

4309 

8068 

Dec.1997 

15« 

Nornura htenriOWi 

SWEDISH KRONOR 
Sudraetdeutache LB CpJMdfcQ 

450 

10625 

99J071R 

Feb.1999 

CL22SR 

+23tn)M8| MerriB Lynch naemtoUnto 


Anal tarns and norwtitatote uflMs stand. The yWd spread (over relevant gownroorrt boncQ at tanh is suppfirt by 9m load 
manegor. MJnVstodl j flo uUinj rate note. #Sen*-annual cotton. Ft feed re-offer, prices foes are shown at the re-oflar toreL a) Priced 
lodey St 38Q-38Sbp over Treaatwte a . fa) Ce Md e on coupon (Mas from Mar .00 at par. bl) Tranche 1. bfi) Tranche 2. bSQ 3-*rth Ubor 
+3Qbp to 22/3/00 aid tSOfap thereafter, g) Priced today, q Long 7 at coupon. 


Treasuries rise as data match forecast 


By Lisa Bransten in New York 
and Martin Brice in London 


US Treasury prices rose 
modestly yesterday morning 
after important economic data 
came in almost exactly as 
expected. 

By midday the benchmark 
30-year government band was 
up £ at 96% yielding 7831 per 
cent At the short end of the 
market, the two-year note 
gained & at 99j| .yielding 7862 
per cent 

Inflation has yet to appear in 
the prices of final goods, 
according to consumer price 
index figures released by the 
Labour department In Novem- 
ber the CPI grew 0 2 per cent 
bringing yearly inflation to 2.7 
per cent Although up from the 
0.1 per cent figure for October, 
it was generally in line with 


analysts' expectations. The 
increase was largely due to an 
uptick in energy prices follow- 
ing two months of decline. 

The figures led to a slight 
reversal of recent yield curve 
flattening as analysts specu- 
lated that the low inflation fig- 
ures might keep the Federal 
Reserve from raising interest 
rates at the December 20 meet- 
ing of its open market commit- 
tee. The spread between the 
yields of the two-year note and 
the long bond bounced back 
near 27 basis points after fall- 
ing as low as 13 points os 
Tuesday. 

The spread has tightened 
sharply since mid-November, 
when the Fed increased the 
interest rate 75 basis points. A 
flattening yield curve Is viewed 
as an indicator that market 
players expect a slowdown. 


In spite of the low Inflation 
data, there were signs of eco- 
nomic strength further down 


GOVERNMENT 


the economic chain. Data on 
industrial production showed a 
0.5 per cent increase for 
November with capacity utilis- 
ation at 84.7 per cent Capacity 
utilisation greater than 85 per 
coat is generally thought to be 
a signal of future inflation, but 
the market had anticipated 
such a figure. 

■ UK gov ern ment bonds took 
a positive tone from a raft of 
UK economic data, and outper- 
formed German government 
bonds yesterday as the yield 
spread over bunds tightened 


from 126 to about 118. Mr 
Kevin Gardiner at Morgan 
Stanley said gfit performance 
was driven by short covering 
in the Treasury market, and 
said the market might have 
underestimated the signifi- 
cance of employment data. He 
said: “The inflation and labour 
market data suggest that the 
phoney war against inflation, is 
over and the real battle Is 
about to commence." 

The December long gilt 
future moved op g to about 
101 if in late trading. 

■ German government bonds 
lagged the rise in the US, with 
the spread under Treasuries 
tightening from 48 basis points 
to 43 in slow trading. Ms 
Alison Cottrell at Kidder Pea- 
body said the eyes of investors 
would now be on the Federal 


open markets committee meet- 
ing in the US on Tuesday. Ms 
Jane Berryman at Technical 
Data said bund investors 
would be following closely the 
coming wage round, which 
may be inflationary as trade 
unions might adopt aggressive 
negotiating tactics to halt fell- 
ing membership. The March 
bund futures contract an Lifffl 
rose by 0.05 on the day to 89.74. 

■ Italian bonds rose yesterday, 
leaving the March bond 
futures contract on Liffe 
around 98-69 in late trading, a 
rise of 0 .03- M r Corrado Costan- 
ttnn at Wflhams de Bros said 
the bottom of the current polit- 
ical crisis had not yet been 
reached. He said: “We will 
have a lot of problems about 
who will form the next govern- 
ment." 


Borrowings raised ante in 
Orange County debacle 


The Orange County, California, 
municipal investment fund fee- 
ing more than g2L5bn in losses 
after losing a highly leveraged 
bet on the direction of US 
interest rates, did not need 
derivatives to snarl its portfo- 
lio. The feet that the Orange 
County treasurer borrowed 
Sl2fibn from securities dealers 
to lift the ante on Its bet 
ensured the fund would have 
had devastating losses as inter- 
est rates rose, even if its pur 
chases were confined to con- 
ventional US Treasury notes. 

However, it is interesting 
that Orange County and a host 
of other US municipalities, 
money market funds and pen- 
sion plans have found a way to 
tuck some highly volatile inter' 
est-rate derivatives into their 
portfolios while assuring their 
constituencies that they only 
invest in triple A rated US gov- 
ernment-backed debt. . 

This little deception has 
become Ear more transparent 
in the light of the Orange 
County debacle, and is rapidly 
chang in g a long-held view that 
government-backed debt is 
completely risk free. While the 
current debate centres on debt 
issued by US government agen- 
cies, the discussion can easily 
be extended to the interna- 
tional arena by examining the 
paper Issued by the interna- 
tional development agencies. 

In the US, government agen- 
cies such as the Federal Home 
Loan Bank Board and publicly- 
held corporations that package 
loans backed by US govern- 
ment guarantiees, such as the 
Federal National Mortgage 
Association (Fannie Mae) and 
the Student Loan Marketing 
Association (Sallie Mae) are 
massive borrowers whose out 
standing debt is second only to 
the US Treasury. 

Their government guaran- 
tees assure these agencies very 
low borrowing costs, bat a 
number of them, seeking to 


lower costs further, have fol- 
lowed the suggestions of the 
Wall Street dealers who act as 
their fffl iAgmim and issue secu- 
rities with imbedded features 

that make returns highly sensi- 
tive to interest rate move- 


or^irK 


Hie derivative instru ment s, 
commonly known as “struc- 
tured notes," offer the same 
vthHq pf risks an d rewards that 

DERIVATIVE 

INSTRUMENTS 

are available by purchasing 
contracts on listed futures and 
options exchangee. However, 
because they carry the credit 
guarantee of the US govern- 
ment, P 1 ” be classified in 
investment ■ portfolios as 
generic “government securi- 
ties," they are often purchased 
by fluids that would never be 
allowed to speculate in high- 
risk instruments such as 
futures and options. 

In the case of the Orange 
County fund, investment 
guid elines were so conssnra- 
tive that even purchases of 
conventions! shares were pro- 
whited However, that did not 
stop Mr Robert Citron, Orange 
County treasurer, from invest- 
ing billions of dollars in agency 
structured notes. In several 
cases - it appears the fund 
bought entire agency issues 
valued at over 5100m each, tai- 
lored directly to Orange Coun- 
ty's s pecifications. 

Orange County officials said 
nn Tuesday that approximately 
y *h n remained in the munici- 
pal fond, but that about $2£bn 
was stall pledged to dealers as 
collateral, reducing equity to 
about $5.4bzL That compares 
with the $7.4bn initially prat up 
by the town and municipal 
agencies that are investors. 

Of the securities remaining 
in the municipal fund, about 60 
per cent are structured notes 


consisting primarily of 
“inverse floaters," which have 
coupons that fall, as interest 
rates rise. With the Federal 
Reserve poised to raise interest 
rates, these securities are 
barely marketable, although 
Salomon Brothers has been 
retained to achieve an 
“orderly* liquidation of the 

portfolio. . 

The California municipal 

fUnd did not blindly stuff its 
portfolio with inverse floaters. 
Mr Citron was a sophisticated 
investor who knew that these 
volatile instruments could reap 
his county higher yields than 
conventional investments. He, 
like many other money manag- 
era, successfully pursued risk 
in exchange for higher returns 
for much of the past five years. 

That the agencies have 
entered the business of issuing 
derivatives Is only mildly sup 
prising. Mr Gene Elsmaiy a 
spokesperson for Fannie Mae, 
explains it simply: "We are a 
very large borrower of funds to 
serve the mortgage markets to 
the US," he says, "Our main 
mission jg to provide affordable 
housing to low and middle-in- 
come ftwtiiiiws m the US, Struc- 
tured notes are just one more 
tool in the quiver of things we 
use to accomplish this." 

Fannie Mae says just 3 per 
cent of the $435bn in debt it 
issued last year was structured 
notes. The Federal Home Loan 
Rank has about $55b& In struc- 
tured notes outstanding, or 31 
par cent of its total debt. . 

To avoid another debacle. It 
has been suggested, that the 
government should stop 
endorsing, or guaranteeing, 
credit on derivative debt issued 
by the agencies. This -would 
take substantial courage on 
the part of legislators, since 
the new budget-conscious Con- 
gress will need e v e r y tried: to 
reduce borrowing costs. 

Laurie Morse 


WORLD BOND PRICES 


BENCHMARK. GOVEfMEEirT BONDS 

Hod Day's 

Coupon Date Price change 

Yield 

ago 

Month 

ago 

Austrafta 

6300 

09AM 

92.0400 

+4L630 

1031 

1Q.1T 

1061 

BelgWn 

7.7S0 

10/04 

963200 

-0320 

035 

834 

833 

Canada* 

9-000 

12404 

9910000 

+0300 

ais 

631 

9.04 

Denmark 

7.000 

12 m 

863200 

-0.160 

8.76 

835 

8.75 

Ranee BTAN 

6 M0 

05/38 

1009400 

+0120 

7^27 

737 

7A7 

OAT 

7.500 

04/05 

908800 

+0300 

&10 

734 

8,11 

Germany Bund 

7300 

11/04 

609800 

-0uD30 

730 

730 

730 

Italy 

8300 

oa/04 

801700 

-0110 12-Q3T 

11.70 

1138 . 

Japan Holla 

4300 

QGA9 

1033400 

- 

332 

331 

434 

No 184 

4.100 

123)3 

063690 

-0090 

438 

431 

4.72 

- ■ — ■— 

rtomaianos 

7350 

10/04 

97.1400 

+0340 

737 

732 

7a48 

Spate 

10-000 

02415 

902000 

-0200 

1135 

11.19 

11.16 

UK Gifts 

6300 

08/99 

90-16 

+3/32 

830 

8.49 

6.43 


8.750 

11/04 

86-10 

+11/32 

832 

837 

838 


9300 

10/08 

104-00 

+14/32 

830 

631 

839 

UStteesury" 

7*75 

UJOd 

10 0-23 


73? 

7.00 

7JB1 


7300 

11/24 

96-04 

+16/32 

734 

73Q 

006 

ECU (French GcnrtJ 

6.000 

04/04 

64.1400 

+0.400 

832 

833 

8.47 


Italy 

■ NOTIONAL ITALIAN GOVT. BOND (0 TP) FUTURES 
(LffQr Ufa 200m 1000* of 100* 


FT-ACTlf ARIES FIXED INTEREST INDICES 


uk on* 


wed 

Dec 14 


Da/9 


% 


Tim 
Doc 13 


xd ad|. 
ytd 


— Lm coupon yM d— -IMvm co u pon yWd- -Hah coupon yield — 
Doo 14 Doc 13 Yr. ago Doc 14 Doc 13 Yr. ago Doc 14 Doo T3 Vr. apo 


Mar 

Jkof 


Opart Soft price Chang* H&i Low 

98-68 +0.02 MJOe 9&60 

97.98 +003 


Eat vol Open ML 

2S143 44230 

0 20 


U ITALIAN GOVT. BOND (pIF) FUTURES OPTIONS QJFFE) LkaSOQm lOOtho of 100K 


1 Up 80 5 years (24) 

2 5-15 yoara (22) 

3 Oust 15 yam (BJ 

4 Irredeemables (6) 

5 Afl slocks (0Q ' 


11934 

+007 

119.76 

2.16 

1034 

5 yro 

835 

63B 

536 

&S3 

837 

537 

073 

076 

5.96 

140.14 

+030 

13072 

139 

1236 

13 yf* 

039 

044 

043 

604 

638 

636 

073 

830 

. 076 

^S7JB^ 

+051 

15837 

040 

1235 

20 yro 

&38 

&4T 

054 

154 

058 

038 

007. 

071 

077 

17938 

+059 

17834 

135 

13.71 

bracLt 

041 

046 

637 







13738 

+036 

13732 

2.11 

1139 













. 




a*- 

— Uflafow 0% — 

— 

— — 

Inflation - 

— 



Sftrfoa 

Price 

Mar 

■ CALLS 

Jun 

Mar 

- pure - 

Jun 

>■ Inrifx-ftited 

6 Up to 6 yen(2) 

18077 

+007 

18064 

132 

537 

9660 

131 

230 

1.73 

232 

7 Over 5 yon (11) 

17041 

+ai4 

173.18 

132 

431 

9900 

134 

236 

136 

010 

8 Al stocks (13) 

17331 

+ai3 

17068 

132 

432 

0900 

130 

138 

232 

3-40 







Doe U Doc 13 Yt ago 


Doc 14 Doe 13 Yt ego 


348 

3^87 


4.16 

541 


1*1 

2M 


a 


aoi 

a73 


ijn 

2.76 


M tool, Ctfs 1T73 to 1076. toloue day"* opwt hU Ms 13615 Pm 11602 


5 yam yWd 15 year yield 

Doc 14 Doc 13 Yfc ago Doc 14 Doc 13 Yh oqo Deo 14 Doc 13 Yt. ago 


8 Debs & Loans (77) 12932 

grass ndomption yttdi am shown 


+020 


12000 2.12 
Lkoihik: 


1090 048 051 7.33 044 

Madtere 8*-lM9fc HtfE lift and onr. T fl* yfafcL ytd Vav to 


046 7.62 040 049 


7.74 


London dosing. “Nsw Varik mid-day 
t Grew fhdudnp nrffthoMnp tax to 
Prtww US, UK In 32ndt, others in 


YMdc Local mi ton oa totd 


125 par Dart peptone by ao n w M wtj 


■ NOTIONAL SPANISH BOND FUTURES <M0=F) 


US INTEREST RATES 




Nerhmnto 


Ona 

81* Two tnonCi _ 
Pa That iwtoL 
& rato- 
Ono 


Treasury B6te and Bond Yields 
548 Tanwir 


Doc 

M m 


Open Sett price Change High 

8045 8043 -008 8060 

8075 8083 -Oil 8088 


Low EbL voL Open tot 
8038 32,708 57,042 
8075 0954 20288 


FT FIXED INTEREST INDICES 


Govt 


(UK] 


522 Tbeejear. 
524 Roptf^ 
628 lSftor 
722 SH«r 


728 

780 

781 
781 
788 


UK 

■ NOTIONAL 


•far *994 
26 arid Arad 


Pec 14 Dec 13 Doc 12 Doc fl Dec 6 Vr oqo High" Low 

0185 91.49 9188 9Z08 91.85 10069 107 JU 8054 
10052 10049 10075 10087 10048 13035 23387 10050 

toigti shea compMore 12780 (B7U35L km 4518071/75). 
ratoud 1974. 


CULT EDOED ACTIVITY MOKES 

Doc 13 Doo 12 Doc 9 


Doc 6 


Dec 7 


Ntfl 


1006 1001 907 

102.7 1018 99.0 

13327 (21/1/94) , tow 0083 CW7Q . Basis 100: 


904 

101JD 


1208 

106.1 

IBfldf 


70096 


BOND FUTURES AND OPTIONS 
Flrance 

■ NOTIONAL FRB4CH BOND FUTURES (MAT IF) 



Open 

Sett price 

Change 


Low 

EaL vol 

Open bo 

Dec 

102-02 

102-20 

+0-13 

102-24 

102-00 

1067 

18936 

Mar 

Jiff) 

101-13 

101-30 

100-30 

+0-13 

+0-13 

102-08 

101-10 

51072 

0 

107876 

0 


FT/ISMA INTERNATIONAL BOND SERVICE 


■ LONG G8.T FUTURES OPTIONS JJFFQ 850,000 64ths of 100% 


levied BU Oder Che. YWd 


laud BU Otar Chg. YtoKd 


BU Oder Chg. YWd 


Mar 

Jun 


Open Sett price Chengs High 

111.48 11124 +036 112.06 

IIOlTB 11184 +036 11138 

110.02 110.54 +0.46 11082 


Low EsL vol Open Int 
111.44 143J064 45827 

110.74 57,744 104838 

110.02 2 2210 


Strike 

Price 

Mar 

- CALLS 

Jun 

Mar 

- PUTS — 

Jill 

101 

2-03 

234 

1-07 

2-28 

102 

1-30 

1-09 

1-34 

2-63 

103 

1-00 

1-34 

2-04 

3-38 


2101 Rffa 1221. f> adQUB d*ft opm to. 


10004 Puts 31001 


■ LONG TERM TOIBICH BOND OPTIONS (MATin 


SMe 

— — 

CALLS 


— PUTS — 



Price 

Jan 

Mar Jun 

J m 

Mar 

Jlffl 

Ecu 

110 

ill 

0.70 

130 

0.16 

0.49 

0.62 

130 

: 

■ BO 

112 

027 

130 

133 

130 

- 


113 

0.08 

0.82 

- 

- 

- 

Dec 

114 

032 

0.40 

- 

- 

- 


Eat voLUULCa 

A 18338 

PUN 14.453 . RMkra d^*a op«n ML. Cab 140378 to 141321 

us 


BOW FUTURES (MATIF) 


00.96 


8120 


+4L3B 


rtfl ft Low EsL id, Open ht 

81J30 8088 3278 3214 


US. DOLLAR 3IRNQHT8 

Abbey NPJTmmjy 6 * 2 ® 1009 88 % 

Mbetanaifrico7%98 1000 

Aalto 8^2 00 400 101% 

Ba4cNQdGmmen799 1000 ftf§ 

9 rtorn*| 0 ^| 9 B____ no MO 

HsAmSbU VOOO 

BFCE7%W ISO 

BMiGB021 IBS II 

1000 mm. 

.500 57* 

1000 &4z 
.100 BOV 


83V 
HV 

kmV 

96V 
raov 

oft +V 


4 


LWtad Kfcwto" 71# 07 
848 VtataMgff W fii 7 03 

812 WtaUBrtcOlfi 

80S WW1M5V0B 

801 Worid BbABV 00 


EEOO 10ft 10ft J, 
MOO MV Oft -ih 
3X0 8ft 21 
3000 8ft 8ft ft 
MB 10ft ft 


Ctang Kong Ri ft 88 
OtaftM 


OandBnpaBBB 


OnmakOVBB 


04 


Qennany 


■ US TREASURY 801® FUTURES fCST) S10O000 32ndm o< 100% 




Open 

Latest 

Change 

high 

LOW 

EsL voL 

Open teL 


Open 

Sen price 

Change 


Low 

fin. vol Open bit 

Dec 

100-00 

99-30 

-0-03 

100-10 

99-28 

33379 

72,760 

Mar 

80.78 

69.73 

+ao4 


8936 

76816 173314 

Me 

99-14 

99-13 


99-24 

99-00 

431,067 

328,122 

Jun 

89.10 

B9.11 

+0.04 

89.10 

89.10 

229 604 

Jlffi 

mmm -z^om 

9930 

- 

99-11 

98-29 

1,185 

12301 


K8C8VW 
esc 8^ as 

98 ft 98 . 
BSft 97 . 


BBDftaRan998. 
BrafenftgS 


BUm 8mk Japsi 9 02 

BqntOwCwpft so 

WUNd Met 7 j« a* 

FMndfiVw 


.300 *3ft 
1000 3ft 
.800 89 

.198 Mft 
.100 Mft 
_SB0 9A 
WOO 103 
. 200 Mft 
.100 K»V 


9ft 
nV 
10ft 
8ft 
85 
10ft 
io*V ft 
9ft ft 
8ft ft 


ft 

ft 

ft 

ft 

ft 


888 

8.10 Mai Ow Bank 8 10 
858 AMHiftOO 
7JB2 


848 OsRHkft 99 
922 3 ft 04 


.100 

1000 

.250 


812 fined* Faros 7% 08 
8,14 Wand ft 99 


■ BUM) FUTURES OPTIONS (UPF6) OM2SOOOO pahta at 100% 


r- l r ' 


.I 




k ral 



[ .■§§ii§§ii 

1*7 \-W 

H < * . ■ : I 

^M’sL ■ i ■ M 



pG 1 ^ 


K 1 . 1 1 



II, \ l 

i^Nil 




jfitoffL'Hl 

W • .r^J 

[ i. , ' 

rrrji 









r 1 . 1 ■ ■. ^ J T JT » 


IK [• V ^y.U [.J 



■ NOTION/U. LONG TERM JAPANESE OOVT. BOM) FUTURES 
(UFFEJ YiaOm lOOte of 100% 


Mar 


Opon 

108.02 


OtJtPT.MQpta 


Hgh Low ElLval Opon fra. 

10882 lOSA* 2047 0 

Mr trcweui dta 


Fad Mokr OwX ft 98 
QvBKCspUftOB 
GMFCft 98 
M ft Jwjwi Rn ft 97 
MsrAmsrDprft 98 
MfftZS 
JwenOHBkftOI 


150 Mft 
1500 Bft 
3000 96V 
15D0 eft 

300 WV 


Ik Par 1098 
tow 9 k Rww ft 03 
UC8R18B7 



10ft 
toft 
10ft 
Mft 
Mft 
WfV 
9ft 

’i 

aft 

9ft 
MS 
MlV 
9ft 
8ft 

35 

Mft 
10ft 
8ft ft 


ft 

ft 

ft 

i 

s 

ft 

ft 

->« 

ft 

ft 

ft 


808 HpnM Molor Fin ft 97 

837 MndftOO 

810 Nte ft D1 

732 OwrigftflS 


WO 

97 

9ft 

9ft 

107 

109 

W7 


7J® 

7JB7 

753 

758 

858 


650 


UK GILTS PRICES 


Nomqf 7^97 
QntortoT^rlB 


KotontakO^m 




Man lot M Wcȣ+8r- Mob Urn 


NpCto M M 


_ 1004^. 
RfciEtV- MW LOW 


.YWd— — 1904- 

m C0*ko£ +or- HUf Low 


PonugriAOa 

OusbocHydo^V W 


TtW 12PC 1903. 


IDtoOClOOS^ 



14*106 

1940C1M8* 

Miutoecimst 

CtoMohnTflKiM.— 

TftoiOi»7to1M7tt_ 

Thni0U|Kltt7»_ 

taiiD^ior 

PtoaOLpclOOm 

tor 50c 107.^ 

Utpcim 

DMTIspclBOB^ 

flmftpciOMBS- 
14061000-1 


Estfi12PClM. 
ItooOiffPeiOOON 

M1»4eim 

TtalOUKlOO 


&83 630 


500 100ft 
5.00 88H 

6.70 102 

(Uh uxPi 
7.10 107A 
TJSf 110A 

7.41 ioru 
7 J8 HBh 
732 97ft 

7.41 inS 
8.03 104ft 
8.17 101 A 
UV 

L30103A* 
US 0612 

U6 H 
631 116A 
L44 12JH 
634 llllt 
BJOia^to 
837 1124 
832 167*1 

96 a 


T07* 

1031ft 

-A 167H 
113*| 

— 117A 
121U 

— 117B 

-A 11U 
+4 lOHi 

-A «ift 

114* 

♦A 110 A 
*4 


i 


1311} 

util 


1084 
10 ! 
_ 131 A 
*fk MW 
*A 12MJ 
+A HU 
U8A 
ft iaiA 

+A tom 


Cam«fWag9 1 asc200t — 

•7V TtaaaVpettMtt 

aVflfa* 

Qn9<aPcaos 

m 3 Ite* i iPatc 2003-6 — 
J®? 7Voc5W8tt 

gft TtaillVpcaWW— 
liras nwftpeaw# 

10ft IS hut 2004-8 

iM& nm soc 2008 tt 

usa vmtfesm 


4.71 

036 

739 

551 

036 

HUB 

821 


10.10 

033 

1030 


&J4 


731 74S|to 
831 1063 
851 OOto 

a« so% 

857 100A 
830 121% 

030 94ft 
057 OQi 

031 116 

632 gstw 
838 120% 
0.40 103ft 
340 0 6U 


00A 
4 129A 
^ 108% 
+B IDDfi 
+% 

VGA 
IIS 
+H 111 % 
+& l«A 
+H HU 
♦A 19IA 
*h U4ft 
77M 


00% 

ioiu 

040 

07 

102% 

116% 

90% 

01ft 

112 % 


m 

WM 238 
112 


1240 

M3 

91B 


3S? 

2%pC01 47L9 146 

2%pcTO {719 337 

(135to 350 

2dc^ 0S JBBlQ 038 

2%flCT1 
2%061S 
2%oc*1fl 
2%flc70 


203% 1970 

Hk nr 




038 

17449 3J1 

173 

^14 174 

170 
. 178 

P3BL1? 179 


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THURSDAY DECEMBER 15 1994 




L^jif t> \jSki 


31 


■B 


Northern Electric 


jM^chael Smith says that a hostile bid for an electricity utility has political ramifications as well as stirring up an already agitated sector 


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Trafalgar action puts 
all recs on defence alert 


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U ntil yesterday the 
received wisdom 
among executives of 
the England and 
Wales regional elec- 
tricity companies was that they 
were safe from hostile predators. 
“There are not anm ^ ji costs left to 
be cat ont to make It wort h while for 
an aggressor to pay a hostile bid 

pcenrinm," said one chief executive 
yesterday morning 
Trafalgar House, the Hngtrwwtng 

and construction group, is not con- 
vinced, as its afternoon statement 
confirmed. And if it goes ahead 
with the takeover bid it has been 
ponsfafarfag for Northern Electric, it 
will be upsetting more than just the 
sector executives’ sense of security 
about r emaining independent 
The repercussions of a hid will be 
felt far beyond the north-east of 
Tgngbmd which is the electricity 
company’s base and far beyond the 
sector. There are significant politi- 
cal implications of a bid, with 
debates between Labour and the 
Conservatives over power privatisa- 
tion growing. 

Yesterday, shares of all 12 
regional electricity company rose 
strongly as analysts and i n vestors 
digeste d the im plications of the first 
moves towards a contested takeover 
in the sector since it was privatised 
four years ago. 

Other co m p ani e s considered vul- 
nerable to takeovers inripflaH Swa- 
Lec, serving south Wales, Sweb, 
serving the south-west, Seeboard, 
based in the southeast, and Chesh- 
ire-based Manweb. 

With one prospective hostile Ud- 
der already having shown its hand. 


v ■ 


ir~ /?■ . 


*1 A 


others are more likely to emerge, 
either to enter the fray for North- 
ern, or to focus on another target 
before it is swallowed up. Potential 
bidders could hw»linfe US nfflftiac 
seeking a stream of earning s out- 
side their own tightly regulated 
areas or US (x w t glomerat es such as 
Hanson. 

The 12 companies may feel forced, 
into each other’s arms. Most indus- 
try executives would prefer to get 
together with another rec, rather 
than face the risk of a non-sector 
company taking them over. The 
urge to merge may become over- 
whelming for some. 

But a second line of defence will 
be to accelerate the process of pass- 
ing out. any “hidden value" in the 
companies to shareholders before a 
hostile predator promises to do it 
for the m . This makes an intensifica- 
tion of cost-cutting and job shed- 
ding inevitable. 

It also increases the likelihood, 
already strong, that the National 
Grid irill be floated next year. Many 
analysts believe that the Grid’s 
value is not yet folly reflected in 
the 12 companies’ share prices and 
will not become so until it is fully 
d em erged from their ownership. 

AH of these developments will 
take place in the full public glare. 
The Labour Party has sensed that it 
can win votes through its attacks 
cm electricity privatisation and has 
been on the attack this wed: aver 
job losses and the National Grid flo- 
tation, which it says win benefit rec 
sh ar eholders greatly but customers 
and the ta x payer far less. 

The gOTernmenfs trrrJinatmn will 
be to intervene in elec tr ic i ty as 1 ft- 

■ a a ■ • 

s By davfri Liascefles 


tie as possible and to let the market 
decide on the future of the electric- 
ity industry. However, its owner 
ship of a golden share in each of the 
recs and the National Grid until 
April 1 means that it has the power 
to intervene, and Labour may chal- 
lenge it to do so. 

Even after the golden share ends, 
the government may have to con- 
front wider competition issues if 
merger mania leads to widespread 
consolidation of the industry. By 
some estimates, today’s 12 compa- 
nies could shake down into four or 
five super-utilities, possibly owning 
regional water and gas companies 

as wan. 

The role of Professor Stephen 
LittlechUd, the electricity industry 
regulator, will also come under 
close public scrutiny. 

In the eyes of the Labour Party he 
Is pn* of the villains of tiw piece, 
rfwrg it is under his regulation that 
the recs have been able to became 
so profitable and therefore so 
attractive to predators. 

There are likely to be calls cm. 
Prof Littlechild to ensure that con- 
sumers are protected, for example 
by ring-fencfog cash piles accrued 
by the recs so that bidding compa- 
nies cannot take it out for non-elec- 
tricity purposes. 

But like the government. Prof 
Littlechild is a strong believer in 
the market and is unlikely to want 
to Intervene simply to preserve the 
industry structure introduced at 
privati sation in 1990. 

The structure was inherited from 
pre-privatisation days. The govern- 
ment considered various options, 
but in the mid decided to privatise 


the regional electricity structure as 
it was. The 12 area boards thus 
became 12 regional companies. 

“The whole industry was being 
changed," said one former govern- 
ment adviser yesterday. “We woe 
breaking up the Central Electricity 
Generation Board but the area dis- 
tribution structure seemed not 
unreasonable because it had been 
developed over a number of years." 

If the government's decision 
against reforming the regional elec- 
tricity structure has proved uncon- 
troversial, the same caxmot be said 
of the price regulation it put in 
place. 

Even the executives of the 
companies acknowledge, in 
retrospect, that the targets for cut- 
ting prices in the distribution busi- 
nesses which provide their main 
income have proved to be extremely 
lax. 

The companies have been able to 
cut costs by far mare than they 
expected, largely through imple- 
menting reductions in workforces of 
more than 25 per cent on average. 
Distribution prices have meanwhile 
been able to rise. 

The result is that the f,f>T<T p nr|ip<I 
have become considerably more 
profitable than they were intended 
to be and have been able to accrue 
large cash piles. Hie sector’s shares 
have performed better than any 
other in the past four years. 

Nor is the share price growth 
expected to end there. Prof little- 
child is widely viewed to have 
missed the op portunity to rein in 
the companies’ profitability in the 
regulatory review he announced 
in August, and which is to 



London 


Southern 

Southwestern 

a 

SWALEC 

Mwwreb 




London 

SEEBOARD 

-Southern 

Southwestern 

SWALEC 

Marwab 


( 0 tM| 

1.01 

1.10 


124 

1J0S 


Midlands 

NO^WEB 

Yoricshto' 

N orB ww i 


be implemented next April. 

Stockbrokers’ analysts believe 
that virtually all companies will be 
able to increase their dividends by 
about 8 per cent a year in real 
terms for the next four years at 
least 

In the current results season, 
rises of mare than 20 per cent have 
been the norm. In utility stocks div- 


W 

044 

0.89 

147 

148 
1.70 
148 
148 


2.16 


8 J» 


idend growth is one of the key 
assessment criteria. 

All of this mpiins that even fol- 
lowing recent share price rises, 
many stock broking analysts have 
been advising their clients to buy at 
least some of the companies in the 
sector. 

Whichever predators move into 
the sector, they will have to reckon 


East Midland* 

Midlands 

NORWEB 

Yorkshire 

Northern 


with a steadily toughening competi- 
tive rlimate. Prof Littlechild is liber- 
alising the electricity market so 
that by 1998. all the regional barri- 
ers will be gone and each distribu- 
tor will be able to sell wherever he 
likes. No country In the world will 
have such an open electricity mar 
ket, and the uncertainties will be 
considerable. 


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A logical target 
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Why, with 12 . regional 
electricity companies to 
choose from, has Trafalgar 
House fixed its sights on 
Northern Electric? 

The choice «ama as no sur- 
prise to the electricity indus- 
try, where Northern has long 
been seen as the prime take- 
over target. 

Its relatively small size 
ntekes ft readOy digestible - 
though at last night’s stock 
market dose it was worth 
£L25bn - and a reputation fur 
lacklustre m an a g eme nt would 
attract predators who think 
tiny can do better. 

Another reason could be 
that Trafalgar has a large 
presence of its own in 
north-east England, which 
Northern serves from its base 
in Newcastle. But the key 
question is whether Northern 
is really as vulnerable as the 

wa rh rf IWnltR ■ 

Much of Northern’s reputa- 
tion Is based on financial ana - 
lysts 7 personal impressions of 
Mr David Morris, the chair- 
man, and his executives, who 
come across as rather stuffy 
and remote. 

The company has also been 
less a g g r ess i ve than some of 
its southern rivals In cutting 
costs, and though this week’s 
results showed profits up 20 
■par cent »nd the dividend up 
16 per cent, this was only 
average in an industry famous 
for spectacular numbers. 


Northern has also bought 
baric a chunk of hs shares, and 
reduced Its debt, which puts ft 
in a strong financial position. 
Btit, again, this is standard 
practice in the industry. 

Against that, though. North- 
ern has taken a number of 
bold steps which have marked 
it out from the pack, and 
caused some analysts to adjust 
their views. 

The most conspicuous was 
its dedshm to expand outside 
its region and sell electricity 
to big commercial and indus- 
trial customers. 

Northern now has the larg- 
est supply business of any rec 
it sells electricity to nearly 200 
Marks and Spencer stores 
around the cou n try, for exam- 
ple. In the last six mouths it 
boosted these profits by ElOm. 

r.ffcg other recs. Northern 
has also expanded into the gas 
business. But rather than just 
act as a di stributor , it went a 
stage further and bought a 
share in a North Sea gas field 
in partnership with Neste, a 
large Finnish energy company. 
With other recs now complain- 
ing that they are being 
squeezed in the gas market. 
N o r the rn has access to its own 
gas and could therefore be in a 
stranger position. 

In September Northern took 
another innovative step by 
offering to buyback its shares 
through an agent rather than 
directly, a technique which 



MArric Northern's reputation is based on analysts’ 
IVIUmbi im pressions that his bomd is rather study 


could be more tax advanta- 
geous for shareholders than 
the straightforward buy-backs 
used by most other recs. 

But Northern’s efforts have 


reviews. 
Critics a ttri b ut e the success of 
the supply business to the lhct 
that electricity generation 
prices have been capped by the 
regulator - but only temporar- 
ily. When the cap comes off. 
Northern conld find itself 
marooned by rising prices. 
Similarly, some analysts are 
reserving judgment on the gas 
strategy because of the uncer- 
tainties in the market, and on 


the tax credits until they are 
approved by the inland Reve- 
nue. 

This suggests that while 
Northern may have polished 
up its act, it stiff lacks the 
credibility enjoyed by some 
other rec managements who 
have persuaded the markets 
that they really know what 
they are doing. 

But Northern will fight a 
hid, and it clearly thinks it has 
done sufficiently well by both 
its customers and sharehold- 
ers to be able to count an their 

hadrtag 


■ TRAFALGAR HOUSE: By David Wighton 

Deep pockets 
in search of 
stable profits 


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Suspicions on both sides about 
the motives of Hongkong Land 


Trafalgar House could face an 
n phfn struggle if it decides to 
bid fin- No r t h ern Electric. The 
resistance is not, as me might 
expect, only going to come 
from Northern's shareholders, 
but from its own investors. 

They are deeply suspicious 
of the motives behind Trafal- 
gar's interest, in spite of the 
obvious tax benefits the com- 
pany would derive from a UK 


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Some fear Trafalgar could 
become a pawn In the political 
games being played by its 
major shareholder, Hongkong 
land, the pr o pe rt y arm of Jar- 
dine Uatheson. Jardine has 
been anxious to invest its 
funds internationally in 
advance of the transfer of 
Hong Kong to China in 1997. 

"One has to ask if one is 
acquiring a stream of naming s 
and cashflow which is benefi- 
cial to Trafalgar House or to 
Hongkong Land,” said one 
investor. 

The dilemma is intensified 
for shareholders who have 
been in Trafalgar for some 
time. “Trafalgar has been a 


poor investment," said one 
institution. “Yet TTnngktmg 
fame in and rescued the com- 
pany. Perhaps tins is the price 
we have to pay far Trafalgar 
not going bust," 

Some feared that any 
arrangement to fond a hid 
could allow Hongkong Land to 
acquire outright control with- 
out making a foil offer. 

“I am positive that Hong- 
kong Land will end up owning 

the majority of Trafelgar," said 

an institution. “And they will 
have bought the company on 
the cheap.” 

However, he was resigned to 
such an outcome. “If a Trafal- 
gar without Hongkong Land 
woe still solvent, and were bid 
for, it is unlikely the bidder 
would have to pay a premium." 

For Northern's shareholders, 
any approach from a company 
with Trafalgar’s track record 
would probably be unwelcome. 

A paper offer appears oat of 
the question. “That would in' 
effect be a disguised rights for 
Trafelgar and we would not 
support that," said a Northern . 
Electric investor. 


A cash bid would have to 
take account of the long-term 
value offered by utilities, and 
the high quality of earnings 
they provide. This means that 
a cngii offer would have to be 
substantially in excess of last 
night’s 101 Op closing share 
price. 

There is a farther complica- 
tion in that most of the icstitu- 
tions are not even sure them- 
selves what the right value 
should be far Northern shares. 

For example, there is sub- 
stantial value yrt to be realised 
from the flotation of the 
National (kid, which is esti- 
mated to be valued at more 
than £4bn. Northern's share 
could be worth more than 
£280m, of which a substantial 
pr oportion would find its way 
to investors. 

Most of the electricity com- 
panies have been in an 
extended dosed period, doe to 
discussions on the National 
Grid and the results season. 
"They have not really been 
able to talk freely with share- 
holders," aid one investor. "So 
it is difficult far institutions to 


be sure of the value to be given 
to such issues." 

Value might not be such an 
insurmountalde obstacle, how- 
ever. “It is possible that in tts 
effo rt s to move funds out of 
Hang Kong, the Jardine empire 
might be wding to pay more 
for Northern, an the basis of 
strategic reasons, than other 
companies might for industrial 
reasons.” cue aharehnldw said. 

But most investors might 
find an a p pr oach from a fellow 
utility - such as Scottish 
Power - easier to take. "One 
could stay in the sector and 
reap the obvious operational 
benefits," an Institution said. 

Another investor thought 
this was the most likely sce- 
nario and said he expected "a 
third party to enter the frame." 

This is perhaps the most sig- 
nificant effect of yesterday’s 
announc ement "The Bnmpgny 

has best put into play, there is 
no doubt about that,” Mr 
Kevin Lapwood, of brokers 
Smith New Court said. “The 
chances of it being indepen- 
dent in she months’ time are 
vey shm.” 


For a company to be 
contemplating a £lbn-plus 
takeover bid only two years 
after it nearly went under 
might appear to be evidence of 
a miraculous corporate recov- 
ery. But it has more to do with 
the deep pockets of Jardine 
Matheson than a turnround at 
Trafalgar House. 

Jardine dropped anchor off 
Trafalgar at the end of 1992, 
when the conglomerate built 
up by Sir Nigel Broackes was 
taking on water. Hongkong 
Land. Jardme’s property arm, 
captured 15 per cent of the 
shares later increased tts 
stake to 25 per cent 

Whatever the Jardine camp 
thought at the time, it soon 
found itself at the helm of a 
step that was making rapidly. 
Trafelgar had incurred losses 
in 1991, although it originally 
reported a profit, and these 
mounted in 1992 as it was 
forced to make heavy write- 
downs on its large property 
portfolio. 

Trafalgar had raised £ 310 m 
from a rights issue at the t*mg 
of its ill-fated acquisition of 
Davy Corporation in 1991 and a 
further £204m In March 1993. 
But the writedowns, as well as 
provisions against the value of 
its Cunard cruise ships, the 
Ritz hotel and Davy's Emerald 
North Sea rig; left its balance 
sheet badly holed. Exactly a 
year ago, Trafelgar announced 
the terms of a convertible pref- 


erence share issue to raise 
£40fen. Trafalgar is now valued 
at £l- 2 bn, only £ 2 00 m more 
than investors have injected 
over the past three years. 

jardine now calls the shots 
at Trafalgar and Mr Simon 
Keswick, whose family con- 
trols Jardine, took over as 
chairman in 1992. , 

During the 1960s and 1970s, 
Trafelgar bought a wide range 
of companies such as Canard, 
the Kte and the Express news- 
paper group (floated off in 
1982). In the 1980s, it became 
the world’s fourth largest engi- 
neering and construction con- 
tractor with acquisitions 
including Redpath Dorman 
Long. Scott Uthgow, John 
Brown and, ultimately. Davy. 

But after Trafelgar recorded 
profits of £266m in 1969, the 
recession nearly snuffed it out 
Over foe past three years, it 
has lost almost £400m before 
tax. Trafalgar's tax losses and 
unrelieved advance corpora- 
tion tax could shelter a large 
part of Northern Electric's 
profits. 

Mr Nigel Rich, the Jardine 
mm installed as execu- 
tive in August, is likely to 
argue that Northern’s stable 
profits stream will offset 
Trafalgar's highly cyclical 
earnings. Trafalgar's other 
shareholders may not see it 
quite that way. Many bought 
into the shares as a play on 
cyclical recovery, which is yet 



DSrtli- to argue that Northern's stable profits stream w» 
niLrll. offset Trafalgar’s MgMy cyclical ewriugs 


to come, and may not wish to 
see that diluted by Northern's 
utility profits. 

Mr Gavin Launder, an ana- 
lyst at Goldman Sachs, com- 
mented: “It may be a sensible 
move for Jardine but it is hard 
to see how it is very good news 
for Trafalgar House.” 

Though some overseas 
opportunities may be opened 
by combining Trafalgar’s elec- 
trical engineering skills with 
Northern's expertise in power 
generation and distribution, 
the business fit is minimfit. 

For Jardine, a takeover of 
Northern would be a way to 


exchange Hong Kong cash for 
UK profits. 

Given Northern's strong 
cash generation, a large part of 
the purchase price could be 
funded by debt. The rest is 
expected to be met from the 
proceeds of a share issue, prob- 
ably of convertible preference 
shares, underwritten fay Hong- 
kong Land. Same shareholders 
yesterday voiced concern that 
this might allow Hongkong 
Land “to buy control on the 
cheap". But they also recognise 
that without Jardine. Trafalgar 
might by now have gone to the 
breakers' yard. 


