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FINANCIAL TIME S 


Europe^- Business- Newspaper. 


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' h w West reacts coolly 
n to Karadzic plan 
• for Bosnian peace 

b » 

Western governments reacted cooEy to the six-point 
p^ce |dan proposed by Radovan Karadzic, the Bos- 
1 P ; , man Serb leader, and Us invitation to Jimmy 

Carter, the former US president, to act as a media- 
}L\\ . tor. william Perry, US defence secretary, said the 
.. . > plan “could be a positive step forward in the 
.- ]*•■•. humanitarian direction'’ but “history i ndicate s the 
■ . > need for some scepticism”. Page 16; France and US 

> raise stakes. Page 2 . 

*• ■ * 

Arctic oH pntfect threatened: A S15ta project 
to develop the Tiznan Pechora oil basin in Russia's 
; _ > Arctic circle is in jeopardy following last-minute 
- demands by the Russian partner for a 50 per cent 

equity stake. Page 16 

Siemens expects 20% profits ri se ; Siemens 
*- ' . forecast a 20 per cent surge in profits in the current 
-^77 financial year. Page 17; Lex, Page 16 

Sabena, Belgium’s state-owned national carrier, 
was set for a radical change in ownership as Swiss- 
air confirmed it was in discussions with the Belgian 
government over the aMine. Page 17 

4 1 Swiss Reinsurance, the world's second-largest 
reinsurance group, and CS Holding, the finanriai 
ij services group bunt around Credit Suisse, have 
formed a strategic alliance in financial and reinsur- 
ance products. Page 17 

' UK electricity takeover stalled: The UK 

government is to retain its “special” shares in the 
regional electricity companies until the end of 
March, making impossible the completion of a 
potential takeover of Northern Electric by conglom- 
erate Trafalgar House before then. Plage 17; 
Observer, Page 15; Lex, Page 16; Trafelgar House 
cuts charges. Page 24 

SaaAcM chairman ^ future unsure: Maurice 
Saatchi’s tenure as chair man of SaatcM & Saatchi, 
the UK advertising company he founded, looked 
increasingly uncertain last night after the compa- 
ny's financial advisers, S.G. Warburg and UBS, rec- 
ommended that the board should ask him to stand 
down. Page 17; When charm wears thin. Page 14 

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This week's fatal accident In North Carolina 
(above), when a small commuter aircraft crashed 
into a wood, killing 15 of the 20 passengers, may 
deter passengers from short-hop flights. Many pas- 
sengers already dislike the propeller-powered air- 
craft typically used-on these flights. Page 16 

Prospect of new talks over Chech n ya; A 

full-scale war in the rebel Rtusian republic of Che- 
chnya remained in obeyance last night as the possi- 
bility emerged of a new round of negotiations and 
as rumours spread of the unwillingness of Russian 
troops to encircle the capital Grozny. Page 2 

Berlusconi pr ep ar es for showdown: Sflvio 
Berlusconi, the embattled Italian prime minister, is 
preparing for a showdown early next week in par- 
liament with his troublesome illy Umberto Bossi, 
leader of the populist Northern League. Page 3 

Incfian cabinet set for reshuffle: P.V. 
Narasimha Rao, India’s prime minister, last night 
seemed to be preparing a cabinet reshuffle in an 
effort to win back public confidence following the 
ruling Congress (D party’s defeat in state elections 
last week. Page 4 

Mercosur trade talks begin: The four mauber 
countries in the South America's Mercosur customs 
union began a filial meeting setting the seal on the 
formal establishment of the trade area on January 
1. Page 6 

Ulster fa«Mw progress: Northern Irish loyalist 
leaders emerged from a historic first round of talks 
with British government officials and said they 
were satisfied that gnarantees that the province 
would remain part of the UE would be honoured. 
Page 9 

D ia m o nds stolen: Thieves took at least $lm 
worth of diamonds from Belgium’s big Kring dia- 
mond exchange in Antwerp. Police said the thieves 
apparently used forged keys to alter one of the 
country's best-protected buildings and open safes. 


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FRIDAY DECEMBER 16 1994 


D8523A 


MAM s inks Morgan Stanley, Warburg merger plan 


By John Gapper and Norma 
Cohon in London and Ffichard 
Waters in New York 

Morgan Stanley and S.G. 
Warburg yesterday called off 
talks armpri at creating a domi- 
nant global investment bank 
because of resistance from War- 
burg’s fund management arm 
Mercury Asset Management to 
the proposed merger. 

The talks broke down after the 
board of MAM, which is 75 per 
cent owned by Warburg, 
demanded a premium offer fin: its 


minority shareholders, as well as 
operational independence from 
Morgan Stanley. 

Morgan Stanley’s executives 
acknowledged for the first time 
that the primary motive was to 
gain control of MAM. “MAM was 
the reason for us to do this deal," 
said Mr Stephen Waters, co-man- 
aging director of Morgan Stanley 
Europe. 

Although Warburg intends to 
resume its str a tegy of building a 
global business independently, 
the breakdown could increase the 
chance of a takeover bid and 


offers by other investment banks 
to merge. It could also renew ten- 
sions between Warburg and 
MAM, which believes its custom- 
ers prefer it to be independent 

Earlier this year, MAM limited 
business it gave Warburg in pro- 
test at the handling of a takeover 
bid. 

MAM'S board, advised indepen- 
dently by Lazard Brothers, the 

merchant bank, is thought to 

have asked for a premium of up 
to 30 per cent for minority share- 
holders, which would have meant 
offering about £40Qm for their 


equity. 

Senior executives of Morgan 
Stanley said last night that they 
would have been prepared to pay 
some premium to the MAM 
shareholders. However, they 
were not willing to accept the 
MAM demands for independence. 

Warburg’s shares fell to dose 
99p down at 699p after the 
announcement yesterday, while 
MAM’S shares fell 67p to 678p. 
MAM shares bad risen on expec- 
tations of a premium offer. In 
New York, Morgan Stanley’s 
shares had Mien 25 cents at mid- 


day to $6TA. 

MAM said in a statement its 
objective bad been “to maintain 
the operating independence of its 
business for the benefit of its cli- 
ents’'. The company has strongly 
defended its independence from 
Warburg in the past 

Lord Cairns, Warburg’s chief 
executive, said the merger had 
been “a bold initiative, bat by no 

means essential far further prog- 
ress”. He raid Warburg was “as 
strongly placed as ever” to be a 
top global investment bank. 

Mr Richard Fisher, Morgan 


Stanley’s chairman, said War- 
burg would have bear “a good 
fit” and the collapse was unfortu- 
nate. Morgan Stanley said the 
price and terms on which MAM 
indicated it would participate 
woe unacceptable. 

Talks broke down yesterday 
after a meeting in London on 
Tuesday attended by Mr Fisher 
and Mr John Mack. Morgan Stan- 
ley’s president. The US firm 

Continued on Page 16 
Lex, Page 16 
Warburg left in lurch. Page 22 


Fine Gael prime minister pledges to continue peace process I F0VTVC 

n a • 11 1 1 — 1 1 1 1 mi in'i m n ji-»~ ■■ Jr 


Bruton wins 

yote to head 
new Irish 
coalition 




By John Murray Brown hi Dublin 

Ireland agreed a new coalition 
government led by the conserva- 
tive Fine Gael party yesterday, 
ending a month of political 
uncertainty after a scandal 
dragged down its Hanna EYdl-La- 


Mr John Bruton, the Fine Gael 
leader, supported by 65 votes to 
74 , becomes Ireland’s tenth prime 
minister, leading a coalition with 
Mr Dick Spring’s Labour party 
and the Democratic Left of Mr 
Protasias De Rossa. 

Mr Bruton, who succeeds 
Fiaxrna Ffiil’s Mr Albert Reyn- 

Page 2 

■ Calm hand at the helm of 
uneasy coalition 


olds, said the gove rn ment’s first 
national aim would be to sustain 
the Northern Ireland peace pro- 
cess. In London Mr John Major, 
the UK prime minister, said he 
had sought an early meeting with 
the new Irish premier. 

Speaking to the Ddil (parlia- 
ment), Mr Bruton said his gov- 
ernment would “work ceaselessly 
and sensitively to make peace a 
permanent part of our future". 

IBs election was welcomed by 
unionists in Northern Ireland. Mr 
Peter Robinson, Democratic 
Unionist MP for East Belfast, said 
Mr Bruton had a greater under- 
standing of the Ulster Unionist 
position than most other mem- 
bers of the Irish parliament 

His desire to change articles 


two and three of the republic’s 
constitution - which claim terri- 
torial jurisdiction over Northern 
Ireland — was a "p mnmigmg back- 
cloth" to his term in office, Mr 
Robinson said. 

The wwtitiftn , embracing con- 
servative and radical elements, 
may prove hard to maintain On 
economic policy. Fine Gael's fis- 
cal targets may coma under pres- 
sure from Labour and DL. 

Mr Bruton conceded, that the 
government was made up of par- 
ties whose "origins abd polities” 
were very different. But he 
Insisted that “differences don't 
have to pose a threat”. 

Fine Gael, a rurally based 
party with largely middle-class 
support will have eight minis- 
ters. Labour, which has tradition- 
ally projected itself as a Europe- 
an-style secular party, will have 
six ministers - the same number 
it enjoyed in the outgoing admin- 
istration. However, Labour's Mr 
Ruairi Quinn wifi taka over the 
finance portfolio, the first time 
the finance ministry has not been 
controlled by the largest party in 
a coalition. 

Democratic Left, the successor 
of the Official IRA when the Pro- 
visional IRA split to pursue the 
armed struggle in 1970, dropped 
its earlier insistence an two cabi- 
net positions. 

The main points of the new 
government’s agreed programme 
include moves to keep public bor- 
rowing below 3 per cent of gross 
national product; tax cuts for the 
low paid; a freeze on privatisa- 
tion; a referendum on divorce; 
and a commitment to the North- 



*1. m +*> ' • 

r mrnmz 



leaseback plans 
for Gibraltar 





Taking charge: Fine Gael leader John Bruton receives his seal of 
office in Dublin from the Irish president Mary Robinson hguto nootar 


em Ireland peace process. 

The breakthrough coincides 
with talks yesterday Jn Belfast 
between the British officials and 
representatives of loyalist para- 
militaries. 

David Owen adds: In London, 
Mr Major said he was confident 
the new Dublin government 
would wish to “ s us t ain together 
the work we have done over 
Northern Ireland." 


By Tom Bums In MacMd 
and Jimmy Bums In London 

Spain is planning to resurrect 
suggestions for a leaseback of 
Gibraltar, or a sharing of sover- 
eignly, that were raised 10 years 
ago at the first annual bilateral 
meeting to discuss the fixture of 
the British colony. 

Mr Javier Solaria, the Spanish 
foreign minister, will tell British 
negotiators on Tuesday in Lon- 
don that “imaginative steps” are 
required to end a diplomatic 
deadlock and avert a "mafia- 
type” takeover of the colony. 

One Spanish proposal is that 
Gibraltar should be leased to 
Britain for an unspecified num- 
ber of years. Another is that Lon- 
don and Madrid would, for a 
period of time, share sovereignty. 

Under . either -formula, tento- 
rial sovereignty over Gibraltar 
would eventually be resteed to 
Spain, though its institutions and 
identity would be safeguarded by 
self-rule powers negotiated 
between T/Wdnn and Madrid 

The UK has difficulties with 
the leaseback suggestions 
because the British government 
is committed to Gibraltar’s 1969 
constitution. This guarantees 
that the UK will not cede the 
colony to Spain against the 
wishes of the majority of its pop- 
ulation. 

Spain is also concerned that 
Gibraltar's economy, which was 
once dependent on the UK’s Min- 
istry of Defence, relies increas- 
ingly an money laundering and 
cigarette and drug snmggiing. Mr 


Solana will seek firm assurances 
from Mr Douglas Hurd, the UK 
foreign secretary, that illicit 
activities on the Rock will cease. 

Spanish diplomatic protests 
about Gibraltar's alleged illegal 
economic activity have increased 
in recent months, and Madrid 
has stepped up border controls 
between Spain and the colony. 

Spanish police patrols on 
beaches dose to Gibraltar seized 
three separate hauls of hashish 
weighing a total of 350 kilos last 
week. 

In addition. It emerged yester- 
day that an international police 
investigation into allegations of a 
£5.4m fraud, linked to a large 
property development in Gibral- 
tar, had run into difficulties. This 
occurred because of failure to 
trace a series of banking transac- 
tions related to the alleged 
fraud. 

British and Danish police have 
been conducting a lengthy inves- 
tigation into alleged irregulari- 
ties arising out of the muBi-mill- 
ion-pound property development 
financed by BalHca Finans, a 
Danish finance company. 

But one senior investigator 
admitted that the probe bad so 
far proved inconclusive because 
of the absence of a clear link 
between certain bank accounts 
held in Switzerland, and a trust 
in Liechtenstein called the GDP 
Foundation. The trust is alleged 
to have held monies on behalf of 
the Gibraltar government 

Gibraltar dispute as bard as the 

Rock, Page 3 



French central bank warns 
Balladur oyer public deficit 


GENEVE 


By David Buchan hi Paris 

The Ttnnfe of France warned the 
Paris government yesterday that 
it must stop slipping behind its 
plan to reduce the public deficit, 
if necessary raising taxes to meet 
the Maastricht criteria for mone- 
tary union by 1996. 

The wanting came as the 
newly independent central bank 
set monetary goals for 1995. It 
renewed its pledge to keep 

annual Inflation below 2 per Cent 
anil thn franc stable, and to allow 
M3 - the broad measure of 
money supply - to grow by 5 per 
cent a year over the medium 
term, permitting non-in flationary 
growth of 2-5-3 per cent. 

Reacting to the slight weaken- 
ing of the franc in recent days, 
Mr Jean-Claude Trichet, the 
Bank of France governor, said 
“speculators [against the franc] 
trill lose, as before”. He claimed: 
“hi my eyes there is the potential 
of the franc appreciating.” 


France's inflation rate, now 
running at an annual L6 per 
cent, had been better than that of 
Ge rman y and the Netherlands for 
the past 3% years, and, with the 
exception of one half year, better 
than that of the US since 1987. 

Mr Trichet urged the govern- 
ment of Mr Edouard Balladur, 
prime minister, and its successor 
after next May’s presidential elec- 
tion to “undertake a decisive 
reduction of public deficits”. 

In November 1993, France 
joined Germany in aunonnemg a 
joint convergence programme 
that was supposed to bring down 
French public deficits to 5J. per 
cent of gross domestic product 
this year and 42 per cent next 
year to meet the Maastricht 
guideline of 3 per cent in 1996. 

The outcome of this year's pub- 
lic deficits is 53 per cent, and the 
government’s prediction for 1995 
is deficit spending equivalent to 
4.6 per mit of GDP. 

Mr Trichet, who negotiated 


Maastricht for France when he 
headed the Treasury, said “the 
target of 3 per cent in 1996 win 
have to he met”. 

He added: “It would be unimag- 
inable for France, representing 
what it does in Europe, not to be 
within the Maastricht criteria in 
1996.” Monetary union in 1997, 
although difficult, was possible 
through “will and continued 
effort". 

He urged that extra tax reve- 
nue from economic growth, 
which msec, the official statistics 
agency predicted would be at an 
annual pace of more than 3 per 
cent in the first half of 1995, “be 
devoted to cutting the defiriT. 
Non-productive public spending 
must be further squeezed, too. 

If these two measures were not 
enough, “then extra revenues 
will have to be raised”, although 
privately the central bank 
acknowledges that that is likely 

Continued on Page 16 





CONTENTS 


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Boutique. 14 New Bond Street. Tel. 071/409 3 





© THE FINANCIAL TIMES LIMITED 1994 No 32,551 Week No 50 


LONDON - PARIS - FRANKFURT - NEW YORK - TOKYO 


V 

* 











Wt 


FINANCIAL TIMES FRIDAY DECEMBER 1« 1994 



NEWS: EUROPE 


France and US raise the stakes in Bosnia 


Telecom 


Italia set 


By Bruce Clark in Brussels 


France and the US. the leading 
western players in the Bosnian 
poker game, have both raised the 
stakes by promising to get more 
deeply involved, at least to the short 
term. 

That was the conclusion to emerge 
yesterday horn a two-day meeting of 
Nato defence ministers where ambi- 
tious plans for new multinational 
operations in Bosnia topped the 
agenda. 

Paris and Washington have both 
made it plain that deeper involve* 
meat for a short time could be a 
prelude to abandoning the scene in 
Bosnia - something neither country 
wants to do, although it could 
become inevitable. 

And, according to diplomats at 
Mato headquarters, each country has 


a hidden as well as an overt agenda. 

France is promoting a plan to 
regroup and reinforce the UN mis- 
sion in Bosnia, which would have 
the happy side-effect of making it 
much easier to withdraw if that 
becomes unavoidable. 

The US has thrown its weight 
behind the idea of a massive Nato 
operation to provide “cover” for an 
eventual UN pull-out from Bosnia. If 
it ever goes ahead, this operation 
would also have a side-effect: It 
would satisfy the long-standing US 
demand for effective western inter- 
vention against the Serbs. 

The French plan for upgrading the 
UN operation in Bosnia will be dis- 
cussed next week in The Hague at a 
mating of militar y chiefs from the 
11 Nato countries which are directly 
or indirectly involved in Bosnia. 

Britain, second biggest troop con- 


tributor after France, has serious 
reservations about the French plans. 
One reason, say diplomats, is that 
London fears a watering down of the 
authority of General Sir Michael 
Rose, the British officer who is UN 
commander in Bosnia. 

The French ideas include the sec- 
uring of Sarajevo airport; the cre- 
ation of a safe corridor between 
Sarajevo and Split; and the regroup- 
ing of UN forces near the corridor. 
Whatever their other merits, all 
these ideas would make for an easier 

withdrawal. 

As for the US-sponsored plan for a 
massive withdrawal operation, one 
of its affects would be a transfer of 
operational control from the UN - 
whose caution in Bosnia has infuri- 
ated Washington - to the Atlantic 
aTlfanca 

That could mean that even as they 


withdrew, western forces in Bosnia 
would finally take the action against 
die Serbs which US politicians have 
long been advocating. 

The scale of the proposed opera- 
tion, which would be by for the big- 
gest mission Nato has ever sent Into 
a war zone, seems to grow with 
every news report. 

Under one scenario circulating 
among Nato diplomats, the exercise 
would require 29,600 ground troops 
and 4,000 airmen for combat roles 
alrma phis many thousands mor e in 
ernnrniTniratinins and logjstlCS TOlCS. 

Mr William Perry, OS defence sec- 
retary, disclosed yesterday that the 
Nato operation would also envisage 
removing or destroying the Serbs* 
anti-aircraft barriers, something the 
US is already im patient to do. 

However, the Nato withdrawal 
plan would present all countries 


with ame hard ffnanHal choices. On 
one hapd, it has been estimated that 
getting the necessary equipment 
into position would cost about $800m 
- roughly the equivalent of Nato’s 
entire military budget for the year - 
while every month th e oper ation 
lasted would cost about 1270m. 

These are big sums. and. sp endin g 
thorn could have the unfortunate 
effect of leaving Nate without foods 
to finance military co-operation with 
countries in central Europe. On the 
Other band , Canada and Nordic 
states deployed the best of their 
armour and communications equip- 
ment in Bosnia, and the thought of 
ahanAmfng or destroying them in 
an over-hasty or poorly supported 
withdrawal would be nightmarish. 

The six-point ceasefire plan 
advanced by Mr Radovan Karadzic, 
ttreenton Serb leader, has clouded the 


outlook for any of the plans dis- 
cussed in Brussels ever coming to 
fruition. As one Nato diplomat saw 
it, Mr Karadzic is clearly hoping that 
his new show of reasonableness will 
divide the international community 
by satisfying some countries while 
leaving others sceptical. 


to sign 


mobile 


Mr Peny. and Mr Willy Claes, 
Nato secretary-general, hath stressed 
yesterday the ceasefire proposals 
were no substitute for a foil-blown 
peace plan. Mr Claes expressed 
douht as to whether It was necessary 
for ex-president Jimmy Carter, or 
any other high-level intermediary, to 
talk ceasefire terms with Mr Karad- 


phone pact 


ByAmfcew 
in MHan 


ZlC. 


But Mr Perry was slightly more 
positive, saying the Bosnian Serb 
initiative could help the humanitar- 
ian situation. 


Italian ministers should dedde 
today whether to relax the 
terms of Telecom Italia's 
monopoly over certain tele- 
phone services, in order to off- 
set the impact of increased 
competition in the lucrative 
mobile telephone sector. 

In an indication that a com- 
promise may be found tosafr- 
isty the state-coatroBed cam- 


Calm hand at 


limits 


helm of uneasy Prospect of new talks over Chechnya 


pany, the Telecoms Ministry 
said yesterday that, after the 
ministerial discu&sion, 
Telecom Italia was likely to 
sign the joint convention gov- 
erning digital mobile phone 


Irish coalition 


By John Murray Brown 
fn Dublin 


Mr John Bruton was once 
described as “John Unionist” 
by Mr Albert Reynolds, the 
man he succeeded yesterday as 
Ireland's new prime minister. 

It was an unfortunate slip of 
the tongue. Nonetheless the 
inadvertent allusion to Mr Bru- 
ton's views on Northern 
Ireland hi ghlights one of the 
key differences in government 
policy likely to emerge with 
his accession yesterday as 
head of a three-party coalition 
between his Fine Gael party, 
Labour and the small Demo- 
cratic Left 

The feeling in Dublin last 
night was one of relief after a 
month of deliberations and 
allegations, which had left 
Ireland in the hands of a care- 
taker administration since the 
collapse of the Fianna Fail- 
Labour coalition after a judi- 
cial appointment row. 

The delay had cast an ill- 
timed shadow over the North- 
ern Ireland peace process, 
straining relations between 
Dublin and Sinn Fein, the 
IRA’s political wing, and halt- 
ing negotiations on the joint 
framework document which 
Ireland and the UK hope win 
form the basis for all-party 
talks an Ulster's constitutional 
foture. 

Ireland still faces a hectic 
diplomatic agenda, with Dublin 
due to host the European 
Union’s 1996 intergovernmen- 
tal conference. Some analysts 
yesterday predicted the coali- 
tion might not survive that 
long. 

The potential for discord 
within such a wide-ranging 
coalition is clear. Fianna Fail, 
licking its wounds on the oppo- 
sition benches, is in no mood 
to be forgiving. 

Mr Bruton’s Fine Gael is a 
rural-based conservative party 
with largely middle class sup- 
port which has lost votes to Mr 
Dick Spring's more urban 
Labour party. Meanwhile, Mr 
Proinsias De Rossa’s Demo- 
cratic Left is an old-fashioned 
socialist party and the succes- 
sor of the Official IRA, when 
the Provisional IRA broke 
away to pursue the armed 
struggle in 1970. 

Even at the last minute yes- 
terday, Democratic Left looked 
set to pull out of negotiations 


once It became clear the party, 
winch has just six seats in the 
DaiL, was being offered a single 
cabinet portfolio. 

In Mr Bruton, the govern- 
ment will have ^aim if imchar- 
ismatic leadership. A former 
finance minister, he is a plain 
speaking barrister with 20 
years in the Dafl and a wealth 
of ministerial experience. Polit- 
ically he is said to he close to 
the rural wing of the party, 
identified with Mr Liam Cos- 
grave, a former prime minister. 

In February Mr Bruton rode 
out a leadership challenge, and 
still co old be vulnerable to 
attack from the liberal wing of 
the party associated with 
another former premier. Dr 
Garret Fitzgerald. 

Mr Bruton tikes to dub Fine 
Gael as “part of the great Euro- 
pean Christian Democrat 
movement”. He campaigned in 
favour of divorce reform, 
where there will be a meeting 
of minds with Labour and 
Democratic Left. 

On the North, the strains 
may he difficult to hide. Fine 
Gael is historically identified 
as the party which voted for 
the Anglo-Irish Treaty of 1921. 
which created partition. As a 
believer in a more accommo- 
dating stance towards the 
Unionists, Mr Bruton is likely 
to push for reform of Articles 2 
and 3 of the constitution, 
which enshrine Ireland's terri- 
torial claim to Northern 
Ireland. 

London in particular is keen 
to see that Fianna Faff which 
has played a key role in the 
peace process so for, should 
not now be isolated. The party, 
as the voice of constitutional 
republicanism (Fianna Fail 
voted against the Treaty) 
enjoys better relations with 
Sinn Fein than the other par- 
ties. 

As a result, Fianna Fail's 
support could be critical if tin 
coalition is to steer through 
constitutional reform, which 
would have to be put to a refer- 
endum. 

On the economy the coali- 
tion’s problems are perhaps 
more acute. Mr Bruton won a 
reputation for tight spending 
policies when in charge of 
finance in 1982. But any 
attempt by Fine Gael to cut 
taxes and reduce public spend- 
ing Is likely to be resisted by 
Labour and Democratic Left 



Finance East Europe reports 
twice-monthly on investmcnL finance 
and hanking in the emerging market 
economies of Central and Eastern 
Europe and the European republics of 
the former Soviet Union. 


As a subscriber 10 Finance East 
EUROPE you will be kept abreast of: 


Privatisation and restructuring of 
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efficienU market-driven businesses, 
and the pan played by Western 
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Investment m die region - by 
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and die World Bank, as wdl as 
commercial banka. 


New legislation and regulations 
affecting nuance and in vestment in the 
area. 


The development of domesti c equities 
and debt markets in [he countries 
concerned. 

The development often with Western 
participation, of a commercial 
banking sector. 

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FT Bdnitind LJtiff p ri ife Lid. 

R«g*4rftd Office. Number One Sutflfefrilfc Briefer, 
l-j^lon SKI WL, Engbutl Rcpncrcd No. "TOM. 
VAT Rcgufeiiiaii No. OB 278 5. HI :i. 


By John Lloyd 
hi Grozny 


A full-scale war in the rebel 
Russian republic of Chechnya 
remained In abeyance last 
night as the possibility 
emerged of a new round of 
negotiations and rumours 
spread of the unwillingness of 
Russian troops to encircle the 
capital, Grozny. 

General Dzhokar Dudayev, 
the Chechen president, said he 
was willing for negotiations, 
broken off on Wednesday, to 
restart - “at the highest politi- 
cal level". 

He was speaking after a cabi- 
net meeting at which Mr 
Paimaz Abubakarov, the 
finance minister and head of 
the Chechen negotiating team, 
presented a new position 
for discussion with the 
Russians. 

Earlier, Mr Abubakarov had 
told the Financial Times that 
the new position depended on 
the Russians halting hostili- 
ties, on the agenda being 
broadened and on the level of 
the negotiating team being 
raised. 

“I believe that to continue to 
negotiate is the only way to 
stop massive bloodshed", he 
said, a line evidently supported 



rendering weapons for a fur- 
ther 48 hours and agreed to 
talk at a higher level 

There are signs that dis- 
agreements about the war 
within the Russian leadership 
have afflicted the troops in the 
field 


Telecom Italia has withheld 
its signature pending a satis- 


factory reply to Its demands 
for foil liberalisation of mobile 
phone tariffe and a cut in the 
foe it pays the governme nt for 
Its monopoly over other 



1 


fcVf 




The column coming in foam 
the west, commanded by Gen- 
eral Ivan Babichev has beat 
halted for two days at the vil- 
lage of Davidenho, where the 
road to Grozny is blocked by 
women dancing and praying: 

Within the capital, the popu- 
lation continues to prepare for 
war. On its northern side, 
emplacements are being 
thrown up, trenches dug and 
elite volunteer regiments, some 

of them claiming to be ready to 
fight to the death, are taking 
positions In front of the Rus- 
sian tank column. 


Armed Chechen women demonstrate against the Russian 
in Grozny yesterday 


outside the 


palace 

AP 


by Gen Dudayev and the cabi- 
net 

The situation around Grozny 
remained very tense last night 
as the first shell fell within the 
city itself - on its northern 
suburbs - and as the northern 


division of the Russian forces 
moved to within 7km of the 
city’s edge. 

At intervals, the Russians 
bombarded Chechen positions 
on the perimeter of Grozny, 
although the firing vjzs lighter 


than in the past two days. 

In Moscow. President Boris 
Yeltzin appeared to support 
the more conciliatory line 
emerging from the Chechen 
leadership. He reportedly 
extended the deadline for sur- 


The stakes were raised by a 
Chechen claim that they had 
nuclear artillery shells and the 
cannon to fire them - left by 
tiie Russian army - based in 
Shiali some 25 miles southeast 
of Grozny. 

They said, however, that they 
would not fire the shells prefer- 
ring instead to have them put 
under international control by 
the United Nations. 


Santer: firm believer in market forces 


Lionel Barber on how the next Commission president will face the tough tasks ahead 


M r Jacques Santer, 
prime minister of 
Luxembourg and 
presidentelect of the European 
Commission, holds the first 
official session with his new 
colleagues in Brussels today. 
In Its own modest way, the 
mating marks the end of the 
Defers era. 

Mr Santer has been kicking 
his heels these past few weeks 
as Mr Jacques Defers has occu- 
pied centre stage with his on- 
off interest in the French presi- 
dency. 

Stiff as visitors to his office 
in Luxembourg report. Mr San- 
ter has been using his spare 
time to reflect upon what he 
intends to accomplish in his 
five-year term in office. This 
begins at the end of next 

mnnth 1 as aiwlwg he ftp 

rest of the 2frmeraber Commis- 
sion win approval in a vote of 
investiture in the European 
parliament on January 18. 


THE FINANCIAL TIMES 
Published by Tbe Financial Times 
(Europe) GmbH, Nibdimgeapbtz 3, 
60318 Frankfurt am Mam, Germany. 
Telephone -M49 69 156 850. Fax *-W9 
69 5964481. Telex 416193. Represe n ted 


in Frankfurt by J. Wilber Brand, ? 
hdm J. Brian, Colin A. Roman! 


wa- 


GcschafbfBhrer and in London by 
David CM. Bed and Alan C M2fcr. 
Printer DVM Druck-Vemieb nod Mar- 
keting GmbH, Admiial-Roeendahl- 


Mr Santer is determined to 
make a good speech to tbe par- 
liament the day before. He has 
carefully circulated drafts to 
colleagues, and wants to set 
out the Commission's pro- 
gramme in terns which can be 
understood by ordinary citi- 
zens. “Santer is very worried 
about the gap between public 
perceptions of the European 
Union and its policies,” a col- 
league 

As the president-elect under- 
stands, substance matters. So 
what are his own priorities, 
and how does he intend to 
reach a consensus made the 
newly-expanded Commission, 
an uneasy combination of 
heavyweight hold-overs such 
as Mr Martin Bangemann 
(information technology) and 
Sir Leon Brittan (bade), and 
tigerish newcomers such as Ms 
Hitt Bjerregaard, the Dane in 
charge of environment policy? 

Just as important, how does 
he intend to keep tiie 15 mem- 
ber states an board, a drill at 
which Mr Defers excelled dim- 
ing his 10 years in Brussels? 

Mr Santer says all the big 
ideas are on the table; now it is 
up to membra- states and the 
Commission to make them 
work. Hie has therefore set 


himself three conventional, but 
difficult tasks; He is committed 
to achieving monetary union 
by the end of the century; to 
strengthening the common for- 
eign and security policy; and to 
laying the groundwork for the 
1996 inter-governmental confer- 
ence (IGO to review the Maas- 
tricht treaty, the Uman’s blue- 
print for closer integration. 

Mr Santer is an unahaBbad 
Emu supporter and sees a sin- 
gle currency as the indispens- 
able nrwnplmignt to tile fitngla 

European market He is cau- 
tious about tbe prospects for 
Emu by 1997, but relatively 
upbeat about reaching the 
Maastricht treaty target of 
1999. 

On no account does he advo- 
cate softening the Emu “con- 
vergence criteria" on budget 
deficits, government debt and 
exchange rate stability, thoug h 
he recognises that the Maas- 
tricht treaty does offer flexibil- 
ity, provided that candidates 
for monetary union are moving 
in the right direction toward 
targets. 

Most striking to visitors is 
Mr Saltier's belief in tiie virtue 
of market forces. Whereas Mr 
Defers’ first instinct was to 
corral the financial markets. 


asperiafiy daring the currency 
turbulence in 1992-1993, Mr 
Santer leans toward a lighter 
touch. He thinks the introduc- 
tion of wider 15 per cent fluctu- 
ation bands in August 1993 for 
currencies in the exchange 
rate mechanism - and the fact 
that they have worked so well 
since then - shows that people 
should put more confidence in 
markets than politicians, 

Mr Santer is less sure about 
how best to strengthen the 
oommon foreign and security 
policy, though he shares the 
view held in Bonn, Brussels, 
London and Paris that it is not 
working p ro per ly . 

Now comes the hard part 
Countries such as the UK and 
France are wary of Commis- 
sion encroacbmmit in foreign 
policy-making and prefer the 
Council of Ministers to take 
the lead role. Mr would 
like to bolster the Commis- 
sion’s role in intelligence gath- 
ering and political analysis and 
has also been dropping hints 
about stre n g t h ening the West- 
ern European Union, the fledg- 
ling EU defence arm . 

This does not amount to sup- 
port far, say, the creation of a 
pan-European army but he 
would agree with Mr Defers’ 


recent comment that the Union, 
“must be more than the Red 
Cross". 

On the 1996 con f erence, Mr 
Saute’s bottom line is that the 
Union must put in place new 
arrangements so that it can 
cope with the next round of 
enlargement covering the for- 
mer communist countries of 
central and eastern Europe, as 
well as Cyprus and Malta, per- 
haps around the turn of the 
century. 

Contentious issues include 
an adjustment in the voting 
system in the Council of Minis- 
ters which is weighted dispro- 
portionately in favour of small 
member states; a reduction in 
the number of Gamnnsstaoers; 
and a change in the six- 
monthly rotating presidency 
system so that large member 
states preside more regularly 
in an expanded Union. 

Mr Santer keeps his cards 
dose to his chest, but he is 
adamant on one matter the 
IGC must take decisions which 
will allow the Union to Amo- 
tion with an expanded mem- 
bership Of more than 25 mam. 
bars before negotiations with 
the east Europeans can begin. 
He is betting an a long inter- 
governmental conference. 


The. final ministerial deci- 
sion could, be complicated fay 
the obvious Hi-feeling stirred 
up this -week between Mr Sil- 
vio Berlusconi, Italy’s prime 
minister, and his old business 
rival Mr Carlo De Benedettiu 

Offiretti, tbe computer group 
chaired by Mr De Benedetti, is 
; one of the leading partners in 
j the consortium which will 
operate Italy’s new digital 
mobile phone network. 

The consortium, Omnitel- 
Fnmto Italia, won the licence 
to compete with Telecom Italia 
on tiie eve of the March gen- 
eral election which brought 
Mr Berlusconi to power. 

The defeated consortium 
included Flat, the automotive 
and industrial group, and Fis- 
| invest, Mr BcrinseonPs media 
group. 

Mr D» Benedetti angered Mr 
Berlusconi by Indicating, in an 
interview pti b B ahed last week- 
end, that hisadxnintetratlon 
should be replaced by an insti- 
tutional government 

On Tuesday, Mr Cesare Prev- 
ia, defence minister and for- 
mer 4 Mninvest lawyer^. told 
another newspaper that tiie 
mobile phone contract had 
been granted “unjustly” to the 
OmnltetPronto Italia consor- 
tium. Hr Previti said he would 
go into more detail "when the 
moment cmnes to explain this 
abomination". 

Mr Berlusconi himself also 
launched a thinly vdled attack 
on Olivetti and Mr De Bern- 
dettt In a. letter to H Sole 24 
Ore, Italy’s business newspa- 
per, published ahead of his 
questioning by MHan anti-cor- 
ruption magistrates on 
Tuesday. 

Telecom Italia has 
demanded the right to set its 
own prices for mobile tele- 
phone services on the existing 
analogue network. 

The company has bnilt a dig- 
ital network, with which 
O mni tel-Pronto Italia will 
compete. But the state com- 
pany argues that if the prtee of 
its analogue services continue 
to be regulated it will lose sub- 
scribers to the new 
consortium. 

Omnitel-Pronto Italia - 
which includes US, German 
and Scandinavian partners - 
claims any concession to Tele- 
com Italia would put it at a 
further disadvantage as the 
new entrant in the market 

Analogue customers can use 
their phones only in Italy, 
whereas the digital subscrib- 
ers can make calls from other 
European countries which 
have adopted the common 
“GSM" standard. 


Lambert, cfo Tbe Financial Tuna Lim- 
bed. Number One Southwark Bridge, 
London SB! 9HL» UR. Stnrabokkn of 
the Financial Times (Europe) GmbH 
are: The Financial Times (Europe) Led, 
London and F.T. (Germany Advertis- 
ing) Ltd, London. Shareholder of the 
above mentioned two companies is: The 
Financial Times Limited. Number One 
Southwark Bridgp. Loodon SE1 9HL. 
Tbe Company a mcotpora ied under the 
laws of rhgland and Wales. Chairman: 
D.GM. ML 


Bulgaria backs ex-co mmunis ts and king 


T he Bulgarian. Socialist 
party (BSP), successor 
to what was once the 
eastern European communist 
party most loyal to Moscow, is 
expected to return to power 
after general elections this 
weekend. If so, it will join simi- 
lar parties In Lithuania, 
Poland and Hungary which 
revived like Lazarus from what 
was widely assumed to be 
death after the collapse erf the 
Berlin Waff 

But an equally miraculous 
revival has been taking pia» 

at the opposite end of the polit- 
ical spectrum - a surge in pop- 
ular enthusiasm for the idea of 
monarchy in general and for 
the exiled monarch, ex-King 
Simeon the second, in 
particular. 

The popularity of the king 
has been rising since the down- 
fall of Todor Zhivkov, the old 
communist dictator, in 1989. 
Even president Zhelyu Zhelev, 
a former dissident, who used to 
he the most popular politician 
in Bulgaria, recently came 
behind King Simeon in public 
opinion polls. 

The 57-year-old king , who 
lives in Madrid, Is widely con- 


FRANCE: Publishing Director: D. 
Good, 168 Roe de Rivoi l F-7S044 Pub 


Cede* 01. Telephone (01) 4297-0621, 
Fax (01) 4297-0629. Printer SJl NorJ 
Eclair, 13/21 Roe do Cairo, F-59100 
Roubaix Ccdcx 1. Editor Richard Lam- 
bert. ISSN; ISSN 1148-2753. Cbmmb- 
flon Paritnirc No 67808D. 


DENMARK: Financial Times CScandm- 
Avia) Ltd, Vimactitaftcd 42A, 
DK-116! CopnhafieaK, Tdahtee 33 
13 44 41. Fax 33 95 53 35. 


COMPANY NOTH 


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Theodor Troev in Sofia and Anthony Robinson in 
London report on the political revival of two rivals 


sldered to be closer to restora- 
tion as a irmrimn cons titutional 
monarch than any other exiled 
royal dafmamt in the former 
communist world. Many of the 
49 political organisations con- 
testing the election have 
sought to capitalise on the pop- 
ular longing for “a good and 
just king". 

The socialists have not been 
able to ride the monarchist 

chariot for Ideological reasons. 
But political rivals claim the 
BSP has secretly inspired mon- 
archist organisations to regis- 
ter for the election to prevent 
them joining the Union of 
Democratic Forces (UDF), the 
main anti-communist coalition. 
Every vote diverted from the 
UDF serves tiie BSP cause. 

In 1991, most royalists voted 
for the UDF after King Simeon 
appealed to Bulgarians to vote 
for the “democratic farces". 
This was Interpreted as sup- 
port for the UDF. although the 
King refused to urge anyone to 
vote for a particular party. Dis- 


persion of pro-monarchist 
votes, meanwhile, mamt that 
none of the divided monarchist 
groups managed to clear the 4 
per cent hurdle needed to enter 
parliament 

This weekend’s early elec- 
tions result from the refusal of 
both the BSP and the UDF to 
replace tbe outgoing non-party 
government of technocrats. 
This was led by an academic, 
Mr Lyuben Berov, but sup- 
ported by the BSP. ft resigned 
last September after success- 
folly renegotiating Bulgaria's 
$&3bn (£5.7bn) foreign debt. 

This time around the ’ UDF 
has faffed to attract more than 
a few of the smaller pro-monar- 
chist dubs to join Its election 
campaign and has found it 
hard to attract pro-monarchist 
and pro-republican voters. The 
UDF has pledged to contest the 
1946 referendum which abol- 
ished the monarchy, but has 
not come out in favour of a 
restoration. 

King Simeon has urged the 


monarchist groups to unite. 
But political infighting and 
personal power struggles have 
left voters to decide between 
seven big monarchist groups 

flnd many smallm* 
clubs. 

All that unites the groups is 
a desire for restoration of the 
old Turnovo constitution. The 
king’s supporters say he is still 
the- monarch as there was no 
formal abdication. The royal 
family was forced to leave Bul- 
garia when Simeon was just 
nine’ years old after a rigged 
plebiscite under the new com- 
munist rulers. 

This abolished the monarchy 
in 1946, although the Turnovo 
constitution, with the monar- 
chy as head of state, was not 
changed at the time. On reach- 
ing his 18th birthday, Simeon 
of Saxe-Coburg-Gotha was pro- 
claimed Kfcog of the Bnlgwrlflwn 

under tiie Turnovo constitu- 
tion. 

Opinion polls suggest that 
more and more Bulgarians see 


restoration of the monarchy as 
a guarantee of stability. Royal- 
ists also aigne that monarchy 
could help build a harrier 
against further ethnic tensions 
in the Balkans. Politicians, 
eager to seize more power in 
elections, are more prone to 
mardpulatingaOmic minorities 
than a monarch of ris- 

ing above such calculations, 
they add. 

In an interview, King Simeon 
said that he could provide the 
country with "unity, national 
reconciliation and a sense of 
recovered (figrifty”: 

The ex-ktag does not rule out 
the possibility of co-existence 
of constitutional monarchy 
with a socialist government. 
But analysts in Sofia doubt 
that the monarch could be 
brought closer to tiie throne if 
the polls are accurate and the 
politically disciplined BSP 
defeats the divided nwngn»hffi 
and anti-communist forces. 

The latter outn umb er the 
socialists by a big majority, but 

have proved unable as yet to 
forge the alliances needed to 
keep the socialists out of power 
or put the king back on bis 
throne. 


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“jCmissile contract 

* *Q|jfl Ministry yesterday awarded Matra a 

B i b “™n (£230m) contract to develop a long-range cruise mis* 

2 r die, CTentuaily giving France the equivalent of the Toma- 

^ tj hawk, which the US used against Baghdad in the 1391 Gulf 
w. Matra Defense- jEspace, part of the Lagarddre group, plans 
. 5 5 to develop the subsonic “stealth” cruise missile, with a range 

^ 400600km, using some of the technology from its shorter- 
“’■ ?■. T" - ' 1- ! tange Apache mi ssile already being producing' with Deu tsche 

* *• *\ V Aerospace of Germany. Matra, which is negotiating to mergB 
i J : its missile business with that of British Aerospace, ai*n hopes 

'”*■ t® mtsrest the UK Ministry of Defence in a derivative of the 

7 inisdle. The UK has invited offers for its programme for 

z ‘- -i;\ ‘ -f .. ■ ■, the Conventional Armament Stand Off Mforfip an air-to-sur- 
-t fe® 6 ndssfle with a range of nearly 400km, and Mr NoSl 
*'!&3 Forgeard, head of Matra Defense, said yesterday that his 
► L i company would propose a scaled-down version of the French 
v*:,'"' ‘-Vj.'i cnrise nris s tte to the UK. The French cruise wifogfle which 
s</ could cost a total of FEltfbttFFrlObn, was the only big new 
programme written into the 1396-2000 military frame- 

". v * :s '., v work programme approved earlier tins year. Matra heat Afiros- 
, -r. / >r, i- patia l e for the development, but the latter company will be a 
. \ m /■ ; s ub co nt ractor on the cruise missile’s development anH was 
■ ~ " 1 - j- ^ yesterday awarded another FFr2hn contract to develop a 
” j ‘ supersonic anti-ship missile. David Tbichan, Paris 


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Greek sell-ofF chief suspended 

.7 J : Mr Vassilis Sevdalis, the head of Greece’s privatisation 
- agency, has been suspended following allegations of a conflict. 
1 / - of interest in the sale of Piraiki-Patraiki, once Greece’s biggest 

: textile company, to a group of Greek and Saudi investors. A 

“/ judicial inquiry into the disposal is under way. Mr Sevdalis, 
*>: t. chairman of the Organisation for todustpat Reconstruction 
-v. (OAE), an umbrella organisation for disposing of debt-bur- 
^ ^ denied state enterprises, denied any wrongdoing. But according 
-_i,J 10 / to. industry ministry cffiraalg he admitted Hgmg a shareholder 
: - to a computer company controlled by the Vemikos group, one 

=. - . of the investors to. Piraiki-PatraikL OAE agreed last month to 

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r r* : EU farm "switchover’ abolished 

'^ii- 

'sr-t,.' European Union farm ministers agreed yesterday to abolish 
'•;/ tiie “switchover” mechanism, which has cushioned farm 
' prices over the past decade at a cost of Ecufibn. (£4.7bn). The 
- ; switchover is part of the ED’S system for converting farm 

payments into national currencies. It operated to boost agri- 
cultural prices by 21 per cent over the last 10 years as it 
revalues farm payments to follow the upward movements of 
T 7 ? the strongest EU currency, which was usually the D-Mark. 
The German government, which was in favour of retaining the 
switchover, managed to pass a compromise package which 
,/J^ offers some compensation to fanners for currency movements. 
" Hie new rules compensate former* if real exchange rates 
^ ■ move three percentage points below or five percentage points 

7 -- s above the green currency rate which is used for. converting 
' "V form prices. The compromise was p^. -jed against the view of 
r ‘ t the Commission and the UK government, which, with Den- 
mark, voted agahwrf the package. Deborah Hargreaves, Brussels 

• /•; Ukraine abandons bond issue 

■ b ^n 

/ President Leonid Kmchma yesterday abandoned Ukraine’s 
; ~ $I0bn (£6fan) bond issue. The scheme, launched this spring by 

s*/ former President Leonid. Kravchuk, had been criticised over 
v ] the legality of sellmg bonds backed by Ukraine’s industrial 
and natural resources. One MP also alleged the bonds were 
^ sold in the UK and Switzerland, with the revenue diverted to 
" secret bank accounts, Mr Kuchma’s decree dissolves the Ukrai- 
. . nian Credit Fund, which oversaw the sale of 400 hands worth 
‘ $25m each, and orders prosecutors to look into the corruption 
'.■ / allegations. Matthew Kaminski, Kiev 

- ECONOMIC WATCH 

-■ • rl 

Swedes, F inns see inflation fall 


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' ■ ' Sweden and Finland 

swaaem mnanoi^- . ■ yesterday announced a slight 

Aariuai% danybCPl'- . . .• ' fall in inflation to November 
" ' jc ' ‘ ‘ : • ’ • ' . only days after the central 

'' banks of both countries 

' 4 _ 0 a J ‘ '..'iL’.J raised interest rates because 

^ I : <rf ®sars of an upward swing 

3 ^ . I — . ' — _•■■ ■ in inAntinn next year. The 

' , .1: .. . . consumer price index to Swe- 

■ ‘ ai Q*'=l:'. _ / •' den rose 2.4 per cent in the 

“ l ■ A* ' : j ” Fear to Novraiber, cooqjared 
^5 with ZJS per cent in the year 

- 1 ; f " - to October. However, the 

2-0 . ■ - ‘ . Rikshank believes tax rises 

' and capacity shortages will 
i4 ‘ 1 ■ * ’• ■■ ■ » ■' ■ ;i »‘ «,"» lead to a breach of its target 
Jan tbo 4 Dae of 3 per cent inflation in 1996 
atwoKpaMnan- '! '. Also yesterday new orders to 

industries rose 1.0 per cent in 
October from September and jumped 17 per cent compared 
with October 1333. In Finland, year-on-year care inflation 
’ . stood at just LI per cent in November, compared with 1,3 per 
cent the month before. This was well within the central bank’s 
target of 2 per cent in 1996, but it fears economic over-heating 
' and rising wage chains. Hugh Camegy, Stockholm 
■ A 0.2 per cent rise in prices during November kept Spain's 
.. year-on-year headline inflation unchanged at 4.4 per cent The 
. failure to reduce price increases will now make it difficult for 
the government to achieve its revised year-end headline infla- 
tion target of 4J. per cent and means that the gnwwmmgnt will 
have to increase inflation-indexed state pensions, which are 
I nnmmTiy calculated on the of November's 12-month 

1 [ figure. 

i ■ Registered unemployment in the Netherlands rose to 490,000 
in the three months ended November 30, from 448,000 in the 
similar period a year earlier. Unemployment was L2 per cent 
higher than the previous three-month reporting period. 


Spain and UK seem unable to control developments in the colony, write Tom Burns and Jimmy Burns 


B ritish officials have long 
compared annual meet- 
ings with their Spanish 
counterparts to discuss Spain’s 
claims to the UK colony of Gib- 
raltar to “visits to the dentist”. 

Stepped-up border controls 
by Spain, which claims that 
the Rock has become a drug 
smuggling and money launder- 
ing centre, are likely to make 
the next round of talks 
between British foreign secre- 
tary Douglas Hurd and his 
Spanish counterpart Javier 
Solana, scheduled for next 
Tuesday to London, more pain- 
ful than ever. 

The 2%-sq mile Crown colony 
that, nestles under a towering 
limestone rock near the 
southern tip of Spain remains 
an intractable problem on the 
diplomatic agenda of both the 
British and Spanish govern- 
ments. The increasing asser- 
tiveness of Mr Joe Bossano, 
Gibraltar’s chief minister since 
1988, has served to drive the 
bi-lateral talks even further 
down a dead-end. 

The embarrassing truth 
about the talks is that neither 
side has anything of substance 
to say to the other for both 
appear impotent to control 
developments on the Rock. 

In foot, each of the parties 
involved with Gibraltar has a 
separate agenda: Spain wants 
territorial sovereignty over the 
Rock which the Gibraltarians 
refuse to accept: the UK is 
committed to respecting the 
wishes of the Gibraltarians but 
it wants to monitor closely 
what goes on in its colony; and 
Gibraltar wants freedom from 
Spanish claims and from Brit- 
ish mterference. 

What makes it all the more 
difficult is that the border con- 
trols, ostensibly to build up a 
data base on the Rock’s drugs 
business, often result in six- 
hour queues stretching deep 
into the colony's overcrowded 
urban centre. Gibraltarians 
resent it as much as they did 
the blockade imposed by Gen- 
eral Franco in 1969 and which 
was lifted only after 16 years. 

Accusations of bad faith, real 
or imagined whispering cam- 
paigns and sheer 31-temper fos- 
tered by past fears and present 
fr u s trations lave replaced the 
optimism that mar ked the re- 
opening of Gibraltar's . land 
frontier with Spain in 1986 and 
the start of the so-called Brus- 


The Rock Of dbraltars "a stone in the shoe* of Madrid's relations with London 



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Ut WtlUXw nWSIQiny 

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sels negotiations process 
between London and Madrid to 
discuss “all aspects” of the 
future of the colony. 

Meanwhile Gibraltar, 
described by Spain’s prime 
minister Mr Felipe GonzdJez as 
a “stone in the shoe” of Mad- 
rid’s relations with London, 
has been pushed, and has 
pushed itself, into an isolation 
that is wholly at odds with an 
open European economy. 

Effective lobbying to Brus- 
sels by the Spanish, who elatm 
sovereignty over Gibraltar, 
has, among other things, pre- 
vented the airstrip, which 
divides the Rock from main- 
land Spain, from gaining the 
benefits of air traffic deregu- 
lation within the EU. 

But the tough tactics 
employed by Spain as it pur- 
sues its 281-year old claim over 
Gibraltar are increasingly 
overshadowed by Britain’s 
efforts to reclaim a measure of 
control over a colony that it 
fears may have cut loose from 
Whitehall’s moorings. 

Mr Bossano believes a return 
to a virtual frontier blockade is 
bad enough Rut worse is the 
squeeze he suspects is being 
engineered by London to 
undermine the colony's 
attempt to make itself econom- 
ically self-sufficient as a first 
step towards self-determina- 
tion. 

The view from London is 
that Mr Bossano has overstep- 
ped his ' brief by seeking, 
though without much success, 


Berlusconi 
plans League 
showdown vote 


Ely Robert Graham in Rome 

Mr Silvio Berlusconi, the 
embattled Ttaih>« prime minis- 
ter, was yesterday preparing 
for a showdown early next 
week in parliament with Ids 
troublesome ally, Mr Umberto 
Bossi, leader of the populist 
Northern League. 

Mr Berlusconi indicated he 
would be the one to impose a 
vote of confidence, rather than 
leave the initiative to the 
opposition, ms aim is to force 
Mr Bossi and his 105 deputies 
to decide once and for all 
whether they back the eight- 
month-old, right-wing 
coalition. 

The issue of a confidence 
motion was raised in a meet- 
ing between President Oscar 
Luigi Scalfaro and Mr Berlus- 
coni yesterday afternoon. The 
debate could be staged on 
Tuesday or Wednesday, 
depending when the 1935 bud- 
get dears its last parliamen- 
tary hurdles. On Wednesday, 
President Scalfaro decided to 
cancel all engagements outside 
of Rome to be on hand to mon- 
itor Italy’s fast-evolving politi- 
cal crisis. 

The president has indicated 
he has few Illusions about the 
durability of tire current gov- 


ernment Last month Presi- 
dent Scalfaro voiced open dis- 
agreement with Mr Berlusconi 
over the advisability of calling 
early elections. 

He still opposes early 
elections, while Mr Berlusconi 
regards the threat of holding 
fltwn one of ids w»atn cards, 
believing Mr Bossi risks 
being one of the main 
casualties. 

Mr Bossi. for his part 
declined to confirm he was 
willing to formalise a new affi- 
ance with the centre-left that 
would place the League with 
the former communist Party of 
the Democratic Left (PDS) and 
the Popular party (PPI) of Mr 
Rocco Buttighone. 

This affiam-p on Wednesday 
humiliated the government, 
voting to create a special par- 
liamentary commission for 
broadcasting. Mr Bossi later 
met Hr Massimo D’Alema, the 
PDS leader, and Mr Buttig- 
liane. 

Suggestions that almost half 
the League's 105 deputies were 
not willing to follow Mr Boss! 
in a break until the govern- 
ment were denied yerterday. 
However, Mr Roberto Mar tini . 
the Italian interior minister 
and a League MP, is cautions 
about mafcing an y move. 


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to set up Gibraltar as an off- 
shore financial centre selling 
banking services to the Euro- 
pean Union as a de facto mem- 
ber but with looser regulations 
than in the UK. Britain is 
responsible for the Rock’s 
external affairs under the 
terms of the colony’s 1969 con- 
stitution and Whitehall is firm 
about its supervisory powers, 
to particular those covered by 
EU directives concerning the 
financial sector. 

The festering relationship 
between Whitehall and the col- 
ony’s local government came 
into the open this s umm er 
when Gibraltar’s London-ap- 
pointed attorney general, Mr 
John Blackburn Gittings, 
resigned nearly a year before 
Ms three-year posting ended. 

He had concluded that con- 
flicts of interest in an increas- 
ingly politically-charged envi- 
ronment had left him with no 
option but to stand down. As 
attorney-general, Mr Black- 
burn Gittings had to pursue 
the dual role of legal adviser to 
the Gibraltarian government 
and legal representative of the 
British government at a time 
of growing tension between Mr 
Bossano and London. 

At the ce n tre of that tension 
is Mr Bossano ’s accusation 
that Whitehall's regulatory 
supervision prevents Gibraltar 
from developing tax-efficient 
financial services similar to 
those in Luxembourg. “I think 
(the UK) is hampering us,” he 
says. “It could be a long-term 


strategy to make Gibraltar 
look to Spain for its future.” 

Mr Bossano says the EU 
allows discretion in the imple- 
mentation of its directives and 
that Whitehall should allow 
more leeway over those that 
directly affect Gibraltar’s inter- 
ests. This makes Whitehall 
nervous. 

“We are making absolutely 
sure that we have control over 
financial regulations in Gibral- 
tar,” says a senior UK Trea- 
sury official “In the past the 
Gibraltarian government has 
had a very large say and this is 
no longer the case." 

Seen from Madrid, the core 
of the Gibraltar problem is that 
London has been too lenient 
with Mr Bossano. “We are com- 
ing round to thinking that Lon- 
don cannot deliver anything on 
Gibraltar,'* says a Spanish dip- 
lomat who will be attending 
the London talks. 

At the same time, as the 
recent border controls demon- 
strate, Spain is making no 
attempt to “win the hearts and 
minds of the Gibraltarians ”, 
say British officials. They point 
out that the Spanish govern- 
ment was angered when Mr 
Bossano attended the IMF- 
World Bank meeting in Madrid 
in October as part of the UK 
delegation and it ignored the 
chief minister when he said he 
was prepared to negotiate 
directly with Spain. 

Madrid was not to the mood 
for such peace overtures after 
a “Gibraltar national day” that 




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had been held on the Rock the 
previous month. Mr Bossano 
bad invited Basque and Cata- 
lan separatists to celebrate the 
colony's self-determination 
ambitions. 

Then there is the growing 
evidence that Gibraltar’s econ- 
omy. as it foils to make head- 
way in its off-shore banking 
ambitions, is becoming increas- 
ingly dependent not just on 
cigarette smuggling into Spain, 
a traditional money-maker on 
the Rock, but on narcotics. 

Madrid claims that in the 
first 10 months of this year 42 
tons of hashish bave been 
seized by Its police as well as 
2.3m cartons of cigarettes, 
Hashish seized from Gibraltar- 
based boats last year totalled 
38 tons, up from 10 tons to 1992 

Spanish officials say the 
Rock is coming close to a 
Mafia-type takeover “Gibral- 
tar’s narcotics business is 
industrially organised,” says 
one official. 

There are few satisfactory 
explanations for the presence 
of 200-odd fast launches - 
painted black to help avoid 
detection at night - moored in 
Gibraltar’s marina 

The stock response an the 
Rock is that the launches leave 
the marina empty of goods and 
return empty; whatever might 
occur in the 9-mile wide Straits 
of Gibraltar that separate 
Morocco from Spain is not the 
concern of the colony’s govern- 
ment. Spanish police say drugs 
are loaded in the straits and 
off-loaded on Spanish beaches. 

Smuggling has increased In 
Importance as Mr Bossano’s 
financial centre ambitions 
have foundered - partly 
because of Spanish opposition 
and partly because of timing, 
given the recent global reces- 
sion. The financial services 
industry’s prestige headquar- 
ters was to have been a 
multi-million development 
called Europort, work on 
which began in 1989 on land 
reclaimed from Gibraltar’s har- 
bour by Baltics group of Den- 
mark. The office towers are 
completed but virtually empty. 

After dragging Baltics FM- 
ans, the Danish group's invest- 
ment unit, to the brink of 
bankruptcy. Europort has con- 
tinued to haunt Mr Bossano's 
government because of a row 
over fraud and corruption. 

British police have been 


asked by Gibraltar's governor 
to co-operate with the Danish 
police who are following up 
allegations of fraud linked to 
the development. Unofficially, 
they are looking into whether 
there is evidence of corruption 
by members of Mr Bossano’s 
government 

A former Baltics employee 
has testified at a Danish court 
hearing into Baltica's near col- 
lapse that a payment of 
£250,000 was made to a Gibral- 
tar minister in connection with 
Europort. 

Mr Bossano denies any 
impropriety by members of his 
government. “There are allega- 
tions of fraud by Danes against 
Danes involving Danish 
money. There Is no Gibraltar- 
ian money involved,” he says. 

The UK and Spain, as allies 
in the EU and Nato, cannot 
allow the Gibraltar problem to 
degenerate further. North 
Africa, clearly visible from the 
Rock, is enough of a security 
flashpoint for Europe as it is. 

In the circumstances, the 
best outcome for the talks next 
week would be a realisation by 
both sides that the Brussels 
negotiating process has run its 
course and that a radically dif- 
ferent approach is required. 

One way forward, favoured 
by some Spanish foreign minis- 
try officials, could be for Mad- 
rid to take up Mr Bossano’s 
olive branch and begin discreet 
contacts with the chief minis- 
ter to find out what is on his 
"shopping list”. 

Should Madrid take such a 
plunge it might well find to its 
surprise that Mr Bossano, who 
is a tough bargainer but is ulti- 
mately a realist, will be willing 
to settle for some form of dual 
sovereignty or leaseback 
arrangement that will respect 
the Rock’s identity and institu- 
tions. This was suggested by- 
Spain ten years ago, and Mad- 
rid says London has never 
properly responded. 

Mr Bossano needs a deal 
because he cannot afford to 
have Europort, the duty-free 
shops on Main Street and the 
hotels losing increasing 
amounts of money (the Holiday 
Inn hotel, the second-biggest 
has applied for receivership). 
And certainly he cannot afford 
to bave the blackened hulls of 
the stripped-down speedboats 
in the marina as virtually the 
only sign of financial success. 



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■ ■ a 

India’s PM plans cabinet purge 


By Stefan Wagstyi 
In NewDeffd 

Mr PV Narasimha Rao, the 
Indian prime minister, last 
night seemed to be preparing a 
cabinet reshuffle in an effort to 
win back public confidence fol- 
lowing the ruling Congress (I) 
party’s defeat in state elections 
last week. 

Large numbers of ministers 
offered to resign yesterday in 
order to give Mr Narasimha 
Rao a free hand in rebuilding 
his government 

The offers came amid persis- 


tent opposition attacks on 
alleged corruption and incom- 
petence in the government, 
especially in its handling of the 
1892 Bombay stock market 
scandal and of a sugar short- 
age earlier this year. 

The turmoil was com- 
pounded by arguments over 
the resignation on Wednesday 
night of Mr A K Antony, the 
civil supplies minister, who 
quit unexpectedly after he was 
named in a government note 
on the sugar affair presented to 
parliament earlier in the day. 

The note, deliberately writ- 


ten in a low-key way to avoid 
giving offence, levelled vague 
criticisms at several officials 
and ministers. Mr Antony, who 
is known for his honesty, 
reacted strongly at being 
tarred with the same Inrush as 
others he believes guilty of 
incompetence in the affair. 

While his resignation is 
unconnected with yesterday's 
offers, it increases the pressure 
on ministers tainted fry corrup- 
tion allegations. 

These Include Mr Romesh- 
war Thakur, the minister of 
state for finance, and Mr B 


Shankaranand, the health min- 
ister, who were both named in 
a parliamentary inquiry into 
the Rs40bn (£82Qm) securities 
scandal, in which money was 
illegally siphoned out of banks. 
Mr Thakur was accused in the 
report of delaying an official 
probe into the affair. 

Mr Shankaranand was 
accused of having authorised 
illegal money transfers wheat 
oil minister and head of the 
state-owned Oil Industry 
Development Board. Sepa- 
rately, Mr Kalpnath Rai, the 
food minister, has been critic- 


ised in [nn flaiwant for allegedly 
mismanaging emergency 
imports of sugar. 

Mr Narasimha Bao has 
be come concerned about alle- 
gations of In competence and 
corruption because these 
issues figured prominently in 
the recent state elections in 
w hich Congress was defeated. 
Although voters were more 
concerned with their local 
sta te administrations than the 
government in Delhi, Mr Nara- 
siwiha Rao seems to believe 
that: the party needs to project 
a cleaner image nationally. 





Narasimha Rao: anxious after 
accusations of incompetence 


Quitting lifts lid on Indian sugar industry 

Probe fall-out draws attention to highly regulated and corruption-prone sector, writes Stefan Wagstyl 

A Cabinet minister's res- World snow pricw ter with a reputation for bon- try is in charge of food distrl- MMTC which are run by the it could have paid too * torn 

ignation has cast an esty, who was furious at being button, and Mr AC Sen, the commerce ministry, to import- less through more a dep t fra 

unwanted light into S per twin* ■ bracketed with those he chief cdvil servant in the food lxn tonnes to top up the domes- mg, it would have saved 

450 — 


A Cabinet minister's res- 
ignation has cast an 
unwanted light into 
the murky world of the highly 
regulated and corruption-prone 
Indian sugar industry. 

The causes of the departure 
of Mr A K Antony, the civil 
supplies minister, lie in the 
government's mishandling of a 
sugar shortage earlier this year 
which forced the country to 
pay tens of milli ons of dollars 
more for imported sugar than 
it might otherwise have done. 
Sugar producers and traders, 
in India and abroad, made 
bumper profits at the expense 
of the Indian government and 
of sugar consumers. 

In June, Mr PV Narasimha 
Rao, the prime minister, 
ordered an inquiry into the 
affair by Mr Gian Prakash, a 
retired civil servant, who pres- 
ented his findings in Septem- 
ber. The prime minister at first 
refused to publish the report 
But this week, after the ruling 
Congress (D party’s defeats in 
the recent state elections in 
which corruption was an 


400 — 


350 


300 — §• 


Jan 


1994 


Dec 


important issue, Mr Nar a s imha 
Rao responded to opposition 
party pressure and allowed a 
junior minister to present a 
short written summary to par- 
liament This vaguely appor- 
tioned blame to almost every- 
one involved in control of the 
sugar industry. 

The low-key note, which the 
prime minister presumably 
hoped would offend no-one, 
outraged Mr Antony, a minis- 


ter with a reputation for hon- 
esty, who was furious at being 
bracketed with those he 
believes responsible for the 
debacle. 

Mr Antony's resignation has 
intensified the pressure on 
those who played a bigger role 
in the scandal. 

India is both the world’s 
largest producer and consumer 
of sugar. To ensure that even 
the poor can buy sugar, about 
half the output is sold through 
government ration shops at 
artificially low prices. The rest 
is sold on a so-called free mar- 
ket, although even here prices 
are influenced by the govern- 
ment which regulates the vol- 
ume of sugar reaching the 
stores. Entry into the industry 
is controlled by the govern- 
ment which grants production 
licences - a lucrative source of 
bribes. 

All this interv entio n faffs to 
eliminate periodic swings 
between gluts and shortages. 
The first inkling of a shortage 
this year emerged last winter 
when Mr Antony, whose minis- 


try is in charge of food distri- 
bution, and Mr AC Sen, the 
chief cdvil servant in the food 
ministry, warned Mr Kalpnath 
Raj, the food minister, that 
imparts were needed. Mr Rai 
rejected the advice at a meet- 
ing in December of the Cabinet 
Committee on Prices, which 
controls administered prices. 

Because of other official 
business, the committee did 
not meet again until Match, 
when rising sugar prices in the 
domestic market had set alarm 
bells ringing. Mr Rai finally 
conceded that the crop would 
be smaller than expected. 
According to documents leaked 
to Indian newspapers, Mr Man- 
mohan Singh, the finance min- 
ister who chairs the commit- 
tee, remarked drily that sugar 
production estimates should be 
assessed independently since 
"certain parties had a vested 
interest in giving credence to 
unreliable estimates”. 

The committee agreed to 
allow private imports of sugar 
and authorised the state-owned 
trading corporations, STC and 


MMTC which are run by the 
commerce ministry, to import 
lm tonnes to top up the domes- 
tic output of 9.6m tonnes. The 
first privately imparted sugar 
arrived in mid-April but it was 
not until the end of May before 
the government agencies made 
their purchases. 

The purchases were delayed 
by arguments between the 
food, commerce and finance 
ministries over who should pay 
for any losses suffered from 
buying sugar at world prices 
and selling them at (lower) 
Indian prices. The delays were 
compounded by an abortive 
attempt by the Food Corpora- 
tion of India, a third govern- 
ment agency, to make its own 
sugar imports - a move 
authorised by Mr Sen, the food 
secretary, and blocked by Mr 
RaL 

As word of India’s purchas- 
ing phms leaked into the inter- 
national market, so prices 
soared from about $290 a tonne 
in January to $360 by June. 
The Indian government even- 
tually imported lm tonnes - if 


it could have paid $50 a t onn e 
less through more adept trad- 
ing, it would have saved $50m. 
Private traders imported a fur- 
ther lm: some of them made- a 
killing by. securing early con- 
tracts. Those who bought late 
actually lost money since by 
the end of the summer prices 
were falling once more. . 

Once the panic to secure sup- 
plies had passed, the attention 
shifted to apportioning bla me . 
Under pressure from the oppo- 
sition parties, the prime minis- 
ter ordered Mr. Prakash’s 
inquiry. Althoug h it has not 
been published. It seems to 
have exonerated the prime 
minister personally and spread 
blame among other ministers 

and nffidala. 

All those allegedly involved 
have denied they were at fault 

If Mr Narasimha Rao hoped 
that the sugar affair would 
gradually away amid con- 
cern over more immediate 
issues such as last week's state 
election results, Mr Antony's 
resignation will have soared 
his plans. 


Row over rescues may Nigeria under pressure to 
dog Japan bank chief scrap economic controls 


Matsushita takes over as governor of central bank 
tomorrow, reports Gerard Baker from Tokyo 


T omorrow Mr Yasuo Mat- 
sushita will take office 
as the new governor of 
the Bank of Japan. He moves 
in to the central bank at a deli- 
cate time in Japanese ftmmnsii 
history. 

Money market interest rates 
are rising, despite an anaemic 
economic recovery and chroni- 
cally weak demand for money. 
But his immediate concern win 
he the fragility of the nation's 
banking sys tem , and especially 
a growing political furore over 
the bank’s handling of it 
The problems began last 
week with an announcement 
by the outgoing governor, Mr 
Yasushi Mieno, of a rescue 
package for two of the coun- 
try's smaller credit associa- 
tions. 

The scheme - a lifeboat to be 
launched in February for the 
two institutions - looked innoc- 
uous enough. Tokyo Kyowa 
and Anzen, like many of their 
larger peers, waded far too 
deep into the waters of the 
bubble economy of the late 
1980s. 

They now have bad debts of 
more than YlOObn (£638m) and 
are virtually insolvent So the 
bank announced a rescue oper- 
ation, funded partly by itself - 
with capital of Y20bn - and 
partly by private sector institu- 
tions, to take over the troubled 
companies and dispose of the 
bad debts. 

But this week the decision 
was publicly denounced by one 
cabinet minister, and two oth- 
ers appear to have expressed 
concerns about it Mr Ryu taro 
Hashimoto, the minister for 
international trade and indus- 
try, said the move was a dan- 
gerous precedent 
What has upset ministers is 
that the rescue breaks with 
past practice. Two years ago 
the ministry of finance, princi- 
pally responsible for banking 
supervision, floated the idea of 
a publicly funded body to take 
over the bad debts of the bank- 
fog system, along the lines of 
the Resolution Trust Corpora- 
tion in the US savings and 
loans collapse. But there was 
imm ediate hostility from the 
public, and the plan was qui- 
etly shelved. There is still 
fierce opposition among the 
Japanese public to the idea 
that bankers should be rescued 
from their own folly by the use 

of public foods. 

When institutions have been 
in danger of collapse in the 
past . the bank and the MoF 
have twisted the arms of larger 
companies and persuaded them 
to put up the necessary fund- 
ing for the rescue. 

In Japan’s intertwined finan- 
cial world, most of the smaller 
institutions have close Unks 
with larger, better-capttalmed 
companies. Only two months 
ago. Mitsubishi Bank was per- 
suaded to take control oE the 
ailing Nippon Trust Bank. 






Matsushita: a delicate time in 

Japanese financial history 

which had been brought near 
to collapse by the same had 
lending problems. 

But in recent months, the 
larger banks have been telling 
the MoF they can no longer 
justify the burden of rescuing 
ailing affiliates, without some 
assistance from the authori- 
ties. Hence, analysts believe, 
last week’s unprecedented 
measure. 

But this leaves a further puz- 
zle. Just six weeks ago Mr 
Mieno, in what was widely 
billed as one of the most signif- 
icant speeches of his governor- 
ship, signalled what many saw 
as a shift in Japanese financial 
policy. He stated in unequivo- 
cal terms for the first time that 
banks and financial institu- 
tions that got into trouble 
could not expect to be rescued. 

u It is not the business of the 
central bank to save all finan- 
cial institutions from failure,” 
he said. Only where there was 
clear evidence of “systemic 
risk” arising from the failure of 
an institution should the 
authorities feel the need to act 
“Should a failure have the 
potential to undermine stabil- 
ity as a whole, then that poten- 
tial must be removed." 

These sentiments would not 
be unusual from the mouths of 
other central bank governors 
who have tried to parry criti- 
cism that they are too soft on 
banks. But in Japan, where the 

it represented & significant 
departure, and was widely 
flagged as such by BoJ offi- 
rials . 

Yet it is difficult to argue 
that the failure of Tokyo 
Kyowa and Anzen, with their 
combined deposit base of a 
mere Y243bn. represents any 
kind of systemic risk to 
Japan's admittedly fragile 
banking system. 

So why has the Bank, at the 
first opportunity to demon- 
strate its new, tougher policy, 
retreated from it so spectacu- 
larly? 

S ome suspect that the plan 
represents the triumph of old 
MoF philosophy. The MoF is 


Preliminary money snppty 
figures published by the Bank 
of Japan yesterday gave mixed 
signals about the state of 
liquidity in the Japanese 
economy, writes Gerard Baker 
in Tokyo. The basic measure of 
the broad money stock 
accelerated in November by 
2.6 per emit on a year earlier, 
compared with an annual 
growth rate of 2.4 per emit tn 
October. On a monthly basis, 
the broad money figure - M2 
(cash in circulation plus sight 
and donand deposits) and 
certificates of deposit- rose OJ 
pa- cent from October. But the 
rate of growth of the broadest 
measure of liquidity slowed 
slightly. M2 plus CDs plus 
postal savings deposits, 
government bonds and 
investm en t trusts grew by <L5 
per cent In November from a 
year earlier, compared with a 
preliminary 34> per cent rise a 
year ago. 

much more instinctively sym- 
pathetic to the proposition that 
bank collapses threaten finan- 
cial stability. 

The financial crises of the 
1920s and 1930s were more 
severe in Japan than elsewhere 
and there are many in the MoF 
who believe that any threat of 
a repeat, however small, 
should be avoided. 

Those suspicions are 
enhanced by the arrival of Mr 
Matsushita- Unlike his prede- 
cessor, the new man is a for- 
mer MoF official and is 
thought likely to take a less 
independent line than Mr 
Mieno. 

But this theory ignores the 
fact that the rescue was 
announced by Mr Mieno before 
the end of his term. 

A more likely explanation is 
that both Bank and the MoF 
are mindftil of the 
diffi culties faced not by the 
likes of Kyowa and Anzen, but 
by the larger h anks. 

One senior banker suggested 
yesterday that the surprising 
move is intended to test the 
waters of public opinion for a 
support operation that really 
will be needed to ensure sys- 
temic stability if, as is possible, 
a leading bank comes dose to 
failing in the next year or so. 

Although the total level of 
had loans has probably peaked, 
hanks’ prospects of eliminating 
the problem quickly are not 
assisted by declining profitabil- 
ity and weak lending demand. 
The risk of a serious setback 
remains strong. 

In the meantime the political 
row will intensify in the period 
before the lifeboat is formally 
launched - not the Ideal start 
for Mr Matsushita’s tenure. 
But if the larger hanks’ health 
does deteriorate In the next 
year, the new governor's posi- 
tion will get a lot more uncom- 
fortable. 


By Paid Adams in Lagos 

A team from the International 
Monetary Fund has completed 
. talks this week in Abqja with 
Nigeria’s finance ministry less 
than three weeks before the 
military regime is due to 
review economic policy in the 
1995 budget 

General Sani Abacha, head 
of state, is under pressure from 
investors and official creditors 
to scrap the economic controls 
imposed in January and deal 
with the $8bn arrears in debt 
service to the Paris Club. 

Since early 1992 Nigeria has 
not serviced its debt to the 
Paris Club, which accounts for 
more than half its $28bn exter- 
nal debt Nigeria needs some 
form of agreement with the 
IMF and a few months' good 
track record to gain external 
debt relief and unlock intern a- 
tional finance for planned gas 
export projects. 

Acting finance minister Mr 
Anthony Ani intends to make 
a ret u rn visit to Washington 
next month. 

Hie fond is looking for sig- 
nificant steps to deregulate for- 
eign exchange and interest 
rate policy, cut the budget defi- 
cit and account for afi oil reve- 
nue. 

There is continued concern 
about the estimated 150,000 
barrels a day of on revenue 
that goes into offshore dedica- 
tion accounts under the super- 
vision of the presidency and 
which never enters the govern- 
ments books. 

The Nigerian government is 
being urged to curb uneco- 
nomic capital projects and 


In an unprecedented attempt to crack down on the country's 
black market in foreign cur rency and reinforce its controversial 
exchange rate pyRey* Nigeria’s military government has made it 
an offence to disclose the street value of the naira, Michael 
Holman. Africa Editor, writes. 

In a decree issued last week, the authorities warned that to 
“publish or c a use to be published exchange rates and I n terest 
rates other than that approved by the Central Bank" would be 
an offence. 

The penalty for individuals breaching the decree is a fine of 
N100,000 (£2£00 or $4*500) or two year imprisonment, or both. 

In January the government pegged the foreign exchange rate 
at N22 to the dollar and closed the secondary or parallel market 
which allowed investors to faring in and change dollars at the 
open market rate, which was between N45 and N5Q earlier this 
year. 

The g over nm ent also capped bank lending rates at 21 per cent 
Privately the guramment admits the measures bave fallal, with 
inflation rising to more than 100 per cent on an annual basis, 
and the market rate of the Naira plunging from N50 to N100 
between June and November this year as receipts from the 
country’s exports foiled to keep up with the demand tor foreign 
currency. 


recurrent spending and to find 
more revenue. 

Although the government 
forecast a hnianrad budget in 
1994, economists believe the 
budget deficit this year will be 
more than $4hn, which is 
nearly 100 per cent of forecast 
expenditure and about 14 per 
cent of gross domestic product, 
despite the failure to meet 
commitments to supply foreign 
exchange to industry and the 
underfunding or joint ventures 
in oil production. 

There have been conflicting 
signals about the government's 
intentions, particularly over 
the most contentious issue - 
foreign exchange policy. Same 
finance ministry officials and 
the Central Bank of Nigeria 
argue for deregulation. 

But Mr Amina Saleh, a lead- 


ing figure in the government, 
recently ruled out deregu- 
lation. 

In January the gover n ment 
pegged the Foreign exchange 
rate at N22 to the dollar and 
closed the parallel market 
which allowed investors to 
bring in and change dollars at 
the prevailing rate, between 
N45 and N50 early this year. 

ft also capped hank tendfrig 
rates at 21 per cent , less thap 
half the commercial rate. 

Privately the government 
admits that both measures 
have failed. Inflation surged to 
over 100 per emit, the official 
source of foreign exchange 
dried up and the black market 
naira rate plunged from N50 to 
N100 between June and 
November, although it has 
since strengthened. 


- ■. 

IfjrTONATlONALNBJ^DjG^r^ 

Kenyan move 
on bank theft 

A former senior civil servant in Kenya has been charged with 
conspiring to steal Ks5.7Sm (£82m) from the central 
inure timed to reassure a donors’ meet ing la. P aris cfjw 
govurament’s commitmeait to stamp out corruption. Mr Wu- 
fred the powerful permanent secretiuy at the trea- 

sury until his retirement in May, is the most senior gawfr 
mypfr official to be charged in connection with a series of 
financial scandals which robbed the Exchequer of more ttom 
Ks30bn last year - the biggest embezzlement of public rands 

In Kenya’s history. - ■ ■ ^ , 

Mr grtiwaTiyt denied the prosecution charges ana ras been 

remanded in custody until his ball appli c a t i o n is beard next 
week. The International Monetary Fund is understood to have 

warned President Daniel azap Mai that it would not sign a new 

l o an agreement unless his government took firm steps to bring 
wrongdoers to justice. Without the WFs seal of approval, 
neither the World Bank nor bilateral donors would be IMy to 
pledge more aid at the. Consultative Group meeting in Paris 
today. Kenya is seeking up to $80Qm (E5l2m) in aid for 1995. 

Leslie Crawford. Nairobi 


Murayama 




The Japanese prime minister, Mr Tomfichi Murayama, will 
visit Washing ton early next month for talks with President 
am fnintm, the government announced yesterday. The visit 
will be Mr Murayama's first to the US since he became prime 
nrfnfetar last June. Bilateral trade relations, including the 
unresolved issue of trade in cars and car components, are 
, once q gato, to be the principal focus of the discus- 
sions. Mr KSozo Igarasbi, the chief cabinet secretory, hinted at 
a press conference that the timing of the trip, early in the year 
that wmfips the 50th anniversary of the end Of the second 
world war, was as Important as its substance. 

Mr Murayama will be accompanied by the foreign minister 
Mr Yofaei Wrem and the deputy chief cabinet secretary. Mr 
Hiroyuki Sanoda. Gerard, Baker, Tokyo 

Child health ‘improving’ 

Big improvements in health, education and weUare. mean that 
child mortality in the developing world should fen by about 
2£m next year compared with 1990. The findings, in the latest 
review fay the United Nations World Children's Fund*, show 
that more than half the world's developing nations are set to 
meet the ambitious targets put forward at the World Summit 
tor Children in 1990. The biggest advance, has come fax disor- 
ders involving iodine deficiency. Such illnesses are the world’s 
single biggest cause of preventable mental retardation. Almost 
60 of the 94 affected countries are meeting the taigets to tackle 
iodine deficiency set in 1990, while a further 32 nations could 
do so over the next 12 months. 

Substantial progress has been made in eradicating polio, 
while deaths from measles, diarrhoea and pneumonia have 
faTfan abruptly as tonwimicaHnn - has increased. 

* The State of the World's ChUdrtn 1995, published for Unicrf by 
Oxford University Press. Price £L95.Haig Sanonkm, JSnoiran- 
ment Correspondent 

Philippine-IMF talks hitch 

Philippine debt negoti a tor s yesterday haggled with a visiting 
International Monetary Fund review teamover the fine poiints 
of what appeared to be a " ta c i t", a greement on increased 
monetary expansion ceffings in- the country's economic pro-' 
gramme. The Philippine government wards theagreement jbq. 
it can aim fern bigheroveraH economic growth'targafe wfthoitf 
being hemmed in by tight liquidity and inflation ceilings. Mr 
Gabriel Sngsan. governor of the Ban^jb’Sentraft ng- 
the country’s central monetary authority, fetid a breakfast 
forum yesterday the visiting IMF team '“has agreed that there 
will be some relaxation on monetary aggregates for 1996.- 
However, Philippine panel member Mr Roberta de Ocampa 
the secretary, earlier told journalists that the lMF baa 

asked for "mere evidence" freon the government negotiators to 
support the reqoest for new ceilings. JbseGuhmg, Manila 

Zimbabwe convertibility move ; 

Zimbabwe wiH move to foil currant account convertibility 
from January l with the hberatisation dividend remittances 
and regulations covering domestic borrowing by for- 
edgn-owned companies. The changes, announced fay Mr John 
Nkomo, acting finance minister, mean that foreign companies, 
which invested in Zimbabwe before May 1, 1996, will be per- 
mitted to remit 100 per cent of after-tax profits instead of 50 
per cent as at present 

The relaxation applies only to dividends declared after Janu- 
ary 1 and puts all foreign-owned companies on the 
footing, to the past, only mwipanfea that invested sinr-a May : 
1993 were entitled to full dividend remlttability. Latest figures 
show Zimbabwe's net foreign asset position has improved from 
minus $470m a year ago to a positive $3m. The country now 
has foreign exchange reserves covering eight months imports.' 
Tony Bowkins, Harare 

Packer moves on. casino award 

Mr Kerry Packer's Darling Casino consortium- yesterday 
started legal proceedings against the Casino Control Authori- 
ty's decis ion to award Sydney’s A$Um plus casino to 

its rival, the Sydney Harbour Casino (SHC) joint venture. 
Darling Casino (DCL) r which includes Circus Circus, the large 
US gamin g group, was outbid for - the development rights 
earlier this year by SHC. But before the licence could be 
formally granted to SHC - a Joint venture between Showboat 
another US casino operator, and the Lei ghton group, an Aus- 
tralian construction and property group — questions Were 
raised about Showboat’s probity and a public inquiry was set 
up-Ntkfci Tad, Sydney 


Shift from protest to power tests ANC 




At the official 
launch of his 
autobiography 
in Johannes- 
£ burg last week. 
South African 
President Nel- 
son Mandela 
joked that such were the rig- 
ours of his office that he some- 
times longed for the relative 
calm of prison, writes Mark 
Suzman in Johannesburg. 

As his African National Con- 
gress gathers tomorrow in the 
Afrikaner city of Bloemfontein 
for its first national conference 
since winning the April elec- 
tion, it is a sentiment that will 
be appreciated by the 3,000 del- 
egates - the transformation 
from liberation movement to 
government is proving much 
more demanding, and the 
social and economic fruits of 
political victory for more elu- 
sive, than expected. 

Eighty-three years after its 
foundation, having weathered 
decades of the imprisonment 
torture, exile and murder of its 
m emb ers at the hands of the 
white government, the ANC 
will be hoping to emerge from 


its first post-apartheid confer- 
ence with a united front and 
shared vision for the new era. 

Although Mr Mandela's pop- 
ularity among blacks remains 
at levels other heads rtf govern- 
ment nan only Hi wm of, is 
growing steadily among other 
race groups, the ANC as a 
party is losing ground. 

Paid-up membership has 
fallen off sharply since April, 
contributing to a budget 
crunch that has forced the 
retrenchment of a large num- 
ber of party officers. More seri- 
ously, while black expectations 
were never as unrealistic as 
whites feared, the govern- 
ment’s failure to begin imple- 
menting its much-vaunted jobs 
and housing programmes has 
led to an upsurge in grassroots 
dissatisfaction - with the 
result that opinion polls show 
the ANC’s national support 
has dropped from 60.6 per cent 
in April to 53.6 per cent in Sep- 
tember. 

Part of the problem is that 
members of the new national 
and regional parliaments are 
finding that their experiences 
in the protest movement are of 


limited use when trying to 
draft and implement legisla- 
tion. As Mr Tokyo S exwale, 
premier of the Gauteng region, 
the country's most powerful 
province, asked rhetorically 
last month: “Are we in power 
or just in office?” 

The primary theme of the 
conference - “From Resistance 
to Reconstruction and Nation 
Building" - reflects this con- 
cern. It is a theme which 
acknowledges the ANC’s 
inability as yet to managa the 
transi t ion to efficient adminis- 
tration. It is also, however, a 
theme designed to appeal to 
the party’s core black constitu- 
ency to try to offset disillusion - 
ment with what some ANC 
members describe as the gov- 
ernment’s overly reconcfliatory 
attitude to whites. 

to an official position paper 
for the conference, drafted last 
month, Mr Thabo Mbeki, dep- 
uty president, called on the 
ANC to refocus its atten tion an 
its mass base - “the black 
working class, black rural poor 
and the significant sec tion of 
the bla ck, middle strata”. The 
government will be hoping this 


Africanist rhetoric •’ will be 
enough to defuse the radical 
elements at the rywitar erora 

But there are other problems 
to be overcome, particularly 
concerning the party's relation- 
ship with its traditional allies. 
Although the ANC remains in- 
formal alliance with the coun- 
try’s largest labour federation, 
Cosatu, as the gorenmtent ft is 
now reluctant to condone 
strikes and inflationary wage 
demands that a year ago it 
would have supported. 

Similarly, while the civic 
associations which sprang up 
in the 1980s as opposition 
m ovem ents to imposed local '■ 

government structures are still 

formally aligned to the ANC, 
the two groupings . have 
clashed publicly (and some- 
times violently); on the of 
continued rent and service 
boycotts in the black town- 
ships. The government, desper- 
ately wanting extra revenue to 
fund development projects, is 
insisting that residents resume 
payments or face eviction, a 
stand the associations are 
unwilling to endorse. 

Politicking .within the ANC 


% • 

over who -should hold.senior 
party posts is complicating- the 
situation. Mr Mbeki remains 
the front runner to -be elected 
deputy president of the party 
to place of the ailing Mr WSttw 
Sisulu, but the occasion wffl 
also be an important ganger .<tf 
support - Cor his fthtef rival. Mr 
Cyril Ramaphosa. • 

After his defeat to tire ffg fafc 
for the deputy presidency of 
South Africa, Mr 'RamajpiujBa, 
who. is tire party’s incumbent 
secretary-general, has kept a 
low profile, to recent stfjntfas. 
there , has been speculation' he 
may withdraw from politics, 
perhaps accepting a job to the 
private sector. However, Intife- 
past few weeks most', of 'tiKT 
ANC’s regional groupings have -. 
voiced support for Mr Rama* 
Phusa, iSKSw.-getSSr 
to retain his position. 

But whatever tribulations 
the ANC-led government is 
forced to address, osm. thought . 
will be uppermost in the mtod 

of every STte- delegates 
gathered in Bloemfontein “ 
they are challenges that the 
party's founders would have 
been only too pleased to-fiicfc: 




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cMjJ 


O' USAs 





CTCT# 









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BP, famous for their deep water drilling, 
have done it again. We went west of 
Shetland to find out more... 


I gather you found the field west of Shetland, Julia? 

No, I didn’t... 

Oh, I was told... 


...we all did. I worked on the seismic 


Well it wasn’t just me. It was practice. What 


we learnt in the North Sea we used to tackle 


the Gulf of Mexico which was much deeper. 
That gave us the know how for this. That’s the 


way we work. 


analysis. That’s like X-raying the sea bed. it 

■ 

costs a fortune (or so they keep telling me) 


but it’s worth it 


So you did the seismee... thingy in Mexico? 
No, but what they learned there was 


You bet. Basically it’ll keep reserves going well 
into the 21st century, it’s the largest discovery 


in the last 5 years. 


Over fifteen hundred of them. 


\ didn’t. Talk to Julia, one of our geologists, 
she deserves the credit. ..after all, she did the 


hard bit... 


passed on to me. Before that there wasn’t 
any point in looking here - we’d never 
have got the oil out even if we’d found it. 
Do you follow? 


Talk to Tom, one of our drillers... he did 


hard bit. 


But, he said... 


ALL TOGETHER 


BETTER. 





i 


* 























6 


cWAMriAT. TIMES 


FRIDAY DECEMBER 16 J!*M 



IS WORLD TRADE 


Mercosur to be formally launched after ministers negotiate last details of trade pact 

Four nations to sign up to customs 


By Angus Foster in Ouro 
Prato, southern Brazil 

The four member countries of 
the South American Mercosur 
customs union, launched in 
1991, yesterday began a final 
meeting setting the seal on the 
formal establishment of the 
trade area on January 1. 

Foreign ministers from Bra- 
zil. Argentina. Paraguay and 
Uruguay met in the southern 
Brazilian town of Ouro Prato, a 
colonial gold mining centre, to 
agree final details about the 
customs union. The four presi- 
dents are due tomorrow to sign 
the Protocol of Ouro Preto, 
which will put the union Into 
effect and spell out the work- 
ings of Mercosur institutions 





including procedures such as 
appeals. 

Ministers are also negotia- 


ting final lists of products to be 
exempted from the free trade 
area within the four countries, 
and also from the c ommon 
external tariffs (CET) of 0-20 
per cent on imports from out- 
side the union. 

Mr Josd Artur Denot Medei- 
ros, Brazil's main Mercosur 
negotiator, said between 5 and 
10 per cent of total trade would 
retain domestic tariffs for a 
further four years to give 
uncompetitive industries more 
time to prepare for customs 
union. Tariffs would be 
retained to protect such items 
as Argentine paper and Brazil* 
ian processed fruit, but will be 
phased out according to pre- 
arranged timetables. 

A further 10 per cent of 


items, mainly sensitive prod- 
ucts such as high technology 
and capital goods, will not 
adopt the CET until early next 
century. This is designed .to 
heLp Brazilian companies 
which are currently protected 
by tariffs of 2W5 per cent Bra- 
zil's tariffs will frill, again by a 
pre-arranged timetable, to 
meet the CET of 14*16 per cent 
for these sectors. 

Brazil and Argentina, which 
account for mans than 95 per 
cent of Mercosur's GDP, are 
also expected to announce 
details of a package of compro- 
mises to help Argentine wheat 
compete in Brazil against sub- 
sidised exports from North 
America. The two countries 
are also due to approve closer 


Integration between their two 
car industries. 

Mercosur has led to a rapid 
increase in trade between the 
four countries as tariff and 
other barriers have beai pro- 
gressively removed. Trade 
within the four partners 
increased from $3J6bn in 1990 
to $8.7bn last year. Despite the 
success of the venture, Brazil 
and Argentina now want to 
consolidate recent gains rather 
than push for a foil common 
market 

Decisions will continue to be 
taken by the four countries' 
governments and there are no 
plans to set up a European- 
style Commission. Brazilian 
and Argentine fears about dim- 
inished sovereignty sniffed out 


union 


a Uruguayan proposal for a 
supranational court to rule on 
trade disputes. Instead, the 
four countries are expected to 
announce a complaints process 
with final appeal to a previ- 
ously established, but so far 
untested, arbitration trlbunaL 
Leaders are expected to dis- 
cuss in detail Mercosur's role 
within the Free Trade Area of 
the Americas, which all Ameri- 
can leaders except Cuba last 
weekend agreed to set up by 
2005 at last week's Summit of 
the Americas in Miami Merco- 
sur has already Invited Chile 
and Bolivia to loin as free 
trade rather than customs 
unions members, and both 
countries will attend the Ouro 
Preto summit as observers. 


Sutherland warns over growing 
recourse to anti-dumping actions 


By Finances WBtiams hi Geneva 

Mr Peter Sutherland. Gatt 
director-general, yesterday 
warned that the achievements 
of the Uruguay Round global 
trade accords could unravel if 
governments abused fair trade 
rules to protect special inter- 
ests. 

Eel a review of developments 
in the trading system since 
spring 1993, Mr Sutherland 
said confidence In the new sys- 
tem depended on a willingness 
to abide "by the letter and 
spirit" of the World Trade 
Organisation, which succeeds 
the General Agreement on Tar- 
iffs and Trade next month. 

Nearly 60 of Gatt's 125 
members have now ratified the 
WTO accords and Mr Suther- 
land is predicting that up 
to 100 nations will be WTO 


members from January l. 

Presenting the review to 
Gatt's governing council yes- 
terday, Mr Sutherland urged 
"judicious use” of countries' 
room for manoeuvre in imple- 
menting the Uruguay Round 
accords in order not to erode 
the benefits for world trade. 

His anxieties, and those of 
many Gatt members, centre on 
the growing use or anti- 
dumping actions to keep out 
cheap imports, and the prolif- 
eration of regional trade group- 
ings. Though both are permis- 
sible In principle under 
international trade rules, they 
are increasingly seen as 
stretching those rules to the 
limit and beyond. 

Of 91 requests for consulta- 
tions between 1989 and 1994, 
the first step in Gatt's disputes 
settlement procedure, a quar- 


ter related to anti-dumping 
actions, the report notes. This 
partly reflects the rising num- 
bers of such actions and partly 
“an increasingly wide gap in 
perceptions of the acceptable 
limits of actions”. 

After a peak of 251 cases in 
1992-93, the number of anti- 
dumping Investigations 
launched by the 25 members of 
Gatt's anti-dumping code 
dropped back to 226 in 1993-94. 
However, this drop mainly 
reflected the earlier surge in 
suits brought by US and Cana- 
dian steel producers. 

Investigations initiated by 
the European Union and Brazil 
have risen sharply, leaving the 
EU and the US joint "leaders” 
in 1993-94 with 47 cases each, 
followed by Australia and Bra- 
zil The US had by Ear the larg- 
est number of anti-dumping 


measures in force - 306 in Jane 
1994, up from 279 a year earlier 
• while the EU came second 
with 157, down from 185 the 
previous year. 

However, the report points 
out that the most frequent 
users of anti-dumping actions 
are also frequent targets. EU 
companies head the list (89 
cases In the two years to mid- 
1994), with almost half the 
cases concerning Germany and 
France. China was the biggest 
single country subject to inves- 
tigation (58 cases), followed by 
the US (45). The bust couple of 
years have also seen more anti- 
dumping suits against imports 
from eastern Europe, notably 
Russia and Ukraine. 

The Gatt report says 11 new 
regional trading arrangements 
- all in Europe - were notified 
to Gatt between April 1993 and 


■ 9 9 

Dumping: the accusers and accused 

•_ - . . - - ' 

, Exporter* subject Ip two or«or» arthtanptog h w agrtow, 1992-94 ’ 

■ " ™ *■ p # ■ 



Dumping bw aaByafl o nn launched b ot ws en 1988-94 by; - ■ 


US 
Australia 
EU 
Canada 
Mexico 
- BrazH 
Turkey 
Soum Korea 
New Zealand 
India 



Source Galt Geneva 


November 1994, bringing to 40 
the total notified ova: the past 
five years. 

It is generally admitted that 
Gatt’s procedures for examin- 
ing the consistency of free 


trade pacts with fair trade 
rules are inadequate. Virtually 
none of the working parties set 
up to examine regional trade 
arrangements has been able to 
agree on their Gatt conformity. 


Thailand invites $4bn power station bids 


By WnDam Barnes in Bangkok 

Thailand’s electricity authority 
yesterday invited bids to build 
and operate $4bn of power 
plant projects with output 
totalling 3A00MW by 2002. 

The tender, announced as 
part or the gradual privatisa- 
tion of Thailand’s energy sec- 
tor, has aroused considerable 
interest among major interna- 
tional power generators and 
local construction companies. 
The bids to supply 1.000MW in 


the year 2000, 1.400MW in 2M1 
and 1.400MW in 2002 must be 
in by the end of June 1995. 

Successful companies will be 
well placed to bid for four fur- 
ther 1.700MW projects coming 
on stream every year between 
2003 and 2006. A spokesman for 
the electricity authority 
(EGAT) said he expected all 
foreign bidders would bring in 
local partners: British Gas lias 
already teamed up with Thai- 
land's Union Energy and Mit- 
sui said it would soon 


announce a link with a local 
partner. 

The tender process has been 
delayed for several months fol- 
lowing complaints by potential 
bidders in August that the 
original draft terms were too 
tough. EGAT said it had soft- 
ened its demands which previ- 
ously included the right to 
take over any project that it 
deemed was not fulfilling its 
contractual obligations. For- 
eign executives said that this 
condition would have made it 


difficult to obtain financial 
backing. 

The Bangkok representative 
of the Hong Kong group Hope- 
well Holdings, Mr Cohn Wier, 
said the project was “a first for 
Thailan d" and would provide 
companies with interesting 
opportunities but added: "We 
will have to think long and 
hard about the ground rules.” 

EGAT will judge each bid 
primarily on price although 
financial backing and experi- 
ence will also be taken into 


account. The choice of fuel is 
likely to be difficult as the gov- 
ernment has indicated its pref- 
erence for environmentally 
friendly fuel especially natural 
gas. Thailand, however, has no 
spare gas supplies. These 
would have to be bought from 
Burma or elsewhere. 

EGAT is cautiously seeking 
private sector help to meet 
demand for electricity which is 
rising by U per cent a year. 
The Asian Development Bank 
has calculated that Thailand 


needs to invest $22bn by 2000 
to meet projected electricity 
demand. 

The first step in the privati- 
sation programme was the sate 
of 50 per cent of the Electricity 
Generating Company, which 
owns a power station in 
southern Thailand, earlier this 
year. 

This was a popular but rela- 
tively modest-sized flotation 
with a stock market value of 
about BtShu. EGAT itself plans 
to go public within three years. 


YYOR^^RAD^NEW^^IGEST 

F oreign chip 
sales up in J apan 


NmvJananese semiconductor manufacturers 
aToeSfom® Japanese chip market m the thud q^rter. 
*E2n « 1 ner centinthe same period last year, US and 

officials reported yesterday, 

chntiid belD defuse tensions between Washington and Tokyo 

the us and Japflfl Agreed to tt target 20 per wm 
of Japan’s market tor semiconductor products 
agreement In 1886. the foreign share stood at 

“h&Tsantor, US trade representative, welcomed the 
Increase in foreign market store calling it a aw*y JjSfjJ 
develooment" that showed the success of a results -onentea 
agrJ^Sbut he warned against “backsliding* . The Japanese 
market, which accounts for about one third of world chip 
sales, Is espected to he woittataost J3Bm “blayeaxvacoOT^ 


EC agrees shipbuilding accord 

The European Commission has agreed a shipbuilding accord 
drafted by the Organisation for Ec o n om ic Cooperation ana 
Development (OECD) and expressed hope that EwnopMin 
Union member states would approve it on December 20. The 
plan, designed to remove state aid from the shipbuilding 
sector to make it more competitive, allows for some govern- 
men t support in France, which is concerned about the effect of 
the pact on its shipbuilding industry. Reu ter, Brussels 


Coca-Cola plant for Ukraine 

Coca-Cola Ama til, an Australian-based distributor for the 
American soft drinks giant, plans to open a new distribution 
centre and a production plant in Ukraine. The e xp a n sion 
follows similar moves in Slovakia, Hungary and Belarus to 
gain market share and challenge PepsL-Cola in former Commu- 
nist countries. The new factory, under a joint- venture project 
with Kolos brewery, will produce Coke in Lviv, a western city. 
The production company, with an initial glLfim in capital is 
57 per cent owned by Coca-Cola Amatil and the rest by Kolos. 
Matthew Kaminski, Kiev 

Thai toll road wrangle ends 

A 15km motorway from the centre of Bangkok almost to the 
city's international airport was opened yesterday, two years 
late. The Don Muang Tollway Company expects to be able to 
complete its delayed Bti2bn ($478m) stock market listing and 
raise $50m following its victory in a contract wrangle with the 
government. The original contract drawn up stipulated that 
two flyovers competing with the motorway would be knocked 
down. After a long row, the government decided to have the 
flyovers turned 90 degrees to serve east-west traffic and this 
week gave the company permission to build a 5.5km extension 
to the airport William Barnes in Bangkok 

■ South Korea's Goldstar has agreed to supply CD-ROM 
drives to Kalian computer maker Olivetti. Goldstar, a unit of 
the Lucky-Goldstar Group, said a formal contract would be 
signed soon for the $60m deal to supply about 500,000 double* 
and quadruple-speed drives to the end of next year. Reuter, 
Seoul 

■ ABB, the electrical engineering multinational has signed a 
co-operation agreement with Velnii and Neva, two Russian rail 
equipment suppliers, to design and build a prototype electric 
locomotive equipped with. ABB power etectrantes. After devel- 
opment of the prototype, a joint venture is expected for vol- 
ume production of the locomotive, which ABB said could play 
a key part in the planned modernisation of the Russian rail 
system. Velnii and Nevz are part of the Novocherkassk indus- 
trial group, based in the city of the same name about 700 miles 
south-east of Moscow. Andrew Baxter, London 






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A large corporation would surely 
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■ 


ZURICH 

INSURANCE GROUP 











FINANCIAL TIMES FRIDAY DECEMBER 16 1994 



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NEWS: THE AMERICAS 


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President due to outline $50bn 


proposals in televised speech 


Mexico raises privatisation revenue 


Republicans 


damn Clinton 


tax cut plans 



By Ted B arda dce 
if i Mexico City 




By George Graham 
hi Washington 


Republican leaders yesterday 
took preemptive aim at Presi- 
dent Bill Clinton's proposals 
for a middle class tax cut, dis- 
missing them as inadequate 
even before they bad been 
made. Mr Clinton was due to 
outline bis plans in a televised 
speech last night, and was 
expected to propose tax cuts 
totalling around $50bn (£32bn) 
over five years. 

Senator Phil Gramm, a Texas 
Republican who has already 
announced his intention to 
challenge Mr Clinton for the 
presidency in 1996, said yester- 
day that the president was 
“more than a day late and 
more than a dollar short”. 

Mr Gramm said that the 
lower limit for a tax cut was 
the figure of $i07bn promised 
in the contract with America 
manifesto, on which most 
Republicans in the House of 
Representatives campaigned in 
the November elections. 

“I am not going to support a 
tax cut for families that short- 
changes them, and the presi- 
dent's proposal is going to be a 
non-starter unless it at least 
meets the level that has been 
set by tie House of Representa- 
tives,” Mr Gramm said. Mr 
Haley Barbour, Republican 
National Committee chairman, 
said Mr Clinton was trying to 
jump on the tax cut train after 
it had IgA the station. 


Mr Clinton has been consid- 
ering an income tax credit for 
families with children, but 
with a lower income ceiling 
than the $200,000 proposed by 
Republicans, and possibly lim- 
ited to children under six. He 
has also been looking at a tax 
credit for vocational training. 

But the president has also 
promised be would only pro- 
pose a tax cut if he could pay 
fix' it with oEEseUlfig spending 
cuts, and has been examining 
options as radical as abolishing 
entire government depart- 
ments, such as Housing and 
Urban Development or Trans- 
portation. 

Republicans warned Mr Clin- 
ton, however, that in a poker 
game over who could propose 
the biggest tax cut and the 
largest reduction In govern- 
ment, they would outbid him. 
“We will see him a tax cut and 
HUD, and raise w™ Education 
and Energy,” said Mr Edwin 
Feuhier, president of the Heri- 
tage Foundation, a right wing 
Washington think tank 

But fiscal conservatives are 
alarmed at the tax cut bidding 
war now in progress. “Don't 
buy this pig in a poke. It may 
feel good in the short term, but 
it's not going to fed good in 
the long term,'' said Senator 
Bob Kerrey, a Nebraska Demo- 
crat who chair ed a bipartisan 
commission appointed to con- 
sider long term reforms to 
bring the government’s 
finances into balance. 




Serra: new privatisation list 


Mexico is to embark on an 
ambitious new privatisation 
and foreign borrowing pro- 
gramme designed to raise 
&5bn (&5bn) In 1995, accord- 
ing to Mr Jaime Serra Puche, 
the new finance minister. 

The funds will be used to 
stimulate tefiastructure invest- 
ment and help finance the 
country’s large current 
account deficit 

Mr Serin saM in an interview 
this week immediate candi- 
dates for privatisation are the 
high-volume Mexico City-Qaer- 
etaro and Mexico City-Puebla 
toll roads and the country's 

ports. Significant revenues will 
also come from the fees 
charged to new entrants in the 


longdistance telephone service 
market when the former state- 
owned telephone company Tel- 
mex is stripped of its monopoly 
status in January of 199 7. 

Although Mr Sena stopped 
short of de s ignati ng the coun- 
try’s rail system and secondary 
petrochemical plants among 
other state-owned Industries to 
be sold off, these sectors are 
expected to be included in the 
new privatisation list This 
would allow the Mexican gov- 
ernment to reach its stated rev- 
enue target without being 
forced to achieve the $5bn for- 
eign borrowing limit it bas set 
for itself in 1995. 

Privatisation of the railways 
would almost certainly require 
a constitutional amendment, 
while the regulatory frame- 
work for petrochemical privati- 


sation already exists. 

Funds raised from privatisa- 
tion other one-time reve- 
nues, together with foreign 
borrowing by government enti- 
ties, will be used to provide 
flnanffing guarantees and/or 
risk capital for private infra- 
structure projects. Export pro- 
motion programs would also be 
targpfoid with these new reve- 
nues in an attempt to reduce 
Mexico's trade deficit, which in 
the first nine months of 1994 
grew by 3L9 per cent over the 
same period last year. 

Mr Serra also acknowledged 
that privatisation and other 
structural reforms had addi- 
tional motives. He said the 
moves wittrignal that Mexico 
was going forward with the 
sort of reforms that would 
strengthen the confidence of 


foreign investors in A* c0 ^; 
try pnd lead to more capital 

inflows- 

Most analysts consider seem* 
ing sufficient foreign capital to 
be Mexico’s biggest mscroeco- 
condc challenge in the commg 
year. The government is fore- 
casting a current account defi- 
cit of 7.8 per cent of GDP. or 
approximately *30-5bn, a sbgtt 
increase over 1994’s estimate of 
7.6 per rwr| t and $29bn respec- 
tively. This year capital 
inflows fell short by some 
$7bn, causing a corresponding 
drop in international reserves, 
which, now stand in the neigh- 
bourhood of $X7bn. 

Mr Sana refected a simi lar 
foil in reserves during 1995, 
arguing if capital i nflo ws 
were to slow down so would 

the economy and imports. At 

■ 


the time, however, he did 
acknowledge that thiawts a 
long-run relationship and there 
could be a short-tom gap 
between the supply of Jarign 
ffluital and demand for foreign 
py n d s happened In 1994. „ 
“The reserves exist to cover 
this gap," said Mr Sena, reject- 
Ing jrmg and time again in the 
interview that the way to 
soften a possible shortfall in 
the capital account was via a 
devaluation in the peso. 

Were such a gap to repeat 
itself in 1995. Mr Serra said 
that although "we're not going 
to mess with the markets," he 
would rather see interest rates 
raised before he would agree to 
a one-off devaluation of the 
peso or an increase in the daily 
depreciation of the exchange 
rate band. 


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Account offers credit to countries in economic transition 


IMF to extend loan facility 


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Executive directors of the 
International Monetary Fund 
agreed yesterday on a four 
month gYt-nstnm of the Fund's 
systemic transformation facu- 
lty, a loan account that pro- 
vides special assistance to help 
formerly communist countries 
make the shift to a market 


economy. 

The IMF board agreed to 
extend the STF, which was due 
to expire at the of this 
year, to April 30. The STF 
offers loans to countries in eco- 
nomic transition under looser 
policy conditions than a nor- 
mal IMF standby loan. 

IMF officials and member 
governments had hoped to 
agree on a longer STF exten- 
sion at the Fund’s annual 


meeting in Madrid last Septem- 
ber, as part of a much larger 
of meas ures intended 
to expand the resources avail- 
able to developing countries 
and especially to t he new mar- 
ket economies of eastern 
Europe and the former Soviet 
Union. Mr Michel Camdessus, 
the IMFs managing director, 
had wanted the package to 
include a general distribution 
of SDR36bn ($52bn) to all mem- 
ber countries. 

The plan fell apart in Madrid 
in a blazing row between the 
Group of Seven leading indus- 
trial nations, which wanted a 
much smaller distribution of 
SDRs, and developing coun- 
tries. Developing countries also 
objected to the STF extension, 
com plaining that the G-7 and 
the IMF have devoted all their 
attention to eastern Europe 


and the former Soviet Union. 

The IMF did agree at the 

fiTTiB tO PYpanrt ifo s-yiayq limit s 

for member countries. Standby 
loans have been increased 
from 68 per cent of a country's 
quota - a measure cloee to its 
share in the IMF and calcu- 
lated hi reference to the shoe of 
its economy - to 100 per cart, 
with similar increases for other 
IMF loan accounts. That mea- 
sure alone will increase the 
amount Russia could borrow 
from the IMF by $2bn. 

Agre emen t on an extension 
of the STF to April 30 gives 
IMF member countries enough 
time to resolve their dispute 
before the spring meetings in 
Washington of the Fund and 
the World Bank. 

G-7 officials expect that the 
SDR row will be resolved by 
then, although little progress 


an specific solutions appears to 
have been made so far. 

The IMF has been consider- 
ing not just extending the STF, 
which has so far lent a total of 
$4.9bn to transitional coun- 
tries, hut of expanding access. 
Countries are at the moment 
allowed to draw on the STF 
twice, hut the possibility of a 
third drawing has been raised. 
• The IMF yesterday 
approved a loan of 16£m SDRs 
to Armenia under the systemic 
transformation facility. This is 
the former Soviet republic’s 
first IMF borrowing, and fol- 
lows progress in efforts to sta- 
bilise the economy. 

The IMF si »d monthly infla- 
tion had fallen from over 50 
per cent in Januaxy-May to 3-6 
per cent in Jun e-September, 
though it then increased to 13 
per cent in Octdber-November. 




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Camdessus: wanted SDR36bn distribution 


Strike impasse dashes hopes for a new start to baseball 


Caracas 


■ - r« 



By Jurek Martin bi Wa sh ing to n 


Negotiations to resolve the baseball 
players’ strike that cut last season 
short have broken down, greatly 
reducing the chances that the sport 
will start again next spring in any- 
thing approximating its current 
major league form. 

Owners of the 28 teams, meeting 
in Chicago late yesterday, were 


expected to declare an impasse in 
the talks, a legal device under 
labour relations law that would 
enable than unilaterally to impose 
a cap on player salaries. 

The players’ union is likely to 
counter with a lawsuit accusing 

mflHflgqmflmt nf failing to bar gain jn 
good faith. This would lead to an 
investigation by the National 
Labour Relations Board, the inde- 


pendent federal agency, which could 
last two months. 

The NLRB has already sided with 
the players on a related issue by 
announcing that it has filed a com- 
plaint that the owners improperly 
withheld f7ihn (£5m) in contribu- 
tions to the players’ pension 
fund due on August L, less than 
two weeks before the strike 
started. 


Last week the department of 
Labour certified the dispute as offi- 
cial, thus dealing the way for the 
anion to petition the government 
not to gra n t visas to non-American 
players, mostly from Latin Ame rica, 
whom the owners have threatened, 
to import as substitutes, along with 
minor league players, in an attempt 
to get some kind of season under 
way next year. 


There had been some hope earlier 
this week that the latest round of 
negotiations was "raking progress 
on alternatives to a pure salary cap 
as the best means of sharing reve- 
nues more equitably between rich 
and poor dubs. iHhjfWed proposals 
by the owners on taxing team pay- 
rolls had not been dismissed ant of 
hand by the players, hut no agree- 
ment proved possible. 


With spring training doe to start 
in 10 weeks, there has been no 
break in player solidarity, thongfa 
public opinion now tends to Maine 
them more than the owners for the 
problems of the country's nattnmi 
apart. Some owners have wpiywrf 
misgivings about sacrificing 
another season, but the majority 
seem determined to let the confron- 
tation run its course. 


takes over 




■* — 


more banks 





*.WMI 


By Stephen Fidter, Lathi 
America Editor, te Caracas 





Cardoso on his mark for a reforming sprint 


B razil’s Senate gave an 
effusive farewell on 
Wednesday to Mr Fern- 
ando Henrique Cardoso, who is 
to become the country's next 
president on January L If he 
pursues the policies needed to 
modernise the Brazilian state, 
and which are sure to be 
unpopular, it may be some 
time before he is invited back. 

Mr Cardoso used the occa- 
sion to make a wide-ranging 
speech listing the priorities for 
his four-year term in office. 
Rather than grandiose visions, 
he concentrated on reforms he 
needs to tackle during the first 
few months. 

“Brazil is in a hurry. We 
have only a limited period to 
take the measures to guarantee 
stability and prepare for a new 
cycle of development," he said. 

Mr Cardoso’s haste is 
prompted by time bombs 
within the government budget 
and social security system. 
Both threaten the success of 
the Real currency which Mr 
Cardoso planned when he was 


Brazilian president-elect is clear about his policy priorities, writes Angus 


finance minister. The currency 
reduced monthly inflation, 
from about 50 per cent before 
its July launch to 2-8 per cent 
today and its success ensured 
Mr Cardoso's election victory. 

The Real worked partly 
because the government has 
this year balanced its budget, 
mainly by severe spending 
cuts. Next year, however, the 
government is forecasting a 
deficit of $5bnn$i0bn (£3.2bn- 
£6.4bn), equal to 1-2 per cent of 
GDP and enough to prompt 
worries about inflation. Mean- 
while, Brazil’s badly designed 
social security system, which 
will soon have more beneficia- 
ries than contributors, is set to 
oost $28hn In 1995, against just 
£14_2bn three years ago. 

In his speech Mr Cardoso 
highlighted three areas for 
reform, all requiring constitu- 
tional changes. He said the 
central government’s responsi- 
bilities, and spending obliga- 


tions, needed to be devolved to 
local government and the pri- 
vate sector; government reve- 
nues needed to he raised by an 
overhaul of the tax system; 
and the social security system 
had to he reformed to remove 
anomalies and lax rules. 

None of these ideas is new, 
and there is widespread agree- 
ment in Congress and the busi- 
ness sector that reform, in gen- 
eral terms, is needed. The 
problem, however, and the rea- 
son why change has not yet 
happened, is that specific pro- 
posals proved unpopular and 
often threatened big losses for 
powerful interest groups. 

Mr Cardoso, a cautious man 
who likes to build consensus 
before acting; took care in his 
Senate speech not to mention 
any unpopular measures. 
Talking about tax reform, he 
stressed the need to cut taxes 
on exports and basic goods for 
poorer families. He did not 


dwell an his probable need to 
lift the overall tax burden from 
25 per cent of GDP, which is 
low by international standards. 

He said he would send spe- 
cific ideas on constitutional 
reform to Congress in Febru- 
ary. Any changes would need 
three fifths a p proval; Mr Car- 
doso so far looks capable of 
mustering the support 

His Social Democracy party 
(PSDB) and its allies have just 
under half the seats in Con- 
gress, and earlier this week he 
won the backing of the Demo- 
cratic Movanent (PMDB), Bra- 
zil’s biggest political party. But 
until Mr Cardoso takes office 
and spells out his plans, it is 
difficult to assess the loyalty of 
his allies. 

“He will have two to three 
months’ honeymoon, then it 
will get difficult," Mr Luiz 
Pedane of the University of 
Brasilia predicts. “There will 
be strong opposition, mrindfrng 


from some of the government’s 
backers, on controversial 
reforms like reducing the cen- 
tral government’s spending 
obligations and the size of the 
public sector.” 

The reforms Mr Cardoso is 
seeking will take time to affect 
significantly the government’s 
budget and will not start 
reducing its spending obliga- 
tions until 1996 at the earliest 
Next year’s deficit will probar 
bly have to be covered by pri- 
vatisation receipts. 

Mr Cardoso said Brazil's pri- 
vatisation programme, which 
has lagged behind those of 
neigh boors such as Argentina, 
needed to be “accelerated and 
extended” to energy, transport 
telecoms and mining. 

Departing from bis prepared 
text, he spoke of how 
impressed he was by US tele- 
communications technology on 
a recent visit to Miami. Brazil's 
telecoms' monopoly - which 


has suffered from a lack of 
competition and government 
under-investment - needed to 
be made more “flexfide’’ or be 
left behind, be said. 

These signals, which will be 
welcomed by foreign compa- 
nies eyeing Brazil’s telecoms 
market, suggest Mr Cardoso’s 
cautious c on v er sion to privati- 
sation is However, 

he stressed the state need not 
lose control of its monopoly, 
and he did not mention the 
state-owned oil monopoly 
Petrohris. 

Persuadi ng Cong ress to back 
speedier p riv ati sa t ion will also 
be difficult State-owned com- 
panies axe still seen by many 
politicians as sources of 
patronage. 

A member of the outgoing 
government said Mr Cardoso’s 
popularity when he took office 
would give him dout to make 
many of the changes . he 
needed, but only If inflation 




v- 


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Cardoso: Brazil is in a hur ry 


stayed below 2-3 per cent a 
month and people continued to 
fed better off. 

“The first half of next year 
will be crucial for approving 
these reforms. The danger is 
the new government will spend 
too long trying to reach com- 
promise solutions with interest 
groups which stand to lose out, 
and the door wifi close.” 


Venezuela’s banking crisis this 
week claimed another victim, 
as the gover n ment took over 
the Grupo Latinoamericano, a 
conglomerate of 43 financial 
and other companies, because 
of troubles at the two banks it 
owned. 

The two banks In the group 
controlled fay Mr Orlando Cas- 
tro - Republics and Progreso - 
will continue operating. They 
were taken over following the 
failure to service loans made 
earlier this year fay govern- 
ment agencies In an attempt to 
prop up the bank ana, more 
recently; settlement difficul- 
ties. The group “had a liquidity 
problem and a solvency prob- 
lem,” according to Finance 
Minister Julio Sosa. 

The takeover means the 
state now owns about 70 per 
cent of the banking system, fol- 
lowing a crisis which erupted 
at the start of the year. Ironi- 
cally, the first bank to go 
under - Banco Latino - 
reopened its doors this week, 
as did its Edge Act subsidiary 
in Miami 

Mr Sosa said in an interview 
that he believed the crisis was 
drawing to a dose. “I think we 
are more or Jess getting to the 
end of it People now realise 
that their deposits are OK.” 
Government policy now is to 
keep the hanks operating. . 


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FINANCIAL TIMES FRIDAY DECEMBER 16 1994 




NEWS: UK 


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Overseas develop ment minister set for ‘tough talking 9 with Treasury over cuts in aid budget 

Chalker warns on recouping Pergau funds Cabinet rows 


; V S. By Peter Montajpion 
y ~ f *' and. James BEtz 


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Lady Chalker, Britain’s minister for 
Overseas Development, has warned 
that her ministry might not be able to 
claw back all the money due to be 
spent in support of Malaysia’s Pergau 
dam, even though the use of the aid 
budget for. this purpose has been 
declared Illegal 

The British government hna agin 
that the ODA’s overall budget will not 
be af fe cted for the next two years by a 
recent High Court ruling that has 
forced the Treasury to provide £48m 
fn planned support for Pergau from 


its own reserves. But on Tuesday, Mr 
Douglas Hurd, foreign secretary, left 
open the question of what would hap- 
pen in later years when the British 
government is required to pay fruftin 
to the Mala ysian authorities. 

Lady Chalker said yesterday she 
expected there would be some “very 
tough talking* with the Treasury over 
whether the ODA budget shrmiri take 
cuts commensurate with the amount 
being paid for Pergau from Treasury 


"It would be nice to have all the 
additi o n, but I don’t expect we shall 
get it all," she said in an interview 
with the Financial Times. 


Her remarks are bound to concern 
aid lobbies which had hoped the court 
Judgment on Pergau would raise the 
amount of money spent on projects 
designed to alleviate poverty. 

Under a High Court ruling last 
month, the ODA cannot make pay* 
meats for the Pergau project because 
it is deemed to be “economically 
unsound”. 

But tn a statement to the Commons 
earlier this week, Mr Hurd said the 
exact size of the ODA budget from the 
financial year 1986-97 would have to 
be determined in future public expen- 
diture rounds. 

Labour MPs and aid groups fear the 


ODA will end up indirectly financing 
the project because the aid budget 
will suffer cuts to compensate for the 
Treasury payments for Pergau. 

Labour MPs reacted angrily in the 
Commons when the government said 
it would not restore the £24m which 
has already been spent on Pergau to 
the ODA budget 

But Lady Chalker said yesterday 
that the government had been 
through the judgment very carefully. 
“I believe we have complied with 
what the divisional court said abso- 
lutely to the letter." 

The ODA had not decided how to 
spend the £48m that would be 


returned to its budget this year and 
next, she said, but it was likely to go 
on emergency relief in countries such 
as Bosnia and Rwanda. 

The aid and trade provision bad 
already been set for this year and the 
money would not be used for extra 
projects in this area, she said, 
although she vigorously defended the 
use of add to help UK trade. “It’s good 
for Britain, good for British jobs that 
we should be involved.” 

“We have an aid and trade system 
that is strict and gives British compa- 
nies the chance to compete on equal 
terms with other aid donors who are 
also interested in trade." 



EU ban 

on cow 

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European Union agriculture 
ministers yesterday agree d to 
extend a ban an the use or the 
controversial milk-boosting 
hormone bovine somatotro- 
phfn (BST) for cows onto the 
end of the decade following 
widespread resistance to the 
prod uct 

Mr WQUam WaSdegrave, UK 
agriculture- minister, was 
alone in voting in fav o ur of 
the synthetic hormone, despite 
strong consumer opposition to 
its use in Britain. 

BST; which Is produced by 
Monsanto and Eli LHley, the 
US biotechnology companies, 
is an artificial version of a nat- 
urally occurring hormone in 
cows which enhances milk 
o utput 

Mr Wal degrave said scien- 
tific evidence supported the 
use of BST. Consumers and 
animal welfare activists are 
concerned about its effects, 
including an increase in the 
incidence of mastitis in cows. 

There was some confusion 
over the wording of the coun- 
cil's final decision on BST. 
Monsanto said the council had 
agreed that some farmers 
could make limited commer^ 
rial use of the hormone in 
order to gain practical experi- 
ence of its effects. UK govern- 
ment officials said this would 
be restricted to field trials. 

The product received 
approval in the US six months 
ago and since then, Monsanto 
says it has been used by 10,000 
dairy farmers on over 800,000 
cows. 

But the EU Commission was 
concerned about the economic 
damage that could be done by 
increasing milk output at a 
time when quotas are in place 
to limit production. 

The ban on its use will now 
last until the milk quota 
restriction runs out at the end 
of 1999. 

The EU Commission has 
agreed to prepare a report on 
farther scientific trials by 
1998. Consumer groups have 
called on the Commission to 
prevent any milk produced as 
part of the trials from entering 
the food chain. 

Monsanto said there was no 
reason why milk produced 
firing BST should not be sold 
to c onsu mers. 

The company produces BST 
near Vienna and Eli LOley has 
a production site outside Man- 
chester. 



The Queen Elizabeth 2, flagship of the Canard Line, will be welcomed back to her home port of Southampton this weekend following a £30m refit at the Blohm & Voss 
yard in Hamburg, Germany. The QESthen sails for Hew York on Saturday at the start of a 117-night round the world cruise 


QlynOnh 


Retail sales data sluggish 


By PhBp Coggan, 

Economies Correspondent 

Official figures on November’s 
UK retail sales confirmed the 
impression left by the Confed- 
eration of British Industry sur- 
vey this week - that consumer 
demandwas sluggish in the 
run-up to the vital Christmas 
period. 

Retailers are finding it diffi- 
cult to attract shoppers with- 
out cutting prices. For exam- 
ple, according to the British 
Retell Consortium, department 
stores reported fragrance sales 
well ahead, but only with the 
help of price promotion that 
had damaged margins. 

- November's 2.5 per cent 
annual rise in retail sales vol- 


umes, seasonally adjusted, is 
the lowest increase sinoe April 
1993. In October the annual 
rise was a revised 3 per cent 

Seasonal adjustment is an 
important part of the statisti- 
cal process at this time of year; 
November is normally the sec- 
ond busiest shopping month. 
While the seasonally adjusted 
figures show no change in 
sales between October and 
November, In unadjusted 
terms sales actually rose by 7.5 
per cent 

The Central Statistical 
Office’s preferred measure is to 
use a three-monthly average. 
On that basis, sales volumes in 
the three months to November 
were 3 per cent higher than in 
the same period of 1993. How- 


ever, the rise compared with 
the previous three months (to 
August) was just 0.5 per cent 
In value terms, unadjusted 
retail sales in November were 
3.4 per cent higher than in 
November last year. 

Comparing- the three months 
to November with the previous 
quarter, the -strongest sector 
was household goods, which 
recorded a rise of L9 per cent 
Significant foils In sales of 
camcorders, video games and 
home computers were 
reported. Yet sales of white 
goods, televisions and hi-fis 
were up on a year ago. 

Separately, Barclaycanl said 
its credit card turnover was 9.4 
per cent higher in the year to 
date than in the previous year. 


Customs to review VAT 


ByJkn Kafly, 


Britain's Customs and Excise 
department is to review 
whether VAT should be paid 
on some services sold to 
insurance companies after 
three successful actions by 
companies seeking tax 
exemption. 

In the meantime, services 
similar to those provided In the 
three “test cases are to be 
exempt from VAT and 
Customs has withdrawn legal 
appeals hi the three cases. 

However, most such services 
will stffi carry full VAT. “This 


is not a Manta* exemption,” 
said a Customs official. 

A period of consultation with 
insurers and others will begin 
next year to see whether UK 
VAT exemptions match the 
those set out in current 
European law. A paper to 
begin the consultation period 
wOl be published in early 1995. 

The move follows three 
successful appeals to VAT 
tribunals from Barclays 
Insurance Services Company, 
Countrywide Insurance 
Marketing and Curtis 
Eddington and Say. 

The companies claimed that 
they should be exempt from 


VAT on services which, they 
provided. They said the 
services fell under the broad 
description in the VAT Act of 
“file making of arrangements 
for the provision of any 
insurance.” These included the 
provision of a help-line 
telephone inquiry service. 

Any provider of services like 
those in the three test cases 
could be eligible for a 
repayment of tax and Customs 
advised that they contact their 
local VAT office. 

If, as a result of the review, 
there are further changes to 
VAT liability then any change 
will not -be retrospective. 


CBI survey finds 

buoyant demand 
in manufacturing 


By Peter Norman, 

Economics Editor 

Demand for British 
manufactured goods is more 
buoyant than at any time since 
January 1989 and more compa- 
nies are forecasting higher out- 
put in the next four months, 
the Confederation of 
British Industry reported 
today. 

In its monthly trends 
enquiry for December, the CBI 
pointed to continuing upward 
pressure on output prices, 
although the balance of compa- 
nies expecting to increase 
prices in the next four months 
stayed unchanged compared 
with November. 

Mr Sudhir Junankar, the 
CBTs associate director respon- 
sible for economic analysis, 
said the latest survey showed 
that “the mannfiar-h n-iri g recov- 
ery is likely to continue at a 
smar t pace into the new year, 
with overall demand improv- 
ing to its best level for nearly 
six years.” 

The survey, which covered 
1,207 manufacturers between 
November 25 and December 14, 
found that 27 per cent thought 
their present total order book 
was above normal, 19 per cent 
below normal and 54 per cent 
normaL 


The resulting balance of plus 
8 per cent, which the CBI con- 
siders indicative of the trend; 
was the highest since January 
1989. It compared with a bal- 
ance of plus 5 per cent of com- 
panies in November and minus 
19 per cent in December last 
year. 

Export order books were also 
above normal, although the 
balance of plus 7 per cent In 
December was slightly below 
November’s 10 per cent posi- 
tive balance. 

Over the next four months, a 
balance of 27 per cent of com- 
panies plan to raise output 
compered with 21 per cent in 
November and 9 p er cent in 
December last year. However, 
output expectations were 
below the plus 30 per cent bal- 
ance recorded in August 

The closely watched CBI 
indicator of companies plan- 
ning to raise domestic prices 
was unchanged between 
November and December, with 
a positive balance of 22 per 
cent for both months. The CBI 
reported that 54 per cent of 
companies expected prices to 
stay unchanged in the next 
four months. 

Mr Junankar said it was 
“encouraging” that manufac- 
turers* output price expecta- 
tions had levelled off. 


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Cautious welcome 

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for trial results 
of new cancer drug 


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By Danfef Green 

A maverick drugs Industry 
entrepreneur may be about to 
prove his detractors wrong 
with a cancer drug that 
appears to he as good as exist- 
ing treatments but without 
severe side effects. 

The drug will be submitted 
for regulatory approval in the 
first quarter of 1995 and could 
be on sale in Europe by 1996. 

Dr David Horrobin's com- 
pany Scotia Pharmaceuticals 
yesterday published final stage 
clinical trial results on a pan- 
creatic cancer drug EFL3 that 
show that the life expectancy 
of cancer patients was up to 
two-thirds better than with 
normal chemotherapy. 

Shares In Scotia Pharmaceu- 
ticals rose 2lp to 2?4p after the 
company presented its results 
to City analysts. 

Cancer experts gave the trial 
results a cautious welcome. 
Professor Gordon McVle, scien- 
tific director at. the Cancer 
research campaign, a London- 
based charity, said that the 
results from the clinical trials 
were “encouraging". 

But he pointed out that the 
trials compared EF13 with his- 


toric data on mortality. They 
would have been more con- 
vincing if the drug bad been 
compared with a placebo In 
which neither doctor nor 
patient knew which was being 
administered, be said. 

Scotia said that promising 
preliminary trial data meant 
there were ethical problems in 
knowingly witholding the drug 
bum sufferers. 

- Professor Karol Sfkora, can- 
cer consultant at Hammer- 
smith Hospital, said the results 
were “interesting” but “much 
more evaluation” was needed. 

Cancer of the pancreas is mm 
of the deadliest, with about 
60,000 deaths a year in Europe 
and north America. Historic 
data suggests that with the 
normal treatment regime in 
the UK. morphine to kill pain, 
average Ufa expectancy is just 
over three months. 

With the intensive chemo- 
therapy sometimes used in the 
US, the figure Is seven months. 
.With . high doses of EF13, 
patients survived on average 
far one year. 

With yesterday's share price 
rise, Scotia is tire UK’s second 
hugest biotechnology c o m p any 
by market capitalisation. 


British Gas to transform showrooms 


By Robert Taylor and Robert Corzfne 

British Gas is to withdraw all consumer 
advice and complaints services from its 
high street showrooms next month as part 
of the transformation of Its network into a 
purely retail operation. 

The company has agreed to trade union 
requests to station security guards at 
some shops because of fears that the with- 
drawal of services could aggravate some 
customers. 

A trial of the new-style showrooms in 
wine cities has resulted in some customers 
threatening employees, according to Brit- 
ish Gas officials. 

At present consumers can use gas show- 


rooms to pay bills, inquire about services, 
malm complaints or receive energy effi- 
ciency advice. 

But from January 3 the shops will be 
converted to wholly retail appliance out- 
lets. The advice and complaint services 
will be available by telephone for the price 
of a local ««ll- Customers who want to pay 
their bills in person will be directed to 
post offices. 

British Gas plans to launch an advertis- 
ing Mwipaign in the next Sew days to 
inform the public about the changes. 

Olgas, the gas industry regulator, yester- 
day said it was satisfied with the alterna- 
tive arr an g em ents. 

It regards the post office schema, intro- 


duced earlier this year, as particularly 
effective, as gas bills can be paid at any of 
19,000 post offices, compared with only 266 
gas sh o wrooms. 

Meanwhile, the string of public relations 
pitfalls which has beset British Gas in 
recent weeks continued yesterday when 
MPs and consumer groups criticised the 
company for trying to impose deep pay 
cuts on several thousand showroom work- 
ers only weeks after Mr Cedric Brown, 
British Gas chief executive, was awarded a 
75 per cent pay rise. 

The House of Commons employment 
committee said it wants Mr Brown to tes- 
tify at a hearing into the issue of executive 
pay next month. 


over replacement 
for RAF aircraft 

A decision by the British government to purchase more than a 
handful of sew Hercules transport aircraft would severely 
damage UK participation in the development of the European 
Future Large Aircraft, British Aerospace warned yesterday. 

The warning came as a cabinet-level row over bow the RAF 
should set about replacing its ageing Hercules fleet appeared 
to gather momentum at Westminster. 

Mr Malcolm Rifkind, defence secretary, is understood to be 
p ushing for up to half the current Gfrstrong Lockheed Hercules 
fleet to be replaced with the same company's C-130J aircraft 

But Mr Michael Heseltine, trade and industry secretary, is 
believed to favour refurbishment of the current fleet, which 
the RAF says will need replacement from 1996. 

This would enable a decision on a long-term replacement to 
be delayed until 2002, when the FLA - for which BAe will 
build the wings - becomes available. 

If the C-130J is chosen, Mr Heseltine is understood to feel 
that a maximum of 15 - equivalent to an operational RAF 
squadron - should be ordered. This would minimise the risk of 
undermining the FLA's chances of competing successfully 
with Lockheed for future orders. 

The controversy over the aircraft order came amid signs of a 
fresh split in the cabinet over whether the government should 
offer a referendum on the next stage of European Integration. 

Mr Kenneth Clarke, the chancellor, has won Mr Hesei tine's 
harking for an intense behind-the-scenes effort to persuade Mr 
John Mqjor against appeasing the Tory right by committing 
the gover nm ent now to a referendum. 

Tunnel shuttle set to start 

Passenger shuttle services through the Channel tunnel will 
start next Thursday following the award yesterday of a safety 
certificate to Eurotunnel, the tunnel operator. 

The level of fares to be charged will be announced today. 
They are expected to be roughly comparable with those 
charged by the ferries, with which the shuttles will compete. 

The start-up or passenger shuttles is 18 months later than 
originally planned but it completes the range of services 
offered by the tunnel following earlier launches of freight 
shuttles, through freight trains and Eurostar through services 
between London. Paris and Brussels. 

Coffee price rise goes ahead 

Nestle, the multinational food company which produces the 
Nescafe brand of coffee in the UK, said yesterday It would go 
ahead with a 7 per cent increase in wholesale prices from 
December 20 in spite of a sharp drop In world prices over the 
past week. 

Since the company announced the planned price rise on 
December 7, international coffee prices have dropped by 13 per 
cent. The world market has faUen by 40 per cent since Septem- 
ber as assessments for world supply have become more opti- 
mistic. 

NestlS’s forthcoming price increase will be the third rise this 
year in the wholesale market, and will inevitably pus fa up 
consumer prices. The company said yesterday that it does not 
respond to short-term changes to coffee bean prices. 

Kraft Jacobs Snchard, part of the Philip Morris group and 
one of Nestfe’s competitors, announced yesterday It was can- 
celling a planned increase to French retail coffee prices over 
the next three mouths. The company said this was in response 
to lower world prices. 

Rosyth wins refit order 

The Rosyth dockyard in Fife, Scotland has won a £i0Gm 
contract to refit the Royal Navy’s nuclear submarine HMS 
Superb, it announced yesterday. 

The 2%-year contract follows on from a similar contract for 
a sister submarine of the Swiftsure class, Sovereign, which is 
currently nearing completion. 

Babcock Rosyth Defence, managers of the yard, which 
employs about 3>500> said work would start immediately and 
continue until mid-1997, providing work for up to 1,000 people. 

Ballot for Peugeot workers 

More 2^00 car workers at Peugeot Talbot’s Coventry plant will 
be balloted to the new year on industrial action after rejecting 
a two-year-pay deal by almost four to one. 

The staff; members of the TGWU, were offered 3.5 per cent 
to first year of the deal and 4 per cent - or the rate of 
inflation, if higher - in 1996. 

One mayor area of disagreement is ora 1 compensation for 
loss of premium payments after the Ryton plant’s recent move 
from day and night working to a double dayshift pattern, with 
work starting at 6am and 2pm. 

Management claims to have compensated for any conse- 
quent loss by offering production workers lump-sum payments 
totalling £200 over the two-year period. The union wants the 
compensation payments to be consolidated into base rates. 

Jaguar car workers are currently conducting a strike ballot 
after overwhelmingly rejected a two-year pay deal worth 7.5 
per cent Rover Group car wor k ers last month voted narrowly 
to accept a pay deal which for most of them was worth 10.7 per 
cent over the next two years. 

Tour operators cease trading 

Two UK tour operators ceased trading yesterday - but hun- 
dreds of their customers currently abroad were assured their 
holidays were safe. 

The Civil Aviation Authority said Ultimate Holidays and 
Transamerica Holidays were both covered by Air Travel 
Organiser’s Licence bonds. 

“Passengers currently abroad will be able to continue their 
holidays and travel home as planned,” said a CAA spokesman. 

There will be no farther outbound flights from midnig ht 
today. 

Ultimate H o bdays, based in Bishop’s Stortford, Hertford- 
shire, traded as Spirit of the East and Ultimate Flights and 
specialised to travel to Europe, the US and the Far Eastin 
July {hia year Ultimate took over Transamerica, based in 
Harley, Surrey, and traded as Transcanadian Hobdays, Ameri- 
can Vacations, Value Vacations and Transavers. The company 
specialised in North American breaks. 

A spokesman for Transmerica said it had 300 passengers 
abroad at the moment and 15,000 booked to travel over the 
next 12 months. 


Ulster loyalists satisfied on constitutional safeguard 


Northern Irish loyalist leaders 
yesterday emerged from a his- 
toric first round of talks with 
British government officials 
and said they were satisfied 
that guarantees that the prov- 
ince would remain part of the 
UK would be honoured. 

Mr Billy Hutchinson, leader 
of the delegation from the Pro* 
gressive Unionist party, which 
has dose links with the Ulster 
Volunteer Force* said after 
three hours’of talks: "We are 
confident the constitutional 
guarantee is safe." 

Mr Gary McMkhael, leader 
of the delegation from the 
Ulster Democratic party - 
which has insights into fhe 
thinking of the Ulster Defence 


Stewart Dalby reports from Belfast on the latest round of talks 


Association, the other main 
unionist paramilitary group - 
also said he was satisfied there 
would be no change in the con- 
stitutional guarantee that 
Ulster remains part of the UK 
while the majority so wishes. 

"We have seen the British 
government discussion docu- 
ment and we are satisfied the 
constitution is safe," he said. 

Mr Hutchinson, who has 
served a prison sentence for 
terrorist crimes, said the ques- 
tions of anas surrender and 
prisoners were discussed, but 
were secondary to the constitu- 
tional question. “The surren- 


der of arms is some way down 
the road. Guns and prisoners 
come second after oar constitu- 
tional concerns.” 

The talk* ramp qq the anni- 
versary of the Downing Street 
declaration, nine weeks after 
the loyalists announced their 
ceasefire and six days after the 
first exploratory talks between 
Sum Fein, the political wing of 
fhe IRA, and British govern- 
ment officials. 

Like those with Sum Fein, 
yesterday’s talks dealt with 
how representatives of the 
paramilitary groups might 
enter the peace process. 


Mr Michael Ancram, the 
Northern Ireland political 
development minister who is 
in overall charge of discussions 
with the loyalists and Sinn 
Fein, said that arms deoom- 
misskming was central to the 
exploratory talks as far as the 
British government was con- 
cerned. 

But the loyalists were 
unhappy with the govern- 
ment's suggestion in a discus- 
sion document that their par- 
ties did not sq]oy sufficient 
electoral support to warrant 
participation in wider all-party 
talks on the province’s future. 


• The Northern Ireland peace 
process has already bought 
heightened interest in retail 
property in the province, with 
Belfast and the border towns 
expected to gain most, the 
Royal Institution of Chartered 
Surveyors said yesterday, 
Simon London writes. 

Research carried out for the 
institution by fhe University of 
Ulster found property and con- 
struction companies were also 
<« pertfag house htriMfag and 
sales to benefit The peace pro- 
cess was expected to bring 
greater mobility of housing 
and greater religious mix 


in private housing areas. 

A rise in cross-border eco- 
nomic activity is also pre- 
dicted, with the Bel&st-Dublin 
corridor likely to he the focus 
of development 

However, local companies 
are expecting intense competi- 
tion as companies from the 
rest of the UK expand into the 
province over time. 

Mr Denis Rooney, head of 
the institution working party, 
said: “Our report identifies 
tourism in particular as offer- 
ing enormous potential for eco- 
nomic growth provided the 
right infrastructure is devel- 
oped. That means new hotels 
and other facilities as well as 
communications services." 


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FINANCIAL TIMES FRIDAY DECEMBER i« 19W 


Anglian Water is undergoing a 
radical overhaul in its drive for 


efficiency, writes Jane Bird 


CHRISTOPHER LORENZ 


Keeping 


Ford’s global 




afloat 



matrix gamble 



A lan Smith, group managing 
director of Anglian Water 
(AW), works a 60-hour 
week, including most Sun- 
days and some Saturdays. Although 
he admits he’s a workaholic, he dis- 
courages his staff from overwork- 
ing. “It's a sign of inefficiency," he 
says. 

Eliminatin g inefficiency has been 
the prime objective of an especially 
controversial management change 
programme at AW during the past 
year. It has involved 10,000 staff 
interviews, 900 redundancies and 
the e limina tion of multiple layers of 
management. Some £60m of last 
year's £192 .2m pre-tax profits were 
set aside to pay for the exercise. 

The scale of his task was illus- 
trated this week when Ofwat, the 
UK water industry regulator, sin- 
gled out Anglian in its Levels of 
Service 1993-94 report as one of four 
companies "where performance 
against one or more measure Calls 
short of what customers can reason- 
ably expect" (on two of the four 
criteria it scored well below aver- 
age). 

Nevertheless, Ofwat's observation 
that Anglian has "reported signifi- 
cant improvements already" will be 
an encouragement to Smith, who 
took over the helm in 1990, the year 
after flotation. Drastic action has 
been necessary, says Smith, 
because, despite its profitability, the 
company was still living with big 
problems inherited from its public- 
sector days. 

Smith was initially anxious to 
avoid upheaval but in 1992 he 
attended the 10-week Advanced 
Management Programme at the 
Harvard Business SchooL One of 
the lessons he says he learned was 
the importance of radical change. 
"You don't create a winning busi- 
ness by nibbling away at the sides," 
he says. “That just leaves you with 
frayed edges.” 

In 1993, he commissioned a study 
focused on the 2,700 white-collar 
staff. It recommended that about 
one-third of them should go, and 
that the hierarchical comma pd-and- 
control style management should be 


eradicated in favour of a flat struc- 
ture baaed on coaching and empow- 
erment 

Smith also canvassed, his staff for 
their views on the company's man- 
agement style in an employee opin- 
ion survey. 

The survey results were pretty 
bruising, he recalls. "What c ame 
across was an organisation based 
an bureaucracy, poor internal com- 
munications and too much fear." 

Smith, who had long campaigned 
for a more open style of manage- 
ment, held a series of employee pre- 
sentations on the results of the 
opinion survey. It was an embar- 
rassing experience being openly 
criticised on subjects such as his 
£163,000 salary, but he believes that 
attending the presentations was a 
turning point for many employees. 
“Until that moment many of them 
did not believe the changes we had 
been talking about would happen." 

In getting rid of the 900 staff, 
Smith's main problem was to 
ensure that the right people stayed. 
So instead of keeping only those 
staff whose jobs remained, he 
decided all employees would have 
to re-apply for positions under the 
new order. Fart of their appraisal 
would be an occupational personal- 





Alan Sm ith : ‘You do n ’t create a wtmdng business by nftsbttng away at the sides 1 


uppa 


an indicator of how somebody 
might be able to adapt to a new 
culture, especially managers. 

“If you want a brave new world, 
spending half an hour discussing 
what someone has done for the past 
10 years doesn't get you for ahead." 
In any case, the questionnaires 
were only part of the appraisal pro- 
cess, he says. 

Another lesson he learned at Har- 
vard was the role of Total Quality 
Management. “I knew it was impor- 
tant before I went, but I came away 
undearstanding that it meant for 


Tm aware of the hard road we’ve embarked 
on and am determined not to give up” 


ity questionnaire, designed to look 
for abilities that would be needed 
by the new AW: conceptual think- 
ing; innovation; team-working; ini- 
tiative; people-orientation; and flexi- 
bility. 

The questionnaire became a focus 
of resentment among some staff 
who felt they had been unfairly 
deprived of jobs. Some psycholo- 
gists have also shed doubts on the 
validity of the terhniqng arguing 
that what people say in question- 
naires may not bear much relation- 
ship to how they do their jobs. But 
Smith, who also filled in a question- 
naire; insists they are valuable as 


more than l had realised.” One way 
that Smith put this theory into 
practice was by upgrading the sta- 
tus of staff working on water mains 
and sewers. 

“They're our front-line people and 
if they were not properly customer- 
focused all our efforts behind the 
scenes would foil apart." Hence his 
decision to bring all these staff into 
a customer services unit By Octo- 
ber, ah the appointments had been 
made, while at the same time the 
number of management tiers 
between any individual and the top 
had been reduced to three. Smith, 
expects the changes to yield annual 


savings of £2Qm within the next two 
years. 

One of the main outstanding 
tasks is to select a computer system 
capable of handling the streamlined 
flow of data across and np the 
organisation, in addition to the 
downwards route. 

“You don’t do anything big with- 
out computers," says Smith. “That 
was the third lesson I learnt at Har- 
vard." Part of the £60m provisi on 
will help pay for new information 
technology systems. 

Although most consumers feel 
they do not have a dunce of water 
supplier Smith says competition Is 
reaL Hie is keenly aware of Severn 
Trent Water and Yorkshire Water 
pressing on his borders and of the 
possibility of smaller independent 
operators moving in to siphcm off 
the most lucrative parts of the busi- 
ness. 

Meanwhile, staff will have to be 
constantly vigilant to ensure they 
do not slip back into their bad hab- 
its, he warns. 

Cultural changes do not happen 
overnight, and many companies 
that embark on ambitious pro- 
grammes abandon them half-way 
through. “But Tm conscious of the 
long, hard road we've gmharkad on 
soul am absolutely determined not 
to give up.” 

An article on psychometric tests 
wiD. appear on Monday’s manage- 
ment page. 


In just over a 
fortnight’s time, 
on New Year's 
Day, one of the 
boldest organisa- 
tional experiments 
of the decade will 
kick into action. 
After a remarkably 
- some would say dangerously - 
short preparation period of only 
10 months, the Ford Hotter Com- 
pany wID merge its North Ameri- 
can and. European operations into 
a single “global" str uctu re . 

In place of its long-standi n g 
twin organisations on each side of 
the Atlantic, which suffered from 
overlap, waste, poor communica- 
tion and inadequate exchange of 
know-how, it is creating five 
transatlantic “vehicle centres", 
each with responsibility’ for partic- 
ular sizes and types of vehicle. 
Four of them will be located in the 
US, bat the one with the greatest 
growth potential, for small- and 
medium-sized cars, wiS be based 
jointly in Britain and Germany. 

The centres will have responsi- 
bility not only for designing, 
developing and launching their 
respective lines of vehicles for 
North America and Europe, but 
also for tiie profitability and cash 
flow of each product throughout 
its life. Their development respon- 
sibilities will also coves: Asia, 
alth ough Ford’s Aria Pacific and 
Latin American operations will 
remain officially separate from 
the new structure for now. 

The group’s transformation, 
christened “Ford 2000”, has 
rightly attracted widespread 
attention on a series of counts: 

• For its speed: most multina- 
tionals in other industries have 
taken a decade to shift their 
organisations gradually from 
national or regional struct ur es to 
near-global ones. 

• For tiie degree of “process re- 
engineering” involved: a key part 
of Ford’s transformation is the 
introduction of a single set of 
worldwide processes and systems 
in product development, produc- 
tion, supply and sales. 

• For the sharp “delayering” 
which is occurring in several parts 
of tiie organisation, halving Ford's 
average number of levels from 14 
to seven. 

• And for the degree of behav- 


ioural and cultural change 
involved in what is, in effect, an 
overdue bid by Ford’s new ch a i r- 
man, Alex Trotman, to drag the 
company the late 20th cen- 
tury by removing Its outdated mll- 
itary mentality. 

More than most other multina- 
tionals outside the Germanic 
world. Ford b« suffered for too 
long from a “command and con- 
trol" culture which has fostered 
tiie power of departmental barons 
at the expense of innovation, 
speedy dectefon-maklng and cross- 
functional teamwork. 

But one key facet of the trans- 
formation received surpris- 
ingly little comment, given its 
inherently c on troversial and risky 
nature: that' the new structure 
consists of a matrix in which most 
managers — an estimated 20,000 of 
tt»«n - will find their lives com- 
plicated in the new year by baring 
more than one boss. 


Trotman has 
declared that matrix 
management will be 
‘more tike jazz than a 
structured orchestra’ 


Host will report to a manager 
from one of the new vehicle cen- 
tres. But they will also report to 
an executive from one of the 
“functional" departments (manu- 
facturing, marketing/sales, pur- 
chasing etc.) 

In many ways, the introduction 
of ttds ""wfriTr is Ford’s most fun- 
damental change. It is certainly 
the one being trumpeted most 
noisily within the company as 
vital to global teamwork and 
organisational effectiveness. 

Ford's internal videos and other 
forms of employee .communica- 
tions have waxed lyrical over the 
past few mouths about the virtues 
of matrix management. They 
claim it provides “a flexible envi- 
ronment where all avenues are 
open, there are no one-way s t ree t s 
and no dead ends”. 

In similarly colourful vein, Trot- 
man has declared repeatedly that; 
compared with Ford's established, 
pyramid-llke organisation, matrix 
management will be “more like 
jazz than a structured orc hest ra”. 


It will, he promises, allow consid- 
erable informality, and improvisa- 
tion as situations change. 

Trotman’s metaphor is striking. 

But ft ignores the foct that, while 

some jazz combos do achieve the 
“perfect harmony” which Ford 
says it wants to create, others pro- 
duce only cacophony and chaos. 

This was certainly the painful 
outcome of most of the matrix 
management practised widely in 
the 1960s and 1970s, especially by 
Ameri can multinationals. 

With a few notable exceptions, 
their matrices were plagued by 
internal conflict, inefficiency, 
expense and delay , as divi si onal, 
geographic and functional manag- 
ers debated and fought with each 
other. In many cases disputes 
were only resolved laboriously by 
powerful co-ordinators acting as 
matrix “potice”. 

Ford hopes to rehabilitate 
matrix management by several 
pwini^ both “bard” and “soft". 
They Include: making doubly sure 
that objectives are agreed pre- 
cisely between the vehicle centres 
and the functional ride of the 
organisation; specifying dearly 
the respective roles sad responsi- 
bilities of individuals towards 
each side of the matrix; changing 
appraisal and reward systems, 
accordingly; only appointing 
senior executives who have shown 
they can work collaboratively; 
training everyone involved in the 
art of developing a co-operative 
matrix “mindset" which largely 
replaces the need for.pblidng; and 
introducing much more intensive 
and open communication than the 
organisation is used to. 

Enthusiasm for the new way of 
working Is palpable within the 
company, not merely at the top. 
There is particular excitement 
about the risibility of tiie new 
vehicle centres, and tiie global 
future which they promise. 

Yet to an outsider, the organisa- 
tion has too modi of the stupe 
and fori of what borintefi school 
academics call a “balanced 
matrix”, in which the power of its 
two sides are too even for them to 
operate smoothly together. If this 
proves to be the case, Trotman 
win have to do some tricky retim- 
ing. That: could prove almost' as 
controversial as the current 
uphe&vat 


Ben in penStripe by Gieves & Hawke s. 


EE 





LEONARD CURTIS 



BY ORDER OF THE JOfNT ADMINISTRATORS C MACMILLAN FCA & D. SMftDEN PCA 

M THE MATTER OF 

THORNLEY TRADING LIMITED 

TRADING AS 1HORNICY MSnBUIION ' ~ ' 'a 

Equity investors are sought in respect of the above Compaiy * 

• Leading video games distributor • Based in the .North Waste Turnover approx £3.5 million 

• Solid customer base 

AS enquiries should bo addressed to Paul Kaefey at . . 

Leonard Curtis & Partners, Chartered Accounta n t s 

3rd Floor, Peter House, Oxford S t ree t, Manchester Ml SAB Tel: 061 236 1955 Fax: 061 228 192 9 


Edible Nut & Snack 
Processors 
and Distributors 


With own brand labels. 
T/0 £3.5m aiti growing. 
Modem wefl equipped factory. 
Seeks outright sale. 


Write to Box B3767, FfamcM 



The Bacon Group Limited 

(In Administrative Receivership) 


UNITED COLORS 
OF BENETTON. 


-L?a 'isij, 1 


The Joint Administrative Receivers offer for 
sale the following business and assets which 
principally comprise: 

■ Established High Street shoe and fashion 
retailer with a strong niche position. 

■ Annual turnover of c. £25m. 

■ 48 stores (3 freehold and 45 leasehold) 
mainly in the East and West Midlands, all 
in excellent trading locations. 


Excellent Retail Opportunity Fbr Sale 

Three large Benetton Shops In West Midlands 
with an approximate turnover of £2,000,000. 
Alternative shops available in major towns In the 
Midlands and South West of England. 

For further Information please contact: 

Mr P Ported. 119 London Street, Reading, BerksHre RG1 4 Q 



u URl.n I'WHH - I J \f tt\ (_ \[< 
C < i\ V(.K>|< i\ ( UMIVWY. 


7 In Store fashion concessions. 


41,000 sq ft freehold warehouse (with 
office space) in Somercotes, Derbyshire, on 
the A38 three miles from J28 of the Ml. 

Distribution fleet of 7 vehicles. 


This flourishing business is for sale as 
a going concent. Superb location. 
An eacefl en i opp o rtuni ty 
form ideal way ofB&, 
Around £250000 

TeizOAG 861303 Faxz 04638*1353 






Prict-: 1:445. (HU) 

I 'AX: M'123 NM-ltiOO 


COMMERCIAL PROPERTY 


FOR SALE 


Newly installed EPOS system providing 
daily sales and stock control information 
from all stores. 


For further information, please contact: 
David Duggins or Davena Dyball, 
Arthur Andersen/ 

1 Victoria Square, Birmingham, Bl 1BD. 
Tel: 021 233 2101. Fax: 021 643 7647.. 


ROCHESTER 

= RIG & TALL : 



.Arthur 

Andersen 


From city suits to casuals, size won't be a problem at Rochester Big & Tall. And with a huge range 
i( designer names, including Jhane Barnes, Alan Paine and Charles Jourdan, we’re big on quality too 
So if you’d like to be the height of fashion, come to 90 Brompton Road (071-838 0018) 

or Freephone 0800 442277 for a catalogue. _ 

For your added convenience, we accept the American Express® Card. j 

nOw qpF. n opposite harroDs. Don "I Law Home WMfaat V 


Arthur Andersen &Gq SC 



Accountants ba 


l it r XT ( i • • _ ‘ I i i —rid A •> l.. 


GOLDEN OPPORTUNITY 
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2 buildings, lease for 999 years consisting of: 

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a ppe nding theatres, x-ray, E.C.G., treadmill and 
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One penthouse and one self contained furnished 
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Sale includes business and premises 

Please call Mr Alghoul 

Tel: 071 224 0986 Fax: 071 224 0985 


ART GALLERIES 


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to aafl roungfc w tt hem pahfcg fci 
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PERSONAL 


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be last decade has seen a 
revolution in cold-weather 
apparel, and winter sports 
enthusiasts face an entic- 
ing but confusing array of synthet- 
ics. 

Choosing a wardrobe for cold- 
weather sports used to be straight- 
forward- Skiers, skaters, ice fisher- 
men, and ice climbers would pads 
sjlfc or cotton long-johns, wool 
; sweaters and down Sachets. The 


TECHNOLOGY 


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PT)' 

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■ :,s -. 3 !h ; main concem was choice of colour. 


ithes manufacturers are wanning to man-mad 
fibres, writes Victoria Griffith 

Hot synthetics 


Itese days stores stock dothes 
e of materials with enigmatic 


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■ names such as Thermae p^artec, 
- , ^ ■nunsulate and Akwatek. Most of 

V‘ ; the high-technology fabrics are 
H derived from polyester, a material 
■■'JJ- formerly. associated mainly with 
1 T 7 ' C';.^ cheap suits. Many consumers have 
* hard time believing in the new 
^ Mgb-perfbnnance polyesters. 

7°° bad told me five years ago 
that polyester would be the state-of- 
- . the-art fabric for cold-weather 
4 -■ clothes, I would have laughed," says 
!>>• James Riley, vice-president of 
; fe k design for Reebok, the sportswear 
company, which has recently 




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incredibly flexible material.' 

. Polyester is manipulated in vari- 

ous ways to Improve insolation. “A 
-_ I; - few main focus in the industry has been 
^..1 J'% keeping moisture away from the 
: skin," says Catherine SaJtftno, mar- 

■> ket editor for DNR, a leading puhh- 
4 . -. cation of the US tertflp sector. 

~~ j 4j Long underwear is probably the 
weakest eigwatf in the traditional 
- V '. s --j ^ 1 cold-weather ensemble. Silk 
, *.! L-.' cotton both absorb moisture easily 

r r -* 5 ,v and although sDk retains some of 
'P'-K its insnlating power when wet, 
' ■■ 1 ^ / damp cotton loses nearly all its 
warming capability. 

Early experiments with synthetic 
long-johns In the 1970s, however, 
were not successful Cold-weather 
retailers such as Patagonia used the 
plastic polymer polypropylene in 
early high-technology models. The 
new material's hydrophobic prop- 
erty kept users dry, but customers 
complained that their plastic-de- 
rived long-johns melted in the 



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clothes dryer. The fabric also had 
an uncanny ability to retain odours. 

Synthetic long-jo has have come a 
kmg way since then. Patagonia now 
offers a chemically-altered polyester 
called Capflene, which has gone 
through anti-microbial treatment to 
hel p the fabric reject odour. 

DuPont has also come up with 
some important new materials. 
ThermaStat and Thermax are light- 
weight polyester materials that aim 
to trap air next to the body while 
funnelling moisture to the outer 
layer, where it evaporates. “These 
fabrics have a hollow chamber 
which helps them trap the warm air 
close to the body," Bays Arun 
Aneja. research associate with 
DuPont, "and air is a good insula- 
tor." 


Aneja says scientists got the idea 
for the material by studying polar 
bear fur. "Each strand of polar bear 
fur is hollow, and that gives the 
bear incredible insulation." 

Reebok challenges the idea that 
moisture should be drawn away 
from the skin in cold weather. The 
company is negotiating to make use 
of a new fab ric, Akwatek, developed 
by Comfort Technology. Akwatek is 
a polyester that has undergone a 
chemical bath, and Reebok etafras 
the material is equally effective in 
cold weather or waim. 

“In warm weather, Akwatek 
draws moisture away from the skin 
to the outer layer, where it evapo- 
rates," says Riley. "But in cold 
weather, the warm moisture stays 
next to the skin." 


Long-john technology may be 
impressive, but the textile industry 
hit the jackpot with polar fleece. 
Malden Mills was one of the early 
inno vators of this materiaL which is 
now as ubiquitous on US streets as 
wool sweaters. Polar fleece is popu- 
lar because it is lightweight, rejects 
moisture and dries quickly. Fleece, 
which entwines thousands of 
strands of microfiber polyester, also 
feds soft and furry. 

In outerwear, scientists still face 
a formidable competitor in down. 
“It is hard to beat down in tains of 
warmth-to-weight ratios,” admits 
Elizabeth Volkers. brand-manager 
for the insulation material Thmsu- 
late at 3M. But once down is wet it 
offers almost no protection. It is 
also expensive and bulky. "Down 


jackets give people that Michelln 
man look," Valkms says. 

Tmniiating material for outerwear 
us es the hollow rEwmbw concept 
High-technology fillers are honey- 
combs of fabric that trap warm air 
nesr the body - one erf the main 
challenges for scientists is to fit the 
highest number of chambers is the 
smallest space. Tbinsulate by 3M 
has emerged as one of the most 
popular TrHmlating materials, partic- 
ularly for cold-weather gloves and 
ski pants. Sports enthusiasts are 
still drawn to down jackets for their 
lightweight comfort 

In terms of pure insulation power, 
fur is also diffi cult to beat How- 
ever, the material's disadvantages 
are numerous: it is expensive, 
heavy and controversial. 

Over the next few years, s e v e ral 
new technologies are expected in 
the cold-weather apparel market 
One of the latest is recycled fibres, 
which manufacturers hope will 
prove popular with environment 
conscious consumers. 3M plans to 
introduce recycled Thinsulate next 
year and recycled fleece is already 
available. _ 

Scientists have set their sights on 
developing bizarre-sounding miracle 
fabrics. “Technology today is based 
on passive fabrics, which work by 
trapping beat generated by the 
body." says Aneja. "We are working 
on fabrics that would harness 
energy from outside the body, such 
as visible light and wind. We are 
trying to modify the polymer from 
which the yam is made so that it 
absorbs this energy." 

Aneja is also researching materi- 
als that adjust to temperature 
needs. "We would like to have a 
material that warms you when you 
are cold, cools you when you are 
hot" The most promising polymers 
in this area are elastic, engineered 
proteins, which adjust to tempera- 
tures by creating a temperature-sen- 
sitive binsystem. 

Cold-weather rinthmg has already 
undergone a significant overhaul in 
recent years and more technological 
change is cm the way. The day may 
soon arrive when ski holiday suit- 
cases contain wind enesgy-hamess- 
ing jackets and protein long-johns. 


■ ■ i -• ■ 


irt 




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be search for the perfect-fit- 
ting pair of jeans can turn 
into a lifetime crusade for 
same women, but a new software 

prog ram is arnimg tn chang e tha t.. A 

Boston-based company called Cus- 
tom Clothing Technology has devel- 
oped a way of Tnafrmg custom-fit- 
ting jeans by computer. The 
technolo^ is being used in US 
stores this month to measure cus- 
tomers for Levi Strauss jeans. 

£ Sales assistants measure women’s 
waist, hips, rise - the distance from 
- the front waistband, between the 
legs and up to the back waistband - 


The perfect pair of jeans 


and inside leg. The measurements 
are entered into a computer which 
identifies a prototype jean providing 
the closest mateh Barb participat- 
ing store will be stocked with hun- 
dreds of prototypes. 

The customer tries an the proto- 
type and after final adjustments the 
gatea person sends the information 
by modem to the company's Ten- 
nessee factory. A computerised cut- 
Jer puts out the pieces, which, are 


then sewn together. 

Three weeks later, the customer 
can pick up the jeans at the store, 
or have than mailed The jeans cost 
about $10 (£6) above the normal 
price and win initially be available 
only at four stores. 

Kit, by the end of January, Levi 
Strauss plans to offer the product in 
seven other stores. Because «!« 
people have to be trained in bow to 
use the progra m , however, it may 


take some time before the product 
is widely available. 

Sung Park, an ex-IBM software 
progr amm er and president of Cus- 
tom caothing Technology, says he 
developed the progr am after spend- 
ing time in Hong Kong, where he 
could get a suit tailored in a day. 

"I thought, wouldn’t it be great if 
this were available to the mass mar- 
ket in the US?,” says Park. "And 
then I started wondering, what the 


best applications would be.” Park 

says he flfikwH big fwnalp flatmates 

which piece of clothing it was most 
tWffiraii* to find a good fit in, and 
tba answ er was unanimo us: jeans. 

Park has an exclusive contract 
with Levi Strauss for tailored jeans, 
but he is talking to other companies 
about custom-made bathing suits 
and men’s suits. 

Levi Strauss says it will expand 
the product to men’s jeans and 
other styles for women if the tailor- 
ing proves popular. 

VG 


Worth Watching • Vanessa Houlder 



New look at brain 
abnormalities 

Toshiba, the Japanese electronics 
company, has developed an 
imaging technique which could 
make it easier for doctors to 
examine brain function 

abnormalities, such as epilepsy. 

The technique Is a fonn of 
magnetic resonance imaging, 
which monitors the 
electromagnetic radiation given 
off by excited nuclei in a 
magnetic field. 

The "double echo” MRI method 
produces separate images of the 
neurons and adjacent blood flows 
by relying on differences in the 
ten-off characteristics of their 
wave signals. Toshiba believes the 
accuracy and speed of the 
technique w£D assist doctors with 
diagnosis, presurgical mapping 
and tiie exploration of complex 
brain functions. 

Toshiba Corporation: Japan, tel 
033457 2105; fax 033456 4775, 

Video connects 
Internet novices 

Cyberia, the Loudon cate where 
customers get hitched up to the 
Internet, has produced a video to 
smooth the learning curve for 
novices of the net 

Internet The Cyberian 
Connection, which was produced 
with Purple Training, is a 
step-by-step guide to Internet 
services and how to get 
connected. 

Purple Training: UK, lei 0181 742 
0607; fax 0181 994 3650. 


Golf club drives at 


An oversized, remodelled golf 
dub could be the answer for golf 
enthusiasts who yearn for greater 
accuracy and distance. 

Spalding, a US equipment 
manufacturer, has designed a 
driver in which 20 per cent of the 


weight of the head has been 
redistributed to Hs perimeter and 
sole. The head’s higher moment of 
inertia and lower centre of 
gravity gives the ball less spin, 
allowing it to go further. The 
weight shift also makes the driver 
more stable, helping the golfer 
attain greater accuracy. 

The Top-Flite Magna Heat 
Driver, which is designed for 
mid-to-high handica p golfers, will 
go on sale at the beginning of 
nest year at around £ 99 . 

Spalding Sports: UK tel 0954 781 
67% fax 0954 782498 

Bagtag keeps track 
of airport luggage 

An Identification system that was 
originally devised for 
sheep-tagging is being tested in 
airport baggage handling 
systems. 

Magellan Technology, an 
Australian company, has 
developed a radio frequency-based 
device that recognises encoded 
tags. Unlike previous radio 
frequency-based systems, it can 
simultaneously identify 1 a number 
of tags and ft can operate with the 
tags in any position. 

The developers say the system, 
known as Bagtag, is nearly 100 
per cent accurate. 

Magellan: Australia, tel 09 455 
2231 

Slow speed town 
traffic transmitted 

Measuring the speed of traffic 
flows in towns can be difficult 
because vehicles are constantly 
stopping and starting. 

Trafflanaster, a company that 
provides live traffic information 
to motorists, believes it has 
overcome this problem by 
devising a system that uses video 
cameras and number plate 
recognition software to track the 
speed at which traffic moves 
through two points on the road. 

A video camera photographs 
the number plates of a batdi of 
cars, which are digitised and 
transmitted by radio signal to a 
rite Anther down the road, where 
another camera photographs the 
targeted number plates. 

Trafficmaster plans to Install 
the equipment early next year on 
two London routes. The company 
will destroy the sightings data 
after its use to protect drivers’ 
privacy. 

Trafficmaster. UK tel 01908 
249800: fax 01908 200380 


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Friday 20 January to 

The Financial Times invites its readers to spend 
an exclusive weekend at one of the country’s top 

spa hotels playing bridge in the company of our 

; Bridge correspondent, E.P.C. Cotter. 

The Financial Times hosted a similar weekend 
two years ago in Switzerland at a hotel 
overlooking Lake Geneva, as illustrated in the 
picture above. It was a resounding success, 
hence a repeat of the weekend in the New 
Forest, Hampshire. 

Chewton Glen offers luxurious accommodation, 
superb cuisine, outstanding recreational 
facilities including a 9-hole par 3 golf course, all 
set in wonderful parkland. - 

Bridge will be arranged each day by Clair 
Sexton and his wife Anne, who will also pair 
single readers and those with non-bridge playing 
partners as required. Pat Cotter will be on hand 
to help improve your game. The bridge will be 
of a “house-party** style with a mixture of rubber 
bridge in the evenings, and duplicate during the 
day. 




For a two night stay at Chewton Glen, the inclusive price, 
with lull board and use of the Health Club and sports 
facilities, is just £300 per person. FT readers may tailor 
their arrangements as they wish, by, for example, arriving 
early (or late), or incorporating the bridge weekend into a 
longer stay at the special rates that we have negotiated*. 

Special Bridge Weekend includes: Two nights 
accommodation in a standard room**; full English breakfast; 
lunch and dinner from the Table d’hote mean with coffee; free 
use of indoor pool, gymnasium, spa pool, steam room, outdoor 
tennis court and par 3 9 -bole golf course. 

*eacb additional night costs £137.50 per person for full board. 
** standard zooms can be upgraded for an additional cost per 
night - Suite £125; Croquet Lawn Room £75; Principal Room £40. 

The in formatio n yon provide will be held by us and may he used by 
other select quality companies for mailing purposes. 


i CHEWTON GLEN BRIDGE WEEKEND 

'To: Louhtt Gotfdon-FoxwelL Financial Tunes, Soulhwarfc Bridge, 

| London SEi 9HL Fax: 07 1-873 3072 

1 Please send farther details of the FT Invitation to a bridge 

i weekend at Chewton Glen. 

i 

i TITLE.. INITIAL SURNAME - 

i 

I ADDRESS .A.AMl 




-<•* To receive further details, simply complete the 
coupon opposite. 