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■ WHAT IT MEANS FOR INVESTORS 

Sid in middle of 
an unfamiliar 
battleground 


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If Trafalgar House goes ahead 
with tts bid, it would mark the 
first takeover of one of the 
more than two dozen utility 
companies which have been 
privatised over the last 10 
years, writes David Lascelles. 

Sid, the proverbial private, 
first-time investor, who bought 
many of these stocks, could 
therefore find himself 
in the thick of an unfamiliar 
battle. 

As of last June, Northern 
had 123,000 shareholders, more 
than 97 per cent of whom held 
fewer than 1,000 shares. But 
though they represent the 
numerical majority, their tiny 
holdings mean that they 
account for only 20 per cent of 
the vote. 

Nearly 00 per cent is held by 
big investment institutions. 
The government only holds 
one share, but that is an over- 
riding golden share which will 
expire next March 

While Sid’s relatively small 


holding means that he would 
play only a minor role in a 
takeover battle, the bidder’s 
financial advisers will 
have to take account of his 
unfamiliar! ty with hid proce- 
dures. 

His presence could also 
sharpen political controversy 
over the hid if, as seems 
likely, Labour uses it to have a 
go at the alleged financial 
excesses of the electricity com- 
panies. 

So far, only two well-known 
privatised companies have 
been subjected to takeovers: 
Brltoil and Jaguar, and in nei- 
ther case did the government 
use its golden share to block 
thftm, 

Sid has done well out of 
Northern. He paid 240p for the 
shares at privatisation in early 
1990, and last night they stood 
at more than £ 10 . 

He has also recouped a third 
of his original outlay In divi- 
dends. 


... 


— r\* 




* 


s 











32 


TIMES 


THURSDAY DECEMBER 


15 1994 



COMPANY NEWS: 


■Be 

Distributor has no plans to merge with other 


speculation 


Restructuring leaves Manweb lower 


By Michael Smith 

Mr John Roberts, chief 
executive of Manweb, said yes- 
terday the electricity distribu- 
tor bad no plans to merge with 
other regional companies. “Our 
aim is to remain an indepen- 
dent business,” he said, 
announcing the first-half 
results. 

The Chester-based company 
reported a 40 per oent increase 
in the interim dividend, in 
spite of a sharp decline in pre- 
tax profits and turnover. 

In common with other com- 


panies in the sector it saw a 
strong rise In its share price - 
up by 51P to 83 lp - althoug h 
much of the increase was due 
to speculation about bids and 
-mergers. 

Mr Roberts said Manweb was 
on trade to cut jobs in the 
main distribution business by 
150 during the year. This 
would contribute to a 500 
reduction in the five years to 
1997. Annual costs of £20m 
would he taken out by then. 

Pre-tax profits in the six 
wxmth* to September 30 ML by 
58 per cent from £54.9m to 


£23 ,2m on turnover lower at 
£39fin, compared with £437hL 
The result was struck after 
exceptional costs including a 
£2L3m restructuring provision. 

Mr Roberts said Manweb 
planned, along with other recs, 
to damage its full holding in 
the National Grid, assuming 
flotatio n went ahwaii. 

Earnings per share were 
]&9p, compared with 311p, and 
the interim dividend advances 
from 7p to S8pi 
The dividend rise is the sec- 
ond highest in the sector so 
Mr. The company said it was 


partly the result of rebalancing 
interim and final payments. 
The underlying increase was 
about 15 per cent 

The company said profits 
before interest, restructuring 
and debt ' redemption costs 
increased from £&3m - also 
excluding one-off items - to 
£5&2m. 

Manweb attributed the 10 per 
cent fell in turnover to a 13 per 
cent reduction in supply busi- 
ness sales, where margins were 
tight- In tiis distribution busi- 
ness, turnover rose 7 per cent 
to £126 hl 


The company Is introducing 
price cuts of 2 per cent for 
domestic customers from 
January L 

It is also introducing a £Gu8m 
energy efficiency sch emein 
Ehonsley, Merseyside, pull in g 
up half of the investment with 
the EU providing the balance. 

Mr Roberts said Manweb 
would pay up front far installa- 
tion on customers’ premises tor 
energy saving technology. “By 
sharing the savings with the 
customer we will receive a 
co mm ercial return on our 
investment” 


■ 

London Electricity sees rising pay-outs 


By DbvM LascaBnv, 


London Electricity yesterday promised 
its shareholders steadily rising divi- 
dends as it nnnniTTirgd a 22 per cent 
increase in profits. 

The company made £S5.3m before tax 
and exceptional items in the six months 
to September 30, against £69 ,9m. Excep- 
t k m a ta took in a £33m provision tor 
restructuring over the next three years 
and £9.5m to cover the premium 
incurred on the repurchase of govern- 
ment debt Underlying earnings per 
share improved 25 per cent to 30. lp 
<34p). 


Sir Bob Reid, chairman, said the com- 
pany was “in good shape” with strong 

Tm p m v giyignta in trading TOtOMBS and 

continuing efficiency gains. The interim 
dividend is raised 28 per cent to 9.5p; 
allowing tor the buy-back of shares ear- 
lier this year, amnimts to an under- 
lying increase of 20 per cent. 

Of the improvement in profits, £5 -2m 
came from higher distribution income 
and £5m from reductions in distribution 
operating costs. The supply business 
transformed last year’s loss of £800,000 
into an operating profit of £lm. Mr 
Roger Urwin, chief executive, said a 
sizeable contribution had come from 
the networks at London's three airports 


the oompany bought for £90m. 

Overall operating costs were down 6l8 
per flgntL The company shed nearly 400 
jobs - about 8j6 of the total - and 
expects to lose another 300 in the seo 
and 

The total rmxr^r of nrnts distributed 
rose 2U» per cent, with the biggest rise - 
per cent — coming from the commer- 
cial sector. 

Mr Urwin said that dividend cover 
could be reduced and tins, when com- 
bined with potential earnings growth, 
gave scope for “attractive real dividend 
growth”. 

Next April wjU see the start of the 
new price regulations which will pro- 


duce a cut of 5 per cent in real terms for 
customers, and cost the company £33m 
in revenues over a year. Mr Urwin said 
that the company disagreed with the 
way Offer, the regulator, had c al culated 
the new price formula. “But it is a chal- 
lenge and we have to meet it” 

Sir Bob said he remained confident 
about prospects. “The key eco nomic 
indicator s continue to look encouraging 
for T^mrirm and we frilly expect to be 
one of the principal beneficiaries.” 

The company would be looking for 
new opportunities to ex pand the busi- 
ness, such as the airports deaL But it 
was also casting its eye abroad for elec- 
tricity distribution protects. 


Success of cider brands 
helps Bulmer to £14m 


By Roderick Oram, 


dder brands of HP Bulme r 
TTnTdiwgw gqjoyed faster growth 
than flip market as whole, 
allowing the Hereford-based 
producer to report a sharp 
jump in underlying interim 
profits . 

Pre-tax profits for thfi 
six months to October 28 
increased to £l4&n. The year 
ago figure of £2J6m was 
depressed by a £&3&n charge 
for disposing of a lossmaktog 


Underlying profits rose 19 
per emit, while operating prof- 
its from confirming operations 
grew 5 per cent to £15.5 iii - 
Tnmover slipped to £33Qm 
(£L39.5m) but excluding dispos- 
als there was a 7 per cent 


Capital investment, cost cut- 
ting, brand developments 
would spur further progress, 
Mr Esmond Buhner, chairman, 
said. 

Bulmer, marimt leader, 
introduced three new products 
yesterday to capitalise on the 
trend to premium ciders: 
Scrumpy Jack Old Hazy, a cask 
conditioned cloudy cider, 
Strongbow Ice, the first ice 
cider, and strongbow Lemon 
White, a flavoured cider for 
Australia. 

The interim dividend is 


Interim Results 

for the six months ended 30 September 1 994 








'■ -y* \.v.r. ■*'2 ^ * "v ci-.jc. 2 i .7? \ >- « w; jR j 


William GoodaH, Oiairman: 






' The comp an y continued to 
make good progress in the first six 
m o n ths of ties year and all the businesses 
have performed well. Our continuing cost 
reduction caid productivity enhanc eme nt 
programme win additionally ensure that 
we meet the requirements of OFFER'S 
Distribution Review. Manweb will sustain 
the drive towards consi ste ntly im proving 
customer service and increas in g returns 
to shareholders. In the first six m onth s 
the opportunity was taken to give future 
financial b en efit to the shareholders by 
buying back 3L48% of the company's 
equity and by repurchasing £5 7.0m of 
high In ter es t loan stock offered for sale 


FINANCIAL RESULTS 

vnoBnynfl prom Desore u uotom, iBG&uaunng ano ooor 
redemption oasts increased from £55.4m (£43.3m excluding 
supply undomoovery) in 1993 to £S6.2m in 1994* Profit bdoro 
ksx, accounting for a £2 1 -3m provision far restructuring and 
£1 1 .2m dab redemption costs was £23-2m (1 993:334,9 m). 

In the sbe months to 30 September 1 994, group iumowr fafl 
1 OK due to a 12.7% redudkm in supply business sales, where 
margins ore very tight. The resubont effect on otferuU profitabi&y 
wos berofore min im oL Al other bu si nesses sow a rise in turnover 
at the sbe month stage. 

The tax charge was £ 6 j 6 m (1 993£1 4u3m) — chi e ff e c t i ve rote 
of 2&1% compared to a rote of 26% fertile same period last 
yeca: Excluding foe debt repayment premium and without the 
inclusion at a large provision far restructuring, tie effective fax 
rote would have been 23.1%. 

The Board has declared an interim dmetend of 9.8p per 
ordinary share. Tha r efleds an Increase in the proportion of the 
fuB year dmdend payable at the Irterim stage and is more 
re p rese r tethe offhetobneae betwee n first hdf year and seoond 
half year earnings. 

Between 7 and 28 September, the company bought bock a 
total of 4 r l 50,000 shares at an average price of 844p per shore 
whkh represents 348% of issued shore c ap i tal . 

Manweb aba bought back two tranches of Its issued debt with 
a total face value of £57m, offered for sale on 18 July 1994 by 
HM Treasury, at a premium of £1 1 .2m. Vfe expect to benefit 
from the earnings enhancement in future yean derived from the 


In the first half of the year, the two vrindfarmsatOafand 
Crass in Cornwall and Coal Clough near Burrrfey, in whrdi 
Manweb has a 4S% stakes continued to perform vrelL After 


No final decisions can yet be 
confi r me d for the future off the N ati o n al 
Grid Company, although terms for a 
flotation are being considered by its 
shareholders. If this occurs our In tention 
at Manweb would be to pass on 
the benefits from Hal a tion <■- — \ 

• ■ i ^ 

to our shareholders 
and customers. * '* 


.■I 


*r' m 




Cosh flow gene rate d from operating odMfes was SStt&n, 
compared with £1 04.5m far the same period last year. This 
reJudion is primaril y os o result of writing capftdrfi an g es 
which reflect the it m o use in VAT on debtors, the reduction of VAT 
prepayments as the year pro gre sses , and OH second tier biffing. 
After paying £27m os port or the shore repunji o se programme, 
and the £1 l_2m debt r edemption premium, we remain cosh 
positive at the Merim doge with cr net cash bakra of £0.5rn ff 
but expect to haveo mcn gin al debt portion at foe year endL 

OPBWnONAL REVIEW 

to the efistribution budnessr turnover was up 7^% to £1 24.1m on 
the same period lost jtaar. DMribution profib at £4&4m rafted 
an inaeose in Ihe cfislribufion Use of System charge and a 3% 
i ncrease in units distributed 

Central to the major cost redudion initiative, plans for the 
restructuring of the distribution bus in ess are well a d v an ced. The 
new organisation wifl come into being on 1 J anua ry 1995 and 
vriR be folly operational in July 7995. 

Ful time equivalent heodcourri is already down by 94 in 
foe regukted buskiereesr and we are wel on trade to achieve 
our planned reduction of 150 in the efistrfoution badness by 
31 March 1995. The overall target to reduce numbws in foe 
distribution b usin ess by 400 ana a further 100 from other areas 
wffl be achieved by 1996/97. We ore well on trade far achieving 
ptawed of £12m in 1995/96 and £20m by March 7997. 

Supply turnover fall by 1 2^% to £349J8m os a result of a 
decision not to chose un pro fita ble c us to m ers. This led to o fa 8 in 
the number aF customers supplied by M an web in the co mpetiti ve 
markets. Margins in tiro supply business were maintained. The 
reduction in poBl on kst year from £1 7.4m to £7.4m was as a 


the g en e rati on business reported a profit of £0. 1 m, broodfy 
cjunsi s te nt with lost year's figure far foe some period. 

Manweb Gas has trebled foe number of customer contracts 
since last year, and has been investing in marketing, new 
technology arid customer service to ensure it is weU placed to 
lake a d van ta ge of farther deregulation of the gas market Due to 
reduced margins^ foe business has mode a £0*1 m loss rtf the 
half year stage, twit we uyed ft to report a pratt at foe year end. 

CAPITAL EXPENDITURE 

With many of the major customer servioB project near 
completion, aspM aqendSurB costs ore beginning to fat from 
fheir recent enhanaed lovsk Gapoc in foe six months to 
September 1994 was £41 .lm,a 1 3.1 % reduction against foe 
same period last year: Over the nwet 2 years. Capex w9 continue 
to faB, as major projects are completed, and should stabilise d a 
lower level in 1996/97. 

PRICES AND CUSTOMER SERVICES 
In line with our dedared strategy of d cE win g ohigh level of 
customer service and at foe same time cm rti offing 009*3, we 
continue to poss on foe benefits of cost reductions to c u stotnere. 

In April 1994 prices.were reduced by l%and inionuary 1995 a 
farther radudton of about 2% off unit diarges far aO domestic 
cutiumers is pfanriedL In addition, the dEsoo unts ovafcfafa for 
both direct debd/standing order payme nts and for payment 
through cord operated meters wiR be doubled. expect to 
announce farther tariff redudions before 7 A pril 1 995- 

Manweb b now the top-ranked REC by OFFER in terms of 


and westil lead the field in having the fowsst number of 
disconnections aver the lostl 2 months - just 23. In adc&ion, our 


trend in customer approval of Manweb and its major 

NEW BUSINESS OPPORTUNITIES 


.The 

Holyhead fomove Demand Side Management (DSM) pr o jed 

a 10% fofl in 


The retail b u s ines s reported a slight i 


in 


customers b obo underway in Crewe. 

As o farther d e v elo pment of ties programme, foe comp an y 
has gained European Union Obfedive One fandfag fora B6JBm 
"shared savings' scheme in pcelr wraf tip with Khowsky Borough 
Councfl in Mers e y si de, in which we wifl be able to use foe 
expertise gained m ow DSM projeds for more diretf oo mm eroof 
benefit. The scheme b designed to enoourage the use of energy 
efficie n t technology in businesses across foe Borough. 

Matching the European funding on a 50/50 b ossy Manw eb 
will pay upfront for installation in c u stomer s * pre mi ses for fob 


asa 


growth, enhanced by current dab in the organi sa tion. 

Manweb s in dbcusdon with Ch eshi re base d Brunner Mond, 
one of our industrial customers* concerning o posable dean cool 


receive a commer ci al return on our investment. This « 


m 



hSgh street aatomer service continues to improve, bofo incur 
shops and in foe growing petworlc of third party outlets. Retail 
mode a loss of £0.6m reflecting the seasorality a f foe business, 
but b expected to report o profit at foe year end. 

M an w ob C on h uUa tg Services timSe^s tumoMer continues to 
rise, with sates increasing by 7.5% to £12.9m. The company 
mode a smoil loss of £0.1 m, due to reduced margins in what b 
an hosodngfy oo mpsiM w market. H ow e v er , by focusing on 
higher margin business and by improving coat control, we ofso 

to report a profit by foe year end. 


ertiena 

return on invesfement, end dbcusstons are continuing. 

THE FUTURE 

TTie compan/s uncterfying paformonce b sound. Oafs ore 
reducing and we continue to adueve high standards in foe 
servioe we offer to aur aretomevs. Our continuing restructuring 
wifl provide increasing effidenQr in our operations. VMe ore 
co nfidecTtfootthb strategy wg deth^quafityecariingg and good 


Copies of the interim announcement are available from foe Company S ecretary ^ The Company's registered office at Sea land Rood, Chester; CHI 4LR (0244 652047] 

Bar farther Information call our Slaveholder Helpline on 0839 500543" 

wfH bo c har ged ct 49p par rrinote and 39p par mlmrte at any other time. 


KP Baliatr . 

■ ■ . 1 

■ ■ * »*•»■* 

Sham pr*M rttawo to *a- 


115- 


110 — , 



Jtan10B3 
8a*C* FTQraphtts 


raised to 4^5p (4p). 

gaming s per share of 17Jlp 
compared with losses of i-42p 
Including exceptionals or earn- 
In ga of X4^4p before. 

Buhner said the UK cider 
market grew by 8 per cent to 
95 Jim gallons in the year to 


September. On-trade. expanded 
by 5 per cent, while Buhner’s 

share rose 8 per cent to super 

cent The off-trade increased by 
12 per cent, with Buhner grow- 
ing by more than 20 per amt in. 

the premium and economy sec- 
tors, but slipping in private 
label and edging ahead In 
mainstream brands. 

Mr John Rudgard, chief exec- 
utive, said Bulmer hoped to 
complete soon agreements 
with Hetaeken in five Nether- 
lands and Interbrew in Bel- 
gium to distribute Its ciders 
to the on-trade in those 
countries. 

Bulmer has a continental 
toe-hold through Stessen, Bel- 
gium’s leading cider maker, 
which it bought' in 1992. 

Farther investment in Stas- 
sen should begin to show 
results this year, although 
profits dipped in the first Half, 

the company said. 


Purchases bolster 
Robert Wiseman 


By David Btackwefl 

Acquisitions have driven both 
operating profits and turnover 
sharply up in the first half at 
Robert Wiseman Dairies, the 
Scottish liquid milk processor 
and distributor floated in 
March. 

Pre-tax profits for the six 
wwn«w to October 1 improved 
to £2J95m, against £&82m last 
time when there was an excep- 
tional gain of £327,000 an a dis- 
posal. Operating profits were 
up 21 per cent at £3.Q2m 
(£2.49m) on sales 71 per cent 
ahead at £49.4m (£2&9m). 

Wiseman has concentrated 
on supplying liquid milk in 
cartons and plastic bottles to 
supermarkets and shops. Lake- 
fhr-like sales were IS pff cent 
ahead as the consumer trend 
away from doorstep deliveries 
continued 

Mr Alan Wiseman, chair- 
man. said the group had been 
“through the pain barrier of 
losing doorstep business”, 
which now accounts for just 10 
per cent of turnover, and was 


confident about progress in the 
current halt 

Earlier this year the group 
acquired two Scottish dairy 
companies, paying £3-2m for 
Mackies in April and £8- tin for 
Kexmerty Farm Dairies in May. 
Mackies contributed £4m to 
turnover in the period, while 
Kexmerty contributed £12 dl 

Net margins fell foam 8 per 
cent to GLl per cent, re fl ecti ng 
the lower margins at Eesnerty. 
Since the acquisition* Wiseman 
has made £4m of disposals 
with a possible £2m more 
expected from the sale of an 
Edinburgh site. 

Capital expenditure this year 
is expected to be ESm, includ- 
ing £5m towards a new dairy in 
Manchester as the group 
moves into the English market 

Mid-way gearing was 45 per 
cent, a level the group is com- 
fortable with. It had £7.5m net 
cash immediately after flota- 
tion. 

The interim dividend of 05p 
is payable from earnings of 
3.24p per share. Tha shares 
closed unchanged at lOOp. 


Stoddard warns of 
flood damage costs 


By James Buxton, 

Scottish Correspondent 

Stoddard Sekers, the carpet 
mater, yesterday issued a prof- 
its warning as a result of flood 
damage at one of its plants 
caused by last weekend’s rain- 
fall, the heaviest recorded 
this century in the west of 
Scotland. 

The shares fell 4p to 28p. 

The plant in Kilmarnock, 
Ayrshire, . was not insured 
against flood damage after a 
p rofessional risk ggysgs ment 
concluded in 1992 that such 
risk was low. Defences at the 
plant had been improved after 
a severe flood in 1961. 

Stoddard Sekers said its pre- 
liminary estimate was that the 
exceptional cost relating to the 
uninsured element of stock 


and lost production was not 
likely to exceed £l-5m. in 1983 
it made pre-tax profits of 
£2.l4m. Analysts had been 
expecting pre-tax profits of 
about £2im in 1994. 

The BMK plant, which 
weaves material for Axminster 
carpets for the group’s contract 
carpet market, was flooded to a 
depth of 4ft on the night of 
December 10 when the Annick 
Water overflowed its banks. 

Tha ripftenrftg instwllpri after the 
1961 flood were left 2ft below 
the high water level 

Stoddard Sekers said last 
month that the contract carpet 
order book was healthy. Mr 
Ralph Ellis, chief executive, 
said yesterday that the Kil- 
marnock plant would be frilly 
operational by the end of 
February.- 


Acquisitions help lift 
Chemring to £6.5m 


By Geoff Dyer 

Acquisitions helped Chemring, 
the maker of anti-missile 
decoys, marine distress prod- 
ucts and protective clothing, 
increase pretax profits by 14 
per cent in the year to Septem- 
ber 30. 

The outcome of £6.49m 
(£5.TLm), achieved on turn o v e r 
up 35 per cent at £53.1m 
(£39.4m), absorbed redundancy 
costs of £173,000 which, had led 
to a 23 per cent fell in i nt e rim 
profits. Operating profit on 
continuing business was up 8 
pa cent at £6.2&n (£S-8m), on 
turnover 25 per cent higher at 
S49AXL 

Mr Philip Bfilington. chair- 
man, said that all the group’s 


businesses had shown growth. 

The group acquired Kem- 
brey, a maker of electronic 
marine search products 
cable harnesses, in September 
for £4£m, Hutchwflco, a New 
Zealand supplier of buoyancy 
aids, in May for £l-5m and 
Nova Marine Systems, a manu- 
facturer Of electronic niarina 
search products, for £l.lm in 
ApriL As a result, the propor- 
tion of turnover from the 
defence sector fell from 1 60 per 
cent to 41 per cent. 

A l-for-10 open offer in 
August raised £5 Am to pay off 
debt used for the acquisitions. 

Earnings per share increased 
to 2L3p (195p). The final divt 
dend is 6^6p, making ftjjp Op) 

for the year. 


PUBLIC WORKS LOAN BOARD RATES 


13 


^ Quota toanar^ 


Over 1 up to 2 
Owr2upto3 
Over 3 up to 4 

Over 4 up to 5 

Over 5 up to 6 __ 

Over 9 up to 7 _ 

Over 7 up to 8 

Over 8 up to S 

Over 9 up to 10 _ 
Over 10 iq} to 15 
Over 15 up to 25 
Over 25 


7fc 

7* 

8W 

6tt 

8H 

a% 

«c 

8* 

&K 

8ft 

8ft 

8ft 


7ft 

7ft 

8K 

8ft 

8ft 

8ft 

8ft 

8ft 


8ft 

8ft 

8ft 


0ft 

8ft 

8ft 

8ft 

8ft 

8ft 

8ft 

8% 

8ft 

8ft 

Bft 

8ft 

8ft 


714 

7ft 

8ft 

8ft 

8ft 

8ft 

8ft 

8ft 

Bft 

9ft 

8ft 

9ft 


7ft 

8 

8ft 

8ft 

8ft 

8ft 

8ft 

8ft 

9 

9ft 
9ft 
9 


6ft 

8ft 

8ft 

8ft 

8ft 

9 

9 

9ft 

aft 

9ft 

9M 

9 

9 




Traded Options Softwa 


1NDEXIA 










FINANCIAL TIMES THURSDAY DECEMBER 15 1994- 



33 


per to 



COMPANY NEWS: UK 


Shares rise 1 l l Ap on a deal expected to be worth millions of dollars 

VideoLogic to play with NEC 


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By Alan Cane 

VideoLogic. the small 
mnltimedia company, has 
sigaed a development agree- 
ment expected to be worth mQ- 
Doas of dollars with NSC, the 
Japanese electronics group, 
after a breakthrough which 
could, revolutionise the com- 
puter games business. 

Neither VideoLogic nor NEC 
would comment an the value 
of the deal, but the total will 
indude an immediate payment 
and royalties _an sales or the 
system. 

The news boosted VideoLo- 
gic’s shares, which rose u%p 
to 5lp against 45p at which it 
was demerged from Avesco, 


the broadcast equipment and 
services compa ny , ««**>* this 
year. At one point the shares 
Ml tomp. 

VideoLogic has already pio- 
neered a number of advances 
in video technology for per- 
sonal computing which have 
attracted contracts from com- 
panies SttCh as Inter national 
Business Machines and Com- 
paq. 

Tt has now developed a tech- 
nique for creating three dbnen- 
sional images which are sub- 
stantially more realistic than 
any so fer developed, at about 
a tenth of the price. Shadows, 
for instance, can be accurately 
depicted. 

The radical cost reduction 


promises to bring games, at 
present limited to arcade 
machines, into he home. 

VideoLogic also published 
interim results yesterday, 
showing losses of £3.7m (£L5m) 
cm revenues 23 per cmt ahead 
at £5. 5m. Losses per share were 
3.4p 0L9p). 

The outcome m n fl mw^ the 
compa ny's October warning of 
continued heavy spending on 
research and development and 
falling personal computer 
prices. 

Mr Derek McLaren, chair- 
man, said the company had 
considered whether to go for 
short-term profits or to con- 
tinue investing in the research 
needed for the multimedia 


breakthrough. If the company 
bad opted for short-term prof- 
its, he maintained that there 
would have been no possibility 
of the NEC deal 

Existing products include 
semiconductor chips and 
printed circuit boards which 
make it possible for PCs to 
handle video images and high 
fidelity sound. It has designed 
multimedia chips for IBM and 
Compaq and has a manufactur- 
ing agreement with Intel. 

Under the latest deal it will 
supply NEC’s IT division exclu- 
sively with multimedia prod- 
ucts. ft is developing the proto- 
type of the games system 
which should be ready for mar- 
ket by the end of 1995. 


Hornby 
warning hits 
share price 

By Peter John 

Old fashioned children may be 
wishing for a train set for 
Christinas, but thetr dreams 
are not being translated into 
c ash for Hornby. 

The USM-quoted toys group 
yesterday issued a wanting 
that profits far the current 
year would be "substantially 
lower” than last year’s £L72m. 

The shares fell by 6 Op 
to 127p» 

"It is going to be a poor 
Christmas. The turnover will 
be good because people have 
money, but the profits won’t 
because people wffl be waiting 
for the sale bargains,” said 
one source close to the com- 
pany. 

Hornby may be synonymous 
with the golden age of rail- 
ways, but the company con- 
centrates most of its precision 
on Scalextric. The 


miniature racing car game is 
largely responsible for an 
expected rise in turnover 
above last year’s £28Jhzu 

The cost off expansion over- 
seas, together with a heavy 
advertising campaign, has hit 
margins. Combined with the 
pressure on high street sales, 
this has prompted analysts to 
forecast an annml profit of 
about £700,000, less than half 

last year’s figure. 

» 

Liquidation 
likely at 
Archer arms 

By Ralph Atkins, 

Insurance Cor respondent - 

Archer, the Lloyd’s agency, 
expects a liquidator to be 
appointed to "a number of 
subsidiaries” affected by liti- 
gation. 

Mr Bryan KeDett, chairman, 
said the group , was regarding 
as discontinued four members’ 
agencies and a managing 
agency hit by court victories 
by lossmaking Lloyd's Names 
- individuals whose assets 
have traditionally supported 
the insurance market 

The agencies were acquired 
by Arches- in recent years but 
the gr o up is taking advice on 
their future. 

Archer also announced it 
had spent £342,000 on profes- 
sional fees while reviewing its 
future in the light of changes 
at Lloyd’s. A separate com- 
pany set up to invest in Archer 
syndicates has raised about 
£4m - lower than the group 
had hoped for. 

Ur KeDett said continuing 
businesses made an operating 
profit in the year. However, 
the group anticipates a L2-5 
per cent fall hi the underwrit- 
ing capacity of an-going insur- 
ance syndicates under its man- 
agement in 1996. The number 
of syndicates run by Archer 
win tell from 15 to 12. 

Archer also announced a 
reduced pre-tax deficit of 
£240,000 (£820,000) for the 12 
months to September 30. Turn- 
over rose to £10. 7m (£8~3m). 

Losses per share were 0.9p 
<1.9p). A recommended final 
dividend of 0.5p makes an 
unchanged total of Ip. 

The group still hopes to 
acquire the members agency 
business of Cox Group. 


Southern Water turns in 

9.8% advance to £70.8m 


Southern Water, one of the 10 
biggest water groups, con- 
finned the strong fame in the 
industry by reporting a 9.8 per 


profits Cram £64£m to £70 Am. 

.Sales in the six months to 
September 30 climbed 1(13 per 
cent to £190-6m with the help 
of a 29 per cent increase in the 
company's non-water activi- 
ties, w hite t ur no ve r on the reg- 
ulated w at er side grew fay 5.7 
per cent to £lS9.5m. 

'Hie improvement triggered a 
9.7 per cent dividend increase 
to 8.45p. The shares gained 3lp 
to dose at 570p. 

Southern’s advance came 
despite a 40 per cent rise in 
investment spending to £l04m- 
Thls ahmite decline in the sec- 
ond half to reach a full-year 


£185m. However, capital out- 
flows will remain a heavy 
drain as Southern plans to 
spend £L2bn over the next five 
years to meet new urban waste 
water standards. 

The rise in interim profits 
came through a mixture of 
h i g her sales, tight cost controls 
and limited acquisitioiis- 

Costs on the regulated side 
remained virtually stabIe.The 
main increase in expenses 
came in Southern’s Don-regu- 
lated businesses, where it has 
expanded into such areas as 
quantity s u r v e y ing and envi- 
ronmental services. 

Earnings per share rose 7 j 9 
per cent to 39-Sp. 


Southern Water's no-surprises 
interim results, backed by this 
week's strong performance in 
the water regulator’s league 


ED&F Man matches 
forecast with £ 31 m 


By Christopher Price 

ED&F l Wan l the agricultural 
products and financial services 
trading- group which came to 
the . market : In : October, 
announced pre-tax profits 
ahead by 19 per cent from 
£2SJ3m to £3L2m in the half 
year to end-September. 

The rise, which was in line 
with indications given at the 
time of the flotation, was attri- 
buted to strong performances 
by the agricultural products 
and brokerage divisions. How- 
ever, the fund management 
business was adversely 
affected by volatility in finnan- 
dal irarrir g bs 

The group declined to gtve a 
turnover figure. Mr Hhrvey 
McGrath, managing director, 
sa»b “Turnover is not a mean- 
ingful figure in our business 
because of the variation in 
commodity prices.” He added 
that in commodity tonnage 
toms, the half-year period was 
up by IS per cent He warned, 
however, that this figure too 
could be unduly fnflngnrflri by 
market conditions. 

Banting s per share rose by 


29 pa 1 cent to &9p (6JJp). The 
company is paying a second 
interim dividend - set at3.2p - 
at this stage, effectively as an 
advance payment against the 
final dividend. In future, it 
intended to pay the interim in 
February, followed by the final 
in Septenber. 

The shares slipped lp to 
170p, still below the flotation 
price of 180p. 

Volumes in the agricultural 
products division rose by 18 
per cent in the first half, with 
profits almost doubled at 
£20.7m (£11.1 m) . Particularly 
buoyant were profits from 
sugar, up from £4.4m to £93m, 
and cocoa, ahead at £4. 5m 
(£L8m). 

Profits in the brokerage busi- 
ness rose by 23 per cent to 
£5.4m (£4.4m). But profits from 
fond management declined by 
46 pcs- cent to £6J2m (ELL5m)- 
Mr McGrath cautioned that 
unfavourable market condi- 
tions continued to undermine 
the dmsLon’s py f ffl i iflT w y 

However, lie remained oanfi- 
dent about the overall outlook 
for the group for the rest of the 
year. 


Stirling ahead to £2.22m 
in depressed markets 


Stirling Group, the clothing 
manufacturer, reported pre-tax 
profits of £2-22m for the six 
months to September 30, 
against £223,000 after losses of 
£926,000 from discontinued 
operations, writes Peter 


The shares closed down 3p at 
54p. Mr Steven Bentwood, chief 
executive, saw the fall against 
a background of a depressed 
textile sector as well as a 
depressed retail sector. 

Continuing activities saw 
operating profits advance 15 
per cent to £%_nsm (£L76m) an 
turnover up 6 per cent at £38m 
(£35 -8m). The p rofits pleased 
Ur Bentwood but he would 
have preferred the t u rnover to 
have risen 8 per cent 

The gronp announced in 
April it was to withdraw from 
its import business. In the haw 
it accounted for turnover of 


DIVIDENDS ANNOUNCED 


• Total 

Currant Data at pontfing for last 

payment payment dvldend year yew 


Archer -"n 

Baggaridga Brick-. — fin 

Burner (HP) int 

Chamrinu ——An 


Chubb Security 



London Bectric 
Man fSD&ql 

KftanwebH 


Ptarmi ga n 
Robert Whaman 

Scottish Radio § fin 

Southend Prtp _l_Jnt 

Southern Water int 

«aB»m ____ h* 

Int 


Tinsley (ERza)§ 
Wkfoey 


05 

2575 

425 

6501- 

232 

05 
455t 

95 

02 

95 

15 

1,7 

09 

9 

084 

855 

06 
156 
02 


Feb 25 
Fab 15 
Fab 20 
Feb 17 
Feb 15 
Feb 9 
Fab 28 
Feb 2 

Mar 9 
Feb 10 
Jan 25 
Fab 23 
Feb 15- 
Feb 27 
Apr 6 
Jan 21 
Feb 1 
Apr 6 


05 
2575 

4 

6 
2 

05 
485 
7.4 

7 

183 


S 

08 

7.7 

055 

156 

nfl 


1 1 

3.125 3.125 

108 

8.8 9 

625 
15 

54 525 


135 


02 


2455 

4 


95 

Z4 

23.1 

1.9 

551 

nfl 


DMdends shown pence par share net except where otherwise, staled. +On 
Increased capital. §USM stock. 


£425m (CLOSm) and operating 
losses of £418,000 (£753,000). 
Last time's figures also 
included contributions from 
the brand division sold to its 
management in December 1993. 

S tirling marie provisions of 
£L&n for the imports closure, 
of which only £l59m was 
required. 

The interim dividend is lifted 
9 per cent to Q5p, payable from 
earnings per share of 1.7p 
Gosses o.06p). 

Scottish Radio 
rises to £4m 

Scottish Radio Holdings, 
formerly known as Radio 
Clyde, boosted aonmiai pretax 
profits by 39 per cent from 
£358m to £42m and fitted its 
final dividend by 50 per cent, 
writes David BlaadewelL 

The CSM-traded company 
will be seeking a full listing in 
the new year. It is also propos- 
ing a 5-for-2 share split to 
improve the marketability of 
the shares, which dosed up 2p 
at 570p yesterday. 

Mr Ian Chapman, chairman, 
aairi the group was “delighted 
to be reporting our best ever 
year.” During the first two 
months of the new -RnanMai 
year, total broadcast revenue 
was 24 per cent ahead. 

Turnover for the year to Sep- 
tember increased by 17 per 
cent to £15.Un (£13.4m). Earn- 
ings rose from 24.7p to 3L8p. 

Radio Clyde, the flagship sta- 
tion, has a 44 per cent share of 
listeners in its area, the high- 
est level in the UK 

The final dividend of 9p, 
makes 135p (95p) for the year. 


table of service standards, con- 
firms its image as one of the 
best-nm groups. Heavy capital 
spending will continue to over- 
shadow earnings, but the dam- 
age may be limited by cost-cut- 
ting and innovations such as 
new technology to remove pes- 
ticides from waste water much 
more cheaply. Southern's rela- 
tively high E-tector in Ofwafs 
review also supplies some 
headroom. Whether that will 
be enough to produce an earn- 
ings and dividend surge is 
unlikely. But Southern’s 
strength compared with its 
rivals has been its consistent 
profits and dividends growth. 
A likely 9 to 10 per cent rise in 
the full-year dividend to about 
25p - a prospective yield of 
about 55 per cent - and a simi- 
larsized increase in profits to 
between £135m and £l40m 
should cement that reputation. 


Crockfords 
expands 
with £18m 
casino buy 

By Davkf Btecjcwsfl 

Crockfords, the casino 
company that was reversed 
Into TV-am last year, 
yesterday bought the 
International Sporting Club 
from Brent Walker for £18m 
cash . 

The International Sporting 
Club in Mayfair is pitched at 
the middle of the market, and 
will be Crockfords’ second 
premises. There are Just 21 
casinos in London, and 
acquisition is the only 
practical way an operator can 
expand in the business. 

Crockfords opened London’s 
first legal casino in Cnrzon 
Street in 196L Last August the 
oompany reversed into TV-am, 
which had lost Its Scene? and 
was planning a voluntary 
liquidation. 

Mr Gary Nesbitt, chairman, 
bought Crockfords from Brent 
Walker in 1390, and has 
turned it from a casino where 
players were betting £2 at a 
time to the sort of 
establishment where players 
can lose £lm in a single night 

He said earlier this year that 
his strategy would be to 
continue to develop the 
existing dub and to look out 
for acquisitions in London. 

Brat Walker has owned the 
International Sporting Club 
since 1987. It has been 
operating from its existing 
premises, which are 
undergoing refurbishment, 
since 1990. 

In 1993 the casino made an 
operating profit of £15m on 
turnover of £95m. 

Crockfords is meeting the 
consideration from existing 
resources. It Is acquiring a 
new 25-year lease on the 
premises. 


MET fails to dispel 
retail gloom with £29m 


By NeB Buddey 

MFL the furniture retailer and 
manufacturer, failed to dispel 
the gloom in the retail sector 
yesterday when it reported 
interim profits at the bottom 
end cf expectations thanks to a 
squeeze on gross margins. 

Pre-tax profits for the 28 
weeks to November 12 rose 
from £24. 5m - excluding a 
£195 &i exceptional gain on the 
sale of MFTs stake in Carpe- 
tright - to £29m. With analysts 
forecasting up to £39m, the 
shares fell to l22p. 

The problem was not on the 
sales side - UK retail sales 
increased 12 per cent, while 
group turnover increased 13 
per cent to £363m (£320m). Mr 
Derek Hunt, chairman, said 
the trend had been maintained 
in the second hall 

“There is no doom and 
gloom here,” he added, refer- 
ring to reports of disappointing 
high street sales. “Last year at 
this time we were 3 per cent 
ahead." 

MFI revealed, however, that 
gross margins bad fallen from 
555 per cent to 5CJ9 per cent. 

Ms Sue Murphy, finance 
director, said that resulted 
from a ten in the proportion of 
MFI-toanuEactured goods sold 
from 55 to 52 per cent, and the 
£3m cost of installing new 
ranges in stores. The group 
was also having difficulty pass- 
ing on to consumers price 
increases for raw materials 
such as paper, chipboard, 
chemicals, and plastics. 

With operating profits up 
11.7 per cent from £27.4m to 
£30.6m, the group operating 
margin fell 02 points to 8.4 per 
cent The effects of the gross 
margin tell was offset by lower 
costs, but analysts were disap- 
pointed by a 5.8 per cent 
increase in payroll costs. 

The interim dividend was 



Derek Hunt ‘there is no doom and gloom here' 


lifted to l.5p (I53p), with earn- 
ings per share up from 2.78p - 
before exceptional^ - to 3Jp. 

Seven new UK stores have 
opened this year. 


If MFI is stft] a barometer of 
the retail trade - it started suf- 
fering from recession a year 
before other retailers - the out- 
look for the sector remains 
blustery, sales growing nicely, 
but gross margins squeezed by 
rising raw materials costs. MET 


hopes to pass on mare costs to 
consumers In the second ball 
However, without recovery in 
the housing market, consumer 
durables will remain highly 
competitive, limiting scope for 
price increases. It must then 
rely on customers buying more 
products from its own facto- 
ries. Consensus full-year fore- 
casts were trimmed to ESOm, 
putting the shares on a pro- 
spective multiple uf 12.5, which 
looks fair given the margin 
uncertainty. 


MAM put in offer period 


The Takeover Panel yesterday 
placed Mercury Asset Manage- 
ment, the fund management 
company which is 75 per cent 
owned by SG Warburg, in an 
offer period because of War- 
burg's intention to merge with 
Morgan Stanley. 

The decision follows market 
speculation over whether War- 
burg and Morgan Stanley will 
make an offer to acquire the 25 
per cent minority stake in 
MAM to merge it with Morgan 


Stanley's fund management 
arm. It mean* that relevant 
share dealings by Warburg. 
Morgan Stanley and MAM, and 
connected parties, have to be 
disclosed 

The panel could eventually 
force Warburg and Morgan 
Stanley to make a tender offer 
for the MAM minority under 
the “chain principle", if it 
decided that a main purpose of 
the merger was to acquire the 
assets of MAM. 



Ar+ m < 













34 


FINANCIAL TIMES THURSDAY DECEMBER 15 1994 



COMPANY NEWS: UK 


Cost cutting behind 
Chubb’s rise to 15% 


By Tim Burt 

Chubb Security yesterday 
reported a IS per cent increase 
in first half profits as the elec- 
tronic alarms and looks group 
reaped the benefits of its cost 
reduction programme. 

As part of the four-year pro- 
gramme, launched last year, 
the group has sold lossmaking 
operations, endured large 
redundancies and unveiled 
new products to improve mar- 
gins and market share. 

Mr David Peacock, chief 
executive, said those measures 
had begun to pay off with pre- 
tax profits rising from £342m 
to £39.2m in the six months to 
October 14. 

Turnover showed a more 
modest rise to £37l.Bm 
(£355 Jim), including £2 .55m 
(£3. 88m) from discontinued 
activities, giving a 5 per cent 
increase in underlying sales. 

However, Mr Peacock said 
the group had seen orders 
grow by 10 per cent from 
£353m to £388 m . including the 
contract to guard the premises 
and equipment of the National 
Lottery. Demand strengthened 
in several markets, particu- 
larly Asia and Australasia, 
where operating profits rose 
from SllJJm to £14m, confirm- 
ing its second place to the UK, 
where profits were unchanged 
at £I7.7m. 

Physical security - locks and 
safes - saw profits rise to 
£19.4m (£I7.4m) while elec- 
tronic security - alarms and 
fire detection - rose to £L9m 
(£l8-lm). 