I •UIUMHIHUI 

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! POST TOWN 

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ms ac^^-rrrjs.^g^v g -i^-jsi 


A positive 

a++itude 


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It does seem as if India, the nation, has caught up with Essar, the 
corporation. Our belief in a positive attitude is today the preserve of an 
entire country. With good reason, too. 

India’s recent economic surges have catapulted it into the top 5 
investment markets. Stoking this interest further is its base of potential 
consumers, over 200 million strong. India’s commitment to a market- 
driven economy indicates a spurt of 30% in corporate returns. 

At Essar, a $2 billion-asset company with quality professional 
manag ement, we see ourselves as major contributors to, and beneficiaries 
of, this ideal scenario. We’ve already achieved business leadership in 
steel, shipping, oil & gas, power, finance. And a position among the 
world's largest groups. As we explore further, our diems and affiliates are 
discovering that In India, we test positive. 

STEEL-SHIFTING- Oil. ft GAS- POWER- FINANCE -TURNKEY PROJECTS -TRADING 



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12 


THE PROPERTY MARKET 


L ondon Docklands is a 
barometer of the wider 
mood of the property 
market Grand plans 
for the regeneration of the area 
to the east of the City of Lon- 
don - including the massive 
Canary Wharf development - 
were the products of economic 
over-optimism. 

The sudden downturn in the 
property market left docklands 
stranded, with its unsettling 
mix of very old b uilding s, very 
new buildings and derelict 
sites. 

Now the mood is one of cau- 
tious optimism. Attention is 
slowly turning from damage 
limitation to future expansion. 

This Is most apparent in resi- 
dential housing. The stock of 
empty homes in docklands has 
been sold and a minor develop- 
ment boom is under way. 

In business space, the over- 
building of the late 1980s wQl 
take longer to sort out Out of 
a total 13m sq ft of office space 
in docklands, about 45m sq ft 
is sQll vacant - an occupancy 
rate of Just 65 per cant 
Yet the overhang of space is 
steadily being eroded. Mare 
than lm sq ft of offices has 
been let this year, up from 
600,000 sq ft in 1993. 332,000 
sq ft in 1992 and 192^000 sq ft in 
199L 

Even Canary Wharf, the 
grandiose monument to the 
last development boom, is on 
the way to being folly lei. If 
negotiations with investment 
hank Barclays de Zoete Wedd 
over 500,000 sq ft axe success- 
fully concluded, less than lm 
sq ft of the 45m sq ft develop- 
ment will remain unoccupied. 

Mr Mike Bignell, head of 
property development for the 
London Docklands Develop- 
ment Corporation, said that 
there was potential for another 
10m sq ft oE office space in 
docklands, including further 
phases of Canary Wharf. 

While the imniediate priority 
most be to £EQ vacant space, 
the next phases of develop- 
ment are already on the hori- 
zon as distent possibilities. 

Survey evidence is certainly 
encouraging for docklands. A 
poll of central London office 
occupiers by Jones Lang Woot- 
tan, the surveyors, found that 
many companies were again 
thinking about moving out of 
the City and West End, after a 
lull during the depths of reces- 
sion. 

The motivation was not out- 
right cost, but the desire to 
rationalise sites and b ring 
operations under one roof. 
Favoured destinations were 
areas within the immediate 
orbit of central London - 


Docklands 
dreams again 

Simon London on the revival of 
optimism in east London 


Commercial and Industrial space fmflBan sq ft) 


Status 

Me of 
Dogs 

Surrey 

Docks 

wappfeat 

Lfenetmne 

Royal 

Docks 

Completed 

14.6 

4.0 

3.3 

22 

Under constructor 

02 

- 

- 

“ 

Planned development 

05 

1*6 

04 

1:2 

Potential 

24.fi 


1J 

12.6 

Total 

309 

7JB 

5j6 

16j0 


LOO C 



Office construction mqjr one day bavMMe Item Canary Wharf tower agflln 


including docklands - which 
could offer modem space at 
prices a shade cheaper than 
the City or West End. 

Against this background, it 
is not beyond the realms of 
possibility that Canary Wharf 
and the LDDC will be dusting 
off development plans within a 
couple of years. 

Sir Peter Leveue, chairman 
and chief executive of Canary 
Wharf for the past 18 months, 
recognises that the nature of 
his task is turning from crisis 
management to long-term 
development 

With piecemeal lettings tak- 
ing all thfi time — this 

week the Personal Investment 
Authority confirmed Hot It Is 
sub-letting one floor of the 
Canada Square tower - the 
gyrating b uilding s are achiev- 


ing critical in ternra of 
tenants. 

“The Jubilee Ling extension 
will be wflh us by 1998, cutting 
journey times into the West 
End to 15 minu tes and linking 
us with Waterloo and T-cmrion 
Bridge stations. That will fun- 
damentally change perceptions 
of Canary Wharf and, in plan- 
ning terms, is not far away," 
commented Sir Peter. 

The original design for 
Canary Wharf envisaged 12m 
sq ft of office space. The foun- 
dations have already been dug 
for two farther buildings - 
numbers 17 and 20 Columbus 
Courtyard - amounting to 
340,000 sq ft. 

Canary Wharf Is also in 
negotiations which could lead 
to the development of its 
remaining river frontage. The 


area is currently a temporary 
car park, but permission has 
been granted for lm sq ft of 
mixed use residential and 
office buddings. 

With so much empty space 
to let, at present the LDDC is 
confining its development 
activity to nonoffice schemes. 
But that does not imply any 
lack cf activity. 

In the mainly derelict Royal 
- Docks area at the eastern 
extremity of docklands, there 
are plans for an exhibition cen- 
tre the size of Earls Court and 
Olympia combined, an urban 
village, a university, science 
park, commerce park and 
retail development 
Flans for the exhibition cen- 
tre are the most advanced, 
with the LDDC set to announce 
its favoured development part- 
ner within the next few weeks. 
Work is scheduled to start an 
the 8&acre site before the end 
of next year. 

J ust over the water at West 
Silvertown, an urban vil- 
lage of dp to 1J5Q0 homes 
will be built by Wimpey, 
the housebuilder. Work 
should begin as soon as the 
planning process - controlled 
by the LDDC rattier than file 
local authority - has been 
completed. 

While the Royal Docks devel- 
opment programme will not 
add directly to the stock of 
office space, it could give dock- 
lands critical mass in other 
respects which would add to 
its attractions as a business 
location. 

So what wQl be the effect on 
the City and West End if 
Canary Wharf and the Isle of 
Dogs do - finally - establish 
themselves as London’s third 
business district? 

Sir Peter Leveue recognises 
that rents at Canary Wharf 
will have to remain below 
those charged by the best 
buildings in core City loca- 
tions. While the diffe rential 
will narrow as Canary Wharf 
gains credibility and improved 
infrastructure, the availability 
of cheaper space to the east of 
the City and West End will 
present real 
dally for pre-let 
It is not safe to assume that 
docklands is not real competi- 
tion and that there will be no 
further development,” said Mr 
David Price, head of central 
London agency for Hillier Par- 
ker, the s u r v eyors. “Padding- 
ton, King's Cross or Spitafields 
would be preferred locations 
for some occupiers but not for 
alL And they cannot turn the 
key on new development as 
fast as Canary Wharf.'’ 



FINANCIAL times FRIDAY DECEMBER 16 1994 

PEOPLE 



Aitken-Davies signals 
Railtrack’ s route 


The government has picked 
Richard Aitken-Davies to be 
director of Railtrack's privati- 
sation unit It hopes to float 
the company, which has taken 
over British Rail's tracks, sig- 
nalling and stations, in the 
first three months of 1996 but 
many questions remain to be 
answered before the market 
can hazard its value. 

Cruoially, the level of 
charges it can levy on the train 
operating companies has to 
obtain the Ball Regulator's 
approval eariy nest year. 

Aitken-Davies, 45, the man 
who will be most closely 
responsible for steering Rail- 
track to a successful flotation, 
was formerly director of corpo- 
rate finance at PowarGeo. He 
was finanrani controller at the 


state-owned CEGB before it 
was broken up into PowerGen 
and three other companies in 
1989- He helped create Power- 
Gen’s capital structure and 
orchestrate its flotation. He 
believes his experience with 
PowerGen will stand him in 
good stead at Pail track . “They 
axe both new companies 
formed from much larger 
organisations with no track 
record of their own," he says. 
“We will have to go out and 
persuade the City to invest" 
Aitken-Davies can claim 
practical, drily experience of 
the railway, commuting from 
Baynes Park in south west 
London to Waterloo. He is also 
a regular user of BE'fl Intercity 



He stepped down from 


PowerGen in October intend- 
ing to fait* a break from busi- 
ness but the government’s 
decision to bring forward Rail- 
track’s privatisation required a 
q uick flariafan. He will join the 
company flill-tiue in January. 

Aitken-Davies, a former 
counriflor in the London Bor- 
ough of Merton, devotes same 
of his free time to acting as an 
ex t er na l a pimbter in business 
studies at Luton University. 
Charles Batchelor . 


Non-executive 

directors 



Yorkshire Water yesterday 
appointed two nonexecutive 
directors less than three 
months after rejecting smaller 
shareholders* attempts to elect 
a similar candidate to the 
board. 

Yorkshire has appointed Pa t 
ricia Marsh, 48, (above) and 
Colin Cooke, 54, to replace 
retiring directors. Tom Jack- 
son and David Cramb. 

Marsh, former managing 
director of Ace Coin Equip- 
ment, one of file UK’s largest 
distributors and manufacturers 
of electronic . interactive 
machines for the leisure indus- 
try. is a former of fits 

customer services committee 
for the water industry regula- 
tor’s Central region. Her 
appointment follows the resis- 
tance of Yorkshire manage-, 
meat and institutional share- 
holders to the nomination of 
Diana Scott, former chairman 
of the Ofwat Yorkshire cus- 


tomer services committee. 

At the time, Yorkshire’s 
board argued that Scott, who 
had the support of a substan- 
tial number of smaller share- 
holders, did not have the rele- 
vant business experience. 

Yorkshire yesterday sought 
to stress Marsh’s busines s 
qualifications, citing her posi- 
tions as nonexecutive director 
at Yorkshire-based Rosebys, 
the households and soft ftur- 
nishhip retailer, and chair- 
man of the Birmingham Chil- 
dren’s HosuftaL 

Cooke, who will join the 
board in the spring, is chair- 
man of industrial groups Tri- 
plex Uoyd and Fenner, and a 
non-executive of Aril & Lacy 
and British Dredging. Peggy 


■ British Biotech has replaced 
Brian. Richards as non-execu- 
tive chairman, with John Rais- 
man, former chairman and 
chief executive of Shell UK. 

The change came about at 
Richards’ suggestion, says 
Keith McCulIagfa, chief execu- 
tive of British Biotech. 

“Brian Is an R&D oriented 
man Board discussions are 

lnrrpgflmg i y financ ial an d ocm - 
menial. As we move towards 
commttciaKsatfon. it is a fit- 
ting change," he says. 

Raisman, 65, retired from 
Shell in 1985 after 30 years 
with the company; he is a non- 
executive director of Lloyds 
Bank, and formerly on the 
board of Glaxo. 

Richards, 62, a cofounder of 
the company in 1986, remains 
cm. the board. Darnel Green 


In the pipe- 
line at Hardy 

John Walmsley, the former 
finance director at Enterprise 
Oil, the UK’s largest Indepen- 
dent oil explorer, has been 
appointed chief executive of 
Hardy OB and Gas as from 
January L 

He will succeed Peter Elwes, 
who will become deputy chair- 
man with a fuHrtime executive 
role. Elwes, who was Enter- 
prise OB’S first chief executive, 
interviewed Walmriey for his 
first job at Enterprise in 1984. 
The two men say their loner 
relationship should ensure a 
smooth transitkm. 

Elwes has been head of 
Hardy since 1989, when the 
company was demerged from 
Trafalgar House. He is due to 
retire in 1996- Walmriey was a 
director of Enterprise Oil from 
1984 to 1993 and departed sev- 
eral months before Enterprise 
made its abortive bid for fellow 
explorer Lasmo. 

His appointment at Hardy 
ends almost a year of industry 
speculation about his fixture. 

Walmsley says there Is 
unlikely to be any big shift in 
strategy at Hardy; he intends 
to follow the philosophy be 
developed at Enterprise of 
focusing on core areas. In 
recent years the company has 
used the considerable cash 
generated by its extensive 
North American operations to 
fond longer-term projects in 
the UK sector of the North Sea. 
Robert Corztne 


Carrying on 

John- Toyne, a _ tran sport 
consultant, has been appointed 
group ffMghig director of 
United Carriers which has 
upset investors by making two 
profits warnings In the nine 
nmaittt since' tt was floated on 
the stack market 
Toyne, «L replaces Mfchari 
Howe who was sacked last 
month following the second 
profit warning. The first set* 
back was blamed on too few 
parcels; the second .on too 
many, flu shares - floated at 

153p - were unchanged at SSp 
yesterday. Alan Sinks, who 
lost Us job as chairman bat 
retained the title of chief exec- 
utive, admitted at the time 
that tbe return to the market 
had been "a right mess”. 

Toyne joined hnperlal Group 
Sn 1965 and has spent ova; 20 
years in production and ‘per. 

.sonnri. management. As chief 

ex ec u ti ve of LowtteHL a gro- 
cery distribution business, he 
led the management buy-out 
from Hanson in 1988 . LowfleM 
was acquired by Tlbbett & 
Britten in 1989 and Toyne sat 
on tea Tlbbett board until last 
year. Most recently he has tQ 
bean operating as a consultant 
In the transport sector and 
iw Wd ny on a number of man- 
agement buy-outs. William 
BaU 

■ David Codtt, chief legal 
adviser, John Dandey, general 
manager sales and marketing, . . 
and Janet Stoner, general 
manager producing operations, 

hare been appointed to tbe - 
board of TEXACO Ltd. 

■ Alfred Hepden, formerly 
so ut h ern region construction 
director with Arlington Project 
Management, is returning to 

Project Management 

International, partof BRHTSH 
AEROSPACE, asmd. 

■ John Hmcom is promoted to 
deputy tad and Stephen 
Walker to engineering director 
of THAMES WATER Utilities. 

■ BfflEfrkwood. formerly 

sales & marketing director fat 
Thomas Cook Travel 
Management Europe, has been 
appointed md of Air 2000, part 
of FIRST CHOICE HOLIDAYS. 

■ Dieno George, formerly md, 

marketing and strategic 
pfenning, is appointed deputy 
chief executive, and Alan Hade; 
mtiof group operations*. and 
Graham COQyar. technical 
director, of SETON 
HEALTHCARE GROUP. #. 

■ Ann Ntassey, formerly group 
director of IT at Redland. has 
been appointed director of IT _ 
a* LLOYD’S REGISTER. 





INTERCONNECTION - 
THE EVOLVING IK PROG: 
AND ITS INTERN ATIONAL 


dfiel 


O zJ 


The London Hilton Hotel on Park Lane - 8 February 1995 

The Financial Times and OFTEL have joined forces to arrange a conference on interconnection, focusing on 
the critical nuts and bolts of the competitive telecommunications regime as it goes into its second decade. 


CHAIRMAN: 

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Financial Times 

OPENING ADDRESS 

Mr Don Crukk&bank 
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OFTEL 


FORUM: UK INTERCONNECTION PROGRAMME 

- COMPETITION ISSUES: 

INTERCONNECTION, ACCOUNTING SEPARATION 

Mrs Ahb Taylor 
Director of Competition 
OFTEL 

- LONGER TERM ISSUES: UNIVERSAL SERVICE 
OBLIGATION, ACCESS DEFICIT CHARGES, RE- 
BALANCING, ALTERNATIVE COSTING AND 
CHARGING STRUCTURES 

Mr Alan Bdl 
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- OTHER ACCESS ISSUES: NUMBERING, 
PORTABILITY, INFORMATION SYSTEMS 

Mrs Pal Sellers 

Director of Licence Compliance 

OFTEL 

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PROGRAMME 

- INTERCONNECTION TECHNICAL ISSUES: NICC 
(NETWORK INTERFACES CO-ORDINATION 
COMMITTEE) PROGRAMME, QUALITY OF SERVICE 

Mr Peter Wsdker 
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OFTEL 

INTERCONNECTION AND INFRASTRUCTURE 
COMPETITION - A EUROPEAN PERSPECTIVE 

Mr Nicholas Argyris 

Director, Directorate A (Telecommunications anti Postal Sendees) 
Directorate-General XHI 
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COMPETITION IN INTERNATIONAL 
TELECOMMUNICATIONS - THE UK’S 
PERSPECTIVE AND POLICY 

Mr Wirtlam Maciatyre ca 
Headof Tetecommmications Division 
Department of Trade and Industry 



INTERCONNECTION AND A GLOBAL 
INFORMATION INFRASTRUCTURE (GII) 

Mr Scott B Harris 

Bureau Chief. International Bureau 

Federal Communications Commission 

THE SWEDISH APPROACH TO 
INTERCONNECTION 
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Director General 

The National Post and Telecom Agency 


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renewed violence and tee approaching winter 
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especi ally th e children. 

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children and the elderly - with a minimum of 
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We raise and deliver aid in the form of food, 
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tee large international agencies, using our own 
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With your help - we could be doing even 
more, right now; as winter doses in. 

Please send your donation TODAY - either ^ 
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erereeMw 

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7 Cariton Gardens, London SWIY 5AE. Tel; 071 839 1AM 

UK itefliriered Charity Na 1027^8 M 


/ 















r.r- hmia 






FINANCIAJL TIMES FRIDAY DECEMBER 16 1994 


ARTS 



13 




i>V- 

^ • v-.'V. 

‘.iv'l ' 


emembering Frederick 
Ashtoa's ballets - and 
Covent Garden's second 
programme In tribute to 
him b» called Asfcwi Remembered - 
Is too nostalgic for my taste. What 
to most see is Ashton, the ™™ we. 
know from his choreographies, 
afire on stage through scrupulous 
performance. When his works are 
well performed, audiences under- 
stand the ess entia l Ashton, what he 


Let’s keep Ashton’s flame burning 

Clement Crisp argues that more of the great choreographer's work should be in the repertoire 


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g**® the Royal Ballet, what he 
fv. wanted classical dancing to look 
7> ■ -i** v Bkfiu Not memories, but deeds. 

^ The matter of preserving his 
s * work and td$ style (which was the 
man), seems to me argent. The 
Royal Ballet does not maintain a 
eorpos of Ashton pieces in reper- 
tory - a fault owed to an inade- 
quate allocation of performances - 
and I sense that schooling hi Ash- 
' K '?tvf Ionian nuance, vital matters of pos- 
,5 s V 1 hire, precision and clarity of exsecn- 
tion, is not always carefuL The 
® oys ^ Ballet no longer speaks Ash- 



tan’s poetry as well as it does For- 
sythe’s rap. 

There sometimes semis a pretti- 
ness. an almost fatal charm, in 
Ashton ballets, as with the fables 
in The Dream or Cinderella, or the 
skaters in Les Patmeurs. But the 
prettiness is not over-sweet, and 
sustaining every charming moment 
is a master’s craft (The scherzo in 
The Dream is a miracle of camposi- 
tion matching Mendelssohn’s airy 
genius). Ashton should be second 
nature to oar dancers, though 
recent disastrous casting in Sym- 
phonic Variations, with performers 
so physically unsympathetic to its 
Style that they dismantled the 
piece, show how easy it Is to 
destroy his work. 


The good things about the Ashton 
Remembered bill, as I saw ft at the 
week’s end, is that The Dream has 
been well revived, and Facade has, 
at last, a Dago worth watching. The 
Dram was at its gossamer best 
Brace Sansom is a commanding 
O heron, classically sore. Peter 
Abfaeglen is a delightful, because 
innocent. Bottom. The fairy legions 
are quick-footed, deliciously 
melting in pose. The lovers are 
freshly fanny, and touching. 
Vivians Durante can spin through 
Titama's steps with the best, but 
the role lacks radiance and that 
wilful sensuality to t nominate the 
last duet Tetsnya Kumahawa is a 
technically astonishing Pock - the 
role has never been mere ebul- 


‘The Royal Ballet 
no longer speaks 
Ashtons poetry as 
well as it does 
Forsythe's rap’ 


Iientiy danced - but Us Interpreta- 
tion is a Knmakawa flag day. ffis 
bravura is destructive because too 
emphatic. 

Ashtonian fragments make op 
the centre of the programme. Two 
pieces have been rescued from 
oblivion: the “Air” pas de deux 


from Homage to the Queen, which 
was the ballet’s tribute in Corona- 
tion year; and the Raymonda duet 
made in 1962 for Beriosova and 
Donald MacLeary. “Air” is a lovely 
thing, despite Its clattering Mal- 
colm Arnold score. After all the 
years, memories came back of Fon- 
teyn and Somes effortless and 
serene in it It looked less than 
serene with the first appearance of 
Deborah Bull and WHUam Trevitt, 
but it will handsomely repay their 
farther study. 

Raymonda brought Darcey Bus- 
sell to the stage after a long period 
of injury. She has the expansive 
g race arid grandeur that th& 
needs - if not yet all the stamina - 


a delight 


again, though if the piece Is to per- 
sist in repertory the ballerina's 
pink costume had better be sent to 
the nearest Oxfam shop, and some- 
thing less cate be confected. Zoltan 
Solymosl was Bussell’s cavalier - 
and rather cavalier in manner. 

The luscious Thais duet - Masse- 
net’s swooning violin; an extremely 
high sugar-content; the veiled 
vision of an Alexandrian courtesan; 
one lingering ldss: can life offer 
more? - was done to a tarn by 
Vivians Durante and Stuart Cas- 
sidy. Divinest patchouli-scented 
hokum. And, unnecessarily, a tiny 
Ashtonian sneeze - La chatte rrdta- 
morpkosee en femme - was also 
remembered. It does nothing for 
Ashton's reputation, and not 


enough for its in te rp re t e r, Maria 
CaleazzL 

The closing Facade was memora- 
bly led by Stephen Jefferies as the 
Dago. It was a role made wildly 
funny by Robert Helpmann, com- 
pounded of sinuous wit, brilhan- 
tine, diamond rings and devastated 
gl a i m No-one, nntfl Jefferies, has 
come anywhere near Helpmann’s 
satiric s kill . Jefferies plays It dead- 
pan, and wonderfully so, and 
mi ss** *; not one comic trick. He is so 
good that the Noche EspanoL in 
which Helpmann used to saunter 
about in a maddened pin-strip suit, 
should be restored to the ballet for 
him. The revival was, otherwise, 
decent - though the Popular Song 
could be more bored and oh-so- 
slightly more relaxed. Ashton was 
properly remembered. Long may 
the company remember its duty to 
him. 

Ashton Remembered: Covent Garden 
on December 17 (mat & eve). 





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Theatre / Alastair Macaulay 

‘Threepenny 
Opera’ updated 

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1 



hen a theatrical 
weak we know Is 
updated and relo- 
cated to the place 
we live in, we expect a certain 
gain in immediacy, a certain 
thrill of recognition, a certain 
now-ness. The Donrnar Ware- 
house’s new staging of Bertolt 
, Brecht’s and Kurt Weill’s 1928 
bitter, satire The Threepenny 
"• Opera (Der Dreigroschenoper) 
has been set by its director, 
FhyUida Lloyd, in London, and 
(more or less) in the present 
day. During the overture, vid- 
eo-screens show ns Mack the 
Knife (Tom Hollander) frater- 
nising with Trevor Nunn; later 
an, they show us Anneka Rice. 

Mr Peach um trains beggars 
in the latest techniques of beg- 
ging. Jeremy Sams’s ultra-now 
new lyrics speak of Id execu- 
tives who take coke, Tory min- 
isters who like crumpet. Tor- 
vill and Dean, and so on. “Now 
^ remember that fire in Houn- 
slow? - 20 Asians and the cat?" 
V - sings Jenny in “The Flick- 
- Knife Song" about Mack the K. 

; ■ - “While they’re raking 
, \,i /" through the embers^ There’s a 
; f flick-knife. Fancy that" The 
. : _ ■ - main element of fiction is that 
- Prince WiDiam is about to be 
^ crowned William V. Clever 

« -i 

sRut 

Too bad L then, that this 
• ' Threepenny Ojrara 'feels 

. remote, artfficial, implausible. 

One problem is that Lloyd has 
not wATiag wi to give her team 
of sin ging actors any one per- 
forming style. Tara Hugo (as 
Jenny, the whore who betrays 
Mack) is mordantly involved; 
Simon Dormandy (as Tiger 
Brown, chief of police) is ironi- 
cally hammy; Beverley Klein 
(Mrs Peachuzo) is vividly cyni- 
cal; and so on. Oh yes, and 
Polly here is Irish, her parents 
Scottish and London-Jewish, 
her two female rivals white 
American and black English. 

Another problem is that The 
Threepenny Opera is an anti- 
opera whose balance of words 


and music needs to he very 
finely judged. I guess that this 
production has been planned 
as a sequel to the Donrnar 
Warehouse’s very successful 
production of Cabaret this time 
last year. {Cabaret carefully 
evoked the Germa n mid -war 
world that had produced The 
Threepenny Opera.) 

The Warehouse is a marvel- 
lous place for music theatre, 
where songs can be projected 
without amplification. Here. 
Weill’s accompaniments have 
been well directed by Gary 
Yershon. (Some songs are 
miked, 'but okay - tfri« is to 
make a dramatic point) 

But in general this is an 
evening that forces Brecht 
noisily down poor Weill's 
throat As Mack, Hollander 
shouts his songs hk» a punk 
rock star. He is a tight, light 
frog-Eka baritone who runs out 
of voice at either extreme. His 
biggest melodic line, the seem- 
ingly romantic arch of “For 
love will flourish or fade 
away”, he sings twice. Hie first 
time it is a shoot the second 
an unimpressive falsetto. 

By contrast, Klein delivers 
Mrs Peacbum’s music with a 
buzzeaw vibrato - the kind of 
old-style vocal artifice that 
surely this kind of music thea- 
tre. was never about even 
thdug jh her voice ~has a real 
training that certainly delivers 
all her vocal lines firmly in 
(dace. It is Hugo whose style of 
sta g in g best combines urgent 
diction and musical phrasing; 
and hers Is by far the evening's 
finest performance. 

It is hard to believe in little 
Hollander as “the last real man 
in London”. He plays the role 
as a coolly vicious spiv, with a 
blaring Londoner accent 
(sounds like Griff Rhys-Jones), 
and he plays it with unhesitat- 
ing force. But he lades sexual 
allure and, more important, 
dimension of spirit. Why 
should we spend two hours 
smA three-quarters attending to 



Sharon Small and Tom HoQander as Polly and Mack 


Abattoir Muir 


a tale about this minor crook? 

Sharon Small , as Polly, is 
sometimes too stagey and 
vocally uneven, but hers is a 
talented, if unfocused, perfor- 
mance. As a Scottish Mr Pea- 
chum, Tom Manning is loud 


and dull. Sams’s lyrics are this uninvolving production 
so forceful that they contribute that I would tike to save 
to the Brecht-heavy feeling of for another staging of this 
the evening. But they are tricky work. 

almost all so accomplished 

and so right-on that they are At the Donrnar Warehouse, 
one of the few components of WC2 


Music in New York/ Andrew Clark 

The Immortal Hour 



ritata’s fixture may lie 
in Europe, but its cul- 
tural heritage still 
means far more to 
Americans than to anyone on 
the other side of the English 
Channel. How else do you 
explain the enth usiasm with 
which Fta ghsh music is cham- 
pioned in the US? 

Frank Coxsaro and Leonard 
Slatkin have both gone out of 
their way to introduce unusual 
repertoire to New York. Oor- 
saro, known this side of the 
Atlantic for his stagings at 
(Hyndebourne, has a penchant 
for negle cted British operas. 
Vaughan Williams’s Hugh the 
Drover and Delius's Fenrdmon 
and Oerda are among his 
recent credits in the US. He 
has now produced Rutland 
Boughton’s The immortal Hour 
at the Juflliard Opera Center, 
of which he is artistic director. 

It would be wrong to suggest 
the production was a revela- 
tion, but it made the best possi- 
ble case for an opera which - 
despite the praise once heaped 
on it by Elgar ami Bax - today 
seems irredeemably dated in 
lansma&e and musical idiom, 

Boughton (1878-1980) and his 
Glastonbury Festival, where 
The Immortal Hour was prani- 
ared in 1914, are among the 
more eccentric footnotes to 
English musical history. 
Boughton propagated Celtic 
mythology, snriaHsm and com- 
munal art The Immortal Hour 
was never intended for mass 
consumption - and yet a cult 
of popularity developed around 
it in the 1920s, when it had 
more than 500 performances in 
London. The last major 
revival, at Sadler’s Wells in 
1963. was a flop. 

With its simple, folk-song 
style, The Im mortal Hour taps 
the mystery and romance of 
Celtic legend. That is its 
appeal The music amounts to 
little more t fra n a handf ul of 
undemanding, poorly inte- 
grated themes, one of which - 
the a capella chorus “How 
beautiful they are” - is some- 
times heard independently. 


The story, set In a forest, 
concerns a king who falls in 
love with the fairy princess 
Stain. He dies after she aban- 
dons him for Mldir, Prince of 
the Immortals. There are ech- 
oes of Rusalka, Lohengrin, Pel- 
lias. New Grove describes it as 
a “poignant depiction of love’s 
inevitable ending in loss”. 
Edward Dent said It was “one 
of those rare operas to which 
an inward surrender has to be 
made”. 

I failed to make that crucial 
step, but 1 could not resist the 
mesmeric beauty of the Juil- 
liard production, which tapped 

Although never 
intended for mass 
consumption , 
Boughton’s opera 
developed a cult 
following 


the otherworldly, dream-like 
quality of the work. Corsaro 
focused on essentials - poised 
acting, visual atmosphere - 
and paced the dr ama with 
unerring skill, using the audi- 
torium for theatrical proces- 
sions and for those distant cho- 
ruses that are so peculiar to 
this piece. Stephan Olson's 
decor consisted of little more 
than a raked platform. John 
Gleason’s lighting was exqui- 
site, exploiting the shady 
depths of the stage and throw- 
ing into relief the soft colours 
of Constance Hoffman’s medi- 
eval costumes. 

The cast included one out- 
standing talent - Jon Villars 
as Mldir. His tenor has a big, 
heroic quality which projects 
effortlessly, while retaining a 
lyrical core. The technique is 
good. With his giant frame, VUr 
lars seems destined for a major 
career. P eggy Kriha's Stain 
was properly ethereal, and 
there were effective contribu- 
tions from Brian Nickel as 
Eochaidh, the tragic king, and 
Jamie Offenbach as Dalua, the 


sinister spirit who manipulates 
the drama. Randall Betar con- 
ducted the student orchestra 
with clear commitment 

Slatkln’s anglophile sympa- 
thies need no introduction, 
here, but it is reassuring to 
note that be does not reserve 
them for British audiences. US 
radio stations regularly play 
his Vaughan Williams record- 
ings, and his Saint Louis 
orchestra is a fearless inter- 
preter of contemporary scores, 
including Peter Maxwell 
Davies’s Worldes Bits and 
Nicholas Maw's Odyssey. 

Due to an unfortunate pro- 
gramme dash I was forced to 
choose between Graham Vick’s 
new Shostakovich production 
at the Met and Slatkin’s perfor- 
mance of Odyssey at Carnegie 
HalL I chose the Met and was 
amply rewarded - but it is 
worth recording the reaction to 
Maw’s orchestral epic, which 
was receiving its New York 
premiere. The hall was well- 
filled, but there was a steady 
exodus throughout the two- 
hour performance. The New 
York Times critic said he was 
jealous of those who left, and 
characterised the score as “a 
mighty parliament with no 
majority". Newsday described 
it as an ungainly beast which 
“only a mother could love". 

That probably says more 
about American conservatism 
than the inherent merits of 
Maw’s music, which is scarcely 
calculated to appeal to mini- 
malists. But there was unani- 
mous praise for Slatkin and his 
orchestra, whom I heard the 
following evening in Mahler’s 
Third Symphony. Carnegie 
Hall is halfway through a two- 
year Mahler cycle. Slatkin's 
dean, efficient performance 
may have gone down well in 
Saint Louis, but it did not have 
the personality which the occa- 
sion demanded in New York. 
The drama of the first move- 
ment was matter-of-fact; the 
finale lacked depth and expres- 
sion. Only the memo soloist, 
Nancy Maultsby, seemed truly 
inspired. 


Delicious French bonbons at the Wigmore Hall 



a 

Si 

i 


I’M COIR 
PUASI C10OJ* 
I’M STMffM 


he Nash Ensemble has a well-es- 
tablished association with French 
music of the L9th and 20th centu- 
ries. The group is celebrating its 
30th anniversary with six concerts of 
French musk: from .Saint -Safins to Poul- 
enc. Saturday night’s programme was a 
delicious selection, of chocolates. 

The choice for gourmands would proba- 
bly have been Quatre po&mes Hmdous by 
Maurice Delage, one of a small number of 
Parisian composers you could call exqui- 
site. Dekge's settings are exotic, sharply 
imag ined evocations Of tadia, scored for 
voice with a lovingly chosen ensemble of 


pairs of flutes, clarinets, an oboe; harp and 
siring quartet The ample, weighty vocal 
quality °£ the soprano Fran poise Pallet 
fiftgmad well-suited to these languorous yet 
colourful pieces. 

It was less so in Faurt's song cycle La 
Bonne Chanson, in which a lighter touch 
was needed. The version was FaurS’s own 
amplifie d one which adds a string quintet 
to the piano - a patchy affair Faur§ 
leaves out the piano for long periods, then 
suddenly brings it in only to 'make the 


strings seem superfluous. Faurfc himself 
preferred the songs without the strings. 

An arrangement of Ravel's Sonatina 
seemed a second-best substitute for the 
piano original, too. The Nash's harpist, 
Skafla Kang a, bad adapted Carlos Salze- 
do’s arrangement for flute, cello and harp 
by replacing the cello with a viola, spread- 
ing the interest more evenly. It fell short 
of redeeming a lost cause, for all the art- 
istry of Skafla Kanga, flautist Philip 
Davies and viola-player Roger Chase. 


After two slightly sullied masterpieces, 
the evening ended with one in its pristine 
form. Faurt’s second Piano Quintet, com- 
pleted in 1921, is characteristic of the aus- 
terely searching quality of his later years. 
In each movement the streamlined consis- 
tency of texture is a cover for provocative, 
unexpected turns of melody and harmony. 
The First movement and slow third move- 
ment somehow convey serenity and 
anguish at the same time. The scherzo 
slithers by. The finals is surprisingly brief. 


as If impatient for its radiant conclusion, 
fascinating work, beautifully played. 

On Tuesday evening Franpoise Pollet 
returned to the Wigmore Hall in a recital 
of French songs with the baritone Fran- 
cois Le Roux and pianist Roger Vignoles. 
Le Roux was warm but rather tremulous - 
fine in an untypically fluttering song by 
Chausson (Les PapQlons) but inclined to 
chop up Faurfe’s Le chanson du Pfteheur 
and Chanson’s baleful La camoane. 

PoUefs voice production was blustery, 


too, though she sang Falla's Siguidille 
with great gusto. The singers joined in 
Duparc’s passionate duet La ftnte, adding 
Bizefs breezier setting of the same wards 
as an encore. Oddly they were most 
impressive when really stretched by the 
grand, arched phrases of Berlioz's Les 
mats d'ttL Pollet found her best form in 
the tragic, statuesque appeals of Absence. 
The role allotted Vlgnoies was to suggest 
the ahimmer of the orchestral version with 
alarmingly few notes: it was remarkable 
how evocative his contribution seemed. 

Adrian Jack 


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• Die ZauberflOte: by Mozart 
Conductor Daniel Berenboim. 
production by August Evening of 7 
pur, Dec 20, 23, 25, 28 

• Domrbschen: by Tchaikovsky. 
Conducted byStotza, 
choreographed by Nureyev at 7 pm; 
Dec 26, 27 

• La Traviata: by Verdi. Conducted 
by Rtzzi , production by KirsL In 
Kaftan at 7 pm; Dec 17 

■ BRUSSELS 




,r - 





* 


■ AMSTERDAM 

CONCERTS 

Het Concertgebcuw Tefc (020) 671 
8345 

• Phflllpe 1 tena w sgh e: with the 
Fraiberger Barxx&orchestra and the 
CoBegium Vocale Gent conducts 
Bach at 8.15 pm; Dec 20. 22 

■ RERUN 

CONCERTS 

Phaharmonie Tel: (030) 2548 8132 

• Berlin Phfflmirnonic Orchestr a : 
conducted by Claudio Abbado and 
with soloist Maurizio Poffini plays 
Brahms and Mussorgsky at 8 pm; 
Dec 16. 19, 20. 21. 3a 31 (5.15 pm) 
OPERA/BALLET 

Deutsche Op« Tab (330)3 41 92 
49 .... 

• Siegfried: by Wagner. Conductor 
Horst Stein, production by Gfltz 
Fnedrfch at 5.30 pm; Dec 27 
Staatsopar Untar den Linden Tefc 
(03Q)2 00 4762 

9 Die Verurteflung des Lukuflus: by 
Paul Dessau. Conductor Hirscft, 
production by Beighaus at 8 pm; 
Dec 18 (3 pm) 


PhKhanmonkjue de BruxeHes Teh 
(02)507 84 34 

• Andr&s Schfffc pianist, plays 
Bach, Reger. Handel and Brahms at 
8 pm; Dec 19 

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with pianist Evgeny Kisski and 
conducted by Sfr Georg Solti, plays 
Beethoven, Bartok and Koddty at 8 
pm; Dec 17 

■ LONDON 

CONCERTS 

Barbican Tet (071) 838 8891 

• LSO New Year Viennese 
Concerts; conducted by John 
Georgiadts, the musk: of Strauss In 
this traffic naJ celebration of the 
New Year at 7J3B pm; Dec 31 

• Royal Philhamionic Orchestra: 
Chri s tmas concert with conductor 
Owain Arwel Hughes at 7.30 pm; 
Dec 20. 26 
ORBWHALLET 

EngUeh National Opera Tefc (071) 
632 8300 

• Figaro’s Wedding: In house debut 
for conductor Derrick inouye at 7 
pm; Dec 17 

• Khovanshchlna: new production 
of Mussorgsky's opera. Director 


Francesca ZambeBo at &BO pm; 

Dec 16 

Festival Hall Tefc (071) 928 8800 

• The Nutcracker by Tchaikovsky. 
English Nations! BaHet 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 
choreo^upher Fredrick Ashton. 
Includes pieces by Mendelssohn, 
Offenbach, Massenet and Walton at 
7.30 pm; Dec 17 (2 pm) 

• Cinderella: music by Prokofiev. 
Created by Frecfrfck Ashton in 1948, 
this was the first fulMength baHet by 
an English choreographer at 7.30 
pm; Dae 23 (2 pm) , 26 (2 pm) , 27, 
30.31 

• La Traviata: by Verdi A new 
production by Richard Eyre. Georg 
Solti conducts for the first five 
performances, then PMGpe Augufci. 
in Jtafian with English eurtitles at 
7.30 pm; Dec 16, 19 

• The Sleeping- Beauty: a new 
production of Tchafrovsky’s baifeL 
Produced by Anthony Dewed, set 
designed by Maria Bjomson at 7.30 
pm; Dec 20 (2 pm) , 21, 22, 28 
THEATRE 

Barbican Tel: (071) 638 8891 

• New England: World pra mfera of 
Richard Nelson's new play. No 
performance 12-1 5th Dec., 
otherwise at 7.15 pm; to Dec 29 
(Not Sun) 

National, Lyttelton Tel; (071) 928 


absurdist writer at 7.30 pm; Dec 23, 
26,27 

• The Children’s How: by Lillian 
Heilman, directed by Howard Davies 
at 7.30 pm; Dec 16, 17 (2.15 pm) , 
19. 28. 29 (2.15 pm) , 30. 31 (2.15 
Pm) 

■ MUNICH 


to Dec 31 (Not Mon) 


PARIS 


Champs Elysries Tefc (1) 47 23 37 
21/47 20 08 24 
• French National Orc h estra: 
Jeffrey Tate conducts Beethoven 
Symphonies Noe. 2 and 3 at 8 pm; 
Dec 17 


Stephanie Blythe at 8.30 pm; Dec 
16, 17, 18, 19 

• New Year’s Eve at the Kennedy 
Center Members of the National 
Symphony Orchestra perform 
popular tunes and waltzes at 9 pm; 
Dec 31 


Kunsthafie der Hypo-Kutturstfftamg 
• Paris- Belle Epoquec An evocation 
of the period from 1880 to 1910, 
with paintfogs, drawings, posters, 
photographs, glass and furniture; 
from Dec 16 to Feb 26 

■ NEW YORK 


Whitney Musewn 
• Franz Kline: Black and White 
1950-61: mstfar Abstract 
Expressionist works from the last 
decade of the artist’s fife; from Dec 

16 to Mar 12 


• Out of a House Walked a Mare 
by DanK Kharms. A Royal National 
Theatre and Theatre de CompOcite 
co-procfcction of a coHection of 
musical scenes by toe Russian 


Metropolitan Tel: pi 2) 362 6000 

• We Ftedermaus: by J. Strauss. 
Sung in German with English 
dialogue at 8 pm; Doc 22. 29. 31 

• Don Giovanni: by Mozart, sung in 
Italian at 8 pm; Dec 16. 20, 24 (1.30 

pm) 

• Madama Butterfly, by Puccini at 
8 pm; Dec 17, 21, 27, 30 ■ 

• Peter Grimes: by Britten. English 
at 8 pm; Dec 19, 23, 28, 31 

• Rjgofetto: by Verdi at 8 pm; Dec 
17 

New York State Theater Tet (212) 
870 5570 

• The Nutcracker by Tchaikovsky, 
performed by the NY City Bafiefc 
Tue-Thu 6pm. Fri 8 pm. Ring for 
other times and matinees; 


Louvre Tefc (1) 42 60 39 26 

• British Art In French Public 
Collections: paintings by 
Gainsborough, Reynolds, Constable, 
Lawrence and Tuner. Closed Tue.; 
to Dec 19 

OPERA/BALLET 

Champs Bysftes Tel: (1) 47 23 37 
21/47 20 08 24 

• Casse-nolsette: Tchaikovsky’s 
baHet performed by the Kirov ballet 
company, St Pstersberg at 8.30 
pm; Dec 22, 23. 25. 26, 27, 28, 29. 
30,31 

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by the Kirov company, St 
Petersberg at 8.30 pm; Dec 20, 21 
Op6ra National de Parte, BastSe 
Tel: (1) 47 42 57 50 

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Tchaikovsky. Choreographed and 
produced by Rudolf Nureyev. 
Conducted by Veflo Pflhn/Ermanno 
Ftorio at 7.30 pm; to Dec 31 (Not 
Sun) 

■ WASHINGTON 

CONCERTS 

Kennedy Centre Tel: (202) 467 
4600 

• National Symphony Orchestra: 
perform Handel's Messiah. With 
conductor Peter Bay, soprano 
Janice Chandler and mezzo-soprano 


National Gallery Tefc(202) 737 4215 

# Italian Renaissance Architecture: 
Brunelleschi, Sangailo, Michelangelo, 
the Cathedrals of Florence, Pavla 
and St Peter's; from Dec 18 to Mar 
19 

Sadder Tel: (202) 357 2700 

• Paintings from Shiraz: the arts of 
the Persian book created in the city 
of Shiraz during the 14th -16th 
century; from Dec 24 to Sep 24 


Kennedy Centra Tefc (2Q2) 467 
4600 

• The Nutcracker music by 
Tchaikovsky. Presented by the 
Joffrey Ballet, choreographed by 
Robert Joffrey. Mats at 2pm 
otherwise at 8 pm; to Dec 17 

■ ROME 

OPERA/BALLET 

Teatro DetP Opera Tefc (06) 481601 

• Cronaehe Itafiane: ballet in two 
parts based on work by Stendhal at 
7 pm; Dec 18. 20. 21, 22, 23 

■ TURIN 

OPERA/BALLET 

Teatro Regfo Tel: 011 8815 241 

• The Nutcracker: ballet in three 
parts by Tchaikovsky. Performed by 
the Kirov company, St Petersburg. 
Sun mat only at 3 pm; to Dec 18 
(Not Mon) 


WORLD SERVICE 

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l 






14 


FINANCIAL TIMES FRIDAY DECEMBER 16 


Taming the wild 
beast of derivatives 




The explosive 
growth in 
financial deriv- 
atives since the 
early 13S0s has 
been one of the 
most Profound 
FE inm L s^rtural de- 

yttLW — velopments in 

financial markets since the 
organisation of limited-liability 
equity markets early last cen- 
tury. 

Derivatives - financial 
instruments that derive their 
value from that of an underly- 
ing asset or index - have 
added another dimension to 
business decision-making. 
Derivative finance has commo- 
ditised the risk of price 
changes in many common 
finan cial assets, such as 
equity, fixed income and for- 
eign exchange 

For example, the risk of 
losses through exchange rate 
movements can be separated 
from the risk of price move- 
ments in foreign assets. A 
stream of variable interest rate 
payments can be converted 
into fixed rate payments. The 
risk of an interest rate rising 
or falling by more than a set 
amount can be bought or sold. 

A fundamental economic 
benefit of this development is 
that it makes it easier to quan- 
tify the financial risk in any 
venture and thereby produces 
better allocation of resources. 
However, this happy picture 
has been marred by the grow- 
ing realisation that the new 
industry has burst upon a reg- 
ulatory, supervisory, account- 
ing and legal stage that is not 
suited to deal with it 
In particular, the traditional 
supervisory and regulatory 
structure for large banks - the 
key players in derivative 
finance - is Hi-equipped to deal 
with the problem. The gristing 
focus on periodic examinations 
of on-balance sheet transac- 
tions is inadequate to deal with 
an environment where the on- 
and off-balance sheet positions 
change so fast that even end- 
of-day positions are no longer 
sufficient measures of an insti- 
tution's risk profile. 

There is also a fear that mar- 
kets have become less trans- 
parent and more intercon- 
nected, that derivative 
business is unduly concen- 
trated in a small group of deal- 
ers (some of the btg investment 
banks and securities firms) and 


that derivative markets are 
critically dependent on unin- 
terrupted liquidity in the mar- 
kets for the underlying assets. 
These have given rise to con- 
cerns that problems in the 
derivatives markets could deal 
serious shocks to the financial 
system. 

The regulatory and supervi- 
sory response has so far 
focused on refining capital 
requirements, improving 
supervisory oversight and 
increasing disclosure. 
Although this approach Is a 
step In the right direction, it 
does not deal with the basic 
Issue, namely that derivative 
finance has fundamentally 
changed the balance between 
regulators and financial insti- 
tutions in favour of the latter. 
Instead, emphasis needs to be 
put on fostering the growth of 
a framework for derivative 

Risk would be 

reduced through 
the self-regulation 
Imposed by 


markets that shifts responsibil- 
ity for the control and manage- 
ment of risk back into the pri- 
vate sector. 

One of the most notable 
institutional features of deriva- 
tive ftriflnnp is that it is cur- 
rently provided by two types of 
market organisations: the 
organised futures exchanges 
and the providers of over-the- 
counter derivatives such as 
banks. The OTC operators 
account for about two-thirds of 
notional values in outstanding 
obligations. 

What makes this surprising 
is the similarity between a 
large proportion of the con- 
tracts sold by each type of 
organisation. The logical step 
in developing a reliable market 
framework would he to ‘per- 
suade a large part of the OTC 
derivative activity to shift into 
self-regulatory clearing houses 
or exchanges - as has hap- 
pened in other financial mar- 
kets. 

The major advantage of OTC 
operations is customisation - 
the products are tailored for 
the customer. However, most 
of the forward exchange and 
swap contracts involve little 
such tailoring. It is estimated 


that 60-70 per cent of outstand- 
ing OTC contracts could be 
handle d by standardised con- 
tracts on the exchanges. 

Many of the leading OTC 
dealers have taken steps to 
improve their risk manage- 
ment However, risk to the 
finmrffll system Is generated 
by the weaker traders and not 
the best-managed ones. It 
would be preferable to reduce 
the risk through the self-regu- 
lation imposed by excha n ges, 
which m aximise liquidity by 
standardiration. 

The Importance of derivative 
markets to the stability of the 
flmwirial system suggests that 
there is a public interest In 
inorpasing their transparency, 
integrity and liquidity. The 
playing field should therefore 
be tilted away from the OTC 
markets, which escape rela- 
tively ti g htl y under the present 
regulatory structure, to induce 
migration to " organised 
exchanges. This could be done 
by increasing capital require- 
ments for banks that take 
derivative positions, so that 
they are as costly as positions 
taken through derivative 
exchanges. 

Finally, the increase in 
transparency would reduce 
systemic risk. The high credit 
ratings of exchanges, their 
lower transaction costs and 
hi gher liquidity would provide 
additional impetus to sus- 
tained growth in demand of 
derivative products by end- 
users. 

The OTC market would 
retain its important innovatory 
function, and offer contracts 
for which demand is not large 
enough for exchange trading. 
But lower trading costs, econo- 
mies of scale from liquidity 
and the low systemic risk 
pushed trading in equities - 
originally also an OTC opera- 
tion - on to exchanges. This 
will also happen for deriva- 
tives, and the sooner the 
better. 

Alfred Steinherr 

The author is director of finan- 
cial research, European Invest- 
ment Bank. With David Folk- 
erts-Landau, he wrote “The 
Wild Beast of Derivatives: To 
Be Chained Up, Fenced In. Or 
Tamed?", which won first prim 
in the 1994 Amex Bank Review 
Awards 


C abinet ministers in 
Her Majesty’s govern- 
ment receive flowers 
from Maurice Saat- 
dii, paid for by Saatdbi & Saat- 
chi. every time they change 
jabs. 

The chairman and founder of 
fluatehl & Saatchi has made a 
career - and a personal fortune 
- out of charming- the rich and 
powerful. Institutions as 
diverse as the Conservative 
party. Mars and British Air- 
ways place their advertising 
business with the firm, in part 
because of the personal rela- 
tionship between their top peo- 
ple and Mr Saatdn. 

However, Mr Saatchi will 
today have to use all his per- 
suasive powers to prevent the 
gaatchi board - which con- 
tains such corporate notables 
as Sir Peter Walters, former BP 
chairman, and Sir Paul Gtro- 
lami, former Glaxo chairman - 
from succumbing to share- 
holder pressure to have Mm 
removed- 

The company’s biggest 
shareholders, led by Mr David 
Herro, a 33-year-old fond man- 
ager at the Chicago-based Har- 
ris Associates, have warned 
directors that, if Mr Saatchi 
does not stand down at a board 
meeting today, they w31 call 
an extraordinary m Bating - to 
force him out 

Some directors argue that Mr 
Herro represents only a minor- 
ity of the group's owners. But 
it is a substantial minority. Mr 
Herro’s own fund controls SL8 
per cent of Saatchi's equity. 
His previous employer, the 
State of Wisconsin Investment 
Board, controls &5 per cent 
and is backing his stand. 

Other US funds with him are 
General Electric Pension Trust, 
with 6£ per cent, Tiger Fund 
Management with 2 per cent 
and Grantham Mayo, with 3 
per cent 

From the UK, unit trust 
group M&G - owner of 5J5 per 
cent - last week joined Mr 
Herro in expressing consider- 
able dissatisfaction with Mr 
Saatchi. 

Mr Herro says that a farther 
substantial shareholder has 
said it can be counted along- 
side the dissidents. He believes 
that more than 40 per cent of 
the group’s investors are com- 
mitted to ousting Mr Saatchi, 
and that a formal poll would 
see the odds heavily stacked 
against his survival. 

Carrying ont such a poll, 
during the seven weeks before 
an extraordinary meeting 
could be held, would do great 
damage to the company - and 
to morale - in a people busi- 
ness. For this reason, Mr Haro 
is convinced that the board 
will "do the right thing”. 



All over the country perfectly 
sensible businessmen end women are 
working on their school projects. 


They’re all part of the Private 
Finance Initiative, the PFX. 

It encourages companies and 
education to do business, business 

that benefits both sides. 

Since the initiative started all 
sorts of colleges and universities 
and all sorts of companies have 
been involved. 

And now schools are too. 

Already, millions of pounds' 
worth of business has been done. 

From setting up joint research 
and development centres to 


running sports facilities that 
double as sports centres by night. 

From (ending some finance to 
lending some experience through 
consultancy. 

The opportunities abound. (There 
are 24,000 places of education in 
England alone.) 

And now they are even easier to 
take: since the Budget, schools, 
colleges and universities Have 
more flexibility in Wmwrfwg 
projects. There's a free brochure 
that will tell you more. 


For your copy just get to work 
on the coupon. 

j 


Job Title. 


Addrm 


■ 1 

■rOACOflfi 


Send this c o up on . to; Education Mi 
Business, PO Box 2195, London* EI5 2EU. 
To ificoifc more information about the 


IX you'd rather phone for tUa brochure 
call 081 &6S0733 (Mon-Fri fi&m-Bpm)* 

prajj 


EDUCATION MEANS BUSINESS 


DFE 


‘rxrvivT nt 

EDUCATION 



When the charm 

wears thin 

■ * 

Robert Peston and Diane Summers explain why 
Maurice Saatchi has angered some shareholders 

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Shareholders’ ire has been 
aroused by several factors. Far 
20 years after the company 
came to the stock market in 
1975, investors who backed Mr 
Saatchi awd bis brother made a 
lot of money. However, the 
shares have fallen 98 per cent 
a gains t the mar ke t in tfrg mne 
years since he stepped tip from 
chief executive to chairman. 

His huge ambition - whose 
extreme manifestation was his 
never-consummated plan in 
1987 to buy Midland Bank and 
Hill Ranrpffl l merchant hank — 
was mostly to blame. 

Mr Saatchi was not content 
with bring just an advertiser, 
albeit the world’s biggest one 
far a brief period alter the 1986 
acquisition of the US Ted Bates 
agency. In a shopaholic's 
spending spree, Saatchi bought 
management consultancy 
groups, public relations firms 
and a range of marketing busi- 
nesses, on the bogus theory 
that companies would want to 
purchase all their media and 
consultancy requirements from 
a single purveyor. 

To finance this expansion, be 
used the latest financial 
devices, including issuing 
bonds committing the com- 
pany to a substantial deterred 
cash payment The ctmse- 


er m #wh a aw 


quence was a near-disastrous 
postponement of the true cash 
cost of these acquisitions to 
the tom of the decade - or the 
middle of possibly the worst 
ever advertising recession. 

The company escaped col- 
lapse only after a painful and 
complicated financial recon- 
struction, which involved rais- 
ing sew money and reorganis- 
ing tiie balance sheet, in 199L 

T he group also gained a 
down-to-earth chief 
executive, Mr Charles 
Scott, who could con- 
trol costs while Mr Saatchi 
concentrated on playing the 
elder statesman, exploiting his 
legendary corporate contacts 
to win new business. 

That was the theory until 
the end of last year, when the 
Saatchi board took two actions 
that infuriated Mr Saatchi, 
according to his colleagues. On 
Mr Scott's advice, the board 

agreed that the chairman and 

holding company staff should 
vacate their stylish but expen- 
sive Mayfair head office - sav- 
ing more than £lm a year - to 
move in with the Saatchi & 
Saatchi advertising subsidiary 
in London’s Fitzrovia. 

It was also decided that Mr 
Saatchi’s enigmatic brother 


Charles - the much vaunted 
"creative" talent of the siblings 
- should leave the board. 

Soon after that, a series of 
stories began appearing in 
newspapers about an alleged 
feud between Mr Saatchi and 
Mr Scott, with Mr Saatchi 
reported to believe that the 
"bean counter” Scott had "not 
delivered". 

It later emerged that Mr 
Saatchi had hired a personal 
public relations adviser, Mr 
David Burnside, the pugna- 
cious former public relations 
head of British Airways. 

Mr Herro, a supporter of Mr 
Scott, was outraged. "My con- 
cern about Maurice started 
with this extraordinary press 
campaign,” Mr Herro says. He 
became even more furious 
when he learnt that Mr Saatchi 
had submitted Mr Burnside’s 
biU to the company. The com- 
pany has told me it did not 
pay," Mr Herro says. 

Meanwhile a debate was rag- 
ing in the press about why 
Saatchi was doing worse than 
rivals such as WFP. Was it 
poor operations management 
(Scott’s responsibility) or fail- 
ure to win new clients (Mau- 
rice’s role)? 

Peace broke out between 
Scott and Saatdbi in the 


s pring , when the company said 
bothwould stay on. As part 
the settlement, Mr Seated 
appeared to respond to the 

Spread lnve3t0 Lf^. P S 

long contracts for pub- 
lic company < flxectorS- „.!" 
dropped his five-year rolling 
cartrad worth £625,000 a year 
for a three-year fixed^rm 
arrangement, paying £2°0jWJ 
annually. The company aaa 
become “1M per cent pohti- 
csdfy correct", Mr Saatc hi said 
at tire ■ 

But Mr Saatchi's new pack- 
age did not appear so PC to Mr 
HBTb.and other shareholders 
when they learnt that a new 
"super-option", package was 
being negotiated for him. 
whichbreacbed guidelines laid 
down br the Association of 
British Insurers, the fond 1 man- 
agement lobby group. 

The company’s 

committee, chaired by Sir 
Peter Walters, offered Mr Saat- 
chi options worth eight times 
his old salary -of £625,000, 
which would have given him a 
£5m profit in three years If tbs 
Saatchi share price reached 
300p (compared with 253ttp 
yesterday). 

The views of the company's 
biggest shareholders were 
solicited pri v ate ly. The unam- 
biguous response from those 
controtUng more than 40 par 
cent of the shares was hostile. 

Meanwhfla, Mr Saatchi found 
himself isolated from share- 
holders, company executives 
and directors on a different 
Issue, that of whether his sur- 
name should - be dropped from 
the masthead of .the holding 
co mpany . 

Many of them feel that like 
•Thatcherism" - a brand that 
Mr Saa tehj h elped to create - 
the "S aat c hi " name has passed 
its ae&hy dab for the holding 
company, if not for the adver- 
tising subsidiary, Saatchi & 
Saatchi Advertising World- 


They feel that the develop- 
ment of subsidiaries such as 
Bates, which do not have 
"Saatchi” in their brand 
names, is stiffed: when they 
win a eftesat, the success Is usu- 
ally described as a "Saatchi" 
achievement " 

Mr Saatchi, however, has 
fold colleagues that removal of 
his name from the holding 
company masthead would 
force his resignation. 

Whether he has the luxury of 
choosing to go - rather than 
being forced out - he wffileara 
today. A colleague summed tip 
the dilemma facing the board: 
"Like Thatcher's colleagues, 
directors have to decide 
whether to put their personal 
loyalty to him ahead of the 
good of the company." 


LETTERS TO THE EDITOR 

Number One Southwark Bridge, London SE1 9HL 

Fax 071 873 5938. Letters transmitted should be dearly typed and not hand written- Please set fax for finest resolution 


New jobs orthodoxy not reality 


From Mr John Sheldon. 

Sir, It was a refreshing 
change to see a combination of 
common sense and healthy 
scepticism in Richard Donkin’s 
piece on the “end of jobs for 
life” debate ("Don’t throw 
away those gold watches”, 
December 14). 

The zealots of the New Right 
have, until now, managed to 
create a new orthodoxy in the 
reporting of the world of work 
by mixing in a teaspoonfol of 
truth with a barrel load of half- 
baked, politically driven sci- 
ence fiction. 

In this brave new world, 
everybody is (or will soon be) a 
tele-worker on short-term con- 
tracts, paid entirely on the 
basis of some farm or other of 
performance remuneration 
with an individualised relation- 


ship with the employer, mov- 
ing rapidly between rijffarant 
employers and types of jobs, all 
requiring different skill mixes. 
Not only is this paraded as 
fact, but as desirable from the 
point of view of both individ- 
ual employee and employer. 

Away from Star Trek, this is 
far from the reality, but there 
is a danger that it vrill become 
reality by default I have lost 
count of the number of times 
that senior civil savants and 
ministers have repeated with 
tedious regularity that “the old 
days with jobs for life have 
gone for ever” and then make 
some reference to the latest 
headline-grabbing burial of 
lifetime employment as though 
ft was justification for this or 
that cutback or privatisation. 

This represents the real use 


of the set of anecdotes and 
impressionistic observations 
that masquerades as a theory 
of trends in working patterns 
It serves as an academic cover 
for the conscious political deci- 
sion to attack conditions of ser- 
vice, particularly in the public 
sector - and to increase insecu- 
rity at work. 

As Richard Donkin’s article 
suggested, as a personnel strat- 
egy it is as damaging to 
employers as employees. Noth- 
ing is inevitable here and one 
of our objectives as a trade 
union is the preservation and 
farther creation of real, secure 
employment options. 

John Sheldon, 
general secretary, 

NUCPS, 

1241130 Southwark Street, 
London SE1 0TU 


Shareholders must exercise pay power 


From Mr Edward Leigh 

Sir. The problems surround- 
ing shareholder control of 
executive were accu- 

rately and extensively reflected 
in your leader (“Can pay, will 
pay”, December 6). 

I am glad to hear that the 
government intends to act, as 
this was an issue which I 
addressed in a policy pamphlet 
which I published on Novem- 
ber 28- I sai d there that the 
way forward was to empower 
shareholders. Two days later 
the prime minister told the 
House of Commons that he 
was prepared to consider a 
Hhttflar solution. 

In my pamphlet. Responsible 
Individualism, I wrote that the 
public is justifiably suspicious 
when executives raise each 
other's salaries in a round of 
mutual pocket-lining. Espe- 
cially since many of them per- 
form rales more akin to minis- 
ters presiding over large 
bureaMxacies than to genuine 
entrepreneurs who innovate 
and create wealth and jobs. 

It is indisputable that capi- 
talism and the market are the 


most ef fe c ti ve systems to gen- 
erate wealth and improve the 
material well-being of the 
nation. But cannot live by 
those alone; a sense of right 
and justice must also be part of 
the equation. Politicians 
should give a lead. 

The issue cannot be dis- 
missed by the staple argument 
that British companies must be 
free to offer world-class sala- 
ries. There has been a real pub- 
lic outrage and that Is 
something companies and gov- 
ernment ignore at their perCL 
There is an important moral 
dimension and it is twa which 
has been missing on recent 
economic policy. A sense of 
duty and service on the part 
of executives and a sensitivity 
to the feelings of those on 
low wages would not go 
amiss. 

I do not advocate the Labour 
remedies of intervention and 
state regulation. We should 
empower shareholders - who, 
after all, own the companies 
and employ the managers - to 
enable checks to be placed on 
what the public suspects are 


unnecessarily large pay pack- 
ages. 

This can be achieved, first, 
by fiscal measures to encour- 
age direct share ownership - 
something lacking at present; 
and, second, by le g isla ti on to 
ensure that City institutions 
take due note of the views of 
the beneficial owners of the 
shares they nominally hold. 

I recognise there are difficul- 
ties in devising a wifirihantem 
by which the latter could be 
achieved, but it should be pos- 
sible to introduce a legal sys- 
tem, however rough and ready, 
which would make fund man- 
agers respond to the opinions 
of the millions of 'investors 
whom they represent - 

We should trust the people 
in this respect The public is 
bright enough to know 'when 
they need adequately to 
reward an entrepreneur who 
boosts their dividends, asset 
values and pensions, but jaun- 
diced enough to recognise 
blind greed. 

Edward Leigh, 

House o f Com mons, 

London SW1A QAA 


Imperative 
to modify 
ro-ro ships 

From Sir William Barioto. 

Sir, In the past tew weds 
two disasters at sea have war- 
ranted frontpage headliwgB in 
the press. In the sinking of the 
ferry Estonia, more than 900 
fives were lost; following the 
fire an the Achilla La tiro cruise 
ship, almost all of the 1,000 
passengers were saved. 

The reasons? The roll-on, 
roll-off (ro-ro) design of the 
Estonia caused it to capsize 
completely in a few minutes 
with no time for evacuation; 
the AchUle Lauro remained 
upright and afloat for many 
hours, with ample time for 
evacuation. 

There must be an overriding 
objective to design new ships 
or modify existing ro-ro ships 
such that, following a signifi- 
cant ingress of water, an essen- 
tially upright position is Trillin , 
tamed for at feast 30 minutes 
to make evacuation practica- 
ble. Passengers on ro-ro ships 
are entitled to expect 
standards to ensure survival as 
those which apply to conven- 
tional passenger vessels. 

Engineering solutions are 
available and cost or opera- 
tional disadvantages must not 
be allowed to stand In the way 
of this entirely logical objec- 
tive. The Royal Academy of 
En gineering is erairrfniwg the 
matter and will be cxmsulting 
ship owners among others. 
William Barlow, 
president. 

Royal Academy of Engineering, 
29 Great Peter Sheet, 
Westminster, ' 

London SWlP 3LW 


Commission pays up within recommended timp 


From Mr Romero Vamd 
d'ArchtrafL 

Sir, 1 would like to reassure 
Mr Greg Perry (Letters, Decem- 
ber U}/il) that the European 
ftommlarinn does XCSpeCt the 
payment delays suggested for 
member states and business in 


its November 30 recommenda- 
tion. The average delay for all 
payments made by the Com- 
mission during the first n 
months of 1994 was 40.5 days 
wen below the 60 days recom- 
mended. Only a tew of the 
Commission’s payments (less 


than 10 per cent) took longer 
than 60 days, and in most cases 
these delays were the result of 
Irregularities with the invoices. 
Raniero Vanm d’Archlrafl, 
Member of the European 
Commission, 

Brussels. Belgium 


Not a banker 
with that hat 

From Mrs Charies Blackwood. 
Sir, Your article, “Not yet 

the death knell” (December 10/ 
11) impels me to ^ 

Photo caption, "Gentlemen 
in Thrcgmortah Street 

J"; 0 - *** * anS 

^ was at 

SfJSL i 5 tedee ? J Partner at 
cazenorc. He would be turning 

w his grave at being describS 
as a “banker”. 

Susan Blackwood, 

Andrew's Farm Bnw 
Great Dumfbrd. 

Salisbury. Wiltshire SPa RAO. 




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FINANCIAL TIMES 

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Number One Southwark Bridge, London SE1 9HL 
■ Td: 071-873 3000 Telex: 922186 Fax: 071-407 5700 

Friday December 16 1994 


Germany’s EU 
balancing act 






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bast spring, France aid Germany 
announced with some fanfare 
plans to co-ordinate their consecu- 
tive presidencies of the European 
Union - joined, a few months 
latex, by Spain. Their ideas 
included tuning the mam pillars 
of the Maastricht treaty into real- 
ity - fleshing oat a. common for- 
eign and defence policy and foun- 
ding Enropol a police force to 
coonhnate the cross-border fight 
against crime. They wanted to lay 
the foundations for enlargement 
of the EU to the east, balanced by 
a Mediterranean policy to stabilise 

the Union's southern flank, a vital 
French concern. And they wanted 
to provide a launch-pad for a big 
new step towards integration at 
the intergovernmental conference 
in 1996. 

In the event, progress during 
the first fflr wnnthfi, the German 
presidency, has been painfully 
slow, an all fronts. No fewer than 
28 meetings held on Enropol.- a 
plan which would be popular with 
a European electorate worried 
about drug-trafficking and organ- 
ised crime - have produced no 
decisions at all Common foreign 
policy is bedevilled by Bosnia. As 
fox eastern enlargement, the sum- 
mit in Essen produced a few sign- 
posts, but little substance. 

In the first place, Germany was 
hopelessly distracted by its own 
general election. And once that 
was over, the looming date of the 
French presidential election ^ 
spring seems to have paralysed 
progress. Given those circum- 
stances, it is scarcely surprising 
that Germany's handling of its 
presidency came in for stiff criti- 
cism from the European parlia- 
ment on Wednesday. Bonn was 
taken to task for a range of prob- 
lems from vacillation over EU 
enl argem ent to its failure to stem 
refogee flows from ex- Yugoslavia. 

Clearly, some hopes for the EU 
presidency were pitched too high. 
This may partly have reflected Mr 


Kohl’s own optimistic forecasts in 
advance of Germany’s October 
election. Differences of opinion 
with France and the EU’s 
southern members about tbe pace 
of eastern enlargement to the asst 
have became increasingly evident 
in recent months. In general, how* 
ever, Mr Kohl has shown consider- 
able consistency on this issue. In 
recent years he has regularly 
warned would-be members from 
central and eastern Europe 
against excessive optimism about 
the timetable for entry. 

Not least because of the finan- 
cial sacrifices that early eastern 
accession would demand from 
German taxpayers (especially 
fanners), Mr Kohl has important 
domestic reasons for caution over 
enlargement. Additionally, the 
fears of Europe’s southern states 
of negative repercussions from the 
EU’s tfit to the east and north 
need to be taken seriously. 

Now that attention is shifting to 
the French EU presidency in the 
first half of 1995. Mr Kohl must 
hope for maximum co-operation 
with Paris during the period 
before the presidential election. 
M r Fra ncois Mitterrand has com- 
mitted Ids successor to reaching 
an agreement on Europol next 
summer, vital to convince the Ger- 
man electorate that Europe can 
pool police resources to defeat 
cross-border crime. 

Given Germany's preoccupation 
with eastern Europe, the German 
presidency should have been the 
high point for gnlargawwnt hopes 
to the east The next three EU 
presidencies - of France, Spain 
and Italy - will inevitably be more 
pre-occnpied with the sooth, and 
none have ranch incentive to press 
the case of the easterners. France 
will also be totally preoccupied 
with its own presidential elec- 
tions. The 1996 IGC looks less 
likely to produce a grand, con- 
certed push for deeper integration 
than a wintimTing- muddle. 



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At the vary least. Brush Gas's 
plans to cut the wages and holi- 
days of sane of its least-well paid, 
staff is a public relations disaster. 
The move, just weeks after the 
group awarded its chief executive, 
Mr Cedric Brown, a pay rise of 75 
per cent, also suggests a degree of 
misjudgement and naivety within 
-i the company's top management 
- that does little to justify e x oep- 
tional salaries. 

The timing could hardly be 
more controversial. Gas prices will 
rise above inflation next year, and 
public resentment is running 
high, as shown by the govern- 
ments failure to raise value added 
tax an heating fheL 
British Gas explain the cuts in 
wages of its showroom staff - and 
the closure this year of 157 of its 
423 showrooms - by the need to 
drag its retail arm Into profit As 
part of its modernisation, the cuts 
may make sense. The domestic 
market has matured, ami gas is no 

Rail halt 


Critics of UK rail privatisation 
characterise it as a “poll tax on 
wheels", a project so unpopular it 
will have to be abandoned. Recent 
events give credence to that ver- 
dict But this need not be the out- 
come, provided there is both more 
experimentation and more careful 
thought 

This privatisation is running 
into political buffers. First, a 
report by railway experts to the 
transport select committee warned 
that inadequate subsidies could 
. lead to the closure of half the rail 
network. Second, title franchising 
director unveiled his passenger 
service requiremazits, which con- 
firmed feais that services could be 
cut Finally, a leaked Department 
of Transport memo has revealed 
Whitehall concerns that the pro- 
cess Is advancing too fast 

These developments have 
increased the press u re on the gov- 
ernment to back down. This is 
hardly surprising since public sup- 
port for rail privatisation has 
never been more than lukewarm. 
One possible response is that no 
■ privatisation was popular initially, 
but most seem justified in retro- 
spect Yet this government is 
hardly in a good position to per- 
sist with an unpopular policy. Fur- 
' thennore, there are good reasons 
evmxfbr supporters of the privati- 
sation to be concerned. 

This does not mean that the pri- 
vatisation is a bad idea. The rail 
system does urgently need an 
injection of private rector manage- 
ment, since British Rail’s perfor- 
mance was notoriously unsatisfac- 
tory. It could do with private 
sector capital as well, since suffi- 
cient public funds will not be 
forthcoming. Separating train 
. operations from ownership of the 
track ami stations appears compli- 
cated. But it has in the 

airline and shipping industries 
and is being applied with success 
abroad. That the idea is new is 


lunger battling fiercely to win 
market share. Wages and staffing 
levels in the showrooms need to 
be aligned to the high street, not 
to British Gas's infernal scales. 

But the group has been extraor- 
dinarily insensitive to public and 
political opinion. Evmi after a 
decade, the case for privatisation 
of utilities is hardly wan in tire 
public mind. The popular image of 
the legacy of privatisation is not 
of improved services bat of rising 
water bills - and now of Mr 
Brown’s £475,000 pay packet Yet 
British Gas cannot afford to waste 
goodwill; it wants the Gas Bill 
now before paTtiammt to spread 
tire costs of providing universal 
access across all suppliers. 

The group’s latest advertising 
trumpets the flexibility of gas, 
with the slogan “don’t you. just 
love being in control?” But its 
executives may now find, having 
turned up the political beat, that 
they cannot turn it down. 


hardly a cogent objection. 

Closer examination of what is 
happening shows that many fears 
are misplaced. The mi-nimum ser- 
vice requirements will allow train 
operators to cut services, but 
there never was any guarantee of 
service levels under British Ra£L 
In any case, it cannot make sense 
to tudst that the present network 
and service be maintained in fuIL 
The new system will also provide 
canrarercLal incentives for opera- 
tors to run more trains if they are 
profitable. In addition, tight con- 
trols are proposed on commuter 
fares, which should assuage the 
mnnems of these politically influ- 
ential, captive passengers. 

Nevertheless, there is a strong 
case for proceeding with caution. 
There axe legitimate worries, for 
example, about the extent to 
which tickets will be available for 
journeys across the rail system. 
The prospect that long-distance 
tickets will be available only from 
a “core” group of main stations is 
also a concern. 

Yet the really big mistake is to 
proceed with franchising most of 
tire inter-city network, and a large 
part of London’s commuter ser- 
vices, in one go. The first fran- 
chises ought to sorve as an oppor- 
tunity for learning, with the 
inevitable mistakes avoided in 
future contracts. Among other 
thin g s , tire level of subsidies - the 
indefinite continuation of which Is 
justified by the feflure to charge 
the social costs of competitive 
modes of transport - must be 
adjusted in tire light of experience 
with the franchises. Zn addition, 
the privatisation of Rail track, 
which owns the stations and 
track, is being pushed too fast 

fit ever there was a care for trial 
and error, this privatisation is it 
The government must be more 
cautious. Otherwise, the great 
train privatisation will go the way 
of tire poll tax. 


L ike tire flow of lava spill- 
ing from a volcano, the 
accumulated errors of 
eight months’ govern- 
ment are overwhelming 
Silvio Berlusconi and his rigfatwing 
coalition. 

Following Mr Berlusconi’s inter- 
rogation on Tuesday by Milan anti- 
corruption magistrates, the govern- 
ment headed by Europe’s first 
media magnate- turned-politician 
could tell before Christinas. The 
exact timing will be determined by 
the final passage of n e x t year's bud- 
get through parliament 
But while the government looks 
certain to resign, no dear alterna- 
tive has yet emerged. 

“We are in feet one step away 
from a ‘general crisis': that break- 
ing point where the confused state 
of Italian democracy could precipi- 
tate a collapse of the entire sys- 
tem," warned Mr Ezk) Maura, the 
editor of La Stampa newspaper, 
owned by the Agnelli family. 

Tempers are running high in par- 
liament, where verbal abuse has 
become more aggressive as the 
world has been divided into friends 
and foes of the government Ur 
Umberto Bossi, leader of the popu- 
list Northern League, has turned 
from coalition partner into the 
prime minister’s greatest adversary, 
MT Berlusconi is laabfeg out ever 
more desperately at his perceived 
enemies - Mr Bossi, tire Milan mag- 
istrates, the communist-dominated 
left and even his former follow busi- 
nessmen. Increasingly, 57-year-old 
Mr Berlusconi presents himself as 
the victim, behaving like a lat- 
ter-day King Lear cast loose in a 
storm; a man “more sinned against 
th a n sinning”. 

“We are building up to a storm of 
unheard-of violence: one of those 
epic, hameric storms”, observed Mr 
CSuKano Ferrara, minister for par- 
liamentary affairs and the govern- 
ment's spokesman. 

The dements of the storm can be 
divided into the external and inter- 
nal pressures. 

The principal external pressure 
comes from the ffaanrf*! markets. 
With Italy’s debt now more than 125 
per cent of gross domestic product, 
the country is enormously vulnera- 
ble to speculation against the lira. 

The lira is already at an historic 
low, rinse to LL050 to the D-Mark. 
Since Mr Berlusconi took office in 
May, it has depreciated more than 8 
per cent against the D-Mark. The 
I talian risk factor is also reflected 
in the 4 percentage point differen- 
tial between Italy's and Germany’s 
interest rates. 

The authorities might be forced to 
raise interest rates to defend the 
currency; that would further 
increase the public sector deficit, 
which is already 10 per cent of GDP. 
As a rule of thumb, each percentage 
point rise in interest rates adds an 
extra Ll5,00ahn in a full year to the 
TYeasmy’s budget 
Italy’s political uncertainty has 
added to the doubts in tire markets, 
with fears that the government's 
programme for reducing the deficit 
in the 19% budget will fafl. 

The budget was never more than 
the minimum necessary - it would 
have held the deficit to L138,000bn, 
equivalent to 8 per cent of GDP. 
Nbw that aim has been seriously 
weakened by tire decision to remove 
pension reform from the package of 
measures to head off a general 
strike planned for December 2. Pen- 
sions are tire single largest c u r ren t 
spending item in the budget, and 
the postponement of reform until 
next June will create a further six 
months of uncertainty. 

Even without the removal of the 
measures to cut the cost of pen- 
sions, the budget targets would 
have been The deficit reduc- 

tion has been undermined by a com- 
bination of higher than anticipated 
payments on Italy's huge stock of 
debt, lower Treasury receipts ibis 
year, the cost of paring for damage 
caused by November’s disastrous 
floods in the north and the need to 
provide funds for pension arrears 
after an expensive constitutional 
court decision on the subject 
Mr Lamberto Dini, the Treasury 
minister, admitted this week 
the budget is e ff ect i vely out of date 
and additional measures would be 
needed early next year. Experts 


The Italian prime minister’s position is 
becoming more perilous, as financial and 
jolitical pressures grow, says Robert Graham 

Curtain rises on 

a 

the final act 



Silvio Berlusconi deft) is increasingly in conflict with Umberto Bossi (top right) and President Scaharo 


believe that a gap of at least 
L25,000bn will have to be bridged, 
almost certainly by raising taxes, 
which Mr Berlusconi pledged not to 
do in his election campaign. 

The continued weakness of Italy's 
public finances at a time of political 
turmoil means a rise in interest 
rates cannot be excluded. The pros- 
pect of tire damaging frtncpqnPTwac 

of a fresh rate rise could determine 
the nature and length of the 

impending political ShOW-dOWD. 

AH parties are agreed the budget 
must be approved rapidly, no mat- 
ter how imperfect its measures. 
Otherwise tire lira, already under 
pressure in tire ftnsnwfei markets, 
could come under renewed attack. 

"Once the budget is approved, 
Berlusconi should resign,” observed 
Mr Massimo D’Alema, opposition 
leader and head of tire former com- 
munist Party of the Democratic 
Left “I have to accept that the gov- 
ernment no longer exists.” 

If the external pressures are 
financial, the internal ones are 
political. First there Is the increas- 
ingly anomalous position o£ Mr Ber- 
lusconi, who is under investigation 
for corruption while running Fin- 
invest, his business group which is 
Italy’s second biggest private com- 
pany. He is alleged to have known 
about the payment of bribes to 
members of the Guandia di Finanza, 
the financial police, to ensure 
favourable inspections of tbe 
group’s books. 

Mr Berlusconi has rebutted the 
charges with vigour “Everything is 
based on tire presumption of know- 
ledge of operational arrangements 
[in Fininvest companies] which 1 
never dealt with and could never 
have done, given the well-known 
size of the group,” be commented 
combatively after his interrogation 
by the magistrates. 

He h as also made dear his deter- 
THhmtirm not to resign. “It is my 
firm intention not to back away 
from the task confided on me by the 
majority of Italians in the mandate 


from the March 27 ejections.” 

This sense of a popular mandate 
is deeply imbued in Mr Berlusconi 
and feeds his conviction that be can 
appeal directly to the electorate 
through television, over the head of 
parliament His ability to drum up 
support in this way should not be 
underestimated since RAI, the state 
broadcasting organisation, is now 
run by his supporters, and his three 
c omm ercial channels account for 
more than 85 per cent of the private 
television market 
But resorting to the media to sur- 
vive merely focuses the spotlight on 
another of tire anomalies surround- 
ing Mr Berlusconi, tire conflict of 
interest between his role as prime 
minister and his ownership of Fin- 

The prospect of a 
fresh rate rise could 
determine the nature 
and length of the 
impending political 
show-down 


invest He has been unable - or 
unwilling - to distance himself 
from Fininvest since he took office. 

Rather than improving, the situa- 
tion becomes more g"fempieri the 
longer he governs. Far instance, it 
is impossible to see how his gove r n- 
meat could reform Italy's broadcast 
ing system, where his dominant 
position has become a matter of 
political co n troversy, without being 
considered p arti «am 

And although he is trying to use 
hia position as prime to 

defend himself against the scrutiny 
of the magistrates, their investiga- 
tion relates to Mr Berlusconi's time 
as a businessman, not as premier. 
He has failed to explain why, as the 
founder and chief executive of Fin- 
invest, he did not interest himself 
in the visits of the Guardia di Fin- 
anza, especially in a group that is 


structured in a cascade of tax-effi- 
cient companies. 

Moreover, the case against him 
remains open for a full six months, 
dating from the first warning on 
November 21 that he was under 
investigation. The cloud of suspi- 
cion cannot be dispelled quickly. 

Meanwhile there is now open war 
between Mr Berlusconi and the 
Milan magistrates. Since October, 
inspectors of the justice ministry 
have been chppJtfng on the behav- 
iour of the Milan magistrates. 

Mr Berlusconi and Mr Alfredo 
Biondi, the justice ministe r, insist 
they are trying to ensure that 
proper judicial practices are being 
observed. The magistrates have 
clearly abused the rights of citizens 
in interrogations and in leaking 
documents to discredit individuals 
- not least Mr Berlusconi. But these 
events are portrayed by tire govern- 
ment’s opponents as a determined, 
seif-interested attempt by tbe gov- 
ernment to undermine anti-corrup- 
tion investigations. 

In the past 10 days the confronta- 
tion has forced the resignations of 
Mr Antonio Di Pietro, Italy's best- 
known anti-corruption magistrate, 
of an appeals court judge and all 21 
inspectors at the justice ministry. 
The wounds are now being frit 
within tbe judiciary itself as people 
take sides. 

The situation is such that there 
can he no peace between the Milan 
magistrates and the present govern- 
ment. And it is a battle in which 
each is seeking to disable the other. 

Another equally damaging insti- 
tutional conflict has raged between 
the prime minister and President 
Oscar Luigi Scalfaro since Mr Ber- 
lusconi took office in May. 

The mutual mistrust is every day 
more apparent Mr Berlusconi does 
not prevent his ministers from rain- 
ing insults on the president Nor 
does he dissuade thp-m from maWng 
dark threats to raise embarrassing 
questions about his Christian Dem- 
ocrat past as interior minister. 


By faffing to reach a modus Viv- 
endi with President Scalfaro, Mr 
Berlusconi has alienated the figure 
whose constitutional position 
allows him to play tire central role 
in tire next stages of the crisis - the 
formation of a new government or 
the dissolution of parliament The 
hostility between the prime minis- 
ter’s office and the presidential pat 
ace has passed a point of no return. 

A similar point has been reached 
in Mr Berlusconi’s relations with 
Mr Bossi. The League leader has 
long been playing the opposition 
within the rightwtug coalition. This 
week he voted against the govern- 
ment for the first time and has 
effectively changed sides. Mr Bossi 
has never felt comfortable in the 
same affiance as the neo-fascist 
MSI/Natianal Alliance of Mr Gian- 
franco Fini 

But there has been a for greater 
contradiction at the heart of the 
coalition. Mr Bossi has never had 
an interest in anything but the 
short-term success of the Berlusconi 
government. The League is a lesser 
partner in the coalition, and Mr 
Berlusconi’s Fonsa Italia movement 
was instrumental in providing back- 
ing to elect the bulk of Mr Bossi’s 
deputies. A durable government 
could submerge the identity of the 
League in that of its larger partner. 

B y threatening to break 
the alliance, Mr Bossi 
has retained the 
League’s identity. But 
this tactic cannot be 
maintained throughout tire life of a 
legislature, and. Mr Bossi’s threats 
to leave the government once the 
budget is approved look likely to 
come to pass. 

The present government can be 
brought down only in parliament, 
but the League’s defection to the 
opposition would provide the neces- 
sary numbers to bring this about 
Until now the League has hesitated 
because Mr Bossi fears early elec- 
tions and has failed to secure an 
alternative alliance. But Mr Bossi 
has now pushed himself Into a posi- 
tion where he cannot draw back. 

Mr Berlusconi is the only political 
leader to favour early elections, 
with the reluctant endorsement of 
his chief ally, Mr FinL However, 
President Scalfaro is likely to 
explore other options first, if only 
because tbe electoral laws need to 
be changed to remedy the faults of 
the reformed system first used this 
year. 

There is also a strong practical 
objection to early elections, since 
this would entail at least three 
months erf uncertainty during the 
preparation and campaign - the 
most alarming scenario for the 
financial markets. 

One alternative would be a res- 
tyled version of the present govern- 
ment It would be headed by Mr 
Berlusconi but less reliant on the 
MSI/National Alliance and would 
have links to the centre parties that 
are guardians of the Christian Dem- 
ocrat heritage. The League might 
accept this formula; and signifi- 
cantly Mr Berlusconi’s Channel 5 
ran a telephone vote on Wednesday 
that showed 50 per cent in favour. 

But the idea suffers from being 
linked to the figure of Mr Berlus- 
coni, whose position is clouded by 
the judicial investigation into his 
affairs. No other leader could easily 
hold this type of coalition together, 
not least because Forza Italia 
remains little more than a Berlus- 
coni supporters’ dub. 

This leaves various forms of a 
broad-based government of national 
unity as the most stable option. 
Such a government would have the 
limited and dearly defined task of 
tackling Italy’s public and 

preparing a new electoral law - not 
unlike the 1993-94 administration of 
Mr Carlo Azegjio Ciampi. 

As the showdown approaches, the 
most optimistic tone has been 
sounded by Mr Ferrara, the govern- 
ment’s spokesman: “When venom 
thickens the air forcing great 
storms to break, this deans the 
atmosphere.” 

Instability may lead to political 
regeneration. But the Italian politi- 
cal system, caught between the 
need for change and tire instinct for 
self-preservation, is unlikely to pro- 
duce a dear-cut solution. 



Passing the 
baton 

■ Will UN Security Council 
meeting s ever be the same again, 
now that Sir David Hannay, the 
UK’s representative, is to step down 
next July? 

Always ready with a crisp 
warning for Sa ddam Hussein or 
(rather less credibly) to the Bosnian 
Serbs, the Humphrey Appildiy 
look-alike has rather become tire 
dominant figure in tire council since 
1902, when his US colleague Torn 
Pickering was exiled to India. 

Pickering was replaced by the 
lacklustre Ed Perkins, followed by 
Clinton fraifirfflrrt ft 
Albright, for whose inexperience 
Hannay felt the need to cover, 
sometimes in an offensively obvious 
manner. But then, subtlety was 
never Sir David’s strong salt 

The typical self-confident 
Wykehamist, his ab r as i ve bonhomie 
was given particularly free rein 
when he represented Margaret 
Thatcher’s government at tbe EC 
between 1985 and 1990. 

Hannay hands over to Sir John 
Weston, currently Britain’s man at 
Nato. Briefly political director of 
the Foreign Office during the Gulf 
war. Sir John is credited with 
having persuaded John Major to 
intervene on behalf of the Kurds. 
Lady Weston had watched what 
was happening on television, and 
gave him no peace until he did 
something about it Presumably she 


wifi not be underemployed during 
her husband’s next posting. 


Pulling strings 

■ There are those who say that, 
without Denis Vau ghan, Britain 
would not have a lottery. Vaughan, 
an Australfan-bom orchestral 
conductor, would presumably 
innbidg hfms plf in thg Ttef, ffa has 

been lobbying government for years 
on the subject - but now it is up 
and running he reckons too much 
lolly is going to the greedy 
operators, and that more of the 
pr ofits should be distributed to the 
arts. 

So Vaughan has just submitted to 
the Treasury a modest invoice for 
his services to date - £3^695 jOOOl If 
Her Majesty's government coughs 
up - not a rating certainty, it has to 
be said - the monies will be put to 
good use in the guise of the Denis 
Vaughan Orchestral Trust Fund. 


Humble pie 

■ Some good news at last from 
BIS, tire giant conglomerate which 
has lost its premium rating after 
underperforming the stock market 
by around a quarter over tire past 
sbt mouths. It has just won a 
ProShare award for its success in 
attracting private sh areho lders. 
ProShare singled out BTR for 
attracting over 600 new 
shareholders a week despite its 
falling share {nice. Were the 



company to expend as much effort 
explaining itself to the City, its 
shares might he trading at rather 
less humble levels. 


Enchante 

■ In the good did days, of course, 
spooks had no names at alL Even 
allowing for the showier demeanour 
of the modem variety, however, 
there are those who would consider 
the recent escapades of Guy Azais, 
number two in France’s leading spy 
agency, faintly autrL 
For Azais. who works at the 
General Directorate for External 
Security, has just multiplied 


himself. A commoner is reborn an 
aristocrat Meet Guy Marie Joseph 
Gerard Azais de la Garde de 
Chambonas. 

The genuine aristocracy, needless 
to say. has no truck with such 
behaviour. But commoners may 
legally adopt aristocratic handies 
that would otherwise become 
extinct The former president 
Valerie Giscard d'Estaing was only 
so-named because his family went 
title-shopping in the 1920s. 

But it didn't wink. Almost 
everyone referred to him as VGE. 
So are you ready GMJGAGC? 


Nelson's eye 

■ Perfectly understandable if 
Warburg’s Sir David Scholey does 
not feel like exchanging Christmas 
cards with hazards' vice-chairman 
John Nelson. Nelson, one of the 
City’s shrewder merchant bankers, 
has been making life miserable for 
S.G. Warburg of late. First ha was 
one of the main reasons why GEC 
chose Lazards rather than Warburg 
In its bid for VSEL, despite the fact 
that Scholey is a GEC director. 

When thoe are so few big bids 
around, it might have helped 
Warburg impress Morgan Stanley a 
bit more if GECs Lord Wemstock 
had given it the nod. Now 
Warburg's planned get-together 
with Morgan Stanley has collapsed 
because Warburg’s Mercury Asset 
Management subsidiary dug its 
beds in over the price. Guess who 
was advising MAM? Much more of 


this and Warburg will have to make 
a takeover bid for Mr Nelson. Better 
to have him on the inside etc, etc. 


Expensive exit 

■ Forget Trafalgar House’s Nigel 
Rich or his big boss, Simon 
Keswick The man to watch in the 
coming battle for Newcastle's 
Northern Electric is Ian Robinson, a 
52-year-old Geonlie who has been 
running Trafalgar House’s biggest 
business, its engineering division. 

A fortnight ago, he handed in his 
notice to fake up a new job as chief 
executive of ScottishPower - which 
qlso happens to be very interested 
in what happens to Northern 

Electric. Not only does Robinson 
know where tbe weak spots are in 
Trafalgar House's brand new top 
management team - and there are 
still a few - but he should also have 
a pretty good idea of Trafs game 
plan for Northern Electric. Hard to 
imagine an old pro like Lord 
Hanson letting such a key player 
slip away at such a crucial time. 


First footing 

■ British Coal may soon be 
handing over its meson d’&tre to the 
private sector, bat its marketing 
department has not lost its sense of 
humour. Its festive cards cany the 
following inscription: “It’s Mazy 
Christmas from us, and Happy New 
Year from someone else." 


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Friday December 16 1994 




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Itfr wraU truck industry is no 
place far the feint-hearted, as 
Bankets plunge through exag- 
gerated cycles of feast and fam- 
toe. 

Four years of recession in 
: ''.Western Europe had pushed 
^ juost of the region's trade mak- 
■ ' ■‘fisrs into loss by last year with 
' one leafing producer coDaps- 
Sing into receivership. Now the 
.^'European industry's fortunes 
i.’^are again on the mend, bat 
: already truck makers at the 
'.v^fPrefront of the recovery are 
. /^straining against the limits of 

-their production capacity, as 
■ ‘ j. demand rises more steeply 
^ ' than expected in markets such 
; as the UK and Scandinavia. 

'. In North America, heavy 
truck makers lost more than a 
third of their market between 
1388 and 1991. In the past three 
years sales have surged back. 
y however, with demand almost 
doubling from 108,000 in 1931 
\ to a forecast level of more than 
206,000 this year. Trading US 
producers such as Paccar, are 
. achieving record profits. 

In Japan, truck registrations 
fell for five years in succession 
from 1989 to 1993, but here, too, 
the worst of the recession 
appears to have passed. Japa- 
nese domestic track sales, 
; exports and production have 
' all begun to recover in recent 
months. 

Surviving such sharp flucto- 
: gHnns in demand exerts heavy 
press u res on the track makers, 
' and their ranks have been 
thinned : as each recession 
takes its toll. In western 
Europe there were still 52 
truck makers. In operation in 
1975. By 1984, the total had 
been reduced to 14 and by this 
year the number had flflea to 
1L 

The outcome of the latest 
bout of restructuring in Europe 
remains unclear, however. Da£ 
the Dutch commercial vehicle 
maker which, took over Ley- 
land, the loss-making UK truck 
producer, in the second half of 
the 1980s, became the most 
notable victim of the latest 
recession, when it collapsed 
into receivership in early .1993. 

The former Daf group's 
Dutch and Belgian heavy truck 
operations have been reestab- 
lished, however, thanks to a 
state-hacked rescue package, 
and other parts of the group m 



On track for Europe: a Scania track Hnes up on the Chennai TUnnel train 

Worst is over for the 
global truck makers 

After four years of recession, demand for commercial 
vehicles is beginning to rise in Europe and Japan. 
Kevin Done examines prospects for the industry 


the UK have also emerged 
from receivership as indepen- 
dent companies, albeit after 
severe restructuring. 

The biggest change to the 
Industry - in Europe and In 
the US - was heralded by the 
planned merger of Volvo, 
already the world’s second 
largest heavy truck maker, 
with Renault, the Frmch state- 
controlled automotive group. 
Together they would have con- 
trolled around 26 per cent of 
the European heavy truck mar- 
ked: and 23 per cent of the US 
market through their respec- 
tive subsidiaries Volvo GM 
Heavy Truck and Mack. 

The merger foundered, how- 
ever, in the face of a revolt by 
Volvo shareholders and senior 
management, which had fun- 
damental concerns about the 
valuation of the Swedish group 
and the holding of a “golden 
share '’ by the French state. 

The. two companies have dis- 
solved the dK-year-old alliance 
and' test.month completed the - 


break-up of the 45 per cent 
cross shareholdings in their 
respective truck and bus 
operations. 

Both groups have been 
forced to develop alternative 
strategies to replace the alli- 
ance, although KarirEriing Tro- 
gen, president of Volvo Truc k , 
insists that, “the i u ri n glrlal West 
behind the merger is stfil valid. 
I foresee the need for different 
kinds of partnerships in the 
future to get economies of 
scale in industrial production.” 
he says. "The business 
approach has not changed.” 

The leading European truck 
makers dominate the world 
heavy truck market. Mercedes- 
Benz of Germany, the world’s 
largest truck and bus maker, 
and Volvo both have substan- 
tial operations and market 
shares in Europe and in north 
and south America, while 
Scania of Sweden is ffie market 
leader in Brazil as well as the 
most profitable of the track 
makers in Europe. 


The European producers are 
now seeking to broaden their 
operations by establishing a 
stronger presence in Asia, 
where the industry is still dom- 
inated by the leading Japanese 
truck makers, EBno, Isuzu, Nis- 
san Diesel and Mitsubishi 
Motor. 

Volvo is seeking to establish 
a joint venture in China with 
the aim of adding a production 
centre in Asia to its three 
wilting re gional track manu- 
facturing operations in Europe 
and north and south America. 
It has also launched a feasibil- 
ity study into establishing pro- 
duction in India. 

According to Mr Trogen, 
Asia is Volvo's "number one 
priority” for the geographic 
expansion of its truck 
operations. It has entered a fea- 
sibility study with China 
National Heavy Truck and 
Shandong Automotive for the 
establishment of joint ventures 
for the production of both 
tracks and components In* 


Truck market (16 tennes and above) 



Thousand units 
600 r-r 

WORLD iZr3*£: m ' 

' . ■ >' 

■■ 

• \ • . '*.i 


■* 


v: 


© Sweden. Denmark, Nonvay and Finland 
^ ..l j© GWBrfMi ©Germany 

5iL-«U-i!© France © Italy, Portugal and Spain 

r r \ I; I© Belgium, Netherlands Austria, Swtaeriand^Gnaeoapireiancl&Uix. 


Rest of 
the world 











t/~- 


200 — 


TOTAL 



1979 606182 83 84 858687 


90 91 92 9S 94 


zoo- NORTH AMERICA 


TOTAL 


100 — 




ao bi az 83 84 as ee 


Shandong province south-east 
of Beijing and is now awaiting 
official approval for the project 
from the Chinese authorities. 

Mercedes-Benz is negotiating 
two ambitious joint ventures 
in China for the production of 
heavy trucks, and buses and 
coaches. It is conducting a fea- 
sibility study with Yangzhou 
Motor Coach Manufacturing 
(YMC), the Mggest Chinese bus 
and coach producer, for the 
formation of a joint venture 
with the target of producing up 
to 12,000 bus chassis and 6^000 
large coaches a year. 

Global expansion is also 
causing other changes in stra- 
tegic approach. 

This year Mercedes-Benz 
started production in Indonesia 
of a new range of light-duty 
trucks and buses. The project 
marks a drastic whangs in the 
German group's approach to 
developing new vehicles for 
the global commercial vehicle 
market, as it seeks to overcame 
the-ctisadvaniage of-its high 


tt SB SO 91 82 83 M 


domestic cost base. 

The MB 700 range of light- 
duty trucks (7-5 tonnes gross 
vehicle weight) has been devel- 
oped to meet Asian cost levels 
using a system of global sourc- 
ing of components. 

En gines for the vehicles will 
be assembled in Indonesia 
from components produced by 
Mercedes-Benz’s commercial 
vehicle subsidiary in Brazil. 
Transmissions and front axles 
are to be supplied by Tata 
Engineering and Locomotive 
(Telco) in India, while the rear 
axles will also come from India 
from AAL, a licensee of Rock- 
well, the US automotive com- 
ponents supplier. 

Brakes and shock absorbers 
will be supplied from India, 
propeller shafts will be made 
by Spicer in the US, Mercedes- 
Benz Argentina will supply the 
mechanical steering system, 
optional power steering will 
come from Koyo in Japan, 
while cab parts will be sup- 
plied by Mercedes-Benz's Span- 


ish 80818283W8586878889B0919293M 


ish subsidiary. 

“The supply of major compo- 
nents from a country with high 
wage levels like Germany 
could not satisfy the cost tar- 
get. New ways had to be 
found,” says Klaus-Dieter VOh- 
ringer, Mercedes-Benz compo- 
nents production director. 
“Commercial vehicle concepts 
in the Far East and Europe dif- 
fer considerably, not only iu 
dimensions but more so in the 
cost structure. The market 
requirements in Europe cause 
a cost situation that is unac- 
ceptable to customers in south- 
east Asia.” 

Such global initiatives prom- 
ise gradually to remove the 
existing marked regional dis- 
tinctions in the world track 
industry, which have tended 
hitherto to limit the amount of 
global competition between 
regional product concepts. 

European and Japanese 
truck makers generally 
develop and produce their own 
principal- driveline components 


- engines, gearboxes and axles. 
In North America, by contrast, 
the truck makers concentrate 
chiefly on assembly, while 
engines, gearboxes and axles 
are bought in from component 
makers. 

At the same time Japanese 
and Asian truck development 
has been influenced by the 
geography and infrastructure 
of Japan. Shorter distances, 
lower average speeds and 
lower gross vehicle weights 
mean that trucks are generally 
smaller in Japan. 

Such regional differences 
have so far prevented Japanese 
producers from competing sig- 
nificantly in the European and 
North American heavy truck 
and bus markets, and the US 
overseas presence is also lim- 
ited. 

The leading European pro- 
ducers have made the stron- 
gest efforts at overcoming such 
regional hurdles, and Asia is 
the new target for global 
expansion. 




Barcelona, Baden-Baden, Basingstoke. 

To Mercedes Service 24h, they’re all just a couple of hours away. 


»r 




> wf 





* » 



M any Mercedes-Benz trucks and 
vans put in a lifetime's work 
without neec&ng any more than routine 
maintenance. But if a Mercedes ever does 
come to an unscheduled haft, there's 
smother one ready and waiting to Mt the 
road. The Service 24h rescue vehicle. 

As the name implies, Service 24h works 
round the dock, all year long. And 


whenever a Mercedes operator calls, ft's 
ready to spring into action. Providing fault 
diagnosis and repair at the roadside 
and helping the driver to get the toed 
moving again. 

in most cases from the phone cal? to the 
truck resuming its journey takes under 
three hours. That’s a response time for 
Mercedes-Benz operators throughout 


Europe, from Southern Spain to North 
Germany. (Some other manufacturers 
boast about local UK response times. But 
that*S not a lot of use when you're stuck 
at the other side of Europe.) 

With Mercedes-Benz, you have the 
world’s largest manufacturer of bucks 
and vans behind you, offering support 
from over 2700 sendee points In Europe 


alone. And you have the additional 
reassurance that all Service 24h rescue 
teams are trained to know the Mercedes- 
Benz range inside out. Which means that 
they wont start taking the truck apart if 
it’s a just ample electrical relay that 
needs replacing. 

Of course, Mercedes-Benz has always 
been famed for reliability. And in an ideal 



Mercedes-Benz 

Trucks and \&n$ 

A Member of the Daimler-Benz Group 


world, there would be no need for a rescue 
service because our trucks would never 
break down. But until that time comes, 
we're keen to make Service 24h the best 
service in Europe. Wherever you are. 

It's ironic, in a way. We set out to make 
Service 24h the best rescue service in the 
market And then do our very best to 
ensure that they never get any practice. 


For mure Information on the Mercedes-Benz range, finance and service packages, phone fra* on 0800 18136! or write; 
Merced es -Benz Trucks end Vans, Dept. C3. FREEPOST, RM805, Ilford, Essex IG2 MR 











- Himm i* -‘ir -riirft . - - 


:-rTP 9iy^yyyci~ - 


t*tOi 


II 


FINANCIAL TIMES S^RIDAY DECEMBER 161994 






L . • ' 


WORLD COMMERCIAL 



■ ■«. 


v« 


T he west European track 
industry is finally 
emerging from four 
years of recession, although 
the recovery remains hesitant 
Demand has picked up 
strongly in markets such as 
t.hnsp in the UK and Scandina- 
via, but these increases have 
been (Abet by the continuing 
weakness of sales in Germany 
and Italy. 

The pattern of the recovery 
has led to a wide divergence to 
the performance of mdividnal 
European producers,*™ 1 
some groups 

Benz, Iveco, and MAN still 
struggling to emerge from 
gSs tatuwpe. while others 
cnrh as Volvo and Scania, the 
two Swedish truck makers, are 
already experiencing a spectac- 
ular jump in profits. 

Truck sales in western 
. ■Europe (above 6 fannw gross 
vehicle weight) began to fall in 
1990 from a peak of 296,000 in 
1989, and the decline became 
precipitous in 1993 with sales 
falling by 22L8 per cent to only 
132,000, according to the latest 
report by DRI/McGfaw-HEU, the 
UK-based automotive analysts. 

During 1994, manufacturers 
have become increasingly con- 
fident that the worst of the 
recession has been passed, 
however, and producers are 
now forecasting several years 
of significant growth to the 
end of the 1990s. 

According to the latest DRI 
World 'frock Industry Forecast 
report truck sales (above 6 


■ ■ 

Europ e: finally emerging from four years of recession, says Kevin Done 

- 




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Industry looks forward to significant growth 


tnrmnai gre expected to rise by 
ZJS per cent this year to 199,000, 
and demand is expected to 
stren gthen In 1995 and 1996 

with growth of around 10 per 
cent in both years. "Most 
national markets have Joined 
file recovery process in Europe 
after the worst down tu rn on 
record,” says the - DRI report 
Western European truck 
sales are forecast to rise far- 
ther in tiie secnry fl half of the 
1990s to reach 272,000 by 1999, 
although this will still be 
below the 1989 peak 
The recovery has been led by 
the UK, which was also one of 
the first markets to fall into 
recession. In 1992, UK truck 
sales fall to 31,398. the lowest 
level since the mid-1950s, from 
a peak of 69,234 in 1989. 

In the first 11 months this 
year UK truck sales (above 3.5 
tonnes) have Jumped by 23 per 
cent, following an increase of 
15.8 per cent in 1993, and the 
industry is confident that this 
improvement will be sustained 
next year. m 

The sharpest contrast with 
the UK is provided by Ger- 
many, where sales accelerated 
to a peak in 1991 in the wake of 
reunification - offsetting the 


early onset of recession in mar , 
kets such as the UK 
France — only to decline 
abruptly in the past three 
years. 

DRI forecasts that the "turn- 
ing point could soon be 
reached* in Germany, too, 
however. The decline in truck 
sales eased farther in the third 
quarter of 1994 with a year-on* 
year fall of 6 per cmt, leaving 
sales in the first nine months 
10.1 per cent lower than in the 
corresponding period a year 
ago. 



y contrast with the hesi- 
tant recovery in overall 
sales across western 
Europe, truck production has 
recovered strongly with DRI 
farecasting a rise of 181 per 
cent to 251,000 following the 
drop of 27.2 per cent last year. 

Output was depressed last 
year by low demand and by 
excess stocks. By 1994, the 
heavy constraint of surplus 
stocks had been removed, how- 
ever, and truck makers bare 
also been gearing up to meet 
stranger levels of demand not 
only in Europe but also in 
overseas markets, in particular 
in Latin America and Asia. 


Against this background the 
two Swedish truck makers, 
Volvo and Scania, have bene- 
fited most with their competi- 
tiveness enhanced by the 
weakness of the Swedish cur- 
rency, as well as by the tough 
restructuring measures t a ke n 
during the recession. 

Scania, the specialist heavy 
truck maker (16 tonnes and 
above), increased its truck and 
bus sales worldwide in the first 
Tune months by 28 per cent to 
23*500 from 18,400 in the corre- 
sponding period a year earlier. 
The volume of its order book- 
ings rose by 61 per cent daring 
the first nfrie months to 29,100 
trucks and buses from 18,100, 
while operating mornne recov- 
ered to SKi2448bn from only 
SKrSUm a year earner. 

A similar transformation has 
been achieved by Volvo Truck, 
where operating profits in the 
first nine months surged to 
SKr2i87bn from only SKrt83m 
a year earlier. 

Daf, the Dutch truck maker, 
which collapsed into receiver- 
ship in early 1993 as the most 
notable victim of the recession, 
is also regaining some lost 
ground, after its heavy truck 
operations in Holland and Bet 


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gium were rescued by the 
Dutch Flemish govern- 
ments. In the first sax months 
of this year it achieved a net 
profit of F139-2m. 

Since the rescue in March 
1993 it has been able to 
Increase its workforce from 
3500 to LfaO with production 
at its Eindhoven plant up by 
more than half compared with 


1993 . E has recently taken on 
about 200 temporary produc- 
tion. staff at sites in the Nether- 
lands and Belgium in response 
to rising riamanri. ' 

With the continuing weak- 
ness of the German market, 
M e rcedes-Benz and MAN Nutz- 
fahrzeuge, the leading German 
truckmakers, have t aken lon- 
ger to emerge from recession. 


Mercedes-B®ux*s commercial 
vehicle operations are expected 
to suffer an operating loss for a 
second year in succession in 
1994, according to Bend Gotts- 


group's commercial vehicle 
division. However, he forec as ts 
a retail to profit in 1995. - 
MAN suffered a pre-tax loss 
of DMBOm in its latest financial 


year to the end of JoniLbatfhe 
ywwpany fa also forecasting g 
return to profit in the wuent. ; ~ 

year, its profitability has { , 

declined sharply during the i 

-past time years with fad 1983/ 

94 loss following pre-tax profits 
of DM6im In 1992/93 and 
DM pnfim In 1991/92. 

The has restruc- 

tured under the pressure of 
recession, and Rudolf Rnp* 
precht, chief executive, saja 
the group has again been oper- 
ating profitably In recent 
months. It forecasts vehicle 
deliveries In the current finan- 
cial year will rise to 37,000- 
38,000 from 33,000 last year. . 

Despite the start of raceway 
this year Helmut Werner, Mer- 
cedes-Benz chief executive, 
warned recently that the Euro- 
pean truck industry was stOl 
tying “enormous exoess pro- 
duettan capacity**. which was 
likely to grow farther due to 
productivity increases. Current 
output of trucks , (above 6 
tonnes) was using less than 60 
per cent of the available capac- 
ity fa the industry, be said. 

“The consequences are 

highly aggressive c om p etition 
and a battle over prion and 
conditions which cwtthmw to 
cause serious , problems," he 
said. - 

. Fart of. Mercedes-Benz’s 
respo n se to fads pressure fa a 
plan to reduce radically the 
share of tohonae production in 
its commercial. vehicle 
operations, which fa to be cot 
from 42 to 30 per cent. 



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Profile: VOLVO 


Far-reaching global expansion plan 


Volvo, the Swedish car and 
truck maker, has faced testing 
times in the past 12 months 
since the collapse of its 
planned merger with Renault 
of France. 

The group, the world's sec- 
ond largest heavy truck maker 
(above 15 tonnes gross vehicle 
weight) behind Mercedes-Benz, 
has been developing a much 
more aggressive strategy to 
expand its automotive 
operations and to divest nonr 
core operations as it prepares 
for an independent fixture. 

■ The 45 per cent cross share- 
holdings with Renault Vari- 
eties Industrials have been 
dissolved, and Volvo has been 
working on plans to increase 
its share of the world truck 
market alone, rather than in 
an alliance with the French 
truck maker. Renault's 45 per 
cent holding in Volvo Truck 


was acquired For FFr4*5tra late 
last month. 

Volvo is now poised to 
embark on a far-reaching 
expansion of its truck 
operations to Europe and Asia. 
The ambitious moves include 
the development of a new 
range of tracks to allow it to 
enter the Europeian Hg^rt truck 
market for the first tone. 

As a crucial part of this 

strategy it fa planning : 

■ To expand the c ap ac i ty of 
its heavy truck operations in 
Europe by up to 20 per cent by 
mid-1996, with the investment 
of more titan SKrlbn ($140m), 

■ To develop a range of light 
trucks (7.5 tonnes gross 
vehicle weight) to allow it to 
challenge for the first .time 
established rivals such as Mer- 
cedes-Benz, Iveco, MAN, Ren- 
ault and Dti in this segment of 
the European market. 


■ To establish a joint venture 
to China w ith t he aim of 
adding a production centre to 
Asia to Its three existing 
regional truck manufacturing 
operations in Europe and 
Nbrth and South America. It 
has also lanmched a feasibility 
study into establishing produc- 
tion in India. 

Volvo is leading toe Euro- 
pean track Industry's emer- 
gence from recession helped 
by several factors farfndiiig 
the weakness of the Swedish 
krona, the successful launch of 
a new range of heavy tracks 
and its large share of those 
European truck markets with 
the strongest g r ow t h such as 
the UK and Scandinavia. 

Production of its Volvo 
brand .tracks, chiefly in 
Europe and to Brazil - it cur- 
rently sells under the Whi- 
teGMC brand to North Amor- 



Profile: RENAULT VEHICULES INDUSTRIELS 


Putting on a brave face 


Jilted at the altar at the end of 
last year, Renault VI, the 
trucks and buses arm of the 
French state-owned motor 
group, Is putting a brave face 
on life after its failed merger 
with Volvo. "We lost a big 
opportunity, but we remain, 
very confident," says a spokes- 
man for the company. 

Optimism Is made easier by 
the rebound in toe European 
truck market which is pulling 
out of the severe recession of 
1992 and 1993. But revival in 
the market, which still 
remains well below its peaks of 
the late 1980s, may mask, 
rather than resolve, the longer- 
term strategic challenges fac- 
ing the French group. 

In the short term, the target 
is a return to profitability. 
After suffering losses of 
FFrl.4bn in 1993, the company 
aims to report an operating 
profit for 1994 and to move 
back into the black at the net 
level next year. The revival fa 
based on three factors, stron- 
ger sales in Europe, particu- 
larly in France, continued 
strength in the US market 
where Renault VI is present 
through its Mack subsidiary, 
and further cost-cutting and 
productivity measures. 

In France, the company 
expects sales of about 34,000 
vehicles this year, compared 
with 28,000 in 1993 and an aver- 
age of about 40,000 over the 
past 20 years. For Europe as a 
whole, sales of trucks above 
five tonnes are expected to 
reach 210,000 this year, com- 
pared with 203,000 in 1993. The 
upturn is confirmed in the 
company's order bocks which 
saw a rise of more than 30 per 
cent for Europe in the first 
nine months of the year. 

Maintaining market share 
has, however, proved a strug- 
gle. In France for example, 
Renault Vi’s share slipped 


slightly to about 42 per emit for 
the January-September period, 
partly because of the price 
advantage gained by its Swed- 
ish rivals as a result of devalu- 
ation last year. 

In the IK, Mads has steadily 
strengthened its performance. 
Acquired to 1990, toe company 
returned to profitability to Feb- 
ruary and is benefiting from a 
vibrant market Total sales In 
the US of Class 8 trucks, which 
are more than 15 tonnes and 
comprise Mack’s principal 
products, should reach a 
record level of 220,000 this 
year. 

The turnaround at Mack is 


*We lost a big 
opportun i ty, but we 
remain confident,’ says a 
company spokesman 


not just the result of a buoyant 
market It also reflects the ben- 
efits of restructuring measures 
which have seen the workforce 
fall from 26,000 In 1987 to below 

6,000 today. Similarly, the 
number of employees in the 
company’s European 
operations has been reduced 
from about 35,000 to 20,000. 

The cost-cutting and effi- 
ciency gains are aimed at 
enabling the company to 
remain in profit through the 
next industry downturn. It is a 
tall order, which requires fur- 
ther progress towards econo- 
mies of scale to manufacturing 
and the reduction of develop- 
ment cast 

Renault VI sees the solution 
fa terms of on eZTOMlflll Of 
specific alliances, rather than a 
grand merger i la Volvo. “A 
big marriage would be very dif- 
ficult,'’ says a spokesman for 
the company, citing the lack of 
appropriate partners. Iveco, for 
example, the trucks division of 


Fiat, is seen as too similar. 
Both companies have a strong 
presence in southern European 
markets and a virtually identi- 
cal model range. 

Some steps towards more 
modest partnerships have 
already been tak«n In July, 
Renault concluded an agree- 
ment with Iveco, under which 
the two companies wH co-oper- 
ate to the manufacture and 
development of cabins. For 
Renault VI the deal concerns 
its 3 .5-tonne and 6-ttmne Mes- 
senger vehicles. With Volvo, a 
joint project to develop rear 
axles has survived the divorce. 

Renault VI also sees scope 
for production economies 
within toe group. In particular, 
there are plans to develop 
co-operation with Marie to toe 
development of motors and, 
possibly, suspension and brake 
systems. 

Are such measures mongh? 
For R«ng«U: VI, the response is 
positive. “We have no handi- 
cap linked to our size." says 
Shemaya Levy, who took over 
as chairman at th e beginning 
of the year. 

Officials at the company 
point to the progress made in 
improving profitability and the 
benefits of having a strong US 
presence. “The US market has 
now moved largely out of 
phase with the European mar- 
ket," says a company official. 
“So there is a compensating, 
anti-cyclical effect which 
smoothes earnings.” 

As for the prospect that Ren- 
ault VI could be spun off from 
the parent company or that 
Mack could be sold, the answer 

is clearly negative. "Mr 

Schweitzer has emphasised 
that Renault VI is a core ele- 
ment of the group’s business,” 
the company says. “Mack is an 

important element of our strat- 


- is r unning at an amnud- 
ised rate of 45,000 a year, an 
Increase of more than 60 per 
cent from fewer than 28*000 a 
year to the depth of the reces- 
sion to nrid-1993. 

Volvo’s share of the west 
European heavy track market 
has jumped to 1U per cent 
tins year from 12.1 per cent to 
the whole of 1993, and the 
company's track operations 
are operating at the limit of 
their capacity to Europe. 

It increased its deliveries of 
tracks by 38 per cent to the 
first tine months this year to 
49,400, and its order book for 
heavy and medium-heavy duty 
trucks at the end of September 
was nearly double the level of 


Volvo is already investing 
SKr390m to raise truck capac- 
ity from 45,000 a year to 

50.000 (excluding North Amer- 
ica) by July next year. The 
Volvo board Is expected to 
approve soon the investment 
of more than SKrlbn to raise 
capacity farther to between 

55.000 and 60,000 a year by 



uroetrouing oxeross mono nss dogti working on pesra to mcraoso rs snare or mo wono uuck manon 


a year 

The losses of 1992 and early 
1993 have been overcome 
thanks to a combination of 
tough restructuring and cost- 
catting and a strong recovery 
to demand. The trndk division 
has closed one truck plant and 
one has plant, has cot the 
work f orce by 19 per cent with 
the redaction of 4,700 jobs and 
has concentrated Its spare 
parts operations. 

Volvo claims that new prod- 
uct development processes 
that are being pot in place will 
cot lead times from the 60 
months for previous track pro- 
grammes to an grirmriiri 36 
months to t u t ore . 

In toe first 9 mont h s this 
year operating . profits for 
Volvo Track surged to 
SKr2.697bn from only 
SErlOSm in the corresponding 
period a year earlier. 


Volvo’s plan for e ntr y into 
tiie European fight track mar- 
ket will also be completed to 
coming months. It is expected 
to adopt a strategy of purchas- 
ing the main components such 
as engines, gearboxes and 
axles from outside suppliers, 
and negotiations on supply 
con tr acts are likely to begin in 
early 1995. Aimnai production 


The losses of 1992 and 
early 1993 have been 
overcome thanks to tough 
restructuring 


waiting for approval from Bei- 
jing. Production coold rise to 
ar o un d 20,000 a year over six 
to seven years and Volvo is 
“looking at the investment of 
MDions of kronor”. 

The group is also establish- 
ing a greater presence in east 
Europe with the establishment 
of a small volnme track 
assembly plant to Poland. The 
fadlity, which will he located 
fa Wroclaw, will have a capac- 
ity to assemble np to 1,000 
heavy and medium-dirty 


capacity is expected to total 
well to excess of 10,000 a year. 

According to Karl-Erling 
Trogen, president of Volvo 
Truck, Aria is Volvo's “num- 
ber one priority* in the geo- 
graphic expansion of its truck 
operations. It has launched a 
feasibility study with China 
National Heavy Track and 
Shandong A uto m oti ve for the 
establishment of joint ven- 
tures for toe production of 
tracks and components to 
Shandong province south-east 
of Beijing. 

Mr Trogen says that Volvo fa 


The decision to establish a 
wholly-owned plant follows 
toe failure of its collaboration 
plans with Jelcz, the Polish 
truck maker, which had begun 
to assemble Volvo trades tills 


The Swedish group is mov- 
ing equipment, tools and per- 
sonnel from the Jelcz facilities 
to Its hew .plant to Wroclaw, 
where it is planning to pro- 
duce more than 700 tracks In 
1995. K fa the leading importer 
of heavy-duty tracks to Poland 
and expects to deliver around 
550 this year. It has estab- 
lished a new mutating and 
finance company during 1994, 
and has a network of 10 deal- 
ers selling exclusively Volvo 
vehicles. 


. Volvo is also seeking to 
expand its track activities in 
North America -and is invest- 
ing fsoom fa the next five 
years to modernise Its . US 
heavy truck operations. It fa 
building a new cab assembly 
plant and a high-volume paint 
shop dose to its existing track 
assohhiy jOant at DubUn, Vir- 
ginia, with operations doe to 
begin in 1997. 

Volvo’s US heavy track oper- 
ation, Volvo GH Heavy Trade, 
fa owned 87 pa* cent by the 
Swedish group and 13 per cent 
by General Motors of toe US. 
It has rold its tracks hitherto 
under toe WhtteGMC brand 
name, bat this is to be 
replaced by the Volvo brand 
name, as new products are 
introduced. 

Production capadty at the 
Dublin track assembly plan* is 
to be increased by 20 per cent 
by the end of 1995 to 72 trucks 
a day from the present capac- 
ity of '60 a day. The fadfity fa 
bring developed as Volvo GM 
Heavy Track’s high -volume 
production operation to the 
USL - 

The cab assembly plant wfll 
have an initial capacity to pro- 
duce 70 cabs a day, bat this 
will be increased later to 110 a 
day, and the Dublin facility 


will ahwr supply cabs to Volvo 
Gars other track assembly 
plant at OrrvHIe, Ohio. 

The investment in the US 
prodnetkm fadUtin is part of 
toe ambitions modernisation 
of Volvo's heavy track range, 
which began last year with the 
launch of its mew FH soles of 
heavy trucks in Europe after a 
seven-year, SKr&5ba develop- 
ment programme. 

The group is planning for 
the first time to integrate its 
US-btrilt trucks with its Euro- 
pean-built products, and is 
aiming eventually to ach ieve 
as much as 30-40 pier cent com- 
monality of components, 
excluding the driveline of 
engine, gearbox, and axles. Hr 
Trogen nays. that. Volvo also 
plans to supply around 25 per 
cent of its US tracks wjth its 
own engines hi the next two to 
three yean compared with a 
current level of around 15 per 


Volvo GM Heavy Track is to 
fourth place in the US market 
with a share of around a 


(Freigh timer) with 24L2 per 
cent, and toe US produces* 
Paccar (22.3 per cent) and 
Navistar (1&9 per cent); ~ 


Kevin Done 


T he collapse of the UK’s 
truck market to 1990 was 
the worst since the sec- 
ond world war. Continental 
European markets suffered a 
similar collapse in 1992 and 
throughout last year. In these 
conditions, industry minnows 
such as ERF are not supposed 
to be able to survive the sav- 
age discounting and other mar- 
ket pr ess ures exerted by the 

ERF’S production peaked at 
A319 in the 1989 surge and sub- 
sequently fan to only half this 

level, from which it is still 


Profile: ERF 


sion and during nearly four 


Minnow bucks trend 


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Some Industry observers, 

however, remain guarded 
about the company’s post- 
Volvo prospects. “It is stOl an 
open question whether Renault 
is big enough to survive long 
term without some substantial 
partners," says a motor indus- 
try analyst at one Paris mer- 
chant bank. “Volvo was the 
ideal solution, in terms of prod- 
uct range and geographical 
spread and Renault wfll find it 
that much harder to find the 
financial resources to revamp 
its model range on its own.” 


John Ridding 


Yet once again ERF and its 
chairman, Peter Foden, have 
come striding relatively 
unscathed through the recess- 
ionary rubble, whereas the 
remains of much larger DAF 
have had to be resurrected 
from receivership and 
UK truck-maker, AWD, has 
fa llai s ubject to a takeover. 

ERF, the UK’s last publicly- 
quoted independent heavy 
truck maker, made a profit of 
£453,000, after interest pay- 
ments, in the second half of 
last year. This was not suffi- 
cient to offset a first-half loss 
and for the full year to April 2 
there were pre-tax losses of 
£26^000. However, this was still 
a significant improvement on 
the £U2m loss of 1992. 

“Margins are still pretty dif- 


ficult but volumes are now ris- 
ing and exports outside 
Europe, particularly to south 
and west Africa, are looking 
up,* according to Mr Foden. 
“We are now making 15-16 
trucks a week, compared with 
lWL at the start of the year.” 

The claimed break-even level 

fa 10-11 units a week 

"Five or 10 years ago, every- 
one was saying that by now 
ERF would have disappeared 
or became just part of a Mg 
group. It hasn't happened 
because I think we have a loyal 
UK market; the product has 
been well accepted after being 
standardised around the Cum- 
mins (engine), Eaton (trans- 
mission) and Rockwell (axle) 
drivelines; we have spent 
money on developing new 
products and other improve- 
ments throughout the reces- 
sion, and have a strong bal- 
ance sheet” 

There is an element, too, of 
“keeping your head down and 
being a bit stubborn", adds Mr 
Foden, a stocky figure with 
that blunt manner of speech 
popularly considered archetyp- 



P6*w Foden: keeping hb heed 
down nd being a bft stubborn 


ical of a northern entrepre- 
neur. The business has its 
headquarters in Sandbach. 
Cheshire. 

The production increase has 
meant that, after a long period 
of retrenchment which saw 
ERFs work force halved to 750, 
recruitment has begun a gam 

About 150 jobs have been 
added this year. 


With a slow but steady 
recovery continuing on the 
continent. Mr Foden expects 
production to rise further, to 
20-21 a week, over the next 
year or so. However, thi* 
would still be well below the 
30a-week single-shift; opacity 
which has been created 
through a re structurin g of 
operations for . greater effi - 
cienc y. Cab production, for 
e rample, fa now carried out at 
separate facilities to nearby 
Middlewich. ■* 

During the past two years 

ERF has made its first substan- 
tive efforts to establish a conti- 
nental European sales grtf i ser- 
vicing network, starting with 
France and Spam. It now has 
18 French and eight Spanish 
distributors, although the 
truck market recession in both 
countries has meant that sales 
have been slow and ERF has 
yet even to launch on the Con- 
tinent left-hand-drive versions 
of Its EC range, the develop- 
ment of which has accounted 
for the largest portion of a 
£14m investment programme 
kept up throughout the races- 


The EG trucks, covering the 
15 tonnss-plns market sectors 
in which company speci- 
alises, will be .launched .to 
Europe next year, acccmdihg.io 
Mr Foden. He that 

as ERF'S distrib uting • 
spreads throughout the . region, 
“there fa no reason why we 
should not capture around 2 
per cent of our sectors of the 
European truck market”. That 
would require extra p mrtwrHnn 
of around 1,500 trucks a year. ~ 

Tie next countries to 1 lio* 
are Portugal and th» Benelux 
states. 

ERF exports 15-20 per ceht df' 
its production by value. It has 
an assembly plant fa South 
Africa where the truck uerkst 
fa already benefiting from the 
post-apartheid “peace divi- 
dend” 

Despite an active leisure life 
which includes competing fa. 
his Aston Martin racing car,. 
Mr Foden says he has no -inten- 
tion of stepping back from the 
chairman and chief executive’s 
role in the foreseeable future. 

"My excitement and. satisfac- 
tion comes from bring fa the 
office and running the busi- 
b&ss — its much more fun than 
sitting on a bench fa. the sun 
all day.” 


John Griffiths 


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;.; fierce - competition in 
;,tBkirqpean bos manufacture is 
' ' Vkadtag to reorganisation and 
/■ i fxatfooalisattort As a result, the 
''■ . ’ ;. p»«fr l2 months have seen 
■ ' . , extensive Activity in this seo 
";•. tan The forecast, back in July, 
- •■ by Helmut Werner, president 
and ri itef executive officer of 
* "/ Mercedes-Benz AG that a 
• . r . rpaBgn ma nt in the bus market 
- 'iiras in prospect has since been 
proved correct, in fact, Mer- 
v ; -cedes has had a hand in it. 

. - 1 1 -; Subject to European Com- 
mission approval under its car- 
tel law, January 1. 1995, sees 
: the startup by Mercedes of a 
new company to control its bus 
and coach operations. This 
.move by the world leadin' in 
.\bus and coach manufacture is 
A arguably the most tfl g nj fl sgnt, 
■ of the actum plans of European 
vbus manufacturers to get their 
industry back on trade. 

In his July comment, Mr 
. Werner said that the market 
- tad become so small that ade- 
quote capacity utilisation was 
• no longer ensured tar all man- 
. ttfacturers. Anyone trying 1 to 
prevent the Introduction of 
measures designed to safe- 
guard the industry's future 
refused to acknowledge reality. 

. Mr Werner emphasised that 
Individual companies had for 
some time been unable to 
influence what was happening 
in this market The market’s 
development in the foreseeable 
' future and the competitive sit- 
uation could not be ignored. 

Mr Werner disclosed that the 
new company would consist of 
Mercedes-Benz's bus and coach 
activities in Mawnhrfm and its 


Buses; Eric Gibbins looks at the rationalisation taking place in the sector 

Mercedes move spurs market realignment 


operations in Turkey. It will 
also include K&ssbohrer, the 
family-owned bus and coach 
manufacturer, which had them 
just been acquired by Mer- 
cedes. Tbe dm , ha said, was to 
form a medium-sized company 
“to improve customer proxim- 
ity and efficiency in what is a 
difficult market”. 

The plan is for Kfissbohrer 
(with its production sites in 
Dim, Neu-Ulm and Ligny in 
France) and the Mannheim 
plant of Mercedes to constitute 
tbe industrial line of a futur e 
European bus company 

With traditional markets 
proving weak, the main 
bus manufacturers are 
looking east 

together with Mercedes-Benz 

TGrk, which also manufactures 
complete buses. 

Once, the new company is in 
place, buses are to be distrib- 
uted in a dual-trademark: strat- 
egy c-nmbining K3SSbohrer an d 
Mercedes-Benz, but keeping 
tbe K&ssbohrer trademark, 
Setra. 

A Call-out from the Mercedes/ 
KSssbohrer deal was the acqui- 
sition by Volvo Bos of KSss- 
bohrer’s Danish body-building 
subsidiary. Aabenraa Karosser- 


ifabrfk, which builds bus bod- 
ies in aluminium mainly on 
Volvo chassis. 

The difficult times experi- 
enced by the bus industry in 
Europe came to a bead towards 
the end of 1993 when the 
United Bus Group in Holland 
filed for creditor protection. 
The members of the group - 
DAF Bus, Den Oudsten and 
Bova in Holland, DAB in Den- 
mark, and Op tare in the UK - 
were all affected by this. How- 
ever, management teams at 
Den Oudsten, Bova and DAF 
Bus quickly made successful 
moves to buy out the Dutch 
companies with similar Danish 
and British teams moving in at 
DAB and Qptare. 

DAB'S stay with the manage- 
ment team was short-lived 
when Sweden’s Scania Bus 
Division acquired the Silke- 
borg-based company. Said 
Scania: “DAB will continue 
production of its current prod- 
uct range, which includes a 
low-floor bus and a flexible, 
somewhat smaller service bus. 
tong-term, Scania’s and DAB’S 
product ranges wiB be coordi- 
nated and replaced with a 
jointly-developed bus range.” 

The summer saw takeover 
Cover. Apart from the Kissbob- 
rer and DAB moves, Sweden’s 
Volvo announced its acquisi- 
tion of Drfrgmdller, the Ger- 


man quality coach body- 
builder, while Berkhof, the 
Dutch bodybuilder, announced 
the purchase of the bus and 
coach operations of Belgium's 
Joncfcheere Bus and Coach. 
Volvo was already using Drtig- 
mfiller to build bodies an Its 
latest coach for the German 
market - the 812/5000. This 
reflected a co-operative deal 
between Volvo and DrOgmfiller 
involving product development 
and the marketing of complete 
coaches. 

The reason given for the pur 
chase by Berkhof of Jonck- 
heere was'fhat the Jon ckheer e 
family, the existing share- 
holder, wanted to involve itself 
more in other Jonckheere com- 
panies. Berkhof pointed out 
that survival had been increas- 
ingly difficult for small bus 
construction companies. It pre- 
dicted more and more amal- 
gamations. As a result of the 
acquisition, the new group has 
a yearly production capacity of 
about LOOO large buses. 

The takeovers have meant 
the loss of some joint ventures. 
A notable casualty, for exam- 
ple, 1ms been the deal, struck 
just 12 months ago, between 
Iveco and Kfissbohrer to 
design, produce and sell new 
12m and 10m city bus and 
articulated bus ranges. These 
were to be introduced at 



At Maastricht, heed's EuroClass HO MgMaefcor won the 1985 Coach at 


Iveco’s Valley Ufite plant in 
Italy and at KSssbohrerts plant 
at Ligny in France. 

One Joint development pro- 
gramme that has survived is 
that between Volvo and Ren- 
ault at the Heuliez Bus com- 
pany in France in which both 
the Swedish and French com- 
panies each continue to hold a 
substantial (37.5 per cent) 
interest 

There are, too, some compa- 
nies that are beating the Euro- 
pean bus recession. The most 


notable concerns a British 
company, Dennis Specialist 
Vehicles of Guildford. This 
long-established bus builder 
(1995 is its centenary year) is 
recording record sales - more 
than L100 buses will be built 
this year (1994) and next year 
the target is 1,400. This does 
not include several hundred 
bus kits for export 
With traditional western 
European markets proving 
weak, the main bus manufac- 
turers have continued to look 


east. Scania has just 
announced that it has started 
co-operating with a Russian 
consortium to build bodies and 
market buses in Russia, using 
chassis from Sweden. RussS- 
can is the name of the com- 
pany involved. 

This Scania move followed 
an earlier agreement In Riga, 
Latvia, for Scania bus assem- 
bly by AutoSkan, Scania’s Lat- 
vian importer. This develop- 
ment occurred at the same 
time as a deal by Volvo Bus 


with a company called Sokol in 
Ekaterinburg (Sverdlovsk) to 
build some 300 Volvo-based 
buses a year in that locality. 

Another company to develop 
in eastern Europe is the Gor- 
man bus builder, Neoplan. A 
letter of intent was signed in 
the summer with Russian 
interests for Neoplan 15m 
buses to be built under licence 
and operated in Moscow. 

This joint venture involves 
Autobus Zil and the Moscow 
Committee for the Manage- 
ment of State Property. Buses 
will initially be built at Neo- 
plan's Pilsting plant in Ger- 
many by a team from ZiL Man- 
ufacture will later be shifted to 
Moscow, mainly using compo- 
nents supplied from Germany. 
The long-term aim b for ZU to 
build 1,000 Neoplan buses a 
year. 

Neoplan also started build- 
ing coaches in Hungary early 
m the year providing competi- 
tion for the main domestic 
manufacturer, Ikarus, which 
itself has been heavily 
Involved with western compo- 
nent manufacturers, including 

Detroit Diesel. Perkins, DAF 
components, and Cummins on 
the supply of engines. Renault 
VI is the latest to become 
active in this sector with the 
supply of power units to the 
LVOV bus plant in the 
Ukraine. 

Renault Vi’s biggest involve. 
raent in eastern Europe is in 
tbe Czech Republic where this 
year it has been integrating its 
product into vehicles of Czech 
bus maker, Karesa, which the 
French company partly owns. 




■* “ 


The liberalisation of the 
European road haulage indus- 
try has made great strides in 
recent years. Many of the bar- 
riers tn what was once one of 
tiie most highly regulated sec- 
_ tore have been sw ept away, 
i A progress report to the 
European Commission on the 
: deregulation programme pnb- 
- fished in Jnly conclniied that 
■ for the most pari the liberalis- 
ation process was producing 
benefits for the continent's 
economy. 

“Given the importance of 
road haulage to the success of 
the economy ... the sector 
most continue to operate in as 
compeiitive a manner as possi- 
ble," the 10-stnmg committee 
of inquiry said. 

Where problems had arisen, 
the committee noted, they 
were attributable to adverse 
economic conditions and the 
difficulties caused by the tran- 
toa freer transport -cli- 
mate. 

These condashnis came as a 
relief to organisations such as 
the UK's Freight Transport 
Association (FT A), represent- 
ing 12,000 companies which 
make use of road haulage as 
well as the hauliers them- 


crisis in road transport.’ 

But there has been 
able change in the shape of the 
industry. In countries where 
previously highly-controlled 
markets have been deregu- 
lated tbe number of hauliers 
has increased sharply. In 
France, the number of compa- 
nies rose by 28 per cent 
between deregulation in 1968 
and 1900 while in Ireland the 
number of operators quadru- 
pled in the seven years to 


Transport deregulation in the European Union: Charles Batchelor reports 

Many barriers swept away 


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“The report tended to con- 
firm that liberalisation was a 
good thing,” said Chris Welsh, 
tiie FFA’s Brussels representa- 
tive. “It confounded foe critics 
who were claiming there was a 


In countries with long-estab- 
lished liberal haulage regimes 
such as Belgium, the UK and 
Sweden the imwiiw of opera- 
tors has remained stable^ the 

For the most part the 
liberalisation process is 
producing benefits for the 
continent's economy 

progress report said. 

In all markets small busi- 
nesses continue to predomi- 
nate, though a relatively small 
number of- the most active 
operators usually accounts for 
a disproportionate market 
share. 

In the UK, for example, 10 
per cent of hauliers operate 60 
per cent of the vehicle fleet 
Two areas wore highlighted 
by tiie committee as being of 
particular concern, the need 
for “a framework of harmon- 


ised standards to ensure fair 
competition’' and a stricter 
enforcement of the standards 
which already exist. “Unau- 
thorised and illegal operations 
are a major distortion for the 
market and need to be 
addressed urgently,” the 
report said. 

The committee saw the 
gre a te st need for further har- 
monisation in the area of qual- 
ifications for entering the 
transport profession, taxes and 
other charges and working 
conditions. 

This struck a chord with the 
Road Haulage Association, 
representing 10,000 UK haul- 
iers. 

It has long taken the view 
that “the single European 
market in haulage was failing 
to adjust quickly enough and 
uniformly to the liberalisation 
enshrined 1 h the Treaty of 
Rome' 1 . 

The inquiry committee 
called far a study to be made 
of the training methods and 
professional examinations in 
use throughout the European 
Union. 

It called for the establish- 
ment of a muon-wide organisa- 


tion to see that standards were 
met Training should include 
subjects such as information 
technology, financial manage- 
ment and safety, it said. 

ft also called for a uniform 
standard to be set for the 
fiwanriai standing of haulage 
businesses. Present diverse 
levels in use throughout foe 
union should be increased 
until they reach a uniform 
standard, the c ommi tt e e said. 

This particular p roposal was 
less acceptable to organisa- 
tions such as the FTA in a UK 
climate where government has 
attempted to reduce the 
amount or red tape burdening 
business, 

“We are amcerned that peo- 
pie would pick up the negative 
points of the report which 
refer to access to the profes- 
sions,” said Mr Welsh. u We 
argue that we have adequate 
standards in Europe.” 

But time is strong British 
support for the idea of greater 
harmonisation on the level of 
charges imposed on transport 


many and Luxembourg will 
have to pay a £1,000 annual 
motorway tax per vehicle from 
next year. 

Although operators based in 
these countries will also have 
to pay these charges they are 
expected to receive a rebate on 
their vehicle excise duty to 
compensate. Rebates have 
already been agreed for Ger- 
man and Danish hauliers and 
are proposed in the other 
countries. 

There will be no correspond- 
ing charge made by other EU 
member countries although 
France, Spain and Italy 
already charge tolls on their 
motorways. 


The result will be that Brit- 
ish hauliers will pay for 
motorway use in most EU 
countries while non-UK opera- 
tors will have the free use of 
Britain's roads. 

On the subject of enforce- 
ment foe committee of inquiry 
called for urgent action. “Lack 
of enforcement ... is perhaps 
foe single greatest problem 
facing the [transport] sector,” 
it said. 

It called for tbe application 
of information technology to 
produce documents which are 
better protected against fraud 
and abuse; the sharing of 
information between different 
regulatory organisations and 


countries; and the more effi- 
cient monitoring of vehicle 
and container movements and 
drivers’ hours. 

On-board computers could 
be used to maintain both 
driver and vehicle records 
while, in future, roadside con- 
trols should be replaced with 
automatic roadside reading of 
on-board records. 

The committee also made a 
controversial appeal for foe 
Impounding of vehicles when 

There is strong support for 
greater harmonisation on 
charges imposed on 
transport businesses 

there had been a serious 
infringement of the regula- 
tions. Impounding is standard 
policy as a means of control- 
ling unauthorised parking in 
towns but it would be more 


problematic, and involve 
greater costs, if applied to 
international commercial 
vehicle movements. 

It also urged that shippers 
should be made jointly liable 
with hauliers for any infringe- 
ments of EU regulations. At 
present it is only In Ireland, 
Germany and Spain that ship- 
pers can be made liable if they 
employ unauthorised opera- 
tors. The committee called for 
this to be extended throughout 
the EU. 

Joint liability would also 
help to overcome the problem 
of legitimate hauliers who are 
picked up for carrying over- 
weight containers or hazard- 
ous goods. Tbe haulier usually 
does not know precisely what 
is in a sealed container awl is 
at tie mercy of an unscrupu- 
lous or unthinking shipper 
who may have loaded unau- 
thorised goods or changed foe 
details of tie shipment. 


Haulage operators travelling 
to or through Belgium, Den- 
mark, the Netherlands, Ger- 


Profile: IVECO 


Award marks a turning point 


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_ For Fiat Group’s Iveco commercial 
7 vehicles subsidiary, Maastricht is rather 
/. more than the quiet Dutch city where the 
. European Union treaty was signed 2 Vi 
.. years ago. Although much less attention 
7 was paid to the Maastricht Bus Show at 
foe end of October, it was nevertheless an 
’ important event for Iveco and for Europe’s 
otter bus and coacfamakers. 

At Maastricht, Iveco’s EuroClass HD 
highdecker won the 1995 Coach of foe 
; Year award. Glancario Boschettl, Iveco’s 
- managing director, said that the bus seo- 
" tor was a care business of strategic impor- 
tance to the company. 

In spite of difficult market conditions 
' over recent years, Iveco has continued to 
invest In the bus sector, developing new 
' vehicles and Us plant at Valle Ufita near 
Naples. The EuroClass HD, with its 
emphasis on safety, use of nan-corroding 
materials, low fuel consumption and con- 
formity to tight environmental standards, 

. is a result of Iveco’s commitment to the 
bus sector 

Winning the award in Maastricht aptly 
winds up a year which has been a turning 
point for the company. After a particularly 
bleak period, results are at last improving. 
Announcing its half-year figures at the 
end of September, Turin-based Fiat was 
able to point to Iveco's sales of 50,700 
units, 13.7 per cent up on the figures for 
January to June 1993. Revenues in lire 
were 17.6 per cent higher at L4,198bn. 

Managers are confident that tbe com- 
pany will break even this year. They 
describe this as an enormous turnround. 
This is an understatement given that 
Iveco, a Netheriands-registered company, 
recorded a loss of FL 592m ($339m) on 
sales of FL 8,437m last year. It was the 
second successive year of falling revenues 
and third successive year of losses. 

The company expected a difficult year, 
but it turned out to be wocse than antici- 
pated. Indeed. Iveco was making losses at 
operating level, before financial charges, 
during the first part of 1993. Cash flow for 
the year was negative. At the yearend net 
financial indebtedness increased to 
FT-ii ftism, approaching the level readied 
in December 1984 at the end of the previ- 
ous recession. 

It is a measure of the depths plumbed 
. last year that Iveco's net «■!« were only 
L6 per cent higher than those recorded in 
1984. white losses were 49.9 per cent 
higher. “The industry is feeling the effects 
erf a pan-European recession which has 
lasted longer and bitten more deeply than 


anyone ever anticipated,” tbe company 
commented in its report earlier this year. 

In its Italian home market, where more 
than one in two of new vehicles exceeding 
3.5 tonnes carries the Iveco badge and 
which absorbs more foam one third of the 
company's European sales, Iveco’s vol- 
umes fell by a quarter last year to 26,300 
units. The company suffered steep rtecHnes 
in France (down XEL5 per cent to 10,600 
units), Germany (down 1&8 per cent to 
13^200 units) and Spain (down 429 per cent 
to 5,100 unite). 

Only foe UK relieved an otherwise awful 
European situation. Iveco was able to ben- 
efit from the upturn in UK sake, beating 
the market’s 7E per cent improvement by 
increasing its volume by 22.4 per cent 
Sales of 9,000 unite earned the company a 
24J5 per cant share of foe UK market for 

Managers are confident that the 
company wffi break even this year. 

This witt be a big turnround 

commercial vehicles exceeding 3J> tonnes. 

Iveco’s management notes that foe com- 
pany was particularly affected by the 
recession because the market collapsed 
when its investment programme was mak- 
ing heaviest demands, to its 1993 report, 
foe company notes foot the old ranges 
have been phased out leading to “complete 
renewal of foe product range”. 

The EuroStar vehicles for long distance 
transport and EuroTrakker trucks for 
heavy duly quarry and construction site 
work were introduced last year. Earlier 
this year the EuroCargo range was jamed 
by 4x4 vehicles for off-road uses. Iveco's 
EuroCargo range Of medium and medium- 
heavy 6-tonne to 16-tonne vehicles, 
launched in 1991, won the Truck of the 
Year award for 1992. 

The company stamped its name on the 
European truck scene the following year 
when it won the award again, tbe first 
constructor to win tn successive years. On 
this occasion the award went to its Euro- 
Tech 16-tonne to 26torme medium-heavy 
to heavy range. 

Research and development expenses 
reflect the efforts to renew the model 
range. From 1988 to 1992, annual expendi- 
ture was between FL47Qm and FL56Qm. 
Last year, expenditure dropped to 
FLS6&X4 though the fall in sales meant 
that research and development's share of 
revenues continued to be above 4 per cent 


Investment in plant and equipment has 
also made significant demands on Iveco’s 
financial resources. When sales volumes 
and revenues peaked in 1989, the compa- 
ny’s gross new fixed investment was also 
peaking, the FLLOOQm representing 8 per 
cent of net sales. Investment continued to 
weigh heavily in the following three years, 
but fell to FL 352m flust over 4 per cent of 
net sales) last year. 

"The years of big spending designed to 
develop and to protect the business are 
behind us. The level of investment in fixed 
assets has been fatting steadily since 1991 
and has now been brought baric Into line 
with what was spent on average in the 
years between 1983 and IffiS," the emit 
pany noted earlier this year. 

Acquisitions are also a matter for the 
record rather than a strategy far the 
fixture. Iveco undertook some important 
acquisitions between 1986 and 1992, includ- 
ing Ford of Britain and Seddon Atkinson 
in tbe UK, and Enasa Fegaso in Spam. 
Company managers say that no acquisi- 
tions are in sight, either short or medium 
term, thpngh joint ventures are likely to 
be a pffiar for growth outside Europe. 

Parallel to its large investment pro- 
gramme, Iveco has been reorganising Its 
operations. Production costs have been cut 
and break-even points lowered. Payroll 
has been slashed. Iveco had 41,300 employ- 
ees on its books at year-end 1991; foe fig- 
ure was 33,700 at the end of last year and 
is stifi. faiKrig White-collar and managerial 
staff have been most affected, reorganisa- 
tion Wiwmtng their numbers from 16JOOO 
in 1989 to 10,000 last year. 

i^an and flexible are foe watchwords. 
Rationalisation of internal procedures has 
helped to reduce overheads, as well as 
pushing responsibility lower down the 
hierarchy and encouraging workforce par- 
ticipation. At the same Hme, the company 
has been examining how improvements to 
structures can help the customer. A new 
figure, the field engineer, has been cre- 
ated, giving customers a direct link to foe 
factory. 

Iveco believes that it is well placed to 
take advantage of foe economic upturn in 
Europe. The company is confident that its 
new models sat&y market demands, while 
efficient manufacturing systems allow 
tight control over production costs. Next 
year win not be easy, hot managers fore- 
cast that it will much better than 1994, and 
that Iveco will return to good profitability. 

David Lane 





The strength of Scania 


Scania 's operations are focused on heavy 
vehicles for goods and passenger transport. We 
develop, manufacture and market heavy trucks, 
buses and industrial and marine engines. 

Scania was founded in 1891, and is one of 

■ 

the most respected vehicle manufacturers in 
the world. The first Scania truck rolled off the 
production line in 1902. Since then, we have 
produced over 700,000 trucks and buses. 

Scania’s R & D centre and main manufac- 
turing plant is in SfidertSlje, Sweden. Wa also 
have factories in the Netherlands, 

Argentina and France. 


Scania employs some 19,000 people and has an 
annual turnover of over 22,000 million Swedish 
kronor. 

Approximately 30,000 vehicles are produced 
per year, 97% of which are sold outside Sweden. 

Our objective is to maintain a lead in quality, 

■ 

performance and environmental awareness whilst 
ensuring optimum haulage economy. 



S-181 87 SMarttfo Swcdwi 


« 









FINANCIAL TIMES FRIDAY DECEMBER 


l« 1994 



WORLD COMMERCIAL 


Regulation: John Griffiths discu sses implementation of the new rules 

High cost of new standards 


more titan a year after the European 
Commission’s Euro I roles curbinjf 
exhaust Donation by heavy goods vehicles, 
Europe’s truck makers are 
road to 

other problems of a Anther 

lation - the much stricter standards of 

^TteEuro 1 standards becan» mandatory 


particulates (the cause of diesel “soot"), 
down from 0*36. 

T&g pstrolemn industry Is alsn Wng 
obliged to play a part in reaching 
levels. Reaching the particulates target 
requires iowensulphur fuels. Thus, under 
an EU-set timetable, the 0.2-0.3 per cent 
sulphur content usual in diesel fuels will 
have dropped to a maximum of 0.05 per 
cent by the time Euro H is fully effective. 
To cater for the first stage of the Euro n 
standards by October 1, 1995, at least 25 
per cent of the diesel fuel available in EU 
member states must be below the 0.05 per 
cent ceiling. 


oc auiv * Ota**—.- - — _ 

on October 1 l ast yea r^Tfre Enro n 
dards, which require almnst a fialvmg of 
the Euro 1 emissions, come into effect on 
October l, 1 996, to r all trucks in prodno- 
Hm at that time, and a year earner for 
new designs of trucks. . - 

However, already 
the steady trickle of 
new truck designs 
for which manufac- 
turers have to obtain 
legislative .app r o v al 
- or homologation - 
are virtually all con- 
forming to Euro H 
The leading truck 
engine makers have, 
indeed, been increas- 
ingly launching Euro 
H-com pliant p ^ginpt 
for well over a year. 

The Industry has 
had relatively little 
technical difficulty 
meeting the Euro n 
standards, although 
the investment 
required in manufac- 
turing and design Maafcfcig out the fumes; manufacturers am already conforming to tighter nries curbing exhaust 

changes has been pollution which some Mo effect on October f, 1996 
substantial 

Towards the end of the decade, theoreti- 



The problem has been one not so much 
of technical difficulty as cf time," says 
Rem Armstrong, product marketing man- 
ager of Iveco-Ford. 

More recent engines have been designed 
fr om the start to meet the Euro n stan- 
dards, he points out. But other engines, 
designed earlier but which require further 
use to be financially viable, are nee din g 
more work to upgrade them to the stan- 
dards. Even so, he estimates that his own 
company's ranges will be progressively 
brought up to Euro n levels by next 
spring. 

The cost of compliance for each range 
can vary considerably, from a few pounds 
for modifying injector holes on recent 
units to up to £1,000 on complicated inter- 
cooled and turbocharged engines. 

In terms of costs to manufacturers, Mr 
Armstrong estimates that Iveoo-Ford has 
spent some £lbn over its half-a-dozen 
pn grrnp ranges. 

The standards, which apply to all 
engines above 150 kilowatts (brake horse- 
power) require a more than halving of 
carbon monoxide emissions to 4 grammes 
per k w (from 9 i n Euro I), to LI grammes/ 
kw of hydrocarbons (from L7), 7 grammes 
of nitrogen oxides (from 1X5) and 015 of 


cally in 1999, yet another tightening - 
Euro in - will be introduced, alt houg h EU 
member states have not readied sufficient 
of a consensus on what they should be for 
the European Commission to be able to 
publish a draft directive. 

However, Mr Armstrong says he thinks 
it likely that they win closely resemble 
proposals drawn up by Germany. 

These call for carbon monoxide levels to 
be cut to 2.0-2£ grammes, hydrocarbons to 
O.fHJ.77 grammes, nitrogen oxides to 4.7-5 
grammes and particulates to 0.1 grammes. 

If adopted these would represent a much 
stiffer technological challenge to the 
industry, particularly since the test driv- 
ing cycle - a simulated “typical" route - is 
also to be changed to rrflect modem traffic 
conditions. 

The c urr e n t EU test cycle is a much-crit- 
icised slow speed one, still not reflecting 
that 80 per cent of the EtTs goods are 
moved by truck across ever-longer dis- 
tances along high-speed motorways. 

Even so, companies such as Iveco, Volvo 
and Ley land DAF do not doubt the indus- 
try’s ability to meet them - and hope they 
will he able to do so without having to 
resort to some technologies in which they 


do not wish to become involved. Notable 
among these is the particulate trap - to 
collect the soot-forming particles in a 
chamber off a more complex exhaust sys- 
tem, in order to bum them off when the 
vehicle Is not in use. 

They hope, but are by no means certain, 
that they will be able to meet even the 
Euro in standards with farther refinement 
- mainly through irxxreased electronic con- 
trol - of high-pressure find injection and 
other engine management systems. For 
example, instantaneous adjustments can 
be made to fuelling quantity and timing in 
pflhh injector, under the control of a cen- 
tral computer taking 
readings from vari- 
ous sensors around 
the Exhaust 

gas recirculation 
(EGG), or passing 
exhaust gas back 
through the engine 
again for more cent 
plete combustion, is 
also likely. 

That presumes 
that the final Euro 
m standards are not 
significantly tighter 
than the German 
proposals - “the Ger- 
man proposals are 
about the limit 
before going down 
these other routes,” 
says Mr Armstrong. 

Development of 
Euro Hi-compliant 
on gin pc is well under 
way - not least because manufacturers 
think it likely that some countries may 
bring in financial incentives for operators 
to buy these “cleaner" trucks in 1998 or 
earlier. 

Thus there Is likely to be a repeat of the 
Euro n scenario, in which companies such 
as Iveco-Ford with Its Eurostar truck 
range and Volvo with its latest FH ranges, 
launched Euro Il-compliant trucks well in 
advance of the formal introduction of new 
ami «atinns s tandar ds. 

The other main area of legislation, 
noise, is proving rather mere problemati- 
cal. 

Another EU directive is to go into effect 
on October 1 next year requiring a truck 
to emit a ™dmnm cf 80 decibels, mea- 
sured by roadside microphones, when 
travelling at 50 kilometres per hour. The 
current rnaTimnm is 84 decibels, and 
although the reduction may not appear to 
be much, this is around a halving of per- 
ceived noise. 

To meet the standards manufacturers 
are seeking a number of remedies, such as 
sound-deadening body panels, partial 
encapsulation of the engine and, as Mr 
Armstrong puts it, “exhaust systems like 
small dustbins". 



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Enterprise* LftL Rggetao* Ollkc Mwnbg Soah—fc Britfro I rmOon SEI9HL 

Rcpflcrvd in *096 



3T*>VH UV f 


assembfinq an average of 1 S7 heavy-duty tracks a dqy 


America, 


Good times roll on and on 


The North American heavy 
truck industry is enjoying the 
biggest boom in its history, 
with 1994 production headed 
toward a record 905,000 muts, 
and new order backlogs so 
vast that tiie good times for 
track assemblers should roll 
straight into September 199 5. 

Exp e r ts say tiie industry is 
enjoying tiie peak of its cycle, 
with orders, tempered by ris- 
ing interest rates, expected to 
taper off about 10 per emit 
sect year, and another 15 to 
20 per cent in 1996. 

In the meantime, truck mak- 
ers and their suppliers are 
struggling to meet demand. 
This is the sixth cuiaw-utlre 
quarter that North American 
class 8 trade producers, led by 
Freightliner and Navistar, 
have operated at or above full 
capacity. 

AftfamgTi the cyclical recov- 
ery had been widely predicted, 
the eatent of the surge caught 
producers by surprise, result- 
ing in some production bottle- 
necks and a scramble by the 
leading truck makers to repo- 
sition production and labour 
to make the best possible use 
of available reso u rce s . Navis- 
tar, .for example, added more 
than 600 workers this spring 
to meet demand, despite a 
long-term campaign to trim 
labour costs. 

Host factories are working 
round the dock, and compa- 
nies that make a variety of 
track lines are retooling to 
place heavy truck manufactur- 
ing at their highest-capacity 
plants. Stiff, component short- 
ages continue to restrain out- 
put, pushing production sched- 
ules to meet order backlogs, 
currently above 100,000 units, 
deep into 1995. 

Hie situation is the first test 
of the American industry since 


the rigorous rationalisation in 
the mid-1980s. At that time, 
when demand was in a trough. 
North American trade produc- 
tion consolidated, with subse- 
quent capacity reductions by 
trackmakers and their suppli- 
ers. Freightliner was pur- 
chased by Daimler-Benz dur- 
ing that period, while Hack 
Tracks became a property of 
Renault. International Har- 
vester became Navistar, and 
sold off more than half of its 


Since track makers are 


worked hard to balance their 
businesses, with cyclical 
industries representing less 
than half of their sales.” 

Stark’s Off-Highway Ledger, 
a Chicago-based newsletter 
that tracks the track industry, 
reports North American 
heavy-duty track makers are 
operating at 109 pm* emit of 
availa ble capacity in the 
fourth quarter, manufacturing 
an average of 842 tracks a day. 
That compares with 7 48 trucks 
a day in the fo urth quarter 
last year. 


up 28 par. cent this year at 


North A m er ican heavy-duty truck assemMy 


Navistar 
Mack 
Ke nw ort h 
Volvo GM 
Fold 


38,270 

29,500 

18,790 

18,520 

17,875 

13,745 

13,225 


30,765 

27,150 

14£90 

17,525 

14*855 

12,420 

11,915 


24 A 
a.7 
28.8 
5.7 
isb 
107 
11 .0 


Navistar’s sales are also 
surging, at $5J3bn, but high 
operating costs limited 1994 
nk Income to jurt 582m. ■ 

David Healy, ah auto aM. 
autoparts analyst with SO 
Warburg in New Turk, -say* 
the heavy trade boon has Mt 
with such gusto for more rea- 
sons than a prolonged period' 
of low interest rates a nd 
pent-up demand. “Truck traf- 
fic is very strong, and fleets of 
existing trucks are ageing," he 
says, “but even newer trocks- 
are being replaced. There has 
been such engine innovation 
recently, tn terms of environ- 
mental considerations and 
from the standpoint of fuel 
use, that ft makes tt smart to 
replace to get lower operating 


Total 


149,728 




com- 
panies that assemble compo- 
nents made by outside suppli- 
ers, the fates and capacities of 
truck and component manu- 
facturers are closely linked. 
Some of the biggest winners in 
the gold rush are engine mak- 
ers such as Cummins and Cat- 
erpillar and other leading 
track compponent makers 
such as Rockwell and Eaton. 

Ironically, even with the 
industry at an historic peak, 
investors are not bidding up 
truck industry shares, “Most 
of these c o m p a ni es are heavily 
discounted because of their 
cyclical nature, whether they 
deserve it or not," one analyst 
said. 

"Many com panies, inriirflitg 
Cummins Engine, have 


Of that total, the newsletter 
says Freightliner is assem- 
bling 214 units a day and oper- 
ating at 129 pea: cent of capac- 
ity, and Navistar, under its 
International brand. Is making 
170 trucks a day with capacity 
at a strained 148 per cent. 
Mack, tiie tinrd4argest North 
American heavy track maker 
is assembling 118 tracks a day 
and is operating at 107 per 
cent of capacity. 

Seattle-based Paccar, which 
owns Kenworth and Peter- 
built, is North America's other 
big heavy track producer. 
Combined, Paccar’s companies 
are a«gmhHng an average of 
157 heavy-duty tracks a day 
this quarter. 

Industry leader FreigfatH- 
ner*s sales are projected to be 


He says that Jn*Mn-tin» 
inventory, procedures a dopted 
by a vast nmnher of US compa- 
nies over the past decade have 
also boosted track traffic. “It 
seems tint what need to be 
kept.fo. the warehouse is now 
kept rolling on tracks,” "he 


In tact, the volume of heavy 
trade antes serves as a lead- 
ing economic indicator -for 
some analysts. "Track vol- 
umes precede the economy by 
three to six months,” says 
John. Stork, editor of the Off- 
highway Ledger. “Since heavy 
trucks carry volumes of goods 
from one part of the country 
to another, they rrileet early 
changes fo the economy.” 

Truck company executives 
fear that if the US tightens 
interest rates any further, it 
will lead to a flood of order 
cancellations late this year. 
However, to date there has 
been little sign of order slow- 
downs. 


Profile: NAVISTAR 


Barely making a go of it 


While most North American 
heavy track manufacturers are 
hauling away big profits this 
year, enjoying the biggest pro- 
duction surge in the industry's 
history, Chicago-based Navis- 
tar is barely nwWng a go of ft, 
with its truck anti engine-mak- 
ing operations still mired 
under burdensome operating 
costs. 

Once carrying the world- 
class nameplate of Interna- 
tional Harvester, the company 
changed its name to N a vistar 
when the Harvester logo and 
its agricultural equipment 
operations were sold to the Ji. 
Case division of Tenneco in 
1985 as part of a debt-reducing 
restructuring. 

While stiff North America’s 
top producer of medium 
trucks, and the number two 
producer of heavy tracks and 
diesel engines. Navistar, one of 
the few independent truck 
makers left in America, has 
teetered so long an the brink of 
solvency that securities ana- 
lysts still rate the company as 
a highly speculative invest- 

ynwif , 

With its factories operati n g 
at nearly iff) per cent of capac- 
ity this year, the co mp any had 
net income of $82m on sales of 
$5.3bn. This puny return on 
sales is an improvement over 
1993’s loss of $501 hl However, 
it pales next to industry com- 
petitors such as Freightliner, 
which will earn twice the 
amount that Navistar will earn 
this year on a fraction of the 
sales. 

The sale of the International 
Harvester agricultural machin- 
ery division a decade ago 
turned into an expensive 
long-term disaster for Navistar, 
which retained pension and 
healthcare obligations for 
those who retired from the 
spun-off unit. 

At one point Navistar was 


supporting three retired per- 
sons far each one of its active 
workers. 

James Cotting, Navistar’ s 
chief executive, has spent his 
15-year tenure at the company 
keeping bankruptcy at bay, 
gradually reducing $4bn in 
debt and last year landfag a 
union agreement that allows 
the company to swap anmp of 
its pension obligations for 
equity. 

The deal, which, was credited 
with salvaging the company's 


year’s peak, and experience an 
even bigger decline in 1996. 
“He has about cue year to plan 
for the cyclical dow n t ur n," Mr 
Start says. 

He suggests Mr Horae will 
search for a “white knight" to 
save the company from 
another crisis, although, he 
says, “they stiff have such a 
heavy debt load that few peo- 
ple will be interested. He may 
be forced to go it alone.” Mr 
Horae declined to taffy about 
his plans for the company. 


tar’s medium track line. 

Many of Navistar’s troubles 
stem from having to service 
debt far above industry aver 


The sale of the International Harvester 
agricultural machinery division was an 
expensive long-term disaster for Navistar 


future, tripled the number of 
Navistar shares outstanding, a 
dilution that dulled any bud- 
ding enthusiasm for the com- 
pany on Wall Street 

With business conditions 
strong; and the hnwiariiyto erf. 
sis past, Mr C o t tin g amunwx^d 

in October that he would be 

handing the baton over to 
John Horne, currently Navis- 
tar’s president, in March. A 
Efe-long Navistar employee, Mr 
Home is an engineer by train- 
ing and is steeped fo Navistar's 
operating side, in contrast to 
Mr Clotting’s financial focus 
an r! background. 

Mr Horne will be charged 
with managing a high-cost pro- 
ducer in an industry faring m 
imminent downturn, says John 
Stark, the editor of the Chica- 
go-based Off-Highway Ledger 
and a veteran observer of the 
US track industry. The ques- 
tion cf the moment is how he 
is going to cope with the drop 
in d eman d for Navistar's prod- 
ucts that will begin neat year." 

The general outlook ia for US 
heavy truck demand to drop 
off 10 per cent in 1995 from this 


Although most cyclical busi- 
nesses bank profits in a highly 
profitable year to cushion the 
lean times, Navistar, uniilrw its 
competitors, is not malting 
extraordinary profits this year, 
and so has less to take to the 
bank. 

This will hurt doubly no^ 
year, as Ford introduces Its 
new line of heavy trucks, and 
other competitors larmrb new 
products to challenge Navis- 


In an effort to cut costs, the 
company for the past three 
years has focused on negotia- 
ting lower-cost single-supplier 
agreements for its heavy truck 
components. 

fo a fiat or declfofog market, 
being tied to o p s supplier fan 
be economical. 

However, in Highly profitable 
times, having a single. supplier 
for critical components can 
lead to shortages and 1 produc- 
tion bottlenecks, both prob- 
lems suffered by Navistar this 
year. 

The single-supplier problem 
is less noticeable at Navistar's 
diesel engine production 
operations, where Mr Horae 
has moulded the most success- 
ful of the company’s divisions. 

Lack of capital has also 
blocked the company’s obvious 
need. to diversify to temper the 
cyclical effects of its business, 
Slid has forced tie company, to - 
defer much-needed manufac- 
turing improvements. 

Laurie Morse 


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££*#*•**%•. tun ^ 

" l i 




WORLD COMMERCIAL VEHICLES 5 


Patrick 


Potential for growth is huge 


Sharp growth in Brazil’s 
ccamoerdal vehicle market is 
jRttlltag higher production 
while locally-based manufac- 
turers are increasingly inn^ing 


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(Argentina, Brazil, Paraguay 
and Uruguay) for econonnesof 

scale. ’ 

But manufacturers are wor- 
ried about growing imports, 
particularly in light commer- 
cial vehicles, and despite 
impressive productivity gafoq 
In recent years local producers 
stifl lag behind foreign compet 

T a 1 1— i- 

itOTB- 

-Production of light commer- 
cial vehicles is expected to 
reach 253,000 units this year, 
up 13 per cent an 1993. Heavy 
vehicle production is likely to 
increase by 31 per cent to 
SUM) units. 

And the potential for future 
growth in the market is huge, 

say vehicle makers, pointing to 
Brazil’s 157m population, its 
important fa nnin g *mt\ indus- 
trial sector and a land area 
roughly the same size as the 
United States excluding 
Alaska. 

Rolf Eckrodt, president of 
Mercedes-Benz do Brasil, is 
optimistic about the long-term 
potential: “The lorry fleet is 
old. about 12 years on average, 
and needs replacing. At the 
same time there is enormous 
scope for economic develop- 
ment spurring demand. For 
instance, only 9 per cent of 
roads are asphalted so far.'’ 

Much of the short-term 
potential, however, will proba- 
bly depend an whether Brazfl’s 
economic stabilisation can be 
maintained. A new real cur- 


•• • • * * Missis 








*■ v. . ¥ # .. + 

x.Vah/. * - 

fdmb * t ? 1 ■■ v 

- 



■..." fr^Vbfcawagw l - : 

=□ 


Ford 


Total [*0019 


rency, introduced in July and 
linked to the country’s interna- 
tional reserves, has brought 
down monthl y inflation from 

50 per cent in June to about 3 

per cent in November. 

But to consolidate the new 
currency’s future. President 
Fernando Henrique Cardoso 
will have to negotiate tough 

The market has been 
helped by increasing 


economic reforms with Con- 
gress socm after taking office 
on January l. 

The growth in Brazil's com- 
mercial vehicle m^rViet is part 
of a booming domestic vehicle 
market Last year production 
was L39m units, up 29 per cent 
on the year before. This year 
production is expected to 
approach XGm. 


The increase has been 
sparked by agreements 

between the gover nm ent, com- 
panies and unions which have 
reduced taxes, increased pro- 
ductivity and limited wage 
demands. The agreements were 
aimed at making 1 Brazil’s 
motor industry more competi- 
tive after former president 
Fernando Conor began to open 
the economy to imports in 

1990. 

As well as the se agreements, 
the onmtnffrriql vehicle iraHrri- 

has been helped this year by 
increamng business confidence 
following the new currency 
launch and by the development 
of leasing financing for compa- 
nies. The proportion of heavy 
commercial vehicles bought 
through leasing contracts has 
inc r eased to about 40 per cent 
this year from 9 per cent in 

1991. 

“Today inflation is under 
control, there is a strong cur- 


rency and these is much more 
confidence among companies." 
says TJdo Kruse, president of 
Ford's Brazilian subsidiary. 

He says a "snowball effect" 


is e mergin g among companies 
seeking to renew their often 
aged transport fleets. “In April, 
we sold 660 lorries to Pepsi and 
soon after that Coca-Cola and 
Brahma, a local soft drinks 
manufacturer, began to make 
inquiries." 

The beneficiaries of this 
growing demand have been the 
mam locally-based manufactur- 
ers - Volkswagen. Flat. Gen- 
eral Motors, Ford and Merced- 
es-Benz - which have been 
improving productivity and 
quality to respond to growing 
competition, from imports. 

Since 1990, productivity 
gains have averaged 17 per 
cent a year, half the gains has 
been due to higher volumes 
and the rest to restruc turi ng, 
according to a report by con- 


sultants Boo&ABen earlier this 
year. Vehicle defects have 
fatten by 50 per cent during the 
same period. 

Productivity measures have 
led to job cuts In some compa- 
nies. Mercedes-Benz has 
reduced its workforce from 
20,000 to 1S.000 in the past two 
years, while increasing produc- 
tion to 40,000 from 34.000 
vehicles, says Mr Eckrodt 

Be adds that the company is 
attempting to increase radi- 
cally the contracting out of 
work. Today, the company is 
highly vertically integrated 
and is malting 58 per cent of 
the value of the vehicle in 
house. In fixture, it plans to 
purchase much more from out- 
side suppliers reducing the 
level of in-house work to 35 per 
cent 

Manufacturers know they 
must continue to increase effi- 
ciency if they are to compete 
with imports, which have been 
increasing since impart duties 
were lowered under Collar and 
speeded up following the 15-18 

Manufacturers know they 
must increase efficiency 
to compete with imports 

per cent appreciation of the 
real this year. The government 
recently cut tariffs again, from 
35 to 20 per emit, after frustra- 
tions at local manufacturers’ 
inability to supply domestic 
demand, which the govern- 
ment feared would pressure 
inflation. 