David Peacock: securing the Lottery premises and equipment 


Mr Peacock said the first half 
performance meant it was now 
halfway to meeting its target of 
increasing its share in the 
£7J2bn world market from 9.5 
per cent to 11 per cent 

“We’ve done this after just 18 
months of a our four-year pro- 
gramme.” 

While aggressively pursuing 
increased market share, the 
group has also sold its loss- 
making alarms division in 
France and locks business in 
Australia, and set aside £298m 
to cover first half redundancies 
and reorganisation. 

The cost of such measures, 
put at £4.5m a year during the 
cost reduction programme, was 
offset by strong cash genera- 
tion. which during the period 
rose £7 -2m to £429m. 

Banaings per share rose to 


EL2p (7j08p) and the interim div- 
idend is raised to 2L32p (2p). 

• COMMENT 

Solid rather than sparkling, 
these figures were nonetheless 
creditable for a company 
which has yet to complete its 
“pain first, gain later” restruct- 
uring. Although sales were 
slightly below expectations, 
the growth in orders suggests 
the strategy is working. The 
group has saved £23m in the 
first phase of cost-cutting and 
its emphasis on new products 
and emerging markets prom- 
ises long-term rewards. With 
margins growing steadily, {all- 
year profits are likely to reach 
£88m, giving a p/e of 15 .3. The 
shares, down 5p at 293p, look 
fairly priced, given that they 
touched 424p earlier this year. 


No action to be taken over 
leaked BTR announcement 


By Ian Hamfflon Fazey, 
North e rn Correspondent 

The Stock Exchange is to take 
no formal action after the 
£35. 5m disposal by BTR of 
three subsidiaries was 
announced in Australia before 
London markets had been 
informed. 

Presspart Manufacturing and 
Decorpart of Lancashire and 
Presspart of North Carolina 
are being sold to management, 
which will combine the busi- 
nesses into a 500-employee 
group exporting nearly 60 per 
cent of its UK output 

Combined turnover is about 
£30m with profits of about £5m. 

The sale was supposed to be 
announced in London at 
7.30am yesterday, but the news 


was out in Australia at least 12 
hours earlier. 

The Manchester office of 31 
which brokered the merger 
and negotiated the sale, is put- 
ting £l3m of equity into the 
venture. The Royal Bank of 
Scotland is providing senior 
debt of £20m, with £6m of mez- 
zanine debt coming from Inter- 
mediate Capital Group. 

Under exchange rules, 
quoted companies should 
ensure all investors get the 
same information at the same 
time when a potentially price- 
sensitive transaction occurs. 

In this case, although there 
is understood to be some 
annoyance, the breach is seen 
as unintentional, with little 
opportunity for trading 
between the announcements. 


BTR acquired Presspart and 
Decorpart when it bought the 
Rockware Group in 1991. Pres- 
spart has struggled under a 
succession of managers, but 
Decorpart has prospered since 
Rockware headhunted Mr Ray 
Maddisoru a steel industry spe- 
cialist, In 1990 to ran it 

The companies make cans 
for the bear, beverages, drugs 
and cosmetics markets and are 
understood to have recently 
worked out how to use metal 
to make the in-can “widgets” 
which gassify beers, solving 
recycling problems caused by 
first-generation plastic devices. 

3i has wwigted on Mr Say 
Way, chairman of Denby, 
becoming Pressparfs non-exec- 
utive chair man It is also 
bringing in a finance director. 


Expansion 
for Fairey 
with £37m 
US buy 

By Peter Pearse . 

Fairey Group, the Industrial 
electronics and specialist -- 
engineering concern, is further 
expanding its electronics side 
with the acquisition of 
Randomat of the US for £37m. 

Mr John Pool ter, chief 
executive, said that since 1991 

the group had spent £52Jan cm 
six business in the field of 
on-line measuring and 
electronic controls. 

Randomatis sole operating 
subsidiary is Microscan 
Systems, based in Renton, 
Washington, ft makes 
high-performance fixed-mount 
bar code scanning and 
decoding devices. 

Mr Pool ter saM Microscan 
would stand alone from the 
group - although there were 

similarities between the 

company and other Fairey 
companies which wonM give 
“advantages rather than 
synergies”. There would be no 
rationalisation and Microscan 
Is expected to be 
earnings-enhancing in 1995. 

Mr Boulter said Fairey 
would encourage Microscan to 
develop its markets, 
particularly overseas. 

Curre n tly between 75 and 80 
per cent of its sales are in the 
US. 

An Initial payment of about 
£31 Jim, comprising £29Sm 
and $2.7m (£L64m) will be 
mad e at completion. 
Subsequently, loan notes for 
$&5m will be payable in 1995 
and 1996 to Mr Mike Mertel, 
Microscan’s founder, president 
and minority vendor. 

About £ 18.5m of the £3L5m 
will be raised from a placing 
of 5m new ordinary shares at 
374p. The balance w£Q come 
from existing cash resources 
and facilities, which will leave 
the group with cash in double 
digits at the December 
year-end. 

Mr Poulter said that while 
supermarket barcode scanners 
needed % to % a second to 
“read” information, 

Microscan’s produ cts could do 
400 to 500 scans a second. 


Memory placing 

Memory Corporation, which 
has developed a technology ' 
which cuts the cost of 
producing computer memory 
chips, has placed ld5 per cent 
of its equity at 45p per share. 
Market capitalisation will be 
£26. 6m when trading begins 
under Rule <L2 on December 
21 . 


Tins announcement is neither nn offer to sell nor a solicitation of an offer to buy these 
securities . The offer is made only by the Prospectus Supplement and the related Prospectus. 

New baWDcmnliiT (x. 1W4 



MIDLAND 

Member HSBC Group 

Midland Bank pic 


$400,000,000 

S 5/s% Subordinated Notes due December 15, 2004 


Price 99. 623% 


Cofdes of the Pmsjxrtus Supplement and the related Prospectus may' be obtained 
in anv State from the undersigned and such other dealers as may 
Iturfullv offer these securities in such State. 


J.R Morgan Securities Inc. 


Lehman Brothers 

Merrill Lynch & Co. 


Placing with institutions intended to raise £3m of new money 

Sunsail plans £20m flotation 


By David Btadnwfl 

Sunsail International, the 
gaffing holidays operator with 
more than 650 yachts world- 
wide, is planning to come to 
the market early in the new 


The group, which aims to be 
valued on flotation at about 
£20m, intends to make a plac- 
ing with institutions to raise 
more than £3m of new money. 

Pre-tax profits in the year to 
October 1993 were £lim, on 
turnover of £21m. Turnover to 
October 31 this year is expec- 
ted to top £24m; net debt stood 
at about £3J5 hl 
T he business has grown from 


a sailing school near Ports- 
mouth, which was acquired in 
1979 by managing director Mr 
Christopher Gordon, a sailing 
enthusiast since childhood. 

It now operates in 18 coun- 
tries from 19 bases and nine 
hotel sailing clubs. About 
80,000 people sail with the com- 
pany annually, with repeat 
bookings on about 50 per cent 
of business. 

In 1980, Mr Gordon made bis 
first foray abroad through the 
purchase of Island Sailing, 
with 40 boats in Greece, from . 
Guinness with a three-year 
interest free loan of £300,000. 

The company expanded by 
acquisition, inrliirffng one in 


Turkey. In 1987 it more than 
doubled in to an operator 
of 250 yachts by buying the 
Yacht (hulsing Association. A 

joint venture in tbs US took 
Sunsail foro the Caribbean. 

In 1991 Mr Gordon sold the 
company for shares worth up 
to £8m- in Airbreak, the 
USM-quoted tour operator. 

But Airbreak collapsed the 
following year, in part bla min g 
unexpected problems following 
the deal , with Sunsail. Mr Gor- 
don and his wife Sally, market- 
ing director, turned to Mercury 
Asset Management and put 
together a £L4m management 
buy-out to retrieve the com- 
pany. 


“We »Mnfc we may be the 
only tour operator that actU’ 
ally survived a parent com- 
pany going bust,” said" Mt Gor- 
don. 

Mercury remains the major- 
ity shareholder, with Mr . Gor- 
don. his wife and management 
holding the rest Mercury is 
expected to sell most of its 
fiiiip; management is planning 
to sell' some shares, but to 
retain about 30 per cent 

Flotilla sailing accounts for 
only about 20 per cent of turn- 
over. Sunsall’s activities 
include Independent yacht 
chartering and shore-based 
watersports holidays, as well 
as sailing tuition. 


Development costs push 
PhoneLink £1.96m into red 


By Pad Taylor . . 

PhoneLink, the Birkenhead- 
based electronic information 
services company which was 
floated on the USM 18 months 
ago, yesterday reported a first- 
half pre-tax loss of £196m 
reflecting the planned cost of 
bringing the group’s Tel- Me 
product to market 

At the same time the grou p 
announced that it had signed 
an agreement with WH Smith 
Office Supplies to develop and 
provide an on-line office sup- 
plies catalogue. 

The system, which is due to 
be Launched in early 1996, will 
enable business customers to 
select and then order office 
supplies from a screen, and 
will mark the first use of the 
Tel-Me system for direct elec- 
tronic trading. 


The group has also signed an 
agreement with ExpoteL a UK 
hotel reservations specialist, 
which will allow Tel-Me sub- 
scribers to make hotel reserva- 
tions “at favourable negotiated 
rates”. 

PhoneLink's loss for the six 
months to September 30 com- 
pares with a £301,000 deficit in 
the comparable period and 
came on turnover up by 36 per 
cent from £586900 to £797,000. 

Losses per share ware 5-5p 
against (L8p a year earlier. The 
shares rinsed 2p lower at 218p. 

The group’s DataCare tele- 
phone directory service for 
database users generated most 
of the first half turnover, 
although the Tel-Me service 
was launched in May after 
three years’ development with 
marketing beginning in Sep- 
tember. 


Mr Trevor Burke, chief exec- 
utive, predicted "explosive 
growth'’ for Tel-Me, which is 
based cm a simple- to-use but 
highly sophisticated informa- 
tion retrieval software pack- 
age, and is aimed at the busi- 
ness market 

Tell-Me enables personal 
computer users to call up busi- 
ness information such as com- 
pany reports, telephone num- 
bers, maps and news to their 
s c re en quickly and cheaply. 

PhoneLink has already 
signed agreements with a num- 
ber of data providers including 
BT, the Automobile Associa- 
tion and British Rail, 

The group ended the period 
with net cash of £4.09m after 
capital expenditure of £Llm on 
completion of the infrastruc- 
ture required for the Tei-Me 
service. 


Increased demand boosts 
Baggeridge to £5.81m 


By Chri sto pher Price 

Baggeridge Brick yesterday 
reported pre-tax profits nearly 
trebled from £2jD3m to £5 Atm 
for the year to September 30. 

- The results were achieved 
against a background of a 
recovering housing market 
along with an improvement in 
brick demand and a subse- 
quent rise in prices. 

Baggeridge said increased 
demand had prompted the 
company to delay the introduc- 
tion of a sew brick line to 
enable it to satisfy demand for 
Its existing products. 

The recovery in the bunding 
materials business bad also 


underpinned a rise in capital 
expenditure, with new produc- 
tion capacity being installed. 

Turnover increased 26 per 
cent to £37.7m (£29. 9m) and 
paminfre per share trebled to 
9.68p (393p). The final dividend 
is maintained at 2975p for a 
sam&again total of3.125p. 

The shares closed up lGp at 
124p. 

' The company said the lack of 
a "feelgood factor” in the hous- 
ing market was holding back 
sustained growth potential and 
adding to pressure on margins. 

However, it remained confi- 
dent of an “overall improve- 
ment” in the brick market in 
the coining year. 


Ptarmigan Inti 
at £57,000 

Ptarmigan International 
Capital Trust, formerly Castle 
Cairn Investment Trust, 
reported net income of £57,000 
for the half year to November 
30. 

For the six months to end- 
December 1993 net income was 
£36,000, but the company said 
that the results were not com- 
parable as in March it had 
changed its polk? from invest- 
ing <mly in investment trusts 
to Investing in individual 
companies. And the company 
had also changed its 
year-end. 

Earnings per share 
amounted to 1.18p (L24p) and 
an i n t erim dividend of 1.7p is 
declared. 


Improved 

markets 

for ECC 

By Geoff Dyer 

Shares in English China Clays, 
the minerals and chemical 
group, rose 17p to 34Qp yester- 
day after It announced a mod- 
estly improved performance in 
the third quarter in its main 
markets, especially the paper 


The Calgan offshoot in the 
US increased dollar sales reve- 
nue by 5 per cent against the 
previous year, with the stron- 
gest growth in paper chemi- 
cals. ... 

Sales of SCO’s European 
sourced minerals rose 3 per 
cant, a lower rate of increase 
than in the -first half, and 
ECCTs sales in the Americas 
and Pacific region were flat. 

An exceptional charge esti- 
mated at £5m will be made 
against 1994 operating profit 
for further rationalisation at 
Calgon. This also includes the 
cost of. integrating EZE Prod- 
ucts, toe US supplier of special- 
ity chemicals to the paper and 
surface-treatment industries, 
which it acquired for 345.4m 
(£27.6m) In October. 

Gartmore Micro 
raises £345m 

Gartmore Micro Index Trust, 
which was launched hi Novem- 
ber to . track the MicroCap 
index covering, the smallest. I 
per cent of UK equities by mar- 
ket capitalisation, has raised 
about £34£m net of expenses 
through a placing and open 

offer. 

The trust said yesterday that 
a total of 35J5m ordinary shares 
(with warrants attached) at 
lOOp each had been subscribed 
for. . 


NEWS DIGEST 


Widney 
recovers 
with £1.2m 

Recovery continued in the 
second half at Widney and the 
electrical and mechanical engi- 
neer is paying its first dividend 
for five years. 

On turnover of £3L2m (£22m) 
including £282,000 from acqui- 
sitions, pre-tax profits for the 
year to October 1 were £L19m, 
compared with losses of 
£160,000. Earnings were 0.73p 
Gosses 0.49p) and there is a 
proposed final dividend of 09p. 

Southend Property 

Interim pre-tax profits at 
Southend Property Holdings 
edged ahead from £l.78m to 
£l.S3m, while rental income 
was Elm higher at £8. 76m. 

Earnings per share for the 
period to September 30 came to 
Lllp CL23p), but the Interim 
dividend is raised to 094p 
(0-8p). 

Close Brothers 

Close Brothers Group, the mer- 
chant banking and financial 
services concern, has acquired 
a further 15.2 per cent of 
Winterflood Securities, its 
marbetmakmg subsidiary, tak- 
ing its stake to 98.7 per cent 

The consideration of £8. 74m 
cash was satisfied by the issue 
of 397m new ordinary shares, ' 
which are being placed by War- 
burg Securities at 220p each. 

Dunedin W’wide 

Net asset value at Dunedin . 
Worldwide Investment Trust 
showed a modest decline from 
843Jjp to 835.6P per share dur- 
ing toe year to October 31. 

The trust’s benchmark - the 

Morgan Stanley Capital Inter- 
national World Index in ster- 
ling - dropped 3.4 per cent dur- 
ing toe same period. 

Earnings per share fell to 
4,42p (9.68p) but the final divi- 
dend is again 7.1p for a main- 
tained total of 9-5p. 

• Dunedin Smaller Compa- 
nies Investment Trust saw its 
net asset value rise 39 per cent 
to 315.1p per share over the 
same period. Earnings per 
share emerged at 896p ($.72p) 
and a proposed final of 6p 


maintains the total dividend at 
9p. 

Mice placing 

Mice Group, which dpsignu and 
manufactures exhibition 
stands, came to the market via 
a £2 9m placing of 81.7m shares 
at 3p to finance expansion and 
debt reduction. 

The placing was folly under- 
written by Ellis & Partners 
who reported “an extremely 
good take-up” by mostly pri- 
vate clients. 

Mice is an acronym for 
Museums, Interiors, Confer- 
ences and Exhibitions an d ha s 
three subsidiaries - MkeftlK), 
Silver Knight Exhibitions, and 
Reflections- 

Prospective earnings for 1594 
are 0-31p. The forecast net divi- 
dend for next year is Q.096p. 

Tribune Newspapers 

Tribune Newspapers, the Dub- 
lin-based printing and publish- 
ing group, swung back into 
losses at the operating level in 
the year to June 30. 

Despite a ma rginal increase 
in turnover to I£6-54m (£6.43m) 
there was an operating loss of 
I£1.17m against a profit of 
I£56,000 last tune. At the pre- 
tax level, losses deepened to 
I£L58m (I£471,000). 

A new editor was appointed, 
in April, and Mr Gordon Col- 
leary, the chair man, said it 
was now the board's intention 
to raise new equity and to 
carry out a financial recon- 
struction early in 1995, with 
the aim of bringing the debt/ 
equity ratio back to a more 
acceptable leveL 

Coxnpco at £ 366,585 

Compco Holdings, the property 
company, achieved pre-tax 
profits of £366985 in toe half 
year to September 25, com- 
pared with losses of £198,149 
last tune after an exceptional 
£550,003 charge relating to one 
of its joint venture properties. 

Net rental income was little 
changed at £919,714 (£919977). 
Operating expenses, however, 
increased to £314935 (£268967) 
mainly because of fees 
incurred in reorganising group 
borrowings and joint ventures 
toe company said. 

In December the property at 
MUlharbour, London Dock- 
lands, was sold for £l.43m, 
some £175,000 less than book 


value, which would be 
reflected in toe second halt 
Earnings per share came 
through at lL32p (9-58p losses). 

Bogod setback 

Bogod Group, which sells sew- 
ing TnarMnes and accessories, 
reported the anticipated 
decline in interim profits hut 
said that trading had improved 
in the third quarter. . 

On turnover of £3.11m 
(£3 .04m) pre-tax profits for the 
half year to September 30 
amounted to £59,000 (£74,000). 

Directors said the company 
was unlikely to match the out- 
come of last year’s second Half 
Earnings fell, to 0.7p (L26p); 
interim dividends were held at 
0-lp per ordinary and 0.2p per 
A restricted voting share. 

Queens Moat replies 

Queens Moat Houses yesterday 
denied it had been granted soft 
banking terms to enable it to 
continue trading. 

The reply from Mr Andrew 
Coppel, chief executive, was in 
response to mmm/rptg fry Sir 
Paul Nicholson, Chair man of 
Vaux, who on Tuesday said: 
“Certain companies, which ran 
into financial difficulties, have 
been kept afloat with subsidies 
from their bankers enabling 
them to gain a competitive 
advantage over properly 
financed companies." 

Mr Coppel said be “totally 
disagreed” with the comments 
but refused to make any fur- 
ther statement for fear of 
“adding credibility to {the 
accusations]”- Queens Moat is 
expected to announce terms of 
its financial restructuring 

before the December 21 AGM . 

1 ■ 

TBI £24m boy 

TBI, the property group, is 
acquiring a £24. 1m portfolio of 
11 investment properties. The 
aet price, after assumption of 
£12 9m of bank debt, is £ll9m. 

The principal vendor is Mr 
Peter Thomas, brother of Mr 
Stanley Thomas, TSTs deputy 
chairman who taka over as 
chairman on January 1. 

The consideration is being 
met by the issue of 28m new 
shares at 40p. 

Kaye funding 

Further funding of £l45m has 
been provided for Kaye Alu- 


minium, the extrusions com- 
pany that was bought by man- 
agement from Pechiney of 
France for £39m in 1986. 

Less, than a quarter of the 
cash has been used to acquire 
a competitor, Finales, from 
Heywood Williams. 

Visionware bought 

Santa Cruz Operation, a Calif- 
ornia-based specialist software 
group, has bought Visionware, 
a Leeds-based software com- 
pany, for *14.75m (£8.9ni). 
mostly in cash. 

Eliza Tinsley ahead 

Eliza Tinsley Group, the USM- 
traded hardware manufacturer, 
yesterday reported a 24 per 
cent increase in interim profits 
despite a marginal fan fo sales. 

Mr Jeremy Sharp, chairman,, 
said the improved pWformance 
reflected “stringent cost con- 
trol” and the divestment of the 
lossmaking ET Hi-Tec - com- 
puter business. 

The pre-tax line for the six 
months to September 30 
amounted to £407,000 
(£329,000). Turnover eased to 
£7.7m (£796m). 

Earn i ng s per share impmwnf 
to 3-63p (2.84p); the interim div- 
idend is maintained at L96p. 

Grainger Trust 

Grainger Trust, the property 
company, hoisted pre-tax prof- 
its from a restated £L74m to 
2595m for the year to Septem- 
ber 30. The result included an 
exceptional credit or £l9m. 
Earnings were 189p <59p). A 

final dWidend of 495p makes a 

total of 59p (&25p). 

Bolton Group 

Mr Ivor Goletka is not recefr- 
mg any compensation for his 
«ss of office at Bolton Group, 
the property investment" group. 

He lost the chairmanship "to 
Mr Mark Keegan in March 1993 
and left the board in March 
this year. He 

still holds a 49 per cent 
stake. 

Danka £4m deal 

Business Systems, the 
office equipment supplier . 
which is quoted in the UK but 
operates mainly in the F® haa 
acquired Capital ~ 

Machines for fat am 










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FINANCIAL TIMES THURSDAY DECEMBER 15 1994 


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Beirut: city of surprises 
after 15 devastating 
years: see page ii 



FINANCIAL TIMES SURVEY 








Saudi Arabia’s banks 
face a further squeeze 
on profits: page ill 


Thursday December 15 1994 


A rab banting is sot what it was 
fire Tears ago. By and large, the 
region's basks - and notably 
those in the Gulf — are more 
fffidenBy managed, more soundly capital* 
ised. better regulated, and generally more 
pro fit able. They offer a wider range of 
services to increasingly sophisticated cli- 
ents and can draw on a ftflW quiver of 
varied financial instruments, many of 
thsn new to the Middle East Capital mar- 
kets m the region are starting to emerge 
and showing tentative signs of w«ip»*fag 
Equally, however, Arab bashing has not 
become the distinctive International force 
many of the region’s bankers believed it 
might - even as tittle as five years ago. 
Regional integration of the industry, for 
instance, has failed to live up to mm* of 
the more visionary dreams of the late 
1980s, particularly In the Gulf states - 
“nothing materialised,*’ says a Riyadh 
banker. "There’s no regional solidarity 
among the hanks, there are no lnstito- 
turns,” 

More than a decade of discussion of 
cross-border cooperation among the six 
Gulf Co-operation Council states (Saadi 
Arabia, Kuwait, Oman, Bahrain, the 
United Arab Emirates and Qatar) remains 
mostly talk - “nobody's taking a pan-Arab 
view,” says one Gulf banker. “Sand! banks 
have plenty to do in Saudi, for instance: 
they’re not in the least Interested in the 
outside world. They're not even interested 
In Qatar neat door." 

Internal rationalisation of the individual 
and intensively banked Gulf markets, 
notably in Kuwait and the UAE, has also 
been slow to materialise, with family- 
owned Institutions stubbornly reluctant to 
heed central bank urgings to merge. 

Internationally-aspiring Arab banks, 
moreover, which once viewed themselves 
as the prospective pillars of a new Arab 
banking order, have largely failed to fawn 
such ambitions. Banks such as Arab Bank- 
ing Corporation, Gulf International Bank 
and National Bank of Kuwait have sur- 
vived the rigours of the Gulf war and 
retained significant cross-border 
operations. But none of the banks bom 
during the petrodollar recycling boom of 
the eariy 1980s has fully achieved its inter- 
national ambitions. Most have retreated 
from optimistic ventures in North Amer- 
ica, Europe and the Fear East for want of 
profitable business. 

“AH the Gulf banks had problems.” com- 
ments Mr John Cnntiffe, chief analyst with 
Capital Intelligence, the Cyprus-based 
bank analysis and rating agency. “They all 
had large deposit bases but, until recently, 
had no great opportunities in their local 
markets, so they bad to go overseas. But 
by and large they were too small to get the 
best business." 

One result, concluded one senior hanker 
at the recent Neath Afric a n a nd Mid dle 


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ITw Gulf naukm ttw Arab world’s benUng powartwass, lad by Saudi Arabia, wrfde Morocco (laR} 
end Ttmbia era s ee i ng > steady kitenattooe fag ttoo of their banking systems. Pictured right tithe 
British Bank of ttw ISddS* Bast In Beirut Lebanon, where the bunting confluence of Lebanese 
bankers la a throw ba ck to the days before the war whan Lebanon was an Im port an t htarorfooel 



Regional unity remains elusive 


Eastern economic summit in Casablanca is 
that “it's no longer appropriate to speak of 
'Arab banking’ as such - what we have is 
banking, done in Arab countries." 

Looked at market-by-xnarket. it is per- 
haps most fruitful to divide Arab banking 
into three centres of grav i ty; the Gulf. 
North Africa - specifically Tunisia and 
Morocco - and those countries tike Jor- 
dan, Egypt, Lebanon and Syria whose 
chief economic itepTmfnHnt to the near 
term wiH be the prospective fruits of peace 
with Israel 

The Gulf remains the Arab world’s 
banking powerhouse, led by Saudi Arabia. 

The 12 Sand! ft wnmMrifl] hanks ncffiMint 

for 30 per cent of the gross tier one capital 
of the Arab top 100, according to recent 
figures in The Banker magazine, and the 
other five GCC states 40 per cent But to 
give some idea c£ the scale of Arab bank- 
ing, a participant at a recent GCC banking 
conference pointed out that there are 12 
Japanese banks with greater assets than 
all 160 Gulf banks combined. 

espite the o v ercrowding in some 
Gulf markets, most banks have 
begun to offer an increasing range 
of retail services in countries where such 
Bifnga as bank cards, telephone hanking 
and consumer loans are relatively recent 
developments. Given the large wealth and 
youth of most Gulf states' populations, 
such services are offering hanks some 
room for gr o w th . 

Corporate banking is also benefitting 


Political suspicions have often been the chief 
impediment to economic and financial integration in 
the Arab world, observes Mark Nicholson 


from the relative success in countries such 
as Saudi Arabia, the UAE and Bahrain of 
long-standing government support for non- 
oil based tight industrial development 

Capital markets In Saudi. Bahrain and 
Oman are growing. And the persistent 
needs of Gulf governments are adding to 
the still em br y o n ic financial markets. The 
recent Saudi offering of 6280m of floating 
rate notes, with a second offering expected 
soon, is one recent example. 

In Morocco and Tunisia, meanwhile, the 
success of International Monetary Fund- 
guided structural adjustments is leading 
to the steady modernisation and interna- 
tionalisation of the banking system. A 
number of western banks has stakes In 
their Moroccan cou n terparts while two of 
the kingdom’s largest banks. Banque 
Populaire and Banque Maxocaine da Com- 
merce Erterieur have subsidiaries in 
Baris, Madrid and Belgium. 

Investment funds jointly owned by 
Moroccan banks and compan ies su ch as 
ONA, the kingdom's largest priovate com- 
pany, and foreign interests are incxeas- 
in giy a ctive in purchasing shares in newly 
privatised companies . Foreign investment 
in Morocco this year will be close to $lbn, 
nearly twice last year's figure. 

Thoughts of pan-Arabistn have largely 


died for bankers in both countries. Tuni- 
sia’s experiment with a number of largely 
Gulf and Saudi government backed banks 
proved a failure. These left a trail of poor 
investments and bad debts which will take 
years to write off They did nothing to 
generate a competitive national banking 
industry. 

the minds of private investors 
in Algiers, Tunis and Casablanca are 
turned increasingly towards_ Europe , 
with a number of North African-European 
banking aiKancas being formed. GP Bank, 
which is the merchant hanking subsidiary 
of Soctett Marseillaise de Credit and a 
group of north African investors who this 
autumn acquired 40 per cent of the capital, 
has spawned two banks and one brokerage 
house in north africa. 

Union Bank was recently set up in 
Algiers - the first of its kind in Algieria. 
International Merchant Bank is the first 
north African merchant bank and was set 
up in Tunis last October, with a capital of 
ffezt$Sm. Its shareholders include north 
African individuals, Creditanstalt Finan- 
zlera and the IFC. In Casablanca, Manx 
Service Intermediation (MSI) in which GP 
Bank and nine other Moroccan investors 
each have a 10 per cent stake is one of the 


newest brokerage bouses. 

Similar trends are true of Egypt and 
Jordan, where economic reforms have in 
the past few years led to reviews of bank- 
ing regulations and practices. In both 
countries, cautious privatisation and liber- 
alisation policies are stimulating Cast capi- 
tal market growth and rising foreign inter- 
est. And though banks in Egypt, in 
particular, lag their Gulf counterparts in 
range, efficiency and sophistication - only 
one Egyptian bank offers an automatic 
telling (ATMs) - they are Cast teaming the 
virtues of capital market services. Local 
banks have launched five new investment 
funds, the country's first, this year alone. 

But perhaps the most significant devel- 
opment in this part of the Arab world will 
be the outcome of the peace process 
between Israel and its neighbours. 

As the recent naaManrn economic sum- 
mit signalled, there is a dear determina- 
tion among some regional states, most 
energetically pursued by Israel, Jordan 
and Morocco, to create from peace the 
kind of economic integration the region 
has so manifestly lacked. They will be 
building from a low base. Recent studies 
suggest that intra-Arab trade, to give an 
illustration, has actually declined over the 
past five years to around 7 per cent of 
total trade flows from 10 per cent - one 
compelling reason why the region’s bank- 
ing system has remained “fractured and 
localised," as one Riyadh banker puts it 

For many at ffrcahianrai, a first step was 
seen as the creation of a new regional 


development bank. Its rationale was put 
by Mr Basel Jardaneh, managing director 
of the Jordan Investment and Finance 
Bank: “Since the institutions of the region 
are not fulfilling their intermediation role 
to attract international capital and the 
fact that the banking system is divided 
into small markets which has created 
rigidities and inhibited their ability to 
intermediate effectively and at reasonable 
cost, the establishment of a sew regional 
bank should stimulate the integration of 
the regional Bnanrial market," he told one 
Casablanca seminar. 

There were, however, as many doubters 
os advocates in Casablanca. Many bankers 
wondered if the region needed a new insti- 
tution. where there already exist several 
Arab development banka. There was also 
as little agreement as to exactly what the 
bank's precise role should be as there was 
a la** of zeal among some western and 
Arab countries - notably Saudi Arabia - 
to fund the institution. 

The prospect of a peace-led economic 
integration has also raised the question of 
where, and indeed whether, there might 
emerge a new banking and financial hub 
for the region. 

This question is central to the ambi- 
tions, specifically, of Lebanon. Mr Rafik 
Hariri, Lebanon's prime minister, has put 
at the core of his multi-biuion-doUnr plans 
to rebuild the country after its 17 - year 
civil war, the notion that Beirut will 
recover its lost 1970s rede as the region's 
chief financial intermediary. 

There is little doubt that Mr Hariri has 
made significant strides In recapturing 
regional and international financial confi- 
dence in Lebanon. 

The recently heavily subscribed dollar 
bond issue and successful flotation of Suh- 
dere, the company formed to rebuild bat- 
tered Beirut, are two clear examples Hun- 
dreds of millions of dollars of private Gulf 
fruds have flowed back into the country. 
Institutions such as ING Bank, Robert 
Fleming and Paribas have all established 
or expanded their presence in Beirut. 

But there are as many bankers and busi- 
nessmen who wonder whether the concept 
of a banking centre makes any sense m 
these days of 24-hour global banking. The 
waning importance of Bahrain, which dur- 
ing the mid-1980s turned itself into the 
capital of the petrodollar recycling boom 
and replaced Beirut as the Arab banking 
hub with the world, is often cited as a 
counter-example to those who believe 
regional banking needs centres at all 

“Bahrain has become much, much more 

Continued on next page 

□ Trends in Islamic banking: Page II 

□ Kuwait and Bahrain: Page in 

□ UAE, Jordan. Palestine: Page IV 

□ Arab-Israell issues: Page IV 

□ Quiet revolution in Morocco: Page IV 





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ARAB BANK 

Brings our worlds together 

64 YEARS 


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With 64 years of growth , we are among the largest international financial institutions in the world . 
With branches and affiliated offices all over the world,we have created a complete range of services. 
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36 


FINANCIAL TDWOES. THURSDAY DECEMBER 1S !994 



ARAB BANKING 


James Whittington on Lebanon's prospects as a financial centre 

■ ■ 

Beirut, city of surprises 


T here used to be a Joke in 
Lebanon that so wealthy 
family was complete 
without its own bank. Not only 
was it the ultimate status sym- 
bol but it was aim useful in 
raising cash to help fund other 
family business Interests. For 
the seriously rich, this lure of 
personal hanking was no jok- 
ing matter and, during the 
1370s, the number of hanks in 
Lebanon proliferated. 

Despite 15 devastating years 
of civil war in which the politi- 
cal and economic structures of 
the country came dose to vir- 
tual collapse, the majority of 
the banks . have survived. 
There are currently 52 Leban- 
ese banks, 14 subsidiaries, and 
12 foreign banks operating 
through a network of over 590 
branches - that is roughly one 
branch per 5,300 residents - 
winking Lebanon one of the 
most over-banked countries in 
the Arab world. 

The bursting confidence and 
resilience of Lebanese bankers 
is a throwback to the days 
before the war when Lebanon 
was an important international 
banking and financial centre. 
The system of free exchange 
and strict secrecy attracted 
money from a variety of 
sources; and a number of loans 

to India , Renault and even the 
World Bank were arranged in 
Beirut before 1975. 

Now that hostilities are over 
and a massive reconstruction 
programme is under way, the 
government of prime minister 


Mr Rafik Hariri is lobbying 
hard to persuade the world 
that the country can regain its 
position as a regional centre 
for hanking and finance. 

To meet such aspirations the 
local banks are working hard 
to strengthen their balance 
sheets, diversify their assets, 
upgrade their Infrastructure, 


y 

■ . 

1 ** 


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_ . . 1 ^ . ■ 

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% 

operations. At the top of the 
hat of changes deemed neces- 
sary by the central bank, 
Banque dii Lfoan, is a shake 
out of some of the smaller 
banks - more than 30 banks 
are capitalised at less than a 
mini on dollar s. By February of 
next year, all hanks must com- 
ply with the Basle Agreement 
and fulfil a capital adequacy 
ratio of 8 per cent. This may 
set in train a series of mergers, 
thoug h only a smell number of 
hanks are expected to disap- 


and modernise their systems 
and products to catch up with 
rest of the banking world. 

“There will be major changes 
[in the h anking sector] over 
the next few years. The whole 
business is light years behind 
and it needs a lot of invest- 
ment in infrastructure, ser- 
vices and human resources," 
argues Mr Derek Kelly, a chief 
executive officer with the Brit- 
ish. Ttonk of the Middle Bast 
who moved to Beirut this sum- 
mer to shake up the bank's 


For the larger banks, the 
pressing need Is to iron out the 
distortions left over from the 
war. Balance sheets' have 
grown tremendously over the 
past few years, albeit from a 
low base. Total assets 
Increased by 826 per cent from 
49 trillion (Le. mQlkm) 

Lebanese pounds in 1990 to 
LP20.9 trillion by June -1994 
with private sector deposits up 

from LP3.5 t rillion to LP16 tril- 
lion over the same period as 
rich Lebanese expatriates 
returned flightcapttaL 
But lending to the private 
sector remains low and the 
principal currency used by the 
banks, and indeed the economy 
as a whole. Is still the US dol- 
lar. Even though the pound 
has been stable at around 1,700 
to the dollar since February 
1993 and the central bank has 
built up a hefty g3£bn in for- 
eign reserves, the commercial 
banks do little mare than buy 
high-yielding Treasury Bills 


Questions on regional unity 


Continued from page one: 
regional than it was a few 
years ago,” says Mr Cunlifle. 

“Things have changed con- 
siderably since Beirut's hey- 
days,” says another banking 
analyst “Nowadays, Saudis 
and other Arabs have discov- 
ered they can do all the bank- 
ing they want in Paris, New 
York, London. These places 
offer more than Beirut did or 
Bahrain does.” 

If any centre is to emerge, it 
may prove to be Israel, which 
in Its drive to integrate itself 
into the region politically, is 


carrying with it presently the 
strongest force for regional 
economic integration. But, in a 
region where political suspi- 
cion has often been a chief 
impediment to economic and 
financial integration, Israel’s 
energy may create as much 
competitive jealousy as unity. 

Mr Hariri, for example, 
believes strongly that Leba- 
non’s ambitious pit the coun- 
try directly in competition 
with the Jewish state. 

For tiie time being, however, 
there is no other centripetal 
farce acting on the Arab finan- 
cial world. The Gulf states may 


make greater headway in 
creating a cross-border bank- 
ing and capital market Oman 
and Bahrain, for instance, are 
exploring cross-border share 
listings. 

But the greater trend is 
likely to be increasing openess 
to the international financial 
currents flowing into liberali- 
sing economies such as Jordan, 
Egypt, Morocco, Tunisia and 
Lebanon. 

Whether such currents will 
leave remaining anything 
indissolubly 'Arab 1 about the 
region's banking system, looks 
at this point unlikely. 


with the Lebanese pound. More 
Hum 60 per cent cf deposits 
and 88 per cent of lending are 
in dollars. Tbs average credit 
to deposits ratio for the sector 
is only 31 per cent and all 
loans are short term for trade 
and commerce. 

In an attempt to encourage 
the banks to extend more 
credit in local currency, the 
central bank has relaxed its 
rules on compulsory Treasury 
Bill subscription from 60 to 40 
per cent of Lebanese pound 
deposits. More importantly, 
interest rates this year have 
come down from 17 per cent to 
14 per cent on 12 month matu- 
rities. Bankers believe that as 
the rate comes down further, 

margin pressures will force 
them to find more borrowers in 
the private sector. 

Meanwhile, to cope with the 
demand for medium to long 
term fimmring which is essen- 
tial if the country's reconstruc- 
tion programme is going to be 
a success, the Beirut Stock 
Ex c han ge is being revived. 

“We are conscious that the 
Le bane s e economy cannot sus- 
tain real growth if we do not 
have medium to long term 
credit. That’s why the central 
bank is backing all efforts to 
develop capital markets," says 
Mr Riad Salameb, the central 
bank governor. 

Beirut's stock exchange was 
one of the most active in the 
region before it was closed in 
1383 at the height ofhostflitiesw 

The core of the new capital 
market is Solidere, the $L8bn 
property-development com- 
pany which is rebuilding the 
centre of Beirut 'Hie success of 
the $65Gm Solidere issue earlier 
this year, which was .42 per 
cent over-subscribed, farmed 
the basis of a secondary mar- 
ket la u nch e d in late June. 

Thirty-two banks and finan- 
cial institutions have bought 
seats on the market's frilly 
co m put e rised trading floor and 
foreign institutions such as 
Paribas, Robert Flemming, 
Merrill Lynch and the Dutch- 
bank ING have recently set up 
or revived offices in Beirut in 
anticipation of a fully-fledged 
stock market in the new year. 

“As a city famous for sur- 
prises, Beirut may once again 
have its day,” says one banker, 
hopefully. 


Riyad Bank, the Saudi Bank, has 
strengthened its position as the most 
highly capitalized bank in the Kingdom 
of Saudi Arabia. 

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Roula Khalaf highlights Arab banks outside the Arab worid 


Competition in trade 


finance hots up 


“We have stopped being a bank 
of Mg loans and Mg transac- 
tions, today it’s Yank to basics” 
says Mr Bernard Jacquet, ■ 
rh*tnr*Tt of the management 
board of Union des Banques 
Arabes et Francoises (OBaF), 
Parte. . 

His words aptly summarise 
the fate of Arab banks set up 
in the West in the heyday of 
Arab Banking with the ambi- 
tious aim of recycling the 
mountains of capital exported' 
from the Gulf. After faffing vic- 
tim to the LDC debt crisis, 
most of the banks either went 
bankrupt or were taken over 
by Western counterparts. 

The few lucky survivor s - 
including remnants of the 
UBAF Group, Saudi Interna- 
tional Bank and United Bank 
of Kuwait - have largely 
scaled back their ambitions 
and are now focused cm carv- 
ing out comfortable niches 
tram their western bases. 

The former UBAF group, 
once a loose federation of 
hanks to the West with com- 
mon Arab public sector bank 
shareholdings has now divided 
into separate banks In each cf 
Paris, London and Rome. The 
Parte and London banks have 
secured an important stabs in. 
the trade finance between 
Europe and the Arab Worid. 

UBAF Paris, the larger of the 
two with $5.2bn In assets, has 
had a harder time shedding its 
LDC debt problems, given a. 
relatively gigrrifiramt exposure 
to Middle East countries, 
including Iraq. Unable to gen- 
erate enough earnings to cover 
provisions in re cent years (the 
bank lost FF722m hi 1993), the 
bank turned to shareholders 
again this year. Mr Jacquet 
says the latest capital injection 
of FESinm, which raised total 
coverage to a comfortable 66 
per cent, will be the last 

The trade ftnanrn business, 
meanwhile, is becoming 
increasingly competitive, and 
business from Gulf countries - 
a big Tnariret for the bank - is 
down fids year. This has forced 
UBAF to streamline operations 
- staff has been cut by 15 per 


cent in the last four years, says- 
Mr Jacquet - “we’re doing cur 
work -smoothly and calmly and 
trying to do what we know 
how to do: trade finance,* be 
says. 

Trade finance business at 
UBAF Bank Ltd in London 
<1993 assets: gLlbn), 75 per 
cent owned by Arab sharehold- 
ers and the rest by Midland 
Bank ELC* is focused an. Norik 
Africa, and- while business 
with Tmrtsda and Morocco is 



ana (Mpuy enw 
In 



our raison cTStre," ha says 

flourishing; Al geria continues 
to be a critical risk. 

With LDC problems behind 
it, and 73 par cent coverage of 
protean oxmtry risk, the bank 
was able to release £7 5m in 
provisions back into income 
last year, which allowed it to 
register total after-tax profits 
of £L8.7m and pay dividends for 
the first time since 1986. The 
London rating agency, IBCA, 
raised its individual rating of 
the batik this year. 

UBAF London opened its 
first overseas office in Beirut, 
Lebanon *hfa year, but "our 
raison d'etre remains trade 
finance and we have no plans 
for a concerted break-out into 
anything else,” says Mr 
Mohamed Fezzani, general 
manager and deputy chief 


executive. The Beirut opera* 
tion is headed by Mbguerdltch 
Bouldoukian, a former vice- 
governor of the Ban qua da 
Titan, the central bank. 

London-based Saudi Interna- 
tional Bank (with $45min 
assets in 1993), 50 per cent 
owned toy tbfi Saudi Arabian 
Monetary Agency and 20 per 
cent by Morgan Guarantee 
Trust Company, has un dergo ra 
a significant *w»Twforr l ' fl tinin hx 

the last decade, gradually mov- 
ing out rf wmwnm rifll banking 

and Into in ves tm ent b anking . 

SIB's shareholders have been 
mare than s u ppor ti ve - they 
rid the bank of a dogging LDC 
problem by buying the LDC 
portfolio to two tranches in 
1967 and 1989. A gra dual p has- 
ing out of laming activity, has 

now led to nmdnierest income 
accounting for nearly half of 
total revenues, and derived in 
large part from dealing profits. 
Buoyant markets last year 
thus pushed pre-tax profits up 
more than 80 per cent 

The bank's nkhe is among 
institutional Saudi clients - 
total funds under management 
now hover around 345bn. SIB 
attempts to bring to the table 
sophisticated deals domra tic 
banks may. be . reluctant to 
embark an. A typical exa m p le 
is the $196m ftmd set up earlier 
this year with the USh Morgan 
Stanley offerin g collateralised 
loan obligations, with the col- 
lateral made up cf high yield 
bonds. 

United Bank of Kuwait, 
based in London, is one of the 
few Arab banks outside the 
Arab world not to have been 
lured by the appeal of LDC 
debt - “that's where the herd 
ware going and we never found 
the risk appealing ,” say s Mr 
Christopher Keen, UBE?s gen- 
eral manager. But tho book, 
which chose instead to charmeL 
Arab funds Into financial 
instruments an world markets, 
suffered a blow in the 1987 
Stock market COllapSB- It bU 
since shifted gears and refo- 
cused its business an foe-in- 
come from money manage- 
ment 


The strategy seems to have. . 
paidoft Last year, UBK, which 
has $2JSbn in assets, saw prof- 
its increase by ■ 

cen t to fttAoi and lts mamo- . 
ual IBCA rating Taised. Fee - 
fru-Ame now makes up andut 40 

per cent of revenues. 

TJBBL whose largest share- 
holder is Kuwaitis Public tosti- . 
tattoo for Social Security, now 
manages Ifcfibn to fends end 
tailored port fol ios. It has chan- 
uded investments into a H25tax 
high yield securities food and 
launched a fend based an the 
ip rtyg of developing country 
debt with the capital guaran-. . 
teed. 

> • * ■ 

O n the lending tide, the 

Hank has SOUght dtVBT- 

gifleatien and has built - - 
a sizeable business in p ro p erl y A 
and aircraft finance. ■ 

In November 1992, UBK. pro- 
vided S26m to the lessor of a 
Boetog 75T operated by British 
Airways, and In March this 
year, exten d ed a Anther $24m 
on a second BA aircraft its 
total aircraft portfolio now 
fl t 

The bank is highly exposed 
to the property sector, which 
constitutes a good chunk of its . 
loan partfoUo, thang h accord- " ~ 
tog to IBCA the vast majority 
of the loans are on completed 

and f uDy le t bufidingi. 

But UBK stm harbours amhi- 
tions to plsy a larger role an 
fatwynatirmai .markets, ; It is 
now' a tte mp tin g to taka a gtent 
leap forward by sailing its 
money management skills to 
US pension foods. 

Last year, the bank set up 

•pflrtxp y n Asset H 

new subsidiary, that ..will 
attempt to attract US pension 
fund Investments into interna- 
tional global garorsmeatbond 
markets, where the largest 
component of, DBS's funds 

under management are 

■ * - .... 

mVBStSCL . - - * 

“We think ftmd management * 
is an area we can compete to 
with anybody,” says BCr Keen.' 

Tt would be a pity if we dktot . 
extend our horizons further ■ 
from Guff markets.” r! - 


Acceptance of Islamic banking is growing, writes. Roiita Khalaf 

An inherent contradiction 


A fter years of struggle to 
define itself, Islamic 
banking - which follows 
the Koran’s prohibition against 
receiving or paying interest - 
is gairring greater acceptance 
in both the Arab banking 
worid and the global financial 


Bolstered by a growing wave 
of Islamic consciousness 
amongst depositors on one part 
and the realisation among 
western banks that they might 
as well take advantage of the 
increasingly esoteric way some 
people , are choosing to bank, 
Islamic banking is attracting 
newcomers and is now seen as 
the fastest-growing segment of 
Arab banking. The US's Citi- 
bank has jumped on the band- 
wagon and. is set to open a 
full-fledged Islamic banking 
subsidiary in Bahrain next 
year. ' 

The gr owt h of Trfmmte bank- 
ing is a cause of concern as 
mnrih as reiphrerHnn a s inten- 
sifying competition will 
increasingly thrive banks to 
take on added risk in an indus- 
try that remains fragmented 
and largely outside the reach 
of regulators. 

Industry statistics are hard 
to come by, but estimates put 
total ftmds invested in an 
Islamic way in the region of 
$50bn. Based on a study of 
eleven inianiin hanks In the 
Gulf, Egypt and Jordan, Mr 
Farah Fadfl, an economist for- 
merly with the Central Bank of 
Kuwait, says Islamic 
deposits account for nearly 17 
per cent of total demand depos- 
its, and almost 15 per cent of 
savings and investment depos- 
its. Hie es timates these funds 
grew at 8 per cent to 9 per cent 
annually in the 10 years* 

Saudi Arabia continues to 
resist granting Mamie htmir^g 
licences, lest it draws attention 

to the fact that all banks deal 
in interest But A1 Rajhi Bank- 
ing & Investment Company, 
which has a banking licence on 
the condition that it not offi- 
cially call itself Islamic, 
remains the largest Islamic 
deposit taker, with 1993 assets 
qf $7.6bn. 

Kuwait Finance House, 
meanwhile, is one of the larg- 
est commercial hanks £n 
Kuwait, With a 16 per cent 
share of the deposit market 
and gLSbn in total assets. How 
ever, conventional Guff banks 
like Saudi Arabia’s National 
Ctomnsrelal Bads, which have 
opened Tslamic windows” to 
eatar to religious cUeiits. are 
now stepping up their Islamic 

Hanking activities. 

Jeddah-based A1 Baraka with 


an estimated $2hn in assets 
and Geneva-based Dar A1 Mai 
A1 Island, with 8609TO in assets, 
have tried in vain to obtain 
licenses to take deposits In 
Saudi Arabia and now act 
more as investment companies, 
catering mostly to large deposi- 
tors. A newcomer to foe Add is 
the International Investor, an 
Triamie merch ant bank set up 
in Kuwait in 1992 with institu- 
tional Saudi - and Kuwaiti 

shfliftholdfaig s. 

The increased competition 
on the commercial and invest- 
ment banking sides Is likely to 
put pressure on the industry to 
provide better yields to deposi- 
tors. According to Mr Fadil, 
I slami c banks, with very few 
exceptions, provide returns 
below those offered by conven- 
tional counterparts. 


receive sub-Libor rates to gat 
their finds invested. 

The concentration of Islamic 
money m short-term deals con- 
tinues to generate much debate 
in Taianrir hanking as to 
whether the industry is follow- 
ing the spirit to. addition to the 
letter of the Koran. 

Many Tsiamir scholar s insist 

that the atm of Talamlft hawk. 

tog should be to develop the 
economies of poor Moslem 
countries by providing finance 
to small enterpraneurs ignored 
by conv entirmfll banks - “the 

nhaTlang w nf Twlamir hanking jg 

not to finance the same project 
on another legal basis,” says 
Mr Volker Nienhans. an 
Tel amir hawking expert at Ger- 
many’s Bochum Un iv e r sity. 

Ttm drop in interest rates in 
recent years, however, has 


Funds invested in an Islamic way in the 
Arab world may mount to $50bn - much 
of it is used for commodity trades 


The reason may Be to the 
fact that there is an inherent 

wmtBwHfHrvn tn TglamV hank. 

ing. The Koran prohibits inter- 
est because money should not 
be created out of money. 
Rather, profits should be gen- 
erated from taking risk on pro- 
ductive investments and depos- 
itors should share in the 
bank’s profits as waD as losses. 
But the banks know that when 
depositors, religious or other- 
wise, place their money to a 
bank, they expect to came back 
and find it 

F aced with this challenge, 
Mamie banks, to some 
Moslem scholars’ cha- 
grin, have chosen to mirror 
conventional banking's fixed 
rate products that provide a 
pre-detennined rate of return 
in a Short t erm. About 75 per 

CQlt Of Talarryifl hanking- f nryfa 
are invested In diort term cam- 

modity trades and trade 
Ptwanffg deals where. In return 
for a fee, a middleman - often 
a Western bank, like citibank 
- arranges for a trader to buy 
goods on Triflmfc banks' behalf 
and resell them at a predeter- 
mined mark-up. 

To wdniwriafl their credit risk 
further, Islamic banks often 
seek guarantees from third 


The Western banks have 
always been happy to oblige. 
Islamic banks, at least in the 
e arly day s, paid so little to 
depositors that they were con- 
sidered a relatively cheap 
source of funding. Islamic 
banka a re often willing to 


eroded margins on trade 
finance and though Islamic 
banka do not deal in interest, . 
tiie mark-ups they charge are 
for competitive reasons 
directly finked to the interest 
rate market This, coupled 
with the spread of Islamic bou- 
tiques, which widened deposi- 
tors’ choices, has forced 
Taiamig banks to focus an lon- 
ger term deal* to an effort to 
improve yields. 

Is lamic scholars are pleased 
with the arrangement, winch 
brings folamtp. b anking closer 
to the spirit, if not only the 
let ter, of the Koran. And so are 
Western bankers, whose expe- 
rience and international reach, 
allow tham to bring long-term 
deals to the Islamlf h anks * - 

table 

Leasing transactions are 
ga ining popularity. For exam? 
pie, ANZ Grtodlays last year 
arranged for A1 Rajhi to lend 
<92 m in bridge finance to 
Pakistan's gL9 bn Hub Power 
project. The International 
Investor, meanwhile, raised 

$ 45 Gm in Islamic money in 1993 
to fin ance leases for seven 
Kuwait Airways aircraft. 

United Bank of Kuwait 
recently set up an Islamic 
equipment leasing fund, mar- 
keted to Islamic and non 
Islamic clients, and promising 
a 9 per cent return. 

Mr Duncan Smith, UBlTs 
head of Islamic investment 
b ankin g unit, says the wbayia^ 
in the fund can be traded and 
UBK has agreed to bay the 
shares back from investors 
wishing to sell 


But there is mueh work 
ahead for the industry. A mate 
challenge is to expand the 
menu of products it offers. 
Some Western fiwanHai ini^ 

- rations, for instance, are ped- 
dling derivatives .tailored to 
the Islamic market But am 
Islamic banks invest to deriva- 
tives? It depends on the bank's 
sharia board, whose members 
are experts on the Koran hot. 
less so to the .field of hank 
options, considering them 
“ rmijOaTTik* ,* hot Dar MaaTs 
sharia board, far example, has 
ap pr ov e d the use of cunkncgr 
options. 

What about equities? 

It used to be the case that ap 
Islamic- banks resisted invest 
tog to equities of fisted securi- 
ties an world markets because 
most companies 'have -gome- 
form of leverage. Now Dar Ai- 
Mai has convinced its nlwri»r 
board that equities are acceffc 
able investments. The Interna- 
tional Investor, meanwhile, 
says its sharia board approves 
investments to companies that 
are no more than 30 per cefit 
leveraged. 

TFs up to each institution to 
say what is Islamic,'’ says Mr 
Richard Duncan, director of 
Islamic finance at ANZ Inter- 
national Merchant Banking - 

The absence of a standard 
interpretation of the shaH» or 
Islamic law, will dampen for- 
ther development of the indus- 
try and slow efforts to estab- 
lish capital markets where 
standard products «»t) he 
traded between various Islamic 


A no ther growing concern 1 
that the industry remain 

unregulated, lacking not only 1 

lender of last resort to case- 0 
faitore - and there have been; 
few to the 1980s - but alw 
restricting banks from wmiwi 
tog risk and managing the! 
daily liquidity. The banks ran 
not keep reserves with thi 
Central Bank or borrow on tin 
interbank market because the] 
would have to receive totsres 

tn return. 

Mr Fadfl says tkat TeTamf/ 
banks have resorted to pri 
vately arranged short-tenr 
liquidity techniques as a sub 
s«tftte. but he argues th &1 
these instruments are ofter 

“ d thus negative^ 
affect the banks' profit mavimi 

ration - “this is an unregu 
toted sector that controls $ 
proportion of monetary 
jMSipegates in the economy, 
and this is a cause for con 
says Mr Fadfl. "What u 
jJJJjted Is the beginning of s 

between centra) 
ranks and lstomie banks"' 


w 


J 

i 


■ ah 


" " " \ 









37 


Cttrtfy 

bpu 

Maas 

rTwifl 

Rstem oo 

Rabin on 



M 

($m) 

•Qolty. % 

wctt.% 

Saudi Arabia 

3,188195 

4.732J8 

1W 

0*62 

0j42 

Sud Arabia 

1J85M2 17,65156 

134a3B 

72* 

a7S 

SausS Arabia 

1,84160 

1197439 

246.16 

13!Q 

1.76 

Batntn 

1.64100 18*43330 

133*00 

8*37 

0.75 

Sudan 

1,81438 

1,707.24 

34.56 

2.15 

233 

Kuwait 

1,69139 11944*96 

187.78 

16wM 

133 

■ - — - 

tNMuoil 

1*06137 

14(283.10 

107.15 

iaio 

0.75 

Saudi Arabia 

1.03236 

733145 

299.83 

mm 

114 

IME 

96337 

6*313*53 

78*42 

a.i4 

1.24 

Kuwait 

91239 

0554*60 

128*48 

14,07 

130 

Saudi Arabia 

mim 

10*54175 

25139 


239 

Libya 

694JS3 

3347.21 

5*54 

a so 

114 

Saud Arabia 

687.00 

837930 

107 JO 

18*10 

1.77 

qmshi Arabia 

65930 

851J00 

1280 

134 

130 

SaiRg Arabia 

64Mg 

6373*49 

8934 

13*84 

135 

Saudi Arabia 

642.04. 

8(48082 

13223 

onKfr 

136 

Qatar 

575*80 

4,19435 

74J03 

1236 

1.78 

Bahrain 

52144 

7.171 .83 

88*20 

18*89 

133 

UAE 

■anaao 

838939 

40*24 

8*05 

084 

Kuwait 

48159 

4,170.17 

58.01 

1132 

130 





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'.JIf '€; • - 

Oi *> •-■ * % *' 
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THE 


1 IdLYJlJtZL I 




COMPETITIVE EDGE 








s: - 




Gulf Internationa] Bank* (GIB) is a wholesale jM 
commercial bank based in Bahrain. It is wholly ttfcj 
owned by Gulf Investment Corporation (GIC), 
the international investment banking corporation qam 
owned equally by the governments of the six 
member scares of the Gulf Cooperation Council (GCG) 
- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and die 
United Arab Emirates. This ownership provides a 
guarantee of fi na ncial strength, integrity and commit- 
ment to the regional markets. 

GIB offers a comprehensive range of wholesale com- 
mercial banking services including Corporate and 
Islamic hanking and Treasury activities. Target clients 


B include major indigenous private-sector corp- 
orations, Gulf based financial institutions, mulri- 
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To support our clients and provide them with a 
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area, technical expertise and the latest sophisticated oper- 
ating systems. We are present in Manama, London, New 
York, Singapore, Abu Dhabi and Muscat. 

GCC market knowledge, expertise m its industries, 
extensive product skills, international reach and a com- 
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HEAD OFFICE 

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BAHRAIN 
TO- (971) 534000 
FA * (973) 5*»*33 


LONDON 
TEL (7i) S15 zooo 
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- NEW TOOK 
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FwfeO*, Jdi Amu, NtwYafc. NY 10105. Itt 11) <2121 307 8274. JantaGcam: Samba HraoccSA. 3 ft 7 Rue du Conmanr, 12W Geneva, TcL (111 till .410 24 00 
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38 


financial times 


THURSDAY DECEMBER 


15 1994 



ARAB BANKING IV 


C apital increases over 
the last two years have 
brought most Golf Arab 
hanks above the eight per 
capital-to-risk-weighted assets 
guidelines set in 1988 by the 
Basel committee of the Bank 
for International Settlements. 
The average capital-to-assets 
ratio of the top 30 Gulf banks 
at the end of last September 
stood at 1L96 per cent. 

However, other issues of 
supervision and control still 
cause concern to central 
banks. So much so, say many 
Gulf banters, that Gulf mona- 
tary and other authorities are 
ignoring important areas that 
affect Gulf financial institu- 
tions’ long-term interests. 

Two recent conferences illus- 
trate these contrasting atti- 
tudes. In the first central bank 
auditors from the Arab 
League's 22 countries meeting 
in Abu Dhabi at the end of 
November under the auspices 
of the Arab Monetary Fund, 
showed how monetary authori- 
ties are still preoccupied with 
banking supervision and 
haunted by other problems left 
over from past crises, factadr 
ing the 1982 unofficial stock 
market crash in Kuwait; the 
seven-month Gulf war of 
1990-91; and the 1991 collapse of 
Bank of Credit & Commerce 
International. It was the last of 
these which finally spurred 
Gulf Arab central banks to 
implement the Basel commit- 
tee’s guidelines. 

Central banks' auditors' pri- 
orities still focus an the need 
for quarterly reporting and 
inspection of hanks ' financial 
statements, stronger central 
banks' initiatives to persuade 


UNITED ARAB EMIRATES 

Call for greater innovation 


domestic banks to merge, more 
open disclosure in bank 
reports; all standard issues 
which need to be respected 
before the GCC banking sys- 
tem ran mature. In foe UAE, 
an extra element of control 
was added last year with the 
imposition of apparently strin- 
gent but In some cases still 
undefined lending limits, to a 
financial mar ket which is the 
most bouyant of the six GCC 
countries. 

According to the UAE’s cen- 
tral bank governor Mr Sultan 
Al-Suweidi, UAE financial 
institutions increased their 
c ombine d profits last year by 
65 per cent compared with 
1992. 

A. central hank report on 27 
November showed credits from 
the country’s 47 banks had 
increased 13.1 per cent to 
DhSLfibn ($ZL4bn) to the end 
of September this year, com- 
pared with the first nine 
months of 1993. 

Dubai contains some of the 
most adventurous of the Gulfs 
financial entrepreneurs; and 
foe UAE as a whole, because of 
its federal structure, is cer- 
tainly the most difficult of the 
six GCC countries to regulate. 
So it is not surprising that it is 
the UAH’s central bank which 
has been the most authoritar- 
ian. However, UAE and Gulf 
h anker s insist that, instead of 
concentrating solely on tighter 


control over banks in their 
own national back-yards, what 
the central banks and other 
authorities should be con- 
cerned about is the fragmenta- 
tion of Gulf financial institu- 
tions w ithin hi g hly protected 
country zones. 

For example, in all of the 
GCC, only one local bank, 
Bank of Bahrain & Kuwait, has 
a franchise, excluding repre- 
sentative offices, in as many as 

Domestic banks cannot 
provide the wide range 
of financial services 
offered by international 
investment houses 

three of the six GCC states. 

By contrast, British. Bank of 
the Middle East, among foreign 
hanks , has a franchise in five 
of the six. 

Restricted in the UAE to 
eight retail outlets and gener- 
ally deprived of large and 
cheap government deposits, 
foreign hanks have to work a 
lot harder for th eir profits. 

Speakers at a recent finan- 
cial forum in Dubai staged by 
Emirates Hank International , 
constantly returned to this 
theme of national banks' frag- 
mentation and protection. 
They included the former 
Kuwait central bank governor 
Mr Abdul-Wahab Al-Tammar; 


tiie UAE’s assistant under-sec- 
retaiy for revenue and budget, 
and chairman of Emirates 
Industrial Bank, Dr Khalffan 
Bln Kharbash; Mr Henry 
Assam, chief economist from 
Saudi Arabia’s National Com- 
mercial Bank; Citibank's UAE 
manager, Mr Ahmed Bln Brek; 
and the former ^Ito^ of 
Arab Banking Corporation, Mr 
Abdullah Saudi. 

These and other prominent 
Gulf bankers have focused on 
the need for greater innovation 
In the financi al services 1 sec- 
tors, with harking from “the 
powers that be," to match up 
to competition from w estern 
international banks, whose 
innovation skma and emmbmt 
range of new products were 
leaving Gulf banks further and 
further beh ind , 

“Who manages the huge pri- 
vate sector institutional 
Individual portfolios?" asked 
one speaker. The answer inter 
national inves tment houses , 
because domestic hauler were 
not equipped to offer the same 
range of products. 

“Our market is liquidity- 
rich,’' said another speaker, 
and this liquidity “is being 
parked abroad." 

Governments had to estab- 
fish credibility by setting up 
transparently fair “practices, 
procedures and polities” - so 
banking, business, and judicial 
processes worked effectively 


and equally. Individual GCC 
country markets bad to be big 
enough for serious investments 
to be made. Either govern- 
ments provided these - and 
reca t events bad Shown that 
governments no longer wanted 
to continue to be Che primary 
investor - or entrepreneurs 
took up the slack. 

For that, foe authorities h ad 
to set foe hanking sectors free 
by privatising their shares in 
commercial banks and allow- 
ing iin foreign co mpetition ; by 
establishing country and 
regional stock-markets (in the 
UAE a purely national stock- 
market has been in the “study- 
stage" for almost 13 years); by 
allowing banks to operate 
freely across GCC national 
boundaries; and allowing them 
to adapt to compete with non- 
bank financial interests which 
were entering the market to do 
many of the things, such as 
Credit rawds anti a ntryjagerng , 
that only banks used to da 

The private bond sector 
should also be encouraged to 
help cater for regional funding 
requirements through the 
establishment of an Arab 
credit rating agency. In this 
way, domestic Arab Institu- 
tions would be encouraged to 
issue their own bands for mar- 
keting across GCC national 
boundaries. 

Robin Allen 



VfrwMnii far nrwirrr 11 m 1894 IhM PMBB Pita WkvMn — (OT Mr alfolt* toward* P** r * ^ BV "■ 

Arafat, MU toerf prime 

Ftowt centra^ era pktavd tare ibdr medab and <fiptanas I* 1 cRy hw _ 

Israel's prospects as a regional financial centre 

Everything depends 

on the peace process 


T his year’s historic peace 
agreement between Jor- 
dan and Israel, signed on 
October 26, poses a big chal- 
lenge to the kingdom's bank- 
ing and financial sector. Fast- 
moving plans for regional 
co-operation and joint ven- 
tures, along with Increased 
competition for cross-border 
investment and trade present 
huge opportunities for develop- 
ment 

Some Jordanian banks have 
already begun to respond to 
the new political environment 
by opening branches in the 
rapidly expanding economies 
of the West Bank and Gaza 
Strip; meanwhile, a number of 
Israeli bankers have begun 
looking for custodians to carry 
out their business in Amman. 
On both sides of the River 


Jordan’s peace agreement poses a big challenge for banks 

Fresh opportunities abound 


Jordan many hope that peace 
will act as a catalyst for faster 
economic reforms and liberalis- 
ation. A recent report by the 
World Bank* urges the Jorda- 
nian government to push an 
quickly with its economic 
reforms if it wants to capitalise 
on the benefits of peace. In the 
banking and finance sector it 
says the authorities must 
loosen the regulatory environ- 
ment, while the kingdom's 
banks need to modernise their 
operations and introduce new 
products and services if they 


are to catch up with interna- 
tional banking standards. 

“We’ve been running the 
banks in the form of crisis 
management for the past few 
years with one eye on political 
uncertainty and foe other on 
regional instability," explains 
Mr Tawfik Fakhouri, rfigh man 
of the Rank of Jordan which 
was the first to re-open a 
branch in the West Bank this 
year. “Now we have a peace 
treaty, banks will be willing to 
expand and invest in the long 
term stability of Jordan and 


Palestine,” he says. 

Jordan's crisis management 
began in 1989 when the IMF 
was called in to deal with an 
overwhelming burden of for- 
eign drift This resulted in a 
five-year adjustment pro- 
gramme and strict foreign 
exchange controls. In the same 
year, the central bank was 
forced to take over two trou- 
bled local institutions, Petra 
Bank and Jordan Gulf Bank, 
for failing to comply with 
banking regulations. The psy- 
chological impact of the Petra 



Your Ba 
State of 




■ vr -.-: .-JfcVS 


The International Association of Islamic Banks 

The International Association of Islamic Banks (IA IB) was founded, in August 1977 under the 
auspices of the Organisation of Islamic Conference in Jeddah, Saudi Arabia. 

The fundamental objective of the Association is to reinforce the ties and links amongst 
Islamic financial institutions and to promote mutual cooperation and coordination. 

The Association undertakes to further the understanding of the philosophy and principles 
of Islamic economics and banking. It endeavours to standardise the procedures and 
operations of these financial institutions through encouraging interaction amongst scholars 
of the relevant disciplines, practitioners of Islamic finance, and governmental regulatory 
agencies. 

The Association has a membership base from diversified Islamic financial backgrounds, as 
well as an observer status criteria for conventional financial institutions. 

For more information, please unite to or phone. 

Samir Abid Shaikh, Secretary General IAIB 
P.O. Box 9707, Jeddah 21423, Saudi Arabia 
TeL (+966-2) 6516900, 6519024, 6518092 
Fax. (+966-2) 6516552 


Bank scandal, in which one of 
the kingdom’s biggest and 
most innovative banks was 
imahlfl to honour its liabilities, 
is still felt by the 15 main com- 
mercial banks operating In Jor- 
dan. 

Although the regulatory 
environment has eased over 
the years, certain stipulations 
remain such as credit/deposit 
ratio requir ement, restrictions 
on capital transfer, and a 
national currency which is 
fixed at a daily rate against a 
basket of currencies by the 
central bank. 

Mr Michel Martou, foe dep- 
uty central bank governor, 
says that more llberahsatian is 
an tiie way with the central 
bank working towards full cur- 
rency convertibility and gradu- 
ally moving away from direct 
controls to open market 
operations - there has been a 
weekly auction of Certificates 
of Deposit for nearly a year 
now. 

He argues that Jordan’s 
banks stand a good chance of 
benefitting from the peace 
agreement, as long as they 
diversify their services In 
favour of universal tankfrig , 
and further strengthen their 
balance sheets. 

Nat that the banks have 
been complaining much about 
the central bank’s rules. The 
health of their balance sheets 
has Improved dramatically 
under the well-regulated 
regime of the past five years. 

Continued an page V 


A fund manager in Tri- 
Aviv «n eat a civilised 
breakfast and stm trade 
on the Far Eastern stock 
exchanges. Daring the day he 
<-qn hoy sell in all the 
European markets. And before 
he can tune into Wall 


Treasury official, who now 
represents Salomon Brothers 
of New York in Israel - 
“mostly, they axe employing 
Israelis as their eyes and 


business with die Jewish s tate 
- “we’ve got nothing against 
the people with tin money," 
Mr Landau explains, "and 
they’ve got nothing against ns. 
More and more- visibly, they're 


If kDddle East peace adds 
the necessary element of polit- 
ical tranquillity. Israel is 
ready to exploit this geograph- 
ical advantage to promote 
itself as a regional financial 


Meir Het, a former chairman 
of the Tel- Aviv stock exchange 
and of Hank Leumi, Israel’s 
second biggest bank, told The 
Financial Times: “We should 
try to encourage qualify finan- 
cial services that can utilise 
the benefits of a location 
where yon can sleep soundly 
in the night and still be active 
in all the major exchanges." 

If the tax incentives were 
right, Mr Het predicts that 
American and European Jew- 
ish professionals would set up 
shop in Td-Avtv and provide 
the essential expertise. He sug- 
gests conditions similar to 
those operating in Dublin - 
low taxation for companies 
that do the business, no taxa- 
tion on fonds. . 

Mr Het served on a govern- 
ment committee, which 
report e d last February on the 
dividends that Israeli banks 
and finance houses could hope 
to gain from peace with their 
Arab neigfabouxs. It came out 
emphatically against turning 
Israel into a tax haven - “it 
would attract the kind of 
money we’re not Interested in 
at tra ctin g," Mr Het insisted. 
"We don’t need laundered 
money here. What we should 
get into are things tike fond 
management and custodial 


Israel could also become a 
regional centre for develop- 
ment tanking- Ten American 
and European Investment 
bankers are already dipping 
their toes in the water. 

"Almost everyone who 
counts today has some kind of 
foothold in Israel," according 
to Dan Halperln, a financial 
consultant and former Israeli 


Originally, these ban k s were 
attracted by Israel's privatisa- 
tion programme. They are also 
angting fin- a share in large 
infrastructure projects, such 
as the expansion and moderni- 
sation of the rational rail net 
work, plans for a rapid-transit 
system in Tri-Aviv, and expan- 
sion of Ben-Gorion interna- 
tional airport. 

“By and large." Mr Halpertn 
admits, “the investment bank- 
ers are here for the Israeli 
work. But some are also cant 
ing In order to be involved in 
regional projects, in which 
Israel will be involved. Let’s 
say, a natural gas pipeline 
from the Gulf to Israel, <jr all 
kinds of projects for the Jar* 
dan Valley mid the Dead Sea 
that were mooted at the Casa- 
blanca Middle East economic 
conference In November. 

“Notiiing is very ’concre te * 
yet, but the bankers are 

TnftMnp. " 

M eir Het is equally cau- 
tions - "everything 
depends on the peace 
process," Ik says. “If it goes 
well, the prospects are good. 
Interest is. being ex p res se d, 
but bankers are conser va t i ve 
people. They will need to see 
that conditions are stable. It’s 
a future hope, bnt not some- 
thing yon can buUd on." 

Pinhas Landau, a senior 
financial columnist on Tele- 
graph, an Israeli business 
daily paper, believes that 
Israrii banks could also tom 
into primary players- in 
regional project and trade 
finance - “If only because the 
Israeli economy will be domi- 
nant,” he argued, “it is per- 
fectly feasible that Israeli 
banks will take a lead.” 

They would, however, have 
to build qp their expertise - 
and compete with the tatarnar 
ticmal giants. 

The Golf Arabs seem 
already to have trampled 
down the political and psycho- 
logical barriers against doing 


What nobody takes serionriy 
Is the s og ges tio n that Tri-Aviv 
might assume the role of 
regional banking ce n tre that 
Beirut played before the Leb- 
anese civil war broke out in 
1975. The oil sheikhs no longer 
need it They have made altar; 
native arrangements, and the 
banking world has changed. 

The days when Beirut was 
the only Arab capital where 
the phones worked are long 
over. With foxes and elec- 
tronic mall, it is as easy and as 
quick to soul instructions to 
Europe as it is across town. 
Market information is *on tine* 
to real time. If the princes and 
tiie playboys went to Beirut to 
escape the purl taoism of Saadi 
Arabia, they can now fly to 
London or Paris in five or six 
faonra. And even- with peace, 
tranquillity: vflt remain rela- 
tive. 

“If you’re an Arab sheikh to 
Kuwait, waiting for. the Iraqi 
fawifc* to roll again,” says Pta- 
has Land™, “you keep your 
money to classic safe havens - 
Switzerland, or Luxembourg, 
or the Channel Islands, or to 
London or New Talk. What 
they offer is a historic record 
of expertise and political sta- 
bility, safety, security, secrecy. 

“Tri-Aviv is lacking most of 
the classic requirements of a 
banking centre. Nothing on 
earth is going to make, the 
Middle East in general and 
Israel in particular a safe 
haven any time to the near 
future, even if we-roaka peace 
with everybody." 

Then there is the more spe- 
cific Issue of a body of exper- 
tise - "it is entirely lacking," 
he says. "It can begin and 
develop gradually. Tel-Aviv 
has certain things to offer, 
Jewish financial know-how 
among them. But while manor 
factoring centres like Hong 
Kong can be bUDt overnight, 
ce n tres cannot” 

Eric Silver 


Jordanian banks clamour to re-open branches 

A rush back to Palestine 


F or the Palestinians, one tangible 
sign of progre s s in the Middle East 
peace process is the return of Arab 
banking to the West Bank and Gaza 
Strip. Before the historic peace agree- 
ment, signed in September 1993 between 
the Palestine Liberation Organisation 
and Israel, most Palestinians kept their 
savings under the mattress and the only 
credit available came from the UN Relief 
& Works Agency for Palestine Refugees 
in the Near East 

After the 1967 war, nearly all the Arab 
banks operating in the occupied territo- 
ries moved out Likewise, during the 
heady days of the intifada, most Israeli 
banks which ventured frtrtp Pales tinian 
territory also closed down. As a result, 
Arab banking activity was limited to the 
odd branch of the Bank of Palestine in 
Gam. and Jordan's Cairo Amman Bank 
which opened in the West Bank to 1987. 

Since the peace agreement all this has 
changed. Jordanian tan ire are clamour- 
ing to re-open brandies in the West Bank 
and the Palestinian authorities have big 
ideas such as {Hinting their own money 
and setting up a capital market far their 
nascent state. 

Six Jordanian hank* - Jordan National 


Bank. Arab Bank, Jordan Gulf R ank, 
ANZ GrtncDays, Arab r-smd Bank , and the 
British Bank of the Middle East - have so 
far re-opened branches and more are 
planned for nart year. Other Palestinian 
institutions are also to the pipeline. 

Under the present arrangements, Jor- 
dan's central bank is responsible for 
hanking regulations in the West Bank 
and Gaza Strip. However, the Bank of 
Israel and the Palestine National Author- 
ity are also involved to licensing and 
roamtaring of the financial institutions, 
and a Palestinian Monetary Authority is 
planned for tha new year. 

T his confusing web of regulators, 
along with the free existence of sev- 
eral currencies, are among the 
prime concerns of tank ers on the ground. 

“It’s a very difficult environment Not 
only are their huge risks to offering in*n« 
to different currencies, but the regula- 
tions are a big headache," explains one 
banker. 

Operational difficulties aside, most 
banker s are salivating at the prospect of 
an investment-led economic boom which 
has been forecast for the territories If and 
when the $24bn worth of aid funding 


which has been committed over five 
years materialises. Taken against the 
World Bank's estimates of GDP for the 
West Bank and Gaza Strip of between 
£L5-$2.75bn, it is obvious that tta huge 
capital inflows involved will be a great 
boo st to the services sector. 

Arguments are still raging, howe v er, 
between donor countries, the World 
Bank, ami the Palestinians over who will 
ha nd le the distribution of aid. The two- 
main Palestinian institutions involved 
me toe Palestinian Economic Council far 
Reconstruction and Development (Pec- 
dar) and the finan ce ministry, alth ough 
individual donors have insisted an mead- 
taring their contribations closely. 

uncertainties 

surrounding the final outcome of a Pales- 
t mfe n / Tsrari i settlement, bankers are ood- 
vtoced they will have a big role to play - 
*^he secret is to get to early and develop 
at the pace of things on the ground. Sure, 
it’s frustrating, but in the end it should 
be very lucrative," explains a Jordanian 
banker who plans to open the first 
Islamic bank to the Gaza Strip in the new 
year. 


Janies Whittington 


Continued from page ID 
1992 to $l4.4m this year. 

Torn n th ar irwHtjrtjffnfi gt fi P fl 

out among tiie 09 QBUs and 
pvpj jipt companies in Bahrain. 
Both are the anHt borfs of GIC 
and GIB. 

the first, Arab Banking Cor- 
poration (ABC), has developed 
in just 17 years to became the 
biggest commercial tank in 
the Gulf and one of toe largest 
bank holding companies in 
the Arab world. By the end of 


Expansion in Bahrain 


last June the ABC group had 
built up assets to just under 
flSbn. 

ABC’s strategy and growth 
was synonymous with the 
vision and energy of its 
founder and chief executive, 
Mr Abdullah Saudi, a Libyan 
national, who felt compelled 
to resign last May as a result 
of political pressure exercised 
through the US Treasury's 
Office of Assets Control. 


IBs replacement, Mr Ahmed 
Abdulla tif, formerly deputy 
governor of the Saudi Arabian 
Monetary Agency (SAMA) and 
now managing director of Jed- 
dah-based Riyad Bank, will 
mean a radically different 
style of leadership. 

The second, Investcorp is a 
more recent creation even, 
than ABC, no less suc- 
cessful. It was founded in 1982 
to Bahrain by Iraqi-born US 


citizen Mr Nemir Kirdar with 
¥50m capital paid in by a 
wealthy Gulf individuals. His 
aim was to marry the ca pital 
export potential of the Gulf 
with investment opportunities 
in north America and Europe.' 

By the end of last October, 
Investcorp had arranged 82 
corporate and real estate 
investment transactions 
worth over $65bn. 

The few shareholders have 
become more than 10,000; 
soid-to capital is now $378m 
mi total assets of $L4bn. 


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FINANCIAL. TEVZES THURSDAY DECEMBER 15 1994 




39 


ARAB BANKING V 


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Ambitious privatisation programme in Morocco 


■ 

Quiet revolution under way 





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many International 
hanks and investment 
funds, the privatisation 
National dTnves- 
tJssejnents (SNI) marked a 
watershed In Morocco's ambi- 
tions priva ti sation progra m me. 

Tbe setting of G&64 per cat 
cffhe state's share in the capi- 
tal; of this holding company, 
whose Interests range from 
cement to drinks and the 

ssss^^jrt 0 ^- netted 

* Vr - w* 8 Dhl03bn (£14Sm). This repro- 

-- - - . gents twice the amount 

t brought in July 1993, when the 

ncjai ^ state sobl'a 51 per cent stake in 

™ Cftl the QOB cement company to a 
v* French subsidiary of the Swiss 
Bolderbank group. 

The sale of SNI shares was 
split three ways: 35 per cent of 
SNI shares were sold to Moroc- 
can institutional investors, 
who cannot sell them for five 
years; and 16 per cent to 

Moroccan and foreign institu- 
tional investors. The remain- 
ing 15 l 64 per cent were floated 
on the Casablanca stock 
exchange where they were 
over-subscribed eight times. 

Critics were many, however. 
The authorities decided to float 
15.64 per cent of the shares on 




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5 ^S : the Casablanca stock exchange 
during the first week In 
November at Dh300 a share, to 
■«.-!r so fas^ enconrage institatfons to bid a 
hi gher price. SNI shares had 
i) Dna} bri i,*i been suspended at Dh425 a few 
-n ^ da ^ 3 ear tt £r - 

cipj Trading resumed before the 
1 >: -‘ 1 - The oflX? sak to institutional i n vestors 
:,w d n Tig.^ had been completed. Hie mlni- 
^bie mum sale price per share for 

’.oniiUj, institutions set by the commis- 
Thp sum which overseas prlvatisa- 

thc c a j v ,'*Sk tfon operations was Dh32S. 
tht ^ Successful! bidders eEEectrvely 

i.ii-r bought the shares at Dh425. 

ir-.’n'rcJf Pnrthennore, bankers in 
London and Casablanca 
described the back-room 
* “isr operations of the Banque Popn- 
■ ton®, whidi was the agent, as a 

“shambles " 

However, the broad success 
of the sale means that that the 
Q , country's p riv atisation drive is 
3 hns { more or less on trad but the 
; tons' Quick gains realised by some 
private investors smacked of 
speculation - not the kind of 
impression the authorities 
give if this selling of 
'■-fc' “the family silver* is to find 
wide acceptance in Morocco. 

Privatisation this year has so 
far brought in DS$230m, a fig- 
ure which could well increase 
if the state goes ahead with its 
_ proclaimed intention of setting 
its 50 per cent stake in Moroc- 
^ *^5* co's second largest commercial 
1=3 bank, Banque Marocaine du 
Commerce Exterieur. That sale 
is expected to generate no less 
than £7&5m. This operation is 
not expected to be completed 
before the end of the year 
when completed, it will push 
up the proceeds of privatise 
. v. r.r:JE3 tion to twice the £193m level 
reached in 1993. 

The privatisation progra mm e 
launched in 1992 is a tittle late 
on initial targets which had 
suggested that 112 companies 
worth an estimated £1.3bn 


Kins Hawn a at Morocco, left, shakes bands with breed prime minfefar 
Vtaftak ffebin after their recent mooting t& the royaj paiaoain 
OMto n ea. Rabbi was fri Morocco to attend ttw first MWcQe East and 
Norfii Africa Economic Summit UroaO Moroccan- bom Knaaaet 
ufea-pcaaMant RafiGdtf, centra, looks oil 

would be privatised by the end 
of next year. There is no mis- 
taking; however, the quiet rev- 
olution which the sales of 
shares from state companies is 
hriuging into a hitherto very 
cosseted and dosed world of 
banking and share transac- 
tions. 

Direct foreign investment in 
Morocco has risen steadily 
since 1987 to £3*9m last year 
and is expected to top £81&n 
this year. Trading an the Casa- 
blanca exchange has already 
more than doubled so far this 
year and is expected to top the 


were launched early last year 
by Soci6t6 Marseillaise de 
Credit and are managed by its 
Generate de Placement subsid- 
iary, GP Bank. 

Three of the largest funds 
include the £39m Morocco 
Fund, which is Jointly owned 
by ONA, the kingdom's largest 
private company, and Salomon 
Brothers; the £L5m Interfcna 
fund, jointly owned by by three 
Moroccan banks, the Interna- 
tional Finance Corporation and 
Spam’s Banco Exterior, Credit 
Lyonnais Investissement; and 
BMCE and a fund jointly set 


8terocco*s pvfvaffsaQon progranmo 

Companies already soM (sh ow in g sector of opnaBoo to brackets) and 
the price In noBDons of Dirhams: 

□ Chefco (clothing), Db1Q20m; Got (csmenfr, Dh943-2m; CIM (transport), 
Dfi2S4.65mr OMH (petrotaum (fist), DtiTflOLTm; Oragoa Gaz gitodaon (fist), 
Ob dS5m: MobB Uarac (p etro leum (fist), DhllQm; Petrom (peboleun (fist), 
Dh145.00m; Shell (petroleum disL). DM50m; Snep (petrochemicsls), 
Dti3842m; Seders (yeast product^, DhZ8.6m; Sotac-aed& (consumer loans), 
Dht 29.3m; Total Marne (petroleum (fisL), OhOQQm; sewn hotels, Dh204.7m; 
General Tire (tyre manufacturing), Db46m; Socttti Nafored dTiwKSssemerts, 
SM (hokfing company), Dh 2,030m. 

□ Companies airantty being sold Include: Sonasti (steel), Dh918m; three 
sugw pbris, Dh306ni; six holds Db76ra; Fet fin a (tefifem), Dh204<n. 

□ SWX (bank) is expected to be privodlsed before the end of this year. 

Source: UpBna Securities 


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£64flm mark by year-end. 

The Overall Share Index 
shows a 28 per cent increase so 
far this year, equivalent to last 
year’s rise. 

Nonetheless, the stock 
exchange does boast some very 
illiquid shares, making the 
Moroccan market more attrac- 
tive for wealthy investors 
rather than individuals. 