According to Volkswagen 
spokesman Alberto Boas chi 



L-Jr ‘ ’ 

VoBawagen LSQc on oourse for export from Brad to Europe 


imports of light vehicles will 
jump to 60,000, 25 per cent of 
the market, next year com- 
pared to 32,000 vehicles, 16 per 
emit of the market, this year 
and 11,000 vehicles in 1993. 

While Brazilian productivity 
is on a par with Mexico’s, at 48 
hours per vehicle, it is well 
behind Europe, at 36 hours, 
and Japan, 16 hours, says 
Ford's Mr Kruse. Even after 
taking into account Brazil’s 
lower labour costs, productiv- 
ity is still 10 per cent below 
Europe's, according to the 
Booz-AQen study. 

Manufacturers complain that 
even after tax reductions con- 
ceded by the government in 
the motor industry agree- 
ments, taxes and non- salary 
costs are still much higher 
than international levels. 

Companies say the transition 
from a closed protectionist 
market to a highly competitive 
one has been too rapid. "We 


need a reasonable time to 
become world class on quality 
and productivity, *’ says Mr 
Kruse. 

Part of the manufacturers' 
productivity strategy is based 
around the Mercosur free-trade 
area, which companies agree 
will be a crucial motor for 
growth. The Mercosur, com- 
posed of Brazil, Argentina, 
Uruguay and Paraguay and 
with 192m people and a com- 
bined output of $642tm, starts 
up on January 1, 1995. The 
member governments are still 
negotiating an agreement for 
the motor industry but the pro- 
cess of standardisation and 
integration of production 
between multinationals’ plants 
an both sides of the border has 
already begun. 

Mercedes’ plants in Sao 
Paulo, the company’s biggest 
commercial vehicle producers 
outside Germany, exported 
$260m in vehicles and ports to 


Mercosur, mainly Argentina, 
last year, nearly half its total 
exports. Imports from Merco- 
sur totalled around SlOOm. 

The company is planning a 
transporter vehicles plant for 
Argentina, making commercial 
vehicles below six tonnes, and 
production of transmission 
systems was moved to Argen- 
tina several years ago. The 
future strategy will be for Bra- 
zil to focus on trucks and 
Argentina on transporter 
vehicles. 

"The most important thing 
will be the weight that Merco- 
sur carries with other trading 
blocs," says Mercedes’ Mr Eck- 
rodt, who believes integration 
with other countries such as 
Chile, and with other blocs 
such as the North American 
Free Trade Agreement (Nafta), 
is inevitable: “The long-term 
outcome will be a Panamerican 
market including the US and 
the whole of Latin America.” 


J 




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China and the 


Rim: Pat Kennett reports 


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A number of countries in Asia 
and the Pacific Rim are seek- 
ing to develop motor indus- 
tries, and wmiTnerdai vehicles 
feature high on their priftritfas- 
Many nations have turned to 
the west - especially Europe - 
to find partners to help them 
develop their industrial pro- 
grammes. 

China, the world's largest 
potential market for industrial 
products, including commer- 
cial vehicles, is leaning heavily 
on Europe to develop trans- 
port-related industries. In 1964, 
Beriiet signed an agreement to 
bufld heavy trucks in China, 
on a progressive technology- 
transfer basis. That design 
remains in production as the 
Varan heavy six-wheel truck. 

In 1984, the Austrian com- 
pany, Steyr, now part of the 
MAN group, negotiated an 
agreement to build heavy 
trucks and diesel engines, ini- 
tially CKD, tart with increasing 
local content Today, local con- 
tent is just over 80 per cent, 
and the agreement has so far 
produced almost 10,000 trucks 
over 16 tonnes gvw, and more 
than 5,000 engines for other 
purposes. Its success means 
that further development 
beyond 1998 is under review in 
theeighth five-year plan. 

A similar agreement by Iveco 
in 1968 to bufld a modified ver- 
sion of the "Daily”, a vehicle 
family in the 35 to six-tonne 
dess, is in full production By 
late 1994, 65 per cent local con- 
tent was achieved. 

Numerous components com- 
panies are manufacturing in 
nMna on a joint-venture, tech- 
nology-transfer basis, includ- 
ing ZF and Eaton, Bosch, Cum- 
mins. Lucas and Rockwell. It is 
accepted that negotiations with 
the Chinese industry agencies 
cannot be hurried. Steyr’s 
agreement required six years 
af negotiations. That does not 
dissuade others from trying 
and the Chinese agencies 
remain keen to develop their 
aeavy vehicle industry. 

In October 1994, Volvo signed 
i letter of intent with China 
Sational Heavy truck Corpora- 
don (CNHTC) to establish a 
otat venture company to man- 
heavy tracks. So far, 
dates or investment levels 
ve been defined, but Volvo 
frock's president Kari-Erting 
frogen, has declared that the 
Srinrae project is "an integral 
art of an aggressive expan- 
. Son programme in Asia". 

For many years Mereedes- 
lenz has operated a modest 
oint venture In Mongolia 
ailed Norinco producing dies- 
is and axles fix' incorporation 
nto other vehicles, but is now 
negotiating with CNHTC to 
pgrade this to full technology- 
ransfer heavy vehicle manu- 


facturing. Construction of new 
manufacturing facilities was 
completed during 1994, and a 
new heavy track is expected to 
roll off tiie production soon. A 
letter of intent aimed at a joint 
venture with Tangzhou Motor 
Coach Manufacturing aims at 
building up to 6,000 complete 
units a year plus a similar 
number of chassis for local 
body-builders to complete. 

While the spotlight tends to 
fall on China, a great deal of 
activity is evident in countries 
throughout the region. 

(hie of the catalysts far tins 
upsurge in business is the 
development of oil and natural 
gas resources, in China. Indon- 
esia and Malaysia in particu- 
lar. For the first time, economi- 
cal operation of large fleets has 
become feasible. Some esti- 
mates put China’s bus require- 

Negotiations vrith the 
Chinese authorities 
cannot be hurried 


ment at 30,000 units a year 
early in the next century. 
Rapid industrial expansion in 
Korea. Malaysia, Taiwan. Viet- 
nam and Indonesia demands 
high levels of technology 
input, and hero, too, European 
companies are leading the way. 

Iveco established a joint ven- 
ture in Vietnam to build medi- 
um-weight trucks and buses, 
early this year, and that proj- 
ect is now nearly ready to pro- 
duce the first vehicles. . MAN 
is exploiting considerable 
expertise in the use of CNG 
(compressed natural gas) to 
power buses, and city trucks. It 
Is providing substantial num- 
bers of buses to Malaysia and 
Indonesia, and Is negotiating 
an agreement for a joint ven- 
ture, to supply several coun- 
tries in the region. 

Recognising the difficulties 
of China, Scania is developing 
a multi-location strategy, and 
in 1993 sold more than L3QQ 
heavy-duty trucks in the 
region with L800 expected this 
year. Scania has bases in 
South. Korea, Hang Kaos, and 
Thailand, with independent 
importers in more than a 
dozen territories. The principal 
products are heavy tractive 
units to haul containers and 
bulk tanks. Bus business began 
in 1993, and more than 50 units 
were sold in Malaysia in 1994. 

Mercedes-Benz has become 
very active in the region, fol- 
lowing the success of its deal 
with Ssasgyong Motor in 
South Korea, which provides 
engines and technology far 
cars and light commercial 
vehicles. A new agreement 
suggests 50,000 units a year 
being produced by 1996. 


In mid-1994, Mercedes’ Indo- 
nesian partner, German Motor 
Manufacturing (GMM), began 
producing a track range in the 
6 to 8-tanne gvw class, and a 
bus version will follow in 1995. 
This range, called MB700, is 
intended to supply neighbour- 
ing territories as well as Indon- 
esia, and represents a joint 
investment of US$42m. Mer- 
cedes has joint or independent 
partners in 15 territories in the 
Asian region and opened a cenr 
fral parts store in Singapore in 
1991 to support than. 

India has became an impor- 
tant international atonunt fa 
the past year, following a 
decade of quietly developing its 
internal markets. Following 
the acquisition fay Iveco of a 
substantial holding in Ashctk 
Leyland in 1992, and rapid 
development of tracks and 
buses for Asian and African 
markets, Mercedes-Benz has 
renewed its interest in India. 
The vehicle operation of the 
huge Telco conglomerate (Ibta 
Engineering & Locomotive Co) 
was once a joint venture with 
Mercedes, but wholly 

independent in the 1970s. Now 
Mercedes has established a 
new agreement with Telco. 
While this agreement covers 
passenger cars principally, it is 
acknowledged that Mercedes 
technology will help to develop 
Tata commercials, too. In 
recent years. Tata tracks and 
buses have been successful in 
soiuth-east Asia and Africa, ttae 
to ragged dependability and 
ease of maintenance. 

Much the same can be said 
of Ashok Leyland which, as 
well as older Ley land-based 
designs, recently added a sim- 
plified version of the Ford 
Cargo far domestic and export 
markets. Between thwn , Ashok 
and Telco are building more 
than 70,000 tracks and buses a 
year over 5 gvw, and 

about twice that number to the 
lighter sectors. Telco is already 
exporting light commercial 
vehicles to France and the UK, 

and has an agreement with 
Cummins to maaurfact urB d fe * 
sel engines. 

Why is there so much, 
co-operation between Asia and 
Europe, rather than Japan? 
The main attraction is that 
European companies are more 
w filing to engage in fall tech- 
nology-transfer than the Japa- 
nese c ommer cial vehicle mak- 
ers. Another reason is that 
Japanese domestic restrictions 
on heavy vehicles mean that 
European makers have more 
expertise to offer. Conse- 
quently, India. Indonesia, 
China. Vietnam, Thiwan. South 
Korea and others see them- 
selves as genuine international 
vehicle producers in the 
future. 


A fter four years of faffing 
sales, Japan's commer- 
cial vehicle market is 
enjoying improved sales as 
Japan's economy recovers- In 
addition, stfffer emissions 
requirements are forcing the 
retirement of older tracks, and 
new draconian penalties for 
overloading are forcing trans- 
port firms to trade np to larger 
tracks 

Coupled with the benefits of 
streamlining efforts by pro- 
ducers, Japan's commercial 
vehicle industry is poised to 
see its most profitable year 
since 1990. 

The Japan Automobile Deal- 
ers Association recently 
reported that unit sales of 
trucks in October were up 8 
per cent over the same month 
a year ago, and unit sales of 
profitable large tracks jumped 
31.4 per cent to 11,178 
vehicles. 

ft was the sixth consecutive 
month of double-digit percent- 
age increases in sales of large 
trucks, those with a gross 
vehicle weight of 4 tonnes or 
more. 

This sales trend has led ffino 
Motors, Japan’s largest 
medium and heavy-duty frock 
maker, to forecast a doubling 
of last year's pre-tax profit. 
Isuzu Motors now expects to 
show a fan-year profit for the 
first time in four years. Nissan 
Deisel is also expected to 
retain to the black after a loss 
last year. 

ffino is so confident of the 
increased level of demand it 
has just announced a 13 per 
cent price increases for new 
track models. 

This confidence is partly 
based on brightening pros- 
pects for Japan's econ omy- 
Capital spending is starting to 
re c o ver and the track manu- 
facturers expect some pent-up 
replacement demand. New 
truck sales are also getting a 
boost from tougher emissions 
requirements. Air pollution 
levels in the main metropoli- 
tan areas, especially for oxides 
of nitrogen, have not fallen to 
targeted levels. Diesel-burning 
engines are thought to be the 
main culprits for oxides of 
nitrogen, so anthorities are 
tightening emissions Teqnire- 



Wtsrtbhi L300 panel van: economic upturn gives manufacturers a Bttfe more breathing space 

Japan: market is recovering, says Dennis Normile 

On the road to profits 


meats for trucks. 

New vehicles have had to 
meet the tightened require- 
ments since December last 
year. Older vehicles wifi have 
to clear the hurdle as part of 
their periodic safety inspec- 
tions, but depending on a 
truck owner’s circumstances, 
grace periods can stretch for 
np to 12 years. 

Older tracks will have to be 
modernised or retired and the 
industry expects that many 
owners wifi opt to replace 
vehicles that do not meet the 
new standards. 

Those two factors, however, 
are seen to be having a rela- 
tively small impact compared 
to new penalties for 
rated loadings. Previously, 
overloading had been more or 
less winked at with a fine that 
amounted to little more than a 
slap on the wrist Overloading 
came to be a standard prac- 
tice, however, and anthorities, 
citing safety and highway 
maintenance concerns, stiff- 
ened penalties this past May. 
Load limit violators now face 
fines of 7100,000 (US$1,000) 
and the possibility of six- 


month jail terms and the sus- 
pension of permits and 
licenses. Not surprisingly, 
police have reported a dra- 
matic deefine in the number of 
load Hunt violations. Sales of 
large trucks have been run- 
ning at levels of 10 per cent or 
more year-on-year every 
month since May as transport 
firms buy larger capacity 
trucks to stay within rated 
load Hunts. 

T he recovery in demand 
does not mean that truck 
makers can ease up on 
their streamlining efforts. For 
one thing, the move to larger 
tracks caused by the tough- 
ened loading restrictions is 
seen as a temporary boost, 
although it will increase 
replacement demand in the 
fixture. Earlier tins year, ffino 
president Tomio FutamJ pre- 
dicted that the domestic track 
market would stabilise at 
around 150,000 vehicles a year 
in the near term. While this is 
a vast Impr ove m ent over 1992, 
when sales were barely over 
115,000 vehicles, it is still off 
the levels of the boom years 


1988 through 1991, when sales 
topped 170,000 every year. 
What is more, the strong yen 
has dampened exports and is 
encouraging imports. 

In the first 10 months of this 
year, commercial vehicle 
Imports totalled 22,070 
vehicles, an increase of 357.4 
per cent over the same period 
last year, according to the 
Japan Automobile Importers’ 
Association. Nearly GO per 
cent of those vehicles were 
fight tracks built by a Nissan 
venture in Mexico. But Amer- 
ica's General Motors, in partic- 
ular, has been dramatically 
its sales of commer- 
cial vehicles, thanks to the use 
of Isuzu's sales network. GM 
is Isuzu’s largest shareholder. 
And, finally, while ffino and 
Mitsubishi Motors are profit- 
able, Nissan Diesel and Isuzu 
are likely to be barely so. 

The makers recognise that 
this year's upturn gives them 
a little more breathing space 
but that they will still have to 
carry through with the 
restruct uri ng and diversifica- 
tion plans put into effect over 
the last several years. 


The most dramatic aspect of 
that restructuring has been 
paring the workforce, ffino 
says it has managed to cut the 
number of seasonal contract 
workers it needs by half, from 
26,000 to 13,000. All the mak- 
ers have been cutting overtime 
hours and reducing new hires. 
They have also been restruct- 
uring sales outlets and subsid- 
iaries. Isuzu merged an auto- 
body subsidiary into the par- 
ent earlier tins year to reduce 
management overhead. 

The drive to concentrate 
resources is also seen on the 
production end. Hino has 
ceased production of small 
passenger cars on consign- 
ment for affiliate Toyota 
Motor Corp. While this proba- 
bly reflects the need for 
Toyota to put its own produc- 
tion facilities to full use, it 
will allow ffino to concentrate 
on its more profitable truck 
business. There has also been 
an industry-wide drive to 
co-operate to pare develop- 
ment and procurement costs 
and realise economies of scale 
by swapping vehicles. The four 
leading track manufacturers 
jointly agreed on specifica- 
tions for brakes for heavy-duty 
tracks. Akebono Brake Indus- 
trial will supply identical 
brake systems to all four. Co- 
operative arrangements are 
particularly thick in the «wmTi 
commercial vehicle segment, 
which has not been profitable. 

ffino will supply a 5,000 cc 
diesel engine to affiliate 
Toyota Motor Corp- which will 
use the engine in a delivery 
vehicle which wfll be supplied 
to Daihatsu Motor, another 
Toyota group company, on an 
OEM basis. 

A more extensive swap has 
been worked out by Isuzu, Nis- 
san Diesel and Nissan Motor. 
The two Nissan companies will 
produce 1 tonne trucks and 
minivans for sale under the 
Isuzu badge. In return, Isuzu 
will supply the Nissan compa- 
nies with 2 to 3 tonne trucks. 
Starting next year, the 
arrangement is expected to 
involve 23,000 vehicles a year. 
Competition in the light truck 
market is only expected to 
toughen as imports gain a 
greater toehold. 



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Call of the Tatras: beauty 
spots that draw the 
foreign tourists PAGE 2 



Personality and sausages: 
why Vladimir Meciar has 
triumphed again PAGE 3 



Friday December 16 1994 




Lively two year-old 
at the crossroads 


Industry and the economy are advancing steadily. 
But Slovak politics are increasingly polarised, 
write Anthony Robinson and Vincent Boland 



*No to Medar-tan 1 - demonstrators at a student raBy express feats of authoritarian rule by the new prime m inis ter foflowfog the recent general elections Picture: AP 


A 


fter two years of inde- 
pendence the basic insti- 
tutions of the new Slo- 
vak state are in place and the 
economy is responding well to 
tough, IMF-imposed monetary 
and fiscal policies. Rising 
exports axe stimulating a 
recovery of industrial growth 
and boosting reserves. 

But this central European 
country of 5.3m people remains 
politically polarised between a 
coalition of populist and 
nationalist forces, led by Mr 
Vladimir Meciar, and a frag- 
mented opposition of Christian 
democrats, socialists and liber- 
als. 

Slovakia’s aims remain the 
creation of a prosperous 
democracy and eventual mem- 
bership of an enlarged Euro- 
pean Union alongside the other 
former communist states of 
central Europe. But fulfilment 
of these aims remains fraught 
with, considerable uncertainty. 
Geineral elections over the 
i last weekend of September re- 
j affirmed Mr Meciar and his 
.! Moveme nt for a Democratic 
- I Slovakia (HZDS) as the domi- 
Jr^ i' nant force in Slovak politics. 
9 "He won the assent of 35 per 

cent of voters, more than his 
party’s three main rivals com- 
wr y bined. The result was a per- 

sonal triumph for this charis- 
matic but unforgiving man, 
and a traumatic defeat for both 
President Michal Kovac and 
Prime Minister Jozef Mbiavcik. 
Both are former allies of Mr 
Meciar who defected from the 
HZDS and helped to orches- 
trate the parliamentary revolt 
that toppled him and bis gov- 
ernment in March. 

The new government pot 
together by Mr Moravctk in the 
spring was a broad-based “his- 
toric compromise” of socialists, 
Christian democrats and lib- 
eral democrats. It held together 



|| KEY FACTS 

1 


/Q on km 

Population 


rnfllFrvi 1 

Head of State 

President Michal Kovac 

Currency . 

Slovak Crown (Koruna) 

Exchange rate 

31/12/1992 51 =£8-9 SKK 


31/12/1993 $1=32.8 SKK 

ECONOMY 


1902 

1093 

Real GDP growth (%) 

-7.0 

-4.1 

Consumer prices growth (%). 

10.0 

23 2 

bid. production growth (%) 

-13.7 

-13.5 

Unemployment rate {%) 

104 

14.4 

Reserves minus gold ($bn) 

03 

0.4 

External debt ($bo) 

Convertiile currency trade. 

2.8 

3.6 

Current account balance ($mj. - 

68 

-708 

Merchandise exports fSmjL 

3,321 

2£99 

Merchandise imports ($m) . 

3,550 

4,094 

Trade balance (Sm). 

-299 

-1,095 

Main trading partners (%). 

Exports 

Imports 

Austria.™ ■ ■■■«■■»» 

72 

8.8 

Czech Republic 

53.6 

■ 52.1 

Sources: Deutsche Bank Research. 

34.7 

34.2 



well, presented a sober, demo- 
cratic image to the outside 
world and restarted mass pri- 
vatisation and other stalled 
economic reforms. But hopes 
that the coalition parties would 
gain electoral advantage from 
their good -governance were 
dashed by the electorate. 

The Party of the Democratic 
Left (SLD), led by an intelli- 
gent and articulate band of 
young former communists 
under Mr Peter Weiss, hoped to 
emerge as the biggest single 
party from elections. Instead it 
suffered a haemorrhage of sup- 
port from frustrated workers 
and the unemployed and won 
only 10.4 per cent of the vote. 

The Christian democrats 
(KDH), led by Mr Jab Camo- 
gursky, received 10.2 per cent 
while the Democratic Union 
(DU), a collection of l ibera l 
democrats and former HZDS 


dissidents led by Mr Mnravdk, 
picked up &6 per cent In total, 
the coalition parties received 
29.2 per cent of the votes and 
50 seats In the 150 seat parha- 
merrt again wt the 35 per cent of 
vot es an d 61 seats gained by 
the HZDS. 

Mr Medal's victory left him 
far short of the simple majority 
needed to govern, and even 
further from the qualified 
majority of 90 seats needed to 
satisfy his main ambition of 
changing the constitution of 
the state which he did so much 
to bring into existence. His 
long term aim Is to transform 
Slovakia from a parliamentary 
into a presidential democracy, 
with himself as president It is 
a prospect which fills many 
Slovaks with alarm. 

Mr Medar’s appeal while 
not inconsiderable, is concen- 
trated geographically in the 


economically depressed hinter- 
land of the Vah valley and cen- 
tral Slovakia. Sociologically he 
is popular among the weaker, 
less educated elements in Bra- 
tislava and Kosice, which have 
a tradition of ethnic tolerance 
and intellectual independence. 
He. and his xenophobic nation- 
alist allies, the Slovak National 
Party, (SN5), are implacably 
opposed by the 10 per cent eth- 
nic Hungarian minority whose 
votes up to now have been fro- 
zen in the political ghetto of 
ethnic-Hungarian parties.. 

hi the short term, Mr Medar 
faces the task of fa rming a 
credible and efficient govern- 
meat with his nationalist allie s 
from the SNS and his “worfcer- 
ist” partners from the new 
Workers Union. The latter won 
more than 7 per cent of the 
vote by articulating the 
demands of the low paid and 
unemployed for more money 
and more jobs. These demands 
wfiFbe- difficult to reconcile 
with the IMF’s prescription of 
balanced budgets and fiscal 
restraint. . 

Longer term, the task facing 
the opposition is to forge a 
more united and credible cen- 
tre party out of the social dem- 
ocratic. liberal and Christian 
democratic strands of Slovak 
political life, and to keep Mr 
Meciar within the bounds of 
political behaviour that are 
required if Slovakia is eventu- 
ally to enter the EU alongside 
the Czech Republic. 

Meanwhile, behind the 
Sturm und Drang of Slovak 
politics, a substantial improve- 
ment is taking place in the 
macro-economic performance 
of the Slovak economy, with 
substantial agreement between 
the main parties on the need to 
continue taking the bitter med- 
icine prescribed by the IMF. 

The underlying structural 


W hen independent Slovakia was 
born in January last year Mr 
Michal Kovac hoped to use the 
authority of his office as the country’s first 
president to buald a new sense of state- 
hood. But the political instability that 
gripped the country almost from the start 
has left him little time for nation-building. 

"So for I have not succeeded,” he notes 
with a shrug, sitting on the edge of a chair 
in his sparsely furnished office in the 
baroque former Bishop’s Palace where 
Napoleon and the Austrian Emperor 
si gned a temporary peace after the French 
triumph at the battle of Austeriitz. 

The men who has been making life bard 
for Mr Kovac is bis former colleague and 
fellow-communist, Vladimir Medar, who is 
about to return as prime minister after 
being forced from office last March, with 
the president a key player in his ousting. 

Mr Kovac appears unfaz ed at the pros- 
pect of his arch-enemy returning at the 
head of a new government, which is likely 
to be strongly populist, nationalist, anti- 
Hungarian and anti-Michal Kovac in tone. 
Indeed, the president is a little richer 
because of the result of the election at the 
end of September. 

He was the winner of a presidential 
office bet cm t he ou tcome, winning the 
princely sum of SKK1.000 (¥32) by predict- 
ing most closely the share of the vote 
going to Mr Meci ar’s M ovement for a Dem- 
ocratic Slovakia (HZDS) - it won 35 per 
cent; Mr Kovac predicted 33 per cent 
Observers in Bratislava say Mr Kovac 
has learned quickly how to get his opinion 
across within the constraints imposed by 
his position. Every political party, he rays, 
has the same value for him, and be can 
express neither anxiety nor joy at a cer- 
tain party’s success or failure. Election 
results, he says, express the democratic 
wish of the people, and *Tm obliged to 
respect that". 

But the the president now suspects that 
he and the office he holds are due for 
renewed attack. Mr Medar wants to estab- 
lish & presidential form of government in 
Slovakia, a move Sir Kovac thinks Is dan- 
gerous. The roots of democracy are not yet 
deep enough is Slovakta.for such a aysh 
tern, he says, warning of . a. subsequent 
misuse of peratmal power. ^Tm for a par- 
liamentary system, not a. presidential 
one," 



President Kovac; setback at the poCs 

1 Interview: 

Mr Michal Kovac 

Frustration 
of a nation 
builder 

In order to establish a presidential sys- 
tem Mr Meciar needs to muster SO votes in 
the 150-member parliament to secure a 
change to the c o nst i t u t i on. As talks on 

forming a new government drag on with- 
out any immediate sign of success the 
likelihood that the new prime minister 
will achieve his goal recedes, though he 
has still not committed himself to ceasing 
his attacks on Mr Kovac. 

The president says that if a presidential 
system is established its success will 
depend entirely on tire personality of the 
bolder. Does he think Mr Meciar is a suit- 
able candidate for such a position? "I am 
not able to say.” he co mments diplomati- 
cally. 

Would he be a candidate himself? “I 
haven’t decided yet” Observers in Brati- 
slava say he almost certainly would run 
for office in such an event 


He would not object to a presidential 
system, he says, if the new constitution 
that would result allowed for unfettered 
opposition politics and independent radio 
and television, and “If other democratic 
functions were allowed to function”. 

But even without being president or 
even prime minister Mr Meciar has 
already used the power stemming from a 
bare coalition majority to wrest control of 
the media and other key state bodies such 
as the National Property Fund, which pre- 
pares companies for privatisation. 

Early in November, in a parliamentary 
session that has become known as “Bloody 
Thursday”, he organised a parliamentary 
coup which gives his manning govern- 
ment complete control of these bodies and 
gave an early warning of the confronta- 
tional tone of his administration. 

Though he appears remarkably self-con- 
fident for a man who has been publicly 
vilified by bis enemies for his role in 
removing Mr Meciar in the national inter- 
est earlier this year, Mr Kovac is clearly 
disappointed that he has been prevented 
from developing Ids original vision of a 
unifying presidency. 

Mr Kovac was not widely known when 
be asgnmurf Office at the hpgmmng of last 
year. The man destined to become Slovak- 
ia’s first president had been Alexander 
Dubcek, the communist party leader 
whose Prague Spring reforms led to the 
Warsaw Pact invasion in I96&. But he was 
killed in a car accident just weeks before 
his country became independent on 

December 31, 1992. 

Mr Kovac stepped into his shoes. But, 
both as a communist party official and as 
chairman of the last Czechoslovak federal 

parliament after the velvet revolution, be 
has spent a great deal of time in Prague, a 
suspicious past for the more nationalistic 
of Slovak voters. 

Asked whether he thought independence 
had rhang nH him and bis feDow-Slovaks, 
Mr Kovac lamented that the old way of 
thinking, in which the state promised to 
take care of everything, still predomi- 
nated. It even helped to ensure Mr Mec- 
iaris victory in the election. “People still 
think some bright new future will come 
out of that kind of thinking. But such a 
thing does not exist any more,” he says. 

Vincent Boland 


weaknesses of the Slovak econ- 
omy were revealed by the loss 
of an estimated $700m a year 
subsidy from Prague on inde- 
pendence in January 1993, and. 
above all by the collapse of 
Corn earn markets and the end 
of the Cold War. 

Attempts to restructure the 
big military factories concen- 
trated in the Vah valley and 
central Slovakia have had very 
limited results. New invest- 
ment and Joint ventures with 
foreign companies to shift from 
producing tanks to tractors, 
fork-lift trucks and construc- 
tion machinery were all predi- 
cated on a post-communist 
reconstruction boom in the for- 
mer Soviet states which, thus 
for, has foiled to wiateriaifog 
Unemployment in these areas 
remains very high, between 
2540 per cent in some districts 
compared with the national 
average of 14 per cent 

On the other hand, the pri- 


vate sector now accounts for 
more than 40 per cent of GDP 
and is growing steadily. A 
revived mass privatisation pro- 
gramme seems destined to sur- 
vive the change of government, 
albeit with relatively minor 
modifications. 

Several of the biggest former 
state owned industries such as 
Slovnaft, the refining and pet- 
rochemical complex, and VSZ, 
the biggest integrated steel 
group, have been partly priva- 
tised and re-organised with 
substantial new investment 
Long-stalled projects, like the 
Slovalco aluminium smelter in 
central Slovakia, are being 
revived with support from the 
European Bank for Reconstruc- 
tion and Development (EBRD). 

The main need now is for an 
acceleration of institutional 

reforms Of the hanking and 

finance sector and better 
management and new 
investment in the enterprise 


and farming sectors. 
Meanwhile, strong demand for 
steel petrochemicals and other 
Slovak products in world 
markets has contributed to an 
export boom which is raising 
industrial output and pouring 
hard currency into the 
reserves which have more than 
quadrupled over the last 18 
months to around $£Ubn. 

Tight central bank control of 
monetary policy and public 
spending cuts have brought 
prices down to within sight of 
single digit inflation next year. 
Lower inflation and rising 
reserves have reinforced the 
Slovak koruna, which was 
devalued by 10 per cent in July 
1993 in agreement with the 
IMF. Since then the exchange 
rate has been stable. 

Inflows of foreign 
investment, however, are just a 
trickle compared with levels in 
the Czech Republic, Hungary 
or Poland. This is a direct 


result of political instability. 
Slovakia needs to maintain its 
access to the international 
capital markets to get 
financing for the massive job 
of restructuring industry and 
developing the infrastructure. 

The 3.2m people who have 
invested in the voucher 
privatisation programme have 
effectively passed a vote of 
confidence in continued 
economic reform. Mr Meciar is 
far too astute to miss that 
message, and it may yet have a 
large bearing on bis policies in 
government 

“Heed what he does, not 
what he says.” say some 
observers in Bratislava of Mr 
Meciar, arguing that he is a 
different, more pragmatic 
animal in government than his 
rhetoric at the hustings makes 
him appear. Many Slovaks as 
well as potential foreign 
investors and political partners 
will be doing just that 



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5e 


FINANCIAl. TIMES FRIDAY DECEMBER*^ 



SLOVAKIA 



D ifferences over the pol- 
icy and imptementaticm 
<£ privatisation have 
been a battleground between 
Mr Vla dimir Medar and his 
political qpponaits thron^wnt 
the brief lift of the Slovak 
republic. 

Whatever their political ale- 
giances, however, more than 
3-2zn Slovaks, roughly 80 per 
cent of the ■ population, have 
shown their hand by buying 
the books of coupons which 
they can exchange for shares 
in state companies. 

Popular support for pr iv ate 
ownership did not translate 
into, political support for the 
outgoing government as hap- 
pened in the Czech republic 
two years ago. But the voucher 
method chosen for Slovakia's 
second round of mass privati- 
sation is based on that pio- 
neered by the former Czecho- 
slovakia and put into operation 
In both halves of the then fed- 
eral state. 

Though the outgoing govern- 
ment's orig inal plan to privat- 
ise up to SKESObn worth of 
state companies through 
vouchers is likely to be diluted 
by the new administration, 
investment fund managers 
remain confident that it will 
give a substantial boost to the 
country's capital markets and 
fizrther increase the role of the 
private sector in the Slovak 
economy. 

Ladislav Vaskovic, rhafmmn 
of VUB Invest which manages 
Slovaki a's biggest investment 
fund. VUB Kupon, describes 
the response to the voucher 
privatisation programme as 
‘the biggest mandate of all”. It 
is a dear sign that Slovaks are 
in favour of vouchor privatisa- 
tion, he says, and should send 
a message to the incoming 
administration of' Vladimir 
Medar not to tamper with it, 
as he has threatened. 

If even a watered-down ver- 


second round of privatisation is about to start 


Never mind the politics 


sun of voucher privatisation is 
completed it wQL give a sub- 
stantial boost to Slovakia's 
capital markets. Investment 
fund managers say the final 
size of Che voucher privatisa- 
tion programme should be 

SKKBrthn 

This is lower than the 
Moravrik government's t a rget 
■because the original proposals 
included the profitable gas 
transmission and electricity 
generation and transmission 
campanile- NOW, Sergei Kn*Hk, 
Mr Medar's chief economic 
adviser, says tits energy sector 
has been designated a "strate- 
gic industry” in which the 
state will retain a majority 
staardKddtng. 

There are already mure than 
600 companies quoted cm the 
Bratislava stock exchange as a 
result of the first wave of 
voucher privatisation which - 
took place when Slovakia was 
part of federal Czechoslovakia. 
Only 13 companies are fully 
listed, but they include such 
key companies as Biotika, a 


N omura Securities, the 
Japanese Investment 
house, has given a Hg 
boost to foreign investor senti- 
ment towards Slovakia with 
the pur chase of a 28 per cent 
stake In VUB Knpon, the coun- 
try's biggest inves tmen t fund. 
Nomura payed SKK2.l8bn 
<$68m) fra: the stake in Septem- 
ber, in one of the biggest for- 
eign investments in the coun- 
try so for. The transaction was 
also the largest ever recorded 
on the Bratislava stock 


pharmaceutical group, SIov- 
naft the refining and petro- 
chemical giant, Nafta, a gas 
supplier, and Vseobecna Uver- 
ova Banka (the General Credit 
Bank), Slovakia's dominant 

c ft t m naiy i ai hank 
Stockbrokers say tirn bulk of 
trading activity is concentrated 
on about 50 stocks, which are 


and Consulting, Cassovialnvest 
and Creditanstalt as well as 
VUB. 

Share prices are currently in 
the doldrums, with the SAX 
index of most-traded shares 
hovering around the 200 points 
level, compared to its peak of 
401 points last March- That 
rally was driven mainly by 


More than 500 companies are quoted on 
the Bratislava stock exchange as a result 
of the first wave of privatisation 


Squid g™n»gh to allow for a 
true market in their Shares. 
Over 90 per cent of all trading 
is d«np outride the three offi- 
cial trading systems, the stock 
exchange, the options 
exchange, and the RM-S, a 
co m put er trading system that 
depends for its viability on tfis- 
persed sha reholdhig g resulting 
from voucher privatisatioaL 
Trading is dominated by the 
big investment fund managers, 
which indude Harvard Capital 


foreign iiiuHnijnent at a time 
when the Prague stock market 
was also booming, but a 
subsequent pull-out by 
overseas Investors caused both 
markets to collapse. 

The Bratislava market's 
biggest problem is its chronic 
lack of liquidity. Ironically, one 
of the causes of iDiqmdity Is 
voucher privatisation, w hich 
leaves investment funds with 
large portfolios of shares and 
H tt V or no 


The drive for funds 


VU B Knpotn is managed by 
VUB Invest, the fimd manage- 
ment subsidiary of Vseobecna 
U verova Banka, Slovakia’s 
largest commercial bank. It 
owns large Mocks of shares In 

rniiuy of flic Mg w m rpm ri Hi in 

Slovakia and the Czech Repub- 
lic, and is c ur re n tly heavily 
weighted towards the latter, 
with roughly 75 per cent of its 
portfolio currently represented 


lav V askov ic, managing direc- 
tor of VUB Invest 
Slovak fund managers are 
currently establishing new 
investment funds to attract 
some of the 8.2m investors 
who have bought vouchers to 
participate in the privatisation 
programme drafted by the out- 
going government of prime 
minister Mr Jotzef Moravcik. 
Barring undue political delays, 
the final size of the voucher 


Fund managers lament the 
lad of fixed interest stocks in 
the market, with just four 
lares bond issues quoted so ar. 

In common with other 
emerging markets, Slova kia s 
capital markets are also beset 
with problems of transparency 
and lack of regulation. The 
outgoing government has 
almost competed a major plan 
to supervise the banking and 
finawmai sector, and there is a 
proposal to establish a 
regulatory body along the lines 
of the US Securities and 
Exchange Commission to set 
rules and ensure they are 
implemented. 

Briglta Schmognerova. 
outgoing deputy prime 
minister in charge of the 
economy, says the new body 
will be charged with 
supervising the banking, 
pension fimd and investment 
fxmri industries as well as the 
stock exchange. The 
authorities’ main aim is to 
i H went- a franking collapse on 
the scale of that of Banka 

programme is likely to be 
SKE60bn, and competition for 
%> investment points attached 
to vouchers is fierce. 

Each voucher b ooklet , which 
can be bought for SKEX.OOO, is 
wot 111 1,000 investment points. 
Shares are allocated on the 
basis of demand. 

Shares in companies consid- 
ered attractive by investors 
will cost more points than 
those of unattractive compa- 


V. B. 


Bohemia, ft Czech bank that 
was shut down earlier this 
year after it issued Wa worth 
i ftke securities abroad. 

“We have not bad any Mg 

nrobtems so for but it is only a 
matter of time." Ms 
Schmognerova says. I hope 

the new government 
understands the necessity of 
building such an institution. 

The outgoing government's 
plan also calls for the 

concentration of 

in a single market Bratislava s 

three stock markets are an 

expensive anachrortOT hx swdi 
an underdeveloped m arket , 
and a fierce battle for survival 
is currently being waged 
between the stock exchange* 
which is owned by Sfovakias 
major banks,, and tire options 
exchange, which functions as a 
spot market, Thomas Grey, 
principal investment o ffi c er at 
Slovak Internationa l, an 
investment advisory group, 
says the stock market is 50 
years behind the times. 

Volume on the official 
markets rarely exceeds 83UI00 
daily, which is less than 10 per 
cent of total trading. The rest 
is dime directly among brokers 
and market makers who 
bypass official channels 
because it is * cheaper and 
faster. Brokers favour the 
options exchange, where a 
one-day forward contract helps 
set price levels in the 
over-the-counter market. 

Juraj Siroky, president of 
Harvard Capital and 
Consulting (closely related to 
the com pany of the same name 
in Prague), says the options 
exchange is more tuned in to 
market trends and could 
already be the main trading 
mechanism If it had not been 
refused a stock market licence 
by the finance ministry. But 
the latter currently favours the 
existing stock exchange as the 
centre of fixture tra din g. 



St Mchotas Chech, Prarov Picture: Bandphoto 


■»— - * * — aa__ ^ - -it — tr ^ ■ -i a »- m «_ _ *. — a — Jki * m ■ * » jLm ** — — 

VTiiur mv uni I aim vtaRura are uocxuig dock ana nonu are any doomg tot uiiaunn ana urn nvw toot 


Anthony 


Anthony Robinson takes the mountain tourist trail 

Call of the T atras 



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When Czechoslovakia divorced 
into its constituent Czech and 
Slovak parts the Czechs ended 
up with two thirds of the papu- 
lation and most of the viable 
economic assets^ But Slovakia 
ended up with the most beauti- 
ful parts of the former federal 
state which in inter-war times 
extended even further east into 
Trans-Carpathian Butheaia. 

Slovakia's jewel, and the 
fiscal point of its tourist indus- 
try, is the High Tatra moun- 
tains, which separates Slo vakia 
from Poland. Us snow-covered 
central massif is less than 
Sflkm. long. 

Immediately after the “velvet 
divorce" the High Tairas lost 
their habitual aficionados, 
mainly Czechs and Germans. 
Bat this year tourism in gen- 
eral, but especially in the High 
Tatzas, is showing a ™i*gd 
recovery. 

Last year, (according to offi- 
cial statistics Which understate 
the contribution from the pri- 
vate sector) tourism earned 
only S314m from l&3m visitors. 
This year, 14.4m visitors 
entered the country in the first 
nine months alone and earn- 
ings for the first six ™nft« 
reached $288m. In the summer, 
Bratislava, the capital, 
received a steady flow of week- 
end tourists from Austria and 
other countries, while hotels 
and guest houses in the High 
Tatras report full bookings for 
Christmas and the New Year. 

The communist regime con- 
structed a superhighway along 
the base of the Tatras, which is 
fine for tour coaches but bad 
news for walkers. The old 
regime also put up ugly con- 
crete blocks masquerading as 

hotels. Fortunately, however, 
there are also plenty of survi- 
vors from a more civilised age, 
such as the splendid Grand 
Hotel at Story Smoko vec, and 
smaller, cheaper establish- 
ments typified by the chalet- 
like Hotel Panda, also at Smo- 
feovec, which provides a warm 
welcome, goose for dinnw and 
simple comfortable roams for 
$25 a night all found. 

Meanwhile, walkers and 
wanderers can ignore the 
super highway by opting for 
the red trams which wind their 
way around the contours of the 
mountain and through the pine 
forests. 

But there is more to Slovakia 


than the High Tatras. Brati- 
slava, or rather its historic cen- 
tre, is small and provincial 
compared with the glories of 
Prague, ft was further spoiled 
by the communists who demol- 
ished a medieval synagogue 
and a network of cobbled 
streets and old town houses to 
build the bridge which con- 
nects the old town with the 
high rise 1970s suburb of pre- 
fabricated “panelak" housing 
called PetrSalka across the 
fastflowing Danube. 

Under the Habsbuigs, when 
it was still called Pressburg, 
Bratislava was a favourite 
place for weekend outings by 
the people of Vienna upstream. 
Under its honest and capable 
mayor, Mr Peter Krasanek, it is 
now looking up again. The 
mayor, a Christian democrat, 
was re-elected with a comfort ■ 

The Czechs hnherfted the 

wealth, but the Slovaks 

have the scenic beauty 

able majority at last month's 
local elections. 

Privatisation, and the resti- 
tution of property to former 
owners, has led to a recon- 
struction and re-ftubishlng 
boom which has restored the 
elegance of medieval, gothic 
anrf baroque rfrnw«fr«tg l public 
buildings «*Tid tfrp nhwip wwA 
excellent opera and' national 
theatres. Formerly neglected 
streets have been transformed 
and new private shops, cafes 
and rest aurant s have created a 
new vitality. 

A small private hotel, the 
Perugia, has opened near the 
main square and the postwar 
Devin Hotel remains friendly, 
good value and full of central 
European atmosphere. The 
same cannot he said for its 
brash neighbour an the river 
front the French-owned Dan- 
ube, which charges high prices 
for spartan rooms, shoddy 
decor and the same terrible 
telephones as cheaper estab- 
lishments. The Forum Inter- 
continental ranging the smart- 
est hotel in town, but tt too Is 
expensive, heavy cm the mar- 
ble and light on chans. 

Between Bratislava, at the 
sooth western tip of the coun- 
try, and Kosice, 500km. east of 
the capital and 100km. from 


the Ukrainian border, lies a 
string of small towns and 
industrial villages along the 
Vah valley. An alternative 
route takes one through the 
folds of the low Tatra moun- 
tains, actually a succession of 
wooded hills and occasional 
rocky outcrops, often crowned 
with spectacular ruined cas- 
tles. 

Before the war the towns 
and villages must have been 
harmonious little jewels. Their 
cen t res usually still are. But 
all too frequently the commu- 
nists surrounded the historic 
centres with uniformly ugly 
glass and cement housing 
estates in defiance of all the 
rules of aesthetics or the logic 
of natural co n t ou rs. 

Visitors to Kosice, the capital 
of eastern Slovakia, are often 
depressed by the endless indus- 
trialised suburbs an the out- 
skirts, only to be rieHgMtaH by 
the glorious gothic pile of St 
Elisabeth’s cathedral, the 
restored 19th ce ulury theatre 
and tiie strongly Hungarian-in- 
fluenced architectural style of 
the old city. 

Kosice's churches, with ser- 
vices in Slovak and Hungarian, 
synagogues and fine houses 
reflect toe past ethnic complex- 
ity and cultural vitality of a 
city striving to rev i v e its past 
glories. One of the three syna- 
gogues is still functioning, 
although plaques on lie two 
largest recall how thousands of 
Jews were rounded up and 
sent to their deaths when 
Kosice was returned to Hun- 
gary by Hitler and the rest of 
Slovakia was ruled as a Nazi 
puppet state headed by a rene- 
gade Catholic priest. Father 
Jozef Tiso. 

Scattered throughout Slo- 
vakia are remnants of earlier 
settlements of Swabians, Hun- 
garians. Ukrainians, Jews, 
Buft arrians, Gypsies and oth- 
ers. Beyond Kosice lies Bntb- 
ema, although most of Trans- 
Carpathian Ruthenia was 
annexed by S talin after the 
war and now lies in Ukraine. 

In general, the Anther east 
one goes the poorer the people, 
but the more intact are the did 
villages and towns, like Barde- 
jov, and many other reminders 
of a rural past which was 
shaken up but not entirely 
destroyed during the commu- 
nist years. 



DUSL0 


DUSLO 

(omt-siock company 
92703 Safa 
SLOVAK REPBULfC 




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DUSLO was founded in September 1958. At present the company figures among the promment chemical 
enterprises m Central Europe. 

Operations: Production and sales of following products 

1. Rubber chemicals and Intermediates 

Antioxidants: DUSAMTOX IPPD. DUSANTOX 6PPD, DUSANTOX 86. DUSANTQX 90 
Prevulcanuation inhibitors o/ CTP type: DUSLIN P. DUSUN G-80 

intermediates: cHphenytamine, 4^amkiodiphenylamine. pfnhafimkJe. cydohexene. cycfohexanethnl 

2. Industrial tartHtoare: ammonia, urea, calk ammonium nitrate, combined fertilizer NPK. Mg - concentrate 

3. Polyvinyl acetate d to perstons - various typos of trade name DUVILAX: 

4- Magnesium hydroxide - trade name DUHOR: 

Surface treated DUHOR C as flame retardant for plastics and untreated grades lor pharmaceutical 
industry and pasties 


Number ol Employees: 3.200 

Turnover I.- IX. 1994 (USD doflar equivalent OOO's): 111,749 


Tel.: ++42/7W80 1111 


Telex: 937 32 


No. 6 Chequers - High Street - hngateetone - Essex - U.K 

REPRESENTATIVES FOR VSZ AS. KOSICE, SLOVAK REPUBLIC 

FOR SALES IN THE TERRITORIES OF THE U K. 

AND THE IRISH REPUBLIC 

A MODERN HIGH QUALITY PRODUCER OF 
STRIP MILL PRODUCTS OFFERING COMPETITIVE TERMS 

DIRECT TO INDUSTRY. 

Our product range inciudes; 

Hot Rolled Coils & Plates (me. tear pattern) - Hot Rolled Pickled & Otted CoKs & Sheets 
Cold Reduced Coils & Sheets • Hot Dipped Galvanised GoHs & Shetfs 
AJuminised Cofis & Sheets • HR/CR Strips • Electrical Steel 

Tin Plates • Hollow Sections 


Cal! us with your next enquiry 
Phone: (0277) 355155 Fax: (0277) 354649 



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' V;akwt0rs voted in large umn- 
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; ~> iose style and personality 

- . -.gongs store to the tnb- 
•. damping era of the past then 

- s ;» pragmatic, problem solving 
O iproach of modem political 
,. t .%irties. 

'-; t . - His Moveme n t for a Demo 
„ '•a tic Slovakia (HZDS) won 
■- '^arty 35 per cent of votes cast 
61 seats in the ISO seat 
':. ", ■. irliBTwinf, more than three 

- .mes the share of the vote 
•v /dnsd by its nearest rival, the 
' tty of the Democratic Left 
.*“XD), whoserefbrmed rnmirm - 

, . ; ast leaders had hoped to 
. ’ vnerge as the new hegamonist 
optical force in the c ountr y . 

- 'The vote was a personal tri- 

■". >nph fix- Mr Medar, who lost 
‘ : ee premiership for the second 
' me after a parliamentary 
\5feat in. March, and a bxrrrdB- 
: V,hig set back fox aH his polifi- 
il enemies and rivals - 
c winding the president, Mr 

- lchal Kovac, and Ur Jozef 
oravcLt, prime Tniwipfr»r of 

. ie coalition government 
' ■,. "hich replaced him in March. 

Mr Moxavdk, a former com- 
. '.nnlst and academic who 
'.“ted as the last foreign minis- 
.- : ! ;t of Czechoslovakia, earned 
.. V \'t Medal's iipplacahl e ananfty 
'r defecting from the HZDS in 

O JEnconraged behind the 
„ .-f.enes by President. Kovac, he 
' ; ~ idped to topple bis former 
' -ader in March and pat 
her a broad based coab- 
ft ranged from the reform 
inrun uniats of the SLD 
be Christian deno- 

cf the KDH led by Mr Jan 
arroi innlreteH Mr 

own Democratic 
b up of dissident 
t aid small liberal 


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1994 parliamentary elections 


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Mr Medar also master- 
minded the setting up of a spe- 
cial committee to investigate 
the dzaanstances which led to 


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substantial recovery in the Slo- 
vak economy which began in 
the fourth quarto- of 1393. 

However, the decision of the 
SLD, led by Mr Petr Weiss, to 
join forces with ««irtitai and 

liberal-democrats and help 

share the reepansantt^rfor car- 
rying through an IMF-ap- 
proved economic policy of fis- 
cal and monetary austerity 
proved disastrous. 

Instead of gaining respect- 
ability and votes by its partici- 
pation in government the SLD 
alienated its working ci««w 
base who saw no reason to. 
vote for a party which shared 
responsibility for tight eco- 
nomic policies at a time of 


Zumovsky”, a doable pun on 
the town and the Russian 
nationalist firebrand Mr Vladt 
Tnir Zhirinovsky. 

Mr Medar spent six months 
fighting a no-holds barred elec- 
toral campaign awash with 
beer and sausages and per- 
sonal appearances in towns 
and villages throughout his 
central Slovakian stronghold. 

ut he failed to win an 

overall majority and 
needs allies. He found 
them in the SNS, which for- 
mally agreed to join a coali- 
tion, and the ZRS which 
backed Mm in parliament and 
accepted positions in key par- 
liamentary rammlggfftTiH but 
declined formally to join a 
coalition go vernment. 
To get her the HZDS, National- 
ists and Workers mustered 83 
seats, which gave them a work- 




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merely the caretaker govern- 
ment 


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ing majority but was still 
seven votes short of the 90 
seats needed to unseat the 
president and re-write tire con- 
stitution. 

Mr Medar speaks of finding 
“seven trusty men”, Kk» seven 
samurai, to give him carte- 
blanche to forge a presidential 
system with himself at the 
head rather than Hie parlia- 
mentary democracy outfined in 
the current co nst i tution- He 
also makes no secret of his 
desire to inflict personal humil- 
iation. on Presid ent Kovac, 
another former HZDS sup- 
porter who defected in frustra- 
tion with Mr Meciaris domi- 
neering ways. 


*.■ TnW.Mfdv ?aa . ; ; 

Mr Medar’s aiwpa, such as 
I Sergei Kozlik, the party's chief 
economic spokesman, paint 
instead a more reassuring por- 
trait of a rational, middle of 
; the road party. 

He says the HZnS is folly 
committed to IMF-style macro- 
economic stability but 
responds to the hopes and 
fears of ordinary Slovaks, espe- 
cially thong in Miwif indus- 
trial towns of central Slovakia 
where the Soviet-era arms and 
engineering pfanfa are to 
bankruptcy. 

But Mr Medar revealed a 
vindictive streak on the night 
of Thursday, November 3, 
when the newly elected parlia- 


S ergej KozMk has the task of p uttin g 
the best possible face an the HZDS 
and its economic policies, writes 
ANTHONY ROBINSON. 

He is anxious to reassure potential for- 



7dk government. 


by xenophobic nationalists and a working' 
class movement demanding higher pay 
and lower unemployment. 

"We simply cannot make concessions to 
the ZRS workers' a ssoci ation which would 
kad to the loss of macro-economic stabil- 
ity and probably faring down the govern- 
ment yet again, w he says. "We are looking 
for compromises from them which would 
ensure long term growth. We cannot 
allow wage increases w it h o ut higher pro- 


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The voice of 
reassurance 


the agricultural sector and encourage- 
ment of exports and the entr epren eurial 
sector. For good measure, the HZD S poli- 
cymaker adds banking sector reform. 

Hie does not indude privatisation but it 
has be y a point of c g ut e aU en between 
the HZDS and the BEaoravdk government 
which cancelled some of the sell-offs 
rushed through in the last days of the 
Medar government but whose own priva- 
tisation polides were bitterly criticised by 


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privatisation method, bat at least 51 per 
cent of a company should be in the bawds 
of a dearly defined owner.” 

He is abo sceptical about the role of 
investment ftmds which now have shares 
of 200 of the largest Slovak enterp ris es in 
their portfolios. "Funds may be good at 
managing portfolios but what we need are 
people who know how to manage the 
enterp rises,” he says. This is why the 
HZDS tend* to fev oUT numaggpiowt mM 
worker b uyouts rather flan the disper- 
sion of ownership through coupon privati- 
sation and corporate governance in the 
hands of Inv e stm ent funds, he adds. 

He is qnfek to pledge that coupon priva- 
tisation will continue, given the enthusi- 
astic pubHc response to the Moravdk gov- 


as hypocritical and ask why 
fbredgn critics is particular had 
not voiced similar outrage 
when Mr Vadav Hans, (he vic- 
torious Czech leader In the 
June 1392 elec tions, preceded 
to make a similar dean sweep 
of his political opponents. 

Diplomats privately reply 
that the difference Is only 
superficially one of style. In 
practice, the replacement of 
trained lawyers and other edu- 
'cated office holders by poorly 
educated and politically 
untried nationalist or wurker- 
ist antes on such a scale and 
with such contempt shocked 
many Slovaks, inrinrtrng oppo- 
sition parties whose tacit com- 
pHclty is required for the politi- 
cal process to work smoothly. 

Shortly after the event the 
German and French mobassa- 
dors called an President Kovac 
to express- the c once rn of the 
European Union at what is 
locally known as "bloody 
Thursday”. They were 
promptly accused of impermis- 
sible in t e rfe rence in Slovakia's 
internal affairs by the redoubt- 
able Mr Sfota. 

But three weeks after 
"bloody Thursday” voters had 
another opport u nity to register 
their views, at countrywide 
local elections. Mr Skuta was 
reelected unopposed as mayor 

Of ZtTttm- 

But candidates closely asso- 
ciated with Mr Medar and the 
HZDS performed much worse 


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ers hit rock bottom, says Anthony Robinson 


Competition hurts 



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MAIN PRODUCTION 


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Tn communist times more wnm 
8JJOO workers were enjoyed 
In the geologically complex 
polymetallic ora mines around 
Roznava, a 'small town sane 
50fem. west af Kosice and dose 
to the harder with Hungary. 

But tiu aboHticm of producer 
subsidies and the shift to worid 
pricing revealed the hopelessly 
uneconomic nature of most of 
tbe nrirwig 

In a saga rep eated in do zens 
of small towns throughout cen- 
tral and eastern Slovakia thou- 
sands af miners have lost their 
jobs in an area of Ettie alterna- 
tive employment as mines 
have been closed over the last 
four years or production cur- 
tailed. 

A similar fate still hangs 
over the Baawna mfne near 
the town of Roznava where the 
former Hitlerite iron ora work- 
ings have already been dosed 
and uncertainly hangs over the 
potentially profitable polyme- 
talic ore mine. 

Production has already been 
suspended and its future will 
remain in doubt until ways can 
fee found of profitably treating 
a 50,000 tonne concentrated ora 
stockpile and the rich on body 
which stm lies underground. 

Two years ago .Samar, the 
London-based paren t of CMX 
Resources, established & joint 




eliminating the ecological haz- 
ards caused by the stockpiles 
from which mercury had 
already been extracted. 

But initial hopes that an 
Australian roasting process 
would solve the problems of 
profitably separating the cop- 
per, silver, mercury, antimon y, 
arsenic and other metals 
proved vafaL 

Now CMX is experimenting 
with a hydro-metallic laa«lrfng 
process invented by Sunshine 
Corporation of the US which 
"could turn the mine Into one 
of the world's biggest produc- 
ers of antimony along with an 
ounces of silver, and ""mUw 
amounts of copper and other 
metals a year,” according to 
Mr Michael Martineau, techni- 
cal adviser to CMX on the proj- 
ect. 

"We are fiririy confident that 
the prqject will go ahead with 
an investment of ^ 

what would be a long-hfo wring 
and treatment facilities,” he 
adds. But such a decision 
hinges an the snccessfol cook 
pterion of the lwarfifaig trials, 
and the price of antimony 
which is currently at record 
levels. 

Mr Vojtech Krai, managing 
director of Zplpmrnihȣ Ranfl L 

says "we hoped that events 
would move much; faster, but 


p . * 


Bane, the state-owned com- 
pany which runs the Roznana 
urine. CMX, which was intro- 
duced to the urine while work- 
ing with Czechoslovak muring 
engineers in Tanzania four 
y e a rs ago, agreed to evaluate 
the ores and seeks ways of 


Despite the problems we have 
good co-operation with our UK 
partner,” he adds. 

Mr Krai has successfully 
resisted farmer gover nment 
plans to fecJndft the mine in 
the vouchCT priv aibaikm pro- 
gramme, arguing that it needs 


a real owner who understands 
mining and is able to put in 
the capital required. He and 
bis management team would 
consider a management 
buyout "but only if tire price is 
one crown so that we could put 
new resources into developing 
the urine", be say& 

With bank 'interest rates 
between 18 and 22 per cent it 
would simply not be possible 
to irafcfl the mine profitable If 
money had to be raised to buy 
existing assets, he adds. 

The only large scale ™nfag 
still -taking place in the Roz- 
nava area is at the nearby 
Nizna Sian* iron ore mine. 
Hare L200 miners excavate lm 
tonnes of iron ore ammany 
which is converted into around 
450,000 tonnes of pellets and 
shipped to the VSZ steel {riant 
40km. away. 

Reserves axe adequate for 
the next 10 to 15 years with 

ftranahlp flrr thgr riqpngftg s tilt frn 

be confirmed. 

The iron content of around 
54 per cent is well below the 
6085 per cent contained in the 
pellets which VSZ receives 
from Krlvoi Rog in Ukraine 
and costs are high because the 
wrings are und erg r ou nd rather 
than opencast 

What keeps the mine in busi- 
ness is the cost difference 


iTijiriJ-.'-TiBH <Mi jnbiT’B«U:»iT K i 


1400km. by rail from Krivoi 
Bog and famKnp it less than 
50km. to the steel plant which 
guarantees the livelihood of 

tiiwnsaTwte a f farmtiaa through- 
out eastern Slovakia ori fte 
survival cf small towns such as 

Roznava. 


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Internationale Nederianden Bank N.V 
B ratisla va Branch 
Internationale Nederianden 
Securities (Slovakia) spoLs r.o. 
Palisfidy 36 
P.O. Box 123 
814 99 Bratislava 
Slovak Republic 









Tet 427316716 
Fax: 427312367 

Telex: 926S8INGBSK 
SWIFT: INGBSKBX 




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___ SLOV AKIA a. _ 

■ * ■ • • 

Heavy industries enjoy happier days as the tide of recovery starts to flow, writes Vincent Boland 

Austerity begins to pay dividends 


S lovakia’s smokestack 
industries were In the 
doldrums when the 
country became independent 
two years ago. But many are 
now experiencing a rapid and 
profitable revival on the bade 
of rising world demand for 
steel, chemicals and other 
basic industrial products. 

As a result this year has 
seen a remar kable tarnaromd 
in the country's finan cial 
health from a state rf near ^ 
sis dart® Mr Viator Mg 
jar's first year as prune minis- 

k^The outgoing government 
led by Mr Josef 

to power last March with a 
commitment to restart prfvatt 
sation and cut pubnc expendi- 
ture. 


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Slovak national agency for for- 
eign Investment and develop- 
ment: Much of it is small scale 
investment bum neighbouring 
Austria. The big European 
multhiatianals such as Volks- 
wagen, Siemens, Tetrapak and 
Rhdne-PoulBnc are present; as 
is Whirlpool of the US. But 
investments axe stfll small. 

Slovakia’s overall financial 
standing was Improved in July 
last year after pressure on the 
currency forced -a 10 per cent 


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year is whether the new gov- 
ernment continues with the 
privatisation programme 
restarted by the outgoing 

administration. Next. year’s 

budget is depend ent on 
SKRiSbn of revenues fiuco the 
National Property Fund, the 
body that . p rivate 

jptinn, This money has been 
earmarked for debt servicing. 
If it Is not forthcoming the 
budget-deficit will be higher. 

Mr Meciar's attitude to the 
new budget will hold the 
answers to some of the ques- 
tions b rin g asked of his incom - 
ing government.- Mr Moravdk 
says the draft budget assumes 
GDP growth of 2 per cedi "a* 
least” and inflation bebrw 10 
per f«nl It also, aims for & bud-' 
get deficit of 2 per cent of GDP, 


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•'• - A ly Scares in Sprint, the third largest telephone 
. >;A company in the DS, fell 11 per cent yesterday fol- 
i 1 ; t V' ■ lowing s warning that fourth-quarter tnamw would 
•' • A 7 be hit by price pressures in the long-distance mar- 
v J ket Aftlmr Krause, executive vice-president, said 
•• Vv tong-dictance income Would fell from its third-quar- 
: • . ter high of $185nL Rage 20 

’ ■7;V Csarlpto plana counter-bid for Roto 

. :...f A consortium formed by Cariplo, the MOan-based 
' • ' savings bank,'last ni^it armouiKed plans to launch 
• ■ • n. ’ ' a L21/50Oa-&hare counter-bid for 70 per cent of Gre- 
■ -• • '■, fflto Romagnoio (Rolo) of Bologna. Rolo is already 
; A feeing a L20,ooa«-share bid from Gredlto itaBann 
for 65 per cent of the company. 

Cariplo said the tnddfng consortium would 
-. s - include M, the former stateH»ntrolled baniing 
. group, and Cassa di Risparmio in Botogna, Rote’s 
- >-. h neighbour. 

: s,f Pravwntsas bids for rest of Aritoios 

. : Proventus, the Swedish investment group, yester- 

day Laimched a SKrlbn (?132m) bid to buy out the 
t 37 per cent outstanding st ake it does not own in its 

* subsidiary Aritmos, tbs sporting goods company 
.... which Includes Puraa. Page 16 


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Porsche, the loss-making luxury sports car maker, 
has set up a live-year DM30Gm ($191m) credit tine to 
fond the launch of what WendeKn Wiedeking, 
chairman, described yesterday as the biggest prod- 
**'» act offensive in the company's history. Page 18 

^ Bankers Trust faces sanctions 

7 US regulators are within days of issuing cavil com- 

plaints saying Bankers Trust violated anti-fraud 
; provisions of securities and commodities laws in 

c sales of derivatives to Cincinnati-based Gibson 
Greetings. Page 21 

ABW in miH deal with British Steel 

■; ASW Holdings, the Wales-based steal and construc- 

tion products group, is to swap its Scunthorpe rod 
mill business for British Steel's folly-diluted 3&2 
per cent stake in ASW. Page 23 

Tiphook makes trig cut In losses 

Losses at Central Transport Rental Group, formerly 
. lipbook* fell sharply in the six months to October 
SL .as the UK company reported lower exceptional 
charges and an improvement in trading. Page 23 

Record profit for Associated Newspapers 

Associated Newspapers, publisher of the Daily MaD 
and the Evening Standard, has produced record rev- 
enues and trading profits despite a newspaper price- 
cutting war in the UK. Page 24 

i Swob dismisses merger talk 

Sooth Western Electricity (Sweb), the UK utility, 
dismissed speculation that it could become fomatved 
in a merger or takeover as It. reported a 35 per cent 
increase in interim pre-tax profits and a 24 per cent 
dividend rise. Page 24 

Cooiiflides bi this Issue 


©no/la 


ASW ' 

Acatos & Hutchoeon 

MhdRado 

Abb •; --- 

Apolo Motais 

Arttmas 

Asda 




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Britah Biotech 
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Defly Mai 
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GM Hughes 
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JP Morgan 
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FM Worid todoes Ba 
FT Gold Mn» Max - 
FTASMA US boofl s«e 
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23 London Merchant Secs 
23 LovflB (YJ) 

23 M&G 

24 MIM 

23 Mertsuiy Asset Mangt 
ie MU-Stgtes 
18 MoOPgWe Smafler 
18 Morgan Stanley 
23 Murray Johnstone 

23 Nafl Health Labs 
22 New London Capita) 

12 Mke 

20 Normandy Poseidon 

22 Northern Electric 
r» O p tometries 

24 Pli* 1 

20 ^ 

71 Porsche 

V. Proventus 

Ftandooid 

ZL Reflenoe Security 
S Bepofa 
fj Roche 
2* Sahena 
» Saga Petroleum 

23 Stamens 
8 Stovnaft 

20 Smiths Industries 
20 South Western Beet 
23 Sprint 

BA Swiss Relmuance 

23 Swtesatr 
24. Termeco 

12 Total Systems 

24 Trafalgar House 
18 Union Carbide 
18 United Carriers 
24 Warburg (SG) 

20 Worth Inv Trust 
24 Yorkshire Water 


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20 SttoiutOBS 
20 URs equity spnoim 
20 London dare sente 

30 London trad options 
2 Managed Unto sente 
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“ Hem W! bond fesoos 
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31 Short-term U rates 
20 US Interest rates 

31 Word Stock Markets 


221 


24, 17 
24 
12 

1.22 

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12 


31 

34.35 


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_ - 


FINANCIAL TIMES 


COMPANIES & MARKETS 


©THE FINANCIAL TIMES LIMITED 1994 


Friday December 16 1994 


brother. 

TYPEWRITERS 
WORD PROCESSORS 
PRINTERS 
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Confident Siemens expects 20% advance 


By Christophw Parkes 
In Ftwddurt 

Mr Heinrich von Plerer. Siemens 
chatnnao, yesterday forecast a 20 
per cent surge in profits in the 
current financial year as 
Europe's biggest electrical and 
electronics group emerged 
strengthened from the recent 
cyclical and structural crisis. 

Despite further pressure on 
prices, more costly rationalisa- 
tion and unchanged earnings 
from financial investments, net 
profits would increase to about 
DM2bn (JLShn), he claimed. Sales 
would rise only about DBflbn 


above the DM84.6hn achieved in 

1993-94, white order *nbiTn> would 
increase by DMl.Sbn to about 
DM90bn at most 

News of brightening horizons 
at Siemens gave a lift tD the 

Frankfort stock exchange and 
the group’s own shares closed 
DM20.5 higher at DM623. 

Mr vim Pierer also announced 
his medium-tain target of raising 
the group’s return on equity to 15 
per cent from 9.4 per cent in the 
year under review and an expec- 
ted 20 per cent in the current 
financial year. 

In response to criticism that 
Siemens is too heavily focused on 


maturing markets, he said world 
markets offered long-term growth 
of 6-7 per cent a year. The group 
bad no great strategic needs such 
as acquisitions to enter new mar- 
kets or to fill technological gaps, 
he added, although spending on 
stakes in joint ventures in Asia 
would increase. 

Confirming a 17 per cent fell in 
profits in the year to September 
30 - although extraordinary 
gains from disposals bolstered 
the final figure to DML09bn - Mr 
vim Pierer noted higher produc- 
tivity had already cancelled out 
the effects of higher costs and 
lower selling prices. 


Cleared for final approach 


Net pro&tAoSS 

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Swissair in Belgian talks 
to gain stake in Sabena 


By Emma Tucker in Brussels and 
Michael Skapinker in London 

A radical change in the 
ownership of Sabena, the Belgian 
national carrier, was on the cards 
last night as Swissair, Switzer- 
land's national airline, confirmed 
it was in discussions with the 
Belgian government. 

fin a move that would provide 
Swissair with a secure foothold 
in the European Union's single 
aviation market, the airline's 
board of directors said, it had 
asked the executive management 
to take steps towards closer ties 
with Sabena. 

The board also stipulated the 
terms and conditions on which 
such a relationship would 
depend, but would not confirm 
r e p o rts that it was aiming for a 
49 per cent stake in the Belgian 
canter. “These matters are cur- 
rently the subject of promising 
discussions between the two com- 
panies,” Swissair said yesterday. 

It now looks likely that Air 
France's 25 per cent interest in 
the Belgian airline will be 
bought, either by the Belgian 
government or Swissair, dealing 
the way for a deal to go ahead. 


Air France owns two-thirds of 
Fmacta, a Belgian holding com- 
pany which has a 37*5 per cent 
stake In Sabena. The Belgian 
state owns 51 per cent of Sahena. 

Although the French carrier is 
thought to be reluctant to end its 
finks with Sabena, it has come 
under heavy pressure from the 
Belgian government to do so, and 
is understood to be ready to dis- 
cuss terms under which it would 
sell its stake. 

Mr Elio di Bupo, the Belgian 
communications minister, said 
negotiations would start “very 
soon”. The Sahena board meets 
today, and an announcement 
could follow as early as next 


In a letter to personnel, Mr 
Pierre Godfroid, the Sabena 
chairman, said: “Swissair wishes 
to acquire a significant share- 
holding in Sahena’s capital with 
a view to strengthening our 
shareholders' equity." 

Switzerland’s mafn airline is 
desperate to find a base inside 
the EG so it can take advantage 
of the deregulated sfogfo aviation 
market It is also worried that 
Switzerland’s continued determi- 
nation to remain outside the 


Union has resulted in unfavoura- 
ble treatment at key European 
hubs. 

“Swissair feels a bit out in the 
cold,” said Mr Quentin Quarter- 
man, an analyst at Smith New 
Court “It finds it difficult to get 
new European destination slots, 
especially in Italy." 

Pressure to find an entry into 
the EU increased after the col- 
lapse last year of the so-called 
Alcazar plan to merge Swissair, 
KT.M Royal Dutch Airlines, Scan- 
dinavian. Airlines System and 
Austrian Airlines. 

Sahena, which last year made 
losses of BFr4*5bn ($146m). has 
meanwhile been seeking to pres- 
sure Air France into reducing or 
selling its minority stake in the 
state-owned national carrier to 
enable the formation of a part- 
nership with another airixne. 

Sahena has long been seeking 
to forge new partnerships in an 
attempt to strengthen its interna- 
tional operations. Both Swissair 
and Sahena have code-sharing 
agreements with Delta Airlines of 
the US under which they link 
their route networks on booking 
Systems* 

OS airline safety, Page 8 


Swiss Re and GS Holding 
strengthen business links 


By tan Rodger in Zurich 

Swiss Reinsurance, the world's 
second largest reinsurance group, 
is to take a 20 per cent stake in 
the derivatives aim of CS Hold- 
ing. the financial services group 
built around Credit Suisse. 

Swiss Re will buy the holding 
in Credit Suisse Financial Prod- 
ucts, the CS subsidiary that is a 
world .leader in financial deriva- 
tive products, in a cash and 
shares deal. 

The compani es did not disclose 
details of the CSFP transaction, 
but as part of the consideration, 
CS Holding wifi raise its stake in 
Swiss Be from 5 per cent to 9 per 
cent 

At yesterday’s SFrTO4 closing 
price of a Swiss Be registered 
share, a 4 per cent stake was 
worth SFriLSbn <$lbn). 

Credit Suisse and CS First Bos- 
ton, which each own 50 per cent 
of CSFP, *fil see their capital 


stakes reduced to 40 per cent 

each. 

Credit Suisse, however, will 
retain a 56 per cent voting stake, 
thereby ensuring that its balance 
sheet backs up CSFP activities. 

CSFP has capita] and retained 
earnings of slightly less than 
glim. Last year, its net income 
totalled SFr444m* and CS has 
said i t has c ontinued to perform 
very strongly this year. 

Swiss Re and CS also 
announced a strategic alliance in 
financial and reinsurance 
products. 

The two are launching a $2tXttn 
insurance investment fond aimed 
at fledgHng reinsurance compa- 
nies, mainly in Asia and eastern 
Europe, and two other joint ven- 
tures. 

A second joint venture wifi be 
formed between Swiss Re and 
Credit Suisse, to develop prod- 
ucts for their common clients. 

A third, between Swiss Re and 


CSFP, would develop and market 
derivatives on reinsurance 
products. 

Ibis is the second major strate- 
gic move at Swiss Re in the past 
few months. In September, it sold 
off its direct insurance interests 
for some SFrikShn. 

Mr Lukas Mfihlemaxm, a man- 
agement consultant who joined 
the group as chief executive in 
August, said the group had 
decided to concentrate on its core 
reinsurance business. 

Swiss Re said it felt that the 
application of financial deriva- 
tives to risk management in rein- 
surance was a strategic area of 
the future. 

“We feel we have to be in it," 
the company said. 

CS said it was finding that 
reinsurance was hem ming an ele- 
ment in more and more of its 
business deals and saw the alli- 
ance with Swiss Re as an oppor- 
tunity to develop new products. 


In an nrnisiy>ny detailed report 
on the year just ended, Siemens 
provided for the first time a 
break-down of earnings by divi- 
sion. This showed, as expected, 

failing losses in the Siemens- 
Nixdorf (SNI) information tech- 
nology division and a much-re- 
duced financial result 
The mainstay business in tele- 
comm uni cations equipment and 
services generated DML12bn in 
pre-tax profits, while SNI lost 
DM39 im. Power generation and 
distribution earned DMlWm, the 
industry division DMil9m, trans- 
port equipment DM20lm, compo- 
nents DM300m, medical technol- 


ogy DM239m, and Osram lighting 
- including the US Sylvania 
acquisition for the first time - 
DM29im. profits from the energy 
and industrial products divisions 
fell because of lower sales, price 
pressure and heavy restructuring 
costs. Telecommunications earn- 
ings were hit by felling demand 
from east Germany and price 
cuts on public systems. 

SNI reduced its loss by an esti- 
mated DMiOOm despite continu- 
ing price cuts and high restruct- 
uring costs. According to Mr von 
Pierer, lower prices cost the 
group DM2Bbn last year, while 
restructuring rose DM800m to 


DM2.7bn. Further rationalisation, 
including the loss of at least 
12,000 jobs after 21,000 last year, 
would incur additional expense. 

although Mr FCari-Hermann Bau- 
mann, finance director, refused 
to elaborate. SNI would makg its 
first operating profit in the cur- 
rent year, he added, although 
restructuring charges would 
mean a further net deficit. 

Financial earnings would be 
about the same as in 1993-04, 
when they fell from DMl.Sobn to 
DMl^bn, he said. As announced 
earlier, the group will pay an 
unchanged DM13 dividend. 

Lex, Page 16 


Britain plays for time on 
electricity takeover bids 


By Michael Smith and 
David Wlghton hi London 

The UK government said 
yesterday it would retain its 
“golden” shares in the 13 
regional electricity distribution 
companies in England and Wales 
until March 31 1995. 

The statement was viewed in 
London markets as a stalling tac- 
tic while ministers considered 
the political implications of a 
possible bid by Trafelgar Bouse, 
the property, construction, hotels 
and dripping gro up , for Northern 
Electric, the electricity distribu- 
tor in the north-east of England. 

It strengthened the view that a 
bid might be referred for investi- 
gation by the Monopolies and 
Mergers Commission, another 
way of deferring it. “The govern- 
ment may be unwilling to make 
the final derision on such a polit- 
ically sensitive takeover itself," 
one analyst said. 

Trafalgar House said yesterday 
that any offer would not be 
financed by another rights issue. 
It is thought that Northern share- 
holders would be offered high- 
yielding convertible shares with 
a cash alternative underwritten 
by Hongkong Land. Trafalgar's 
2S per cent shareholder. 

Trafalgar shares added l'Ap to 
73V&P yesterday after it 
announced better-than-expected 
foil-year figures. Pre-tax profits 
were £45.6m (975m) compared 
with a loss of £347m in 1992-93. 

Northern Electric is thought to 


T rafa l ga r House 

Pre-tax profits' lossas (Em) 
300 — 


-100 

J2Q& • ■■ -*•— 

~30D 


-400 


1980 90 91 S2 96 


have turned down a request to 
meet Trafelgar board members 
because the potential predator 
bad made no formal proposals. 
Trafalgar announced on Wednes- 
day it was considering a bid. 

Northern yesterday requested 
an inquiry into the recent sharp 
rises in its shares. The London 
Stock Exchange said it was 
already “carrying oat inquiries 
into the circumstances surround- 
ing trading in the shares”. Shares 
in Northern fell 26p yesterday to 
9B0p yesterday, but most of the 
other U regional electricity com- 
panies (recs) rose further. 

The political sensitivity of the 
possible bid was underlined when 
Mr Martin O’Neill, energy 
spokesman for the opposition 
Labour party, said Trafalgar was 
attracted to Northern because of 
a slack regulatory regime 


enjoyed by recs. He called for any 
bid to be referred. The Monopo- 
lies Commission should be laying 
down ground rules for the future 
ownership of the recs once the 
government’s special share has 
expired.” 

Trafalgar House is still thought 
likely to go ahead with a bid. 
Although it has not ruled out 
launching an offer this year, the 
likelihood is that it will wait 
until January. 

* Mr John Deane, finance direc- 
tor of Southern Electric, who 
suggested earlier this week that 
his company would consider 
mergers with other recs, yester- 
day ruled out bidding for North- 
ern. “We would not want to get 
into a competitive bid,” he said. 

Speaking about Trafalgar’s 
results, Mr Simon Keswick, chair- 
man, said: “Much progress has 
been made and the company is 
well on the way to achieving a 
framework of strong central 
financial discipline combined 
with delegated operational 
authority.” He said that Trafal- 
gar was committed to developing 
“a portfolio of investments in 
infrastructure projects". 

It is thought Trafalgar will 
argue that a takeover of North- 
ern would provide it with the 
cashflow and additional skills to 
take advantage of the growth of 
design, build and operate 
schemes in Asia. 

Observer, Page 15 
Lex, Page 16; 

Trafalgar result. Page 24 


This au n om caacm appears as a snaur of rcconi only 


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^Turning computer disaster 
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■» - 




FINANCIAL TIMES FRIDAY Pl-CEMBHK. 1<S 1994 


t • 



J l-I 


INTERNATIONAL COMPANIES AND FINANCE 


Porsche sets up DM300m 
credit line for new models 


By Christopher Parkas 
hi RankAvt 

Porsche, the loss-mak i ng 
luxury sports car maker, has 
set up a five-year DM300m 
($l9lm) credit Hoe to fond the 
launch of what Mr Wendfilin 
Wiedeking, chairman, 
described yesterday as the big- 
gest product offensive in the 
company’s history. 

The financing for new mod- 
els - due in 1986 and 1997 and 
including the lower-priced 
Boaster aimed at younger buy- 
ers - was arranged by Dresd- 
ner Bazik’s Luxembourg sub- 
sidiary and J. P. Morgan, the 
company said. 

Confirming a sharp reduc- 


9iVt< 


tion in losses to DMl50m 

DM239m for the year to the end 
of July. Mr Wiedeking said the 
business was still on course to 
break even in the current year. 
Overall sales were ahead of 
budget, he claimed. 

However, he said car sales in 
the home market and France 
were tending to weaken, and 
complained that the introduc- 
tion in Germany of a 7.5 per 
cent income tax surcharge 
next month was unlikely to 
encourage consumer spending. 

Germany accounts for more 
than a third of Porsche marque 
sales, and is also the most 
important market for the Mer- 
cedes-Benz E 500 , which it 
builds on contract, and a 


souped-up joint-venture estate 
car, the Audi-Porsche Avant 
RS2. 

Porsche has close links with 
the VW group, owner of Audi, 
through Mr Ferdinand Piech. 
file VW chairman, who owns 
10 per cent of Porsche. 

Mr Pifich yesterday repeated 
his appeals for the German 
government to pay a scrapping 
premium for old cars to 
encourage new sales. He told 
VW workers that a lasting 
revival was not yet in sight in 
the domestic market 

However, worldwide group 
deliveries to customers rose 7.4 
per cent in the first 11 months 
with most growth in the US 
and Asia, he said. 


UK retailer beats forecast with 
47% profits leap to £108.7m 


By NeH Buckley m London 

Asda yesterday claimed 
success for its strategy of repo- 
sitioning itself as “Britain's 
best value food and clothing 
superstore” , as it outstripped 
profit forecasts and reported 
underlying sales increases well 
ahead of its rivals. 

However, Mr Archie Nor- 
man, chief executive, warned 
that the watershed era of 
intense competition and foiling 
margins in grocery retailing 
was likely to continue for 
another two years. 

The UK's fourth-largest gro- 
cery retailer announced a 47 
per cent increase in pre-tax 
profits for the 28 weeks to 
November to £108.7m ($169£m) 
from £74m - against City fore- 
casts of £97m-£106nL 

Last year’s figure wqs 
depressed by £14.4m losses at 
Allied Maples, the furniture 
and carpet subsidiary sold to 
Garpedand last December. But 
file core Asda chain’s operat- 
ing profits increased 17 per 
cent to £11 1.5m from £95. lm. 

Mr Norman, who was the 
first leading industry figure to 
warn that the halcyon days of 
food retailing were over, dis- 
puted claims by rivals such as 
J. Sains bury. Tesco and Argyll 
that the fall in industry gross 
margins in the past year was a 
one-off “step change”. 


Asda 

% 

Share price relative to the 
FT-SE-A Aft-Share Index 
200 


175 



100 


1992 . 
Source: FT Graphics 


“I don’t know bow they can 
say that with a straight face,” 
he said. “This was supposed to 
have happened a year ago, but 
gross margins have continued 
to decline in the last four 
months.” 

He said pressure on margins 
would persist as long as 
growth in industry selling 
space outstripped demand 
growth. Food retailers would 
be forced to cut prices further 
to avoid sales falling in exist- 
ing stores. 

Tougher government plan- 
ning restrictions, however, 
were likely to reduce the num- 
ber of new superstores being 
opened by 1996-97, so the level 
of excess capacity would foil. 

“The tightening of planning 


is the best thing that has hap- 
pened to the industry," Mr 
Norman said. 

Yesterday's figures demon- 
strated a further strong recov- 
ery in the fortunes or Asda. 
whose future looked in doubt 
in 1991 when it had debts of 
Elba. The group has paid off 
borrowings which stood at 
£82. 7m last April, and has net 
«wh of fllp-Wm. 

Asda is nearing fire end of a 
three-year recovery pro- 
gramme designed to transform 
it from a clone o£ Saimbury or 
Safeway into a store catering 
for “ordinary working people 
and their families, who 
demand value”. 

However, Mr Norman count- 
ered analysts’ fears that 
growth would now slow, say- 
ing there was still considerable 
scope for raising the perfor- 
mance of As da's stores. 

The store refurbishment pro- 
gramme would continue, with 
some stores replaced, and new 
information technology intro- 
duced. 

Total sales increased 8.4 per 
cent to £2.66bn. Like-for-like 
sales, which exclude new 
stores, increased 7.1 per cent - 
well ahead of Asda’s bigger 
rivals. 

The interim dividend 
increased from 0.55p to Q.61p, 
with earnings per share up 
from 1.79p to 2.62p. 


IRI looks 
at bids for 
flat steels 
producer 

By Andrew Hfil in Man 

The board of IRI, the Italian 
state holding company, yester- 
day agreed to examine the 
bids for flva Laminati Piani, 
the state-owned flat steels pro- 
ducer, In the hope of r&chmg 
a deal on file sale of the com- 
pany before the end of the 


Two consortia are under- 
stood to have submitted offers 
for ILP. One is an alliance 
between Lucchini, the private 
Italian steelmaker, Usinor 
Sacflor of France and Bolmat, 
a company formed by two Ital- 
ian steel traders. 

The other .links Riva, 
another private steel prodncer, 
and Tarnofin, a group of local 
entrepreneurs. 

IRI did not comment on file 
identity of the bidders or Am 
content of the offers yesterday, 
and is set to discnss the sale 
again at another board meet- 
ing before Christmas. The 
holding company is under 
pressure from the European 
Commission to complete the 
sale of . ILP before the end of 
the year, in line with a deal 
struck by EU ministers a year 
ago on state aids for Uva. If 
the offers prove unsatisfac- 
tory, IRI could start private 
negotiations, or invite 
improved bids. 

• Snia BPD, the quoted Italian 
chemicals and fibres company 
which is part of the Fiat 
group, is to invest about $50m 
in the construction of a nylon 
wrapping production line in 
the Basilicata region of 
southern Italy. 

The new line, operated by 
Snia BPD’s Gaffaro subsidiary, 
will have total capacity of 
4,000 to 5,000 tonnes a year 
and should start production in 
the middle of 1996. 

The company said the 
investment would help 
strengthen its position in food 
packaging, while the group is 
planning to invest a further 
$15m over four years in 
research and development cov- 
ering other market, sectors as 
welL 

The industrial and R&D 
investments are part of a pro- 
gramme of development in the 
region by Snia BPD, su pported 
by the Italian state. 


Proventus bids for rest of Aritmos 


By Hugh Camegy 
In Stockholm 

Proventus, the Swedish 
investment group, yesterday 
launched a SECrlhn (5132m) bid 
to buy out the 37 pear cent out- 
standing stake it does not own 
in its subsidiary Aritmos, the 
sporting goods company which 
includes Puma, the German 
sports shoe maker. 

Proventus said it had 
acquired the 15.2 per cent stake 
previously held by the Swedish 
food group CereaUa, which bad 
heen Aritmos's second chief 
shareholder, ft was offering 


SKt 33 per share In. cash for the 
remaining Aritmos shares, a 
p remium of SKr5 over the last 
paid price of SKr23 reached 
before Proven tus and Antmos 
shares were suspended on 
Wednesday. 