There are three ways to 
invest in Morocco - through a 
country fund, which often 
includes Morocco and Tunisia, 
through an Africa or Middle 
East flmd with weighting in 
Morocco or through the pur- 
chase of individual shares. 

Privatisation has encouraged 
the emergence of investment 
funds, the first two of which, 
Sud-Mediterranee et Maroc Pri- 
vatisation are worth £6m each. 


up by Framtington, which is a 
subsidiary of Credit Commer- 
cial de France and Morgan 
Stanley Africa Investment 
Fund. - 

ONA has further contributed 
to the modernisation of Moroc- 
co's financial sy s t e m by a capi- 
tal increase last year which 
took the form of the largest- 
ever shar e issue in Morocco, 
worth yisnm. (Wafa bank ear- 
lier that year raised its capital 
with the first ever public share 
issue in Morocco). 

The comp any also allowed 
foreign investors to buy into 
its capital. A third of tts capital 
is now owned by such 
weQ-known names as Morgan 
Stanley, Lehman Brothers, 
Paribas, BSN Danone and 
Assurances Generates de 
France. Mr George Soros 


bought a 2 per cent stake last 
April for 540m. 

Last year, ONA was the first 
Moroccan borrower to raise a 
euroloan since the kingdom's 
debt was rescheduled In 19S3. 
it raised $30m through Citi- 
bank. A further operation of 
tins kind in the near future is 
not ruled out 

Faster progress in liberali- 
sing the management of Moroc- 
co’s financial sector is being 
handicapped, however, by 
three factors. The first is the 
absence of money and foreign 
exchange markets which is 
affecting both foreign investors 
and Moroccan businessmen 
and bankers. 

The second factor is the 
impossibility of foreign 
exchange hedging. The World 
Bank and the IMF have been 
pressing the Moroccan govern- 
ment on both counts fora least 
two years, but the Banque al 
Maghrib, the central bank, 
appears to be dragging its feet 
while many Moroccan banks 
appear comfortably set in their 
old-fashioned ways and fearful 
of change. 

For decades, their unwritten 
contract with the central bank 
has involved financing large 
government deficits in 
exchange for comfortable mar- 
gins on their other business. 
With an estimated $500m- 
5600m deficit in government 
financing written Into next 
year's budget, the banks have 
plenty of reasons to continue 
in their old ways. 

More recently, a further ele- 
ment of uncertainty has been 
introduced. King Hassan 
suggested, when he opened 
parliament last October, that 
the time might be ripe for the 
government of technocrats - 
headed by the highly respected 
minister of foreign affairs. Mr 
AbdeHatif Filial! - which has 
been running the country's 
affairs for 18 months, to give 
way to a more political cabinet 
Such a government would be 
based on the alliance of the old 
nationalist Istiqlal party and 
the socialist Union Socialists 
des Forces Populaires. 

Doubts already being 
expre s sed about the ability, let 
alone the willingness of such a 
government, which public 
opinion has already nicknamed 
“ Jurassic Parc,” to pursue the 
path of economic reform. Nei- 
ther party has made public an 
economic platform which 
addresses the problems of mod- 
em Mnrocflp and their leaders 
more often than not appear 
caught in an economic time 
warp. 

Many Moroccans believe that 
politicians alone can do the 
“hard sett" which is essential if 
the progress made in moderni- 
sing the economic and finan- 
cial sectors are to be consoli- 
dated. They also take comfort 
from King Hassan’s public dec- 
larations that there is no going 
back an the reforms launched 
a decade ago. 

Francis Ghiles 


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A transformation in Tunisia's business scene 

Women find their role 


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any Tunisians regard a 
group of laws which, 
in 1956, abolished 
polygamy and gave their wom- 
enfolk rights not enjoyed else- 
where in the Arab world, as 
one of their country’s proudest 
achievements. 

The Personal Status Code' is 
-- arguably former President 
■f Habfb Bourgufba’s greatest sin- 
gle achievement The rights 
; granted to Tunisian women 
- - have been further consolidated 
afar** Mr El Abidine Ben 
Ali became president in 1987. 

The efforts to promote ednea- 

- tion, health and family plan- 
'■ ntng have produced dearly vis- 
/ ible results - population 

growth is down to L9 per cent 

- a year and two-thirds of all 
-■ Tunisian women are now hter- 

.. . ate. Furthermore, women are 
increasingly visible in a. wide 
.. variety of professions in 
teaching, medicine, architec- 
„ tore and in factories as work- 
ers, engineers and managers. 

. Today, women have 25 per cent 
of all jobs in Tunisia, 35 per 
. - cent of jobs in industry and 40 
per cent fa -agriculture. 

Increasingly, they own and 
: manage new businesses. A 
minor revolution is afoot as 
the number of new companies 
founded by women fa Tunisia 
j has risen from 7 per cent of the 
4 ' total fa 1985 to 13 per cent this 
/ year. 

Most of these companies are 
small, with less than 10 
employees, but others are 

much laT gw aruf nfl-pn m g a p p 

in international trade fa a 
manner which was quite 
unthinkable only a decade ago. 

It does not come as a sur- 
prise. that 73 per cent of all 
companies owned by woman 
are found in the textile sector. 
That is true fa other -develop- 
mg countries but the quality of 
' some of what is produced fa 
this sector and the sheer Mae 


of some investments points to 
change. 

Leila Boufaid, whose hus- 
band is a senior magistrate, 
started a small luxury braid 
business 20 years ago. Today, 
she employs 200 workers, has a 
turnover of $LSm. Around 90 
per cent of its output is 
exported to Europe and the US. 

Mattie Ffi which opened fa 
1969 hr a 520m investment by 
fiedi Boucbamaoui for his four 
daughters, two of whom man- 
age Tunisia's largest combed 
cotton and yarn production 
plant The company imports 


fa a shipping company, 20 
years ago. Now she owns and 
runs Stomar. a company with 
a turnover of 53m and is active 
fa stevadoring, conveyancing 
and forwarding. 

Rashida Routes! is a leading 
exporter of citrus products and 
is doing battle with the Mar- 
seilles suppliers who have a 
tight grip on the bulk of Tuni- 
sian exports, especially citrus 
fruit, 89 per cent of which was, 
until recently, shipped through 
the French, port Ms Rouissi 
has, however, succeeded fa 
exporting ever -larger quanti- 


Tunisia’s new breed of innovative women 
owner-managers work hard, often more 
diligently than the menfolk 


cotton from the US and pro- 
duces 3,000 tons of high quality 
fabric a year. 75 per cent of 
which is exported. While tiro 
daughters oversee the factory, 
the others are completing their 
studies at univ e rs it y in MIchi- 

KyiL 

Meanwhile, women fa Tuni- 
sia are now branching out into 
other spheres of business. 
Saida Mechri worked fa a secu- 
rity company after gaining a 
degree fa economics fa Bel- 
gium. In 1988 she started her 
own company, Securitap, 

which employs 800 people, 700 

of rim are security agents 
hired out to embassies and 
companies across the country 
and boasting an annual turn- 
over of 51.7m. More recently 
she started a haute couture 
business which employs 10 
designers and sells styles to 
Italy. She readily confesses 
that the company, called 
Tosca, is her “true love.” 

There are other diverse 
examples of successful women 
fa business. Hayet Laouani, for 
instance, started as secretary 


ties of citrus fruit through Tou- 
lon, thus cutting freight and 
other costs. Her battle is not 
merely with Marseilles ship- 
pers but with well-established 
Tunisians who have lived com- 
fortably off their links with the 
French port. 

Alya Heda runs Opalia, a 
joint venture with an Italian 
businessman which makes 
pharmaceutical products under 
licence from Alfa Wasserman 
and Amuchina of Italy. Among 
the hundred doctors and phar- 
macists who work for her, 
eighty are women. Pharmaceu- 
tical exports to African coun- 
tries are flourishing and she 
hopes soon to break into the 
European market 

Selma Rekik is the finawdal 
controller of the Chebtka 
Group, owned by her father 
and brothers. Among the 
group's key activities is the 
manufacture of electrical items 
for cars - Peugeot, Renault, 
Mercedes and Opel are chants. 

She has recently acquired a 
40-year lease on a former state 
farm, the Stifen domains. 


north-east of Tunis and is busy 
developing rich farmland 
where earlier lack of invest- 
ment: over a generation all but 
ended production. All the fruit 
and vegetables produced will 
be exported to Europe. Like 
other women entrepreneurs, 
shp. started in business after 
marrying and raising children; 
her husband is one of Tunisia’s 
leading ophthalmists. 

A study conducted last year 
by Aziza Dargouth, who runs 
the CPS consulting agency, 
suggests that 48 per cent of 
women who start their own 
business find little difficulty m 
recomrtting their professional 
and family obligations, that 43 
per cent ventured into such 
activities for the sake of the 
challenge it offered, that only 
one husband fa five is opposed 
to his wife's activities. Such 
finding s do not conform to a 
widespread European stereo- 
type of Arab women. 

This new breed of innovative 
women owner-managers work 
hard, often more diligently 
than menfolk and is prepared 
to do battle with the civil ser- 
vice which, despite the efforts 
to liberalise mnnagw^ t 
of the economy launched fa 
1986, remains a worthy succes- 
sor of its Turkish and French 
forebears. A Tunisian business- 
woman jokes that edicts of the 
central bank are “as difficult to 
interpret as the Holy Koran 
itself... and spawn quite as 
many hadiths [the body of com- 
ments an the Koran].” 

Such rules, in her view, 
fihnuifl be clearly written and 
implemented with speed and 
honesty. 

Though some women run 
large companies, the bulk of 
such businesses employ 10 peo- 
ple or. less and are often run 
from home. 

Francis Ghiles 


Case study: financial enterprise In Morocco 

A step in the right direction 


I n September 1993, Upline 
Securities, then a 
little-known firm of finan- 
cial intermediaries in Casa- 
blanca, found that a private 
Moroccan shareholder, the Al 
Amane Insurance Company, 
wished to sett the 4 per cent 
stake it held in the capital of 
ONA. the kingdom’s largest 
private company, whose chief 
executive is King Hassan’s 
son-in-law, Mr Fouad FilalL 
That stake was worth 51 5m 
and entitled its owner to a 
seat on the ONA board. Upline 
Securities subsequently sold 
the stake to Baring Securities 
fa London which, in tom, sold 
it to a group of institutional 
investors. That “coup" landed 
a small band of enterprising 
Moroccans on to the front 
page of the Morocco's eco- 
nomic and financial weekly, 
L’Bconoiraste. 

Upline International was 
founded in January 1993 by 
Jolal Houti and Hassan Aitali 
- both aged 30. Jalal Houti 
had returned two years previ- 
ously from nine years in the 
US, where he graduated at the 
business school in Austin, 


Texas; meanwhile, Hassan 
Aitali had graduated at the 
business school of the Univer- 
sity Libre de Belgique. 

Jalal Houti joined the the 
Banque Marocaine pour le 
Commerce et lTndustrie 
where he worked fa corre- 
spondent banking. He was the 
only person who spoke 
Rngiteh fa that department of 
BMCI and soon realised the 
interest that banks such as JP 
Morgan, First Chicago and 
fihao Mahattan had fa trad- 
ing Moroccan debt in the sec- 
ondary market Hassan Aitali 
joined the Moroccan subsid- 
iary of AT ft T, Networking 
Computing Resources. 

fa November 1992, Jalal 
Houti left BMC] and became a 
consultant - to a US bank - 
on the Moroccan economy. 
Then, in January 1993, both 
friends started a weekly 
report which, by mid-year, 
had a dozen institutional 
investor subscribers in Lon- 
don and New York. Today it 
boasts 50 subscribers. 

Both men realised that for- 
eign investors were showing 
greater interest in Morocco 


because, by late 1992, the 
much-heralded privatisation 
programme was finally under 
way. Foreign banks and funds 
were hampered, however, by 
the lack of up-to-date Informa- 
tion on the country. Hence, 
their decision to start a series 
of sector and company studies 
- reports which are common 
in London and Paris, but were 
the first of their kind in 
Morocco. 

L ast month. Upline Secu- 
rities, which now has a 
staff of eight traders and 
financial analysts, all between 
the ages of 23 and 32. won 
their seat on the Casablanca 
stock exchange - a seat worth 
having since the Casablanca 
stock exchange is no longer 
on old fashioned, rather club- 
bable place where nothing 
much goes on. 

Up to 1991, most of the 
activity on the stock exchange 
was in government bonds. 
Now, however, the faster pace 
of privatisation, new share 
issues and the increasing flow 
of foreign investment have 
transformed the place and 


equities now account for 95 
per cent of all trading. 

Upline Securities is capital- 
ised today at Dblxn, 47 5 per 
cent of which was bought by 
the French broker Finacor in 
December 1993. Turnover last 
year amounted to 530m, a fig- 
ure which is expected tu rise 
to SSOm in 1994. By world 
standards, such amounts ore 
small, but the drive and 
enthusiasm shown by this 
young Morrocan team is a 
pointer to the big changes 
being wrought in a highly 
conservative banking and 
stockbroking community, 
many of whose senior mem- 
bers. who belong to the 
Groupement Professions! des 
Banques du Maroc, seem more 
than a little reticent about the 
reforms currently being pro 
moted by King Hassan. 

Meanwhile, Upline Securi- 
ties' aims to combine stock- 
broking and market research 
in corporate finance. A seat on 
the Casablanca stock 
exchange is thus a step in the 
right direction. 

Francis 


Jordan’s debt burden hinders reform 


Continued from page IV 
Total private sector deposits, 
excluding government and 
inter-bank deposits, rose by 94 
per cent from the end of 1989 
to stand at JD4.6bn at Septem- 
ber 1994, while overall assets 
were up by 91 per cent on 1989 
at JD7.2bn. 

The repatriation of savings 
from Palestinians returning 
from the Gulf in 1991, after 
Iraq invaded Kuwait, provided 
an exceptional boost to the 
b anking system with foreign 
currency deposits more than 
doubling fa 1991. As a result, 
the banks have been very liq- 
uid. fa September, the average 
liquidity ratio stood at 56 per 
cent. 

On the lending side, credit 
lines remain very conserva- 
tive. Although the amount of 
lending has increased by 51 
per cent since 1989, Septem- 
ber's credit to deposit ratio of 
53 per cent is still well below 
the legal marinwm of 70 per 


cent. Most credit still goes to 
commerce, trade and the con- 
struction sector. 

Industrial investment this 
year was equivalent to only 6 
per cent of total deposits. 
Although some specialised 
institutions such as the Hous- 
ing Bank offer long term 
credit for mortgages, more 
than half of all Jordanian 
banks' total credit u™»s are in 
the form of overdrafts. There 
is little in the way of corpo- 
rate finance and syndicated 
loans. 

O n the Amman Finan- 
cial Market - one of 
the most well-regu- 
lated and active stock markets 
in the Middle East - the bank- 
ing and finance sector 
accounts for 44 per cent of the 
S5bn total market capitalisa- 
tion. Windfall profits by banks 
over the past few years have 
greatly increased the value of 
their shares. The share price 
index for the finance sector 


rose by 58 per cent between 
the end of 1991 and September 
1994, outperforming the gen- 
eral index which was up 4 S 
per cent over the same period. 
A recent report by Baring 
Securities in London recom- 
mended the Arab Bank and 
the Housing Bank as some of 
the best buys on the bourse - 
although it expressed reserva- 
tions over Arab Bank's lack of 
disclosure. 

Although foreign investors 
have shown an Interest in 
Amman's exchange, with a 
number of tending merchant 
banks now offering Jordanian 
stocks to their clients, they 
are concerned about restric- 
tions imposed on foreign 
funds. Foreign investors need 
permission from the prime 
minister to trade on the 
exchange and strict limits are 
imposed on the amounts they 
can invest Most are waiting 
for tbe kingdom's long-de- 
layed privatisation pro- 
gramme in the hope of corpo- 


rate finance deals and new 
investment opportunities. 

A central obstacle to further 
reforms and liberalisation is 
the kingdom's heavy burden 
of foreign debt which cur- 
rently stands at around U3 
per cent of GDP tStiba)- 
Although a number of credi- 
tor countries has promised to 
waive part of their dues in 
reward for Jordan's peace 
agreement, servicing and 
repayment still requires a net 
outflow nf funds from the 
Treasury. Government offi- 
cials complain that until the 
debt burden is reduced, regu- 
lations have to remain. 

"Jordan deserves a fair 
chance. If we don't get more 
debt reduction, then we can’t 
make the peace dividends pos- 
sible," argues Mr Martou at 
the central bank. 

* Peace and the Jordanian 
economy. The World Bank. 
1994 

James Whittington 


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j . • - 


. — - jli 


financial times 


THURSDAY DECEMBER 


15X994 



COMMODITIES AND AGRICULTURE 


Coffee prices 


Australia resigned to shrunken cotton crop 


ho 


\s\e 







tumble $200 to ^ en< * ^ le season approaches drought losses are already being counted, writes Nikki Tait^ 

««mb » . . . * i i _ aa j «- — n.j. p_«i jm i-tf. ■ _ ^ ^ ^ if.runirTi i avamiHvo u ri w t ft f cron to so in. T his , in lost 


I "V 


— . r. vj^‘ _ ' 


6-month lows 


By Deborah Hargreaves 


Coffee prices tumbled for the 
second day in succession yes- 
terday as roasting companies 
backed away from the market 
and traders executed a flurry 
of technically-driven selling 
orders. At the London Com- 
modity Exchange, the March 
futures contract closed $213 
down at $2,455 a tonne, a six- 
month low. 

The New York market 
started the slide on Tuesday 
when futures prices lost 12 
cents a pound. It failed to con- 
solidate and recover the 
ground yesterday and the mar- 
ket lost a fUzther five cents to 
Sl-48 by mid-morning. 

“The market has shown no 
evidence we have reached a 
bottom yet - trading is quite 
active and defensive," said Mr 
Bill O’Neill, commodities ana- 
lyst at Merill Lynch in New 
York 

Market sentiment had weak- 
ened following a report by the 
US Department of Agriculture 
last week, which showed that 
world coffee stocks were 
higher than the market had 
thought Prices were shaken 
yesterday by a report by Ger- 


man sfartiattelanfl ra tH infl lin g a 
rise in world output fids sea- 
son, accompanied by a drop in 
oceosumption. 

The F.O. Licht report esti- 
mated production at 92.3m 
bags in 1994-1995 compared 
with this year’s 91.1m. It put 
consumption at 83.4m bags in 
green beans equivalent, com- 
pared with the 1950-94 level of 

955m hag s 

Mr O'Neill said the two 
reports had put traders on the 
defensive, but that a lot of the 
selling was also driven by tech- 
nical chart patterns. He said 
the next support point cm the 
New York market could be 
$L35 to $1.40 a pound. 

• Guatemala will cut coffee 
export estimates for 199495 in 
response reports from planta- 
tions on the southern coast 
that trees are producing lower 
yields than expected, an offi- 
cial said, reports Reuters from 
Guatemala City. 

“Farms on the coast are 
reporting a drop,” said Mr Max 
Quinn, vice-president of Ana- 
cafe, the producers association. 
He blamed lack of rain while 
the plants were flowering and 
said the drop in exports would 
be between 2 and 5 per cent. 


E state agents’ hype has 
acquired new twist in 
Mores, the New South 
Wales country town that 
serves as one of the main 
regi onal centres for Australia’s 
cotton industry. "Abundant 
underground water” shouts 
one shop-front notice, advertis- 
ing a A$lflm (£645,000) farm. 
“This property has received 
winter rains," claims another, 
bearing a picture of lush, green 
crops. 

Australia's drought, which 
has devasted much of the rural 
sector on the nation’s eastern 
seaboard, is having a curiously 
progressive effect First to be 
hit were the grain growers, 
who failed to plant a signifi- 
cant winter crop, in some cases 
for the fourth successive year. 
Next, the livestock producers 
were confronted by feed short- 
ages. Now it is the turn of cot- 
ton-producers. 

This sequential impact 
largely reflects different plant- 
ing seasons. Australian cotton 
is sown, between October and 
December and harvested from 
February to May. Hus a plus 
for the industry in interna- 
tional terms as it allows grow- 
ers to export when supplies 
from big northern hemisphere 
producers, like the OS, are at 
low cfbb. 

fa theory, then, a tiny plant- 
ing window remains in the 


1994-95 season. But with no 
sustained rain since March, 
and none forecast until per- 
haps the same time next year, 
many g ro wers - have aboudon- 
ned hope. 

“This year’s over for irri- 
gated cotton,” says Alice Scott, 
who farms In the Gwydir 
region around Moree, “and 
tbere’d be- quite a lot of rain 
needed before yuufd get much 
dryland cotton.” (hi a normal 
year, about 90 per cent of Aus- 
tralian cotton production 
comes from irrigated land). - 

This week, the Australian 
Bureau of Agriculture and 
Resource Economics, the gov- 
ernments forecasting agency, 
said the area planted to cotton 
was likely be 194,000 hectares, 
71,000 less than was harvested 
in 1993-94. This, it warned, 
could lead to the smallest cot- 
ton harvest since 1986-87. 
Abare suggested that produc- 
tion could be U7m bales; the 
Australian Cotton Foundation, 
representing the industry, has 
estimated 800,000-lm bales. 

Even the higher figure would 
be about half the 2.1m bates 
produced in 1991-92, the record 
year. They would also repre- 
sent the third year of faffing 
output as the intensifying 
water shortage in key growing 
areas has sapped stored sup- 


Inevitably, given vagaries of 


rainfall and differing access to 
underground water, the Impact 
of the drought varies within 
the nation’s cotton-growing 
area, which runs from north- 
ern New South Wales into 
south-western Queensland. 

Areas to the north, like 
Emerald, and the Macquarie 
region to the sooth, may fere 
relatively well Unfortunately, 
despite some belated Novem- 
ber ram around the states' bor- 
ders, it will be the central and 
most productive sane, includ- 
ing the' Gwydir Valley and the 
Maciubrye, which is worst hit 
Peter Saunders, regional man- 
ager of Namoi Cotton Coopera- 
tive, -Ok country’s biggest pro- 
cessor /marketer, estimates that 
the Gwydir region “will be 
lucky to do around 50j000 bales 
this year”, compared with 
around 600.000 in 1991-92. 

It is not just growers who are 
hurting. Decisions must soon 
be made about processing fecit 
itles. Namoi says it may run 
only seven or eight of its 11 
gins. Other processors confirm 
that similar cutbacks are 
likely. At the broader social 
level, people are drifting away 
from the region, and towns like 
Moree are beginning to see ser- 
vice businesses fold and shops 
fen vacant. 

To date, according to the 
ACF, no growers have actually 
gone bankrupt, although 


Maree McCaskfil, executive 
director, acknowledges that “if 
there ’s another year of this, 
people will start to go to the 
wall". But already many are 
living off the equity invested in 
. their farms. 

A Anther, less risable, prob- 
lem. may be the extent to 
which the industry has sold 
forward. Unlike many sectors 
of Aus tralian agriculture, cot- 
ton is an integrated b u siness, 
with a fairly short chain 
between growers and end-buy- 
ers. There is, to example, no 
industry marketing board, and 
growers choose for themselves 
whether they sell to cash, sell 
forward or sell into pools. 


A t this stage, no one 
seems keen to predict 
the overall impact of 
forward selling, or the number 
of contracts that will not be 
met. "It will be a problem but 
it’s very hard to quantify," 
says Peter Saunders. "What 
you’ll see is what's happened 
in the past - growers 
approaching buyers and nego- 
tiations to a ion-over,” says 
David Montgomery, managing 
director of Dona vent Enter- 
prises, part of the large Mem- 
phis-based cotton company. 

Perhaps the most realistic 
hope at present is that the 
rains came as predicted in 
March, and allow a nan-cotton 


winter crop to go in. This, In 
turn, could provide income to 
sustain growers . into the 
198495 season. 

But even then, some observ- 
ers worry that cotton’s rela- 
ttvely high up-front cost means 
that ^feting Australian growl- 
ers will be hard-pressed to cap- 
ttalise even if the drought has 
broken by this stage next year. 
As ABce Scott points out, it 
will be eariy-1996 before grow- 
ers see any "significant cash 
flow. * 15181*8 a long way off," 
she says. 

Perhaps the biggest question 

is what this severe hiatus will 
do to Australia's reputation as 
a cotton-growing nation. The 
country is a relatively new 
player; it only began to develop 
a substantial industry 30 years 
ago when strains of cotton 
more suited to the Australian 
climate were discovered and 
irrigation infrastructure 
installed. Because at the depen- 
dence on irrigation, the coun- 
try boasts consistent, good 
quality cotton, and most of its 
protection goes to export. The 
Japanese. In particular, have 
been substituting Australian 
supplies for CaBtonian. 

Most In the industry seem to 
be holding their breath and 
hoping that the impetus - 
which has made cotton Austra- 
lia’s fifth hugest rural export 
to just three decades - will not 


he tost "ft may take a year or 
two to get back some custom- 
ers,” says Mr Montgomery, 
“but price tends to be toe key. 
I don’t think it'll have a 
long-term impact". 

Even in the depths of this 
gloom, however, there are 
some encouraging develop- 
merits. Growers concede that 
the drought has prompted 
experimentation with different 
growing strategies - varying 
the fhtekness of ptentihg and 
so on. Some also suggest that 
the water shortage will acceler- 
ate the drive to develop new 
strains of cotton that can adapt 
to cooler conditions Anther 
south, or the more tropical 
conditions to the north. The 
bigger the growing region, 
runs toe argument, the more 
opportunity growers have to 
diversify their weather-related 
risk. 

But others think Australia’s 
politi cian s could do more to 
help. Mr Montgomery suggests 
+-te>t more, attention should be 
paid to this poten tial for 
gypnwiting production from the 
errigHny rpgfon, where climatic 
conditions are ideal in non-, 
drought years. 

“The one thing stopping this 
industry from doubling In rise 
is available irrigated water," 
he says. The problem is that 
most political parties are -not 
interested in building dams" 


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Funds return to LME 


Harvest disappointment causes havoc in Indian market 



By Kunaf Bose in Calcutta 


Base metals prices at the 
London Metal Exchange had a 
generally steadier day as 
investment fund buying was 
attracted by recent lower lev- 
els in some metals. There was 
also some trade baying and 
bargain hunting. 

Persi stent fund buying of 
NICKEL saw the three months 
delivery price soar by around 
$300 at one stag e be fore it 
ended at $3,450, up $275. 

Three months COPPER 
traded actively around the 
$2£OOa-tonne level for most of 
the day until buyers gained the 


upper hand late in the day, 
taking the price to a close of 
$2£12, up $6. 

Renewed speculative buying 
and short-covering helped lift 
ALUMINIUM, which was also 
affected by talk of power fail- 
ares in the US north-west, 
where many smelters are 
located. 

TIN was subjected to further 
bouts of hedge selling and liq- 
uidation, but this was well 
absorbed in the low $5 ,800s and 
a rally ensued. 


Compiled from Renters 


The absence of a scientific crop 
forecasting agency has once 
again caused havoc in Inchon, 
textile mills. As earlier fore- 
casts of a bumper cotton crop 
of 13An to 14m bales (170kg 
each) have proved excessive 
there has been runaway infla- 
tion in local cotton prices. 

„ Not oily have cotton prices 
risen by 60 to 90 per cent over 
the levels ruling a year ago, 
say Industry officials, but 
farmers and ghmers are hold- 
ing on to their stocks in antici- 
pation of still higher prices. 

The spot price of Punjab J-34 


grade is over RsIAOO a maund 
(821b), compared with Rsl,010 a 
year ago. Concerned about the 
suspected large-scale cornering 
of the harvest from the 1994-96 
season (September to August), 
the Indian Cotton. Mills Federa- 
tion has urged toe government 
to impose restrictions an gin- 
ners’ and traders’ stocks. Such 
restrictions are already 
enforced on textile mills. 

“The market had seen so 
many distortions in the cur- 
rent season that all transac- 
tions in cotton were suspended 
in Punjab, a big trading centre, 
for a week," an industry offi- 
cial gflid 


Most analysts have now low- 
ered this season’s estimate to 
about 13.lm bales. Some 
believe, however, that it will 
not be much, more than last 
year’s 12.1m. Industry officials 
say slow arrivals of new season 
supplies make it difficult to 
make a confident prediction. 
“Only in the new year will we 
get a fear idea of the Indian 
cotton crop,” said one. 

What is known, however, is 
that crops in the three north- 
ern states of Punjab, Haryana 
and Rajasthan, have suffered a 
setback because of the second 
severe boll worm attack in two 
years. And growers are wor- 


ried that boll worms and other 
pests have become immune to 
pesticide. The combinfld crop 
in the three states may be only 
3Am bales, down from toe orig- 
inal of 44m. 

EUsewhere, cyclonic storms 
have hit crops in the southern 
states of Andhra Pradesh, 
Tamil Nadu and Karnataka 
and late rains cut output in 
Maharashtra and Gujarat 

“Because of the Ugh prices 
of the commodity last year, the 
fa n n e rs have raised the land 
under cotton by nearly 9 per 
cent to 7.92m hectares," raid 
an industry officiaL “The crop 
will once again be small, but 


the unusually high prices will 
sustain the growers’ interest” 

The Eastern India Textile 
Mills Association has pointed 
out that many of its members 
are “holding cotton stocks of 
less than a week”. In these cir- 
cumstances the mills, as last 
year, will be importing cotton. 
During 199344, they imparted 
around 3001000 bales duty free. 

Even though the crop Is 
going to be small, the govern- 
ment in conformity with the 
long-term export policy, has 
been considering allowing the 
export of 500,000 bales. So far, 
however, export quotas have 
been granted fix- only 100,000 


bales of the Deshi vari- 

ety and 30,000 teles of soft cot- 
ton waste. The government 
may go slow on exports if 
prices remain at the present 
leveL 

“The issue is not only to sat- 
isfy the domestic requirement 
of nearly 13m teles of cotton 
but also to have enough carry 
forwaxd stocfcs for the next sea- 
son,” said an BTTMA officiaL 
"The Indian cotton season offi- 
cially begins in September. But 
the mew crop starts coming 
Into the * market only in 
November. Ideally, we should 
have an end-season surplus of 
3m bales;*’ ■’ 


' ■ - 






A P " 


. ,* 






COMMODITIES PRICES 


JOTTER PAD 






BASE METALS 


• • : r , » : • i 




Precious Metals continued 

■ GOLD COMEX (100 Tftsy oz_; Vtroy ozj 


GRAINS AND OIL SEEDS 

■ WHEAT LCEJEper tonne) 


SOFTS 

m COCOA LCE (Eflome) 


MEAT AND LIVESTOCK 

■ UVE CATTLE CME (40000**; cmrtribaj 


• i 

% i 

i - 


(Rices tom Amalgamated Motel Tfedng) 
■ ALUMINUM, 90.7 PURITY $ per term! 


SGt IteTt 



Gash 

3 mths 

CtOSB 

1829-80 

1860-1 

Previoua 

1800-01 

1829-30 

HgMow 

1815 

1870/1842 

AM omctel 

1814-5 ' 

1845-55 

Kerb dosa 

Open HL 

ZSOJ999 

1688-9 

Total daily turnover 

68625 


■ ALUMNUM ALLOY ($ per tonne) 



1780-80 

1820-30 

Prmfous 

1775-8S 

1810-15 

■ — * — 

rtgnrKRV 

1815 

1625/1810 

AM Official 

1772-3 

1812-14 

Kerb dose 

Open inL 

2.926 

1821-4 

Total daily turnover 
■ LEAD (S pte tome) 

433 


Ckae 

814-5 

632-3 

Previous 

809-10 

62S-6 

Hghtew 


636/825 

AM Official 

613-5 

631-2 

Kerb dose 

Open InL 

4ZB70 

635-6 

Total ctafly tuvwnr 

12.166 


■ NICKEL (S per tonne) 


Close 

6305-15 

8455-80 

PrevkNa 

7990-8000 

8130-40 

HlghAow 

6278 

6500/8225 

AM Official 

8275-6 

8415-20 

Kerb dose 

Open InL 

87*466 

8450-60 

Total daty tumow 
■ TIN (9 pertonnri 

18J682 


Close 

5605-15 

5810-15 

Previous 

5745-65 

5 84*60 

Hlgh/tew 


5950/5800 

AM Official 

6755-65 

5856-80 


pries 

Iteo 3784 +1J 381 JO 3710 172 38 

•tea 3793 +12 1 

M 381-5 *12 383 2 381.0 82,732 1*718 

Apr 38 53 +1 2 307.2 3852 13,837 287 

JR 389J +1.1 381.6 38SL0 21,323 450 

Mg 3942 +1 J} T384B 394.1 12,111 178 

Tetri 17*316 16*59 

■ PLATOON NYM3C (50 Tray ot; SAroy c*J 


SStf Jtepte opes 

price ring* Mgb line tat 

107.50 +0.75 OTJ50 10585 1,173 

108.45 +0-75 108.40 10800 1,730 


11025 +060 11DL5D 109-95 1,732 12S 


11125 +025 

87.15 +058 9075 9075 
8820 +065 9040 87 JO 


Sri* Iter* 
price taap I** 

834 +6 935 

931 +8 931 

931 +4 830 

960 +21 960 

967 +18 872 

979 +14 980 


8U0I1 


Ih ri M 

918 0694 85 

914 40102 2309 
916 17349 1,300 
927 7,569 245 

840 13285 496 

956 11,805 227 
1HVS13 4210 


■ WHEAT C8T ffrfiQQtiu min; centsA308> bushed 


408 8 

Apr 4125 -U 415J5 4122 12,766 

Jltf 417.0 -13 4105 41 80 13/0 

Ofit 421 J -14 - 826 

Jao 425.4 -12 14 

Total 28*461 

■ PALLADIUM NYMEX {100 TVoy ocl; Staff 


15100 

15425 

1SBJ00 

15725 

15825 


-085 15175 15380 
-025 1562$ 15435 
-085 

-085 15820 15100 
-085 158150 15050 


30 

5574 

781 

126 

10 


Trite 


■ SMJfEH COMEX (100 TVoy ool; Pent a/tofr ozj 


Triri 


4754 

4758 

4705 

4815 

4675 

4916 


+M 4700 4710 101 38 

+25 - - 79 2 

+25 - - 802 - 

+25 4840 4785 75.763 18J80 

+25 4800 4042 10316 2282 

+25 4955 4815 7.440 118 

135,027 


2£0B 

Oec 

36725 

-40 

372/2 

386/2 1.141 

1,058 

IjO 06 

liter 

382/4 

-a» 

3 67/4 

380/D 43J72 1*638 

9 


365/4 

+-5/D 

370/6 

384rt 7,384 

1 JM 

10 

Jri 

337/2 

-firt 

342/6 

338/4 K133 

1,510 

- 

aw 

342ffi 

-Sffi 

3484) 

341/D 709 

7 

un 

Dec 

3S8IO 

-7/0 

358/0 

353/D 252 

14 

oz) 

Triri 




66W 17JD8 

10 

■ MAIZE COT 0JOOO bu mto cente/BBb twriieO 

423 

Dec 

216M 

-ao 

218M 

ZW2 3j6Q2 

1/23 

35 

Iter 

22811 

-m 

229/6 

227/1115306 22308 

28 

tear 

234A 

-a/2 

237/0 

234/4 43342 

2341 

- 

JM 

238/4 

-40 

247/2 

238/2 45,408 

3372 

498 

aw 

24201 

-art 

245/0 

242/0 5J068 

484 

oz) 

Dec 

246/0 

-2rt 

2484) 

245M 28355 

1^79 


Triri 




245,176 3%882 

38 

2 

■ BARLEY LCE (£ perform) 




Sri* Ztefta Opm 

price ebriw Up In M M 

Dec 70595 +0425 79575 70180 5585 2*48 

M 701715 +8450 70225 62700 38.133 7,106 

Apr 70650 +0175 70750 70350 19589 2535 

Jon 65275 +0208 65.450 85.150 6J92 667 

Aoj 63200 +0200 B1450 61225 2.996 125 

Del 54.100 +0225 64.175 63225 1,424 68 

Total 60171 TUM 

m UMHOtascMEf4a^x»be;csm8/to4 


■t* P2i-f“ * 


^ * 7’ 

If 



• .'.C-V 
1 - ir^-l 




''V“ -t-; Sr. 


1240 

+45 

1200 

1169 2 

- 

Ok 

34125 *0225 34275 31900 

4123 

1295 

1266 

+49 

1275 

1206 41*311 

5064 

M 

35925 +0JJ75 37.180 36L750 

14402 

4328 

1278 

+41 

1290 

1225 14052 

888 

Mr 

37525 +6.175 37-575 3 7250 

SJS2 

1382 

1290 

+41 

1290 

1240 5*68 

501 

Jm 

41325 +0A25 41350 41900 

4J08 

1305 

1316 

+41 

1315 

1263 2J70 

162 

Are 

41050 +0275 41200 42600 

1205 

81 

1335 

+35 

1340 

1290 4*781 

150 

Od 

41200 +0380 41375 41jOOO 

1,117 

67 




77,539 8,596 

Triri 


3^144 11 p 110 


i *7 t% 




Sep 1316 +41 1315 

OK 1335 +35 1340 

KM 

■ COCOA (VCCQ) (SDITa^nno^ 

Dee 13 Mee 

Italy 929.42 


■ PORK BQJJES WOOOt^ 



Pm, dw 
83070 


■ CQFFSLCESAome) 


10420 +015 10425 10425 
10015 +025 

10820 +005 10825 10825 
9820 +025 

8725 +025 9720 9720 
0825 +078 


Tetri 


2478 -217 2069 2465 0096 1714 

2483 -206 2830 2449 10232 1455 

2448 -105 2580 2435 5JIJ73 1JS4S 

2448 -170 2545 2445 1,838 382 

2440 -169 2505 2470 2276 235 

2138 -162 2500 2495 416 14 

2B72B 7^48 

! V CSCE (37200l»w oents/bri 


38.150 +0900 38550 37.450 7223 1727 

38500 +0775 38825 37800 1JS19 306 

39500 +0525 40850 30100 819 70 

40650 +0050 40850 388S0 430 25 

39525 +0900 40000 38800 215 7 

40550 +0800 49590 10 1 


CROSSWORD 


18268 1,758 


LONDON TRADED OPTIONS 

Strike price $ tonne — Crib— — Ms — 


No.8,637 Set by DANTE 


ENERGY 

■ CRUDE OIL NYMEX (42200 US gals. 8/beneQ 
Uteri Day's Opm 


Kerb dose 
Open tnt. 
Total My 


22261 

6266 


6690-010 


price dtepps 

17.11 +020 17.15 
17.10 +025 1722 
1727 +026 1727 
1720 +018 1720 

1724 +016 1729 

1725 +020 17.49 


1879 50,197 
1081 90226 
1090 81280 
17.10 20158 
1727 13231 
1725 28216 


Z7273 

27281 

8276 

4242 

1274 


667M 

568/D 


Close 

10633+L5 

1112-3 

Previous 

10693-703 

10973-83 

Hbgh/tow 


112071108 

AM Offlclri 

1088-7 

1114-6 

Kerb close 


1116-9 

Open inL 

106301 


TotaT darfy turnover 

22346 


■ COPPER, flrads A(S per tDRfM) 


Cteee 

2957-60 

2905-7 

Previous 

2943-5 

2889-5 

Hgh/low 

2952/2960 

2914/2680 

AM Offidri 

2951-2 

2899-900 

Kerb dose 


2912-6 

Open mL 

240358 


Total darfy twnover 

56339 



leOB-IPEgritenri) 

Uteri Oafs 

pries cringe Hpi Lsr 

1014 +018 1017 1003 
18.12 +023 1015 1002 
1005 +016 1689 1198 
1686 +016 18.10 1681 
1688 +016 1008 1882 
18.11 +013 18.12 1686 


77268 


Tetri 


85204 

70336 

21893 

10867 

7,165 

6817 


HEPTOjO OIL HYIriX (42800 US 
Uteri Day's 


22864 

19010 

1809 

410 

75 

<7831 

gab) 


Triri 


OS rate: 15800 
retec 15617 


Spot 1561 5 3 mite 1561 3 6 total 5812 9mta15D12 
■ MQH QAADE COPPER (QOMEX) 


+9.60 +1.12 4065 
4925 +029 4980 
4875 +089 <075 
4015 +074 4015 
4085 +049 4059 
4835 -044 


Trial 


Lost tat Vpl 

4045 35203 18,763 
48.75 38880 9228 
4865 20,742 <123 
4090 12846 1251 
4025 72M 1274 
- 0414 325 

147285 30904 


SOYABEANS CST RflOQtai nSQ CtntaffOD tiBriWQ 

r BSV2 -2/2 563A 56fl2 42820 1*182 

r 571/2 -2M 57310 08/2 83J87 4^48 

f 579/6 -2/2 581/2 577/4 18,138 1239 

B86» -I M 566(2 SBZl2 25844 1,758 

| 667/4 -2A 588/4 50661 2277 148 

I 568/D Off 5900 587/2 1,238 20 

ri 150488 24891 

SOYABEAN OIL COT fBQQOOfec carris/tj 

l 2664 +003 2085 2662 8,194 2,748 

I 2784 +008 2788 27.15 31693 128» 

r 2686 +009 2088 2685 28702 7890 

/ 2580 +010 2580 2587 18J63Z 2874 

2581 +014 25.42 2586 11,108 1806 
| 25.10 +015 25.10 2480 2^83 19 

ri 114J25 27,083 

SOYABEAN MEAL GET (100 tana; S/tan) 

1583 -18 157.7 158.1 2862 5800 

1678 -18 1586 1578 28829 11877 

1608 -1 J 1817 1808 28882 3888 

f 164,7 -18 1604 1647 14745 660 

1603 -18 1706 1602 11506 639 

| XT\A -18 1717 171.4 3,179 32 

0 101,180 21818 

POTATOES LCE fffrtannri 

’ 2618 +318 - - 

2818 +08 281 JO 2776 1852 99 

r 2986 +118 2 

2506 

0 1864 09 

RR3QHT (JUU-I^A) LCE (OKVMeR prim) 


■tay 

*0 

Dec 

Triri 


14425 -050 14560 14000 
147.10 -980 14825 14450 
15560 -660 15660 18560 
15760 -960 0 0 

15860 <000 0 0 

15665 -660 0 0 


800) (US oBTTta/feounti) 


71 36 

17847 9,162 
6J86 675 

2,788 220 
1678 366 
1639 175 
3068018688 


■ AUURflMUM 

{99.796) IMS 

1800 

1850 

1900 


Feb May Fab May 

104 171 60 86 

78 145 79 109 

56 121 100 134 


(tade A) LME 


2850 


Dec IS 

ran 

Rev. day 

drib 

14231 

19075 

Iff day ararei — < 

15139 

15154 

■ No7 PRBAUM HAW SUGAR LCE (centa/taj 

Jm 1330 

, — m 

■ m 

Uv 1435 

-035 

37D 

Itey 1435 

-OJDZ 

800 

Jri 1455 

■ ■ • 

300 

Triri 


1380 

■ WtffTE SUGAR UCE(8/tam4 



2950 


3000 

3050 

3100 




Total 


38570 

35780 

35160 

34660 


-3JX> 40&00 402.10 12609 815 

-870 401X10 39680 5630 09 

-380 30060 38860 4443 97 

-360 38160 3S660 1679 29 

-430 35860 39150 128 13 

-6 60 35480 34850 219 B 

25638 16BZ 

CSCE (112600ta 


1600 

1650 

1700 


Feb May Fob May 

147 118 53 167 

117 100 72 197 

91 83 96 229 

Jan Mar Jan Mar 

- 37 522 574 

- 31 572 618 

- 26 622 663 

Mar May Mar May 

59 75 28 44 

45 62 39 66 

34 51 53 70 

IPE Jan Apr Jan Apr 

68 4 64- 

47-96 

32 130 


LONDON SPOT MARKETS 

■ CRUDE OIL FOB (per bsnel/Jan) + 0 i 


llay 

Tetri 


1460 

1468 

1462 

1351 

1260 

1266 


■4L11 1464 1452 9761614680 
-005 1488 1458 37,838 3,128 

“007 1463 1440 21446 1439 

HUM 1370 1350 24550 1.457 

-310 - 8368 1589 

-310 1267 1245 1528 120 


Dubai 8155&551Z +0.085 

Brent Blend (dated/ 51 6.77-6.79 +306 

Bient Blend (Jan) S1&0&307 +300 

W.TX (1pm $16b94-666K +302 

■ Ofl- PRODUCTS NWEriompt dritaery GIF (feennsj 



14 = « - ■.f, 

*2 

; a v ^ 

sue 

r*. 




-* 1 ** thm% 






I'.T . J 


^*->.T.V V 


y ii - 


-i jt i 


; 


’■'4- • 





i-"’ : - P - 


,!_■ “• '1 ’ . 


■ 


- 


• ‘ ■ : _ 

1 ■. . 




• > > 

• 5 J 

1 7 in 


io. 




%: - 


Ptonrium QaanOne 


Heavy Puri Ofl 



Pm 

dflnp 

Nteh ten 

tel 

M 

Ok 

13850 

+2.10 

15730 13190 

4,409 

1338 

jk 

13535 

+2.10 

13630 13460 

1,794 

155 

M 

13536 

+2.10 

• ■ 

757 

12 

Iter 

13425 

+110 13450 13130 2B315 

8337 

Apr 

131 75 

+TJS 

- 

683 

S 

tear 

Total 

128.75 

+1.40 

12630 12730 

3746 218 

*882 11731 


■ OA3 OIL PE (5/tamtj 


Sett Daft 
price cteooe 

14360 +125 
14575 +150 
14800 +180 
14625 +175 
14875 +175 
14850 +200 


Mgh Lav 

14475 14350 
14675 14575 
14875 14775 
14900 14825 
14950 14900 
15000 14800 


PRECIOUS METALS 


■ LONDON BULLION MARKET 
(Prtc«) suppled bf N M RothscNkQ 


■ NATURAL GAS KYfttX (13000 mmBBL; 


44,182 4558 
22526 3471 
11547 1541 

4536 1,132 
1575 110 

8508 1527 
93485 13517 

OLilftan Btu) 


-17 2020 2020 308 
-70 1910 1850 997 
-00 1850 1830 190 
-55 1750 1730 1533 
-89 1865 1531 239 
-45 1055 1840 107 


Jet fuel 


mw 4356 8367 8267 31J6Z 43 8S 

8323 +331 8365 8365 11,132 1,238 

8263 +335 8320 8255 6632 046 

7465 -315 7460 7146 1.173 113 

7160 -020 7315 7165 5589 442 

7270 -320 72J65 7385 83 9 


Aipos. 7ri 


Si 62-164 
$141-144 
997-90 
$107-171 
$162-164 
9146-149 
P71) 359 8793 


*1S 

+3 

-6 

+1 

+1 


■ ORANGE JUICE NYCE (15500fa; oente/fcaj 


Grid (toy olJ 


Momino fix 

Af te rnoon fbc 

Day 1 ! High 
Day's Low 


$ price 
37860-37330 
37310-37350 
37335 
38050 

38050-38390 

378.10-37350 

37850-37370 


Z equtv. 


243144 

243548 


LocoLdnN 

1 mono* 

2 merdhs 

3 mo n ibs 


301 


teg Rates (Vs USq 

6 >^<^.1 11 1 1, i m 383 

12 n ude 1 ...........662 



Lrieri 

iters 



Opn 



teto 

tango 

m 

lap 

Eflt 

W 

Jan 

1.735 

-0333 

1.770 

i.7u> mot turn 

Rb 

1.760 

4L074 

1300 

1.730 20921 

M63 

Iter 

UK 

-0308 

1310 

1710 

18315 

4350 

Apr 

1385 

-0.005 

1385 

1370 

93B 

1425 


1390 

- 

1385 

1375 

9,144 

1,114 

Jon 

1J00 +0-002 

1.700 

1385 

7,189 

914 

Trial 




141317 41380 

■ UV&EADQ) 

OASOLME 





«taa 

11175 

+330 11430 10850 10316 

840 

Iter 

11730 

+335 11730 11335 


691 

nm 

12030 

+335 12070 11830 

1312 

88 

Jri 

12270 

+235 12230 11190 

939 

39 

fap 

12670 

+295 12570 12330 

2,154 

15 

tto * 
Told 

125.70 

+295 12430 12430 

13G0 

- 


Star Rx 

p/toy oz. 

US os equfv. 

Jm 

Spri 

30105 

47630 

to 

3 months 

30170 

48220 


6 months 

31155 

489.75 

Apr 

1 year 

325-90 

50905 

ta 

Qofcf Coins 

S price 

E eqriv. 

Jvi 

Kn^enand 

379-383 

243-246 

Trite 

Maple Lori 

3893049105 

- 


New Smreign 

86-91 

cjLjca 

jCrXf 



WMBUggjOjga^gggW 
Latest Oafs 

price cteegt W Uv 

622) +1.11 5230 5160 
51.75 +U2 51.60 5165 
52.10 +060 52.10 51.75 
55.15 +355 532) 9460 
P 5450 +075 5460 5460 
S4.» 4065 54.75 54^80 


Uvwpoocri- No spot or riJpmertf sales ware 
recorded for 8 re second week In succesrion. 
(Mering was i oat itoed and the riftte woe 
confined to mHrnum QueriiiSb Sknv tnkJwti 
pers i sted ki ce rt a ta apecMri fpoeH tta 


VOUME DATA . 

Open interest end Votme riria shown for 
conbacte traded on COMEX, NWEX, COT, 
NYCE, CME, CSCE and PE Grade 08 are one 
day In areare. 


20618 14,101 
1742S 6668 
3751 2603 
10638 1,113 
5.160 284 

1.442 191 


INDICES 


Deo 14 
216BLO 


Dec 13 
22W3 


(Baee: 16/9/31=100) 

Dec 13 month age 
2381.7 2136.9 

ea (Beee: 19q7»1Q0) 

Deo 12 month ago 

230.10 233.74 


1670.7 


Gold ftxr troy oz>A 
Sver (per troy 
Ratinum ( per troy ozj 
Patatan (»r toy r] 

Copper (MS prod) 

Lead (US pren] 

TWi (Kuril Lumpud 
Tin (New Yore) 

CatOe pve wri y i iO t 
awep vwigrort 
noBffw 

Lon. durawM 
Lon. day susar (wte) 
Tele & Lyto upon 

Barley (Eng. taec0 
Maze (US No3 Ydflow) 
Wheat (US Doric North) 

Altar tlanfft 
fFabjy 

FMtar OCL RSS ffol Jufl 
Coconut 01 (ptiq§ 

Pahn C8 (MaJayJ§ 

Copra (ptittg 
Soyabeans (US} 

Canon OttaokW Mac 
Woottopa (64s Sufto) 


$379.1 
478 JSe 
S41126 


139XIC 
■ML 75c 
l&OOr 
372.6c 
120JBOP 

115l85p 


+QJJO 

-IjOO 

-1J80 

-t « 
-1JJ 


-ai 2 


S350.-IO 

S4iiro 

E342J0 

Un» 

£132J 

eieao 

iaijoap 

loasop 

37S.0m 

SS90LOy 
S720.QZ 
5451. Oq 


-O.AS- 

-02S- 

+3.77" 

*6j60 

+ 6.00 

+4.00 


+040 

+0.50 

+ioo 

•125 

-&0 


1 Metal detector? (Q 
4 Send a letter to cancel a 
debt (5,3) 

9 Acquire money in large 
amounts - like a croupier 
does? (12) 

10 Musical figure (8) 

IS They call on us, but not for 
help (8) 

13 Beat time (8) 

15 Steer straight (4) 

IS Photograph a monster 
in the garden (10) 

19 Actions against the defence 
(10) 

20 Game In which all maw*™. 
are exciting (4) 

23 Show EEC arrangements 
about French wine (6) 

25 Doubtless, people do (4.4) 

27 Definite cure (8) 

28 Viewers - afl but one - upset 
by change erf direction (6) 

29 Highly commendatory 
speeches (8) 

30 Squirm and wither away (6) 


7 Should be zero? (5) ■ 

8 He's at liberty to be privileged 

citizen (7) • - 

11 He takes one’s Kmtm y 
for a start CO 

14 Fields of activity he. gets a 
“axed press about (7) 

XI ReYohittonaiT development tn 
naval toe-power (3,6) 

15 Agent in trouble' about a 
number performing (8) 

18 Ma nag e to define the- bishop's 
position (7) 

21 Go ahead and get eanght in 
deeper trouble (7) 

22 On whidi to get wind of 
something? (6) 

24 Perfect - me to servel (5) 

26 Fortune made by a driver, 

possibly <4} • ; 

Solution 6,636 


1 f - * 

t-b 


-'■-'.“T-.Vfc 


•■,1 Vp 


» v 4g* 


'sV- ‘ ' : 










• i.O-* 














4G2p 


224.18 


Cprii 
pflngri 
Doc. Z 


Gtmmm wtektaPriOB 


9 Lontkyi R^rieri 

oaft.48tafip ftjoe 
teBi teprariou 


re.ee 
v Hoi 
5 OF 


1 Moving horns (7) 

2 Fish with a pole - plain 
enough? (9) 

3 Creates a vacancy, perhaps (6) 

5 Unusual camhinatlon erf artist 
and engineer (4) 

6 Masters the conversion of 
hectares <8) 


□□boob nnQGao 

n □ □ a □ 

□ B B 0 0 D 0 

aamaHanuna oqud 

_ 0 h a q 0 
0u3Q0a 00000000 
u □ a oi 

□BO0QOQ0 OQODQ 

a □ h □ 

□□aa naaBBoonoD 

Q Q □ D fc] [J D 

tanQiaaGig aunanDC 
Q B 0 0 0 0 

1 manara bqdoso 


.S. ' 


A 

•■•'I Ai,— j! 






He 


* • ■ mm mmi" 


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pUMANGIAXi TIMES THURSDAY DECEMBER IS 1994 




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LONDON 



41 


lUBKETHgQHT 

Footsie poised to attack 3,000 after bid move 


'■^ik 


■> 4s 


By SteveThompsoo 

^0 DK market shrugged aside a 
series of disappointing economic 
numbers from both sides of the 
Atlantic, preferring to latrfi cm to 
news of a probable bid for Northern 
■jQectrfdty from Trafalgar House. 

'A hid frmn Trafe for Northern 
seems certain to trigger a series of 
bids and ccrarter-bids in the sector, 
and will drive the vrarfcwt sharply 
higher by the end of the year,” said 
the head of trading at nnt* of the 
City's biggest securities houses. 

' Speculation of stakeb adding and' 
poseable bids baa been rife in the 
dectricity sector for a rmrnhAr gf 
weeks. Northern Electricity shares 
began to outpace the rest of the 
sector as long as a month ago as tiie 
stories began to take hold. And 
Northern Issued a statement to the 


^ Bid hint 


market around midday - two boors 
before the Trafalgar news broke - 
saying it knew of no substance to 
the bid speculation of recent days. 

At the close the FT-SE 100 
was 34.2 higher at 2,880.6 and 
looking set fair to attack the 3,000 
level, dealers said. The hid news in 
the recs Ignited the Test of the mar- 
ket, where the second liners jumped 
for joy. The FT-SE Mid 250 Index 
climbed 32.4 to 3,405.7. 

The equity market was up and 
running long before the Northern/ 
Trafalgar news was released, with 
rumours of bids in the utilities, 
merchant banks and other sectors 
being talked around the trading 
desks. Wall Street's steady showing 
overnight gave added impetus to 
European markets. 

The FT-SE 100 opened firmer at 
2J95QJ2 and made rapid progress 


throughout the day, pansing only to 
ponder what were seen as margin- 
ally disappointing inflation num- 
bers and average Baming s- 

A hearilinB inflation figure Show- 
ing a rise of US per cent on an 
an n ualised basis compared with 
estimates of around 2 £ per cent, 
while average earnings were in line 
with forecasts. The market was 
encouraged by the L7 per cent fall 
in unit wage costs in the latest 
three months 

With Wall Street opening hi good 
shape and up more thaw 12 points 
within minutes in the face of con* 
sumer price index numbers and 
capacity utilisation figures broadly 
in line with expectations, London 
gathered itself for another sharp 
advance. 

The Northern Electricity news, 
plus a good opening by Wall Street, 


which jumped 13 points on the Dow 
Industrial Average in spite of 
slightly disappointing inflation 
news, injected a massive dose of 
enthusiasm into London, which 
raced ahead daring the afternoon. 

One dealer said that although the 
market had bear full of bid specula- 
tion, the actual timing of the North- 
ern news caught marfcetroahera on 
the wrong toot. “The market was 
generally short and got caught," he 
said, adding that the feeling was 
now that the bid fever would proba- 
bly feed into other sectors. He also 
pointed out that the expiry cm Fri- 
day of a whole series of de riva ti v es 
instruments, in the UK as well as 
Germany and the US, would trigger 
all sorts of exaggerated market 
swings: "We are going to see some 
fun and games and possibly some 
jiggery-pokery in the market on Fri- 


day," he added. 

Another senior .dealer said be 
envisaged “open season in the recs 
and the merchant banks which will 
drive the market higher the only 
worry for London cranes from Wall 
Street winch many see as heading 
for a fair. 

There were plenty of other stories 
circulating in the market Dealers 
said (hev expected details on 
the S.G. Warburg/Morgan Stanley 
merger discussions to emerge on 
Monday, with Warburg shares rac- 
ing up again. BP shares performed 
exceptionally well after a well 
received presentation to analysts. 

- Standard Chartered was one of 
the Footsie's most disappointing 
performers, the shares being upset 
by yet more hints that Lloyds 
Bank's 4.7 per cent stake may soon 
be on the move. 



■ Key Indicators 


2960.6 
34QL6 

1494.7 
1481.19 

FT-SE-A Aft-Share yWd 4.13 


100 

MdZSO 
FT-SE-A 350 


+342 

+32.4 

+16.4 

+15JB 

{LIB) 



.. + 1.6 


index 2292.60 
FT-SE-A Non Flro pfe 17.76 
FT-SE lOOFut Dec 2973.0 
10 yr GA yield 3.62 

L009 gtt/equity ytd ratio: 2.10 

Wont pet forming wc t ori 

1 Textfles & Apoarei 

2 BuMng & Const 

3 Qttwr Rnanaal 

4 Rrtntna Paper 

5 FT-SE SmaNCop ex IT — 


*25.6 
lir.sn 
*38.0 
F3«l 
(2 06) 


-0.4 

-0.4 

*02 

-02 

-C.1 


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BM fever gripped the 
electricity companies (recs) 
sector after international con- 
glomerate Trafalgar House 
confirmed recent speculation 
that it is considering making a 
takeover bM for Northern Elec- 
tricity. 

The stock moved sharply 
ahead at the outset foiled by 
continued bid talk. Mh n n w i tum 
was lost briefly around midday 


when Northern said it knew of 
no substance fbr the rumours. 
Two hours later Trafalgar con- 
firmed that it was considering 
a bid and Northern showed a 
122p gain before coming off the 
top to dose a net 100 ahead at 
1010p on volume of 4-fl m- 

Mhch of the activity was said 
to have been executed by Swiss 
Bank Carp, Trafalgar's advis- 
ers, who were thwng ht by rival 
dealers to have built up a near 
3 per cent stoke in Northern 
over the past few weeks. 

Analysts said Trafalgar may 
have to launch a rights issue to 
fund the acquisition. Commen- 
tators pointed to 25 pa* cent 
stakeholder Hang Kong i^*nd 
and its parent Jardine Mathe- 


EQUITY FUTURES AND OPTIONS TRADING 


Stock index futures moved 
ahead strongly in improved 
turnover, with the session 
marked by the almost 
complete absence of seiQng 


pressure, writes Jeffrey Brown. 

The FT-SE 100 December 
contract had reached 2,978 at 
the dose of pit traefing, while 
the March contract was at 


■ FT-SE too BDEX FUTURES ftJFFQ £25 par fcj kxtax port 


fflPt) 


Jua 


Open Srttpfe* Omtge High 
2943.0 2B78JQ -MO 2985J) 

29S9JI 2996lQ +39JS 3003J) 

29 97 JO 30Q5L0 MD 2B0TJQ 

£10 


Low 


&L YOi 

19790 

1105B 




Open fat 

SOSO 

3B037 

2242 


Dec 

Mar 


3405-0 

343&0 


+35JD 

•+34J0 

(OkAX)£10 


0 

0 


1774 


i » i 




Doc 

AI QpWI 


34000 
lor 


287 


d^.T 


■% 


man p+d 


■ rr-SE MO INDEX OPTION (UH^fZVeO) £10 pvUMn point 


Dec 


i a at 

Feb 


3100 3190 

CPCPCPCPCPCPCPCP 
110 1 13B 1 81^2 21j 37*j 7^ 9*2 31 tlz 75 1 125 1 175 

19 167>2 29 tSSk 43 lOO^ K% 72 85 SB 115 148 I»f2 1®fe 

227^ 30 m X^ISX^ra*. 125 79*2 ■ 102 T2)z 129 51 1581z3Efe IS 

239 45 2M 59 ll ^ 7<Ij 14Qlj 85^ 111117^ 89 148 SB T75>2 S2>2 210*2 

Jknt 271*2 73 207% 107 1» 2 149 IK 205 

Ctfs 13JZ15 Mb 123ZB 

■ BURO STYLE FT-SE 100 INDEX OPTION (LFFE> £10 par Ml Index paint 


3(775 3128 3175 

1534 1 WOz 2 5 B >2 5>z 2 l>z 18>3 Z >2 50 1 97 1 147 1 197 

JBI 182*2 21^ 144 33 11p2 48k « 5 ?i 2 95 W »2 126 Ifamh Vi 2Q\h 

Feb 205 35 IN 49»2 13512 64*2 IK 86 W 9 109 139 44 I V^ 31^2 207^2 

Her 216^48^18212 53*2 151 81 123 102 K 12 B^ 7 K >2 154 58 185 431221912 

Jtof 256>2 82 19S% 118 143 162 IK 216 

&■ 2JSI nw 2JB87 * IMMN <** IWw 4 mm » tawd * —MW pfta. 
t long dated apky monUx. 

■ EURO STYLE FT-SE MB 280 HDBt OPTION (OPffljq CIO par ft< Index pofcw 

■ 

3700 


59^ 2^* 21% 14% 4^ 47% 

0 Ptt* fl SfidfaMseoi prion nf ncfemt an MnatCSQptt. 


FT - S.E Actuaries Share Indices 


son as possible underwriters. 

But one specialist warned 
that Trafalgar's move was an 
attempt to take advantage of 
Northern’s cash position. "It 
may find that the regulator 
might put a ring fence around 
the company to prevent it from 
getting at the cash." Another 
viewed it simply as a way for 
Hong Kong Land to move 
funds into the UK before 1997. 

The general view remained 
that Trafalgar’s move is the 
opening shot In what fa likely 
to be a tong and drawn out 
battle. Yorkshire, 26 up at 
74lp, and Scottish Power, 11% 
a held at 34$p, were mentioned 
as the most likely white 
knights. Southern, 30 higher at 


2,997. The gains were 39 and 
42 points respectively. 

December’s discount to the 
cash market was two points, 
or four points under fair value, 
white March dosed at a 
17-point premium, or five 
points short of fair value. 

Dealers said there was good 
steady business throughout 
the session, with active 
participation by a number of 
the bigger houses, notably 
NatWest Securities and GNI. 

Trading volume rose to 
17,425 lots for the December 
contract end 10,706 fbr March, 
of which more than 8,000 were 
thought to be the result of 
spread trading. 

There were few attempts to 
apply direction to the cash 
market, but dealers said 
sentiment showed a dear 
Improvement At one stage the 
Mach contract traded above 
3,000. 

Traded option turnover 
improved to 43,329 tots, from 
39,329 on Tuesday. FT-SE and 
Elec FT-SE business 
accounted for more than 
29j000 contracts. 

The most active individual 
option was Tesco, followed by 
British Gas and BT. Tesco saw 
1,930 lots dealt. 


786p. was also seen as a possi- 
ble contender, as was Hanson, 
which gained a penny at 228p. 
A two-way pull in Trafalgar 
brought volume of 19m as the 
shares put on a penny at 72p. 

The excitement brought 
about by the move on North- 
ern Electricity ignited takeover 
speculation in the rest of the 
sector. South West jumped 55 
to 843p and South Wales raced 
ahead 41 to' 827p. Manweb, 
which reported a 40 per cent 
dividend increase, strength- 
ened 51 to 83lp on the bid talk. 

Composite insurers received 
a boost tram a UBS valuation 
which landed on clients’ desks 
yesterday morning and argued 
that the sector as a whole was 


TRADING VOLUME 


lfcL Goring Day* 


0|M 


270 


>*Wkwf 


ACctLT. 



BIB 

395 

632*2 


Dtf* Y< 

Dbg 14 chge% Dec 13 Dec 12 Dec 9 ego 


DIv. 

yfeUH 


ytoUK 


RE 

moo 


Xdad|. 

ytd 


Total 

Return 




CROSSWORD 



\Vt 


FT-SE SnnBCep ■* taw Tfctnti 


34Q516 

34Q5LO 

1494w7 

1727J68 

1807.06 

1481.19 


♦12 2B4&4 294X4 2977.3 32T&8 4J32 

+1JJ 33702 3372.4 339SLB 3831.6 373 

+1 JO 3370.7 3370L7 33062 96366 330 

♦1.1 14733 14776 148Z6 163X0 4.19 

-31172661 1732.76 173333 17B2J04 345 

-0.1 169694 170X39 171057 174050 3.67 

+16146610 140619 147928 161243 613 


7.47 1682 

609 1677 

699 1638 

7.15 1657 

613 
672 
7 M 1697 


12428 

130.11 

13692 

01.16 

55.07 

5724 



DqTs 

Dec 14 ohge% Dec 13 Dac 12 


Dec 9 ego 


Ov. Earn P/E XU ad 
yMdtt yfakftt ratio ytd 


113696 

127SLS 

1277.04 

116644 

134674 

132927 

117453 

Total 

Aahcn 


10 IflNBML EXTRACnON(f0y 261621 

12 Extractive Indus 9ta(4 370064 

16 06 bntcoratadCS ■ 2S9359 

16 Oj Exdcraficn 6 ffrodni) 100242 


+15 258221 250245 2S9456 241428 353 

+15 36475T 365695 370034 344621 347 

+09256675 2562.71 255957 236915 675 

+06 179226 180613 1831.13 171754 2.72 


622 2421 

554 2230 
679 2150 

_* t 


9682 

9644 


105752 

1021.16 

107054 

104255 


20 084 MANUFACTURERS^®?) 178621 

21 BuBdfcig & Conoliucriofi|33) 94154 

22 Btridng Matts & Mercfe(32l 170253 

23 Cheminb(Z3 221614 

24 Dhmifled taGjsOtabCtG) 168620 

25 Bectrortc & Bed Equ4p{34) 178858 

26 Bigtaieariao(7l) 177158 

27 Engfmmk^ Vfihictas(12) 217612 

28 PtMlng, Paper & Pcfcg(2Q 2 8 8052 

29 Taxtttes 6 ADDWaeZOt 149155 


+05 177X48 178354 180450 194X30 
-0l4 94623 95452 96632121616 
+04 169684 171657 174050 208025 
+05 219618220759 222251 221615 
+63 169050 169651 172051 194612 
♦15 178656178674 180233 188457 
+-L1 176254 176619 177555 174758 
+0l7215450 218X33 217451 206X06 
-62 268611 2701.19 274350 255652 
-64 1497.78148645 150853 182250 


456 

4.15 

459 

458 

557 

427 

X41 

402 

327 


554 2152 7551 
619 2154 37.70 
604 1955 7423 

483 2666 9457 
5.76 2671 9X65 

758 1637 0254 

656 21.17 0610 

159 aooof 9353 
652 1958 8450 

054 1953 0551 


91654 

74359 

00602 


Loraho 


87750 

077.14 

102601 

106158 

106022 


Attej 


Nut 


30 CONSUME OOODSpTy 

31 D rwwta f l7) 

32 SpWx wines & CWeaCWJ 

33 Food MnAdmCO) 

34 Hotaehold Qood^lS) 

38 Hetath C&reC2f ) 

37 Phanac sdteta tlg 

38 Triacoofll 


271619 

Z16059 


153550 

318158 

301750 


+15 213422 213610 215626230352 
+15 260057 200X78 264443 295555 
+08 221553 230459 221856 237X96 
♦15 2282.16 227357 220154 264628 

153557 153642 154X18 170645 

+15 310354 307684 310454 310152 
+1.2 3SB9L56 350697 361 1-50 442755 


447 

7-44 

1X60 117.59 

94QJB 

4w45 

X34 

1447 6928 

97153 

4*33 

7J21 

1X02 11X28 

091-92 

441 

7^1 

1450 100-85 

04X61 

3j96 

727 

1X32 9045 

aaxoB 

3-29 

X50 

40 46 BXS32 

09X98 

428 

X83 

1X03 133.07 101080 

X01 

BUR 

11.20 21747 

02X61 


1010 


tio 

*100 

+4 

435 


40 SBMCESpUl 183273 

41 Dtatributoram 248614 

42 Leieura & Hctataf&S 206676 

43 Medsm 275X58 

44 Batatas. Food(iq 167191 

45 Retritas, Genenri(4S) 150952 

48 Support Senriceafll) 144X44 

49 TtanepoflftO} 216857 

SI Other Sendees 6 BurinetaB ' 7217/48 


+06 182156 182159 1834.11 1998L82 
+61 248687 250X43 201649 288X48 
+15204608206X89206641 201751 
+61 2751^46 275198278674 281153 
+64 168654 109641 167270 168649 
+07 149942 148550 148653 181X06 
+62 144X14 145451 145754 160290 
+15 213357 213855 215659 349750 
+61 121847 122344 123X76 113X56 


X43 

096 

1727 04J38 

90751 

358 

7.43 

1X83 92-80 

88853 

X45 

£39 

21.71 5X11 

101X57 

2_56 

£58 

2122 71-49 

95X70 

X92 

953 

12-37 6X24 

100X96 

350 

7.63 

1X24 0X06 

821.13 

2-97 

X0O 

17-33 41.60 

88X28 

323 

£42 

1X32 7224 

0BO69 

356 

£97 

35L07 3X11 

105X38 


go ummespB 

62 O e c tt cl tati7) 

64 Gas DMxtap} 
66 

as wetatia 



3JDD0 

4900 

1J00 

2JQ00 

xioo 


248X42 

1999.12 

101X32 

173X30 


+66 2400128 236758 240645 239X92 
♦1.1 1977.11 1890552009562347.18 
♦1.1 180155138614 192142233X25 
+X4 167653 164457 168452206752 


454 

ai3 

1X96 0050 

90X10 

356 

1052 

1154 11237 104458 

£90 

t 

t 11952 

08857 

445 

&21 

1452 5759 

81X49 

£78 

14.10 

757 9006 

88151 


169X99 +15 158240 1581.70 159674 1715L21 4.13 &78 1 7J6 WT1 113946 


974 935 


v- T 


70 FMANGSALStlO^ 

71 BentaOQ 

73 haMance(17) 

74 life Aeauanoem 

75 Mer ch ant BetaR 
77 Other RnancMCZd} 
79 Property^ 


210677 +1.1206X21 206040210953247X85 458 948 

278659 +15276X22274625270154319X09 456 1050 

117153 +25113X78 113X79 110057 147356 346 1042 

230747 +1.1 228X15 227850 236745 271757 554 X06 

306057 ♦0.7306X19 308052 305X75 320255 357 954 

181351 -05 161757 182358 182755 1627J30 450 X56 

132X74 +05131X79132X05189X79178654 456 554 


1X26 8X79 84049 
1051 12050 83X72 
1054 0X13 30X86 
1X1012752 80352 
1257 10X78 93X75 
1454 7054 97X31 
24.70 5X67 70666 


a art 

MQ artawn Utaf 


i. 


BO fWESUWBiT THUSTSfiaO MBtf +<U gfl4flJT 2643.40 gSS3J7 2849,78 2AO &flt gffl_£LH 881112 

1*81.19- +lil 1*68.10 1465.19 147&86 1611*3 *.13 7 M 1897 3EL68 117493 


ChvtaLt 


■ Hourly u iow m cntft 


TEN 
T1 Cfaoupt 


950 


1600 1150 


1250 - - 1350 1450 1600 1610 H^M h y Loa/dv 


FT-SE 100 
FT-SE Mid 250 
FT-SE-A 350 


29600 29585 2984,0 20705 296X1 

33747 33767 338X3 33074 38367 

14795 14835 14360 148X0 14875 


14875 148X1 


29744 29795 29625 29495 

34045 940X3 340X7 33735 

14925 14944 1485.7 14795 


Taylor 


inAJWw 


Thom Bit 
TpaUntf) 1 






■■ ■■ /■>» 
<- ■ ■*- • 


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4. 


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Urn. of FT-SE 10D high; SfiBpw Deft tom BMmn. FT-SE. WO 1B9* H^e 3S303( ttt ) Lott ZB7S8 

■ FT-SE Actuaries 380 Industry baskets 

1090 114)0 DLOO 1300 144)0 15.00 18.10 flow IV wla u w 


8k)g a Cramn 
PtWR 
Water 


880l1 8804 881J 681.6 681.6 881.8 8814 8814 884.7 

aoau. .3090.1 811&* JBSVU S11&7 ai18a 3117 j 8 31ia* 3125.4 312&2 3077 J 
1874J6 16744 10854) 1B87J0 1B8BL9 16904 18948 1744J 17342 172a* 1671* 

MQ P.,3 2808L3 2B1241 28146 28122 28107 28003 28142 28214) 28206 2793a 


-03 

+48.7 

+504 

+27JS 


1300 


ftam RneM 71 dm 


Cpi^bwnm!' FT 


IM 


snnpkdiy Tht RMKkntm* 


m - ----- 

"WWws vnapr 

WTuDoraouT 

WhCoinon 

Wkipey 

Wtakatarf 
tat 

Jr 1 

on tattog 


, hi FT-SE 100 
an traded. 


i «• aiAed by The WM Ombmv. t 


Mi 


tan 80 as not rinwn. t Vriun « m0s*aJ«Md£ CHANOfi T^ooh la now Conbri 


\ 


undervalued by 16 per cent 

The research, part of an 
ongoing model that has been 
“back tested” against perfor- 
mances since 1961, highlighted 
General Accident. Analyst Mr 
Christopher Hitchings com- 
mented: "When we launched 
the model in the summer, GA 
was not good value, hot since 
then it has underperformed 
massively." Mr Hitchings 
turned buyer at the stock and 
the shares bounced 22 to 516p. 

■ Elsehwere, Commercial 
Union gained 18 at 5l3p, Sun 
Alliance 10 at 302p and Guard- 
ian Royal Exchange 5 at 176p. 
Dealers said SGST was also 
recommending the sector. 

Oil major British Petroleum 
advanced 9 to 412Kp as inves- 
tors took heart from a key 
presentation to analysts. The 
profits forecasts matched those 
already in place but the mar- 
ket liked the eam mit meut to 
reduce debts. 

Smith New Court was recom- 
mending the stock, arguing 
that tiie company’s estimates 
implied gearing of only 37 per 
cent by 1996, down from 59 per 
cent in the third quarter. SGST 
also came away talking of “an 
impressive performance reveal- 
ing steady progress”. 

Elsewhere in the utilities, 
shares in Southern Water 
moved ahead 31 to 570p after 
the group reported favourable 
figures. 

Merchant bank S.G. War- 
burg improved 14 to 798p, with 
same dealers suggesting that 
an announcement over the 
possibility of a link with Mor- 
gan Stanley, of the US, would 
come on Monday. 


NEW HIGHS AND 
LOWS FOR 1994 



* CUSTOM 


0*4 
INKS | 

fill MCC. 0O6HP Cur. Pf, 
lM fafa 

(Q, SUM HAILS 4 



wi, numucfuncMS 



ItXIBJS 4 APT ARBL R TRANSPORT (f] 

ncwwMna 


Until an announcement is 
made the shares will reflect 
the various views in the mar- 
ket over Warburg's potential 
valuation. Some analysts argue 
that at current levels the 
shares are already at a pre- 
mium to the fundamental valu- 
ation. Others believe the lower 
rating of Morgan Stanley will 


be countered by Warburg's 
enhanced earnings and net 

assets. 

Cazenove has apparently 
been putting the case for War- 
burg shares to trade around 
TQOp. However, Credit Lyon- 
nais Laing cites the takeover of 
Morgan Grenfell by Deutsche 
Bank which, at 2.4 times book 
value, would suggest a take- 
out price around £11. War- 
burg's ftmd management arm 
Mercury Asset Management 
rose a further 27 to 745p. 

Some concern over Royal 
Bank of Scotland’s insurance 
arm saw the Scottish cleaner’s 
shares slip 4’i to 399Vip. 

Transport group NFC 
climbed strongly for the second 
day running, adding 7 at 160p 
following the purchase of a 
large line of shares fay a board 
member. Turnover was 4.1m 
shares, and the stock has now 
risen almost 9 per cent in two 
sessions. 

Newly floated TeleWest 
Communications hardened to 
ITEKtp in 2.1m turnover to mod- 
estly reverse the recent run of 
weakness, which at one stage 
yesterday left the shares 4 
short oT their I82p issue price. 

Traders suggested that 
TeleWest had been supported 
by Kleinwort Benson, Joint 
issue broker, which has until 
December 30 to smooth the 
market in the shares. 

The stock market’s feeling 
was that TeleWest had suffered 
from a flow-back from the US 
tranche of the issue in the 
wake of the continued weak- 
ness of telecom stocks on Wall 
Street 

Vodafone added 2Vi at 197p 


in 9m turnover, while BT 

rounded off an active day for 

the sector, rising 4 to 3i&\ ip in 
7.3m shares traded. 

Building materials leader 
Caradon recovered following a 
buy recommendation from 
UBS which said the recent der- 
ating has left the shares cheap 
on both yield and balance 
sheet criteria. They ended 6 
higher at 234p in 2Sm turn 
over. 

British Steel was the most 
actively traded Footsie sU<k. 
ending 3ft ahead at 15ti’<p in 
turnover of 14m. Similarly. 
British Aerospace regained aii 
and more of Tuesday's soli off, 
rising 7* i to 427* ip, with Klein- 
wort Bvnsuti placing the 3ra 
5b; ires not lukeu up wittun the 
recent rights issue. 

Among smaller engineering 
stocks, Whcssoc forged ahead 
15 to 121p for a two-d.iv 
ad vance of 22p. 

Food manufacturer Cadbury - 
Schweppes fell 5 to 409p in 
heavy trading of 7.7m shares, 
with Hoare Guvctt, the group's 
broker, cutting current year 
profits expectations. BZW also 
reduced expectations but 
remains a buyer. 

Shares in train set manufac- 
turer Hornby hit the buffer; 
after the US M- quoted company 
Issued a profits warning. The 
stock fell 50 to f27p. 

Brokers' downgradings left 
furniture group MFI trailing 
2ft at 122p. 


Peter John, Joel KBmzo, 
Jeffrey Brown. 

■ OUw statistics. Page 30 


LONDON EQUITIES 


| LIFFE 

EQUITY OPTIONS 





Opoon 

Jh 2? Jri jm ap? Jut Opaa 

HtlHv Mg FA Uv Mg 


flfcdtata 500 39 52ft 90 IH 7H Q 

rS33) 550 9 2» 31 21 27 34* 

I 240 12 21H23ft 4H 6 H 

ra*) 260 3* 12ft 14tt 16 1BM25K 

ASM 80 5 7 9 IK ZK 4* 

pa ] to i Tk 4u m Bh m 

ta/Unajs 330 2SK 41 47 2M 8H 14 

P&55 ) 360 10 23K 30 12H 21 27H 

MIMA 420 30 4M4M3H 13 19 
P444 ) 460 8 1M29%2fK 32 39 

Boots 480 28 3M4 fl« 6 12 20ft 

(“473 ) 500 0 IftZItt T9 34 41K 

BP 380 28*35* 43 3tt B 14* 

P4T3) 420 9* 18 2716* 22 39 

BM3M 14017*22*25* * 3 5 

H5B) 160 410* 14 7 11 13 

6w 500 21* 32 40* 11 19* 39 
rsi9) 880 2* 1218*48*51* 59 

Cta&«8l 330 32 43 40* 2* 8* K 
(*357 ) 860 12 25*32*12*21* 27 

OuttriOi 42025* 38 44 6* 15*22* 
(TO) 480 5* 18*21*28* 38 43* 
OtalWn 403 20 37 - 4* 20 - 

(*512 ) 543 514* -32*51* - 


220 14 17*20* 
240 4* 8 11 

13011*15*18* 
140 618*13* 

180 21 25*29* 
8*14*18* 


P5B> 


600 27* 30* * 
660 8 18 26 
140 21* 25 27* 
100 7*12*15* 
1928* 26 


4 8 11 

14 18*2TM 

4 B» 7 
8 11 11 * 

2* B» 9 
10 15 17* 

18 35* 43 
50 68 74 
- 2 4 

5 8* 12 
7 18 18* 


MErii Finds 


57 

3 

VO 

Other Fbtad Irtavst 


S 

6 

3 



54 

41 

101 

Runaml Sfcurwifai^hJi+irt . ... 


128 

127 

373 

Consumer fioortn - 


49 

41 

96 



84 

90 

317 

1 HMm 


37 

1 

6 



62 

59 

224 



95 

28 

342 

Others 


40 

29 

47 

Totals 


631 

425 

1516 


on 


on ta London 


390 5* 18* 1623* 34 38 TRADflKHiAL OPTIONS 

800 42* 54* ID 14 31*38* 

05017*30* 4840*59*69* 

420 30 3742* B* 23 28 
48010*18*23*30*47* 52 
28017*61* 28 10 18 20 
300 8 15 21 21 29*31* 


0ric*ntar5 Expiry 
16 


Mrcft 9 
March 23 


DMrion Qrp, Hrth (QMK 


220 21* 28 28* 
240 7* 18 17 
18318* - - 

200 614* 18 

300 23 30* 33* 
330 7 14 18 


1* 7* 10 
9* 16* 18 
3 « - 

8* 14 18* 
3* 11 13 
17 28* 28* 

Jm Apr Jri 


LONDON RECENT ISSUES: EQUITIES 

Ism Amt MkL 
prica ptatf a* 1984 
p ip (&vv) High Low Stack 


prica 

P 


+/- 


Net 

dtv. 


On. Gra 


P.^ 

not 


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1736) 


("422 ) 

lari Secar 
rS58) 
Maries &S 
P378) 


TSOI) 


700 41* 59 89 5*23* 29 
750 15 31 4525*48*54* 
420 17 31 95 10*20* £8 
460 1 14 1838* 4453* 

18 33*30* 5*13*23* 
312*16*41* 44 54 
2*33* SB 3 7 12 

818*22* 16 20* 26 
1738*40*13* 32 37 
550 2* 12 21* SO 86* 69* 


BM 

r46?1 


T4W) 


450 29 38 - 

475 8 21 - 

48019* 35 43 
500 5 17 24 


3* 9 - 

14 19* - 

8 18 26* 
33 38* 50 


600 


300 

500 


CM) 

talta 
C686 ) 


13 28*. 
3 12 * 


TOO ) 


700 10*22* 
200 18* 22 
410* 


10 18 28* 
31 38* 44 
ZM 12*14* 
31 2D* 38 38 
26 2 5* 8 

18 10* 14* 17* 


P72) 

nnm 

Zmcs 

ran 


70 5* 611* SI 5 6* 

80 1* 5* 7 9 11 11* 

110031* 80 88*14*38* 40 
USD 19* 31 « 45 66 77* 

850 Bfi* 88 18 38* 48 

800 8*22* 91 52 72 78* 

tav tog Fsb Mif Abq 


OariMri 

360 

33 

40* 

48* 

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11 

16* 

(■388 ) 

390 

13* 

24 

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20 24* 

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140 

15* 

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160 

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19 

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300 

24 

28* 

34 

3* 

13 

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ra»j 

330 

8 

14 

19* 

18 29*! 