The total value of the Cer- 
ealia and remaining bid was 
SKrl.oebn, to be financed by 
bank borrowing, Proventus 
said- 

Proventus, 70 per cent con- 
trolled by Mr Robert Weil, a 
Sw edis h private investor, has 
holdings in several industrial 
companies including Van Roll, 
the Swiss group. But it has 


made sporting and ; leisure 
goods its main Interest since 
buying into Aritmos in early 

1993. 

Since it won control of Arit- 
mos it has restructured the 
group, spinning off the Monark 
Stiga bicycles and Abu Garcia 
fishing equipment divisions 
into separate quoted compa- 
nies in which Proventus 
retains majority shareholdings. 

Aritmos is focused on Puma, 
a previously troubled company 
which returned to profit in the 
first six months oF the year, 
fitonic, the second biggest sup- 
plier of golf shoes in the US, 


and Tretarn, a leading tennis 
ball- maker. Aritmos reported 
pre-tax profits of SKr22*Ira in 
the first six months on sales of 
■ g Krij-Shn, a tumround from a 
SKr722m loss lost year. 

The bid was favoured by the 
Aritmos board, but It 'declined, 
to take a definitive position 
until it had received an inde- 
pendent valuation. The offer is 
conditional mi acceptances 
assuring Proventus of 90 per 
cent ownership by February 3, 
but Proventus said it reserved 
the right to complete even if 
the response left it short erf 90 
per cent 


snarenoiaer. u was ouering me - — — - * - 

Repola plans sale of up to 30% 

of Rauma engineering unit 


By Christopher Brown-Humes 

in Stockholm 

Repola. Finland's largest 
industrial group, yesterday 
announced plans to sell up to 
30 per cent of the shares in its 
wholly-owned Rauma engineer- 
ing subsidiary to outside inves- 
tors. 

It plans to list Rauma on the 
Helsinki stock exchange to cre- 
ate “a more independent and 
high profile position” for the 
unit. Repola's main operation 
is its forestry operation. United 
Paper Mills, which accounts 
for nearly 70 per cent of overall 
annual turnover of about 
FM27bn ($5.5bn). 


Rimma has four divisions: 
Timber: ack (forest machines), 
Sands Defibrator (Fibre tech- 
nology). Neles-Jamesbury 
(Industrial valves) and Nord- 
berg (crushers). 

The decision to sell part of 
the unit comes at a time when 
demand is improving - in all 
four divisions due to economic 
recovery and an increase in 
machinery orders in the pulp 
and paper sector. 

The group Is benefiting from 
its strong position in the North 
American and Asia-Pacific 
m arkets. 

Exports and overseas activi- 
ties account for about 90 per 
cent of Rauma’s annual turn- 


over of about FMSbn. 

In the first eight months of 
1994, Rauma doubled its oper- 
ating profit to FM247m from 
FM124m as turnover climbed 
by an underlying 9 per cent to 
FM5.l8bn. 

The unit's order book at the 
end of August was up 75 per 
cent at FM4L81bn, 

The Rauma shares, which 
will be sold to domestic and 
international investors next 
year, may be listed on an over- 
seas bourse at a later date. 
Advisers to the issue are 
S. G. Warburg Securities and 
Prospectus Dy. 

Repola’s shares ended the 
day FM3.50 higher at FM85-50. 


Slovnaft offering returns next year 


By Vincent Boland 
in Bratislava 

Slovnaft, the Slovak 
petrochemical group that was 
forced to postpone a planned 
1100m international share 
issue because of domestic polit- 
ical instability and uncertainty 
on world stock markets, is to 
by again early next year. 

The offering, which mil be 
the first such deal by a Slovak 
company, was postponed in 
late November, but a senior 
official at Kidder Peabody, the 
US Investment bank leading 
the offering, said recently that 
it was scheduled to be 
relaunched in the first quarter 
of 1995. "We hope there will be 
a more receptive market,” he 
said. 


The offering is due to fellow 
a rights issue of up to 3L3m 
shares to existing Slovnaft 
shareholders. The state owns 
80 per cent of the oil refining 
and chemicals group, and the 
National Property Fund of Slo- 
vakia, which administers state 
shareholdings, is believed to 
have indicated that it will not 
take up Us allotment 

This will allow those shares 
to be offered to foreign insti- 
tutional investors. The state's 
shareholding would then fall to 
about 65 per cent Other Slov- 
naft shareholders include Slo- 
vakia's large investment priva- 
tisation funds. 

There is still uncertainty as 
to the future of privatisation in 
Slovakia. The new government 
headed by Mr Vladimir Meciar 


and appointed this week has 
postponed a SKrtiObn ftUftm) 
voucher privatisation pro- 
gramme in order to remove 
electricity and gas distribution 
company shares from the 
sell-off. 

Investment fund managers 
say this will reduce the sire of 
the voucher programme and 
dampen investor enthusiasm. 
The delay is expected to be for 
up to three months. Since Slov- 
naffs decision to postpone the 
share issue its supervisory 
board has been removed and 
replaced by allies of Mr Meciar. 

Slovnaft’s profits are expec- 
ted to jump to SKr3bn this 
year compared with SKrl.6ba 
in 1993. 

Slovak survey, separate 
section 


ETBA 



HELLENIC INDUSTRIAL DEVELOPMENT BANK SA 


REPHRASED 


INVITATION TO DECLARE AN INTEREST IN THE PURCHASE 
OF A MAJORITY BLOCK OF UP TO 100% OF THE SHARES 
OF "HELLENIC SHIPYARDS S.A." (SKARAMANGAS) 

within the framework of the Greek government's policy of privatising afllng carrpanles and Greece's 
fulfilment of Hs obligations towards the European Union and following a decision of the Inter-mlnlstertai 
Co mm itte e tor Pe n attona Pe atton, Helenic Industrial Development Bank SJV. (ETBA), sole sh are holder of 
TCLLEMC SWYARDS SA.”. (hereinafter referred to as foe shipyard) is inviting Interested parties to submit 
initial written declarations of Merest in acqtatog a majority block of up to 100% in the company^ shares. 

THE COMPANY 

Since 1985, ETBA has been the sate shareholder of the Company, which owns and operates the 
Sk a ratna n gas Shipyard (hereinafter referred to as the Sh^yard). 

The Shipyard is the biggest Shipyard in Greece and the largest shipbuilding and shiprepairing yard in the 
Eastern Mediterranean area, occupying an area of 832,000 square metres with building installations 
covering 83,000 square metres. 

The Shipyard has two dry docks (500,000 DWT and 250,000 DWT) and three floating docks (72.CKX) 
DWT, 60,000 DWT, and 37,000 DWT), as waR as hoisting machinery and tug boats. The Shipyard offers a 
foil range of ship repair services for ail types of vessels. Sfoce foe commencement of its operations In 1957, 
repairs have been carried out on approximately 7,800 vessels totaSng 350,000,000 DWT. 

The ShfoyaRl aSso has a btedng berth (200 m x 28 m) for foe construction of vassds up to 40,000 DWT. 

A contract is currently performed for the construction of three MEKO-200 class frigates as well as a 
weapons systems programme for patrol vessels butt for the Hellenic Navy. The Company has also entered 
and is executing agreements lor foe manufacture of rolling stock tor the Hellenic Railways Organisation 
(OSE) and the Athens-PIraeus Electric Rafiways (ISAP). 

The Shipyard has ail the necessary operating certificates as wed as a quality assurance system (AQAP- 
4) which is Implemented in foe construction of trigates for the Hellenic Navy. 

The workforce currently totals 3,092 employees. 

The average annual turnover of the Shipyard during the period 1991-1993 was $95 mflBon. 

FINANCIAL RESTRUCTURING PLAN 

The Company wfli be flnandafiy restructured before being flnafiy transferred to is new owners. 

The restructuring plan provides for the wrtttog off of 98% of the Company's debts to the Greek state, 
banks, public utSties and Greek social security organisations, with the consent of the Company's cretflto ra 
in accordance wkh article 44 of Law 1892/90. 

TERMS AND CONDITIONS 

In view of the fact that the Shipyard win be transferred white in operation, foe new owner wtB undertake 
the commitment to fulfil foe contractual obfigations already assumed by the Company, inducting contracts 
with the Hellenic Navy. OSE. ISAP. and wfil be entitled to the corresponding rights. 

The criteria to be apptied when evaluating tenders wifi be the commitment to continue the oper atio n of 
the Shipyard tor at least ten years (without excluding any other paratiel lawful use), foe number of Jobs 
secured for a period of at least six (6) years, any possible benefits to employees, the purchase price, foe 
business/inve st ment plan, foe financial solvency and business retiabfflty of the parties participating in the 
bidding. 

The buyer wffl transfer without consideration 5% of foe company's shares to foe employees of foe 
company. 

PRIVATISATION PROCEDURE AND TIME SCHEDULE 

Interested parties should contact ETBA at the address below in order to receive a copy of the Letter or 
Confidentiality which must be allied before they can receive the Information Memorandum. 

Parties receiving the Information Memorandum will be able to be briefed further by the Equity 
Participation Division of ETBA and vtatt the Shipyard. 

Prospective Interested parties are hereby Invited to declare their Inttai non binding interest in purchasing 
the shares of HELLENIC SHIPYARDS SA.”, and submit any relevant observations, suggestions or 
proposals not later than 5 January 1995. This Invitation to declare an interest will be followed by foe 
proclamation of the International pubBc tender, during foe course of which prospective buyers should submit 
btodtag offers. 

ETBA reserves foe right to modify foe privatisation procedure and the time schedule if this is deemed to 
be n its own or the Company’s interests. 

After 20 December 1994, and provided they have signed foe Letter of Con fid e n ti a lity, interested parties 
wit be able to obtain the Information Memorandum from etba: 

Equity Participation Division, 87 Syngrou Avol, 117 45 Athens (contact Messrs. N. Anyphandis, 
teL: (01) 9294612 and A Papatflmibfou, teL: (01) 9294609, fax: (01) 9241513, (01) 9241518). 


rSTTTUTO BANCARIO 
SAN PAOLO Dl 
TORINO S.P.A. 
LONDON BRANCH 
ECU 150.000.000 
FLOATING RATE 
DEPOSITARY 
RECEIPTS DUE 1997 

For the period 
December 16, 1994 to 
June 16, 1995 the new 
rate has been fixed at 
6,95 % PA 
Next payment date : 
June 16, 1995 
Coupon nr : 6 
Amount: 

XEU 35 

for the denomination 
of XEU 1 000 
XEU 351 
for the denomination of 
XEU 10 000 
XEU 3 514 

for the denomination of 
XEU 100 000 

THE PRINCIPAL PAYING 
AGENT SOGENAL 
SOCIETE GENERALE 
GROUP 

15, Avenue Emile Reuter 
LUXEMBOURG 


CREDIT LYONNAIS 
USD 500.000.000 FRN 
Dae 1996 

Bondholders arc hereby 
informed that the rate for 
the Coupon N°8 has been 
fixed at 6 J % for the period, 
starting on 14.12.1994 until 
13.03.1995, inclusive, 

_ a period 
of 90 days). 

The Coupon N° 8 will be 
payable on 14.03.1995, 
at the price of 
USD 1 62.50 for the 
USD 10.000 Notes, and 
USD 1.625 for the 
USD 100.000 Notes. 

The Principal Paying Agent 


CREDIT LYONNAIS 




Notice to hoWas of 
ILS. $506,0004)00 

Global Mark International 
Limited 

Exchangeable Beads due 1997 


ET IndoPood Sokscs Makrour 

Nutkv r. berdjy given. and 
Bon dh old er* arc minded, ttea (he 
Fjtdnmgc Code. 21 dcfiaal amkr 
CancfiiMt HAKi) of die kenm ml 
amfitkm rCbabufr*) of ite above 
Bonds, is to ftbvuay. 19*5. Or tfref 
<hc? jifl Bomh will be aamimrfty 
odanpl fir onfiitsy shores of Rp. 
UXX) pv value each of P.T fadofood 
SnktrfcMahnir 

Not bur than Udi bmrey. W95_ hang 
25 day* prior bo (he Exctangv Dade, 
B o nilhnh i rr. muaf tfumpkte an 
Rxdtunpc Nonce mad Jdfrcr the reroe 
io the.'ipcrifial office of any RuAvge 
Agafi as set out in Gooduton 6(B). The 
marina of BondwUas a fawn lu tire 
CbndhioB* %jf fh: abtmr Ronds, aid 
Cundkwn 6 b particular, for a fall 
description of actions required id Ik 
okaa in eaonocuoa widi tadi ddnagr 
and of ihe c onregncnac* of fading bo 
submit an Esdsqpe Nonce. "Itaccanatf 
laday Age m nr 77 k Char 
Mjmhadao Baft. NA, Warigae 
I Lure. Cbfesnao Street London EC2P 
21 fD and 4 Ouse McnoTedi Cater. 
Brooklyn, NY 11245 and Chare 
Manhattan Boik Ijmcoibottg SA. 5 
ro PlKi^ L-Zia Um nb mijL 
CMal Marti latera aU ort Liititcd 
Uta December. 


To Advertise Your 
Legai Notices 

Please contact 
Tma McGorman 

on +44 71 873 4842 
Fax: +44 71 873 3064 



European 
investment Bank 

Itafian Ura 300 BOron 
Capped Rotting Rate Notes 
due 1999 

Notice to the Holders 

Notice is hereby given that the 
Notes carry an interest rate 
of 10% per annum for the period! 
15.12.1984 to 15.03. 1995. 

• I7I_ 125.000 

per m 5.000.000 normal 

* m. 1.250000 

per m 50000.000 nominal 

Luxembourg, December 16, 1994 



UAS200JOQOJOOQ 

MARINE MtQLAlMQ 
BANKS, INC. 

Floating Rate 

Subortfnared Noras One 2000 


05% p* 


U a 650400 Noto! 


lftn Marfa SB 


US SBTZS0 


(5 Xiv.tr Rmic* 


DO YOU WANT TO KNOW A SECRET? 

The LD.&, Gn Sentoar wfi show you how the martete REALLY writ The amadng 
biting techniques of foe legentoy W.DL Gam ewi hereneyaw profis am cortrin yow 
loraeB. HoW7 Thste tin secret Ring 061 474 0080 u book your FT£E ptaooL 


NOTICE 

Adjustment of Subscription Price 

Daiwa Industries Ltd. 

(tbc tf Compa«if <r } 

Bearer Warrants to subscribe 
for shares of common stock of 
the Company (the "Shares*! 
issuedwith li5-$50, 000,000 
1% per cent. Guaranteed 
Bonds 1997 

Notice is hereby given tiuit the 
Company has n^oJvcd a ibe 
meeting of the Board of Director* 
held on 28th November, 1994 lo 
split the Shares fthc ''Stock Split*) 
owned by the shareholders 
appearing on the dosing ngpsfcr of 
shareholders of the Company as at 
3!st December, 1994 (substantially 
as at 30th Dctcmlw; 1994, as 3 1 si 
December is not a business day of 
the fransfer Ageruof the Company) 
(Japan time) al the rale of one point 
two {1-21 Shares to one 01 Share heW 
by them; provided, however, that 
the fractions of a full Share occurrins 
upon such Stodc Spfit shaif be sokf 
as a whole and the proceeds of 
the sale shall be distrilwted to 
the shareholders entitled thereto 
in proportion to their fractional 
interests, and as a result of such 
Stock Split, the Subscription Price 
for the captioned Warrants shall be 
adjusted as follows: 

Before adjustment: Yen 1384.00 

per Share 
Yen 1,153.30 
per Share 

Effective dote: 1 si January, 1995 

• (Japan time} 


Alter adjustment: 


DAIWA INDUSTRIES LID. 
3-13, Azuchi-machi 2-chome, 
Chuo-ku, Osaka. 
1 6th December, 1994 


CUT 

Gatae Rationale cfes 
TSIdcoaimantcatkons 

FF 2,000,000*000 

Floating Rate Bonds 
due 1997 

Notice is hereby given chat 
for chc InruPM Period l?tb 
December* 1994 wi 1 5th March, 
1995 ihc IVukls will carry a 
Rare of Intense of 5.93JS per 
cent, per annum with a Cnupun 
anHHinc if FF 146.44 per 
FF 10,000 Bond mul FF L.4S4.38 
per FF 100,000 Bond. The rele- 
vant interest Payment Date will 
be IfrLiMiiith, MW. 


i Banker* Trim 

f Company ,LotaJoK> Ajecm Honk 


£5,500,000 

HMC MORTGAGE ASSETS 
1Q2PLC 


Mortgage Backed Floating Rato 
States due March 2021 


due March 
For the i n t eres t Period item 
December 14, 1994 to Manh 14, 1895 
me Note Rate has been determined 
at 7A% per annum. The tnteost 
payaote on the relevant Interest 
date. March 14. 1995 reft 
£1,824.66 per ClOtVOOO nominal 
amourtL 


payment 
be C1.82- 


Lineoa.AgsfltDM 
December 16,1984. 





Sovereign (Forex) Ltd. 



let 071-931 9188 
fine 071-931 H 14 


laadMSWIWOSE 



wMcwee CRB lafoTecfc w,. jv. pafam 



JS YEARS Of HISTORICAL PRICES TOR 
CASH, FUWXBS. OPTIOHS <Wf 
INDEX MARKETS. 

AYHrtBSQFiVN»Uian>U.B4PaRMKQaN 
ON OVHlttDCnMMODmE. 

“*r n UK Mnta tanri talk CUB 
CMMndilr Vcw Book, dn Wblc* atlbo 
fiuora i*fcanT. baUUna 

toewloJ ilx^CRBIaftntadi jho p mi hh» <faBy 
ptoe qadaa «ta KK4>Ne. Kni^i.RiAk]<. 


Greedy tote jwi 
INFORMATION: PAm ifcr Vtitil 

1IIY 

TfcL *44 8424083 


wi ^tn 


Cfln' r'.cv; 'o snvo 

-■-•'F -r '- V " 
*j : vc‘r City 

Sp'OV.di.d •*.‘T '!/ 
j: 


0121 

423 

3018 


Powerline 



BANK OF GREECE 

US4 500.000,000 

Floating rate notes 1998 

Notice is hereby given that 
the notes (trig bear interest 
at 7. 1875% per annum far Ota 
period 16 December 1394 to 
IS March 1995, Interest 
payable on 16 March 1995 per 
US$1,000 note wilt amount to 
(JSSfr.97. 

Agent Morgan Guaranty 
Trust Company 

JPMorgan 


Berlin bank 
proposes to 
raise dividend 

By Judy Dempsey in Bortln 

Bankgesellschaft . Berlin, 
Germany's sixth largest bank, ■ 
intends to raise its divided for 
1994, Mr Hubertus Moser, co- 
chairman, said yesterday. \ 

The plan to lift the dividend “ 
from last year's DM9 by at 
least DMi was announced as 
the bank gave details of 10- 
month results. 

The bank was formed ' 
through the merger feist Janu- 
ary of the state-owned Landes- 
bank Berlin, the private Ber- 
liner Bank, and the private . 
Berliner Hypotheken-und 
Pfandbriefbank mortgage 
banks. 

The bank's consolidated 
business volume rose to 
DM3S4.5bn (*l47bn) tor the 
first 10 months of the year, 
compared with DM222bn dur- 
ing the first six months of hs 
operations. Real comparative 
figures on a year-on-year basis 
will only be available in 1995. 

Consolidated operating 
results rose to DM999m com- 
pared with DM734m from Janu- 
ary to June. After taking into 
account risk provisions 
an ointing to DM608m, operat- 
ing results totalled DM669 hl_ 

The risk provisions, which 
amounted to DM326m during = 
the first half of 1994, had been 
increased because of Bankgfr ■"*' 
selischaft’s exposure of 
DMiOOm to Balsam, the sports 
grounds company which ear- 
lier this year ran up large : . 
debts. The bank.hsd a further . 
DM70m of exposure from the * 
collapse erf the JOrgen Schnei- 
der property company. 



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&BINGLEY 

• to ■ I q , m a i ■ fi I ■ i «■ . 

amaoojaoo 

Rooiino ftaie NateMtoft 199G '. ... 

In aonitfenca with fos torn* and 
wncKtiona of the Notes, th, itmrtM 
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rawest payable on ifth Match 
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Agent Bank . 

ROW BANK 

of Canada 


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•^cmpreiicn^'sc axcis nation* of U;e oil morkc-ts’ 

« AI . — Petroleum Argus 

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Service Corporation International 


has acquired 


Plantsbrook Group pic 


Morgan Guaranty assisted in the negotiations , co-mnnaged 
the tender offer, and acted as co-Jinnncial advisor to 
Service Corporation fntemntionnl 


JP Morgan 


Scplfmixr / 99 V 


Hus armouiicrment is neither an offer to sell nor a solicitation of an offer to fair these securities. 
Hie qffir is made only by the PmsfjecUut Supplement anti the minted Prospectus . 

December 6. 199-t 


7, 700,000 Shares 


Service Corporation International 

Common Stock 

(fxir value $ 1 per share) 

Price $25.50 Per Share 



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in ary Jurisdiction from Use undersigned and such other dealers as mar 
lawful/} - offtT these securities in such Jurisdiction. 


2^510,000 Shares : 

International Offering 

J. R Moi^gan Securities Ltd. 

IVterrill f.ynch International Limited 

Cazcnovc & Co. 


ABN AM BO Bonk NX 
Coituncnsbaiik AkUcngcseUsdiaft 


BNP Capital Markets limited 
Credit Lyonnais Securities 


J. Henry Schroder Wiigg & Col limited Soci6t£ G6n6rnlc 


UBS Lmiited 


5;590,(K)0 Sliarcs 

United States Offering 

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J. R Morgan Securities Inc. 

Merrill Lynch & Co. 

CS First Boston 


Tlic Clilcago Corporation 
William BUur & Company 
Kidder Rjabody&Ca 

Iwtepiiiilftl 

Montgomery Securities . 


Dean Witter Reynolds Inc. 

Raymond Jumcs & Associates, Inc. 
A.C. Kchvards & Sons, Inc. 
I .eg; Mason Wood Whlker 

lnterpuiflird 

Williams MacKav Jordun 6c Co-, Inc. 



This antUM/icemenl is nriUter an offer to sell nor a solicitation of an offer to fay these securities. 
Ihe uffer is made wily hr the Proxfiedux Supplement anti the related Pnosjjeetus. 

N<*w liHiie/Drmnlirr ft. 19*M 


3,450,000 Shares 

SCI Finance LLC 

$3,125 Term Convertible Shares, Series A (“TECONS”) 

(litp/idalion preference $50 fur share) guaninhvd lo the extent set 
forth in the Pmsfiectns Sttfif dement tuitl rehtted Prrixf/ectus //>; 
and convertible into Common Slock of 



Service Corporation International 

Price $50 Per TECONS 

Capri's of the Pnmjmtus Supplnnml and the rrlnlnl /'/myxrfrtf iwfiv be ofiUiinrtl 
in tmr Jurisdiction from Uie undentigneil and surh other dealers as may 
lairfully offer Uiese securities in such Jurist iiclitm. 

X I? Morgan Securities Inc. Merrill Lynch & Co. 


This announcement is neither an offer to sell nor a solicitation of an offer to fay Uiese securities. 
'Hie offer is made ordybyUie Prnsfiecltts Supplement and Uie ndtiled Prtisfjeclus. 

New lsHir/Drmiit)erft. IW+ 

$ 200 , 000,000 



Service Corporation International 

8 : Vs% Notes due December 15 , 2004 

(Interest payable June 15 and December 15) 


Price 99.247% 

C.ofHes of Uie l > ros/irctus Supplement arid the related Prospectus mtn m be oblainnl 
in any Jurisdiction from Uie imrlersigned anti such oUier dealers as any 
hatefully offer these securities in such JurisdicUon . 


X R Morgan Securities Inc. 

CS First Boston 

Dean Witter Reynolds Inc. 

Merrill Lynch & Co. 



Service Corporation International 

£185,000,000 
Bridge fxian 

Commilmeril prodded by 

Morgan Guaranty Trust Company 


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Companies seeking strategic advice and superior execution 
across their capital structure can rely on one firm. 



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J. R Morgan Securities Inc. arranged this hart facility 
for the acquisition of Plantsbrook Group pie 


JPMorgan 

m 

September 1994 


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FIN ANCIAL TIMES 


FRIDAY DECEMBER I6I994 


INTERNATIONAL COMPANIES AND FINANCE 


Sprint shares battered by 


price pressure worries 


Nike to buy 
ice hockey 


Highs and lows of forex 


By Clara Gas 
to Now York 


Shares in Sprint, the third 
largest telephone company in 
the US, fell U per cent yester- 
day following a warning that 
fourth -quarter income would 
be hit fay price pressures hi the 
longdistance market 

Mr Arthur Krause, executive 
vice-president and chief finan- 
cial officer, said long-distance 
Income would fall from its 
third-quarter high of $165m, 
although it would remain 
above 1993’s fourth-quarter fig- 
ure of $133m. 

The change from the strong 
growth seen in recent months 
knocked ?3% off Sprint shares, 
which were down to $27% in 
early trading. 

“Competition for residential 
customers has intensified 
during the quarter and 
we have seen price pressures 
in the business market," 


Mr Krause said. 

AT&T, the biggest long- 
distance phone company in the 
US, recently launched a mar- 
keting campaign. Sprint said, it 
planned to target advertising 
and marketing spending in 
profitable areas, but refused to 
give farther details. 

Long-distance phone services 
account for the bulk of Sprint’s 
income, amounting to 71 per 
cent of its net in 

the third quarter. 

However, Mr Krause said 
Sprint expected growth 
in volume for the fourth 
quarter compared with a 
year ago, adding that volume 
in tiie long-distance division 
would increase by between 
10 and 11 per cent 

The Kansas City-based group 
has formed a series of alliances 
in recent months to meet the 
growing competition in the US 
teleconmumlcatums industry. 
In October, it formed a partner- 


ship with three US cable com- 
panies to provide telephone, 
enter taiimigni and info r matio n 
services. 

On Tuesday, Sprint 
announced an glljw** with 
TeMfcuos de Mexico (Talmas) 
to provide services throughout 
North America. ' 

Sprint said at the time its 
alliance with Telmex would 
help it create a seamless North 
American telecoms network. 
Sprint is already aligned with. 
Call-Net, a Canadian 
long-distance canter, and oper- 
ates four cross-border fibre 
optic connections with. Tebnex 
between the US and. Mexico. 

Mr Krause said that local 
and cellular operations were 
continuing to perform In line 
with expectations’'. Cellular 
operations, which accounted 
for 14 per cent of the compa- 
ny’s net Income in the third 
quarter, were its fastest growth 
area. 


equipment 

producer 


A strong yen worked for some Japanese groups, writes Gerar 


C orporate casualties of 
the yen's sharp appreci- 
ation in the past five 
years are a familiar story. Most 
of them are manufacturers 
who have been forced to cut 
margins as the prices of their 
exports have risen strongly. 

However, the increasing 
availability of more sophisti- 
cated corporate treasury 
operations in the same period 
has meant that some compa- 
nies have been able to offset 
some of those losses by hedg- 
ing in the forward foreign 


By Robert Gfobene in Montreal 


Investors welcome spin-off 


Nike, tiie US sports footwear 
and apparel group, is buying 
Canstar, Montreal, the world’s 
biggest ice hockey equipment 
maker, for CS546m (US$396m) 
cas h . 

Canster’s largest sharehold- 
ers, including chairman Mr 
Icaro Olivieri, own 46 per cent 
of the equity and will tender. 

Mkfi’s price is C$27 JO per 
Canstar share compared with 
Canstar’s share price of C$17 
in tiie market at Tuesday's 

dose. 

Nike said Canstar’s principal 
brands, Bauer and Cooper, had 
global reputations and would 
give Nike entry into team 
sports equipment. 

Canstar has a strong posi- 
tion in in-line skating, roller 
hockey and figure skating 
equipment. Wke said Canstar 
would operate as an autono- 
mous unit with existing man- 


Forward foreign exchange comj 
Sept 1303 -Sept 1994 {Ybn) 


Top 10 winners ... and losers 


HIT 


Dn-lcM Securities 
CNyoda Cotp 
Hitachi Zosen 
Honda Motor 
HtacN 


+18JQ All Mppon A*W*y* 
+&A Tokyo Secorftieo 
-tSJS Hkabo Cofp 
+R5 8»v*r Seiko 
+03 MteubtsM Estate 
4&1 ftijfts Com 
421 Mm Houee Industry 


-UJL7 

-3.1 

-2.7 


Chobu Bectric Power 


*2 . 0 Hankyu Corp 


-1JB 

-1.7 

-IjB 

- 1-0 

-1j* 


Ttoe £**> 


of General Mills restaurants 


By Richard Tomkins 

bi New York 


Investors have welcomed the 
decision by General Mills, the 
US food group, to spin off its 
restaurant business and con- 
centrate on breakfast cereals. 
Yesterday its shares rose $1% 
to $57% in early trading. 

The restaurant business, 
forecast to have revenues of 
$3Jbn in the current financial 
year, has nearly L200 outlets, 
including the nationwide Red 
Lobster and The Olive Garden 
chains. 

Late on Wednesday, General 
Mills said it was divesting the 
company to shareholders, giv- 
ing them one share in the new 
business for each share in the 
existing company. The restau- 
rant company, so far unnamed, 
will be quoted on the New 
York Stock Exchange. 

General Mills said that after 
the split, it would become a 
tightly-focused consumer food 
group with expected sales this 
financial year of about $5.5bn. 

The move completes a long 
period of reorganisation for 


Sham prise (3 
■76 — 


70 - 


90; 



iabs 


General Mills, during which it 
has disposed of numerous 
peripheral business including 
Kenner-Parker toys, Eddie 
Bauer clothing and Monet cos- 
tume jewellery. 

Mr Bruce Atwater, chairman 
and chief exec ut ive, said the 
latest divestment would 
enhance shareholder value 
because separate organisations 
with separate incentives would 


produce the strongest growth. 

The split is due to take place 
in June next year when Mr 
Atwater, now 63, retires. In the 
meantime, Mr Stephen Sanger, 
the 46-year-old president of 
General Mills, has been 
appointed president and chief 
executive officer of the com- 
pany. Mr Joe Lee, General 
Mills ’s 54-year-old vice-chair- 
man, will be president and 
chief executive of the restau- 
rant operation. 

The spin-off comes as both 
parts of the business face 
tough competitive pressures. 
The food side of the business, 
in particular, has been suffer- 
ing from tough competition in 
the US breakfast cereal mar- 
ket Earlier this year. General 
MlTls cut promotional spending 
and slashed prices in an 
attempt to increase market 
share. 

The casual dining sector is 
also highly competitive in the 
US. Yesterday General Mills 
produced figures for its second 
quarter to November showing 
that restaurant profits had 
fallsi by 3 per emit 


JP Morgan 
warns of 


profits fall 


J.P. Morgan, the US bank, 
warned that its profits for the 
last quarter of the year would 
not match those of tire previ- 
ous three months, due to 
weaker trading revenues, 
writes Richard Waters in New 
York. 

The announcement signalled 
a weak aid to the year geni- 
ally for banks which are active 
in the en^nrfni markets. 


At the same time; many busi- 
nesses have seen, their perfor- 
mance deteriorate as a result 
of large losses on the same con- 
tracts. 

Precisely who were the win- 
ners and losers and how big 
were their gains and losses 
was unclear until tins autumn, 
when companies were required 
for tire first time to disclose in 
detail their profits on currency 
hedging. A new collation of 
company’s results published 
yesterday by Tokyo Shoko 
Research, a private financial 
research institution, shows the 
extent to which Japanese busi- 
nesses have used this partks*- 
lar de ri v ati ve instrument, and 
how varied the performance 
has been. 

Total gains among compa- 
nies listed cm. the Tokyo Stock 
Exchange neatly balanced 
losses. Altogether, 211 compa- 
nies recorded losses of a com- 
bined YSftfisi ($SKUm) in the 


year to tire sod of September, 
as a result of tire yen’s rise, 
while 162 reported gains of 


(JAL) suffered the largest loss 
of any company, at Y43.9bn, 
four times as large as the next 


Transport companies, espe- 
cially airtmoKj proved the big- 
gest losers. Between them, 
rmn panfos in the transport sec- 
tor lost more than YSfihn. 
Other losing sectors were tex- 
tiles and steel Net losses for 15 
textile manufacturers were 
Y3.4hn, while eight steel- 
makers lost a net Y2.6bn. 

As might be expected, securi- 
ties companies recorded the 
largest net gains. Between 
them, 12 brokers managed 
g«i n«i of more than Y6bn. 
Other net gainers were trans- 
port and electrical engineering 
companies. 

The country's two leading 
airlines , both lost heavily as a 
result of long-standing con- 
tracts to purchase US dollars 
at exchange rates that were 
not realised. Japan Airlines 


biggest laser, AD Nippon Air 
lines (ANA) with losses total- 


ling Y10.7bn- 


J AL begun hedging the 
dollar-yen rate in 1985, 
concluding contracts to 
buy a total of $3.6bn at an 
exchange rate of Y16557 to tire 
dollar at a series of st ip u la ted 
dates. ANA made arrange- 
ments to buy $798m at an 
exchange rate of Y111A5. Both 
companies’ moves were 
Intended to insure them 
agrinat a sharp depreciation of 
tire yen in advance of contract 
payment dates for the 
purchases of foreign air- 


In fact, the yen rose well 
above the contracted levels 
and continued to rise. At the 
end of September 1994, the 
exchange rate stood at 


Setback for Fuji Photo Film 


By IBcNyo Nafcamoto 
bi Tokyo 


$1.69 a share in the latest 
period at Morgan, compared 
with $1.63 in the previous 
quarter. 

In the final three months of 
1993, a period when bond mar- 
kets around the world 


earned $1.92 a share. 

In spite of tire warning; tire 
bank lifted its quarterly divi- 
dend by 7 cents, to 75 cents. 


Fuji Photo Film yesterday 
cited fierce competition in tire 
floroegtlfl market a nd the sharp 
appreciation of tire yen as tire 
main factors behind a 4 per 
cent drop in foil-year nortcon- 
soEdated recurring profits. 

Revenues in the year to 
October 20 fell 6 per cent to 
YTSSBtm ($7 J96bn) and recur- 
ring profits - before extraordi- 
nary items and tax - declined 
to Y120.9bn amid a difficult 


trad in g environment Net prof- 
its woe 4 per cent lower at 
YfiTAbn. 

Trading was slow in all divi- 
sions. in spite of tire introduc- 
tion of new products such as 
the world’s smallest' and tight- 
est «mm video camera. 

The company was adversely 
affected by intense competition 
both at home and abroad, as 
core markets remained stag- 
nant amid sluggish private 


Price cuts undermined 
efforts fay the company to 


reduce costs through rational- 
isation measures* 

In spite of the moderate 
recovery in tire domestic mar- 
ket, Fuji Photo FSm expects 
the trading environment to 
remain difficult 
The company will report 
results for a shortened finan- 
cial year as it is changing its 
year-end to March 31 from 
October 20. It is forecasting 
sales of Y946hn, recurring prof- 
its of Y50bn arid net profits of 
Y27bn for the five months and 
11 days to the md of March. 


CAE sells Venezuela plans $lbn 


military 
unit to GM 


in oil-backed bonds 


Clark USA 
cancels plans 
for fundraising 


Roche, US laboratory In venture 


subsidiary 


By Stephen Refer, 
Latte America Editor, 
to Caracas 


By Robert Gibbens 


CAB, the world’s leading 
aircraft flight Emulator maker, 
has sold its Link militazy divi- 
sion in the US to Hughes Elec- 
tronics, a subsidiary of US car- 
maker General Motors, for 
C$213m (US$153m). 

The Canadian electronics 
group has been trying to sell 
the loss-making Unk division 
for some time. It represented 
nearly half CAE’s total sales of 
CSl.lbn in fiscal 1991 

Link's problems, which are 
partly due to cuts in US 
defence spending, have 
depressed CAE’s stock price 
and hurt overall performance. 

The price compares with 
C$665m paid by CAE to Singer 
of the US, then controlled by 
American financier Mr Paul 
Bilzerian, for link in 1988. 

This year CAE took a 
C$396m charge for Link and 
announced more rationalisa- 
tion. It will take a further 
C$30m special charge this year. 

CAE retains certain Link 
products in ship machinery 
control, oil process control 
modelling, bio-medical and 
entertainment simulation. It 
has also retained US$l£0m of 
tax losses available against 
future US operations. 

CAE said it would now be 
virtually debt-free and would 
concentrate on developing its 
simulator and electronic con- 
trols businesses worldwide. 

Following the merger of 
Thomson-CFS and Rediffosion 
in Europe, only two big players 
remain in aircraft simulators. 


The Venezuelan government 
has been in talks with interna- 
tional investment hanks over 
the possibility of next year 
issuing up to $lbn of bonds col- 
lateralised by oil revenues in 
tire international market 

Mr Jutio Sosa, finance minis- 
ter, said yesterday the idea was 
to issue the first of the bands - 
some $25Qm worth - In the 
first quarter of next 
year. 

Six investment banks were 
“very interested” in tire plans. 
“If we are successful we will 
place to $Xbn,” he said. 

The government plans to use 
the funds to repay some erf its 
$9bn in uon-restructured for- 
eign debt in order to avoid a 
bundling of debt repayments 
in 1996, 1997 and 1998. 


The debt to be repaid would 
be mostly bilateral debt owed 
to other governments, same af 
which, has been in arrears and 
which amounts to some fSbn. 

The government has sepa- 
rate plans to issue dollar- 
denominated paper in the 
domestic market also to be 
collateralised fay tel royalties 
and likely to carry a seven- 
year term and 10 per cent cou- 
pon. 

This week, the government 
began issuing two-year paper 
in local currency in a bid to 
mop up the liquidity washing 
around the economy following 
this year’s hanking crisis. 

The aim is to issue up to 
IgObn bolivars ($94QrrO of this 
paper. The government has 
temporarily stopped the cen- 
tral bank from issuing 90-day 
zero-coupon notes in a bid to 
encourage banks to buy the 
two-year notes. 


Clark USA, tire oil refiner and 
distributor controlled by 
Toronto financier Mr Peter 
Munk, has withdrawn a 
US$250rn Wnanfltwg because of 
weakening capital markets, 
writes Robert Gibbens. 

Clark, wholly-owned by Hor- 
sham Corp, Mr Monk’s main 
bedding company, had planned 
to offer 7J5m shares publicly 
to raise $15Qm, and to issue 
flOOm of senior notes. 

The shares would have rep- 
resented oneddid of tire total 
outstanding. The financing 
was to cover tiie acquisition of 
a Chevron refinery in the US. 

“We won’t sell our shares in 
a weak market,” said Mr Ban] 
Helnuk, Clark president. 
“Clark is a successful indepen- 
dent refiner and marketer and 
financially strong. We believe 
market conditions will 
improve later.” 

Clark earned 820.4m in tire 
first nine months, compared 
with a loss of $4£m last time. 


National Health Laboratories, 
the US dirrirai laboratory com- 
pany, is to merge its din tea] 
laboratories with those of Hoff- 
man-La Roche, a division of 
Roche Holdings! the Swiss 
drug and chemical group, to 
create a $L7bn company. 

The new company will be 
"me of the largest cHniaai lab- 
oratories in tire US”, accenting 
to NHL. 

It will have a total of 40 labo- 
ratories, 17 of which are cur- 
rently owned by Bodre. 


Roche w£E bring its labora- 
tory business, Roche Biomedi- 
cal Laboratories, and will 
invest 8186.7m in cash for Us 
4SL9 per cent share of the new 
b usiness. 

Under the agreement, NHL 
shareholders wiQ have a SOLI 
per cent stake in tire new com- 
pany, and will receive 85.60 
cash for each, of their shares. 
The total payout to NHL is 
estimated at 8475m. 

NHL said tire merger could 
mean cost savings of $90m in 
tire first two years. 

The healthcare industry has 


seen severe cost pressure as a 
result of the change to man- 
aged care. 

Mr James Powell, currently 
president of RJBL, win become 
president and chief executive 
officer of tire new company: Mr 
James Maher. CEO of NHL, 
wfll become chairman. 

The merger is subject to 
approval from NHL sharehold- 
ers. MacAndrews & Forbes, 
which owns about 24 per cent 
of NHL, has agreed to vote for 
tire merger. 

NHL shares were down 14 at 
$18% tn early trading. . 


T enneco to expand gas operations 


Tenneco, the US energy and 
chemicals group, is spending 
8120m. an two investments at 
Tenneco Ventures, a subsid- 
iary of tire company’s gas divi- 
sion, Renter reports from 
Houston. 

It said it was making a $7Sm 
acquisition of Penuzoil’s off- 
shore properties and investing 
$45m in a Tenneco Ventures 
energy investment fond. 

Termeco said the two invest- 


ments supported its strategy cf 
redeploying capital into 
"higher-return growth opportu- 
nities in its natural gas, pack- 
aging and automotive parts 


It said the Pennzoil agree- 
ment, involving offshore oil 
and natural gas properties in 
tire Gulf of Mexico, would add 
more than 90tm cubic feet of 
natural gas equivalent to Ten- 
neco Ventures* reserve base. 


The exact size of tire Penn- 
zail transaction, would be deter- 
mined once other parties had 
decided whether to exercise 
preferential rights to purchase 
the reserves. 

It said the $45m earmarked 
for tire energy investment fund 
would be invested in a combi- 
nation of production, develop- 
ment and exploratory proper- 
ties in conjunction with 
independent producers. * 


Revolving credit 
facility for Saga 


HK regulator cracks down on cash commissions 


An $850m seven-year revolving 
credit facility for Saga Petro- 
leum, Norway’s largest inde- 
pendent oil producer, was 
signed yesterday in London, 
writes Martin Brice. 

Ranks offered to lend a total 
of $1.26bn, but tire loan was 
not increased from its original 
$85Qm target. 

The loan was arranged by 
ABM Amro Bank, Barclays 
Syndications and Deutsche 
Bank. 

Saga was farmed in 1972, has 
a BBB-f/BaaS credit rating and 
plans to apply for a stock 
exchange listing in tire US in 
spring. 


By Simon Hofoerton 
to Hong Kong 


The Securities and Futures 
Commission (SFC), Hong 
Kong’s corporate regulator, 
yesterday said It would outlaw 
the payment of cash commis- 
sions to investment fond man- 
agers in cases where trusts and 
mutual funds are offered to the 

public. 

In a decision which Jardine 
Fleming, Hong Kong’s biggest 
retail fond manager, described 
as a “sledge-hammer to crack a 
nut”, the SFC said that all cash 
rebates to fond managers 
would have to be credited to 


the funds from July next 
year. 

It said that fund managers 
could keep cash c ommissions, 
or rebates, where they manage 
funds on a discretionary basis, 
such as pension fonds. 

In this case tire client will 
have to consent to tire fund 
manager retaining rebates and 
be given a periodic quantifica- 
tion of the value of rebates 
retained. 

The SFC said that managers 
could retain "soft dollar" com- 
missions. These are where a 
stockbroker provides free 
research, computer software 
for portfolio analysis, and 


hardware such as Reuters ser- 
vices. 

The test would be that 
the benefits received are 
demonstrably beneficial to 
investors. 

Mr Stuart Leckie, chairman 
of Wyatt, the pensions consul- 
tant, said: “1 believe it 
is an outcome that is very sat- 
isfactory under all dreum- 


Fund managers said they 
could live with the decision 
although it meant that 
management fees would 
probably have to rise. Some 
also said the end to rebates 
would put pressure an fixed 


commission brokerages in 
Hong Kong: 

The SFC foreshadowed its 
inquiry into commissions and 
“soft dollars" this summer. It 
raised a storm of controversy 
in Hong Kong, pitting Jardine 
Fleming (a recipient c£ rebates) 
against fidelity which is not 
allowed to accept them hut 
winch does take “soft dollars". 

Mr Henry Strutt, Jardine 
Fleming's managing director, 
said: “Well have to look at it 
carefalfr to see what steps we 
can take to mitigate the conse- 
quences.” 

Of Jardine Fleming's 
US$23bn under management 


some US$4bn is managed in 
authorised Hong Kong trusts. 
About US$2bn is subscribed 
from abroad so tire manager 
may have to de-authorise some 
fonds, or seek to place them 
outside the SFCs jurisdiction 
to avoid the ruling. 

Mr Ian Boyce, manacring 
director of Schroder* in Wong 
Kong, said his firm will have to 
look at. the foes it charges if 
rebates are to end. 

“ft is not going to be the 
end of tire world for ns, rebates 
are not that important to us. 
But we wfll be looking closely 
at our fee structure,” he 
said. 


towed by Nippon Telephone 
and Telegraph at YlS-ffibn. 

The research orgaru^tkma 
study covered only forward 
exchange contracts. Comtes 


are not as yet 


S African 


group to 
merge two 
gold mines 


By Mark Suzman 
to Jo hann esburg 


Randgold, the smallest and 
least profitable of South 
Africa's leading gold mining 
groups, plans to ensure the via- 
bility of its Durban Deep mine 
by merging ft with the neigh- 
boaring Rand Leases mine. 

Durban Deep, which had 
bran scheduled to dose earlier 
this year, will acquire all the 
issued shares in Rand Leases 
iri exchange for 2Jhnnew Dur- 
ban Deep shares. 

Mr Peter Flack, Randgold 
chairman, said the transaction 
would significantly reduce nm- 
ning costs through the intro- 
duction of a single overhead 
structure for the two mines, 
and that he hoped to refinance 
the enlarged company in the 
new year. 

Fuff details will be released 
in January. The transaction is 
subject to the approval of Dur- 
ban Deep shareholders, who 
will meet in February to assess 
the plan. 

• Normandy Poseidon, via its 
industrial minerals division, 
has acquired a 9.1 per cent 
interest in Queensland Metals 
Corporation, writes Nikki Tait 
In Sydney. The lOfan shares 
comprising the stake were 
placed with the Adelaide-based 
mining and minerals g r oup at 
A$l .30 each, fro- a total consid- 
eration of A$14m (US?10An). 

• Shell Australia confirmed 
yesterday that it had com- 
pleted the sale of a 30 per cent 
stake in tire Worsley bauxite 
alumina joint venture in west- 
ern Australia to BfQiton Aus- 
tralia, part of South Africa's 
Gencor. The deal is part of 
Gencoris purchase of much, of 
the Shell group's international 
metals portfolio. Shell Austra- 
lia said a further 6 per cent 
interest in Woraley had been 
sold to Reynolds Australia Alu- 
mina, part of the Reynolds 
Metals Company, and th** it 
expected to complete the side 
of its remaining us per w«nt 
stake to Nissho Iwai, a Japa- 
nese trading anfl publishing 
company, by tire end of Decem- 
ber. 

• mtm, the Q ueensland-baaed 
metals group, said it planned 
to i n c re ase Australian copper 
sales by 50 per cent, to 90,000 
tonnes next year. It said it was. 
aiming to fill some of the 
shortfall which Is likely to 
arise when GRA’s Southern 
Copper refinery and mwitar at 
Fort Keanbla close in January. 


Notice to tbc HoUfcxs of 

EUROPEAN INVESTMENT BANK 

Utlfaa Ur* an men Floating Rite Nntaf Doe 1995 


Chap cm No. IS due from Dtceabsr 13. 1994 to Jaw U 1995 
«iZ] fo p*raS*r ttfltog Jaw 13, 199$ at Acme of 9.25$ 

467 JS&r per UL KL 000.000 Nominal 

per rtL lOOJOOOOCe Nootal 

M 


SANFA0LO - LAR1ANO HANK SX 


DEVELOPMENT FUND OF ICELAND 

(FRAMKV/AEMDASJODUR ISLANDS) 

{Established under ckc lows of the Republic cflceUmd) 

U.S.$35, 000,000 

Floating Rate Notes 1997 
Retrmetsbfeat holder’s option hi IMS 

Notice is hereby given that the Rate of Interest has been fixed at 
7.125% and that the interest payable on the relevant Interest 
Payment Date June, 16 1995 in rasped arU.541 00,000 nominal af 
the Notes will be U.S.$3,602.08. 


December 16 . 1994 , London __ .. _ 

By: Citibank. NA (Issuer Services}, Agent Bank CFT1BAN4 


Heron International Finance B.V. 


U.S. $400,000, 


Results of the Bondholders 7 Meetings 


Heron International Finance BY. announces that at ife Bondholders' 
Meetings held In London on 30th November 1994. the necessary 
quorums were present and tbc extraordinary resolutions proposed at 
those meetings were duly passed with the requisite majorities. 


& 


120,083^92 votes were cast in favour of the extraordinary resolution 
at the meeting of Senior Bondholders and L534.S66 votes were ca st 
against die resolution, represe nti ng 93.74 per cent, and L26 percent, 
respectively of the voles cast by Bondholders voting at the meeting. 

31.251,648 votes were east in favour or the extraordinary resolution at 
the meeting of Junior Bondholders and 439J88 votes were cast 
againsuhe resolution, re pres en ting 98.61 percent, and L39 per c tnL 
respectively of the votes cast by Bondholders; voting a the meeting. 


San tande r Financial Issuances Limited 

(bKorporatod In ffta Cayman ts/snds wHf> Smiled BaMByj 

Subordinated Undated Variable Rate Notes 


Signal 


O 120 software a p plica tic ns C 
G RT DATA FROM SI 0 A DAY G 
G Serial SQFTWAR- GUiOE Q 

Call UM3cn • 44 4 (Q| 71 231 3503 

for your curd* 2 nd Signal price list. 



Traded Options Software 


wtthpayment ,gf interest subject to foe profits of 

and secured by a subordinated deposit with 

Banco Santander. SJL 

_ OnoorportOod in Spain with BmHati BaMBty) 

**** to" Oraember 

KSVhfu 


INDEXIA 


By: The Chaw Manhattan Bank, hjl 
L ondon, Agent Bank 


, , . ••• -i /■, - _ * c 


1 - f •• v Z v - ► 


December 16, 1994 







Sdetafls of their other dsriv- 
atives coins or losses. 

TokybStooko points out tb * 
the rapid growth in. the use of 

derivatives in g* p art few 
years makes it banter to WJ 

toe true state of a company^ 
financial opera«^ ; Fuforo 
contracts disclosed this toe 
are just a very small pari of 
off-balance-sheet derivatives 
dealings.- he says. “Interest 
rate snaps are particularly to 
the dsrK but of growing slgna- 


vi 


icarae. * • - 

So the scale of most comp* 

ales’ dealings can f 21 ? b® 
guessed at. There Is little 
doubt that in Japan, as else- 
where, many companies have 
suffered heavily in the past 
year from thair • denvattvos 

trading. 

The problem was glimpsed 
last month with the publica- 
tion of results at Tokyo Securi- 
ties, a snmn stockbroker. Its 
exchange losses alone totalle d 
Y3J.hn, but in all the company 
tost Y32bn, almost a third of 
shareholders’ capital. The com- 
pany acknowledged then that 
the bulk cf that loss came from 
fixed-interest derivatives trad- 
ing. 


* 1 * 
9 M 4 























financial times Friday December 16 1994 



INTERNATIONAL CAPITAL MARKETS 



21 


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deals meet strong Japanese demand 


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g^&aham Bowtay 

■■ ■ 

Strong Japanese investor 
jgipand for yen-denominated 
assets brcn&t a further flood 
of issuance to the euroyen sec- 
tor yesterday as the Republic 
Of Austria launched two offer- 
ings ^of yen-denominated 

bonds, totalling Yiaftm. 

- Elsewhere, two borrowers 
revival the asseWacked sector 
; of- the sterling market, with 
deals by Bristol & West, the 
ins: building society, and a 
T.pK housing QSSOQft- 


over Japanese government 
bonds, and Y6(Hm of 10-year 
bonds juiced to yield 11 ha«fo 
points, over Japanese govern- 
ment bonds. 

There has been a significant 
a m ou nt of issuance in yen over 
recent months, as borrowers 
have taken advantage of strong 
demand for yen assets. 

INTERNATIONAL 

BONDS 


" ■ f '* V 
B ." - .-^s. 

•-• h. . 

■ T- '*•4 pV 
a * . *■ •" « 1 ■ 

. ■ 1 y. 

- -C-V 

:■: ... . 't 

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’ ' 

' : .-\ J V 

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Hons. 

"..Here was also a rush of new 
issuance by Brazilian borrow- 
ers in the dollar sedor to beat 
fbe feared imposttian of bi^ier 
capital requirements and 
higher taxes on capital coming 
into the country, which would 
significantly increase the cost 
of raising capital an interna- 
tional markets, dealers 
. Austria launched a Y60bn 
offering, of six-year bonds 
priced to yield 2 basis points 


Japanese investors have 
shunned foreign currency 
assets this year to avoid for- 
eign exchange loss. Financial 
liberalisation in Japan has 
had an impact, allowing the 
primary placement of euroyen 
paper directly into Japan. 

“There is also a feeling 
among Japanese investors that 
there is no upward pressure an 
i ntere st rates, so they are 
happy to Invest at these lev- 
els,” said one trader. 

Austria’s two offerings were 


placed almost entirely with 
Japanese investors, joint lead 
manager Daiwa said. 

The offering’s two-tranche 
form was a result of distinct 
patterns of demand from differ- 
ent investor sectors, a Daiwa 
syndicate official sail 
. The six-year issue was 
placed with Japanese non-life 
insurance companies and 
regional co-operatives, while 
the longer-dated offering was 
sold to life-insurance compa- 
nies and public sector funds. 

“Some of the trig Hfe insnrers 
have significant ««ii positions 
and they are looking very 
aggressively to invest these 
funds.” he said. The proceeds 
from the offering were not 
swapped, sources said. 

Clips No 1, a Special-purpose 
vehicle set up by Bristol & 
West, launched a £L50m offer- 
ing of bands of varyin g maturi- 
ties backed by a portfolio of 
commercial loans originated by 
the UK building society. 

The main tranche was a 



NEW INTERNATIONAL BOW ISSUES 

US DOLLAR 

RWoBewinto do Bmirtt 
EMP 6 CSA 

KtaUnH 

Senana deMhoracaoicJ) 
Banco Dendsfrantao 

Amount 

m. 

250 

75 

00 

50 

50 

Colson 

% 

(114 

10678 # 

tWM 

16578 # 

1600 # 

Mre 

99 . 1 BR 

89 LS 6 R 

SOSO 

wxesR 

S 9 l 881 R 

. Matm% 

Dea 1997 

Dec .1969 

OB& 2 QO? 

Dea 20 Q 2 

Dec .1997 

F 5T 

160 R 

Q 675 R 

1.00 

150 ft 

0 . 75 R 

Spread Bock nvnor 
kp 

■ Swiss Bonk Gonx 

+ 3250 M 5 yi) CKBxnk htandforal 
48 C 08 M 7 ) Cutoff*/ jp Morgan Ssca. 
+ 570 (W 1 5 yr) Menff Lynch totanadtanal 
+ 443 ( 7 H%- 97 )Wec Menchad Bank 

YBI 

flepUA: of AoelrtaH* 

eoun 

675 

10 O 22 R 

DecSOCM 

0625 ft 

+ 11 EOU 4-04 Daiwa/ LTCB Wffnfftonal 

Hepubic of Austria* 

0 Obn 

640 

10605 R 

•feaSOOl 

0275 R 

+ 2 ( 69 K- 0 Q Dtawa/ LTC 8 totsmaSonN 

STGnjNQ 

CLP 8 No. 1 «t 

123,75 

m 

sum 

Dec 6009 

QJ 90 R 

- GcMnan Sachs trSamattanaf 

UK RwlajNalJW 

36 S05 

aio« 

1006248 R 

Apr 2 Q 23 

(USSR 

+ 75 (mfc%- 17 } Nonxsa totarnfftonff 

D-MARKS 

deechv Rnance Nemertands 

300 

726 

10160 

Jan 6000 

260 

Pretaw Band 


RnN ttma «d ncn-caftabto unteaa etstod. Tht yWd spread (war raiment gowa mm era bond) at tondh it nyiplad by tfw lead 
nansar. AtMsted ^floating rata noto. SSaffli wnuel coupon. Ft (bead i»oflbr price faos are shown at Aa re-odor lavoL 4 Acunp 
jcrfntty and severely w* 8 i O omorin du o Loadnp Anrandomanto MercortB. al) B-mth Libor « 3 SQbp. b) rirtaNa and pUHatals In Daa 97 ol 
99 . 875 % and 10020 % mspadhaly. bl) 12 %% to DacS 7 and 12 WM theresAar. f$ Acting JoWiy and aavarely wfth two mfaa Ma rtaa. 
Puttabto on SttUftO at 86 . 72 %. d) canmancM Loans on fcw aaw wn i Proparty Se ua i teaUu i'. Oo n ataa t Bristol a tiu 8 /S commarei a t 
moitBaaa a on Investment propert ie s. CaSabie on oot^on dates after 5 yre at par. ION ctearn^J call, ExptcLavjfs; 34 yrs. Ctea Ml; 
£ 16 Hm, 3 mth Libor * 110 bp, 10 QR, awJfa: 7 yre. txntoutnan UBS. Class M 2 , GSMn, 3 -Mh Libor + 130 bp. 99 . 73 R, svjtec 7 ym, 
GoMman. Cteas ft Sd-Stes, tarma undbdoeacL Gofctran. oi) 3 -mth Ubor + 2 Sbp. s^Amorttsaa tann S/ 10 U& BvaragaMM yn. Q Long 
t«t coupon, a) Short iat coupon 


Bankers Trust 
faces sanctions 


Sl2a.7Sm.mue of 15-year bonds 
offering a discounted margin of 

a basis points over Ubor. 

Lead manager Goldman 
Sachs said the offering was 


sold to investors m the TIE and 
France, predominantly b an ks 
but alSO TnmTancp wimpanfes 
and money funds. 

UK Rents No 1, a special-pur- 


pose vehicle set up by a group 
of medium-sized hanging asso- 
ciations, launched £36£98m of 
bonds due April 2025, backed 
by future rental income. 


Short-dated US Treasuries outperform 


In New York 
and Martin Brice ki London 

He recent trend of yield curve 
fl attening was broken for the 
second (fey yesterday mo rning 
as the short end of the market 
outperformed the long bond. 

By midday, the benchmark 
80 -yBar government bond was 
down A to 95% yielding 7.865 
per cent but the two-year note 
was K higher at 99%, yielding 
7 JOB per oaxt 

The market reacted quickly 
to a survey by the Federal 
Reserve Bank of Philadelphia, 
that showed a dacHng in the 
index of December business 
activity to 2E9 pm cent It is 

the second monffi running that 

the index has shown a drop in 
activity. 

That data, combined with 
low inflation figures released 


WORLD BOND PRICES 


on Wednesday, added to trader 
speculation that the Fed would 
not raise interest rates. when 
its open market committee 
meets on December 20. Earlier 
this week, opinion was mixed 
on whether the Fed would 
boost rates again before the 
p ft A of the year. 

The Philadelphia Fed’s sur- 
vey is especially important 
because it is an early indicator 
of trends for December. 

The spread between two-year 
and 30-year Treasuries widened 
for the second consecutive day, 
reversing a recent trend and 
causing a steepening of the 
yield curve. Economists view 
flattening of the curve as an 
indication that the market 
expects economic slowing. The 
curve had flattened steadily 
since the Fed raised rates by 75 
basis points in November. 


■ UK government bands were 
lifted yesterday by a rise in 
German government bonds 
and figures showing a slow- 
down in UK retail sales 
growth. 

Retail sales volumes were 
unchanged in November from 
October and up 2 JS per cent 

GOVERNMENT 


from November 1998, against a' 
year-on-year rise of 3.0 per cent 
in October. 

Mr Chris Anthony at Hoare 
Govett said: The sales figures 
have killed off any fears of an 
imminent interest rate rise.” 
He said i n vestors were likely to 
exa mine cl osely the CB1 survey 
and PSBR figures due out this 
morning. 


Trading in gilts yesterday 
was very thin, and dealers 
pointed to five tap stocks 
which were announced on 
November 28, but have not 
been sold and still overhang 
fh*i market 

Dealers also point to strong 
resistance to prices rising 
above a level of 102% and 
although yesterday the market 
touched this ceiling, it bounced 
down each time. 

The yield spread over Ger- 
man g o ver nm ent bonds tight- 
ened from 118 to around 115 
basis points, and dealers said 
there may be same switching 
into bunds at this level. 

The December long gilt 
future moved up ft to around 
102% in late trading. 

■ German government bonds 
edged higher hut prices 


Met 


Day's Week Month 

change Yield ago 


Italy 

■ NOTIONAL ITALIAN GOVT. BOND (BTF) FUTURES 
(JRFQT tin 2(On lOOhs of 100% 


A uetrafa 
Bdgbm 


to* 


04 AS 
n«4 
OETO4 


6L500 QSV04 

7.750 10AM 
9X00 12AM 
7X00 12AM 
8 LOOO 
7.500 
7.500 
8500 
4JB00 

4*100 12/03 

7250 10AM 
lOLOOO 02/05 
6.000 08/99 

6.750 11AM 

MOO 10/08 
7.875 11AM 
7500 11/24 

EBJftanoh GovQ 6400 04AM 
UM*fldHln0. UN Ye* ntfd-4v 


BTAN 

OAT 


No 119 
140 164 


UK GIN 

_ . ■ . 


93.1800 
980200 
90L3000 
883100 

1003500 

953900 

99,8400 

80.7100 

10M400 

9BLB460 

97.1800 
902400 

90-21 

88-16 

104-06 

100-17 


-1-1.150 1811 


40300 9l11 

-0250 830 

+4L010 736 

-ai70 812 

-ai40 732 

40540 11327 


-0.120 

40040 

40040 


1032 

827 

8L05 




-13/32 

-0150 


430 

738 

1135 

836 

830 

838 

7.78 

737 

835 


727 

736 

733 
11JT 

330 

435 

732 

11.19 

847 

833 

831 

734 
731 
638 


1033 
. 831 

aio 

879 

747 

814 

740 

11.70 

406 

4.74 

736 

1120 

841 


Mar 

Jun 


Open 8ettprioa Change High Low 

9838 9947 +0.79 9036 9853 

9738 8877 40.79 07-98 9738 


EsL vol Open ka. 

27341 44373 

5 20 


■ ITALIAN GOVT. BOND (BTF) FUTURES OPTIONS 0JFFE) UnfiOOn lOOttm of 100% 


SBffQB 

rnco 

Mar , 

CALLS ' 

t a . m 9 

-• Jun ... 

— — pun - 

Mar./- ■ • P - 

‘Jun. 

0000 

262 


244 

165 

267 

0060 

- - 1.74 

• ■ ■ 

262 

1.77- •: 

295 

10000 

144 


200 

1JB7 - 

623 


867 

734 

838 


EH voL M Odi 1048 PW» 2191. Previous da/a opwi knt. 


Sprin 


14B44.MS 11866 


wBNwfeflng tn at 12J pre esrt psyhN by 


RteU6UKta 


Open 

8840 


Sett price Change HHJi 
8844 4032 


TMBNiy Sfc ml Bond Ylstt 


Lon EeL wL Open ht 

8833 20,161 48JB12 
8870 10451 23394 




$2 Rn mouth 
Tim 


5A ttmB 


5M 

Ttaojfff 

7j5B 

562 

HmySK 

_ 768 

561 

Am yn . 

7.74 

857 

Tfrynr 

768 

7.18 

VHm 

766 


I 


a mmoviAL ftoch bond futures (matif) 


Dec 

Mer 


UK 

■ NtniQNAL UK Q8T FUnJffiS gJFFg" £50/000 32nds of 100% 

Open Sett price Change high Uw EsL vd Open ML 

Deo 102-18 102-28 40-08 100-30 102-19 538 18394 

Mar 101-28 102436 40-08 102-13 101-28 29588 108483 

Jun 101-08 40-08 0 0 

% LONG GET HflURES OPTIONS (UFFQ C5O000 B4ths of 100% 


Dec 

Mar; 

Jtn 


Open 

11137 

ni.i 2 

11030 


11130 

in.io 

11042 


-0.14 

-au 

-ai2 


Htyh Low EsL vol Open kl 

1113B 111.78 98,227 35,555 

11134 111.06 68,427 113310 

11030 11044 370 2*10 




Price 

108 

109 

104 


Mer 

1-35 

1-03 

0-42 

2121 Mi 2B2_ 


Jm 

2-07 

1-46 

1-Z3 

dqfm 


Mer 

1-23 

1- 55 

2- 3Q 


Jin 


3- 33 

4- 11 


open kL 


a. U0MTB1M FRENCH BOM) OPTIONS QAKTW) 


Mat ' 

Price 

Jan 

CALLS 

Mar Jui 

Jffl 

— PUTS — 
Mar 

Jun 

110 

160 

. re 

006 

0B2 

- 

m 

am 

143 

0.10 

090 

- 

112 

._ 020 

005 

048 

160 

- 

TI3 

006 

060 

1.05 

160 

- 

114 

002 

033 058 

- 

- 

- 

- SL«tiN 

L6tfk 17ri46 

a 

i 

I 

S 

8 

W" 

i 

to 181 JM Puts 142001, 


M eCU BOND FUTURES (MATV=) 


Open Settprioe Change Ugh Low 

8130 81.18 -0.12 8138 81.18 


EsL voL Open InL 
2,072 2320 


Mar 

Jiti 


Open Ssoprioe 

89.74 
88.12 


FUTURES (UFFET BM2BQJOOQ lOQttm of 100% 

~hK^e Hrfi Low. EeL vol Open kit 

+O01 8939 8839 56975 1748© 
4031 0 


■ U8 TREASURY BOPD FUTURES (C8T) 8100,000 32nd» ofl 00% 


Dae 

Mer 

Jun 


99-10 


-0-04 

-0-03 

-04M 


tegh 

Lav 

EaL vdL 

Open hL 

8841 

09-25 

15*715 

54621 

99-15 

80-00 

30O31B 

330613 

99-00 

98-25 

1,093 

12638 


■ BUNPHIfURES QFT10II8 flJFFB PM2S0300 potote of 100% 


Prion 




Jan 

Feb Mar 

Jun 

Jan 

Feb 

PUTS 

Mar 

Jun 

042 . 

057 107 

163 

018 

063 

063 

161 

019 

OS1 062 

101 

045 

067 

108 

169 

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* 


remained within the range of 
recent trading levels. 

Mr Stefan Schneider at 
S. G. Warburg in Frankfurt 
said the movement of bunds 
yesterday mimicked US Trea- 
suries. He said: *T cannot see 
any major domestic event 
shifting sentiment in the bund 
market” 

Analysts point to nest Tues- 
day’s meeting of toe Federal 
Reserve's policy -mating open 
markets onmmrttp. as the next 
event which may have an 
effect on bunds, but say that 
until then trading is likely to 
stay within the 89.50 to 89.87 
range. 

The spread under Treasuries 
shifted out from 43 basis points 
to 45 in slow trading and the 
March bund futures contract 
on Liffe rose by 0.03 on the day 
to 88.76. 


■ Italian government bonds 
rose yesterday, in what some 
analysts attributed to investors 
covering their short positions. 

Mr Simon Maggs at TBJ said: 
“The government will almost 
certainly fall apart at some 
point. The budget will almost 
certainly go through and then 
the market will focus cm what 
will happen in the political sit- 
uation.” 

Hie said investors were made 
nervous by yesterday's 
announcement that the gov- 
ernment was to provide 
Lll,000bn to help repair flood 
damage, and its intention to 
pay for this Increased spending 
by larger taxes had not allayed 
Investors’ fears. 

The March bond futures con- 
tract an Liffe moved to around 
99.49 in fete trading, a rise of 
0l8L 


By Laurie Morse in Chicago 

US regulators are within days 
of issuing civil complaints say- 
ing Bankers Trust violated 
anti-fraud provisions of securi- 
ties and commodities laws in 
sales of derivatives to Cincin- 
nati-based Gibson Greetings. 

The complaints will be sig- 
nificant beyond the Bankers 
Trust case because the agen- 
das involved reportedly have 
determined that the deriva- 
tives at issue - complex forms 
of interest rate swaps - can be 
considered both futures and 
securities, and are thus within 
the regulatory purview of the 
Commodity Futures Trading 
Commission and the Securities 
and Exchange Commission. 

Until now, swaps have been 
considered neither securities 

nor futures, and the swaps 
industry has grown rapidly in 
a largely unregulated environ- 
ment 

Although legislative 
attempts to tighten the over- 
right of swaps have died in the 
US Congress this year, the two 
agencies appear to be extend- 
ing their rraeh independently 
through their enforcement 
action against Bankers Trust 

In particular, a determina- 
tion that over-the-counter 
derivatives are futures would 


require swaps dealers to com- 
ply with the same tough anti- 
fraud and sales practice rules 
that govern li sted futures and 
options. The CFTC exempted 
swaps from much of the US 
commodities law in 1992, but 
reserved the right to enforce 
its anti-fraud provisions if a 
swap was determined to be a 

luture. 

The CFTC is also drafting 
suitability rules for derivatives 
customers, and is in the midst 
of a public comment period on 
that issue. 

A source familiar with the 
Bankas Trust complaints said 
the bank is dose to reaching a 
settlement with the agencies, 
and is expected to agree to 
sanctions and pay fines. 

Bankers Trust earlier this 
month entered into an exten- 
sive written agreement with its 

primary regulator, the Federal 
Reserve, that requires remedial 
action on the way it markets 
derivatives to corporations. 
That agreement did not specifi- 
cally mention Gibson Greet- 
ings. 

Last month. Bankers Trust 
also settled a lawsuit brought 
by Gibson Greetings that com- 
plained that the bank foiled to 
disclose essential information 
about derivatives sold to the 
company. 


Cazenove plans India fund 


By Brethan Hutton 

Cazenove is hoping to raise 
$50m from investors in London 
and the Gulf for a new closed- 
end Indian investment fund, to 
he managed by Chescor. 

The Oryx fund will concen- 
trate on medium-sized and 
smaller companies, with more 
than 70 per cent in listed com- 
panies and about a quarter tn 
up listed Investments. 

The fund wHl he based in 


Guernsey, but listed on the 
London Stock Exchange. 
Investments will be made 
through Mauritius, to take 
advantage of its double taxa- 
tion treaty with India. The 
fund aims to be 90 per cent 
invested within six months of 
launch. 

Chescor is a small London- 
based investment house which 
has already been involved in 
setting up an India fund for 
Martin Currie. 


Pries Iradon 
IIK Gits 


Thu 
15 


D*"* 
change % 


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woo 

Dec 14 


xd acg. 


— Low cotpon ytafaf — 
Deo 15 Dec 14 Yr. ago 


- Mofflun coupon yield - 
Dec 15 Dec 14 Yr. ago 


— Ugh coupon yield — 
Dec 15 Dec 14 Yt. ago 


1 Up to 5 yen £4} 
0 5-15 yam 02) 

3 Onr 15 years (Q 
trreowmetes (0} 

5 Al stocks (BO) 


119-75 +0.13 11984 1.98 1051 5 yr» 

14048 4025 14014 1.83 1929 15 yn 

15&20 *030 157.61 2M 12.05 20 yn 

17BU66 4021 T792B 1.58 13.71 tnvdt 

137.00 4023 13728 Z05 11.78 


8.49 6.55 522 

038 839 EL38 

8-32 836 6.49 

8.40 8.41 663 


649 653 564 

650 664 661 

650 064 654 


868 673 562 

672 676 672 

863 867 673 


-imaflon 5% 

15 Dec 14 Yy. ago 


10 % - 
Dec 15 Dec 14 Yr. 


0 Up to 5 )WbKI. 

7 Over 5 yeerafll) 

8 Afl Mocks f! 3) 


18660 

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367 

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Dec 15 Dec 14 Yr. ego Dec 15 Dec 14 Yr. ego 


yWd 

Dec 15 Dec 14 Yr. ago 


9 Dobs 8 Loans (77) 


12673 


4062 12962 2.16 

LmOK’TVMe 


1690 647 648 764 641 644 

Module e*-10K%i Htfc 11% and oner, f Rat yWd. ytd Year id data, 


766 966 640 


768 


FT FIXED MTEREST INDICES 


Dec 15 Dec 14 Dec 13 Dec 12 Dec 9 Yr ago HghT Low 


GILT EDGED ACTIVITY 

Dec 14 


13 


Deo 12 Doc 9 


Dec 8 




•far 1894. 
26 and 


9164 8165 9169 9160 0609 10697 107JM 
10960 10962 10649 10675 10687 18649 23367 10650 

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Listed are fte 


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1000 03% 

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L1C8 Hi 897 


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600 09% 

150 104% 
1500 Bril 
2000 55% 

1500 54% 

300 101% 
200 writ 
200 eft 
.200 69% 
3500 78% 

.500 100% 
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5000 6ft 
2250 88% 
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94% 

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705 

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812 

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763 

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5.12 

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668 

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611 

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614 

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107 

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866 

93% 


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565 

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637 

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109 

109% 

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570 

100% 


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104 

104% 


503 

10ft 


762 

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wft 

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503 

wft 


7J9 

Qaebec Hydn 5 00 

100 

97 

07% 


848 

10ft 

ft 

800 

SNCF704 

— 450 

108% 

10ft 

ft 

580 

«B% 

ft 

flap 

ModdB»k503 

— ISO 

97% 

97% 

ft 

540 

wft 

ft 

600 

VMdBar*701 

ODD 

108 

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544 

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616 







104% 

ft 

610 

YBI STRMQH2S 






95% 

ft 

827 

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-73000 

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427 

97 


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110% 

111% 

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428 

9ft 


645 

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wft 

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209 

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424 

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300000 

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400 

99% 

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100000 

103% 

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4.15 

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761 

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120000 

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465 

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104% 

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747 

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717 

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871 

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847 

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109 

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— 200 

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978 

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705 




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800 




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FINANCIAL TIMES FRIDAY DECEMBER !^ 1994 


Warburg and Morgan Stanleys the marriage is off 


* “ . ' * 


... «ik* ^ 


* 1 £ 


John Gapper and Richard Waters on the problems that dogged the proposed nwgftr 

Warburg is left in the lurch 

T he collapse of the per Morgan Stanley share, the Morgan Stanley’s operations, be able to combine to form the Whether or not It can pac 

merger talks implied valuation of Warburg This became the main point at strongest global investment its employees, the fan* m 

between Morgan was £lS3bn, OT ®®P P €r ^^ 6, issue at a meeting in T e nd o n bank, how seriously can they have difficultly persuading 3 

Stanley and SG This was wdl below yester- on Tuesday. claim to be global players if shareholders and analysts 

Warburg is an days opening once of 798d. Mr “It turned rmt. va hod a Art. +>,« nm» Mnui« *. * 


T he collapse of the 
merger talks 
between Morgan 
Stanley and SG 
Warburg is an 
unfortunate Christmas pr ese nt 
for both sides. It questions not 
only whether they should have 
foreseen the obstacles, but 
whether Warburg can recover 
its poise as an independent 
investment bank. 

In the aftermath of yester* 
day's statements, some War- 
burg employees questioned 
whether senior executives, 
including Lord Cairns, its cfajff 
executive, should resign. Yet 
whether they stay or go, War- 
burg will find it harder than 
before to maintain the argu- 
ment for its independence. 

The collapse of the teiire was 

sudden, and happened after 
Mercury Asset Management’s 
board and same af its senior 
fund managers started to 
digest the implications of the 
deal. Fund managers were con- 
cerned to protect their incte- 
pendence, while directors 
wanted to ensure shareholders 
were not disadvantaged. 

BlAM’s board, led by Mr 
Hugh Stevenson, its chairman, 
brought in Lazard Brothers, 
the merchant bank, to advise 
cm the deal after it was made 
public. The most obvious ques- 
tion was how MAM'S minority 
shareholders - who own the 25 
per cent of its equity not held 
by Warburg - would be 
treated. 

The problem was that the 
merger offer appeared to value 
Warburg's equity below its 
market price, implying that 
MAM was not being fairly val- 
ued. Mr Philip Gibbs, analyst 
at BZW, estimates that at $80 


AT W 


per Morgan Stanley share, the 
implied valuation of Warburg 
was £L53bn, or 6S5p per share. 

This was wdl below yester- 
day’s opening price of T98p. Mr 
Gibbs says that applying a 
price earnings ratio to MAM 
similar to other US fund man- 
agement acquisitions, and giv- 
ing a premium for Warburg’s 
investment banking business, 
a takeover bid ought to value 
the group at 950p per share, • 

Such calculations made 
MAM call for what it yesterday 
termed “an appropriate offer” 
for minority shareholders, so 
giving them a chance to exit at 
what seeme d a fairer price. 

Although Morgan Stanley 
did not want to pay too much, 
its executives, were prepared to 
accept some premium. 

One senior Morgan Stanley 
executive says that gaining 
control of MAM was “the prin- 
cipal attraction" of the merger 
because the US firm wanted to 
gain a stabilising rnfinenro on 
its earnings. The merger gave 
it a chance to acquire MAM at 
a lower price than it would pay 
for a US fund management 
business. 

Morgan Stanley executives 
believe the gap between the 
premium MAM wanted to pay 
to minority shareholders, and 
its own suggestion, was bridge- 
able. “We were perfectly pre- 
pared to recognise that retiring 
it [the minority stake] would 
have resulted in a premium," 
says one. 

But another problem was 
dogging the proposed merger 
of MAM and Morgan Stanley’s 
fond management aim. MAM 
fund managers who were told 
of the merger last week wanted 
to keep Independence from 


Morgan Stanley’s operations. 
This became the main point at 
issue at a meeting in Tandem 
on Tuesday. 

It turned out we had a dif- 
ferent view. We believed that 
the businesses could be 
brought to gether over Hmfl - ft 
wasn’t a case of jamming them 
together next week,” says one 
senior Morgan Stanley execu- 
tive. The US firm thought that. 

unless the operations were 
brought together - for example 
in technology and marketing - 
the point of the merger was 
lost. 

The negotiations ran into 
other problems, and while 
Warburg executives do not 
believe these were likely to be 
Insuperable, they could have 
been big enough to block a 
deal - even without the asset 
management c omplicati on s . 

Qne difficulty was that the 
two investment banks were 
having problems deciding how 
businesses would be run. 
Although senior executives 
had an o utline view before the 
deal was made public, there 
was still some tough bargain- 
ing to be done among more 
junior managers over who 
would have control. 

Both hanks are adamant that 

there were no “black holes" 
discovered in the due diligence 
process that made either bank 
nervous about finking with the 
other. Indeed, some Warburg 
executives claim they were 
reassured by the view Morgan 
Stanley took of the strengths of 
their business. 

The collapse of the deal 
leaves questions facing both 
banks, given their rhetoric 
about the reason for linking 
together. If they will no longer 


be able to combine to form the 
strongest global investment 
bank, how seriously can they 
claim to be global players if 
they now remain independent? 

The questions are loudest for 
Warburg, whose shareholders 
would have taken a third of 
the equity in the new facing 
company. Tim bank was seen 
to have tacitly admitted that it 
could not achieve global scale 
by itself and had failed to pen- 
etrate the US securities market 
seriously. 

Warburg's executives were 
yesterday arguing that this 
was a logical fallacy. They 
believed that the would have 
achieved a leap of five years in 
their strategy through the 
merger. They now think that 
they can simply resume their 
previous strategy of Indepen- 
dent growth, accepting slower 
expansion. * 


Y et this reasoning 
did not cut much, 
ice yesterday 
within Warburg's 
London offices 
yesterday, where the collapse 
led to an angry inquest. H I 
think the merger was driven 
by two things: panic by people 
an the board who don't under- 
stand this business, and 
greed,” said one Warburg 
employee. 

Some Warburg employees 
said the handling of the deal 
had exposed weaknesses in the 
bank's management 'There's a 
lank of confidence in the peo- 
ple in top management,” said 
the same executive. Qne prob- 
lem is seen as title detachment 
of Sir David Scholey, chair- 
man, from day-to-day manage- 
ment 


Whether or not it can pactif 

its employees, the bank may 
hi fire difficultly persuading Its 
shareholders and analysts to 
accept a resumption of the old 
strategy. This appears to be 
what they wfQ attempt, with 
executives arguing that only 
Morgan. Stanley was an appro- 
priate merger opportunity. 

The most obvious alternative 
would be a merger with 
another “bulge bracket” firm 
from New York such as Gold- 
man Sachs or Merrill Lynch. 
Yet . Warburg executives 
believe that Goldman's more 
hard-driving and aggressive 
culture would not match its 
own, and nefther’s businesses 
would fit its own. 

But bids from other banks 
remain possible, especially 
given the attention Warburg 
has drawn to its own valua- 
tion. Same potential acquirers 
yesterday played down the 
chance of an immediate bid. 
although they said it might 
become more attractive if War- 
burg was farther weakened. 

One rival said delay might 
be the best strategy. “If I wait 
a week or two it might get 
worse,” he said. He also argued 
that it would became easier to 
t-nVn business hum Warburg on 
the argument that “a bank 
that handles its own business 
so badly should not be advis- 
ing anyone else”. 

A farther difficulty for War- 
burg is that the circumstances 
Tinder which the merger col- 
lapsed draws attention to divi- 
sions between it and mam. 
The fund management firm 
drew attention to its indepen- 
dence this year when it penal- 
ised Warburg over its parent's 
handling of Enterprise Oil’s bid 



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for Lasmo. 

The obstacles thrown by 
MAM In the way of the merger 
can hardly improve relations 
between the two companies, 
although Warburg executives 
insist that MAM'S indepen- 
dence is vital to its success, 
and fhe value of its 75 per cent 
stake. Yet the embarrassment 
could provoke it to try to take 
MAM hade into full ownership. 

For Morgan Stanley, ques- 
tions over the future appear 
less pressing: The firm’s execu- 
tives implied that buying MAM 
at a discount to the price seen 
in US acquisitions was the 
main attraction of the meager. 
Morgan Stanley has already 
built a larger European opera- 
tion than Warburg's US arm. 


Even so, the merger's col- 
lapse brings back questions for 
Morgan Stanley. With strong 
ra pifail and ambitions, ft has 
built up a reasonable presence 
in Europe, but it still has a 
long way to go, and it will now 
have to grow organically. Its 
failure to gain control of MAM 
may a1gn prompt it to search 
for another fund management 
acquisition. 

Probably the most bewil- 
dered participants in the entire 
week-long drama will be the 
other Investment banks and 
brokers of the City of London- 
After Warburg’s announce- 
ment last week, many reflected 
on how i«ng they could last 
under independent ownership, 
and without integrating. 

m ■ ■ ■ ■ 1 

I WHAT NOW fOR 


The Warburg-Mbrgen Stan- 
ley incident has demonstrated 
once again that mergers in the 
volatile and often temperamen- 
tal world of investment bank- 
ing are easier dreamed up than 
achieved. If the fundamentals 
of the market have not 
changed, rivals may at least 
resolve to take their time. 

In the wider woritof global 
investment banking, rivals 
may be relieved that a st rong 
global force Is not created at a 
stogie stroke. Yet the tec* that 
two firms were prepared Men 
to consider such a bold move 
shows bow high the stakes are 
becoming in toe battle to buQd 
truly global firms. 

Additional reporting by Nick 
Denton and Norma Cohen 


■-'■-■sue 


lift. 



The old guard Subtle shift in the relationship Back to the 


marches on 


The collapse of talks comes 
just as Warburg employees 
were beginning to come to 
terms with the merger and 
even, some of them, relish the 
broader horizons ft would open 
up. 

“Personally I am disap- 
pointed. What was being 
offered here was a brave new 
world,” said one employee. He 
said that the chance of a more 
dynamic future outweighed the 
threat of job cuts, at least for 
younger staff. But staff say the 
company is “split down the 
middle”. One spoke of the exis- 
tence of an did guard who “do 
not have much to gain from 
this and have much to lose. 
They wfll he able to prolong 
the status quo,” he said. 

Some New York staff and 
Eurobond traders, the Warburg 
employees most exposed to 
rationalisation, have been 
given a stay of execution and 
will also be relieved. 

There is a general recogni- 
tion nevertheless that the 
collapse of merger talks is 


not the end of the story. 
Either another buyer, or 
Warburg itself, will force job 
cuts. 

When or how has become 
even more uncertain titan ft 
was a week ago, contributing 
to the sense of insecurity at 
Warburg. 

"We now have to go through 
a period where we worry about 
whether there will be another 
bid. We are in limbo,” said one 
bond specialist 

Bewilderment has sometimes 
turned to anger. “We have 
been led up the garden path 
and then shoved back out 
again,” said one employee. 

Faith in management has 
been seriously shaken. Cynics 
at Warburg are betting, not an 
markets, but on the future of 
chief executive Lord Cairns, 
after what one described as 
“the bizarre course” of the 
abortive merger talks. 

Graham Bowley and 
Nicholas Denton 


When S.G. Warburg sold off a 
quarter of its holding in Mer- 
cury Asset Management in 
1986. It was trying to make a 
point 

Not only did it want to reap 
some of the value of its fast- 
growing fund management 
arm, it wished to underscore 
the independence of MAM. At 
a time when too many ques- 
tions were being asked about 
dealings between the fund 
management and stock broker- 
age arms of merchant banks, 
independence seemed tike a 
good message to send to the 
public. 

Warburg has underlined the 
message by siting its headquar- 
ters in Finsbury Avenue in the 
City of Loudon and those of 
MAM just on the edge near 
London Bridge. 

Now, officials at Warburg 
may - well be wondering 
whether MAM has became a 
little too independent. With a 
potentially valuable merger 
between Warburg and US 
investment bank Morgan Stan- 
ley thwarted by the indepen- 
dence of HAM directors, the 
relationship between the two 


This announcement appears n a matter of a record only. 