32* 

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Dm 

Itar 

Jm 

Ok 

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Jus 

fans 

110 

4* 

13 

18 

2 

7 

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n») 

120 

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6* 

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8 

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M 

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Wbtfi 

r430) 

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448 IS* 
420 25* 
480 8 


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34 3710* 23 30 
1639*33*47* 54 


13 


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r«3i 


280 23 28*31* 3* ID* 

280 fl* IS* 21* 11* 21 23 
300 17 27 34* 10 12*18* 
390 5 IS* 2927*28* 38 

390 25 30 38* 5* 18 18* 
*1 15 22*20* 33 38 


MtbKjf Nflfl 

390 17* 

30 

35 

1* 14*28* 

(-405) 

420 

1* 

14 20* 

15 31 

37 

Hntam 

125 

7* 

13 

17 

1 5 

8 

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150 

- 

3* 

7 

18 20* 22* 


558 

42 57* 

86 

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19 

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800 

4* 

28 XT* 12* 34* 

42 

Btas OrcfaB 

280 

T3 24*28* 

1* 8 15* 

rzn ) 

280 

213* 18* 

10 17* 

28 

BM Gas 

300 

4*18*22* 

3* 11 

19 

ran ) 

330 

- 

5 

to 28H 30* 38H 

pfegHlft 

160 

19 22* 

28 

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6ft 

fin) 

180 

810* 

16 

4ft IT* 

15 

rannm 

169 f4* 

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22 

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m 

nm 

180 

1 

7* 

11 

6* 10 

17 

loan* 

140 Tlttlfi* 

28 

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180 

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5* 10* 

10 15* 

18 

Mfl POMT 

460 

8ft 

28 

40 

4 17 

70 

r*s3 ) 

500 

- 

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22 36*40*48* 

Sc* PM 

330 14*25*38* 

1 14* 

70 

(■343 ) 

380 

1 

12 

23 17* X 

X 

Sens 

100 

5ft 

10 

12 

H 3 

5ft 

nos> 

110 

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5ft 

7 5* 8* 

11 

Fata 

220 12* 

21 

24 

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r«a» 

240 

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9* 13* 

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21 

Irisra 

110 

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13 IS* 

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120 

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11 

5* 10* 

14 

tarn BM 

1D0D 

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41 

85 13* 32* 37* 

nm 

1050 

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42 57* 84 68* 

158 

220 

13 10*23* 

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240 

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9 19 

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200 11*17*24* 

1 6 

9 

ffll j__ 

220 

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8 14* 10* 16* 19* 

65D2B*5ZK6nt 

3* 26* 38* 

rwi j 

700 

3 

27 

45 30*53* 

65 

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Jm Jpr 

Jar 

JM Apr 

Jri 


IX 

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81 .0 

161 

145 Ashbourne 

151 


WN3.0 

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25 

1X9 

100 

FJ>. 

4J9 

95 

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05 


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re 

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FJ>. 

£75 

108 

105 Boacombe tap 

105 


- 

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FJ>. 

8X1 

173 

133 Qydaporl 

165 


RKL51 

re 

2.7 

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2.77 

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- 

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100 

F-P- 

204 

130 

101 Eudkfan 

102 


- 

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141 

FP. 

2X0 

143 

140 Eurawrin 

140 


VUNX2 

10 

55 

112 

- 

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468j0 

495 

468 Friday Spec Unts 

468 


- 

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re 

im 

FP. 

10-8 

191 

90 FMxjy Sn* C 

66 


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$10 

FP. 

372 

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015 FM fasten Fr 

620 


- 

- 

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- 

100 

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4X0 

94 

91 riateg Nat Rea 

92 


- 

— 

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- 

im 

FP. 

2X5 

106 

98*2 For ft CPI Emrg C 

102* 


- 

- 

- 

- 

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FP- 

3X3 

102 

98 HoaraGovatt 10m 

101 


- 

- 

- 

- 

80 

FP. 

1X9 

83 

83 HpSo ML 

83 


RN- 

re 

- 

336 

— 

FP. 

2X8 

im 

90 NV6SCO Korea C 

96 


- 

- 

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re 

215 

FP. 

9 M 

292 

228 JJB Sports 

228 

-2 

RN6.0 

2-4 

£3 

123 

im 

FP. 

27.0 

109 

im KlnCtapU 

100 


F40 

- 

SO 

- 

im 

FP. 

4X5 

94 

02 fahsson Uoyt* 

B7 

+1 

re 

re 

re 

- 

100 

FP. 

5X1 

92 

88 Munv Eng Econ 

91 

*1 

- 

- 

- 

- 

- 

FP. 

5J>7 

40 

37 Do WttiMd 

39 


re 

re 

- 

- 

- 

FP- 

152 

T45 

143 RAP GfOUp 

143 

-I 

RN4.6S 

XI 

XI 

11 2 

175 

FP. 

3X2 

210 

203 m 

209 


mo 

XI 

2.9 

1X5 

720 

FP. 

015 

144 

720 SaoPariact 

129 


- 

re 

- 

- 

115 

FP. 

235JD 

135 

117 Tlfi 

132 


mas 

2-0 

33 

19.0 

170 

FP. 

\B2 

173 

163 Trie-Cane Cefl 

163 


RN544 

12 

42 

11.3 

182 

FP. 1>I80.0 

188 

177 Tstonmt 

i7Wa 

1*2 

- 

- 

- 

- 

im 

FP. 

17j6 

102 

102 WriOngten UX 

102 


- 

— 

— 

- 

RIGHTS 

OFFERS 








tamo 

Amount Latest 





Closing 

♦or- 

prim 

pak 

Renin. 

1994 




Prica 


P 

UP 

date 

Mgh Low Stack 




P 




180 

Ni 

2Sfl 

30pm 

10pm 

Cow* 

18pm 

100 

ra 

25/1 

23pm 

18pm 

DMrion Qrp 

23pm 

37 

Ni 

371 

6pm 

2pm 

oia 

2pm 

12 

NH 

3/1 

Ifcpm 

Mpm 

Sritim 

Vpm 

25 

NI 

16/1 

4pm 

*»pm 

Uaboma 

\pm 


+2 


FINANCIAL TIMES EQUITY INDICES 

Dac 14 Doc 13 Dac 12 Dac 9 Dac fl Yr pgo "High "Low 


) 

lOCTSpAi 
) 


n tgj 

r«o) 

SBC 

rw» 


750 38* 68* 71 26 40* 53 
80017*38*48* 5087*81* 
428 22*31*88* 7* 16 21* 
480 8*12*19*31*39*44* 
260 11 18* 22 7 10 15 

280 3* I* 1320* 22 27 


P459> 

Option 


600 42* 56* 72* 
65015*30* 47 
BSD 53 70* 81 
7D0Z1K4Z* 54 
420 42*51*59* 
48014*27* 37 
ta May ft* 


7 23* 30* 
29 48*55* 
7* 25 33 
25 49*57* 
3 9* 14* 
14 25 31 
ta itar Am 


229X6 2207.0 22BX7 229X3 232X2 246X8 271X6 2240.B 

Old <ftv. yfaftd 
tan. ykLfthi 
R/E ratio net 
frE ratio nft 

Tor 1994. Otay 

FT Onflnary Sfam hd w bm ds> 1/7J3X 


456 

4.60 

4M 

4j55 

4.50 

X7B 

4jS1 

X43 

£07 

£75 

X75 

£67 

£58 

4.31 

£75 

XB2 

17-31 

17.11 

17.09 

1730 

17^0 


■mjb 

1X94 

1X09 

1X69 

1X67 

1X87 

17JQ7 

27.16 

aojBo 

1X07 


Ita 271X6 2ACA4; low 404 28AM I 


160 1510* 22 3 7 9 

180 4* 012*12*17*19* 


Ohm hourfr (tangos 
9UOO 1OJ0O 11JDO 


1X00 ISjOO 14J0Q 1X00 1X00 Mgh Low 


pITO) 


14 a Tfltri 
21JB2 Put* 21^75 


co n tr it ai! 43.757 Case 


FT GOLD MINES INDEX 


% Cfef 


13 


12 


Mr 


52 


226X1 2274-fl 2277-5 228£6 220X6 228X7 22025 228X0 2291^ 2292.6 2267.4 

Dec 14 Dec 13 Doc 12 Dac 0 Dac 0 Yr ago 

SEAQ baigriro 

19.830 

1X267 

19,913 

20,147 

1X710 

28,006 

Equfty tumow (pm) t 

• 

159X3 

139X4 

11300 

13409 

182X5 

Eoufiy baigaiwt 

- 

2X608 

27506 


24,709 

33^18 

Shares traded |mOt 
tEtafeadog InaxntaM bw 

re 

taw *ri m 

882.1 

farvaaa tuno 

577.7 

WE* 

487.8 

547.0 

6743 


Um 


pq 1S67J1 ♦!! 184L45 184438 219L90 236 238740178X02 


AMca (IQ 

tamuip) 

NMJtarittPD 

Ooptaht ms 
In 


371137 2304*45 
301X89 2171 JO 
203X65 1417JJ0 


294134 +U 2907X0 299X30 3104X5 4.77 

221X33 +10 218BL38 2231j41 219X21 235 

148X92 +11 148X77 146132 1B87J0 089 

Umltatad 1994. 

Mi US Mn Bm Wtas 100X00 3vtMX 
; tav^sdiarita iX3 PtaK Ytalf I9K 251^ f RiM, 
ivuiu "" 


Commercial Property Advertising 

Advertise your property to approximateiy 
1 million FT readers m 160 countries. 

For details: 

Call Emma Hullaly on +44 71 873 3574 
or Fax: +44 71 873 3098 


V 















FIN ANCIA L TIMES 


THURSDAV DECEMBER 


15 1994 


LONDON SHARE SERVICE 


: * 


. j 



rate 


as -55 bis* oatthiGB 

ESU ITT H4A U44 

Bft “QDV £235 3,121 

sd — -3ii we i5sr 

OH ^ av T724 24« 

1T7\f +* 141*2 W 1f72 

1BV +V K»V Tl]V 1210 

a? « » aa 


a W w 

MCtaOX frt PE 
8712 10 4 

In 2 j8» 13 i 
wV s*m is laS 
233 1063 11 IS 


55 "S. K: 

TO 90 «J 


i 




6170 

3235 

m 


KaiY □ me 


A 




% 


1114 

mz 


68 vr 

111 927 


Lu: 


♦a W48* 1T52V 3*912 

882 >11 tto 064 110C 

02 +8 1113 660 UK 

223 » 28 M i 

549 42 BO 519 7J28 

sa* *,a 

013 *4 +2 179 614 7Sb 

m +1 920*4 472 7,109 

EDI i7 •& Cl &5K2 

EZI*2 £33 £21 T&5 

H*2V -4** m 377*2 3200 

% 

011 >*4 825 9U 

ni5 — ms nwajM 

3075 >1 11495 ® HB40 

28 f4 291 W *661 

E7B +A O £E»1*5« 

90 +12 892 5965 *1K 

2235 >10 290 194 *004 

4935 -45 H 442 *44! 




0135 


4+J 


601 

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0*2V 


02 A 
00 • 

10 73 
18 60 
10 65 
u 114 mo 
00 - 
90 - 

15 1A2 
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110 - 
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14 A 

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04 4 

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19 4 

40 U 
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40 07 
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05 

30 09 


% .1 


PT 


Mrs a 

+2 "378 291 397-7 

* ^ ™S « 

308 219 4000 

a 19 £49 
no 193 915 
m 46 MJ 
41 17 IV 

S99 420 U33 

399 927 «9 

M <M 
% % w 

30 127 2*11 

ew as 

891 727 UD 

20 178 MU 

1915 1DB 1402 
sd 870 1004 
90 49 5 m 

40 295 117,1 


£115 

3875 




251 

17M 


140 

3413 

035 


i« ! r — 


+ 0T 1804 
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»V 15 

«4 •» 486 

299 348 

10 168 

-4 191 142 

O 495 

489 345 

+7 SO 3485 
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-10 SM 452 

lO 13 

*12 2773 3125 
>1 8245 0655 

240 105 

*1 314 258 

849 483 

T05 85 

+1 301 200 

+6 "Ml 477 

9 3 

-2 300 227 

H -09 3245 
*85 817 4M 

-2 30 40 

_ t9« 148 


1708 


41.1 
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1829 


102 

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1579 


09 - 

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4 A 11 J 

09 470 

00 570 
24 4 

10 430 


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02 129 
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18 149 

39 A 
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29 149 
29 139 

19 21.1 
11 149 
49 209 
10 180 
00 J S H 
25 140 

20 MJZ 

29 * 

14 

20 229 
45 139 

60 140 

19 230 

40 149 
14 189 

20 215 
49 117 
49 17.1 


m 100 mu 

O & 03 

490 937 007 

239 181 402 

SZ3 570 507 

MO 345 tfU 

330 250 2717 


YU 

en E¥ 
149 1 
14 11 
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34 til 
70 ■ 

44 21 
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59 30J 

72 12! 

40 2V 

6 91 
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29 169 
59 10j 
72 \U 
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27 111 
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29 313 

11 100 

30 17-3 
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a *3 

10 *w 

19 214 
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09 17.1 
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34 115 
39 160 
29 112 
39 2TJD 


^rw. 


Pita 

% 

141 M 

■a 2 


w -4 


i» m 
Ugh tar CMA 

3G»* 258 700 

tA T02 2115 

191 - ra VfJ 

ML 

IS 1*1 0BL1 

107 141 UU 

TO 324 MU 

369 730 3904 

OS 39 048 

« 48 491 




020 250 689 


4^! -55 


|l •• ■ 


n * 


W 21D 1220 
4E . 31 22J 

473 338 *421 

•Qd] C2B5119M 
Mium 

■S”S^S 

91 83 101 

■ 745 ms 

US 


so m 

30 233 


233 


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234 -1 

49 

121 -4 

1ft — 
237 >1 


• vCi ■ : < : : 1 1 1 1 1 . : 


109 211 
101 300 


44 188 

21 129 

114 707 
35 119 


«V 17 749 

489 20 189 

40 & 191 




a ift 441 

a ft 105 
71 42 119 

67 36 480 

460 245 140 

N 2ft M9 
22 115 2 M 

HO 94 129 



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5VpcOJ* 


+w 1094 Mt YU 
PrtDQ - Ugh low tap£A On RE 

34 *2 "68 31 792 - 

HO -3 205 133 904 59 95 

mif an m 0.1 u m 

8711 -1 184 08 1365 59 317 

785 139*2 75 Hft4 119 - 

Id 170 180 400 05 202 

tZ7 +2 127 47 HI - - 

406 -46 412 333 tZ>0 1 J 299 

104 131 101 462 13 122 

34 41 9 156 28 209 

8 49 23 298 14 

VOOrt 177 187 179 20 111 

41 96 1B5 798 50 49 

A 46 28 248 - 

W 232 130 2342 50 110 

127 +1 181 1225. 3807 10 109 

13QU W 179 mo 49 4 

31 9 31 149 - 270 

329 -3 *873 328 2827 25 199 

I7M £15 118 &0 11 55 

a — ok ift tu 

2» » 210 60S 35 117 

a — m 35 120 23 - 

34 a 34 776 10 - 

WOU 296 TOO 175 82 109 

HS5 >5 Wj2 IM 3205 50 130 

107 *m 107 410 13 145 

8 -5 125 5 121 - - 

» 54 31 595 - - 

40 a 44 KB 12 4T0 

215 +5 42 205 1110 - - 

100 *ta 108 320 £9 A 

78 120 74 730 27 107 

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- or fax *44 81 770 3822. Reports wM be sent 
^ the next working day. subject to avaNflbWy. 

17 £ FT Cftyftn* 

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IS Oai ffl+79 4*Ti t*44 TI *W 4078) MwnMensl) 

- for mors Mu mutton on fT ORyflns> 
















































































































































































































































































































































































































































I 







46 


FINANCIAL TIMES -mURSPAV DECEMBER IS 1994 






CURRENCIES AND MONEY 


<•' 




MATOCETS REPORT 


Interest rate optimism gives boost to US markets 


Eurodollar futures rose sharply 
yesterday as fears of a rise in 
US interest rates next week 
receded, writes Philip Gauritfi. 

This helped prices across the 
yield curve, with the March 
eurodollar contract rising to 
92.76 from 9JLS2. 

Markets had been discount- 
ing the possibility of the Fed- 
eral Reserve raising rates 
when it meets next Tuesday. 

The dollar weakened slightly 
to finish in London at 
DML5691, from DML5728, and 
at Y100.26 from 7100395. 

Elsewhere, the Australian 
dollar finished unchanged at 
77.52 US cents. Earlier it bad 
touched a three year high of 
77.8 cents, during Asian trad- 
ing, after the Reserve Bank 
raised Interest rates by 100 
basis points to 7 j 5 per cent 

Sterling lost half a pfennig 
against the stronger D-Mark, 
closing at DM2.4513 from 
DM24569. but was unchanged 
against the dollar at SL5622. 

The D-Mark maintained its 
firmer showing in Europe, but 


there was little significant 
movement in rates. The peseta 
weakened to Ftaftil3 against 
the D-Mark from Pta840. 

■ The catalyst for the perfor- 
mance of US interest rate mar- 
kets was better than expected 
consumer inflation and capac- 
ity ufcffisatim figures. 

The view that a rise in US 
interest rates might be 
deferred caused a short-cover- 
ing rally in D-Mark short 
sterling futures. The March 
sheet sterling contract rose by 
five hams points to 95L5B, while 
the B»n« D-Mark contract rose 
to 9430 from 9127. 

Mr Richard Phillips, analyst 
at brokers GNU said: “The 
Americans have given us the 
lead today and we have eagerly 
taken it” 


DkW 

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1 mtt 
3 mA 

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1.5618 

1.5807 


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Volumes were very heavy, 
with the March eurodollar con- 
tract trading over 200,000 lots. 
One trader commented on the 
buoyant state of market, not- 
ing "Every single trade I did 
today was a buy - either short 
covering, or book tidying 
ahead of Christmas." 

Mr Jonathan Griggs, eco- 
nomic adviser at Barclays in 
London said sentiment had 
also been affected by the publi- 
cation of a report in Washing- 
ton saying interest rates would 
not be raised nest week. The 
report came from a consul- 
tancy reputed to have close 
ties to the Federal Reserve. 

Not everyone shares this 
sanguine view about next 
week’s meeting. Mr Wayne 
AngeU, chief economist at Bear 
Steams, and until recently a 
Fed governor himself, said that 
a 50 basis point rise in rates 
“seems logical". 

Along the same lines, Mr 
David Munro, ehfaf US econo- 
mist at Efigh Frequency Eco- 
nomics in New York, has 


v *... 7... 





A ■■If" • # Ai ■ 5 

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ress Is the function of rising 
interest rates and buoyant 
co m mo dity prices. Commodity 
PTpnr t a are an important 
dimension of the Australian 
economy. 

The dollar also benefited 
from the surprise element in 
yesterday’s move. Most traders 
in the market had been expect- 
ing interest rates to rise last 


* :■ *v 


■ '!>(>wArvf »■*• 

increased fin odds of a rate 
rise next week to even money 
following the release of retail 
sales data earlier fids week. 

He believes the Fed is more 
focused on retail sales as cur- 
rent evidence that the econ- 
omy is beating up, than an pro- 
ducer prices, which are a 
backward looking indicator. 

B The Australian dollar's prog- 


Tbe outlook is for farther 
rises in interest rates, which 
should help the dollar. One 
economist noted: “There is 
mounting concern about the 
sustainability of economic 
growth. This could fores the 
Reserve Bank to push rates 
even higher.” 

Rising economic growth next 
year in the industrial world, 
should - bolster commodity 
prices, lending further support 
to the dollar. Many analysts 
expect the Australian dollar to 
rise to 80 US cents during 1995. 

■ The D-Mark continued to 

profit from political worries in 


Europe — notably in Italy and 
France, «thi also in the UK 
ahead of today’s Dudley West 
by-election. The latest opinion 
poll gave the opposition 
Labour Party an almost 
unheard of 50 percentage point 
lead. TUs put the pound under 
some pressure against the 
D-Mark. 

Analysts said the dollar's 
ability to remain reasonably 
firm, while the D-Mar k was 
also strong, showed that inves- 
tors were switching between 
currencies in Europe, rather 
than between the dollar and 
the D-Mark. 

■ The Bank of England 
cleared a £L3bn shortage at 
established rates in its daily 
money market operations. 


112770 - 112870 
174U0 - 179000 


ft £ 

ttiqpr 171135 - 


0A1 


&7M - 17411 1027 - 18731 


POUND SPOT 


Dec 14 


I I - ♦ * 



DOLLAR SPOT 


Austria 

Belgium 


Italy 


Norway 

Portugal 

Spain 


UK 

Ecu 

SORT 


Argentina 


n * i,lnn 

MQPQCO 

USA 


(Scty 

< PFf ) 

(OKI) 

CFU) 

m 

(DM) 

PI 

W 

H 

VA 

(R) 

(N*d 

« 

puj 

(SKI) 

(SRI 

n 


(Peaq] 

m 

(New P ead) 

m 


w» 

Hong Kong (HKQ 

Ms (Rs) 

Japan 00 

Matayria (US) 

New Zealand (N2$ 

PhHppknes (Pwfl) 

m 

{S3} 

S Africa (Comj ffQ 
S Africa (Ha) (K 
South Korea (Wbr} 

Triwan (13) 

TMM m 

f8CR raws lor Deo 11 


•lb and tea 


SB 

Bld /oCa r Dgyta Md One month Three months One year Bonk of Dec 14 
irtd^pofta on day agreed high low Bale ttPA Pate %PA Rata WA Eng, tadax 

Europe 

17237 -09354 466 - 609 172966 172192 172399 1.0 17.1993 1-3 - 1164 Austria (Seta) 11-0445 

504807 -00827 291 -922 609370 003830 904607 -06 903567 OJB 49.7967 19 . 1169 Belgium OENft) 323010 

99099 -00276 057 - 141 06359 06021 06066 04 06141 -02 05906 08 116L8 Danmwfc (OKi) 6.1615 

79296 400032 200-391 7.6410 79100 - - - - - 87-3 Rr tt and (FMJ 

04507 -0017 483 - 531 8475B 64413 64474 05 84445 03 03964 06 1007 Ranee flRFi) 

24513 -00056 503 - 622 24679 24472 24501 08 24463 06 24116 19 1264 Gamuny fD» 19691 

370000 -1924 946-172 381982 376960 - - - - Qmce W 240645 

1.0153 -00004 146 - 169 1.0177 19136 1j0155 -0l2 1-0145 03 1j 0133 02 10EL1 Ireland OQ 19387 

255499 -5.78 371 - 547 260013 2549.77 256199 -11 257124 -24 2625.14 -24 73.1 Italy « 163625 

604607 -09927 291 - 922 609370 503530 504867 -09 5085 5 7 06 407957 14 1164 Lranhoug fiLR) 324010 

2.7448 -00063 489-406 17613 2.7423 27432 0 J 2.7896 06 2.704 14 1214 Nfldwrtands JFJ 12570 

107020 -04279 982 - 070 10.7343 106771 107029 04 107016 04 106927 Ol 86.1 Norway 060) 64510 

251405 -0148 622-188 262489 251429 262.725 -34 2544 -34 - Portugal 0=4 181450 

206203 -0126 083-313 207425 206093 206966 -2.1 207418 -24 209443 -14 85.0 Spain Pta) 131495 

114118 40036 022-213 114348 11J212 114288 -14 114613 -1.7 114803 -1 A 754 Sweden (SKfl 79610 

24723 -0409 711 -734 24776 24682 24682 2 X 24616 2.1 2416 2.7 1206 Sritew lta ld (Bfi> 14266 

809 UK (Q 19622 

14686 -04029 868 - 874 14893 14851 14066 Ol 14964 0.1 14811 04 - Ecu - 14142 

0428937 - - BORt - 1 -46100 

19990 - 506-594 19600 19660 - Argentina (Paso) 04980 

- 14263 400109 245 - 281 14261 14142 - - - - - - BrazS 08490 

2.1684 +04013 656-672 2.1692 2.1631 2.1668 -02 2.1678 -04 2.1778 -05 864 Oanada (CQ 

64936 -0403 909-96! 54015 54850 - - - - Mtatioo (New Peso] 

19622 - 619 - 62S 19634 19583 19623 -Ol 19823 OO 19620 04 634 USA fi - 

24154 400001 148 - 164 24174 24048 24173 -1.1 24218 -14 24611 -14 - Auetrala (A*) 14901 

124617 40001 880-944 12.1007 124619 124377 5u4 120972 14 124622 04 - Hong King frMJ 7.7402 

494043 -00004 800-196 49L0400 484880 - Mta TO 314688 

160420 -0208 648-703 196440 196370 106486 4-1 160431 4.1 148466 44 1884 Japan (V) 100280 

4.0052 -00003 036 - 067 44079 34990 - Malaysia QMS) 

2.4503 -00019 489-617 24621 24394 24566 -11 24686 -OO 26088 -23 - NewTarild (NZSJ 

37.7272 400012 416 - 125 374500 679850 - - - PMBppfrtae (Peso) 24.1500 

54591 - 576 - 606 54637 09460 - - Saul Arabia (Sfl) 27606 

22916 400004 906-930 22930 22867 - - - Singapore (9S) 19670 

59701 -04009 679-723 59727 59586 - - - S Africa (Cdmj (R) 15666 

54285 -04232 116-463 54453 54260 - - - - - S Africa JRoJ R 4.1160 

123575 4096 843 - 906 123942 123696 - - - - - South Korea (Won) 

414484 404098 873 - 694 414789 41.1485 - - - - - - - Ttawan (tt) 

394106 40.1006 271 - 938 394938 352271 - - - ThaRand (BQ 251635 

ki tin Round Spot tafaia 4ur only ttw W tires dsctaef ptafifle. Forwwd nte mm not drectiy epotad to tin fSOR M tor Deo VL B kM tiM u 
Oh. taeftng Indet^cdmj by tasMc off Bdei Bam «np 1965 » 1OO0W, CNhr red IticMm ta bottt 
from THE VMPBJT8F& 046803 SPOT RATES. Sons wNuas era raundad by ttw F.T. 



JLP Morgan 

on day spread high low Rale %RA Rais %PA Rsie* %PA tadtac 

-0423 420-470 114780 114410 11437 OLB 114206 59 15928 .1.1 1049 

-0464 670 - 150 323570 822870 32266 56 82.336 09 ’ 31981 14 - 1051 

-5018 600-530 51740 51600 51622 -51 &1S3 -51 51373 52 1052 

400019 787-890 49965 49751 49816 09 49789 54 49644 54 614 

-5011 090-100 54296 54090 54078 54 5406 53 5977 56 1050 

-50037 688 - 694 19747 19685 19684 09 19061 09 1944 19 1079 

-0966 620-670 241920 242500 245445 -139 265QS -123 207396 -102 054 

450006 380-394 19394 19846 19392 -54 19392 -51 19306 -51 

-3L75 500 - SO 163890 163490 16399 -11 164735 -10 168575 -28 714 

• -5054 870-150 323570 322870 32288 56 32236 58 31381 13 1051 

-50041 568 - 572 1.7621 1.7568 1.7502 56 1.7538 57 1.7318 19 1063 

-0018 496-626 69758 58487 63622 -02 69445 54 57905 09 962 

-51 100-400 161960 161.100 161.775 -19 16286 -49 166 -2 9 951 

-5085 950-040 122870 131250 13223 -21 13296 -29 134415 -19 850 

450228 563-690 79638 79136 79723 -19 7JSB3S -1.7 7971 -19 858 

-09059 260-270 13330 13249 1324 23 13196 29 12906 27 1064 

- 610-625 19634 19583 19623 -51 19623 50 12B25 09 857 

450027 137 - 147 12147 12112 1214 02 12139 51 12192 -54 . - 

- 979-980 09980 59978 - - - - - 

45007 480-800 09600 58470 - - - 

450008 865-870 1389B 13885 1367 -51 13868 03 13946 -50 823 

-0902 515-535 34560 34510 34536 -53 34553 -03 34827 -53 

979 

- 897-906 12912 12950 12908 -57 12920 -08 13054 -12 919 

409004 399-404 7.7405 72395 7.7361 . 53 7.7369 52 72447 -51 - " 

-09012 650-725 313725 313860 314388 -17 319838 -17 - 

-5135 230 - 290 100920 100230 9992 4*1 9925 49 96379 49 1489 

-09003 633-643 25643 25629 23606 14 29563 12 29843 -58 

-09013 879-691 19994 13835 13694 -57 19719 -59 13809 -58 

- 000-000 243500218600 - - - - 

-09001 003-508 17509 17501 17542 -1.1 17611 -1.1 17756 -17 

400002 665 - 075 14880 14657 14666 13 1.462 14 14456 13 

-09007 648 - 883 33690 33640 15811 -52 16132 -63 17781 -69 

-5016 060 - 250 41300 41050 4143 -82 41875 -T9 4425 -73 

404 900-000 793300 792300 70896 -46 79940 -33 91796 -12 

450062 020 - 060 264160 284015 26424 -59 20464 -09 - 

150-120 252125 2S912D 25193 -14 26284 -19 263880 -11 

r Spot brita trty ta We hw hdM plett fUiStf eta are not d w e fr quoad to the 

&BCU we quoted hUScunnGy.JJP. 


WORLD INTEREST RATES 



Lomlx ‘ DU' VRi » 


7M 

4J0 

■* 

• 

740 

430 

- 

■ 

&00 

“ - 

*78 

k ft 

BOO 

- 

*78 


MO 

439 

MS 

■ ■ ■ 

MD 

430 

4« 



r: 






•;£ m 


. 7M 

- 7 JO 

- MS 




6.836 3J0 

- 4.75 

- 4.7* 

- 1.78 

- 1.7S 


■ SUDOR fT London 


«* 

H 


SORUntadDa 


SJ1 

4* 


at 

*4 

olio 

&13 

4ft 

.3* 


7 

eft 

fl.71 

MO 

5ft 

3ft 


7ft 

7* 

7.48 

TJ6 

H 

4 


A-’.f 


Sr 


1 nti Bfc 4 MhK t/m 4 4 ; _1 W" 

Mo«wd wM»tflr>tQmouoMd>o-awawr»Mfty — . 

d«. Ilw twta w flvim Tnri, Ut flCMvft Bwd^«8 HOW 

us 


M . SUB 0 R 
Kiln 




V"s- 


Out 




5H’Sa s-u 
th- Ws 

5tt-» t-Sh 

ft -S* 8 - s% 

ft-ft OB-.flB 
11 ‘ loH frt( - VA 
«%-8& *H-*V 

4i-4& 4\- <5, 

?:2 

3:S 


^ ■ j-i * 








9178 4504 9231 

■UWOPOUJIliflJFFg" Slrepdnta Of 10074 


Eta. voff Open tat 
25981 60994 

85662 08387 

21101 45117 

13304 








Open 


Juh 


Jun 


9440 

9420 

9191 

9157 


Sett price Change 

9107 4099 

92.76 4514 

0110 4512 

9193 4515 


Satrpriot Change 
9440 4004 

9430 4503 

4096 
+50B 




Ijw 


Eta. voi Open fra. 

27 2637 

0 1400 

0 393 

0 177 


DMlrn potati of 100H 

high ‘ Low Eta. voff Open Int 

120040' 
196116 
1420B4 
14862 84770 

RIIUM (UFFQ LlOOOm patata of 1O0K 


■J 


it 


9434 

9492 


9438 

9421 


Open 

90L46 


Jn 


9067 

88.77 

8044 


Hfch 

9037 


law 

9538 


4520 
4020 

4521 


Eta. voi Open Int 

21464 
31816 


2614. 29710 

(UFFS SRIm pdnte of 100ft 




Open 


Jun 


94.79 


S e tt prtoi Cttange 
-OuOl 


4502 

4002 


Wi 

9170 


Law 


.Eta. vol Open In 
1178 11338 




. 1104 
M79 . 790 

100 % 


7777 

3772 


Open 8ett price Ctinge Ugh 


bow Eta. voff Open in 


r-.fr-i-iAil 


9345 9168 


Mar 

Jun 


4099 

4512 

4512 

4514 


9125 sun 


1796 

666 

212 


4410 


CROSS RATES AND DERJVATIVES 


EXCHANGE CROSS 

Dee 14 BR* 

RATES 

DXr 

Ffir 

KM 

l£ 

L 

n 

NKr 

Ea 

Pta 

SMr 

SFr 

£ 

cs 

9 

Y 

Ecu 

Btighn 

(Bft) 

in 

1994 

1175 

4357 

2911 

5061 

5X38 

2130 

4893 

4069 

2140 

1108 

1982 

4393 

3996 

3103 

2549 

Danmark 

PO) 

6231 

10 

1794 

2JBS1 

1956 

QflCfl 

4000 

2396 

11.14 

2622 

2149 

1*29 

2.157 

1941 

2984 

1926 

1610 

1338 

Brew 

(FR) 

69.72 

1137 

10 

2901 

1301 

3022 

3247 

1266 

2911 

2449 

1198 

2463 

1.183 

2563 

1949 

1863 

1922 

Oennany 

(DM) 

2559 

sm 

3X48 

1 

5414 

1042 

1.120 

4366 

1028 

84.13 

4918 

5848 

5406 

0964 

1637 

6339 


. — . — i 

IPWIHI 

(K) 

4171 

1467 


2X15 

1 

2516 

2703 

1554 

2483 

- anflu 

1194 

2942 

0985 

2134 

1939 

1643 

1267 

Hfty 

W 

1376 

0376 

0331 

5996 

5040 

100. 

5107 

0X19 

9963 

1074 

0X82 

0981 

0939 

0985 

1061 

1132 

5050 

Nathartanda 

(H) 

1139 

1502 

1079 

5893 

0370 

9358 

1 

9.899 

9130 

7115 

4304 

5756 

0384 

5789 


5797 

0X69 

Hawwy 

P«i) 

47.16 

I960 

7997 

2391 

5949 

2387 

2604 

10 

2354 

1927 

1194 

1937 

5935 

2024 

1.460 

1414 

1202 

Portugal 

m 

2503 

1815 

ggyg 

5978 

5403 

1014 

1989 

4348 

105 

8196 

4988 

0923 

0397 

0980 

0620 

6217 

1511 

Spriu 

(PM) 

24.47 

4360 

4996 

1.189 

5482 

1239 

1331 

1189 

1222 

101 

1727 

1905 

0X85 

1950 

0.758 

7695 

0324 

^hwadan 

(SKfl 

42.73 

1136 

7.155 

2975 

0959 

2163 

2323 

9960 

2133 

1749 

10 

1.766 

0947 

1934 

1323 

1326 

1989 

MUalnd 

(SFr) 

2434 

4335 

4976 

1.182 

5490 

1232 

1324 

1162 

1213 

90X7 

5997 

1 

0X82 

1946 

5753 

7594 

0920 

UK 

B 

9546 

1609 

1450 

2X51 

1916 

2654 

2744 

1570 

2619 

2063 

1191 

2073 

1 

2166 

1962 

1516 

1280 

Canada 

(PS) 


4436 

1901 

1.132 

0X69 

1179 

1367 

4940 

1163 

9530 

6452 

0957 

5462 

1 

5721 

7230 

0594 

US 

m 

3230 

1162 

5X10 

1369 

0950 

1636 

1.757 

1650 

1613 

1320 

7981 

1327 

5640 

1387 

1 

1053 

Oftgg 

Jhpan 

m 

3232 

1136 

6398 

1366 


1631 

1.762 

1833 

1659 

131.7 

7942 

1324 

5639 

1383 

0997 

105 

5821 

Ecu 


3934 

7-472 

1571 

1306 

57B9 

1966 

2134 

8320 

1969 

1653 

1184 

1912 

5778 

1984 

1216 

1219 

1 

Dwrih Kroner. Fiwidt Franc. Noneataan Moner, aid PauJili manor pv 15 Btafllwi Aina. Yea Uw 

end Pmi 

tie par TOOL 








■ D-MARK nmins PMU) DM 12S9t» per DM 





■ JJ 

PMtiti 

■ YKM HftfUmS 4**Q 1Z5 par Yen 100 





Op an 

1 

Change 

High 

Lew Eat voft 

Opan Int 



Open 

Latest 

Change 

HSft 

Low EsL vol 

Open int 

Dec 


03366 

-50001 


9 09382 

9,167 

54959 

Deo 


09966 

59974 

-50018 

09974 59956 

9X06 

AWflBH 

Mar 

56376 

56378 

- 

09360 

21716 

61701 

Mar 


19077 

19067 

-09017 

19077 19050 

25.007 

81107 

Jun 


56395 

-09011 

56391 

5 09395 

61 

1.673 

Jun 


- 

19217 

- 


- 


215 

2248 

■ SWISS TOAMC RTTURtaS (9*0 SFr 125900 per SFr 




■ SI 

MM 

annum 

BQMM) 02900 per£ 





Dac 

57516 

57530 

-09007 

57530 57515 

6920 


Dec 


13884 

19604 


19610 19684 

1104 

80923 

Mar 

57564 

0.756S 

-09006 

57568 57846 

16X15 

31355 

Mar 


13504 

13604 

409004 

1983C 

19582 

1289 

42191 

Jun 

57620 

57617 

-50006 

57620 57610 

68 

468 

Jun 


- 

19600 

— 


- 


1 

159 


UK INTEREST RATES 


Dec 14 


MONEY RATES 

Over- 
ngv 


7 days 
nonce 


On. 


On. 


6^-4 ea-6 sa-6 6% - 6& 7j« - 6^ 7\ - 7H 

8 i ■ 8 8 A - 8 A ft 7\ - 7 *| 

fitt-5% 9A-6 
5fi-5B 8*-Bi 
Si 1 . - SU A - 6 V 6»*-8 8 A-sa 7 - 6 % Tfi - 7 {J 
5t| -4^2 58-fiH .... 


Loctatadhodtyl 
Dtacoirt iMtat 


UK doaitag bank twee lendtig reta 6^ pa 

Up to 1 


front 

1-3 

north 


7. 1894 

3-6 64 

months 


9-12 


Carts of Tax (tap- £105000] 


1*2 


A 


3% 


*h 


m^ndnetarpsUEbea, 
period Nov i. IBM ID 
i. 


■ 6ta73Rp&Btameewe 


nJwia«.l90A 
rvavatorpo. 


PUTUmS (UFRQ £500900 pGfrtis of 100% 


Open Sen pries Change 


Dec 


9101 


Htfi 

9151 


Jun 9134 

Sep 91.41 

Draded on APT. M Open 


91.91 

91^47 


4503 
4505 
4505 9130 

4504 91.49 
we tar prevtoue stay. 


Low Eta. *9f Open M 

9146 11307 99162 

8244 27577 96152 

9132 9058 

9139 4407 


(UFHE) E50Q900 pofrtts off 100% 




Price 


505 

0 

0 


501 

0 

0 


— — — PUTS 

Jim Dec Mar 

093 004 036 

501 024 120 

501 549 1-45 

open ha* Ctai 339137 Puts 


Jun 

1.62 

135 

110 


Dec 14 


agakatEcu on day 


Chaiga % 4/- from % spread 

v 


Dfrr. 

Ind. 


119672 

452123 


134964 

6.63683 

743679 




113981 -090071 

392960 -0917 

5791055 +5000738 

131043 -090114 

158720 4500104 

749291 -09037 

191037 40.108 

165877 +0469 


-117 

-101 

074 

576 

136 

430 


797 

173 

631 

644 


17 

15 


-11 


090 



284313 295221 -5178 

179119 199522 -141 

0786749 0778784 40901124 



538 


MOniOM £31250 laanta per poifli4 


Price 


534 

334 

598 


Jan 

190 


taerioui days «oL Otas 


139 

574 

521 

502 

11387, 


420 

154 

141 

068 


098 

527 

501 


004 
134 

198 111 

646 640 

40*099 PI* 372380 


Feta 

029 

574 

136 

231 



<MM) Sim pofrtim of 100% 


I rn. — . ^ — ■ 

L eretr uunge rqgn 


Dec 

Mar 

Jun 


3357 

8SL59 
91 J6 


92.62 -ttLDt 
flljSS 


92.83 
91 M 


suaa 


Etf. vat Open hL 
89J07 807/488 

210/16 460962 

184,186 358,480 


BASE LENDING RATES 


MmAGampHiy &25 

AfadTnntBert &25 


<HnytaM<tr IIM sS5 


Bark United __ 7SS 
nranewaOteBnk- OS 
•Robot Fhrahg&CD - &25 


425 *RodMtfMGijMntae 


no 


BarkafCRns.. 5J5 

W 1 - htekaj 

CrflnK Gn lUBinQ imihiii 

Baric offrxfa 


HabtaBatarAG2itah.i2S 
t t t a n Uue Ba l 


8 

Royri Bk of Scotiand . 625 

•SvAhlWnen Sees . 125 


l.fXVHIll 


MOiflffMdEret.. M . 825 


aHcere&Cc 025 

Hontfpn Q lata m h ta . 838 
Jitare Hodge Bank 625 


OtaanKNA 


The OfrCptaaM Bank 125 
CoubsIOo 125 


Lloyds Baric 
MagM Baric Ud 


* Mount BarMng 


taUMacoMOiwril^. 625 
IMty That Bar* Pfe^ 628 

WMmT hm.— 175 

While— yLaktor, IM . 82S 
Vtahaff fre Berk 128 

•MBBtaarsoflmdon 

frwetamontBaridng 





m us TmAswrr nx nmns ( bum] simper 100% 


Mar 

Jui 

S^> 


9113 


9121 


-092 

-094 


9324 


9113 


1731 18963 

466 1910 

12 


ape. we tar pre-taw day 

(L3T=Q DMtm points of 100K 


Price 


CALLS 

Jen Ms 


Mar Dec 


9470 


521 515 519 023 501 

003 504 508 510 008 

0 501 098 094 030 

B0taei$osa.fr«vtaB(priQPMiiL 
PVUNC OCTIOMS (UFT^ SFr 1m pofaita of 100% 


Jan 

510 

024 

046 


014 

528 

046 


Mar 

018 

030 

049 


Stfto 

Price 




Eta. voL fioiaL 


020 

093 

001 

OFUbQ. 


513 

006 

093 


Jtai 

012 
096 
093 
Inu 




Deo 

091 026 

090 043 

532 036 

2616 Riis 1816 


Jun 

565 

074 

596 





futures Lul 



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FUTURES PAGER 


IIIVIIIIIIlllHlllllllllllllllIIIUSHIIlllllllIIIIIII 

Toray Industries, Inc. 

(formerly Toyo Rayon. Kabushiki Koisbe} 

S.G.Warborg 3c Go. Ltd. anoooncc dot a dividend of Yen 3 JO per 
share has been paid to shareholders on the books of (he above Company 
as at 30di September, 1994 in capecr of die w naoth period 

ended on that date* ■ 


Holders of Bearer 



NoJM foe payment «t> 


4 Lmmboussi 
2 Boulevard Rofal, 


S-G-Warbutg 6c Co. Led. 

Paying Agency, 

2 Finsbu r y Awenuc, 

London EC2M 2PA 

Payment wiO be subject to dcducoos of Japanese Withholding Tax 
and in London, IMced.Kingdrmi Tax (wiicre applicaMe) at the 
appropriate rarea. Details of tax deduction can Ip obtained from rise 

Paying Agents. 

IStb December, 1994 

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NOTICE IS HEREBY GIVEN TO THE PURCHASERS OF 

NON VOTING SHARES OF 

IN I bnflfMG INTERNATIONAL SA (HfflSA) 
ReaNtored in Panama Cltft Republic of Parana 

fcnxwrly 

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AND REGISTRY LTD 

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Slue Carbbe»i BuQding - p.o. Box^7 KIngstown - 
SAINT VINCENT & THE GRENADINES (WJ.) ” 



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market information you need: 


INDICES 


US INDICES 


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f : ■ * : •f/rS' jesss* 


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M 13 T2» 

M 240739 H 2881.17 VI 

4343 4340 4313 4543D 31/1 

2727 2723 2708 28430 31/1 


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13 12 


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(3V11 (4M) pinflfl (2/7732) 

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m (1371^ p2W (B77J3q 

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•updated financial reports 


daily unit trust prices 
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FT Cityline has proved invaluable to business people and investors 
in the UK for years. And now it is available from anywhere in the 
world. 

if you would Tike further details fill in the coupon below or call 
the FT Cityline Help Desk on (071) 873 4378. 


Dec 9 


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FUTURES 6500 times index 


FT Business Enterprises Limited, Number One Southwark Bridge, 
London SE1 9HL Registered in England Number 980896. 


FINANCIAL TIMES 


* 45Q ftO 
454.00 45445 

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hangs High Low 
+0-30 455.70 453^0 


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Starts Om Chongs 

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448X700 m - 

239X500 2Sta +44 

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IM SE 907.103 285.745 337791 
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131B 1,110 1793 

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financial txmes 


THURSDAY DECEMBER 


151994 


ofa \s»DenmtxrH 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


■* InM 

lA 11% MR 


M H ft Om Pm. HM 

« 1 t ID I* Ub Qbm Dm ^ I* 


a® us sis iA 12% <4, 

aW 10 40 299 17% 17% 17% +% 

10 UaiMt R>1 72% +1% 

106 5398 50% 48% 58% +1% 

IS 95 3% 3% 3% 

am 44X1079 4S% 1{<A A 

aw 2A 17 80 e 32% 31% 32% +% 

am 37 12 21 13% 135 13*2 

052 2J 14 89 22% Zl% 22% +% 

8 IK 13*| 13*| A 

044 a0 21 1S38 22*| 21$ 21% -% 


70*| S7*| AMP 
72V 48** MU 
5 3*| ARX 
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33 2S*| KM. 
IA 11%MM*Pr 
23*| 17% A8Ukxl 
18 11*1 Aqnom 
31 2D%4CEUf 


ALUKA GLIB 10® 299 17% I 


1JW U & IMS 72*b 70*2 72*8 +1% 
106 6398 50% 48% 5A +1% 


3120V4CEUI <U4 20 21 1538 22% 21% 21% -% 

12*2 BACMQrtkx 100110 8 S82 0% 8% 8*2 A 

10% 0% *9 BMfpk 08011.2 83 7% 7 7% 

10% AttMBwGpx 006112 385 7% 7% 7% 

12 7% MX BK BIX 1.0013.1 1087 A A A A 

11V 7V Adi 1*11 x 1.08128 213 8% 8% 8% 

BV 8AQIMq^i 0.72 80 727 8% A A 

15% BVMaaOr 044 40 22 63 10% 10% 10% 

131% AAcuBKI T3 210 18% 13% 13% 

30 zsAconsa an aoi5 ibbh% 30 x% A 

13V SVA3M 0388825028% 8*2 a%4% 

18% 11% hail 28 4067 15% 15 18% +% 

18% ISfefttaxBpr 060 44 0 IK 15% 1715% 15% A 

54 46% M Mfcxo a00 58 484 61% 80 51 +% 

31 V IBVAAMc a0012J 78001 28% 22% 23% 4% 

8% 5MMBp 016 11 15 13 5% IS 6% 

20 15 Make 010 07 14 338 15% 15% 15% 

64 48% Mom MR 147 £3 12 10 62% 52% 52% 4% 

B5% 42% MM. 176 00 6 7101 45% 45% 45% 4% 

36% 25% Me 046 14 12 835 33% 33% 33% -% 

22% 15% Mum 088 05 8 2296 16% 16% 16% -% 

4 1% Writhe 1 242 i% m% i% A 

50% 38%Akf>rC OK 22 21 2899 45% 44% 44% +% 


727 8% 8% 8% 
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22 63 10% 10% 
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4 1% Writ he 
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38% 18 Attn# Fit UU 0 1845 18% 16% 18% +% 

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17 10% Altana 184 1U 8 710 13% 11% 13%+1% 

3D%21%Mrai 118 8852 Z7% 27 27% 

18% 13%Att*taAI- On 15 26 1578 13% 13% 13% A 
21% 16%M»vn 035 11 22 889 17 16% 18% -% 

g 13 Manx on 10 17 303 13% 13% 13% 4% 

18% ABM 028 1.1 16 78 26% 28% 25% +% 

17% MAMA OS 12 17 35 24% 2J% S53% -% 

2S%«ta 044 14 18 2723 29 28% 28% A 

28% 19% AfcoM 030 1401 2622 24% 23% 24% A 

65% 49% WS 1JD4 U 52 2070 57% 55% 57% *2% 

33% 23% WOmbi 070 15 4 806 28% 28 28% +% 

32% 14 Mb## aio 05146 181 18% 18% 18% 4% 

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4% %ARn 0 305 % d% % 

27% 17% ABM Cap 144 84 10 763 T7%(flfl% 17% -% 


28% 19% ABM 
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27% 17% Atoaa G*p 144 84 10 763 17% *16% 17% -% 

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11% 8% Aimer 044 46 106 10 9% 8% -% 

23% 24 Ad Bp X OK 13 18 72S7 28% ZB% 29% +1% 

7% 4% ABtoXta 14 973 5% 4% 9% A 

35 21% Aim 13 2224 28% 26% 2B% +% 

90% 64% Aim 140 104693848 80% 79% 79% A 
30% 17AbaCp A 42 1875 18% 17% 18*2 +% 

11% 7Am8ntocx 048117 282 7% 07 7 -% 

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8% 5% Anaxfid 048 12 11 47® 8% 6% 6% 4% 

35% lAtaarthd 042 24 10 ® 20 19% 20 A 

52% 43%AmkM 060 14 50 1678 45% 44 44 -% 

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7% 4% ABtoXta 
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30% 24% AmOart 1.18 42 18 2935 28% 27% 27% +% 
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27% 18% Am MB Pr 230 112 44 284 18 418% 16% -% 

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8% 7% AfflMEl 044 00 4 81 7% 7% 7% 

27% 21 AmSkr O® 14 11 2833 25% 25% 25% +% 

22% 16% An WSttSM 1-25 72 720 17% 17% 17% 

32% 25% Am IBto 1.08 42 11 353 25% 25% 2B% 

43% 38% Ainnefl 142 47 196108 41% 40% 41% +% 

43% 2S%Anamhc 148 44 4 82 30629% 29% -% 

18% 11% Anttakx 024 14 04 347 17% T7% 17% +% 

64% 50% Anwo 120 34 16 5038 82% 61% 61% ■% 

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26 AnWIl X im 07 8 547 27 26% 28% +% 


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36%23%Amtag 22 1217 32% 31% 32% +1% 

29% 24%AP0e8CSX 084 17 17 64 25% 25 25% 

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25% 1B% AppIPH A 012 05 17 211 22% 22% 22% +% 

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19 7%AddU 004 04 15 102 7% 7% 7% +% 

45 30% Amll 080 1.7 13 1007 34% 33% 34% +% 


33% 23% 


20% 13% Awraco 
19 7%AMx 
45 30% Anil 
83% 48% Amft 
14% 10% Aftoi Cap 
7% 5% Aar 


080 1.7 13 1007 34% 33% 34% +% 
100 13 IB 2920 61% 00% 61% +% 
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11 378 


10 % 10 % +% 
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38% 31% BCE x 
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25% 20% BKGEx 
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Bf Mr* 199 39 12 432 96% GB% 38% +1% 

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BmnKx im 10803 K 3Z% 81% 32% +% 

BnmSb 092 OO 3 14 5% 5% 5% +% 

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BRT 32 17 3% £8 3% ■% 

Bmndt <LM 15 14 1854 17% 17% 17% +% 

BnttWUx 032 11 14 67 15% 15% 15% +A 

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50% 42%Bodng 
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26% 9% Barth Om 
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54% 39MM 
86% 65% BP 
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71% 93% BT 

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72% 50 CBS 040 09 14 1483 53 62% 52% -% 

25 19% CMS & 084 37 11 2388 23 22% 23+% 

S2%59%CMRi 172 78 85% B4% SS% +1 

04% 44% CPC 198 29 24 1817 84% 93% 94% +1% 

21% MfflQxp 056 10 25 IK 18% 18% W% +% 

02% 82% CSX 178 27 12 2242 6S% 85% 85% +% 

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24% 16% CeUumi 042 24 15 1461 17 16% 17 +% 

53 33CdMon 29 5501 48% ®% « +2% 

29 24% DtaxXC OK 11 13 231 27% 26% 27% +% 

23% 14% CdxX 058 018 1.13751425 15% U% 15 -% 
21% 10%C*hraOsgn 38 2035 21% 20% 20% -% 

59 35% ChmxW 13 1894 42% 41% 41% +% 


2% 1% DdHeil E 02011.4 1 11 1% 01% 1% 
15% 9% Cdoan Qm X 018 19 27 370 10% 10 10% 
0%15%CeBl0t 18 818 15% 15% 15% 


i9%15%CeB#nr IB 818 15% 15% 15% +% 

15% 9% CM Bta 81104 10% 10 10% +% 

25% 17% CdkM Cox 040 22 20 155 10 17% 18 +% 

« 34% QnpUS 194 28 18 2450 43% «% «% +1% 

H % CMptXRs 50 733 A % A 

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35%30%CM0a 080 24 15 3d 33% 33% 33% +% 

24% 18% tend* d 11 251 21% 21% 21% -% 


24% 18% Ctantaai 0 11 251 21% 21% 21% -% 

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26% 9% CdtartH 033 29 21 387 13 12% 12% -% 

18% 12%CacdlHG 096 17 20 53 14% 13% 14% +% 

21% 1fl%C38BCp 020 19 11 1235 19% 19% 19% 


21% 18% CsnCp 020 19 11 1235 19% 19% 19% 

10% 7%CBdiAnr 005 05 17 687 9% 8% 9%+% 

60% 50 M* 080 1.1 1212B7D 53 51% 5Z% +1% 

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38% 28%CaMFdr 125 11 9 344 27% 27% 27% +% 

13% B%Cmei 060 99 1 1073 8% 8% 6% 

45% 2; ; s Cental x 020 OS fi 517 21% 21% 21% 

30% 22% CntTHdn 298 89 9 141 ZS% 25% 25% +% 

25% 20% CBiwlnd 148 69 11 113 22% 22% 22% -% 

IS 10% Cane Main 090 7.1 9 500 12% 12% 12% +% 

30 24% CwNtop 05B 22 15 31 25% 25*4 25% +% 

22 12% CcArVnm OK 89 10 73 13% 13% 13% 

30% 20% CentSW 1.70 79 12 Z723 23% 23% 23% -% 

32% 21% CentayTl 032 1.1 IB 11K 39 26% 29% +% 

Z7% 18%Qrkh 138 3155 25 24% 25 +% 

® SSOnptaX 020 05 35 1955 35% .14% 35% +% 

12% B% OBpwd 020 29 13 68 5% 6% 6% 

15% 5% OMt Hn 19 W 10% m 10% 


15% 5%0*rtlta# 19 1® 10% % 10% 

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6% 1%QaneB 1 64 5% 4% 5% +% 

21*2 12% 0x5^ 51 509 18% 18% 18% -% 

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42% 31% QMIflBk 1.78 49 716614 38% 37% 37% 

11% 7% Chan Wok 020 22 301058 9% 


35% 22% am® 
47% 38% Chnm 
55% 40% CMIR 


18% 11% OdqBr 
6% 5Qxx»Ftal 
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34% a^uQsMm 
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Chmpedta 072 11 26 1064 35 34% 34% +% 

Chnm 195 49 20 9405 43% 43% 43% +% 

ChtoRnf 146 39 M3 45% 47% « +% 

CHip 029 19 8 620 13% 13 13% +% 

ChockFdl 7 73 5% 5% 5% 

008 13 632 35% 34% 34% +1 


35 4 31% 30% 31% 

B3%43%Ovjdrx im 34 514094 47% 46% 47 +% 

B3%K%OxiMz 194 29 12 3629 75% 72% 74% +2% 

74 57CWax 39442880485% 65 85% +% 

9% 5%CKbH 1 090119 3S8 7 dB% 7 

37%2S%Cfcaph 246 89 11 71 30% 30% 30% 

20% 15% Ck* Bril am 49 20 312 17% 16% 17% +% 

27%1B%CHfl 09B 19 33 464 23% 22% 23-% 

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27% 20% Own 172 79 53 68® 23% 23% 23% +% 

30% S% Qpsco 2m 7J 11 Z32 Z7% 27% 27% +% 

27% 16%Cka*Q 0.10 04 IS 69n 24% 22% 22% -1% 

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71% 50% QMCq 8 918 52% 51% 52% 

21% 12% Dayan Hot OK tlfi 13 2025 13% 13% 13% +% 

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53% 36% Caea C 078 19 2814800 51 $0% 83% +% 

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38% 25% Cotam*) 25 K 32% 32% 32% 

65% 49% CD0>l 194 29 17 8838 84% 6363%+% 

11% 8%Ctanhwx OK 7.4 212 8% 8% 8% 

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34% 17%C*ndK0 OK 1.7 17 253 21% 20% 28% +% 

31% SOntoi 196 49 81347 20% 25% 25% 

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29% 21 Gnmd Md O® 29 14 81 24% 24% 24% -% 

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52% 41% Cnftp 195 18 27 »1 « 41% 44% +1% 


9*4 6% OlHBlIl 
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20% 15%CtanM am 49 

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Please call +7 095 243 1957 or +49 69 15 68 501br more information. 

Financial Times. Europe's Business Newspaper. 


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SB 113 7 7 

33 95 13 12V 

14 3636 19V UV 
7 50* 6V 5 
14 418 UV 15 
DID 19 780 X 19V 
re 337 12 !0V 


2 *V 
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12V -A 
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19V *V 
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13 

18j 

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11V 


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AfCtp 
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FH»U1 
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FSbpOB 
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FfitAm 


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Ffidic 

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FtaU 

FoodUL 


9 X 
024 38 45 

00(48 935 
151585 
124 !2 1773 
12 03 
024 0 
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1X0 7 
1XC ID 
ODD 17 
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1X0 


S77 
221 
424 
82825 
9 374 


FAFto 

FWBqIx 


FtdkrHB 
FiltaaHn 
fi tan 


QXB 519C 
104 ID a 
a 9 
72 05 
a 159 
0X9 132657 
CUB 89 1824 
10 121224 
10 2» 
11 5 

104 11 444 
040 7 377 
7.18 70 276 
05817 0 
0X8 !1 W8 
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11 30 


- F - 

4V mV 
6V 5V 
43V 39V 

av 77 

48 48V 
3V 3V 
5V 65 
mV aV 
27V 25 lj 

2*v aV 

20*i 19V 
23V 22 

41 40V 

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31 31 

BV 8V 
20*2 19V 
6V 6V 
5V 5V 
ft SV 
33V 32V 
12V 12 
3V 3 
3lV SOV 
MfflJV 
24V 0 34 

x a 
17V«16V 
19V 19V 
2V 2V 


«V 

5V 

43*2 

27V 

47V 

3V 

5V 

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27V 

7*V 

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-V 
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16% +1% 
31 

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20*2 «V 
BV 
5V 
5V 
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3V 

31 
13V 

34 


-V 

•V 

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+v 

■V 

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X 

17V *1 

19% ft 

ft ft 


GEAffl 

GUStnr 


GlfMfk 

GbMCP 

firfBM 


10 

427 

112 

10 

140 

10 

157 


GntarCp 
Gam he 
Genome 


A 

BfiBtam 
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toenAP 


Gmaw 
GTIGarp 
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007 19 
4 
10 

016 9 
042 17 

8 

1 _ 

400 23 1727 
25 096 
371236 
040 13 427 
012132428 
0X0 8 102 
13 87 
11 217 
0X22 488 
64 199 
02012 90 
02113 33 
592400 
16 160 
15 996 
51271 


2 1% 
15% 14% 
iB ill 
3V 3V 
6V 6V 
1BV 1BV 
3V <QV 
5 4V 
21 V 20V 
7 BV 
27V 2BV 
13V 13V 
14VHI3V 
i2Vdi2V 
BV 5V 
12 IiV 
2lV 2tV 
3V 3V 
20V 19V 
19V 18V 
2V 2V 

13*2 13 

13V 12 
8*| BV 


iV 

15V +V 
IV +A 
3*2 i-V 
BV *V 
19V 
3V 

4V -A 
21V +V 
BV +A 
26V -V 
13V *V 
13V 
12V 
6V 
12 
21 A 
3V 

20V +V 
19V *h 
2 V +ii 
13 -V 
12V -V 
BV +V 


■V 

+v 

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♦A 


FfenongA 

rWWyH K 

KanwrGp 

Wristap 

HBO&Oo 


Hetanlta 

HBuXT 

Hogacto 

■ i-i — 

ruopc 
■■ — “ 

rase Hu 


HwtJB 
HnfiQOhx 
taco Do 
tafiTedi 
HfcorBto 


27 63 
0X616 12 
020 13 385 
122 

016 384297 

286792 
006 16 315 

20 6Z3 
016 12503 

16 26 

10 13 
0X8 81292 
015 16 374 

19 92 
0X0 9 3 

044 16 0 

2D 78 
044 28 128 
020 141027 
0X0 8 2212 
0X8 1 55 

21 959 

11 130 


6V 5V 
23V 22V 
13V 13 
11 10V 
S X 
3lV 29V 
13V 12V 
BV 7V 
9V dB 
9VdBV 

17 17 

1*VtfWV 
BV SV 
U 13V 
2DVd19V 
27V a 
12V 12V 

4V 4 
15V 15V 
17V 17V 
4*1 3V 
24V 23 

4*9 av 


BV +V 
23V +V 
13V -V 
11 

31 +V 
31 «lV 
13 +V 
8 +V 
BA -A 


♦V 

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17 
14V 
6 

13*4 

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27V +*i 

12V +A 

4 -V 

ISV +v 

17V -A 
3V -*4 
23V -V 
3V -V 


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06 tarns 
MM 


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to 


MtfB 

Warn 


UMjQA 
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IcnugiCp 

hBflMfc 

WtfodD 


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2*9 BIDV 10 

av BV 

B 329 2% 2A 
S3 95 6 5V 

1 121 3V 3V 
040108 114 13V 12V 
024 X 57 IiV 10 

KB 8*2 14V 13V 
308357 27V 2&V 
OK 11 212 10*9 dSV 
1525906 27V 20V 
X Ml 15V 14V 
12 315 3*a ZV 
024 104322 62V K 

10 219 2V ZV 
040115593 8V 7V 

11 718 BV dBV 
024 12 547 UV dBV 

2 304 7V 7 V 
2 847 3V 3V 
6 2566 IB 14V 

311 B95 13X 12V 

12 a iBVmsV 
002 8 63 IV 1*2 

275 19 5V 5*2 
005 U 127 30V X 
21037 3V 3 

13 205 16 15V 

114150 3I2DBV 205 


10V 

BV 

2V 

5V 

3V 

13 

UV 

mA 

27V 

9V 

263 

ISV 

3*9 

80V 

2V 

ft 

627 

10V 

7V 

3V 


+v 

-A 
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-V 
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+A 
+V 

*v 

+A 
♦V 
+V 
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■V 
-.11 
■V 

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15V+1V 
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16*2 
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3V 

30V +V 

3 •*. 

16 +V 

205 -4*4 


JU&BEk 


13 

are is 
jLEindx aiOll 
JAfscnW M 

JanesM 8 

jgm>Madxai0 10 
JnlimQik 120 27 
JSBRn 0X13 
JunUox A3 131036 
are 7 


- J - 

x 11V 11V 
a *V 
36 36V 
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11 V 11 A 
7V BV 
25V a 
23V 28V 
IfiVdIBV 

II 10 


120 

ire 

9 

417 

203 

9 

84 


11V -V 
9 +V 
39flV 
1BV “V 

IiV +v 

BV -V 
3*2 +V 
23V *h 
UV -*2 
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KemanQi 

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008 9 

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2 

072 10 
011 30 
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5 


KLAhstr 

KofiA 

Avnagtac 

tateS 


9 

226 
974 
221 
2 

70 
21 
29 7329 
t 485 
<2 1025 
1C 917 


20% Tft 
10*9 9V 
4V 4V 

a 27*2 
5*3 dSV 
24 23V 
10V 10V 
50V 4BV 

a v 

reV 25*9 

MV 20V 


*1 

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4V 

27*7 V 
5*3 

24 *V 

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UcuFun 

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UnMCM 


Lance 5 

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LUOS 

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Ugcncp 

UeTKDi 


LfttadAx 

LksBr 

UncstaT 


Ufioi 


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mo 

LVItfl 


072 30 32 
012 91182 
213900 
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09619 897 
450 122 

12 41 
26 170 

13 « 
04819 239 

T9M2A 
016 1 438 
1*1264 
202002 
02014 320 
19 

028 13 
120 
052 IS 
13 

028 282061 
040 IS 22 
0X6 281244 
13 531 
407B309 
31374 
DC 21 G 


- L - 

1S%X14% 14% 

ft ft ft ♦% 

4X12 39% 40% ft 
30% 2ft 30 ft 
18% 17% 18% •! 

1817% 18 +% 

6 ft 6% 

4% 3% 4 

1ft 1ft 1ft ft 
2ft 25 2ft 4% 
!9% 18% ift +% 
ft ft ft ft 

17% IGA 17% ft 
30 26% 2ft +1& 
17,% 16% W% ft 
ft 5% ft 
12 % 12 12 % *% 
142 140141% *1% 
16% 14% 18% +1 
30% 29% 30% 

47% 46 47% *2jk 

33 33 33 -1% 
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7 G% 7 

41 39% 40% -ft 
43% 4 ♦% 

32% 32 3C ft 


134 

6(8 

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848 

10 


HQ Cm 
MS Cars 


0X6 USW4 19018% 18% 


18 

0X0 20 
18614 
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07B 11 

23 


606 

Htf ta 23 13S 
CP IDS 219 
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iMrtCp 10 14 

2 30 
11 48 

IMSnU044 10 3 

000 10 IMG 
K 820 


HafiiGp 


550 S«V M mV 
112 13*9 12V 17|I 
32 3?V 31 V XV 
3711 37V ?7V 
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10V »V i(d| 

9*; BV 9*i 
3 2V 3 
41 40V 41 

1*9 IV IV 
7V 7V ;V 
10 ID 10 
19V IBV 19*4 
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uV 
BV 


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04067 5V S 
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056 u 856 av av av 
024 73 77 11 IflV 10V 

aifi 13 55B UV IBV IP 7 ! 
024 36 3*8? 13V 13V 13V 
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rev re rev 
rev rev rev 

BV BV Oil 
14V i< mV 

34 XV 34 
BV SV BV 
77V 75V 76 
3V 3*4 3V 
8 1292 IOV 10V 10V 
58 1878 10 9V 10 

SV 5V SV 

9*2 SV BV 
XV 62*2 B3V 
28 27V a 
25V 25V »V 
197 26V 25V X 
4K 24V 24*9 24*| 


Itafciy G x 070 10 28 
1-38 92619 
72403 
IMndeA 012 15 144 
men 222164 
IMF 020 19 76 
MfilttWB 2X0 S 413 
8 73 


9 483 

3 217 

3120901 
24 8 

088 54588 
05014 
H 052 M 

892 27V 26*2 2BV 
15 SBB 13V 12V 13V 
HtMra 71 71X 18V IBV IBV 
Moderate OX 19 S3 7V 6V 7 

Mums MT 052 15 184 2flV 27V 27V 

an lei 30V re 29V 

0X 251852 32*2 31 V »V 

00*122 373 7V 7V 7V 

OX 18 72 26 25 25V 

058 12 55 22*2 22 22*2 

11 372 OV 26 26V 

4 SOT 9 BV 8*2 




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■A 

♦V 

► 1*2 

♦*9 

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■V 

♦V 

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-V 

♦V 

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-V 

■*1 

ft 

+% 

+2 

ft 

ft 

+1 

ft 

+% 

*% 




HACRb 01613 633 
tabFPCb 032 10 AS 
Ml tanpl 303084 94 
ttibe 020 IB 293 
W ri te NO 5 74 
EC 048217 5 

MafCOr 75 1D14 

NbMGbq 251097 
MstwkS 801063 
tasogen 6 370 
WmCBus 08013 125 
20 1870 
221414 
NwprtCp *00(20 15 

WWDd 285730 
064 22 0 
040 2010993 
1 11 89 

N Sterile 3z1D0 
WrDflTHx 1X4 10068 


NOV Air 


232672 
me A ID GO 

NEC tap 11 45 


- N - 

reV 25V 
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mV 14V 

14*2 13V 

15V 14V 
56V SfiV 
XV 32*4 

XV IBV 
7V JV 
BV BA 
17 IBV 
3V 3V 
30V 29V 
BV BV 
SV 5*2 
55V 55 

47H 45 
IBV 17V 
4V 4V 
34V XV 
15V 14V 
17 15V 

mV soV 
SV d5V 
2V 2V 


S2B4B 


25V 
16 +V 
14V +V 
14*9 +V 
14V -1 
S6V *V 
32*2 +V 
20V +*9 
7V +*9 
BV +A 
IBV -V 
3V -V 
X 

OV -V 
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55 -V 

47 V + 2*2 
17V 
4*2 

33V *V 
14V -V 
UV -IV 
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S*2 -V 
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- O - 


OCtartqe 

Ocfitan 


OtanLg 
OgHqrM 120 
ONofe 146 
OUU 1X4 
QUNfiB 0X2 
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Ora Nn 


17 32 
47 930 
20 480 
12 153 

5 2D 
91266 
9 879 

16 242 

6 860 
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Orison 

taohdi 

OrcbdSfip 


Qrtnp 

OfiMBA 

OMnriiT 


0X9 22 307 
28 452 
031 13 338 
23 136 
025450 111 
050 7 129 
M2 14 77 


10% 8% 
IBV 18 

7 BV 

12V 12V 
XV X 
2sV re 
30V x 

38*j 36*2 
25*2 34V 
7V 7 
40V 39V 
U 17V 
BA 7V 
BV 9 
7 BV 

2V 2V 

14 13V 

iiV ioV 

32V 32V 


BV 

18V 

BV 

12V 

30V 

28V 

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36*2 

25*2 

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39V 

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13V 

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PTetaa 


Pzijco Am 


PVeTrif 

tanVkg 

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tafidil 

WML 

FtenH 


FbOBfitfi 

nccadiz 

PUurett 


Pknotox 


rDCBDK 

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PiuUbx 


1X0 B105T 
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1X2 14 zlOO 
21 060 
294687 
0J36 34 358 
15 30 
050 8 110 
B 3 
1X0 18 66 
07216 543 
101017 
Q2D21 548 
040 71286 
1.12 18 8 
2B 30 
S 643 
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882802 
44 16 
020 17 1103 
088141946 
012 10 20 
4 2 

32 68 
0X9 32213 
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Mat 

PttdBfW 


tad ops 

FMfemB 


17 
27 7S2 
024 20 194 
012 101058 
61680 


44% 43% 

n% m 

29% 29% 
66% 63 

34% 32% 
35% 35 

7% fi 

12V nv 

14V 14V 
31 31 

40V 30V 
4 aV 
IBV IBV 
uV ioV 
27V (BB 
16V 18V 
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7V 7V 
21 X 
18V 17V 

22V 22*4 
34V XV 
16V 14V 
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5*9 d5V 

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44V 4?V 
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33V 31V 
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44*2 +1 
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29V 
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reV +V 
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40V +V 
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18V -IV 
11 +v 


27V 
IBV 
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20V 
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2*2 
34V 
14*2 
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43% +1% 
13*9 -V 
4% *V 

33*2 i-l 
84 +V 

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♦V 

+v 

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antraon an Bi nc 18*2 u iaV +*2 
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171197 UV 15*2 U «V 
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25 465 
088 55 410 
058 1819* 
080 11 7100 
12 1470 


13*9 *1V 

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3*9 1C 

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13 I2*j 
43*2 42% 
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12*2 12 
28>j 2B 
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21 % 27% 

r g% 


H% 

2V 

2V 

17V 

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23*9 

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12V 

43V 

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12*2 

26*2 

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sditaL 

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sq»h 


SB CP 
r -— ‘•B 


SHVTeCP 

Sratfract 






Samiic 

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SfiiMp 

sumoti 

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Sonoce 


A 

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suite 


SW|UGA 

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sewMi 

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StonD 

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smraac 

sunmeTe 

Sim Spat 


SwftTra 


Synrafic 


StoBn 

State 

SptnSdt 


1X6 92421 50% 50 50% 

02011 1ZBe£0% 20 20 

OM201U6 »% 2ft 24% 
1915103 4?A 48% 

15IM9 16% 16 16% 

5 1343 5% db% 5% 
052 II 720 17% (6% 17% 
f 5555 2H ft 
1201S 257 S2d30% 32 

0T8 20 491 18% W% 16% 
036 10 GB 3 2H 2ll 
1.1? 9 131 25 ?«% 25 

no m ift 17% ift 
41020 JA ^ii aV 
5 736 BV IBV 
18 3 *V 4*’ 4V 

a 27 it ire i«V isV isV 

OM 71 1544 3T V 31 V 31 V 
JU1W 4,1 4V 4% 
70 715 19 13V U* J 

>» «7 9V 6 S 
mi 772 rev re reV 
.» e .’V :* :'i 
an M aiB u v s:V a.‘V 

30 1050 6*t « 8% 

an io m i7 iz i: 
714601 70% UV U'l 

an ii rai av sV s% 

17 72 M*.« MV I9*J 
11 Z3 4 V 4% +V 

ass isTins rev rev rev 
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040 173507 JBJSVaaV 

are to 3za i7V i7V **% 

urn 1,; tv iA 

37 3138 S rev C 
060 II 85(14 79V MV MV 
14 2787 74V 74 24V 

008 10 842 IB 15% » 

an 12 588 iov iaV io,! 

ax 10 2116 9V 9 9 

43 37 20*£ XV XV 
1.10 9 50 77 31 »; 2 

11 S3 5% SV SV 

OX25 33B4 38V 35 36V 

id irr uV i7V i3V 
an 14 SB XV 32*1 23V 
084 X 1211 U 7 * 1>V IBV 
X 9*7 30V 30 X 

12 n iv 4% iV 

1413564 33% 32*a 33% 
24 511 X U 19*3 
4118578 SI 49% 50 

IK 6282 U 17 17*3 
040 14 110 17% 17*2 17V 

18 366 nSV 5% 5A 
2 4026 9A BA 9*9 

109 214 18 17V 17*2 

012 26 5085 15V MV 15*9 
22 BZ2 X 19*2 «V 
39 1951 6 5*9 5JJ 


♦■j 

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084 

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43 

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12 80 

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IB 



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200 

13 473 63% 

63 53% 

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20 472 

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164773 22% 22% 1 

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5 57 

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3% 

3% 

■% 


USTtap 

1.12 

23 484 

ft 

9 

9V 

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UBh (Ad 


12 577 

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8% 

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17 IB 

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ft 

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41339 
OSS IS 1329 
12 368 
048 X 61 
151323 
IX 8 484 
171795 
33 1646 
55034372 


Titan Q> 

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7 

Total Sys 
TMCmA 

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001 S3 618 
X 1S1 
TmfMn 021 183179 
lira Com E24035 
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UU 022 21 995 
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TMtftlMr 034 34 770 
Tom ftOM 3B1 2743 
Tofflte 03 931834 
THEnar 1 1100 
TntMMd 12 2 

Traowttx in 12 44 
item 17 445 

nun 3419*2 
TiutafikCxI.IO 12 31 
tagut can M 

TytfdA 00873052*5 


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2V 2*2 
29V XV 
BV dBV 

23 22% 
15V 14% 
41*2 tQ9 
27 22V 
17% 15% 
22*2 21% 
4% 4 

49 47V 
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9V 9V 
» 23*2 
42V 40% 
5% 5* 2 
17V ISV 
6% 5V 
B% 5SV 
12*9 UV 
5% M*t 
4 03V 
9V 09V 
37*2 36% 

2V 2 
15*0 14% 
18V 18*2 
6% d6V 
2 21 V 


2V +V 
29V +V 


-V 

+v 

-V 

+2 

+4 


8V 
a 

15 
41*2 
27 

1S% -1% 
22 +A 

4V *v 
48V +1V 
10V +*9 
9% +V 
23% 

42% +7V 
5% 

17V +1V 
5V •% 
56V 

IIV+IV 
4% -IV 

av -V 
9V 

37% +V 
:V +A 
15 +V 
IBV 
6*2 

22 +V 


-u- 


vnontCM 


Vteor 

VknqM 


VLSTBdl 

MnB 


- V - 

OX X 121 15V U 
1003*238 25V 24*2 
182702 30*2 X 
X 193 24V 23V 
15 802 17V 15*2 
2572658 18*2 17V 
131740 11*2 11 

077 77 150 18% 78% 


IB -1 
24% -V 
20 -V 
23*2 

17V +1V 
18 -*2 
11% -V 
18V 


MtataSL OM 
MdUtadA 022 

MU PH 024 

VD-40 240 


WhnwEn OlO 17 ZH 2*V X*2 
43 193 SS| 5% 
7 913 17V 17V 

13 S06 19% IBV 

14 484 33V 22V 
24 IBS 4lV 40V 

3 268 3% 2V 
91974 26 35% 

10 K 30V 30V 
9 2003 11% 10 

% 413 13% 13% 
18 81 4% 4% 
18 1071 45 44% 

43 6073 29V 29V 
12 11 15 14% 

213208 20% 19% 
21142 V. 3% 
1 237 5% 4V 


Hfc90u OX 

mu Bacox 

VWdta 

mosw 

MSMA 

mu ox 

wmeonoma 
WOimL 026 
WBtefx 040 
MV Group on 
Wjmn*ma40 


23V 

SV 

17% 

19% 

22 % 

40% 

2% 

23V 
XV 
10 % 

UV 
4V 
45 

29& 

15 +% 
20% +% 
3% -A 
5% +V 


+% 

+% 

■% 

■% 

-V 

+% 

+% 

+% 


+1« 


-X- Y-2- 

XBnx 303116 59% 57V 56V *% 

AniCBp 1 25* 3% 2% 2% -% 

Vk*M 0941852472 21% 20% 21% +1 

VDteRBd) 100 250 4% 3% 4 -% 

SsntUbb IX 7 748 34% 033% 34% +% 


• V 


n- 

r 




r. 

A 





t 


RSGKNAL MARKETS 
Hguras n parentheses 
show number at Ones 
or stock 

US 

Defer 

Msx 

Day's 

Change 

% 

- TUE3E 

Pound 

Staffing 

Index 

lAYDBCf 

Yen 

Index 

36GR 1 

DM 

Index 

31994 

Local Local 

Currency % chg 
Index on day 

Gross 

Otv. 

Yield 

M 

US 

Defer 

Index 

ONDAYC 

fend 

Sterling 

Index 

Yen 

ktdex 

R 12 1994 DOLLAR WC 

Local 

DM Currency 52 week 62 week 
Index Index Mgh Low 

*X — 
Year 
ago 

(■ppn»4 

Australia 166 )™, 

10837 

07 

15836 

10530 

13045 

14116 

05 

432 

165.71 

157.09 

10432 

13530 

14143 

189.16 

15738 

16832 

Austria (16) _ 

, 175.81 

Ol 

16834 

11137 

14176 

14168 

Ol 

1.13 

17534 

16830 

11038 

14832 

14158 

19839 

18746 

18233 

F^gvn (35) 

.16178 

-03 

15038 

10437 

134.74 

131.48 

-03 

430 

18533 

15073 

10438 

186.19 

13132 

177.04 

15934 

16036 

Bractf C?« ' 

17634 

03 

16731 

11238 

144.68 

27433 

-02 

076 

17632 

167.72 

111.70 

14437 

27430 




Canada (1 03) _ 

12530 

- 0.1 

119.48 

7930 

10234 

12035 

03 

173 

12539 

11944 

7934 

10102 

12037 

14031 

12054 

13433 

DSMf (33) 

hm.J236.74 

-03 

22436 

18023 

19167 

198.65 

-07 

130 

23082 

22040 

15078 

19538 

20011 

27079 

23438 

23834 

FmftpuJ p4| t 

.17438 

-Ol 

185.47 

11065 

14237 

17835 

-Ol 

0.78 

17436 

165.48 

11020 

14173 

17179 

201.41 

11635 

12137 

Ranee ( 102 ) .... 

163.48 

-04 

155.14 

10174 

13187 

13930 

-02 

108 

164.13 

15039 

10332 

13431 

13934 

16537 

15034 

17138 

Qmn^uiy (5B) 

13S30 

-05 

128.49 

8532 

11071 

11071 

-03 

137 

136.09 

129.01 

8532 

11138 

11138 

16040 

12187 

13831 

Hong Kong (55) .... 

-31139 

1.9 

295-99 

19733 

_q«Km 

30932 

13 

199 

30639 

29007 

19118 

26031 

304.04 

50056 

80539 

41832 

Freknd (14) _ 

195.67 

- 1.1 

18539 

124.18 

16000 

17937 

- 1.0 

336 

197.78 

18749 

12436 

16132 

181.00 

21630 

17736 

18048 

ttaty {59>^.l 

_ .,8068 

11 

65.18 

4339 

68.16 

8437 

14 

138 

6735 

8175 

4146 

5439 

8110 

97.78 

6537 

6734 

Japan (468) 

150.19 

-09 

142.53 

9531 

12231 

9531 

-0 4 

031 

15135 

14166 

9537 

12332 

9537 

170.10 

127.18 

13537 

Malaysia (97) - 

^-.444.01 

13 

42137 

281.78 

36107 

43047 

1.6 

132 

43739 

414.64 

27014 

3S738 

431.78 

62133 

43071 

53939 

Mexico (I B) - . , , , 

196836 

-14 

186054 

124931 

180937 

743839 

-23 

137 

2016.75 

191130 

127121 

1649-04 

780016 

264738 

IMAM 

99MK 

Nethotand (IB) 

209.19 

06 

19Q.S2 

132.76 

171,05 

168.14 

0.6 

144 

207,87 

107.06 

13134 

18938 

18737 


19138 

19442 


Now Zealand <14) 

Norway {Z3J 

S«03pM444) * 

South Africa fS9) 

Spain (38) 

&®CflW (36) irrl"w H| !|« n «. 

Switzerland f47) ><MMMU< . llt 

Thailand (46) 

Untfed Kingdom £0*) 

USA (514) 


7D.ro 

198.73 

343,36 

319.10 

13841 

m i < n227'00 

15938 

15028 

18737 

184.23 


Americas (663) 

Europe (?U 8 ].. 

Nordic | 116 ) 

Pnofic Basin {793} 

Euro-Pacific {1501) 

North Amend (617) 

Europe Ex. UK (504) 

Pacific Ex. Japan {32SK 

World Ex. US (1709} 

WOrid Ck. UK (2019) 

World Ex. Japan (1755) . 


172.16 

163.04 

21038 

-..^157.11 

159J50 

180.61 

rn.niHin146.47 

fll 

161.41 

16010 

■Hi'.iiH 17*9-24 


1.7 

-05 

-05 

0-3 

-04 

09 

00 

2.1 

03 

0 l 2 


ai 
0.0 
03 
-06 
-03 
02 
ao 
1 2 
-03 
-03 
02 


67.15 

13059 

32031 

302.83 

131.35 

21028 

16030 

T42.62 

17753 

174.84 


16038 

154.72 

20534 

14010 

151-36 

17140 

13000 

21554 

153.18 

157.63 

17010 


4491 

12077 

21021 

20150 

87.83 

144.83 

10051 

95.37 

118.72 

11082 


10026 

103.46 

137-32 

99.71 

10122 

114.82 

9095 

14100 

102.43 

10541 

113.75 


57.06 
16250 
281.16 
20092 
11017 
18038 
129 30 
12289 
15097 
15084 


14077 

13031 

17093 

12047 

13042 

14738 

11077 

18535 

131.98 

135.82 

14056 


76028 

23042 

28005 

138.49 

254-32 

13083 

14040 

177.53 

18423 


14021 

146.75 

20040 

103.79 

12076 

16025 

12005 

19096 

124J38 

13021 

17086 


Tho WtorW Index (2223) 167.96 


15040 10059 137J34 142.71 


Copyndtf. Dv Fi mc q Times lmkl Gottran. 
Pmh rbk ftnendma ea to Men 13A&&4 m 


Sa ch s ml Go. aid taflfifest SecaWa UrteL 


15 

-03 

-05 

ao 

-ai 

1 JO 

-ai 

zi 

ai 

03 


0.1 

01 

04 

-ai 

ao 

02 

01 

1.2 

-ai 

oo 

02 


1887 

bfldkn 


1.78 

1.B4 

228 

4.12 

137 

136 

2-51 

435 

299 


231 

020 

143 

130 

236 

237 
2-53 
134 
236 
2.18 
333 


79064 

94050 

31023 

13091 

22530 

15044 

147.28 

187,13 

18338 


17135 

16334 

218.79 

15832 

16032 

18029 

14045 

224,17 

16134 

16637 

17095 


18835 

32733 

301.67 

13138 

21405 

15020 

13939 

17739 

17431 


16330 

15435 

204-56 

14930 

151.89 

17091 

13083 

21231 

15332 

157.71 

18934 


4331 
128L04 
218.13 
20091 
87 JO 
14235 
10003 




11014 

11009 


10056 

10233 

13023 

9076 

101.02 

11182 

92.46 

14133 

10124 

105-03 

11238 


26021 

11169 

18433 

12936 

12041 

15331 

15036 


14060 

13331 

17044 

12091 

13085 

14732 

119.75 

16331 

132.42 

12833 

14033 


68.12 

J85L54 

23148 

28736 

13833 

251.72 

13031 

14145 

17739 

18188 


14333 

14060 

20533 

10334 

12031 

17933 

12730 

10635 

124.46 

139.18 

17033 


7739 

211.74 

40138 

34230 

155.79 

24231 

17056 

21436 

19004 


17058 

23331 

17099 

175.14 

192.73 

15012 


82.08 84-39 

18011 77230 

29436 34231 


18231 13738 

18022 18839 

14931 157.14 

181.11 19848 

17835 18939 


"India is widely regarded 
as the emerging 

market of the 1090s " 
Financial Times 26J0/J3 


17635 

17839 

10020 


18039 

18005 

W34 

15234 

17537 

142.17 

224.17 
15431 
16130 
17834 


16437 

182.12 

147.18 
15431 

186.19 
144,40 


FT 


15005 

18135 

184.02 


FIN ANCIAL TIMES 


16&21 159.45 106.19 13731 142£8 18080 16169 18626 


. . v f ' \ ’> / { f[ f.7A 


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