KNPBT 


N.V Koninklijke KNP BT 

incorporated in Maastricht, The Netherlands, 

announces the successful completion of the Public Exchange Offer 
to the holders of outstanding warrants issued by 


Leykam-Murztaler Papier und Zellstoff AG 

at Graikorn, Austria 


firms may be permanently 
altered. 

“MAM have always seen 
themselves as very indepen- 
dent of Warburg. Not only for 
regulatory reasons but because 
their business in character is 
very different from that of 
Warburg,” said a fund man- 
ager at a rival firm. “At the 
level of the MAM -board, they 
will not welcome losing their 
independence.” 

Neither Warburg nor MAM 
would comment an suggestions 
that the Morgan Stanley deal 
has badly strained relations 
between the two. “There are 
relationships here which go 
back 20 years," one MAM 
insider said. 

But the head of a rival flmd 
management firm argues that 
“there must be some bad blood 
between those two buildings”. 

“There are bound to be a few 
recriminations,” adds Mr 
Philip Gibbs, securities indus- 
try analyst at Barclays de 
Zoeta Wedd. 

And, industry experts say, 
MAM may well emerge with 
■the upper hand. Over the past 
seven years, MAM has consis- 
tently accounted for the lion's 
share of Warburg's earnings, 
Mir Gibbs notes. Any effort by 
Warburg to force MAM direc- 
tors to toe the line could 
encourage the departure of 
some of its leading lights - 
thus undermining SIAM’S 
value. Within Warburg, MAM 
has its own board and execu- 
tive committee, and consider- 
able autonomy in setting its 
own strategy and expansion. 
Its executive committee 
reports to the Warburg hoard. 


i • • _ :■ . - . . ,v. : . • • .*!■> v. ♦.<■? ■ % i grr?- 


How 

Pre-tax profit £m 
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of which its chairman, Mr 
Hugh Stevenson, is a number. 

MAM has periodically 
asserted its independence in 
ways that have proven embar- 
rassing to Warburg. For 
instance, MAM direct or s were 
so irritated at the way War- 
burg handled the purchase of 
shares in oil company Lasmo, 
for which the bank’s client, 
Enterprise, was making & hos- 
tile bid, that ft cot its dealing 
with Warburg’s brokerage arm 
for several weeks. 

MAM and Warburg are now 


both expected to mull the con- 
tentious issue of whether the 
minority stake in the fund 
management company ought 
to be purchased by Wartmzg. 
One objective would be to 
ensure that mam cannot 
thwart a marriage should 
another suitor emerge. 

Alternatively, some analysts 
suggest that Warburg may 
wish to sell its MAM holding 
and re-invest the capital in its 
investment b anking business. 

Norma Cohen 


An opportunistic move to pick 
! up a leading UK fund manage- 
ment company on the cheap? 
Or part of a broader strategic 
move to outflank other US 
investment banks on the inter 
national stage? 

Whatever the real motiva- 
tion behind Morgan Stanley’s 
Interest in Warburg, the col- 
lapse of the proposed deal inev- 
itably raises questions about 
its hritwnaHrinal aspirations. 

Morgan Stanley remains a 
relative minnow in asset man- 
agement, though bigger than 
Wall Street rivals such as Gold- 
man Sachs or Salomon. 

The bank has set a high pri- 
ority on building this business 
further in the increasingly 
capital-intensive and volatile 
investment hanking business It 
remains a relatively stable 
source of foe income, says Mr 
Richard Fisher, chairman. 

Morgan Stanley executives 
yesterday ruled out buying 
another UK merchant hank — 
but, notably, did not rule out 
buying another asset manage- 
ment firm outside the 
US. 

Meanwhile, in the broader 
business of investment bank- 
ing - raising capital fin: compa- 
nies and others, distributing 
and trading securities and 
advising on mergers and acqui- 
sitions - Morgan already has 
highly developed international 
operations. Two out of five 
employees are based overseas, 
with 700 in Tokyo, 400 in Hong 
Kang and nearly 2,000 in Lon- 
don. 


Gaps remain: in equities 
research to Asia, for instance, 
or to its relationships with UK 
companies end equities distil- A 
button to Europe. Morgan exec- 
utives say these weaknesses 
can be met by growing Its 
existing business, rather than 
buying a competitor. - 
■ Revenues from outside. the 
US, largely from trading and 
corporate advisory work, are 
already stronger than most . 
other US investment banks. 

In 1993, thankg to a good 
year to Europe's bond markets, 
Morgan Stanley made pre-tax 
income of S720m (£439m) to the 
region - 60 per cent of Its ~ 
worldwide income, and ter 
more than the £l79m reported 
by Warburg. “The profitability 
of our operations outside .the - - 
US, as measured either by 
return on capital, or profit pm 
professional, has been at least _ 
as big as in the US.” says Mr 
Pbfl Duff; Morgan's rfdaF tbaa>' . 
rfoi officer. 

The US and European bond 
markets have been volatile this 
year. But Mr Fisher says: “We 
have made the decision to fund 
the growth through this diffi- 
cult period.” Staff growth out 
side the US bears this out this 
year numbers have grown by 
IS pm 1 cent, at a time when US 
investment banks generally- 
have been shrinking. : 

If, however, financial mar- 
kets remain weak for . long, 
then those investments seem 
certain to be scaled back: 

Richard Waters 


Arranger 


Deutsche Bank - de Bary 


N.V. 1Z3 


Agents 


Deutsche Bonk AG I 

Bank Austria AO 

OstecvekUidiG Yolksbankea AG 


CfeditoHtill-SankT trdn AG 


AaBtentaM/fruktart/Vtama^ October 1994 


I i- ■» 1 ' -T -. -■■■■ 


■ POLAR: Pre-tax profit of 
this USM-quoted electronic 
components company 
increased 43 per cent from 
£L3fin to £L87m to the year to 
September 30. Sales rose SO per 
cent to £27.6m (£21.2m) and 
operating margins grew from 
6.2 to 6.8 per cent. The 
increased final dividend of 3. Ip 
makes a total of 5.4p (4A5p). 
The shares yesterday added 
1QP to 263p. Polar aims to move 
its shares to the main market 
in the new year. 

□ OPTOMETRIC& The sodden 

demise of one of Its larger 

components customers hit 
interim results of Optometries 
Coip, the USM-quoted optical 
systems group. On sales down 
from $1.88m to $1.72m 
(£L04m), pre-tax profits to the 
period to September 80 
declined by $58,000 to 840,000. 
Earnings per share came to 30 
cents (70 emits). 

■ CRH ACQUISITION: The 
Irish building material a group, 

has acquired Schuster’s Block 
and Bosse Concrete Products, 
of the US. far (£7.lm) 
cash, including debt. Schus- 
ter’s Is the leading concrete 
masonry producer to Indian- 
apolis, Indiana, while Bosse 
makes patio products and pre- 
cast concrete at its plant near 
Atlanta, Georgia. CRH said the 


two companies’ combined trad- 
ing profits amounted to 
on t u rnover of $l6m. 

□ BRISTOL WATER: The com- 
pany Is to restructure its regu- 
lated business as a remit of 
the industry’s price review, 
writes Roland Adburgham. The 
move is likely to result in 
redundancies of about 10 per 
cent among its w o rkforce of 
600. The industry regulator 
has set the company's K tec- 
tor, which determines by how 
much prices can rise above 
inflation, at 1 per cent for each 

of the next five years, “To 
ensure at least the matching of 
the efficiency c r i teria underty- 
ing the delei urination, it will 
he necessary to take a number 
of actions Including a major 
internal r e st r u ct uring pro- 
gramme,” said Sir John Wills, 
chairman. The company 
reported a 15 per cent rise to 
pre-tax profits to £4.73m 
(£4-12m) for the six months to 
September 30, helped by a 
£700400 pro» from the sale of 
non -operational properties. 
The Interim dividend is 12p 
(lLlp); earnings per share 
were 49 Jp (44£p) basic and 
46.3p (393p) fully diluted. 
Turnover rose 4 per cent to 
£3L3m-. Operating profits woe 
£&55m <£6. 4m), after a ELlm 
provision for costs of reorgan- 
ising and reducing staff levels. 


FT International Trade Finance Is the essential newsletter for the 
executive who needs to stay abreast of the opportunities and 
threats that characterise the finance of international trade. ’ 
Published by Financial Times Newsletters, it provides both timely 
reporting and authoritative analysis of the key developments In 
trade and project finance worldwide, every two weeks. 

Essential regular 

reading for 

Major Exporters 


FT International Trade Rnanqe provides you with impartial 
news and analysis of die latest In; 



FINANCIAL TIMES 
Newsletter* 


Credit insurance schemes 
Project finance peckaoee 


Aid and Devetopvnefit funding 

Cm aile r trad e 

Forfaiting 

Gomtry Ksk assessments 


JiMjp on top of fft* world 
amf pmmet Aunca with: 


• • : •— •• • : • • • ^ •, ... 

International Trado Finance •• 




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FINANCIAL TIMES FRIDAY DECEMBER 16 1994 


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COMPANY NEWS: UK AND IRELAND 


wA 

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further rationalisation 


A change of focus for ASW 


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i. " 

- ASW Holdings yesterday 
annonaced'a clean break with 
ifepast by swapping its Scrnt 
fborpe rod mill business for 
BrWsb Steers 35.2 per cent 
stake in' ASW, the Cardiff- 
based steel and construction 
products group. 

_- Ti * transaction is part of a 

- complex package of deals 
which mark a further rational- 
isation of ownership in the 
Bujopean steel industry and 
give ASW its first steel plants 
in continental Europe. 

" They include a 7-for-20 rights 
issue at ASW, to raise about 
^ £29m after expenses, priced at 
16QP and payable in two instal- 
men£&. It has been fully under- 
written by SGWarburg. 

Other de tails of the package 

' arer 

• The disposal by ASW of the 

GWR seeks 
easong of 
growth limit 
as profits rise 

By Raymond Sftoddy 

GWR, the Bristol-based 
commercial radio group, yes- 
terday renewed its appeal to 
■the government to relax the 
restrictions on station owner- 
ship. 

Mr Ralph Barnard, chief 
executive, attached what he 
.called “the ludicr ous anomaly 
preventing GWR bom expand- 
ing because It had the 
maximum 20 licences even , 
though .together they reach 
only 8m people. Other radio 
companies, with fewer but 
larger licences, could reach 
l&n to 17m people: . 

“We are being forced abroad 
by this. We wouki innch rather 
spend our energies and our 
money in the UK,” said Mr 
Barnard, who expressed sur- 
prise at how long it was taking 
the government to deal with 
what appeared to be a simple 


Scunthorpe mill to British 
Steel in effective exchjmgo far 
tbe repurchase of 13.4m ordi- 
nary shares (20 per cent of 
ASW*s ordinary shares) and 
30 An £i cumulative convert- 
ible pffife nmrp glwnn 

The stake held by British 
Steel dates back to the flota- 
tion of ASW in 1988. British 
Steel said the consideration for 
the rod mfn of £50m broadly 
equates to the book value of its 
shareholding in ASW. 

# ASW will acquire for about 
£Slm an 80 per rant stake in 
Society Des Atiars D* Armature 
Poor Le Bfiton (SAM), the steel 
mesh and reinforcement coil 
(recoil) unit of Usinor Sacflor. 

ASW will pay pap «uth and 
issue ltlan new shares to Usi- 
nor, giving the Fr ench group a 
s take of about 12 per rant fa 

ASW. The CanHffbased com- 
pany win, in certain dream- 


stances, buy the rest of SAM 
for up to £19m cash. 

• ASW will invest £17m in its 
Cardiff rod mill, to produce an 
its present reinforcement bar 
(rebar) - now produced at Tre- 
morfa bar null - and recoil in 
one operation. A related £2.lm 
restructuring charge is expec- 
ted for next year. 

Sir Alan Cox, A$W*s chief 
executive, said that, in looking 
for a better ownership struc- 
ture in the industry, it was 
inevitable to question whether 
wire rod was a strategic busi- 
ness for ASW: It retains a 
small wire rod operation in 
Cardiff. 

British Steel already supplies 
steel ballet to the Scunthorpe 
mgl. which is an the same site 
as its main Scunthorpe works 
and employs about 320 people. 

It will be run ss one hndw«s 

with British Steel’s Templebor- 


ough rolling mill in Rother- 
ham. 

Sir Alan said the SAM acqui- 
sition would turn ASW Into “a 
genuine company in the Euro- 
pean sense”. SAM bad group 
sales of FFr2J2hn (£270m) last 
year, and is forecasting sharply 
higher profits this year. It has 
already been extensively 
restructured, but Sir Alan said 
there was considerable scope 
for improving its operational 
cash flow. 

ASW shares rose 20p to 215p 
yesterday. Because the shares 
held by British Steel will be 
cancelled. The number of ASW 
shares outstanding will be 
reduced from 83m to 82.6m 
even after the rights issue. 

The directors said the trans- 
actions would enhance earn- 
ings per share in 1S95 and fore- 
cast an unchanged Bp final for 
1994^ making 6 p for the year. 


Exceptional help Acatos 
advance 40% to £14.2m 


By David BtadfcwmB 

Rising edible oils prices kept 
margins under pressure at 
Acatos & Hutcheson, (he man- 
ufacturer of edible oils and 
fa ts. 

Pre-tax profits for the year to 
October 2 rose from HMm to 
£Ll3m. However, the group 
pointed out that the 40 per cent 
gain was mainly the effect of 
exceptional charges in both 
years relating to disposals and 


m ' 

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Share pric^feoncej 
400- * - 




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He was speaking after the 
group annramrad traded pre- 
tax profits of £3Jm (£900,000) 
for the year to Septonber 30 on 
tumover more than doubled at 

-■ Ramings per share came out 
at B&&> (18 l4p> and a proposed 
fbiaj^Gtvidend of 7Ap makes a 
total & 1% (9p). 

During the year acquisitkms 
Increased GWR’s potential 
wndiflnra from 3 m to 8 m with 
the. addttkm of stations such as 
Radio Trent in Nottingham 
- and Betby and the Ifid Angba 
group with stations in Peter- 
borough, Cambridge and Kings 
Lynn. 

v .The acquisitions accounted 
for ci-im of total operating 
profit of £2.8m (Elm). The 
remits did not Include any 
contribution from GWR's 17 
per cent stake in Classic FM 
winch is not yet paying a drri- 
dezuL ’ 

MrHenry tfeakin» rTtairrMr^ 
said that the present year had 
begun well M with revenues 
ahead (^ budget and strong^ 
ahead of last year”. 

Amies Capel, GWR's broter, 
yesterday raised its forecast for 
tike current year from £A3m to 
2A3m. . 




y Smiths 
\ expands 
K -^ a ? in Europe 


di : 




regular 

ing for 

Exporte rS 


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- 





Smiths 'Industries, the 
aeroqaoe and healthcare com- 
pany, has expanded its indus- 
trial group with two acquisi- 
tions in continental Europe. 

The acquisitions - Sodtemex 
of France and Interplas, a Swit- 
werland-based company with 
operatiems in Italy. Spain and 
ti»UK - will be absorbed into 
Smith's FTex-Tdc ducting and 
conduit business. 

- Consideration for the pur- 
chases Is £13 Am cash, with 
assumed bo r r o w in gs of about 
15m. 

. . Interplas, which specialises 
in suction and diadbiage hose 
ft* a range of industrial activi- 
ties as wdl as electrical con- 
duit, is being acquired from 
Walter Meier Holding, a Swiss 
public com pan y. Sodiamex is a 
Irivatdy-owned company spe- 
cialising in ventilation 
ducting. ~ 

The total net assets of the 
-two companies at the date of 
.acquisition' amount to some 

SlQBi and n p w ratln g profits for 
' K84 are estimated at £23m. 

Barcom £5m deficit 

.The posts of the reorganisation 
-at its Hawkins Plant Services 
stfoddlary highar interest 

<&ngas resulted in a pre-tax 

kW flf SS.hn at Bartorn in the 
year to September 30. This 
compared . with profits of 
n^toprevforatiy. ’ 

The civil, engineering and 
{riant hire group reported static 


Operating profits were flat at 
£13.701, despite a 12 per cent 
increase in sales to £249m 
(£ 222 m). 

The shares dosed lty ahead 
at 264p. 

In addition to raw material 
price increases, the group 
faced increased c om p etiti on on 
prices, citing two other refiners 
seeking to lift volumes “with 
little regard to profit”. The 
group said it bad “responded 
as required to maintain our 
n wri tri: share”. 

Allied Radio 
cots deficit 
to £0.68m : 

Allied Radio, which operates 
licences far Radio Mercury 
and Mercury Extra in the 
south-east and Fortune in 
Greater Manchester, reduced 
pre-tax losses from £L46m to 
£678,000 for the year to Sep- 
tember 30. 

The outcome, which 
included a £203^00 share of 
the startup loss on Mercury, 
was achieved on turnover 
down from £3.75m to £2.82m. 

Allied underwent a capital 
restructuring in May, the 
effect of which was the etimi- ; 
nation of interest charges paid | 
on the convertible unsecured 
hut stock, which have been 
converted into ordinary 
shares. 

Pro-forma losses per share 
based cm shares in issue after 
the reconstruction were 0.5p 

(UP). , ^ 

With some £2m of cash, the 
board plan* to invest in new 
and existing licences. 


galas of £3L4m for the period. 
There was an operating profit 
of £217,000 (£3-42m) but excep- 
tional costs of £ 3 . 59 m repre- 
sented management changes, 
depot closures and plant dis- 
posals related to Hawkins, hi 
addition interest took £1.78m 
(Elian). 

Losses per share of 28. Ip this 
tima c om pared with «»m<np 
of 10.9p previously and there is 
no dividend. Last year 3p was 
paid, faf-lndfag a final of L75p. 

Dewhnrst ahead 

The fweeast improvements in 
efficiency helped Dewhnrst, 
the electrical components and 
control equipment concern, 
raise pre-tax profits by 42 per 
cent from £935,449 to £LS3mfor 
the year to October 2. 

Sales were 7 per cent higher 
at £U.4m (£L0.7m), assisted by 
tam months* contribution from 
the Thames Valley Ufi Com- 
pany. 

BarningS per SbATO WST6 
7 . 82 p ( 5 . 62 p) and a recom- 
mended final dividend of L6p 
malms a total Of 22$9 (3.0^)). 

New London Coital 

Net asset value per share of 
New London Capital, the 
Lloyd’s investment trust which 
ramn to the market in Novem- 
ber 1983, slipped from 9L2p to 
88.7p during the six months to 
SejAendwr 30. 

Net revenue amounted to 
£780^64 for eainings p a share 
of 1.3p. For the six months 
from October 8 1993 to Mardi 
31 1994 net revenue was 
for eanrin gs of 0L9p 

per share. 

A dividend of 0^p is 
declared, making Ip so far. The 


200 




The bulk of the group's busi- 
ness lies in supplying own 
brand oils and fats to UK 
supermarkets; it has about 30 
per cent of the market 
Mr Ian Hutcheson, chairman, 
said earlier this year that the 
insistence of some customers 
that prices should be held in 
the face of unavoidable cost 
increases had “reached a level 


of unrealism we have not 
previously experienced”. 

At the end of September, the 
group said It was forming a 
strategic relationship with 
Archer Daniels Midland, the 
US agribusiness group which 
supplies its biggest refinery in 
London’s Docklands. 

It is also forming a 50-50 joint 
venture with the US group to 
build and operate an edible oil 
refinery and bottling and cate 
ning plant beside ASM’S exist- 
ing oil seed crushing plant at 
Erfth, Kent 

Mr Hutcheson said yesterday 
that tins, together with other 
joint ventures and acquisi- 
tions, would “further improve 
our compe titiveness and I am 
increasingly optimistic for the 
medium to long term once the 
planned programme of 
restructuring and capital 
expenditure is complete”. 

Earnings per share were up 
from 209p to 30L3p. A final divi- 
dend of 5i>p is proposed, taking 
the total to 9p (8p). 


LMS gains 30% with 
aid of property sales 


By Simon London, 

Properly Correspondent 

London Merchant Securities, 
the property and investment 
company, reported a 30 per 
cent increase in interim pre-tax 
pro fi ts from £10. lm to £13 .Ijti, 
helped by gains on the disposal 
of investment properties. 

Net rental income improved 
from £l4Am to £l5.7ln in the 
six Tnrmthg to the end of Sep- 
tember. partly offset by a 25 
per cent rise in administrative 
costs to £2£m. The company 
said these expenses nteluded 
the cost of its High Court 
action agains t shareholders in 
BSB Holdings, the old British 
Satellite Broadcasting bolding 
company which owns 14 per 
cent of BSkyB. 

tats fljahns the terms under 
which it was offered shares 
during BSB’s 1991 rights issue 
were unfair . The case should 
come to trial in January. 


NEWS DIGEST 


current accounting period Is 
for the 18 months to endMarch 
1995. 

GM Firth in black 

Firth (Holdings), the West 


taring group, yesterday 
anno unced a pretax profit Of 
£11,000 for the half year to Sep- 
tember 30 - its first positive 
outcome since 1990. 

The result, achieved on turn- 
over from continuing 
operations of £9JJ7m (£8L4&n), 
compared with losses last time 
Of £756,000. 

Sir Alan Thomas, chairman, 
said the order book at Spartan 
Redheugh, the group’s main 
subsidiary, was “very 
strong . . . further capital 
investment on the finishing 
process Is being undertaken to 
reinforce our strategy of mov- 
ing into the higher quality end 
of the market” 

Earnings per share were Q2p 
(losses of LMp). 

Bradstock rises 

Bradstock Group, the insur- 
ance broker, reported animal 
pre-tax profits up from £7.GSm 
to £8JI2m, includi ng £1.09m 
from acquisitions. Continuing 
businesses showed a 6.7 per 

rant fall 

Mr Eddie McGrath, chair- 
man, said that a strong show- 
ing from the direct insurance 
businesses more than offset 
disappointing results from 
reinsurance. 

Turnover for the year to Sep- 
tember 30 was £32.7m (£27 Am) 
with £4A4m from acquisitions. 
Continuing activities increased 
by 2.7 per cent 

Earning s per share were 


The company’s 5 per cent 
holding in BSB Holdings 
remains valued at nil in the 
balance sheet despite the 
recent flotation of BSkyB. 

Dividends received from 
First Leisure Corporation, the 
leisure company in which LMS 
has a 14A per cent stake, con- 
tributed other income of 
£6321)00 (£5960)00). 

Profits from the sale of 
investment properties were 
£6L5m (£2m) and Tn<*hniad pro- 
ceeds from the disposal of 
assets held jointly with Gen- 
eral Accident; the insurance 
company. LMS said GA 
remained a large shareholder 
and that opportunities for col- 
laboration in new ventures 
were being explored. 

Earnings per share, includ- 
ing capital items, rose from 
2J31p to 4.27P, but fell from 
L97p to L48p on revenue profit 
alone. The interim dividend is 
unchanged at OAp. 


unchanged at &9p and the 
board is recommending a final 
dividend of 4Jp making a total 
for the year of 5.7p <6-5p). 

Reliance Security 

Improved market conditions 
enabled Reliance Security 
Group to lift interim pre-tax 
profits by 50 per cent from 
£991,000 to £1.43m. Turnover 
was up 14 per cent to £40Am, 
against £35JDL 

Mr bhaii gingham, chair- 
man of the sec u r it y services 
group, said the gTgnifirant nee 
reflected recovery from reces- 
sion, benefits of economies of 
scale and lower costs through 
investment in advanced operat- 
ing systems. 

Earnings per share were 4.4p 
(3p) anrt the friterfm dividend 
Is stepped up from l.lp to 
L4p. 

Feedback in red 

Reduced turnover and the cost 
of a number of “policy nritia- 
tives* resulted in a sharp lapse 
into the red at Feedback, the 
USM-traded electronic and 
electrical equipment group. 

T urn over for the six months 
to September 30 amounted to 
£4I8m, down from £4.47m; 
losses totalled £374,400 against 
pre-tax profits last time of 
£267,900. 

Lraaa>g per share were 3A7p 
(earnings of 2.l3p) but the 
h ii wim dividend is maintained 
at 0.5p. 

Moorgate Smaller 

Moorgate Smaller Companies 
income Trust reported net rev- 
enue unchanged at £l-58m for 
the six months to October 31 


Greencore 
ahead 17% 

after lower 
interest cost 


By John Murray Brown 
In Dublin 

Greencore. the sugar, malting 
and mQHng group, reported a 
17 per cent increase in pre-tax 
profits from I£33.7m to 
I£39.5m (£38^m) for the year 
to September 30, reflecting a 
sharp reduction in net interest 
costs and farther efficiency 


other food operations an 
recorded increases in profits. 
Only the malting business 
buffered a fell, reflecting 
difficult marketing conditions 
and high domestic barley 
prices In 1993. 

Group sales Increased to ' 

I£404j>m (TE39aam) tndnding 
££175,000 OEl^fite) from 
dfacontimied activities giving 
an underlying rise of 3 per 


This in part reflected a fall 
in sugar sales, following poor 
crop yields in 1993. Retail 


cent of total sugar volume, 
showed a small decline in a 
difficult market. 

Mr Bcrui e CaWn, chainiuaiv 
said agribusiness was 
responding well to r ef or ms of 
! the EtPs Common Agricultural 
Policy. He welcomed the 
: agreed redaction in “set aside” 
- the land formers are 
required to take out of 
production - from 15 per cent 
to 12 per cent, which would 
result In increased processing 
volumes. 

He added that the outlook 
for the Irish and Belgian malt 
businesses was i mprovin g on 
the back of the upturn In the 
beer and spirits markets. 

Flour and consumer food 
operations increased volumes, 
particularly exports. 

Interest costs were cut by 
I£5m to I£4^6m, onderiintog 
continued strong cash flow 
and reduced working capital 
req u irements. 

Earnings per share 
increased 13 per cent to 3&4p 
(KL9p) and a final dividend of 
6L£p is proposed for a total of 
9Ap (8Ap). 

Apollo back 
in the black 
with £291,000 

Apollo Metals swung back into 
profit during its second half to 
finish the year to September 
30 with pre-tax profits of 
£291,000, against eufan last 
time, writes Paul Cheeseright 

The company incurred a 
first-half loss of £219,000. 

The outcome waB sUghtiy 
higher than the forecast made 
in October when the 
aluminium amd specialist steel 
distributor and processor 
launched a £ 7.79m rights issue 


to finance the acquisition of 
Aviation Metals. 

T ur nover rose from £28^m 
to£33.7m, but after m eeting 
reorganisation costs in 
Germany, operating profits 
fefl from £L42m to £564,000. 

Although earnings per share 
were ml, against 5p, the group 
is confident enough of trading 
prospects to hold the final 
dividend at 2.4p, maintaining 
the total at 3Ap. 


giving naming s per share of 
23lp. The interim dividend is 
unchanged at L8p. 

Net asset value per share 
was 127.7ti at October 31, down 
from 143.3p at the April 30 
year-end and 1325p a year ear- 
lier. 

Equity Consort offer 

Equity Consort Investment 
Trust’s proposals to sharehold- 
ers for capital reorganisation 
have been withheld following 
an approach which may lead to 
an offer. 

The trust also announced net 
asset value per share of 6S4p at 
October 31, against a restated 
725p a year eariier- Asset value 
per deferred share fell from 
EZL50 to £LL67. 

Net revenue for the six 
winntiM to the end of October 
was £877^33 (£704.13(0 for earte 
ings per share of I3.63p 
(14A4p), or 17.66p (3&49p) per 
deferred share. The interim 
dividend is unchanged at 

lL0625p per share or l3J25p 
per deferred share. 

Total Systems down 

Total Systems, the USM-traded 
computer services group, 
reported a 39 per cent drop in 
pretax profits for the half-year 
to September 30. 

The outcome of £7,460 
(£12,330) was struck on turn- 
over slightly ahead at £Llm 
(£1.06m). Mr Terry Bourne, 

chairman aalii the Core busi- 
ness had continued to he prof- 
ttable in a "(Effijaiit* mar ket, 
but Investment in package 
systems had impacted on 
results. 

Tgarnfapt per share halved to 
0.039p. 


CTR cuts loss to £7.2m 
as exceptionals plummet 


By Christo ph er Price 

Losses at Central Transport 
Rental Group, formerly 
Tiphook, fell sharply in the six 
months to October 31, declin- 
ing from £179.7m to £7.2m, as 

the company reported lower 
exceptional charges and an 
improvement In trading. 

The interest charge was 
halved at £2Q4hn (£4G.6m) and 
the results were additionally 
flattered by a £19 Am foreign 
currency gain on Its US 
bonds. 

Mr Ian Clnbb, the non-execu- 
tive chairman who joined the 
board three months ago, said 
the results marked a turning 
point in the group’s fortunes. 

In the past year, CTR has 
parted with several directors, 
iron up hefty losses, been 
forced to sell its container leas- 
ing division and ^ the igno- 
miny of its chief executive, Mr 
Robert Montague, faring bank- 
ruptcy charges. 

Turnover fell to £73.4m 
(£155.7m) for operating losses 
of £2.2m (£i39.lm). However, 
the company said continuing 
operations showed turnover 
ahead SJS per cent for operat- 
ing profits of £9m, compared 
with losses £2.4m. 

Losses per share fell from 
163u4p to 6u5p. 

Sales in the trailer rental 





.y. 

h 



lan Clublx results are turning 
point in group's fortunes 

division improved by 9 per cent 
to £67 Jm as it pushed through 
rental rises of 3.4 per oent Util- 
isation rates also improved. In 
the rail wagon rental business, 
turnover rose £200,000 to Efim. 

Exceptional charges fell from 
£154.6m to £14.9m. This 
included £2J2m in redund ancy 
and reorganisation costs. CTR 
relocates this weekend from its 


prestigious central London 
address to smaller premises in 
High Wycombe with a central 
office staff of 30. a tenth of the 
figure employed at its peak. 
Administrative expenses over 
the half declined from £49.4m 
to £22.9m. 

Mr Clubb said that with a 
four-year agreement with its 
bankas only recently begun, 
the group had enough working 
capital to continue its 
Operations and maintain capi- 
tal investment. A financial 
reconstruction was planned at 
some stage, probably during 
1995. 

However, a contract with 
Schmitz, a German manufac- 
turer of trailers with which 
CTR has a long-term supply 
contract, was not provided for. 

The contract would cost the 
group £l6lm over the next five 
years, with the next payment 
of £18m due in April 1997. 

“With our Improving cash 
flow and market position, I 
don't see this bring a problem 
at an.” said Mr Clubb. 

He reiterated the board's 
view that the personal finanops 
of Mr Montague, who has two 
bankruptcy writs outstanding 
and reputed debts of some 
£40m, were his affair. “But he 
would not be working for us if 
he did not add value, ” he 
added. 


Rejuvenated balance sheet 
behind recovery at YJ Lovell 


By James Whit ti n gton 

Shares in YJ Lovell (Holdings) 
gained 7p to 60p yesterday 
after news that its financial 
restructuring had returned the 
builder and property developer 
to the black 

The tum roun d from losses of 
£59.6m to a pre-tax profit of 
£4_L6m for the year to Septem- 
ber was achieved on the back 
of a rejuvenated balance sheri; 
which strengthened from a net 
liability position of £i&3m to 
show net assets of £S2L2m. 

The first dividend for three 
years is declared at lp, on 
earnings per share rose of 9.4p 
(71fL3p restated loss). 

Growth in all of the core 


businesses of construction, res- 
idential housing and plant hire 
helped lift sales to £251m 
(£224m). 

The restructuring package, 
agreed with a syndicate of 
banks last December, injected 
£75 Am into the balance sheet 
through a £45. 8m debt-to-eq- 
mty swap and a £29.7m rights 
issue. 

The money was used in a 
substantial write-down erf prop- 
erty and land in the US and 
the UK's commercial property 
divisions and residential hous- 
ing in Spain. There was also 
fresh capital investment in the 
Plant Hire company - which 
enjoyed windfall profits of 
£800,000 against a £1.7m loss - 


and in the residential business 
in the US and UK. 

Group net debt was reduced 
from £94Jhn to £25 5m, result- 
ing In on balance sheet gearing 
of 41 per cent 

Mr Bob Sellier, chief execu- 
tive, said: “Our order books are 
looking healthy and we will 
continue to consolidate or dis- 
continue our weaker busi- 


Murray Johnstone to 
launch venture trust 


By Bethan Hutton 
Murray Johnstone has 

announced plana to launch rma 

of the new breed of v e nture 
capital trusts, details of which 
were outlined in the last 
Budget 

Full details will be published 

fa fhp Finance sm nwt mfmfh j 

but the fond management 
group is confident that it will 
be able to work with the 


Murray Johnstone plans to 
launch the trust within the 
first six months of next year. It 
will be managed by Mr Iain 
TuDoch, its Glasgow-based ven- 
ture capital fund manager. 

The group will be locking to 
raise between £L5m and £3Qm. 

Venture capital tr u sts win be 


legally restricted to investing 
mainly in very smaH compa- 
nies with assets of less than 
£10m, which increases manage- 
ment costs. 

However, Murray Johnstone 
aims to mitigate these by co- 
inve&tmg with other venture 

Effi pitaKgt S. 

Private Investors are to be 
offered substantial tax breaks 
for investing in venture capital 
trusts at launch. These facindg 
20 pear cent up-front income tax 
relief on investments of up to 
£100,000 a year, tax-free income 
and capital gains from the 
trust if the shares are held for 
at least five years, and the pos- 
sibility of deferring capital 
gains tax liabilities from other 
investments if the gains are 
rolled Into the trusts. 


The only area where profits 
fell was the Partnership divi- 
sion, which provides social 
housing in conjunction with 
the UK’s Housing Association. 
Pre-tax profits fell 17 per cent 
to £2£m, due to reduced sales 
and government funding for 
social housing, said Mr Sellier. 


Mid-States 
postpones 
ADS placing 

Mid-States, the US motor parts 
distributor quoted on the USM, 
is proceeding with its applica- 
tion to be traded on Nasdaq in 
the form of American Deposi- 
tary Shares but has deferred 
its proposed placing. 

Mid-States bad planned to 
raise $15m (£9 Jin) through a 
placing of ADSs at between SS 
and $11 an ADS (equivalent to 
between 72p and 80p per ordi- 
nary share), but has been 
advised to postpone it because 
of adverse market conditions. 

The directors are unwilling 
to complete the issue at a price 
below 72p because of the dilu- 
tion this would cause for exist- 
ing shareholders. However, 
they may issue a small number 
of shares at a discount in order 
to obtain a Nasdaq quote. 


luiiiiiiiiiiiiiiimimmmimiimiimiimmiiH 

This advertisement is issued m compliance with the requirements of The International Stock Exchange 
if the United Kingdom and the Republic of Ireland Limited (the " London Stock Exchange m }. It does 
not constitute an invitation to the public to subscribe fan or purchase, any securities in ASW Holdings 
PLCL Application has been made to the London Stock Exchange for the securities mentioned below to 
be admitted to the Official List and it is expected that the decision of the London Stock Exchange to 
admit those securities to listing will be announced in accordance with Listing Ride 7 J of the London 

Stock Exchange at 830 cun. on IQth January, 1995 . 



ASW HOLDINGS PLC 

(Incorporated in En gland and Woles number 2086270) 

■ 

7 for 20 Sights Issue of 

18,833^234 Stock Units of 25 pence nominal of convertible 
non-interest bearing subordinated unsecured loan stock 

(“Stock”) 

■ 

at 160 pence per Stock Unit, payable in two equal instalments, 

and automatically convertible into new Ordinary shares 

of ASW Holdings MX at the conversion rate of 

one Ordinary share for each folly-paid Stock Unit (subject to adjustment) 

■ 

I 

Dentils of tbe Stock and of Ae Rjgbiz Issue are given in die document dated 15th December; 1994 (the 
“Listing Particulars”) which comprises listing particulars relating to ASW Holdings PLC prepared in 
compliance with [be Using rales made under section 142 of the Financial Services Act 1986, copies of 
which have been delivered id die Registrar of Companies in and Wales for registration as 

required by section 149 of (hat Acl S.G-Whxbuig is the sole manager of and spoosor to the Rights 
Issue. Copies of die Listing Particulars may be obtained during usual business hours up to and 
mdudhig 20tb December, 1994 (for collection rally) from the Company AnrxnmxsienK Office, 
Loodoa Stock Exchange Tbwer, Cape! Court, off Bartholomew Lane, Loadoo EC2 1HP and during 
usual business hoar* up to and including 9ih January; 1995 from ASW Holdings PLC, 

P.Q. Bos 207, Fortran Road, Sl Meltons, CarsfifF CF3 0YJ and frctn:- 

S.G. Warburg Group 
2 Finsbury Avenue 
London EC2M 2PA 

16th December, 1994 

iiiiiiiiiiiiiiummmimmiiimiiimimmmm 


i 

J 


■i 





FINANCIAL. TIMES 


PRIDA^ DECEMBER 


16 1994 



COMPANY NEWS: UK 


Record revenues behind ris ? s 
43% leap at Daily Mail I difficult 


By Raymond Snoddy 

Associated Newspapers, 
publishers of the Daily Mail 
and the Evening Standard, pro- 
duced record revenues and 
trading profits despite the 
newspaper price cutting wars. 

The performance of its news- 
papers, with both Dally Man 
Evening standard classi- 
fied advertising particularly 
strong, helped the Daily Mall 
and General Trust to a pre-tax 
profit of gftiTTi in the year to 
October 2 - a 43 per cent rise 
on the previous £64.4m. 

Trading profit increased 18 
per cent to £97.6m. The pre-tax 
result was after exceptional 
losses of £16 1m for provisions 
set against investments in tie 
Whittle partnerships in the US, 
hut included a £15 5m surplus 
from Euromoney’s em ^ plac- 
ing of shares to institutions in 
May. Although DMGT sold no 
shares, its Euromoney stake 


feD from 747 per cent to 702 
percent 

Earnings per share were 
5&9p (46£p). The company rec- 
ommended a final dividend of 
12£p (adjusted llJZp) wintring a 
total of 16J3p (adjusted 148p). 

Mr Peter Williams, finance 
director, said yesterday that 
DMGT was delights! by the 
performance of the main group 
newspapers. “It's almost a sur- 
prise to ourselves.’’ 

Advertising revenue rose by 
14 per cent and there was also 
a “sharp increase in profit” at 
Northcliffe Newspapers, the 
regional group. 

The board, led by Lord Roth- 
ennere, did, however, warn 
that while the group’s UK busi- 
nesses continued to experience 
improving advertising mar- 
kets, the national newspaper 
sales market continued to be 
very competitive and a sharp 
increase in newsprint prices 
was expected. 


Mr David Forster, media ana- 
lyst at Smith New Court, the 
stockbrokers, said DMGT had 
produced “a really rather good 
set of results' 1 . Smith New 
Court was now looking for 
profits of £lG3m and G2J3p earn- 
ings in the current year and 
£124 m profits and 75£p earn- 
ings in 199546. 

Other ventures such as 
Channel One, the London 
News Channel and College- 
view, a US-based information 
service for college leavers, 
remained in loss because of 
start-up costs. 

Associates such as Teletext, 

West country, the ITV com- 
pany, the GWR commercial 
radio group and the Bristol 
Evening Post all had improved 
results. 

The purchase of the Notting- 
ham Evening Post is due to be 
completed in January. 

DMGT A shares slipped 2p to 
978p. 


markets 


Dobson Park raises £18m 
and buys rest of Longwall 


By Peter Pearse 

Dobson Park Industries is 
making a recommended offer 
for the outs tanding 41.1 per 
cent holding in Longwall Inter- 
national, it mining equipment 
associate. It proposes to part 
fund the deal with a l-for-4 
rights issue at 62p to raise 
£l7.7m net 

The shares eased 3p to 75p. 

At the same time, the mining 
equipment industrial electron- 
ics and toys group revealed 
pre-tax profits more than 
doubled for the year to 
October 1. 

Profits leapt to £HL5m pre- 
tax, at the top end of expecta- 
tions. The comparable £4I6m 
was struck after a £459m loss 
from the disposal of the Power 
Tools and Revere Aerospace. 
Adjusted for the effect of the 
disposals profits rase 20 per 
cent 

Turnover fell to £100m, 
including £4.47m from acquisi- 
tions, against gigLdm, includ- 
ing £28:9m from discontinued 
activities. Underlying turnover 
showed an increase of 6 per 


cent. 

Kamings rose from L42p, or 
4.65p adjusted, to 5.45p and the 
final dividend is held at JL55p 
for an unchanged total 3-75p. 

Mr Alan Kaye, chairman, 
said the dividend could not be 
raised because of bank cove- 
nants connected with the 
Longwall joint venture. 

In January 1993 Dobson 
merged its mining equipment 
interests with Meco Interna- 
tional, a 1989 buy-out from 
Dowty, into Longwall Dobson 
held 50 per cent of the shares 
and 35 per cent of the votes. In 
September 1993, it bought 
Westpac’s 8.9 per cent stake for 
£2m, though the 12 per cent of 
the votes could not be utilised 
until either Dobson made a 
general offer or Longwall was 
floated. 

Dobson reduced its dividend 
payments when Longwall was 
set up as the joint venture had 
no cash flow, being laden with 
borrowings dating from the 
mbo. Dobson is assuming the 
borrowings, which, at Novem- 
ber 18, stood at £23Jm. Indeed 
Mr Kaye said Dobson wanted 


Longwall “to score” by refinan- 
cing it “In a plc-type way". 

Dobson is offering £l8.4m in 
cash with an alternative com- 
prising an Initial cash payment 
of £I6-4m and a performance- 
related payment of up to 
£11. 6m, linked to profit and 
cash generated over three 
years. 

Mr Kaye said that Longwall’s 
management, holding 25 j 8 per 
cent of the shares and 4L6 per 
cent of the voting rights had 
accepted and, opted for the per- 
formance related alternative. 
That enables Dobson to speak 
for 847 per cent of the shares 
and 8&5 per cent of the voting 
rights. 

Group operating profits fen 
to £5-78m (£6-58m), though the 
associates - Longwall and 
Instem - contributed a further 
£4.79m (£2A5m). 

The industrial electronics 
side lifted pre-interest profits 
to £4. 72m (£3.95n0; mining 
equipment rose to £5.01m 
(£4.48m); toys and plastics 
advanced to £1.63m (£l-33m); 
and a property sale brought in 
£448,000 (£39,000). 


By David Blackwell 

M&G Group, the tndfyf jqdPllt 
Unit trust com p an y fiat 

stresses the importance of 
htgfa dividends, yesterday 
lifted its total pay-out for the 
year by 20 per cent to 30p, 
matching the rise in. earnings. 

Tbe board te recommending 
a final dividend of 17p (I5p), 
to be paid from earnings of 
57 Jp (47.8p) per share. 

Pre-tax profits for the year 
raded September rose by 20 
per cent from £50 3m to £61 ul 
F unds under management 
grew by nearly 12 per cent to 
£IL8bn (£10.6bn) - a record 
net inflow. 

“We are extremely pleased 
with 20 per cent growth," said 
Mr David Watson, finance 
director, given that the 
markets had been difficult 
The FT-SE-A All-Share Index 
at the end of September was at 
an almost identical level to the 
previous year. 

Ova* five to 10 years 94 per 
cent of the group’s unit trusts 
were in tiie first and second 
quartile. “We continue to offer 
above average investment 
per for mance,” stud Mr 
Watson. “We treasure this 
highly.” 

Unit trust sales more than 
doubled to £890m (£4 14m) and 
net of redemptions jumped 
from £2Tm to £527m. The 
group's share of the martlet 
for unit trust Pep sales grew 
from 9.1 per cent to 10.2 per 
cent, helped by the removal of 
the initial charge on the 
Managed Income Fund Pep in 
January. 

Single premium life sales 
were 81 per cent higher at 
£237m (£131m). From January 
sellers of life insurance will 
have to disclose the cost of 
management fees, and overall 
sales are expected to dip. But 
Mr Watson said M&G was well 
placed to win extra business 
as it was among the lowest 
charging companies. 

Net asset value per share 
rose from lS£5p to 216J3p. The 
shares rose by 3p yesterday, 
closing at S40p. 


Lower provision of £24m for further rationalisation 

Trafalgar House cuts charges 


By David Wighton 

Trafalgar House, the 
engineering and prop er t y con- 
glomerate, has returned to 
profit after three years of 
losses, helped by a sharp ML in 
provisions and the cost cutting 
carried out since Hongkong 
Land took effective control last 
year. 

About 2,000 jobs have been 
cut ftum the engineering divi- 
sion in the past year, reducing 
costs by about £30m. 

Yesterday the group 
annmmrgri a further £24m of 
provisions for additional 
rationalisation and redundan- 
cies. These will fall mainly is 
the en gineeri ng division in tbe 
UK and Europe. 


Engineering profits fell to 
£&7m C£77-2m) on turnover of 
£2^3bn (£5L25bn) in the year to 
September 30. Group operating 
profits before exceptionals rose 
to (£91 , tm) . 

Mr Nigel Rich, chief execu- 
tive, engineering margins 

had continued to fell as the 
division wor k ed through con- 
tracts won during the reces- 
sion. He warned engineering 
profits could fell feather this 
year before margins recovered. 
The order book bad remained 
feiriy constant at about £2bn. 

“There has bean a pick up in 
the steel industry and petro- 
chemicals and we are getting a 
lot more work coming out of 
A shL” 

After total exce p tional debits 


of £24Jm, Trafalgar recanted a 
pretax profit of M5.6BL A dehit 
of £396.7m in the previous year 
resulted in a Ices of £347m. 

Mr Gavin Launder, conglom- 
erates analyst at Goldman 
Sachs, described the results as 
"quite encouraging” but left 
hte current year forecast 
unchanged at £99nx. He 
reduced his earnings per share 
forecast from 45p to 4p. 

A sharply reduced interest 
Mil of £23Jm (£41. 4m) followed 
the £400m convertible share 
issue a year ago, which left 

Trafalgar with gearing of just 3 

per cent at its year end on 
shareholders’ funds of £7WLfim. 

Operating profits from con- 
struction were little changed at 
£l3.Zzn (£l2J>m) and there was 


a strong recovery In house- 
building. where profits jumped 

to £19m - • 

Analysts were encouraged by 
the £500,000 underlying profit 
from commercial property - 
compared with a £i5.«u toss - 
but the company said the flat 
contribution of £7 .Sm from 
shipping was disappointing. 
The mass of exceptional 
included property write- 
backs of £5b8m - after write- 
downs of £i78m the previous 
year - and a £l5m provision 
for environmental risks related 
to a site in the US, 

Earnings per share were Lip 
(47.6p loss) and Trafalgar is 
paying a final dividend, of Ip, 
after passing the interim, as 

predicted a year ago. 


Sweb dismisses merger speculation 


By Michael Smith 

South Western Electricity 
dismissed speculation that it 
could become involved in a 
merger or takeover as it 
reported a 35 per cent increase 
in interim pre-tax profits and a 
24 per cent dividend rise. 

Mr John Seed, chief execu- 
tive, said there had been no 
noticeable changes in its share- 
holders’ register. “We are not 
In discussions with anyone 
it is oar intention to remain 
independent” he said. 

As one of the smaller 
regional electricity companies, 
Sweb has been identified by 
investors as one of the most 
likely bid targets after North- 
ern Electric. Trafalgar House 
announced this week that it 
was considering a bid for 
Northern. 

In the six months to Septem- 
ber 30, Sweb made pre-tax prof- 
its of £4L4m (£30.6m) on turn- 
over of £374im (£385 An). The 
interim dividend of 8.7p (7p) is 
being paid from earnings of 
25. 6p (19-Sp). 

Sweb said the underlying 
increase in the dividend was 
18.6 per cent but the amount 
per share had increased far- 
ther by the buy-back of 5.1 per 
cent of its shares. 

Sweb has authority to buy 


bw rfr op to 10 per cent and Mr 
Seed the company would 
choose an appropriate moment 
to complete the programme. 

If it did so. gearing by the 
year-end would be about 20 per 
rent' assuming no other signif- 
icant changes. 

Distribution unit sales 
incr eased by 2JB per cent on a 
weather-adjusted basis, helping 
to increase profits from £26.6m 
to £3S.7m. The supply business 
incurred a loss of £2£m against 
a profit of £&2m in the compa- 
rable period. 

Mr Seed said Sweb aimed to 
cut £27m from the cost basis 
over the next five years, with 
most of the reductions in the 
first two. About £18m of this 
would come from improving 
operation efficiency. Electricity 
business staff is scheduled to 
fall from 24300 to 2,400 by the 
end of the century. 

Retailing halved its less to 
£500,000. Mr Seed said that if 
the company could “find an 
opportunity to make an ele- 
gant exit from retailing we 
would take it”. 

Sweb intends to demerge its 
full holding in the National 
Grid if flotation goes ahead. 



John Seed; aiming to cut £27m from cost base in next five years 


There were two schools of 
thought on Sweb in the City 


yesterday. Some analysts 
argue that it is a good bet 
because it enjoyed a favourable 
regulatory review; others see it 
as being in danger of being 
penalised by investors for mov- 
ing too slowly on cost-cutting: 
particularly jobs. But in these 
beady days evaluation of elec- 


tricity companies has as much 
to do with the likelihood of 
them becoming bid targets as 
with their underlying perfor- 
mance. That is why Sweb’s rat- 
ing is higher than most. Its 
dimes are trading on a yield of 
42 per cent, assuming a 29p 
foil-year dividend. 


Improved beer sales volumes 
help Greene King to £10.7m 


Chrysalis considers 
options on distribution 


By Roderick Oram, Consumer 
Industries Editor 

Greene King yesterday 
announced its first improve- 
ment in beer sales volume in 
three years as it reported a 12 
per cent rise in interim pre-tax 
profits from £9.4Sm to DO.Tm. 
Turnover rose from a restated 
£72JJm to £77-5m. 

Most of the growth came 
fTOm managed pubs, which 
sold 16 per cent more beer, 
partly reflecting additional 
houses purchased from Bass. 
Their sales and operating prof- 
its rose by 19 per cent Vol- 
umes sold to the free trade and 
national accounts dipped 
slightly, leaving overall vol- 
ume up 0.2 per cent at 410,000 
barrels. 

The second half had started 
well with beer volumes and 
food and drink from managed 


Greene King 

Share price (pence) 

' 600 



Source: FT Graphite 

pubs showing further growth, 
said Mr Timothy Bridge, chief 
executive. Consumer confi- 
dence remained fragile, how- 
ever, particularly in East Ang- 
lia, the group's home market 
Underlying profits growth 


was 8 per cent, excluding reor- 
ganisation. costs of £1.02m 
(£336,000) and a £763,000 gain 
on disposal of investments, 
mostly the profit an the sale of 
the 29 per cent stake in Nor- 
land, the Thames Valley 
brewer. 

The £29m proceeds helped 
cot net debt from £100 ,6m to 
£69.2m and gearing from 43 per 
cent to 28 per cent 

Greene King continues to 
look for new pub sites in 
densely populated areas, typi- 
cally to the south and south- 
east of its home base. It hopes 
to open about seven new pubs 
this year; so far it has opened 
one in Crawley and one in 
Oxford. 

The interim dividend is 41p, 
up 02 per cent lforningg per 
share were L9p (16J.p) before 
exceptionals and 17.2p (16.4p) 
after. 


By Raymond Snoddy 

Chrysalis, the music and media 
group, is considering the possi- 
bility of joining a consortium 
bidding for the Channel 5 fran- 
chise or launching a channel 
for cable or satellite television. 

“Channel 5 is not the only 
method of distribution,” said 
Mr Chris Wright, chairman of 
Chrysalis, which will make 
3,000 hours of television this 
year. 

The company, which yester- 
day annonrineri a pre-tax loss 
of £3 .3 9m for the year to 
August 31 on turnover from 
continuing operations up from 
£59m to £68-9m, has not yet 
decided which option to 
choose. However, It is keen to 
keep its status as an indepen- 
dent producer. 

The pre-tax loss of £14. 6m 
the previous year included a 
provision of Eil.lxn against 
losses on the closure of discon- 
tinued businesses such as the 
MAM Leisure amusement 
machine operation. The 1994 
results reflect a credit of £l-5m 
released fTOm the provision. 


Losses per share were lL06p 
C34.44p). 

Mr Wright, a significant 

shareholder in Chr ysalis said 

that “excellent progress’* had 
been made in refocusing the 
company on the multi-media 
entertainment industry. 

“As anticipated, the exten- 
sive investment that this has 
necessitated has impacted an 
short-term profitability bat I 
am confident that our 
longterm goal of a substantial 
enhancement of shareholder 
value will be achieved.” 

Chrysalis has decided not to 
pay a dividend for the year and 
it is clear that the start-up 
costs of Crystal FM, the new 
commercial radio licence for 
London won against intense 
competition, is likely to be 
enough to keep the company in 
loss in the current finanriai 
year. 

Chrysalis, and probably its 
shareholders, will expect the 
company to move into profit in 
1995-96. At present sharehold- 
ers' funds stand at £45m. 

The shares closed unchanged 
at 245p. 


Gold Greenlees shows 
19% advance to £2.66: 


By Diane Summers, 

M ar ke tin g Correspondent 

Gold Greenlees Trott, the 
advertising and marketing ser- 
vices group, reported pre-tax 
profits up 19 per cent from 
£2.24m to £2.66m in the six 
months to October 31. 

Turnover increased 13 per 
cent from £127 .8m to £143JBm 
and group revenue grew 9 per 
cent from £25. 8m to £28m. 
Operating profits rose by 11 
per cent to £3. 16m. 

Earning s per share were up 


from 6.2p to 7.16p. The interim 
dividend is 2p (&3p) with the 
balance of interim and final 
adjusted to reflect the group's 
previous practice. 

Net interest costs fell by IS 
per cent to £507,000, reflecting 
reduced long-term borrowings. 

The results represented the 
best overall performance for 
some time, said Mr Michael 
Greenlees, chairman. This was 
largely achieved as a result of 
improvements in UK oper- 
ations, in particular of GOT 
Direct and GGT Advertising. 


Plysu declines to £2.85m 


By Peggy Hoifinger 

Plysu, the plastic con tain er manufacturer, 
expects to pay at least an unchanged dividend 
this year, despite the adverse effect which 
sharply highar raw material prices will have on 

ET Am* 

pron.es. 

Mr David O'Shaughnessy. chairman, who was 
announcing a 16 per cent fall in interim profits, 
said progress in cutting costs and increasing 
volumes had been overshadowed by rises in 
polymer prices of more than TO per cent This 
represented cost increeses of £1 j5m a month 
across all of Plysu’s businesses. 

The full effect of the increases would be felt in 
the second half. However, Mr O'Shaughnessy 
said Plysu would be able to pass through all the 


price increases, although, that would take h™. 

The drop in pre-tax p ro fit s, from £3 41m to 
£2j85m, for the six months to September 30 was 
on sales 2 per cent higher at £447m. 

Mr O'Shaughnessy said profits were lower 
because of both the impart of higher raw mate- 
rial prices and the negotiation of longer-term 
co n tract s with the dairy «wnpani*« 

However, with the rest ructuring arnirHwed 
last year about Elm In annualised costs had 
been cut out of the UK containers business, and 
£750,000 from the continental European opera- 
tion. The underlying trading position was aim 
improving, he said, with volumes in the juice 
and dairy containers business at record levels. 

Plysu maintained the interim dividend at 2p. 
Earnings per share fell from 4£p to 4p. 


Tumround 

takes ERF 
to £0.8m 


By John 


Recovery In the UK track 
market and some non-Euro- 
pean export markets helped 
produce a pre-tax profit of 
£801,000 at ERF (Holdings) in 
the six months to October 1, 
against a £613,000 loss in the 
comparable period. 

The turnraond follows accu- 
mulated losses of more than 
£9m in the previous four 
years, when ERF and all other 
truck makers suffered from 
the most severe European mar- 
ket slump on record. 

In the second half of last 
year ERF made £453,000 - not 
enough to prevent a loss of 
£26,000 for the year as a 
whole. 

In the current half-year 
gearing fell to 41.9 per cent, 
against 63JS per cent at the 
end of the previous year. 

Turnover rose 37 per cent to 
SSlJSm (£6&9m). 

An interim dividend of 2p 
(nil) Is payable from earnings 
per share of 46p (7£3p loss). 

UK sales ware 25 per cent 
higher, but those to export 
markets, particularly South 
Africa, jumped by 95 per cent 
ERFs 43.9 per cent stake in 
ERF South Africa earned it 
£109,000 (£78*000). 

Mr Peter Foden, Chairman, 
he regarded Sooth Africa 
major potential growth 


ICI sells Teesside plant 


By Chris Tlghe 

Imperial Chemical Industries 
confirmed yesterday that it is 
to sell its ethylene oxide deriv- 
atives businesses to Union Car- 
bide, the US chemicals group. 

Under the £40m deal Union 
Carbide will acquire and oper- 
ate lCI’s ethylene oxide and 
ethylene glycol production 
plant at Wilton, an Teesside. 
The 90 Employees will transfer 
to Union Carbide. 

The deal, signed early yester- 
day, is subject to review by the 
Office of Fair Trading, but is 
expected to be completed 
.wjthin three months,. 

Id was keen to stress the 


differences between this latest 
divestment and its 1993 swap 
deal with Du Font. Du Pout 
has since angered the Teesside 

community, and embarrassed 
ICI, by announcing heavy job 
losses at the nylon plants 
which it acquired there. 

Mr Arthur Dicken, ICTs 
Teesside operations manager, 
said: “There are two big differ- 
ences, the mutual dependence 
to supply each other and the 
very firm plans to invest" 

Under foe agreement ICI will 
supply Union Carbide with eth- 
ylene. for foe Wilton site, and 
buy 45-peroent of its output of 
ethylene oxide, a key raw 
material for a number 


of its bus i n e sses. 

The two companies have 
agreed to fund jointly the 
expansion of the ethylene 
oxide unit at Wilton from 
240,000 tonnes a year capacity 
to 300,000 tonnes. Union Car- 
bide also intends to increase 
Wilton's ethylene glycol capac- 
ity from 85,000 to 200,000 
tonnes a year and may expand 
other facilities. 

Mr Mike Brider, Teesside dis- 
trict secretary of the Transport 
and General Workers’ Union, 
said the unions would seek 
assurances that Union Carbide 
would maintain recogni- 
tion and Id empl oyment terms 
and conditions. 


Devanha for market 
via reverse takeover 


By Bettian Hutton 

Devanha, the cable television 
company, is coming to market 
by reversing into Worth Invest- 
ment Trust, which has made a 
£24m recommended bid far the 
company. 

The offer takes the form of 
2462)468 new shares in Worth, 
with one warrant for every five 
shares, for each Devanha ordi- 
nary share. The £24m valua- 
tion is bused on foe 2Q£p asset 
value of existing Worth shares, 
with a 2p premium. Worth 
shar es were suspended yester- 
day at 24p. 


The new shares will repre- 
sent 79 per cent of foe share 
capital of the enlarged com- 
pany, to be named Caledonian 
Media Communications. 

Marshall Securities is to 
place 20.5m of the new shares, 
17.5 per cent of the total Direc- 
tors and shareholders in 
Devanha have given irrevoca- 
ble undertakings to accept the 
offer in respect of 90^8 per cent 
of the shares. 

The proposals will be put to 
an extraordinary meeting on 
January 9- Dealings in the new 
shares and warrants are due to 
start an January 10. 


Kunick back 
on dividend 
list with 0.5p 

By Geoff Dyer 

Kunick, the leisure group 
which floa t ed its UK nu r si n g 
homes business earlier this 
year, is to pay its first divi- 
dend for three years after 
announcing an 86 per cent 
increase in awnnai profits. 

The proposed dividend is 
0.5p. Turnover for the 53 
weeks to September 30 was 
flat at £95 .2m (£94 lm) but 

pre-tax profits jumped to 
£&98m (£484xn)- Earnings per 
share, after exceptional items, 
were 0.82p (0.l3p). 

Operating profit on continu- 
ing operations was up 28 per 
cent at £7.6&m (£6m). 

The leisure division 
increased operating profit by 
27 per cent to £5.65m (£443m) 
after an efficiency programme 
at Befl Fruit Services and the 
successful introduction of 
AWP machines, which issue 
prizes such as watches. Four 
new entertainment centres for 
the 18-30 age group will be 
opened in 1995. 


Exceptionals propel 
Alvis ahead to £5.83m 


By Geoff Dyer 

Exceptional profits of £2. 52m 
helped Alvis, the defence con- 
tractor, lift pre-tax profits by 15 
per cent in the year to Septem- 
ber 30. 

Hie upturn from £5.07m to 
£5J33m was achieved despite an 
IS per cent fall in turnover to 
£80m (£97-3m), resulting from 
weak order books in several 
subsidiaries. 

The sale of Alvis’s 112 per 
cent stake in Avimo Singapore, 
coupled with the disposal of 
Alvis UAV Engines, resulted in 
exceptional gains of £4 23m. 
However, the gro u p also took a 
charge of £1.7m for redundancy 
and restructuring costs. 

Operating profit from con- 
tinuing operations dropped 
from £5m to £43,000 on sales 31 
per cent lower at £67 Jm. 

Profits at Alvis Industries 
fell from £l.S9m to £i.28m, 
after losses at Alvis Vehicles 
and Alvis Aerospace and 
Transmissions, 

Mr Nick Prest, chief execu- 
tive, said: “We are reasonably 
confident that Alvis Vehicles 


will get some substantial 
orders this year, which is very 
important for the profitability 
of the group.” 

Unipower, the manufacturer 
of specialist military vehicles 
acquired in February, did not 
make a substantial contribu- 
tion to profitability, bat is 
expected to next year. The 
goodwill write-off from the 
acquisition is £3m higher than 
was then expected at £9.42m. 

Avimo Singapore’s contribu- 
tion to profits fell from £8.57m 
to £3 .26m because . of poor 
results at Its Asian operations. 
Avimo Alvis Aerospace, which 
makes castings and mechani- 
cal components, incurred a. 
substantial loss. 

Helio, the maker of peri- 
scopes and equipment for fight- 
ing vehicles, and Arab Interna- 
tional Optronics both 
performed well 

Earnings per share emerged 
at 2£p (2.4p) and an unchanged 
final dividend of 0.5p is pro- 
posed maintaining fog tnfatffar 
the year at lp. 

The shares dosed down lp at 
41p. 


Innovative Technologies 
shares trade at 3p premium 


Shares in Innovative Tech- 
nologies Group, a maker of 
polymers and seaweed-based 
products for the healthcare 
industry, traded at a 3p pre- 
mium to their 120p placing 
price yesterday. 


The issue of 445m ordinary 
lOp shares was fully placed.. 
The company is believed to he 
the last to be admitted to the 
USM. Funds raised will be used 
to repay borrowings and 'exp- 
and manufacturing facilities. 


DIVIDENDS ANNOUNCED 


Current 

payment 


Date of 
payment 


ponding 

dMdend 


Total 

for 


Total 

last 


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Albion 


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HNAN<m TIMES FRIDAY DECEMBER 16 1994 


Silts ch a 

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RECRUITMENT 



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T he debate about whether we 
have a job tor life has 
reached an Interesting «h» e? 
bribe lifwsycta of a trend. 

1- first we have the observations of 
file trend spo tters, in this case and 
perhaps . most prominently manage- 
ment writer Charles Handy, whose 
observations and anecdotes are stri- 
king chords of recognition amon g 
many employees and manage rs. 

Second we have the academics 
who test the theory. 'What often 
happens .with such trend observa- 
tions is that they attract cfisdpies 
who accept them as gospel truth. 
This stimulates the academics, who 
then take great delight hi ri«yini;«K. 
big or blowing holes in the theory 
There follows a period of calm in 
which the trend is found to be not a 
■trend at all, or where its real 
strength emerges. 

In the “end of jobs tor life* 
debate, we have reached the second 
stage. Last week Simon Burgess 
and HttOey Rees at Bristol Univer- 
sity published finding s which 
suggested that many more people 
than might have been expected are 
spending their working lifetimes 
with the same employer. 

Peter Robinson, a researcher at 
the Centre for Economic Perfor- 
mance, London School of Econom- 
ics, welcomed the ftncBng ^ which, 
he said, was “naQfng another myth” 
about the labour market. He 
potated oat that tax the US, where 
many similar trend observations 


JOBS:. A ssumptions that lifetime employment is a thing of the past are being challenged 

V 

Don’t throw away those gold watches 


have been made, the proportion of 
employees reporting they had been 
in their existing jobs for more than 
eight years bad hardly changon in 
the 21 years from 1979 to 199L 

So what are wa to conclude? Have 
t he s ears got it it wrong, or are 
their often anecdotal observa tions 
alerting us to the beginnings of a 
large-scale change? Should we, in 
fact, ignore the evidence of our own 
eyes and experiences? 

Robinson says we should at least 
be guarded about what we might 
believe from our observations. Take 
short -term contract working, for 
example. Surely this is becoming 
ter more widespread? Not so, he 
says. “The tendency is to look 
around you and see what's happen- 
ing hi your own area. I and my 
colleagues are all on temporary con- 
tracts now, but when you look at 
the proportion of employees on tem- 
porary contracts you see it hasn’t 
changed between 1964 and 1994.” 

Part of the problem with such 
academic observations is that they 
are far less fun for consultants and 
writers - including journalists - 
who raairp their livings from trend 
spotting. They may also have their 


flaws in that their findings are his- 
torical Robinson does not deny that 
there may be a trend. What he is 
saying is that the evidence suggests 
the changes may be far more grad- 
ual than we have assumed. 

When change does happen, how- 
ever, it sometimes takes time to 
gain momentum. Many of the 
changes in work patterns emana- 
ting from the industrial revolution 
mainly took place in about 30 or 40 
years around the turn of the 17th 
century. Some people are asking 
whether the information technology 
revolution will prove a similar 
watershed in the way we work. 

The tension between popular 
observation and hard statistical 
analysis does nothing to dear the 
canfoston among employees and job 
applicants who would ready like to 
know what to do for the best 

University graduates could be for- 
given for becoming particularly 
cynical They are courted by the 
Large nnmpanira on the university 
mSkround, yet they are becoming 
increasingly sceptical about the 
prospects on offer. 

The careers department that 
serves both Manchester University 


and U mis t (University of Manches- 
ter Institute of Science and Technol- 
ogy) has started a scheme which is 
trying to encourage more small and 
medium-steed businesses to take an 
interest in graduates. 

Chris Phillips, the department’s 
deputy director, said: “We need to 
do this because the large companies 
will continue to recruit graduates 
but nothing near enough to keep up 
with the increase in the numbers of 
graduates leaving universities.” 

Such careers-orienfcated schemes 
are particularly appealing for 
Umist, which likes its students to 
take part in company-based 
research projects, utilising disci- 
plines learned in their first year. 

Dale Littier, Umist professor of 
marketing said the university’s 
approach, which avoids set texts, 
tries to encourage students to thinic 

strategically about their work and 
to obtain first-hand knowledge of 
company expectations in project 
work. Abilities to do the work, com- 
plete reports, carry out presenta- 
tions and meet deadlines are all 
tested in the workplace. The benefit 
to companies is that findings can be 
used to their advantage. In one proj- 


ect, a team of Umist students 
suggested improvements to a new 
haTiiriwg kiosk developed by the Co 
operative Bank. 

“Some of the solutions to the 
things they are working on are not 
found in text books,” said Littier. 

The separate careers scheme, in 
turn, gives companies which might 
usually consider taking on gradu- 
ates the opportunity to put them 
through their paces without any 
obligation or commitment. 

Some interesting findings on stu- 
dent expectations and approaches 
to their jobs have been discovered 
by John Arnold, lecturer in organi- 
sational psychology at Umist, in 
research be carried out with Kate 
Mackenzie Davey at Birkbeck Col- 
lege, London. They found that 
absence or provision of dear career 
paths had a strong influence on 

whether graduates stayed with an 

organisation or left. It also found 
that they had a preference for being 
developed through the work they 
did rather than through theory in 
training pr ogrammes. 

This again seems to point to quite 
conservative tendencies among 
graduates, to other words, if compa- 


nies are offering well defined career 
paths, they should maintain their 
promise. They might also devise 
projects or programmes that enable 
them to use their graduate recruits 
as performing assets from the start 
of their employment 
• Returning to the theme that 
thing s may not be always as they 
seem. No sooner had I reported on a 
trend among recruiters to seek out 
competencies from job applicants 
that was questioning the need for 
such things as curriculum vitae and 
paper qualifications, than 1 came 
across a system for sifting CVs that 
is being widely used In the US and 
which promises to streamline 
recruitment and sifting procedures 
for recruiters. 

The more thoroughly composed 
the CV, the greater advantage there 
is far the system. 

The system, called Resumix - 
there are other CV database 
systems on the market but Resu- 
mix, based in Santa Clara, Calif- 
ornia, has patents for its informa- 
tion sifting method - was devised 
about six years ago and has been on 
the US market for about two years. 

Whereas part of the recruiter’s art 


is to sift and funnel applicants into 
a digestible interviewobie group, 
vwaiwh acts like o bucket, scan- 
ning as many CVs as you want to 
put in it. The information on them 
is stored and when you have a job 
which has a particular skill or qual- 
ification requirement, all you need 
do is punch in the particular skills 
you are looking for and it spouts 
out a list of names. 

Mercury Communications, which 
is using the system to select from 
the 8,000 graduate applications it 
will have received by the end of 
March, says it has made the selec- 
tion process much speedier. 

By retaining names on a data- 
base. employers can rift through for 
any number of jobs they please and 
applicants’ CVs which would other- 
wise be filed away and forgotten if 
they were unsuccessful in their spe- 
cific Job application can be instantly 
reappraised for other job openings. 

It Is proving particularly popular 
among the big mass recruiters in 
the US such as IBM and Disney. 

So the CV is dead, long live the 
CV. The potential of such systems 
seems enormous. It may be worth 
questioning at some stage whether 
there is any potential for abuse. The 
day when all our CVs are on such 
systems may not be ter away. If we 
have a job for life, however, we 
should only need to use them once. 

Richard Donkin 


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Structured Debt Derivatives 

■ • # ■ ■ 

European Sales & Origiiiation 

To be based in London, individuals for this Vole will have had up to five years 
experience in swaps marketing, structured debt sales, private placements or 
“investment banking", and will be able to demonstrate a successful track record in 
dosing structured deals. 

Working almost entirely with large corporates, government agencies and other frequent 
borrowers throughout continental Europe, the successful candidate must have an 
established diem base with whom he or she is currently engaged in funding and/or risk 
management activities. An understanding of complex options and fluency in one or 

more (in addition to English) European languages is essential. 

■ 

The first year’s package will be negotiable and will comprise an attractive base salary, 
bonus and other benefits. 

Please send detailed 'Curriculum Vitae quoting reference: NH 195. 

Rochester Partnership Ltd., Executive Search and Selection, Garrard House, 31-45 Gresham 
Street, London EC2 7DN. Tel: 0171 600 0101 fax: 0171 796 4255 


London 

£60,000-£80,000 

base + Package 



Rochester 
Partnership Ltd 


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Senior Economist/Project Manager 

Luxembourg 

Monetary and Financial Statistics 
Salary Negotiable 

Cray System is part of the £300 million Cray Group, the largest 
UK owned IT company and a leading supplier of Consultancy. 
Computer products and services. 

As a result of continued growth, we now have a vacancy for a 
Senior EconomVst/Project Manager, to be based at our office in 
Luxembourg. In this role, you will be responsible for the 
maintenance of several databases relating to financial and 
monetary statistics and for the production, of publications 
relating to the monetary and financial indicators, central bank 
interest r a teSt assets and liabilities of financial institutions etc 
Other tasks include responsibility for financial statistics 
sections of ot her publications, methodotognSl work aimed at 
■the harmonisation of financial statistical data, day to day 
management of several economists and other staff involved In 
ECU statistics and financial accounts. 


Cray 


Systems 


Key Requirements: 

• Degree in Economics or Economic Statistics. 

• Minimum of 5 years experience in macroeconomics and 
particularly statistics. 

• Proven project management experience. 

• PC literate particularly with complex spreadsheets. 

• Fluent English and French; other languages advantageous. 

• knowledge of European Institutions. 

If you satisfy the above requirements and would - like to work 
for a major International organisation, please write, enclosing 
full Curriculum Vitae to:- 

Mc. Tony Hegarty, Cray Systems, 11b. Boulevard Joseph II, 
L-1840 Luxembourg. 

A division of the Gray Efedronb Gf oufx 



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Editorial Co-ordinator 

UK Merchant Batik 

Asset Management Division 


APPOINTMENTS 

WANTED 


Our clieitt is the Asset Management 
subsidiary of 6BC of the UK’s most 
prestigious Merchant Banks with £20 
ttHion offends under m asaennen L An 
exciting new opportunity has bee** c re at ed 
for an Editorial Co-ordmator to keep 
cfcqt* dxoast of development* in Ibe 
inves tm e nt m&fcetplace. 

Baaed in the City, you will povkfc 
detailed, tkndy and accurate reports for a 
wide range of cUcm, tumefy, U.lC^ 

Poston Fuads, mtexnatioaal Lnsumrional 
sod Retail invesma. You will be 
respo nsib l e for the creation an d ^ 
dhttanaatiOD ef repots using iafixmadon 
pmvBed by Are iuod raanaga* themselves 


The suecesafiil candidate ia Urrijr to have 
conskkxable ex perience of writing on 
financial issues either in the fidd of 
journalism or from woridng in the 
invrsftitem managem ent industry. Probably 
an economics graduate, you will have a 

thorough undoataixfing of all aspec t s of 
investment mar ke ts m the UK and 


These include the petBxnmree _ 

me w aremcM group, food adn an te al i en 
and the graphics dqwtmat. 


The reraunerreion padeage envisaged 
would be eo mm a ama rg wafa the high 
priority oar client attaches to maintaining 
exedlem rdations with its efieno, To 
apply phase write enclosing your cv, 
(endowing a copy of your best piece of 
written work aad driaih of yoor current 
salary package), tpmring refisnmoe 1074 to 
Fiona Law at FLA Ltd, 211 Pkok%. 
London W1V 9LD. 

Td: 071-738 9732. 


DERIVATIVES & CASH 
MSc. economics 34. Sales & 
trading exp. Cisb-A Der. Markets. 

Looking ter a new challenge. 
Fund Management, Sales. Quant, 
orient. Native German. 

Write to Box A3466, 
Fmandai Times, 

One Southwark Bridge. 
London SE1 9HL 



LA 


■* 


5:" ' 

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toflfehg far a Scandnoriat 


ctponanca com prooBoang. 
antig y. anwh Minn M fcuS Biric s etc. 

tochnofogy, N— lop ro nt 


rniiaiiT r im liTtm. T Tlmnrm] DK* 
3400 M«0d. phm MM2W488 




Project Development & Finance 


Specialist Boutique 


Excellent Package 


London 


Outstanding opportunity for a motivated talented 
graduate to join rapidly expanding advisory team. 


THE COMPANY 

♦ Newly formed, successful company dedicated to 
developing, promoting and financing private 
infrastructure projects in Asia and Europe. 

♦ Strong leadership with excellent reputation for 
structuring and financing major international projects. 

♦ Focus on first class dient service. Clear strategy. 

THE POSITION 

♦ Work in small, high caKbre team in totally professional 
environment. 

♦ Specific responsibility for complex financial modelling. 
Extensive international oaveL 


♦ Opportunity to extend rapidly expertise in an 
international project development and advisory 
business. 

QUALIFICATIONS 

♦ Strong academic background. Graduate, may be a 
linguist. From 1 to 3 years’ work experience. Preferred 
age 23-25 years. 

♦ Outstanding financial, analytical and numerate skills. 

♦ Advanced cash-flow computer modelling skills 
essential. First class communication skills. Confident 
team player with sense of humour. 


Please send fiifl cv, stating salary, ref I CN2986, to NBS, 10 Arthur Street, London EG4R 9AY 


NB SELECTION LTD 
a BNB Resources pk compuiy 


CITY 071 623 1520 

Aberdeen 0224 638080 * Birmingham 021 2334656 
Bristol van 291 142 • Edinburgh ®l Z» 2400 
Glasgow 04 1 204 4334 • Leeds 0532 45JS30 
Manchester 0623 5399SJ • Slough 0753 819227 


HEAD OF COMPLIANCE AND CONTROL 


Enskilda Corporate is file largest 
Nordic merchant bank employing 
400 people in its London Branch. 

With a significant presence in bo fit 
Equity and Capital markets/ and a high 
level of activity in both Investment 
Banking and Corporate Finance we need 
to maintain our total compliance with 
the rules of the Regulatory Authorities 
including SFA, IMK0 and the 
International Stock Exchange . 
Managing a team of three professional 
staff the responsibilities of the post 
cover not only Compliance but the full 
range of Control activities which will 
involve assuming wider managerial 
responsibilities from time to time. 

The postholder will report directly 
to the Head of the London Branch. 


This post offers the opportunity to 
gain experience of different aspects 
of banking while retaining full 
responsibility for a professional and 
respected Compliance function. 
Candidates will have a minimum 
of four years Compliance experience 
gained within an international banking 
or financial environment. A legal 
or accounting qualification would be 
advantageous but is not essentiaL 
A competitive remuneration package 
is offered Which includes the full range 
of banking benefits. 

To apply, please said a detailed 

curriculum vitae to the Head of 

■ 

Personnel, Enskilda Corporate, 

2 Cannon Street, London EC4M 6XX. 


A Enskikla Corporate 


A division of Skancfirraviska Enskilda Banken 


Compliance Officer 

International Securities 


City 


A newly created opportunity to join a management team 
within an innovative and highly successful organisation, 
whose reputation is built on professional standards and 
the quality of its people. 

The company 

• A major provider of settlement, clearing and custody 
services to UK and international institutions. 

b Substantial investment in technology and in 
spedaM markets. 

The position 

• Providing a proactive service to the customer base. 

• Contributing significantly to an ongoing compliance 
renew programme. 


ROOS 



up to £35,000 + benefits 

b To take foil respoasibnily for the foreign equities sector 
within 6 montie of appointment. 

The person 

• Probably a young Accountant or Lawyer, with at least 
two years’ compliance experience and a detailed know- 
ledge of SFA rules. 

• Excellent interpersonal skills and a good team player. 

• Outgoing, intellectually curious and able to keep cool 
underpressure. 

Please write, enclosing a CV and listing separately any 

companies to which your application should not be sent, 

to Geoff Selby (GR/206), Roose and Partners Advertising 
Limited, 100 Gray’s Inn Road, London WC1X SAU. 


PARTNERS 


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FINANCIAL TIMES FRIDAY DECEMBER 16 1994 



TOP OPPORTUNITIES 

SENIOR POSITIONS IN GENERAL MANAGEMENT 


ANAOINQ DIRECTOR 


D S O /u T H 

urnam 

HEALTH CARE 
NHS TRUST 

HEALTH IN Till COMMUNITY 

NON-EXECUTIVE DIRECTOR 

You will have tfn opportunity a> contribute to the development end 
operation of the local NHS Trust provkfing community end mental 
heatti sendees to the population of South Pumam. 

Living ana/or rating whtfn the south of County Durtian. you 
sfwuta be eofop offer coesieerabte oo mm erc fot upertence. 
preferably tom a flnaiclal enutaranott. combined wfoi a 

commitment to local pubHc servfoe. 

For an informal Otecusston contact either John Parsons, 
Chairman, or Peter Stewart. Chief Executive. let (0388) 605811. 

For an Information pack please contact Rachel Thomas* 
Human Resowce Department Tel: (0388) 605811 ext 223. 

If you ara tataraited . and can ghrai at foest 20 days per year to 


One of the leading business conglomerates of U.A.E. requires a 
dynamic MANAGING DIRECTOR to head its activities at the Corporate 
level. 

The group has achieved an extraordinary track record of performance 
resulting from some good foreign associates and pursuit of very 
aggressive but enlightened growth strategies. 

A dynamic person with the vision of an entrepreneur and proven 
senior managerial capabilities is sought to organise and manage 
effectively the operating units, identify business opportunities and to 
successfully implement new projects. 

Candidates will have a broad professional background with a record 
of high achievements in Corporate Management. Successful candidates 
will have a flair for management and business development. A high level 
of intellectual and technical competence, first class communication 
skills to command the confidence of the sponsors is vital. 

Attractive terms of employment, a generous remuneration package 
including a range of benefits is on offer. Interested candidates may 
forward their CV together with relevant certificates to the advertiser: 

Box A5017, Financial Times, 

One Southwark Bridge, London SE1 9HL 


MotoAnology prowd« < ■ yowg. wnfl* 

nKwos# prowdurK and StanT 

the industrial, asricuHwal onJ VoMi *■* * ed "V 







seeks a{m/ff 


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SECRET 

SAGB hbs the objedwe of erecting on environm^ v^ich^ow llw 

reporting to ihe Steering Committee, supports and promote the rern^r. 

wfo indwfrid policy m^ng wpewnce and familiar w«i EU 


Sooth Darina Health Cm NHS That* CttrtttOflt, 


A pml oltbi Bwnl wffl i ele ot a 1» ft ft« t of cm dkh rte sfor 

afowboMnn to the Ba^Mel Ham Authority. 


MiMfcns and/or membtf stole potojl daSrionTnokina proaa»=an> 
imiBd to" respond. Target <andi<£te also .neaarler K.es: 0^35-^ 

■ unjvwsiiy dbaras, extensive comer sxpenerxe wi ®T5ir?jL indusiiy 
atma^amehi levd, be fluent in Engikh and prefernWy French 

Gennorya ndiWstpossK sexceflen.tmond «jadre^™™^on 

obwHy to wore wim 

texferi. •-* « .' v ; -.-fA-r ;^r. 


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The Top Opportunities Section 

Advertise your senior management positions to Europe's business readership. 

For information please contact: 

Philip Wrigley +44 71 873 3351 
Joanne Gerrard+44 71 873 4153 
Andrew Skarzynski +44 71 873 4054 


BANKING FINANCE & GENERAL APPOINTMENTS 


Germany 


Lead an International 

Team for a 

Global Asset Manager 




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Commerz' international Capital :£tobH (Ctciitfif js avi/holly- * 


• to increase sue 

Commerzbank, i 

..*• *’♦ / 

' .We are seeking 





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Headof Fixed-lncomelrivestment 


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demonstrable ability to recogriize and balance o^oy^rties.and nsks. Tbis. ^ -.; ')■ \ ' K’i * 
ordinarily would imply, global or international fixed- income portfoiib '.‘. 
management experience of at feast 7 years in the case of the head snd'S'ybana ’■ i. V 

in the case of the senior portfoHti manager. • . ^ *' ; • * .. v ** 

^ ^ ■ ■ ■ ■ / ■ ■ ■ BB ^ a b *b a BB mm^fw m a % m 


O Experience with performance attribution and risk control systems 


• *-:*• .• 


O Experience with derivative instruments W '■ ‘.' V'- \ -V 

O A high level of computer literacy • ? v.V 

In addition, the head or fixed-income portfolio management will be requins|djto .* l y' ’ * • 

' , 1 1 ’ I*.' „ . • 

O Introduce substantive enhancements to our approach.and contribute new: ' 

product ideas • • . * , ■ 

O Exert leadership and serve as a mehtor . 

O Provide for the staffs professional development '' 

O Perform the administrative functions necessary to keep the team prdperiy 
staffed and equipped. 

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Some previous managerial responsibility^ therefore, would be very helpful/- ".'V. . \''i- 

Both positions will be in our Frankfurt headquarters, the woriupg language ‘ . 
of CICM is English. If you wish to be considered fora key role withm a dynamic ' — » v [+'} 

firm dedicated to success in the asset management- business, please write or. - \ ' 
fax Commerz International Capital Management GmbH, Attn. Mr. Paul Bunk. ' .. / / 

Kettenhofweg 22, D-603 25 Frankfurt am Main, 71912247. * ' *.«' 

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CAPITAL MANAGEMENT. I V: / / 

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Property Analyst/Economest 


Hendcnon Real Eme Strategy (HRE5) n 3 poitnecship between The Hcadoraou 
AdwuNnrfoa Gnrap pfc and Real Et&fe Simrgy Ltd. ffcadeieon ridmhMfliBHM Es t 
uqor iockpcodcac knaoMionl sad maaagcmcai graap based in the UK. Real Edaie 
Strategy (RES), a tfiraioa of HUES, b a leading spedahN pnxvidcr of strategic shrkcoti 
UKpnpeity lac motion, 

RES. based in the Cky. seeks a highly motivated graduate to join a team of property 
The rate involves asabtnig in the provi si op of economic and p rop er ty 
foreasts at a national, r e gi on a l and local IcveL Suitable candidates will be in their nud- 
70S and ahoeld tc able a> d emou auic pml-gnd erp erie t io e ol economka, forecating and 
econometrics; p ro pert y knowledge is mu a prerequisite. Computer competence, 
aunmcrjilctacy and gpod c unun amcfliion skills are essential. 


Ple as e write endosiiig a C\\ no later than 5th January 1095 to: 
Andrew SdulficVL HENDERSON REAL ESTATE STRATEGY 
3 Finsbury Avenue, London EG2M 2PA 


HiR 


HENDERSON 


DEALING ROOM ASSISTANT 

Young Person required for general 
dealing room duties with potential 
for progression 

to a trainee money broking position. 

To apply send CV to: 

Box A5023, Financial Times , 

One Southwark Bridge, London SE1 9HL 




POST 

OFFICE 




Insurance 

Marketing Manager 

London c.£28,000 p.a. 

Post Office Counters Led is the largest mailer in the UK, with anwid 19.000 outlets. The company las recendy tyanded tojnmga of 
products including Bureau de Change, Loaeries and Western Union. As a result of a change in government legislation Post Office Ctsmers 
Ltd are to retafl travel insurance, and wffl fonher investigate the feasMity of ireroducing additional seieaive insurance products. 

R^jorting to the Head of financial Services, the askwfl be to prepare market strategies, identify business opportunities, negotiate amtractSr 
and oversee implementation. 

Leading a small multHunaionaJ team, you wffl address complex business issues where your impact will be highly visile and dedswfc Whedwr 
initiatives are your awn concepts or from alternative sources, as Insurance Martatipg Manager jwu wffi be sqieaed to take control from 
inception dmx^i to completion. 

seek to identity an innovative pawn of exceptionalyhyi caBire - someone who has carved out an impressive career either in a baixassxw 
role, or in a business deveicpmait area ar a compoata inurv. Ac least three yean retevant e^erience supported an adiievenwm-ted ayta of 

vvoria^ are tey rapjirements and an appropriate instance (^nfifiation vmdd also be usefijL 

You will have high level analytical powers, stropg commimkation and teamworking ddBs with the personal oetfiMity to operate successfafly at 
every level within this major company. 

Interested? Tdl us exactly how you meet our profile by writing to Teny Estcourt, Personnel Manager, Post Office Canters Ltd. Room 226, 
Drury House, i/16 Bhddnars Road, London SEI 9UA. Cksaig date: 5 January, 1995. 

Th» Pmt qpg ). nn Fiyirt O p p omm inB Emp t o / a and a p pkakm at wetasned pan ri who meet the d^My oiM epds of sot dtae b^giuend or OiabiGd 

apptnone ae assured tf on wenaewf rhqrweet die nrtiiim (eyrenenb oaerio yfr l ffc ifte pe 

Post Office Counters ^ 


£S&* 


The UK's largest retail network 




The Standard Bank Group of • 

South Africa Is one of Africa's - CflprfcSl 
leading bank and financial ; ;.r 
services institutions, it has total 
assets exceeding US $20 billion ^ 

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and employs more than 31 000 ’ .'vj 

The Group's world-wide 
presence in Fixed Interest is 
to be centralised in and .y »lbHairm &3 
co-ordinated from Standard "T;- 
Capital markets (^CM") in 
Johamesburg. SCM is the group : . .\~A .37. . 

treasury operation responsible for the central 
management of Investment products and the more 
complex treasury activities. As a core activity within 
SCM, the South African Fixed Interest activity 
covers a range of products and services including 
market makkig, research and strategy formulation, 
international marketing and distribution, derivative 


Capital Markets, 


J." 


- ; products and primary issue 

Markets origination. 

V ' ' . • ' We are seeking to appoint 

. a suitably qualified individual 

' OT to head up an already successful 

■ 16301 curantly operating out of 

t^reSt Johannesburg, London and New 

'• York. The post is a key senior 
iT*. appointment and candidates will 

rg baSCtd have extensive experience of 
L '. ; y Fixed Interest markets both in 

South Africa and abroad and will 
'•“-■■■• be capable of ieaefing and co-ord- 
inating this significant group Initiative world-wide. 

Individuals waiting to pursue tills challenge are 
urged to make direct contact with Mark Barnes, 
Chief Executive Officer. Standard Capital Markets, 
PO Box 61 344, Marshalltown 21 07. South Africa, 
Telephone no: (27) (11) 636-2947 to arrange a 
personal and confidential Interview. 


With us you can go so much further. 


SBSftZQia 


Corporate Finance Support 


Research and Information 


There bas been a recent increase in demand for versatile people 
to support or be members of teams within Banks, Management 
Consultancies and Venture Capital organisations. The range of 
talents sought include qualitative and quantitative research, 
expertise with research tools (for example: information 
sources, market models, statistical and textual databases), 
analytical ability, fluency frith office-technology - graphics, in- 
house knowhow systems, and spreadsheets. Also looked for are 
individuals with knowledge of any of the following sectors or 
markets: Financial Services. IT, Media, Telecommunications, 
and FMCG. Anyone who can offer language skills io addition 
will be of particular Interest 


McGregor Boyatt is actively seeking individuals from Information, 
Research, M & A or Corporate Finance backgrounds for roles 
which can involve the production or published research, bid and 
transaction support the mentoring of corporate finance 
owcutivea m research techniques, market intelligence and due 
dffigence work. Candidates should be of graduate calibre with a 
demonstrable interest in the field: relevant post g^duate 
q u alific a tions are an advantage. 

JoUa »■> 
V -IZZ 4 : A“ernativefy send your CV, quoting 

^ 12 , to McGregor BpyaH Associat <Tm 
®ddtega Street, Ixodoq El 7JH« Flue 0171*247 747S. 


McGre gor ■ Boyall 


business ,N Technology Selection Financial Market 


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Dp CO US$/50,000 + 
equity + profit share 


Premier Investment Bank 


Moscow 



vjy±’*£ * ii, %Tr-'-'-\ -fe az ^rr— - vr Zmvii aa i r 'rini it 


Managing Director - Sales and Trading 



' 'i Yu i' 1 ' ~i'r' 'f'iai^ry 


Head of Equity Research 



developing capital markets of Russia, its activities span principal investment, corporate finance, 
The sales and trading team is recognised as one of the most experienced and effective in the maxi 
formal research group. Owing to its growth, the Board wants to appoint a new layer of numagen 

This is a unique opportunity with equity p ar ti cip ation. 


Develop the strategy for the -securities 
business and oversee the risk management 
controls and systems ensuring adherence to 
effective working procedures. 

Lead the team of eight professionals, handling 

all aspects of people management and 
undertaking any future recruitment initiatives. 
Act as a focal point for the development of 
relationships with key global investors, 
constantly reviewing- new product 
development opportunities including the 

creation of hedge funds. 


THE QUALIFICATIONS 

■ Experienced securities manager, likely to be in 
his or her30s, in a major blue chip investment 
bank. Direct exposure to emerging market 
equity sales and trading Is preferable. 

■ Proven management .and leadership skills 
combined with a commercial opportunistic 
eye for new business opportunities. 

■ Entrepreneurial by nature. Strategic vision 
combined with energy to implement change in 
a growth business. 


Manage and build the team of research 
professionals, taking editorial responsibility 
for delivering a high quality research product 
associated with the developed stock markets. 

Actively support the marketing effort by 
liaising with investors on equity strategy, 
sector requirements and individual projects. 

Create a target market of research prospects 
and ensure that the research team is 
effectively organised to deepen the research 
database. 


THE QUALIFICATIONS 

■ Experienced equity research professional with 
some exposure to the emerging markets, 
working in a blue chip Investment bank. 

M Proven ability to deliver quality research 
product. People management skills combined 
with flair for marketing. 

■ Drive and vision to tackle a new market. 
Organised, disciplined and creative. Strong 
communication skills. 



MARKETING 
TOP UK CORPORATES 

Salary g£50,000 +Banking Benefits 

■ 

An outstanding opportunity has arisen for a dynamic, 
experienced, graduate banker currently enjoying excellent 
relationships within the UK's top corporates and multinationals. 
You will be a strong presenter of a wide range of debt, equity and 
treasury products. 

Interested candidates should soul their c.v. to Ron Bradley quoting reference No. £40006 

• mm " 

Jonathan Wren Sc Co* Consultants 

No. 1 New Street, London EC2M4TFTeL 07X-62312S6 Fax. 071-6265259 


1 O \' A I'll A N WREN 1 X 1 CITIVF 


INTERNAL AUDIT 

c.£40,000 + Financial Sector Benefits 

Our client is a major institutional Investment Management Company. They 
are seeking to recruit an experienced financial services auditor to establish an 
internal audit tram.- It Is intended that the, team will be responsible for 
conducting audits with a full assessment of business risks, critically assessing 
existing internal controls and producing/ implementing recommendations. 
This is a challenging position, and re quires an auditor with managemen t skills 
and an understanding of risk methodologies. 

Applicants should send their av’s to Helen Highet 
quoting reference No. E400Q4. 

Jonathan Wren t Co. limited. Financial Recndbnent Consultants 
No. 1 New Street; London EC2M 4TP TeL 071-623 1266 Fax 071-626 5259 


f O N A T HAN WREN EXECUTIVE 


III Schroders 

Exceptional bankers required 
both to lend and advise major 
- companies and institutions 

Schrodera is a leading international merchant and investment banking group with 
a weH-estabdshed presence in the world's major financial centres. 

Due to continued business development, vacancies have occurred for two hlgh- 
cafibre Individuals to join the Banking Division based in London. 

Schroders’ Banking Division is one of the best in the City and offers both lending 
and advice, the latter frequently given in conjunction with our Corporate Finance 
Division. We are recruiting for two teams, focusing on corporate relationships and 
on buikting societies and insurance companies. 

Successful candidates are likely to have a banking, legal or accountancy 
background with up to 2 years’ relevant experience, some of which may have 
been gained in corporate banking (perhaps but not necessarily ini a debt 
restructuring or structured finance unit), or in a corporate finance department \bu 
will be required to contribute to the. marketing, research, project management and 
negotiation efforts of the relevant team and must have proven intellectual 
capabilities and well-developed personal skills. 

Generous remuneration and benefits packages for these challenging roles will be 
available, commensurate with the candidates’ experience and qualifications. 

Interested applicants should write, enclosing a brief resume, to 
Rachel Harry, Personnel Department, Schroders, 120 Cheaps ide, 

London EC2V 60S. 


SPECIALIST FOR STANDARD 
SOFTWARE PACKAGES MIDAS AND KAPUT 

■ ■ . • , J 

Our ■ a nibridhiy company of a btgo bask - is a wttwwehoase 

T wri tIMng bj bank applications and statt-of-tho-art de velopment methods. 
Tbs company uses the standard software package MIDAS, oflets it to to 
fud jg therefore looking for sfcff members who are already 
experienced in (ring « lewt one o£ these prodada. 

to tbs yea will be responsible for the software prodnds MIDAS 

and/or KAPm and .yon wlD take over integration in introducing three 

systems to cur castomois. Furthermore you will bo tn charge of oar training 
courses for applicants, as well as for customers sendee and the tednlcal 


APPOINTMENTS 


e • 

% am taking for employees who already have preedral know-how with one 
ot (beta rwHyft find « oficr an Independent, n fattrthi g sad ztspoos&te 
foacdoo, occetient pay and a Working place in the center of Vienna. Please 
todui your application, 

WI, Pminl and Msntflrmrnffrfni**^ 

Austria, 1000 Vienna. LandatraBcr HanpWmBe 1/21 



.43 T-T Y.y .4 u;'.' z i 

xtor Euro pe 

Spcncc r Stuart 





Y 


Senior Manager - Planning and Control 

European Operations Office - Cologne 


Sony Is a worldwide leading manufacturer of high quality 
electronic products. The European headquarters in 


consumer, broadcast and professional, computer 


Europe and Eurasia. 

For our Corporate Planning department we are 
looking for a young, high calibre manager. You will 
manage a small professional team to: 

• Coordinate the European budgetary and financial 


Advise on business p er form an ce 
Provide information to cop ma 
and Japan 


You wfll be a graduate, around 35 years of age, with 
either an accountancy or MBA qualification and have a 
proven track record in either a controller or corporate 
planning function of a ‘blue chip” international 
organisation. 

Gaining respect as an advisor and being diplomatic, 
persuasive yet culturally aware must come naturally - 
Effective presentation skills are required. 

We offer a challenging career in International 
surroundings with all the benefits of an innovative 
company. 

Write in English, outlining your suitability for this 
role, together with a CV which includes salary details 
and business achievements to Mrs. C. Luchc-Wendt at: 


manag e m ent in Europe 


This is a truly international role, requiring a 
business executive with skills fax 

• Business analysis and control techniques 

• financial planning 

• IS scoping, definition and implementation 


Sony Europe GmbH 
Human Resources (0.06) 
Hugo-Eckencr-Scr. 20 - 

50829 Koto 


TeL: 0049/221/5966-623 



MRFC 


COME HELP US BUILD A NEW BANK M MALAWI 


US$ 70,000 TAX FREE 

MRFC is an emerg i ng new Bank. Owned by the Govern me nt of Malawi 
and supported by the World Bank, we are presently registered as a 
Finance Comp&iy but are ayecl ln g fuff banking status wlhin the next 
twQ/ttvaa years. Our main focus Is on RwM Banking. 

Ws need to appoint a Financial Controler to head the finance division. 
Reporting to the Chief BaecuBwe you ahafl be a xpactad ip develop banks 
management information & control systems and exercise day to day 
financial control over the banks operations carried out tfvough to 180 
tenefcg offices in file Country. 

Ybu shaft guide the systems support team presently engaged in the 
hwtaBalion & development of a comptoerised bank accounting system. 
Treasury & tod management kmcHons as wefi as accoun ti n g ptmrttng, 
budgeting and financial forecasting respansHHes shaft tal under your 
drect control Maintaining fta fa on with the cental bank tar aU bank 
reporting proposes shaft be another Important responsfcHtyL 

Previous experience of dealing with World Bank procedures as weft as 
of developing operations/procedures manuals shaft be uaaM.Trainfog of 
staff at aft levels bo an knportant part of your assign m ent. 

lb be able to meet the challenges of titis position you wcNuld be a man of 
vision, a str a tegic planner & a go getter who has the darky of mind & 
ability to work on mdiiple tasks wfie stift being able to pay attention to 



ktoafty you should be an FCA or FCCA with extensive experience at 
having worted to a senior capacity In the finance cflvfsion of banks using 

nmuj»itarkflfl arwyimHiij systems. 

An Initial contract for two years wfih an internationally competitive tax 
free remuneration package comprisin g tree furnished housing, car, 
hofiday ak tees, medtoai scheme etc is offered. Please apply endoaing 
your G.V. by December 31. 1994. 


MALAWI RURAL FINANCE COMPANY LIMITED 

nroOE BAG 39, LILONGWE* MALAWI, CENTRAL AFRICA 
PHONE: (265)721134 BIX: (265) 742249 


Schroders 

European Equity Analyst 
Smaller Companies 

The Continental Europe team of Schroder Investment Management Is looking for 
a European Equity Analyst to join a team of 15 European investment 
professionals. The successful candidate will be familiar with company accounts 
and financial analysis and will travel regularly in Continental Europe. 

You should have an MBA or post-gaduale qualification In economics or business- 
related subjects. In addition to being computer literate and familiar with 
spreadsheets, you will be sufficiently fluent in one or two European languages, 
besides English, to conduct business meetings. The job wi! combine using 
intellectual and analytical stalls with practical and commercially -orientated tasks 
and Involves meeting the senior management and proprietors of smaHer quoted 
companies to assess the business strategy and management strengtii of potential 
investments and contribute to the decision-making process. It wfil be important to 
be able to present conclusions to colleagues or clients. 

You are likely to be In your late twenties or early thirties with some previous 
business or professional experience and win have the acumen and drive to learn 
quickly and take early responsibility. 


The compensation package includes a competitive salary plus full banking 
benefits package. Career prospects within the Schroder Group are excellent 

Applications in writing, with fun curriculum vitae, should be sent to: 

Mr W G Lewis, Assistant Director, Schroder Investment Management 
Limited, 120 Cheapskle, London EC2V 6DS. 


EQUITY SALES REPRESENTATIVE 

An established Asian Securities Finn is looking Cor a few equities 
sales representatives on emerging markets. 



* 1-3 years ex p e ri ence in securities industry. 

* Saks ori enta ted preferably with experience m dealing with 
ftnyfrurtmiai investors. 

* Experience in Asian market preferred. 

* Sdf-manvattd. 

Upon completion of a muring coarse in Hawaii, the successful candidates 
will be stationed in one of tbs following locations: Kong Kong, Human or 
the UJL Attractive package will be offend. Interested parties pieass said 
in application with Ju3.c.v. Contact jdnam number and expected salary to 
us la Bong Kong by fax (852^30-9890) before 20th December, 1994. 


Senior Buy-Out Professionals 

ApnFalnQ^iiitenulit]^ 

for e^edenced piofesriofttb Id work with Jon Moulton and a small team In 
making medium and lar^ buy-out in veitnipita. A good levid of eK p nim nt 
a essential and an abfliiy Bo work internationally would be an Ad v a n tag e . 
Horn* and conditions wall be unwiooaMer compensation b negotiable. 


Apax Burners & Co 

Applications to AatoadaVftri 




London WIN 3AA. Tel: 071 8726300 


PRIVATE BANKER 

- TO MARKET THE MIDDLE EAST FROM LONDON 

Dne to continued expansion we axe looking for a dynamic entrepreneurial and professional 
relationship manager reporting to the Head of Middle East and Africa, Private Banking in 
London. 

The Bank is one of the best known and most respected in the world with its efficient 
structure, sound balance sheet and excellent earnings position. The Private Banking 
Division In London, comprising a group of multinational professionals with strong esprit 
de corps, adopts a dynamic and personalised approach towards the international investor. 

The ideal candidate will have substantial experience in marketing to the Middle East and 
will have knowledge of Securities, Foreign Exchange and Precious Metals. 

Please send yonr CV to Loma Gray, Human Resources, Credit Suisse, Five Cabot Square, 
London E14 4QR 


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ACCOUNTANCY 


4?’ — 


Cookbook may be put on the back burner 


I t looks like 1S95 Is going to be the 
year of the auditor - and about 
time too. The rule of auditors, the 
scope of their duties and responsibili- 
ties, an issues too long left to the 
almost glacial Dace of changa in the 
accountancy profession. 

Auditors and audits captured the 
headlines during the corporate scan- 
dals of the late 1980 b and early 1990s. 
The public expected them to spot 
fraud and were disappointed when 
they Med. The so-called "expectation 
gap" began to widen. 

The auditors were slow to take up a 
public defenc e of their part In these 
cases. By default they let the public 
think that they were the only culprits. 
They Med to educate society about 
the constraints they fered in unearth- 
ing fraud and fraudsters. 

In recent days, several develop- 
ments in the field of auditing p«iTi+ to 
a new vitality in the debate. A com- 
mon thread appears to run through 
all of them: the auditor is being 
encouraged to move away from the 
"cookbook” approach, based on exten- 
sive rules and programmed proce- 
dures, towards a reliance on individ- 
ual judgment. 

Last week the Institute of Chartered 
Accountants in En gland and Wales 
announced the foundation of a new 
Auditing Faculty - to be run along- 
side its existing faculties in tax, infor- 
mation technology, and finance and 
management Its first chairman will 
be Gerry Acher, head of audit at 
KPMG Feat Marwick. 

Mr Adler marked bis arrival on the 
scrae by announcing a conference in 
the new year on The Future of 
Accounting: Principles or Rules? 


wake of the ‘expectation 


Mr Acher made it dear that while 
the conference might debate the 
matter, as far as he was concerned 
the profession was over-burdened 
with rules and regulations and this 
was its "last chance” to avoid 
being swamped by the "cookbook” 
approach. 

He accepted that the profession had 
retreated behind thp rules, using 
them as a defence, following the 
bruising failures of the past Litiga- 
tion, and the threat of It, had made 
auditors wary of using their judg- 
ment Reliance on the rules had led to 
further Mure as dishonest directors 
used loopholes in than to defraud 
shareholders. 

kfr Acher acknowledges that one of 
the reasons the regulations are so 
long and appear so tortuous Is that 
auditors often pester the Accounting 
Standards Board to maka them spe- 
cific. Many auditors feel safer with 
detailed rules rather than vague prin- 
ciples. 

There is little doubt that many 
auditors find the weight of accounting 
standards oppressive. A senior part- 
ner in one of the Big Six firms has a 
pile of current publications ion the 
comer of Ms desk merely as a visual 
reminder of the body of work 
involved. 

There were distinct echoes of Mr 
Adler's argument in the publication 
of draft proposals by the Auditing 
Practices Board on the audit of 
related party transactions. The 
Accounting Standards Board is pre- 
paring to toughen up on the require- 
ments on directors to flis ringg links 
between various related parties - for 
example between the immediate fam- 


ily of directors and a related pension 
fund. 

David TindspU, the chairman of the 
working group which produced the 
draft proposal, thinks that if auditors 
bad to tM through all the possible 
related party transactions in a large 
company, the resulting audit fee 
increase would be huge. He saw no 
point in a “make work” system based 
on HftWng boxes. 

The result was a recommendation 
that audit procedures in this area 
should be based an risk assessment. 
“The APB is proposing a risk based 
audit approach, in preference to a pro- 
cedural one.” No cookbook here, and 
no rules to hide behind. The state- 
ment from the APB continued: “This 
requires auditors to use their judg- 
ment to determine the nature and 
extent of procedures rather than pres- 
cribing a list, of .mandatory proce- 
dures.” 

The movement towards judgment 
found a further echo in the publica- 
tion last week of The Audit Agenda, 
the APB's comprehensive proposals 
tor the future of the auditing. Prof Ian. 
Percy, the chairman of the working 
party which produced it, talks enthu- 
siastically about the "psychology of 
auditing” the need to train audi- 
tors in the behavioural sciences. 

While the report rejects extending 
the responsibilities of auditors in 
detecting fraud, it calls for "greater 
realism both within and outside the 
profession about the possibilities of 
finding fraud, whether material or 
not”. 

The report called for regular semi- 
nars on fraud and for training for 
auditors in detection and the “behav- 


ioural aspects of individuals under 
pressure”. 

Beyond the annual audit, the repor t 
also called an boards to consider peri- 
odic “forensic audits”. These would be 
nw^tertefcaw by special te?™« trained 
to find fraud and complimented in 
same cases by ex-police officers. The 
forensic audit would be to the annual 
audit what debugging the boardroom 
is to corporate security. - 

Prof Percy wants a more open 
debate on fraud in the profession. He 
is tired of the argument that talking 
about fraud only gives. fraudsters 
fresh impetus to offend. He wants an 
auditing profession alive to develop- 
ments hi fraud and willing to use tbis 
skfil and judgment In spotting fraud 
and - more often - spotting areas of 
potential fraud. 


T he publication, this week of 
Fraud Watch, by Ian Hunting- 
ton and David Davies at EFMG 
Peat Marwick, is therefore a happy 
coimddenoe. The authors start their 
work with a quote: “Fraud and deceft 
abound in these days more than in 
former times.” That was the view or 
Sir Edward Coke, lawyer and politi- 
cian, writing in 1602. 

Luckily the rest of the book is much 
more up to date. It records scores of 
detailed examples of real frauds and 
then hste the wanting signs which go 
with each one. As an aid to Prof 
Percy's enquiring auditor it would be 
diffic ult to think of a better text book. 

On example should snffioe. A chief 
e xec u tive of a bank approved a loan 
to a company for the development of 
a golf course and country dub. Hie 
entered into a secret joint venture 


to be paid 30 per ce nt of 
the profit from fids project. The profit 
was paid into a private com pa ny in 
which he was a shareholder. All the 
an the joint v e ntu re were kept in 
the chief e x ec u tive's office. 

Warning signs hi this could 
have Induded:- 

• ‘Thin” l oan files. 

• Sketchy information, but manage- 
ment Haim "ctedliftrart&iness of the 
borrower is undoubted". 

• B or rowers with common or tike- 

qnm i H f mr wamflft. 

VWWSNPPf^ 

9 Photocopied documentation and 
missing detail. 

• Funds prid before necessary for- 
malities completed. 

• significant numbers of borrowers 

by the source. 

• File handled exclusively by senior 
official. 

9 Inconsistent jottings on file. 

9 Repayments made by persons 
other than the bonoww. 

Of course, there is one big draw- 
back to the auditing profession 
taiicihg so much about fraud. The 
"expectation gap” which has spurred 

it into antim may well Widen If audi- 
tors continue to “fail” to catch fraud- 
sters. Many auditors are sceptical 
about ever seriously restricting fraud. 

Not so Ian Huntington, one of the 
authors of Fraud Watch. He once 
uncovered a fraud by noticing that a 
series of depositors at a bank all used 
the sarne coloured masthead cm thetr 
stationery. In foH- Sw bank was laun- 
dering its own money and the deposi- 
tors were fictitious. 

Fraud Watch, by Ian Huntington 
and Demid Dairies, £45, published by 
Accountancy Books. 


LANCIA!. TIMES FRIDAY DECEMBER 16 1994 


TREASURY systems 

CONSULTANT 

Substantial Package to CTOflBO 

operation and we now wish » wen* w«penenced 
peraon for <wr pns- «»i poswal® support cwWta 
London. T^w integrated Coiporate Treasury systen a 
monitor, manage gnd account for ogaatronid 
financial market risks and exposures, together with 
physical and derivative financial instruments. Our 
teem needs an experienced professional with system* 
knowledge to manage post-sales support initially, 
moving within six months to presales consultancy. 
We are seeking a graduate who has worked in 
Corporate Treasury for several years, can demonstrate 
an expert's understanding of financial market 
instruments and holds a related financial qualification, 
such as membership of the ACT of ICA. This 
challenging and rewarding role will involve extensive 
travel throughout Europe and will commence with a 
period in Australia. 


PLATINUM 


If you feel that you. can. match our 
of fax your Of toe 


20 - 22 Curtain Road, London EC2A3NQ 

■ 

Tel 0171-247 2343 Fax 01993-891178. 


* 

' * A* * 

• ♦ + i 


r- 

V+-? 


. 4 vii:i >• 


To 


Boss 
_ Q 


Herts 

This is an exceptional opportunity to join a 
well known LUC group as their Group Finance 
Director. Working closely with other 
members of the Group Board, among your 
responsibilities will be helping to ensure that 
the company achieves its planned growth. 
This will be accomplished through strong 
financial p lanning and control and assisting in 
the identification and successful realisation of 
new business or project opportunities. 

You will work' alongside motivated directors 
who have a commitment both to the success 
of the group and to their individual areas of 
responsibility. 

The role will encompass all financial and 
treasury functions together with financial 
systems, and a staff of over forty will report 
to the position. 

You must be a graduate calibre chartered 
accountant, who already has board level 


over £100,000 + package 

responsibility in a substantial and profitable 
group. In addition to the general financial 
management skills you have developed, you 
should be able to demonstrate experience 
of corporate finance, developing successful 
banking relationships and financial systems. 
Above all, you should be diplomatic, 
practical, mature in your outlook and able to 
work in a professional environment where 
the main proprietors arc -active managers of 
the business. ■ " . . " 

If you feel that your experience and personal 
attributes match this exacting brief, please 
send a copy of your CV with current 
salary package details and a recent colour - 
photograph to Bruce McKay, quoting 
reference 3436, at Touche Ross Executive 
Selection, Stonecutter Court, 

1 Stonecutter Street, London 
EC4A 4TR. 

Management Consultants 


HEATHROW 


SIEMENS 



lei 

r 1 W L . 1 


■ W 1 u 

Q 

J7? 



lTTT 


Siemens is Europe's 
leading electronics and 
electrical engineering 
company, with an 
outstanding reputation for 
innovation, product quality 
and technical excellence. 
We are successful across 
the globe, with orders in 
the UK alone standing at 
£1 .5 billion and our thriving 
business employing over 
10.000 people. As we look 
to the future, we now 
seek to appoint a 


Finance 

Director 


for one of our subsidiary 
companies, Siemens 
Measurements Limited. 
This Company has been at 
the forefront of metering 
technology since launching 
the first all electronic 

electricity meter in 1988. 
Capitalising on identified 
market opportunities, it is 
now expanding its design, 
manufacturing and sales 
capabilities to launch the 
world's first solid state 
gas meter. 


A key member of the 
senior management team, 
you will play a pivotal role 
in the achievement of our 
objectives. Responsible 
for ad financial matters, 
including accounting, 
control, budgeting and 
reporting, your expertise 
will also be extended to 
encompass IT, materials 
and facilities management 

To meet this challenge, 
you must be a qualified 
accountant probably mid 
30's with a proven track 
record in a manufacturing 
environment Strong 
interpersonal skills will 
need to be combined with 
commercial acumen and a 
proactive approach. 

We offer an attractive 
remuneration package, 
including a car, the 
comprehensive benefits 
associated with an 
internationally successful 
organisation and relocation 
expenses to Okfoam 
where appropriate. 

Please apply with full CV 
and including details of 
your current salary 
package, to: 

Trevor Bromelow, 
Personnel Director, 
Siemens pic, Siemens 
House, Oldbury, Bracknell, 
Berkshire RG12 8FZ ' 

Fax No: 0344 396239. 



r *TV»T«'| i | »-^Ml 





l.-'V *J « mT'A. «■ r . ■ 1 

■ - *7l « 1 1 1 1 « t ' 

-H |fe K 1 


FJj. for a one subsidiary. 

(aged circa S3) with a minimum 
of 3 years FQJE gained in induffxy, 
ideally as a No.1 or Noi of a 
subsidiary or standalone 
commercial operation. 

Candidates must have a 
strong operational background 
with a ‘hands-on’ approach to 
good financial control 
techniques, good working 
capital management, plus they 
must haw the ability to help 
develop a business from a 


(Foe 0121 2363350) 


ANTE 


Innovation ■ Technology • Quality 




The FT can help you reach additional business readers in Franca. Our Bnk with the 
French business newspaper, Lbs Echos, gives you a unique recruSment advertising opportunity to 
capttaBss on the FTs European reacharsttip and to farther target the French business world. 
For Information on rtees and further (Malls please telephone: 

Philip Wrigley on +44 71 873 3351 


Company 
Problem Solver 
ACMA 

- Ex Fin Director 

20 yrs Senior Mngmi Experience 
Gap Pi«inin& Iteorga/Staraps, 
System implementation. 
Interim Bn. 

Smafl/Med Coys Welcomed 
Seeks Long/Start Assignments, 

Bing 0)1733) 265632 


l tufia n A allotted 

•' \fi! \ i V ( ’ • H 1 1 

V\ rrh l I M(. <i lAjH-riciKT 

•'ccks in 'Afirk wiilf 
Luropi'iin \m< ric;u* coninuuv or 
inrTMittiii” ilriti 
u\p:trulin^ upt-nUNm'- m 

u . r ii't • i'tt.\ k T :'\T_\ ! i;:.inu;:t 7i::io, t Inc 

V-H[[h\t,lr:; Jln-J^r. I : m . I - 1 i : 

M [ Mil . 



Out client b 
groups. This 


world-wide as one of the most en tre pr en eu ri al and Innovative international bonking 
tired role offers great reward and challenge as well as ontstendlafflatenwtioaal career 


THE REQUIREMENT 

■ International banking background with at least 9 years 
finance and control experience. Chartered Accountant with 
fluency in English andfor French. 

■ .Broad. financial reporting, planning and_budgg£lng 
experience. Strong analytical capabilities. 

■ Dynamic and.ou^olng personality. Good leadership and 
team skills with ability to motivate and gain credibility at 

. all levels. 

confidence to K/F Associates, 19 Cote D’Eich. L-I430 
Luxembourg. 


THE POSITION 

■ Member of Management & Credit Committees, with 
strategic and operational respon si bility for all fiscal and 
accounting procedures. 

■ Advise jqii future legislation -responsible for tax planning. 

reporting and budget development and control. 

■ Analyse financial data to advise on strategic financial 
decisions Go group management Liaise with regulatory 
authorities. 


If you wish to apply for this position, please send your C.V. 
in strict 




£ 


K/F ASSOCIATES Wmmmmtmmmm 


Selection & Search 




COMMODITIES 

AUDIT/REVIEW 

TEAM 


Our client is the London office of a globally represented accounting 
and business services group. A major forthcoming project has 
created the need to recruit a high calibre team with knowledge of 
the commodities/derivatives sector or audit experience thereof. 
Ibis provides a unique opportunity to join a prestigious and growing 
company which prides itself on quality of service and technical 
excellence. Career prospects exist on a merit basis, both m the UK 
or Europe. 


London 


Salaries £15-45,000 
+ Benefits 



An exceptional Manager, is sought with 
a versatile range of practical experience, 
including the audit of commodities 
such as oil, pain, coffee, sugar or 
metals and exposure to other business 
sectors. ACA qualified, you will be 
professional, technically strong and 
proactive in approach. Ideally, you 
will currently be in a sizeable audit 
practice that has provided you with a 
varied dient base. The company has a 
strong European presence and fluency 
in French would be advantageous, 
but not essential. The Manager will be 
supported by two senior audit staff, 
who should be recently qualified 
accountants with some audit 
exposure to commodity markets, 
derivatives or similar. These support 
positions will surtACA's with 1-3 years 
post qualified experience, finally, 
three juniors are required to provide ' 
accounting back-up to the above. 


These roles will suit applicants with 
1 year plus general accounting 
experience gained in practice or 
industry. Opportunities here exist on 
a contract and permanent basis. 

Candidates meeting these criteria 
should immediately contact Jonathan 
Astburyon 071 629 4463 (evening 
& weekends 071 702 96721 or 
write to him at Harrison Willis, 
Cardinal House, 39-40 Albemarle 
Street, London W1X 4ND, quoting 
RebJA61i4. 

Closing date for applications is 
Tuesday 76th December, 1994. 

HARRISON 

^WILLIS 


■ 

Finance Director Designate 


c£45,000 - Wiltshire 


The Defence Test and Evaluation Organisation (DTEO) 
airrentiy employs 4000+ staff, operates from some 40 sites 
around the LUC and has annual sales of £250m. It la toe 
principal provider of testing and evaluation facOWes to toe 
Mnlstry of Defence and to other governmental and non- 
govemmental customers. 

In common wflh many otherparts of central government, the 
DTEO is moving rapidly towards a more co mme rcial approach 
with the dear objective of enhancing value for money through 
the application of best business practice. A key part of this 
transition Is foe introduction of commercial accounting 
systems and financial management practices. This in turn 
requires foe development of a first class finance function. This 
function wfli be headed by a Ffoance 
Director who, In adcfitlon to having ftdf 
responsibility for ati financial matters, 'wfll 


be a key member of the senior management team reoortina to 

foe Managing Director. 

^The ideal candidate win be a qualified accountant with 
significant commercial experience, preferably gained In a large 
ssrvice-origted organisation undergoing rapid change. 

A competitive remuneration package w Bf be offered, 
a significant perfbman«Hatated bonus element. The 

spP^^nwrttoffiafly is fora fbred term of three yeara and may be 

Applications are welcomed from suitably qualified peoota 
regardless of sex. marital status, race or (fisabflRy.- 

. 31X1 d6taite 01 curTOTt remuneration should 

be returned, by 13th January 1995. to: Senior Staff 

Personnel, Room 114 . Qioi Bunting, 

Defence Research Agency, Ffamborough! 

Hampshire GUI 4 6TD, .. 




















1** *"*w>«ni 4 , .;' ■"•‘■v *00' . • ;•. 

3* ****** *»W V ; . 

w' ,l, ‘ t l'--v V' 


FINANCIAL TIMES FRIDAY DECEMBER 16 1994 



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FINANCE 


7^®^TTOGrcmpl8 a private German company with turnover Is excess 
nrS»^™ 5 t!?i CO ? ,I, ?f y ““afecfcures plastic injection moulded 

The company is based on a commitnieiit to quaE(y P rr 
and excellence in customer service and since 1990 has 
®rown to £ 12 M turnover and 120 employees through 

J VIAlV A PK R ' b ° rttl or * amc ««>wth and acquisition. 

As a member of the Senior Management Team, your 
role covers all aspects of financial and management 
accoun t i n g including' the company's bankers* liaison with 
head office, overseeing IT developments and providing 
detailed analysis to support your input into the strategic 
development of the company. 


midlands 

M42 CORRIDOR 


Competitive Negotiable 


3 January 1995 


As a qualified accountant with experience in a 
manufacturing organisation you w31 dan drive ineneaa 

373Kma “ d “ ap,ra ' t7 “* 

OTTO d eman d s high standards from its managers. With a ‘hands-on’ 
approach you will need the stamina, conceptual insight, assertion and 
charm to influence colleagues and staff to adapt quickfy to maintain the 
company's compe titi ve advantage. 

The company offers you the chance to have an ir up^ c f on a growing, 
dynamic and non-bureaucratic organisation, manag e a friendly, 

professional accounting team, with competitive salary and the benefits 
expected from a I parting organisation. 

Please write with brief CV to Laura Newland, 

Newiand Associates. 48 Rosemary HH1 Road, Sutton Coldfield, 

West Midlands, B74 4HJ. Teb 0121-353 2693. 


\I:\VLA.\n ASSCU :i A I lls 

Ml 'MAN KliSOl'Ki ;!■. CU\Sl i I AN I S 



Coopers 
& Lvbrand 


Executive 

Resourcing 


+*+•*+ - >-•:■:•:■ 

r*r 






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^ ifei +A-’ ++ 75 ''r-- ,?> + + - y a:' 

+ +Tf— r 

•• -A. - •. _ *./ 

•’ ' ."•:< + ••■:.•. ••• . *•• » ; < : •*;• ■» •; i * **+: + +■■ * 

■■ ••. •:•••• ^ • ■ *•-: :. : :: : ;.r!4v#{ 


S.'.''C;» < A • ■ ++ i>:C ': : : 


t'itn 


Oflsbore Accommodation Group ( 0 A 6 ), are ffn owners and 
operators of a fleet of saiU-submenfela occommocktfon r^s; 
wtA* are chartered prtmaOy to 08 companies durtnfl . 
commissioning, mdntooance and redevBtopnwtt phases of 
odshore projads. OAQ which & Jointly owned by Union Bonk oi 
Switzerland and PhOdraw Verdins, commands a snorts motet 
posffion in Bs niche segment ct the onshore sendees industry. 
0A6 now wbh to appoint a top cal&re Ftoancs Director to 
assune comm aftn finance fundlon and to play a tey rate ina 
pmepedlue flotation of toe company. 

Reporting to Sn Managing Dtector, your remit wfll be to provide 
tight financial cmd oasfl controi, to ensure that efleefiva 
according, admlnlsiniflon and I ntan w iftw systems are to place, 
and to ensure the Hmety pradudton and presaMan of 
management reports. You wfll toad rolationshJps iv&h llnaicid 
InsffiuUons, debt providers and professional advfsoa. 

As oi experienced Itoandal manager, you w!B possess wefi 


developed technical skflb in wortdng copSoi and cash 
managemertoidtotoe use otflncncfd bratronents. At the same 
Brae, as part at toe stnaS senior management oroup, you must 
tote a direct 'hands-on' role in toe naming bf toe operdton and 
mange a smafl toon of accounrtng aid admlrfstniBva stotE, 

Condtoatos will be quaffited accountants with strong commercial 
commutation, compiler Betsey, and technical sMKs and 
substamtal Industrial experience. In depth knowledge at UK 
6 AAP aid tax legislation are preraquldp, aid experience In a 
mutt-currency Entemafional enviro nm ent, highly desirable. 
Refevaid experience In an aOshae sendee a shipping 
environment would be of special interest. 

Please send q fetter at oppUcaBon and fell penond and career 
details, Indudnfl cunentremunadton level and dayflme tsfephone 
number In confidence, quoting reference fiO/002JW, to Am 
Dougan, Coopers & Lybrond Bracufve Resourcing Untied, Kmiyre 
Housp, 200 west George Street etasgaw G2 2LW. 



«f & 


General Accounts Manager 

■ 

Preston - c£35k plus benefits 


The Company 

■ Hambro Guardian Assurance is the Unit- 
linked Life Assurance subsidiary of 
Hambro Countrywide PLC which now 
controls some 6 % of the UK residential 
.estate agency market We are poised 
strategically for continued success and 
growth, with exciting prospects, and have 
recently consolidated our Head Office 
operation in the new Riversway Business 
Development at Preston. 

-The Position 
-The role is challenging and presents an 

■ excellent career oRXXtunity for a Life 
Assurance Finance professional to 
contribute to corporate success through 
pro active management of the function. 
-This includes the following key areas 

* Policy Accounting 

* Investment Accounting 
•Treasury 

* Payroll 

* Financial aspects of systems & data 
integrity 


The department comprises IS staff 
(including professionally qualified). 
Individual and team development are 
central features of the job, to achieve our 
commitment to fulfilling customer needs 
and expectations through the provision of 
high quality services. 

The Person 

The ideal applicant will be a qualified 
accountant with Life Assurance industry 
experience, who can demonstrate success 
in managing a base-line accounting 
operation, together with adding value to 
the business through the efficient and 
effective use of resources. Excellent 
management and communication skills are 
essential. 

The Package 

The position carries a basic salary of 
c£35k together with benefits including a 
company car. Assistance with relocation 
costs will be given where appropriate. 


Applicants should send a comprehensive cv together with a daytime telephone number to:- 

Ken Romney, FCA, Assistant General Manager (Finance), 

Hambro Guardian Assurance pic, Harbour House, Fortwa^ PRESTON, Lancashire PR2 2PR. 


APPOINTMENTS WANTED 


I APPOINTMENTS 
ADVERTISING 

appears in the UK 
edition every 
Wednesday & 
Thursday and in the 
International edition 
every Friday. 


For information on 
advertising in this 
section please call 

Joanne Gexrard 
on 

+44 71 873 4153 

Andrew Skarzynski 
on 

+44 71 873 4054 


-j'-. 


vJ*£J#i 


To £100,000 package 
+ benefits 


International Professional 


London 


Corporate Finance 


sustained growth and a clear ^rnTtcgy to position the organisation as a si&aifloant player in the global 
corporate advisory market has generated excellent opportunities to Join this established business. 
Challenging remit to expand and deepen existing client relationships, working as a senior member of an 
experienced team, and to develop new services to promote the firm Into exciting new areas. 


ROLE 


Working with Senior Management to service and 
augment a growing client base, providing broadly 
based corporate finance advice including mergers 
and acquisitions, buyouts and privatisation projects. 


Identifying, evaluating and winning new client 
business, drawing on the resources of colleagues 
throughout the global network. 


Leading and developing a young, motivated team of 
professionals and creating centres of technical 
excellence. 


E QUALIFICATIONS 

Proven record of delivering imaginative business 
solutions encompassing corporate strategy and 
acquisitions/disposals, either In a corporation or as an 
adviser. Age and experience open but likely to be an 
ambitious and commercially- minded graduate, aged 
30+ possibly with an MBA, ACA or legal 
qualification. 

Pragmatic and quick-witted strategic thinker with an 
eye for detail. Adept manager, able to think laterally 
and use a "best team* approach to problem solving. 

First-class leadership and management skills. A 
relationship builder with the credibility to be 
effective at board level. 


Leeds 0532 307774 
London 07! 493 1238 
Manchester 061 499 1700 


Selector Euro pe 

Spencer Stuart 


Mcdv&mpfklfUfOHIH 
ifri 


Corporate Finance Executive 


Manchester 

The Manchester office of N M Rothschild St Sons Ltd 
is one of the leading merchant banking organisations 
outside London. Rothschilds in Manchester has a 
staff of 36, including 2 main board directors and 
undertakes the full range of corporate finance, 
banking and treasury operations for a wide range of 
clients. 

Outstanding performance in the corporate finance 
division has created the opportunity for another 
young executive to join the division. The candidate 
will be involved in the foil range of corporate 
advisory work. 


Essential characteristics for the 
appointed candidate are an outstanding 


(cm) 


Competitive Package 

academic record with at least a 2:1 or better from a 
major university, a professional qualification with a 
leading firm in law or accountancy, possibly an MBA 
qualification and at least 2 years' experience in a 
corporate finance role. 

There are excellent career opportunities for high 
calibre, young professionals, who should be less than 
30 years of age, in this major regional operation of a 
blue-chip merchant bank. 

Please send a foil CV in confidence to GKKS at the 
address below, quoting reference 
number 943S5N on both letter and 
envelope, and Including details of 
current remuneration. 


SEARCH & SELECTION 

PARK HOUSE, 6 KILLING BECK DRIVE, YORK ROAD, LEEDS LSI 4 6UF TEL: 0532 484848. 


A very successful North American Multi-national operating in the media 

and advertising sector seeks to appoint a 

Young M & A Specialist/ 
Operations Manager Designate 


Paris/Asia/ South America 

Based nr the International Headquarters in Paris and 
reporting directly to the Chief Executive Officer, the 
successful candidate will be involved in acquisition 
strategy and the investigation of potential acquisition 
targets. Specifically this will include financial analysis, 
negotiation, managing relationships with financial 
partners and*thc integration of acquired companies. 

Prospects for progression ate excellent with a likely 
move in the short to medium term to a general 
management role within a subsidiary based in Asia or 
Latin America. 

Applicants, aged 28-32, should pusses* a first 
class educational background (MBA), and 


400,000 FF 


have a proven track-rcconl in either a finance or 
commercial marketing role. 

The position wilt appeal to individuals who arc 
flexible and energetic and who enjoy working in a 
fast-moving environment. Fluency in English and 
a working knowledge of Spanish or Mandarin ate 
pre-requisites. 

Interested applicants should forward a comprehensive 
curriculum vitae, quoting ref. EJ 11168 to 
Charles Henri Dutnon or Emmanuel Jalenques at 
Michael Page International, 3 bid Bineau, 92594 
Leva llois Perret Cedcx Paris France. 

Tel: 331 47 57 24 24. Fax: 33 1 45 75 39 18- 


Michael Page International 


London 


I rue mark xml Rcxntirmcm (Innikiina 

PtwyMorf BnankAirt Hoag Kong Sydney 




, • ■ / ’ •#" — , " "■ ' p 4 

- a 


Chartered Accountant 
AND M.B.A. 

20 years commercial accounting experience • 
principally with International engineering companies. 
Based close to London but willing to work 
anywhere in the U.EC or overseas. 

Urgently looking for foil time or temporary roles. 

Please reply co Box AS014, 

Fininciil TittM, One Southwark Bridge, 

London SSI 9HL 



Business Consultant, MBA 

10 years experience in Accountancy/Fi nanci al Analysis. 
European & E/Europe experience. 
Systems/FC literate. Seeking FC/FD position 
hi company start-up or small growing company 
(TO £5m). WOling to relocate. 

Please Write Box: A2194* Financial limes. 

One Soaihwark Bridge, London SE1 9HL. 


AIG Europe (UK) Limited, part of the American 
International Group of Companies, one of the 
world’s largest and most successful Insurance and 
financial services organisations is looking for art 

ASSISTANT TREASURY 
MANAGER 

CROYDON 

Due to continued growth and expansion, this new 
position has been created to assist in setting up 
and establishing system parameters and ensuring 
effective cash management, allocation, documen- 
tation and procedures are maintained. 

The successful candidate must have cash 
management and treasury experience with either 
corporate treasury or accounting qualifications. 
Good communication skills and the ability to work 
accurately underpressure in a constantly changing 
environment arc essential. 

A competitive salary is offered together with 
large company benefits. 

Please write with foil CV. ta 

Louise Smeeih, 

Recruitment Officer, 

AIG Europe (UK) limited, 
om nnr 2-8 Attyre Road, 

EUROPE Croydon CR92LG. 


AIG 


Group Financial Controller 


M40 Corridor 


c £50,000, cai, bonus, benefits 


Outstanding oppolimify fa talented finanffipmfessionri to supptHtGn^ 

maximising ongoing profitable development Highly international c£3)0 million turnover poblidy quoted group with strong record of acquisitive 

and fir gfmir gmnrtli arid aTnh tftnn? fnhTTP plan $. 

THE ROLE 

• Total responsibility fa gnmpancamtingfanctkm covering consnfidations, tax, bodgefe, faaasteaM intern airiyegr^aoa^^ • Extensive 
liaison with external advises. Exposure to main board • Key role in acquisition activity, integration and evalua&m of key commercial projeds. 
t Responsibility for rontiiming enhanognent erf amfrofe and procedores providing strong direction in Baisan with Divisional Finance Directors to 

fBlb sk lBTy finanfial manaympiit 

THE QUALIFICATIONS 

• Graduate, 'fast-trade' 7 Accountant Preferably ACA. Early /mid thirties- * WeD developed interpecsonal skills. High level of comfort with 
in forma ti on teduiology issoes- • Erst class baaiaess acumen, team player, with the accessary assertiveness, willingness and capability to originate 
and implement diange. • Derisive, tough, radical thinker with strong intellect. Performance oriented and ambitious. 

Please rqply in writing to 4th Hoor, EMC0 House, 5/7 New York Road, Leeds, l£2 7PL aidosing a full camcuhim vitae and quoting Reference BHM 
1009a Telqiha* 0632467033, Moilfi053243m 


I H 


E A R C H 




Ik. 2 r : 


.v. 


ta m • ■ ■■ ■ ra teL 


. 0 = 


S E trE- CT I o tt 


29 


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tt 









FINANCIAL TIMES FRIDAY DECEMBER *6 1994 


COMMODITIES AND AGRICULTURE 


LME copper market 
touches 5%-year high 


By Kenneth Gooding, 

Mining C or resp ond ent 

Copper prices on the London 
Metal Exchange yesterday 
surged to their highest levels 
for five and a quarter years. 
Aggressive buying by traders, 
producers and consumers 
helped the market move 
upwards, analysts said. That 
attracted new money from 
investment funds, which 
swamped some profit-taking by 
other funds. 

Prices suggested that sup- 
plies of copper for immediate 
delivery were tight At the 
close last night the backwarda- 
tion, or premium for immedi- 
ate delivery compared with 
delivery in three months, wid- 


ened from. $52J50 a tonne an 
Wednesday to $59^0. 

Traders reported there was 
nervousness in the market 
about the approaching "third 
Wednesday" options activity 
next week which also focused 
attention on copper's supply 
tightness. 

"Copper will remain tight 
until significant new supply 
hits the market - and that's 
six months away,” said Mr 
Wlktor Bielski, analyst at Bain 
& Co, a Deutsche Bank subsid- 
iary, He suggested the three- 
month copper price, which 
closed last night at £ 2 * 979.50 a 
tonne after reaching $2390 at 
one point, was on target for 
$1.40 a pound ($3,085.60 a 
tonne). “I would not be sur- 


prised to see copper at $L50 to 
$1.60 a pound in the first quar- 
ter [of 1995JT Mr Bielski added. 

Mr Ted Arnold, analyst at 
the Merrill Lynch financial ser- 
vices group, said copper had 
“the best fundamentals” of any 
of the LM&traded metals. In 
his monthly metals report he 
suggested capper could reach 
$1.40 to $L50 a pound and that 
“the high will probably come 
during the second quarter, 
which traditionally Is the 
strongest quarter for [metals] 
consumption”. 

He recalled that the highest 
price paid for LME copper was 
$3,707 a tonne or $1.68 a pound 
on December 8, 1988, at which 
time the castri p-three month 
premium was $546 a tonne. 


Old gold 


nTT» 


es index to go 


The Financial Times will cease 
calculating and publishing its 
old gold mines index after Feb- 
ruary 28, 1995. The index, 
which is based on the perfor- 
mance of South African compa- 
nies only and was launched in 
September, 1955, was replaced 
by one with a broader scope 
earlier this year. 

Gold mining c ompanies from 
all over the world are included 
in the new index if they: 

• Have sustainable, attribut- 
able gold production of at least 
300,000 ounces a year; 

• Draw at least 75 per cent of 
revenue from mined gold sales; 

• Have at least 10 per cent of 
their issued capital available to 
the investing public. 

These conditions mean that 
there are no set number of con- 


stituents and the eligibility of 
each company will be reviewed 
four times a year. 

Copies of the list of constitu- 
ent companies and of the 
ground rules of the FT Gold 
Mines Index are available from 
The Manager, FT Statistics, 
One Southwark Bridge, Lon- 
don SEl 9HL. A disc with the 
index’s history will be avail- 
able from the same address 
when calculation of the prede- 
cessor index sales ceases. 

The Mining Journal provides 
technical and financial infor- 
mation to assist calculation of 
the FT Gold Mines Index. 

At present in the new index 
Australasia is represented by 
Dominion Mining; Gold Mines 
of EalgoorUe; Homestake Gold 
Australia; Newcrest Mining; 


Placer Pacific; Plutonic 
Resources and Poseidon Gold. 
Canadian constituents include 
American Barrick Resources; 
Cambior; Echo Bay Mines; 
Hemlo Gold Mines; Pegasus 
Gold; Placer Dome and TVX 
Gold. 

From Ghana there is Ashanti 
Goldfields and South Africa is 
represented by Beatrix; Buf- 
felsfontein; Driefonteln; Elan- 
dsrand; Freehold; Harmony; 
Hartebeestfontein; Kinross; 
Kloof; Randfontein; Southvaal; 
Vaal Reefs; Western Areas; 
Western Deep Levels and Win- 
kelhaak. 

US Mines in the new index 
include Battle Mountain Gold; 
Homestake Mining; Newmont 
Gold and Santa Fe Pacific 
Gold. 


Sugar price consolidation ‘to continue’ 


Sugar prices are likely to stay 
in their current consolidation 
phase with big Importers such 
as China and Russia staying 
away until wefl into next year, 
according to broker C. Czarni- 
kow. 


In Its month Sugar Review 
Czarnikow said: “Although 
renewed strength may well 
emerge during the course of 
next year, there is now less 
certainty about the direction 
which the market might take 


in the shortterm and there is 
likely to be a period of consoli- 
dation”. 

The recent rise in sugar 
prices had taken place earlier 
than might have been expec- 
ted. it added. 


Miners find grounds for optimism in PNG 


Nikki Tait reports on the resource-rich but notoriously unpredictable 

T hree months ago, min- ing that all parties had agreed nomic development have But aside ^«^track 
mg companies held to work towards a February 28 always been closely bound PNG 8 desire future 

their breath as the date for the issue of the “sue- together in Papas New Guinea, developments to provum niture 


T hree m onths ago, min. 
ing companies held 
their breath as the gov- 
ernment changed in Papua 
New Guinea , the resource-rich 
but notoriously unpredictable 
Pacific nation. 

Out went Mr Paias Wingti, 
the former prime minister, 
whose administration was 
regarded as maverick and 
internally divided. In came Sir 
Julius Chan, PNG's first 
mini«rfw after indepen- 
dence in 1975, who previously 
held the prime minis ter's job 
between 1980 and 1982. 

In its first 100 days, the new 
Chan government has given 
the resources community same 
grounds for optimism. Negotia- 
tions over the potential struc- 
ture of the large Aglbn-plus 
Lihir gold mine prefect, a joint 
venture between Britain's RTZ 
and Niugini Mining, have 
resumed. Last week, in Syd- 
ney, Sir Julius said be viewed 
"Cast-tracking” this develop- 
ment as second in importance 
only to resolving the secession- 
ist dispute which has been rag- 
ing on the PNG-controlled 
island of Bougainville. 

Even more recently, Mr John 
Gihenn. PNG’s mining minis- 
ter, returned from a meeting 
with landowners in Lihir, say- 


ing that all parties had agreed 
to work towards a February 28 
date for the issue of the “spe- 
cial mining lease”, which 
would allow the project to pro- 
ceed. The SML was originally 
due a year ago, but differences 
within the Wingti government 
ground the approval process to 
a halt 

In the course of his Austra- 
lian. visit, Sr Julius also noted 
that Lihir was not the only 
project to be progressing. He 
pointed to the recent final 
go-ahead for an oil refinery to 
be built at Motukea Island, 
close to Port Moresby, the capi- 
tal This would be the coun- 
try's first major refinery and, 

a am mring Rnanw» is Organised, 

could get under way by the 
™Mdia of next year. The inter- 
national consortium behind 
the project has retained Pru- 
dential-Bache's Australian 
office to look at local listing 
possibilities. 

The PNG prime minister said 
that there had been a 16 per 
cent increase in "grassroots” 
exploration expenditure In 
PNG in 1994 and held out the 
prospect of a further rise in 
1995. The number of new 
licences granted in 1994 was 
twice the 1993 level, he said. 

But resources policy and eco- 


nomic development have 
always been closely bound 
together in Papon New Gui ne a , 
.and while some clouds have 
been lifting on the former 
score, the latter has become 
increasingly obscured. 

By its own admission, the 
PNG government is facing a 
serious cash crunch. Stories 
have circulated of unpaid bills. 
Including scone owed to Aus- 
tralian exporters. Mr Chris 
Haiveta, PNG's finance minis- 
ter. has denied that there will 
be any reneging on obligations, 
but conceded that people will 
"have to wait in line*. 


S enator Gareth Evans, 
Australia's foreign minis- 
ter, has said that his 
country has brought forward 
remaining ZS94 aid payments 
to PNG - which total around 
A$30Gm - to help alleviate the 
short-term situation while the 
country goes about negotiating 
longer-term facilities with the 
International Monetary Fund 
and World Bank. Mr Peter Sul- 
livan, vice-president of the 
Manila-based Asian Develop- 
ment Rank, recently described 
PNG's macroeconomic prob- 
lems, which are largely blamed 
on runaway public expendi- 
ture, as an "emergency”. 


But aside from promoting 
PNG’s desire to fast-track 
developments to provide future 
income and growth, this 
economic plight could have 
direct repercussions for a num- 
ber of existing resource pro- 
jects. 

First, there are suggestions 
that the PNG government may 
not now complete the vex™ 
deal that was designed to sec it 
lift its stake in the large For- 
gers gold mine from 10 per 
cent 25 per cent This was to be 
achieved by the purchase of 
pHrii tional 5 pa cent interests 
from the three commercial 
partners - Placer, Renison 
Gold Fields and Highlands 

Gold. , . 

The companies involved say 

there been no . formal 
reopening of negotiations over 
Porgera, although th6 rsarran- 
gement of equity stakes should 
have been completed many 
months ago. However, the 
notion has been sounded infor- 
mally in Port Moresby. The 
additional shares were to be 
bought for around K140m 
(£ 77 m), money the government 
certainly lacks at present 

Secondly, there is the ques- 
tion of whether the govern- 
ment tries to raise funds from 
the disposal of other resource 


interests, such as its as per 
cent share in KuiubtL Accord- 
ing to Mr Haiveta. McIntosh, 
the Australian broking firm 
which has an office in Poet 
Moresby, had been asked to do 
a foil valuation of all assets, 
Both he and Sir Julius also 
r emain enthusiastic about the 
prospect of a local PNG stock 
e xc h a n g e, on which some 
holdings might eventually be 

sold. - 

But whether such moves per 
suade the international Invest* 
pwnt community that PNG has 
become a sig n i fican tly better 
risk, when the economic situa- 
tion remains so parlous, has 
yet to be seen. An abrupt deci- 
sion to float PNG’s currency, 
the kino, last October, may not 
have helped, smacking for 
some of the country's familiar 
unpredictability. "I think peo- 
ple w ant to see runs on the 
board," says one mining exeett 

tive. . „ 

Last week, Sir Julius was 
being realistic. Noting that Ms 
own ascent to the office has 
already come under legal chal- 
lenge from political opponents 
- precisely the znaneouvre that 
felled Mr Wingti - he said only 
that he hoped to see “a little 
glow at the end of the tunnel" 
in six months time. 


EU agriculture ministers agree £^T utures f irmer 

environmental set-aside plan COCOA futures dosed firmer New York session, dealers s 

A A L« w a ^ 1 AT T> AAttflviliail 


By Deborah Ha rgre a v e s 

European Union farm 
ministers agreed yesterday to 
draw up new rules on cereal 
acreage set-aside enabling 
farmers to plant trees or opt 
for environmental improve- 
ment schemes on idled land. 

Farmers are required to set 
aside 12 per cent of their arable 
land this year in an effort to 
curb over-production of cere- 
als. Under the current rules, 
producers are not allowed to 
use land planted with trees or 
turned over to environmental 
management schemes to count 


towards their set-aside alloca- 
tion. Environmentalists say 
this has discouraged many 
farmers from taking up some 
of the schemes that are avail- 
able. 

The UK has been pushing 
hard for a change in the set- 
aside rules and welcomed the 
council's commitment to link 
market and environmental set- 
aside. The European Commis- 
sion will now draw up formal 
proposals. 

Mr William Waldegrave, UK 
agriculture minister, said: 
"The Commission’s report 
endorses our view that we 


should be allowed to promote 
more environmentally sensi- 
tive use of set-aside, especially 
on marginal land”. 

Farmers are expected to be 
able to put their set aside land 
into a variety of schemes 
including: recreating flood 
meadows, grazing marshes and 
other wetlands, re-establishing 
lowland heath land, creating 
reed-beds to benefit wildlife as 
well as planting trees. 

The Royal Society for the 
Protection of Birds said the 
decision "has taken a very 
important step towards restor- 
ing the UK countryside”. 


COCOA futur es dosed firmer 
at the London Commodity 
Exchange yesterday, helped by 
short-covering and technical 
chart support A bullish New 
York, fuelled by Investment 
fond and speculative buying; 
was also encouraging, traders 
sakL 

The March contract closed 
£42 up at £973 a tonne, and just 
off a high of £985. 

"Short covering has been the 
mam dynamism but there was 
also a strong technical motiva- 
tion,” a trader said. 

There was little momentum 
driving the PRECIOUS METAL 
markets after a lack-lustre 
morning and quiet start to the 


New York session, dealers sakL 

GOLD continued to edge 
higher, dosing in London at 
$379.65 a troy ounce, up 75 
cents on the day and $&25 on 
the week so fur. 

At the Lond on Metal 
Exchange NICKEL’S recovery 
from Its eariy-week shake-out 
continued at great pace with 
speculators falling over them- 
selves to gat back into the vol- 
atile market. Short-covering 
and stop-loss buying fuelled 
the rise, which saw three 
months business up to $8£90 a 
tonne before trade selling and 
profit-taking reversed the 
trend. 

Compiled from Renters 




. 

1 ; - r 


.*P 




dinS 



■fll 


.*C 


-S'* 


JU 


. : /■-*- V 



W- -a * 



t 


■ 

1 




.1 £7- . 



• J 




.mm 

£3 




' m[ _ : u. 

Jt.-T.” I. 


P 


fail 












- - ~ i 


. rF» 1 




rTO 


.. -j * 




COMMODITIES PRICES 


JOTTER PAD 


U * 


BASE METALS 


LONDON METAL EXCH 

l i M 

(Prices from Amalgamated MefeJ Trading) 

■ ALUMMKMC 99.7 PURTTY (9 per toma) 

Cash 3 nrihs 

Close 1871-3 1903-6 

Previous 1829-30 1880-1 

HlgMow 18650/1855 190871875 

AM Offldri 1855-50 1887025 

Kerb dose 1907-06 

Open fin. 253401 

Total daffy tumow 59032 

M ALUM&BUM ALLOY (1 per tonne) 

Ckne 1825-35 

Previous 1780-90 

tflgftrtow 1800 

AM Official 1795-000 

Kerb dose 

Open k± 2,937 

Total daffy turnover 389 

II LEAD Iff per tenno) 

1885-76 

1820-30 

185571840 

1830-40 

1855-68 

Close 

6340-50 

853-4 

Previous 

614-5 

632-3 

Hghtar 


655838 

AM Official 

630-1 

647-8 

Kata dose 


852-3 

Open InL 

42070 


Total daffy turnover 

7027 


■ MCKB. (Spar tome) 


0090 

8605-15 

8755-00 

Previous 

8305-15 

8455-80 

HgMo m 


8890/8475 

AM Official 

8820-25 

0775-85 

Kerb dose 


8770-90 

Open InL 

68.739 


Total daffy turnover 

18,750 


■ TW {S per tonne) 



Ckne 

5890-900 

5995-6000 

Previous 

5805-15 

5910-15 

■ ■ ■ ■ 
mgnnow 


6010/5920 

AM Official 

5880-5 

5680-82 

Kata dose 


5880-8000 

Open M 

22,780 


Total daffy turnover 

4.751 


■ ZMC, ffpeclal high graria (S per tome} 

O0H 

1117-8 

11444 

Previous 

10630-40 

1112-13 

Wgn/kwv 

1113 

1148/1120 

AM Official 

11130-140 

1141.5-20 

Kerb does 


1145-8 

Open InL 

106092 


Total daffy turnover 

26043 


■ COPPER, pads A Cff pv tonne) 


Ctose 

3038-40 

2979-80 

Previous 

2657-80 

2905-7 

Mg Mow 

3015/3010 

2990/2928 

AM Official 

3012-15 

2945-6 


Precious Metals continued 

■ GOLD CONEX (100 Itoy SAroy <r) 


Kerb c)om 2980-62 

Open InL 238,365 

Total daffy tunow 82.209 

■ LME AM onw OS rate: 1JB609 

LME Otoatno C/S n if: 1-5620 

Spot 1.5630 3 0180:1.5628 6MteCl0624 9ofts:1^BZ2 

■ HfQH QRADE COPPER {COMBQ 


13&S0 
13885 
137 JO 
13815 
132.95 
129.70 


+2.40 139.70 
+290 13955 
+2.15 13870 
+150 137_20 
+1 40 

+005 13150 


138.00 4,146 845 

137J5B 1,774 89 

13870 704 11 

13655 26)514 009 1 

- 759 95 

128.70 3J94 705 

50,516 11052 


PRECIOUS METALS 


(Prices stpptad by N M Rotftscflflfl 
Gold (Tray azj S price 


r ozl) S price £ eqdv. 

379.TO-38QLOO 
38000-380.40 

x 390*10 243*513 

fix 37*20 242-959 

1 39020438050 

r 3794047900 

JOSS 378JB-379l30 

Mean Gold tenting Ratal (Ub USJ) 

4,68 0 months 5.79 

5.01 12 months &4fl 

-&24 


Opening 
Morning fix 
Afternoon fix 
Day's High 
Day's Low 
Previous doss 
Loco Ldn ffftea 

1 month iKhki 

2 months 

3 months 


243*513 

242559 



tatt 

Data 


(ten 



price 

tangs 


low k* 

m 

Dec 

3802 

+10 

3800 

3780 183 

48 

Jaa 

3810 

+12 

- 

1 

- 

M 

3827 

+12 

3820 

3812 9^432 25^419 

tar 

3887 

+12 

3860 

3852 18430 

572 

Jan 

3909 

+12 

3810 

3890 21016 

620 

/to 

3954 

+12 

3840 

3940 12008 

468 

Tetri 




180^187 29034 

■ PLATINUM NYMEX (50 T>oy oz.; SArey ozj 

Jaa 

411.7 

+3.1 

4140 

409.1 11012 

2022 

AW 

4154 

+20 

4170 

4120 13031 

1088 

Jri 

4199 

+20 

4170 

4170 2063 

235 

Oct 

4240 

+20 


- 820 

25 

Jm 

42B0 

+20 

* 

114 

100 

Total 




28016 

VSO 

M PALLADIUM NYMEX (100 Troy ozj SAroy ozj 

DOC 

15345 

+045 

15400 

15400 23 

8 

War 

1S2D 

+045 

15500 

15420 

256 

Jn 

15045 

+045 19600 

15600 781 

- 

tap 

157.70 

+045 

157.10 

157.10 129 

2 

DOC 

15870 

+045 

- 

11 

f 

Total 




4770 

287 

■ SOJ/Bl OOMEX (100 Tray oz.; CantsAroy oz.) 

Ooc 

4780 

+34 

4770 

4730 100 

38 

Jn 

4790 

+32 

- 

79 

- 

M 

481.7 

+02 

- 

2 

- 

ffa 

4647 

+ 02 

4870 

4700 75002 13011 

War 

4907 

+02 

4920 

465J| 10248 

961 

Jri 

487.1 

+32 

4890 

4920 7.431 

47 

Ibtri 




1340M 14021 

ENERGY 





W CRUDE OIL NYMEX (42,000 US gds. 8/bmQ 


Uteri 

Daft 


Opsa 



prlca 

ch sags 


Uar lot 

W 

Jn 

1808 

-031 

1609 

1603 a\999 

M 

16.79 

-027 

1705 

16.75 91096 34.175 

War 

1603 

-020 

17.13 

1801 53037 

7058 

tor 

17.04 

-018 

17.18 

1704 20774 

3010 

■to 

17.18 

Oil 

1728 

17.16 12,469 

3069 

Jan 

1726 

009 

1724 

1725 20260 

1,189 

Total 




408,168 87,462 

■ CRUDE OIL PE (StaaraO 




latest 

Ota* 


Open 



pries 

ctaaga 

Mgli 

Law Int 

M 

Jn 

1508 

Oil 

1005 

1504 49082 20.126 

tab 

1502 

014 

1600 

1502 82207 28089 

Mar 

1502 

013 

1605 

1502 20027 

5223 

tar 

1506 

010 

16.12 

1505 10054 

1097 

May 

1608 

009 

1505 

1509 7,144 

1048 

Jn 

1501 

013 

1199 

1500 7003 

901 

Ttari 




42033 


■ HEATMG OL NYUEX (CL000 US QllL; CftS Qdte) 


Uteri 

Dsyte 


Open 



price 

tangs 

Hta 

bow hri 

M 

Jn 

4500 

064 

4900 

4600 33013 17067 

Fta 

4820 

055 

40L8S 

48.15 39097 

0,725 

M at 

4820 

045 

4805 

49.10 21008 

4022 

to 

4870 

040 

4900 

48L70 13023 

10S 

maa 

4030 

030 

46.45 

48.15 7093 

460 

Jm 

4700 

035 

48.15 

4705 8090 

929 

Tetri 




uafiaa. 

3B033 

■ GAS Off. IPE fS/tanoft 




$rit 

tef* 


op" 



prioa 

daaogs 

n* 

lorn tet 

Vri 

Jn 

14100 

050 

14400 

142.79 40000 

5245 

RA 

14525 

oso 

14625 

14525 22082 

3034 

Mar 

14700 

050 

14800 

14700 12045 

2,785 

to 

WJ5B 

*075 

14125 147J50 «21 

123 

May 

14825 

050 

14825 

14825 1065 

10 

Jon 

14800 

-100 

14000 

14800 6023 

619 

Total 




92,185 18448 

M NATURAL GAS NYMEX p<M»0 lataL: StanritiU 


Uteri 

Gw 1 * 


Opaa 



prioa 

tanas 

Iff* 

Uar Iri 

Vd 

Jan 

1.720 +0008 

1740 

1080 23084 16070 

tab 

1.725 

0003 

1.740 

1700 21060 

9063 

Mar 

UZO *0005 

1733 

1.700 1&347 

iS77 

tar 

1J0B5 44010 

itot 

1080 0089 



10S 

- 

1095 

1075 9,482 

1,130 


1705 +0010 

1.705 

1095 7,142 

892 

Total 




141086 39087 

■ U»fl-EADED 

GASOLME 



NVHGC{42JQ0D US gall: c«S gabl 



GRAINS AND OIL SEEDS 

■ WHEAT LCE S par tonne) 

Srit Oaf's Optfl 


SOFTS 

■ COCOA UCE (Blame) 


MEAT AND LIVESTOCK 


ut Bays 


Ugh Low tat 


107-55 4006 108.15 107J0 1,030 

108.75 +030 109.15 10646 1.753 

11070 +035 11105 11045 1,679 

111J95 +0.10 - - 277 

97.25 +0.10 80 

9030 +0.10 98.75 9030 1,010 


+55 997 
+42 985 
+37 981 
+15 987 
+17 998 
+17 1010 


OH 3033 70 

947 4042410 583 
950 17,188 %124 
968 7.633 400 
975 10852 2,519 
966 11063 681 
1110311471ft 


■ WHEAT CBT (SjOOObu rrfn; oantsTBOtb buriieQ 

Dae 3724) +4/2 372A 3884 892 1.209 

Um 3884) +3ft 387/4 382ft 43340 13050 

Iftf 369ft +4/D 370/6 38441 7083 1,183 

Jri 340 ft +3ft 341ft 337ft 14,116 2J515 

Sap 346/2 +3ft 348ft 344ft 731 44 

086 354A +1A 358/6 354/4 261 15 

Ts&i 07,038 11018 


■ MAIZE CBT p.000 bund* cantoffieb txwheO 


216ft - 217ft 

227ft -0/2 228ft 

234/6 - 238ft 

238ft +0M 239ft 

242/4 +Gft 243ft 
240/2 +0/2 246ft 


■ BARLET LC€ QC per ftOimol 


216ft 2046 1,217 
227ft 116.889 20380 
233ft 44JB82 0893 
238ft 40573 5487 
241ft 5,114 120 

245/2 28493 1/435 
247.605 41,027 


Jaa 103J5 4L55 10430 10400 374 17 

Wat 105L75 -040 - 193 

War 107J66 -055 62 

Sep 9050 30 

RM 9765 87 

Jbi 99l25 

Ttotri 3,304 434 

■ SOYABEANS (St {5jOO0H ok; ovMQb bsdiflO 


AM 

SftP 

W 


562ft +TM 563ft 559ft 4Z466 13^92 

573ft +2ft 574ft 59V4 34/718 0936 

582ft +3ft 582ft 577ft 1BJB13 2J301 

587ft +2ft 597/8 583ft 25£S5 1.716 

880/2 +2ft 500ft 588ft 2233 31 

saw +2ft 591ft 588ft 1237 2 


Ok 29.11 +027 29.12 2060 7^06 1670 

Jn 2723 +0.19 Z7_75 2720 33678 0997 

War 2663 +0.18 28JM 2046 20310 4,180 

May 2002 +0.12 2005 2075 1*580 847 

Jtf 25.47 +008 2050 2531 10967 IAS 

tag aua +005 2530 2010 2256 ' 40 

M 110272 10210 

■ SOYABEAN MEAL CST (100 tons; S/tori) 


1562 -01 1550 

15 73 -Ol 1572 

1850 -0.1 1813 

1849 +02 1604 

1592 -0.1 1092 

1713 -Of T7T.7 


■ POTATOES LCE 


1559 2,103 3218 
1872 27277 7380 
1603 2 08 89 3332 
1642 H72B 326 
1692 12.430 489 

1713 3.184 11 

100,187 18210 




2812 - - - - 

Z78u5 -23 2750 2782 1.358 

2983 -03 - - 2 

2502 

1368 

HT (BIFFEX) IXE fSIQflndapr polnp 

2005 -13 2029 2009 300 

1856 -7 1920 1850 1217 

18Z7 -3 1855 1820 181 

1725 +2 1780 1700 1/407 

1536 +6 1581 1530 203 

1645 +5 1665 1665 106 

0*04 


SBver Fbc 
Spot 

3 monttp 
6 months 
t yw 
Odd Cobu 
Krugerrand ' 
Maple Leaf 
New -Sovereign 


frtruy oz. 
30520 
30925 
315.00 
32820 

S price 
381-384 
390.1049235 
88-01 


US eta equfv. 
47aso 
463.75 
48135 
50836 

£ equfv. . 
244-247 

58-60 


LaM Day's Open 

prigs dsmga Iflgk Lew Rnt W 

5130 -035 53.10 51.70 20JM7 12,130 

5130 -038 5130 5130 17,489 5,109 

5135 4L56 5220 5130 8317 2332 

$440 -0-70 6405 5430 10,178 1014 

5270 -030 3425 5190 5^467 1,190 

5420 -0.40 5430 5400 1.482 293 

87,082 2%BS 


pud 

■SUM ■ 

fTOna aomana igt wock n iuuaMH arxixi mo 
work! has bean Wrong enou^i to maMrin 
price s in the 8ml wnh before the Christmas 
mmm n ino uwig wwml Momos ixsvd 
tended very fsSghtty deonsr from time bo time, 
New Zealand crossbreds sanded to ease again, 
and so me Offish wools sold aft useUy higher 
prices at IMS weeklK Bradf or d auction. With 
British wool demand s tem me d origlnafly bom 
CWna rather than local processors who nor- 
maly domhata thb sector. Baowfwre In die 
vaur woof maricet Is not roftacted In current 
demand bom the retafl end of the trade, trad- 
ing condfttom In (ha Ngh street are extremity 
co m p e ti ti v e and the manufacturing Industry 
continues to find a vary difficult to pass on 
coat Increases In wool, wffh cwrenoy rates 
addng to the rises, as wefl as rises In other 
tare costs. 


-30 1815 1208 10 10 

+27 1321 1295 39A48 11,372 

+33 1333 1310 12271 3y82S 

+32 1350 1348 5,725 826 

+34 1359 1369 2247 130 

+34 - 4jBtt 475 

77^7817219 


■ COCOA 9CCO} (60R l 9Aonne) 


Dos 14 
Otfy_ 


Pries 

94620 


Ren day 

929142 


+59 2550 2170 AZ10 828 

+45 2525 2S5Q 9201 £112 

+30 2900 2439 5.113 886 

+17 2485 2448 1060 320 

+6 2480 2460 2093 5 

+17 - - 429 

2*309 3049 

CE (370002)8: carna/KM) 


Ore 147J5 +390 14709 14700 40 18 

WW 15040 +830 150J0 14730 19099 0098 

Hay 15230 -300 15230 14925 6054 342 

Jri 153.15 -435 15325 15130 2739 310 

Ste 15330 -400 15440 19100 2053 154 

Bso 193.15 -570 15435 15130 1059 51 

Tttri 30050 9018 

W COffff pCO) (US oarria^wundt 

Ore 44 Mbs Piet hy 

Green dSty 94800 929.42 

15 day averaoB 137804 134806 

■ No7 pnareoM raw sugar tee {oentsftre) 

Jm 1300 

Mw 1405 - 370 

War 1435 - 860 

JU 1439 - 300 

Toffri 1030 

■ MATE SUGAR LCE CSAomte 


Put tar 


300 

1030 


LCE (6Aortnte 


41050 +1730 41000 
40130 +700 40330 
30200 +600 39830 
38330 +500 38130 
35130 -000 35330 
35030 +1.10 38230 


Tetri 


401.10 12394 1.754 

394.70 5030 110 

38470 4,463 146 

38800 1079 25 

38730 128 20 

35100 218 6 


24062 2088 

hi 0 CSCE (112,0008)8; emtsferi 


Mar 1501 +041 1033 1407 96051 11003 

■tar 1538 +037 1505 - 37016 4038 

JM 1470 +038 1475 1421 23093 2088 

OCt 1378 +027 1303 13L39 24042 1004 

Hr 1310 +020 13.10 - 6026 7® 

Kay 1201 +025 - 1031 1® 

Tetri 1330* 21,121 

■ COTTON NYCE gggOOfcg centwteft 

MW 8408 +105 8500 8303 32099 4701 

May 85.13 +130 8520 8306 11776 1748 

Jri 8445 +102 6430 83.10 6085 523 

Oct 7530 +003 75.15 7470 1081 310 

Ore 7203 +003 7200 7230 6,140 483 

Mar 73.15 +045 7300 7330 83 1 


■ ORANGE JtflCE NYCE (15.0Qaby cents/ftn) 

Jm 11335 -040 - 10174 1034 

Star 117.15 -015 11730 11630 0664 810 

War 12030 - 12030 11020 1046 202 

JM 12275 +005 - 939 44 

tap 12800 4000 12600 12500 2026 148 

Nov 12505 -045 12175 12300 1092 1 

Tfltri 25057 4*12 


VOLUME DATA 

Open kitefBBt and Volume data shown lor 
eentracts traded mi DOMEX, NYMBC CST, 
NYCE, CME. CSCE and PE Crude Of are one 
day In arreor&i 


INDICES 

W HEUTBIS {Basec ia/OT1=-10Q i 

DM15 DAO 14 month ago 

21654 21683 2145.1 

■ CRB mum Base: 1987^00 

0«o .14 Dm to month no 

229.64 22933 23331 




22433 


sen Wafa opea 

price doage Up Ur Irt N 

y 70075 - 70.790 70L32S 3064 2015 

70500 +0325 70080 70.150 30059 6093 
70725 +0.175 70325 70900 19070 2031 
i 66775 +0400 85000 60400 6090 796 

I 62675 +0375 63325 62350 2065 182 

84900 +0400 64500 - 1064 08 

ri 8B0M 14088 

LIVE HOGS CME (4Q30Qfaa: oantsribri 


33725 -0000 35000 32500 
38.100 +0175 30425 37.175 
30125 +0800 30900 37000 
43080 +0525 44300 41300 
43700 +0060 44200 43.100 
42375 +0775 42000 41080 


1027 1043 
14038 271B 
8040 1041 
4022 877 

10B4 173 

1,100 81 
307*1 8,112 


■ PORK BBJUES CME mOOOtacentatta 


39000 +1.190 40.190 38360 
38000 +1100 40.425 38475 
40090 +0790 41025 38700 
41.490 +0000 42000 ta.700 
40025 +0000 41000 38700 
50125 +0075 50125 49.900 


7033 

1034 

519 

481 

215 

10 


2723 

744 

59 

63 

19 

1 


Tetri 


10089 1 02P 


LONDON TRADED OPTIONS 

ozmoB price e mm ™ urea ^ hues ^ 


(39-7%) LME 

1800 

1890 

1900 


(&ade A) LME 


3000 

■ COFFEE LCE 
2800 


M BRBfT CRUDE 

1600 

1880 

1700 


Feb May Fab May 

139 199 40 78 

106 171 69 98 

82 146 82 122 


Feb May Feb 

178 134 81 

145 114 78 

116 95 92 

itai Mre Jan 

71 107 34 

45 146 58 

27 128 90 

Mar May Mar 

88 99 15 

71 84 23 

56 70 33 

Jan Apr Jan 

60 4 

41 

25 


LONDON SPOT MARKETS 


cum Si 6.03-9. 18u -alls 

Bm Bend (dared) 81&49450O -030 

Brent Blend fto) S1&8SNL84 -0215 

W.T.L (1pm «a0 S16JE-087U -009 

M Ofl- PRODUCTS HW C pnampt deBwy OF (tannri 

Premium Gaaolne 8156*180 -4 

Gas 06 $140-143 -1 

Heavy Fuel Off 997-99 

Na p h tha $165-109 -2 

Jet fuel $181-183 -1 

Diesel $147-148 -1 

ftW e w Aigua. TaL London (071)290 88? 


Gold (per trey 
Sim tpor trey a aft 
Platinum (per trey ozj 
RaRacrium {par trey ozj 

Coppre (US prod] 

Lnad (US prod) 

Tin (Kttaa Lumpur) 
TM(Ne» Yre« 

Cattle (Ivq wetfri ft 
Sheep (flhre we ig h0t4 
Pigs flue wotyiQ 

Lon. day sugar (M 
Lea day sugar (rip 
Tote A Lyle export 

Bwiey (Eng. teec9 
Mates (US Nd3 Yribw) 
Wheat (US Dark North) 

RubterpartV 

fUaber/FeUV 

ftebber(KLR8SNo104 

Coconut oi (mgs 
Prim Oil (Mriay-Jf 
Copra (Ptri)§ 

Soyabons (US} 

Cotei Oudook l A fl Men 
WooAope Super) 


$37905 

AaOJOG 


$15200 

14100 
4a 75c 
1403T 
2770C 

12028P 

114000 

91.760 

$365.70 
8407 00 
£34200 

Unq. 

£1320. 

£1650 

101 0Op 
101000 
3700m 

$B870y 

$7iaoz 

$4490q 

CITQjOx 

80.75c 

47Qp 


+0.75 

+100 

-200 

-025 

+20 

-ai7 

400 

-1.01* 

-5.46- 

4018" 

-040 

-050 


+000 

+050 

4000 

-25 

-100 

-20 

- 1-0 

+ 0.10 

+80 


E pertam utanodHrMeew 
rmagtfkOi ff Mrietai cents 
te z Jen. q Doc/Jan V Londo 
8 BuAon u n in ot dan. A A 
QmQ* at tfeek O Pdem ere 


Lppeneeftfrccwutk 
y JWUl V NMQto. U 


Swop Un wright ntaH). 




CROSSWO 


No.8,638 Set by ALAUN 



1 Plus a funny animal held in 
the hand (8) 

5 Tjghi when you mawapa to go 
to slpqi (3^) 

9 And, carried by the porter, 
bulge (5,3) 

10 Not those, in short, turning 
the bay to Oder (6) 

12 The signal for take off (5,4) 

13 Regfstered among the femoos 
©) 

14 Splashed, the cat wait off - 
rushed off (4) 

16 Support gi v en to an old mafr» 

CO 

19 Because reflected in the gfa«i 
is the word "blasphemous” 
CO 

31 Looking embarrassed, left (4) 

24 Having fflntetewi off the port 

after the beer, is not fadfied 
(5) 

25 Tne feeling that one's 

over big? ( 9 ) ^ 

27 She’s back by 4.50 - in time 
<© 

28 Trad to take a tittle rest after 
working out (8) 

29 The invective, when I get 
stuck in the traffic! (6) 

38 Brake an egg into the bread- 
crumbs (g) 

DOWN 

1 Suppose the other bird will 
follow the booby back (6) 

2 Prairies that have frees, you 
say (6) 

3 The areiatente are positioned 
at a side-turning (5) 

4 Worked at school - it’s just 
not natural! (7) 


6 The telephone number six 
ten is wrong (9) 

7 Passed with a dear round, all 
right (8) 

8 Why Limit goes by so quickly? 
(4,4) 

11 She used to be one of the for- 
eign buyers (4) 

15 Drunk coming out of the 
casualty ward? (9) 

17 It’s obvious tether will have 
torn back fay himself (8) 

15 Besides, it's further across (8) 

20 Point the first Lout in "small- 
est” (4) 

21 Writes one a little verse - 
very thoughtful (7) 

22 The beer is a little watery? NO 
way! (6) 

25 Accustomed as one is to 
underground (6) 

Frightening a number of the 
team (5) 


Solution 8,637 


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ppgsga aaaoaEHB 

□agaoHdE] □aaHC3u 
a Q Q a n r n 

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aaaBQEinaBn E3DCD 

QQQBDmCJB 

iaisiagoi J dBqB 


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■ ! VV- 


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I 






H 



FINANCIAL TIMES FRIDAY DECEMBER 16 1994 



J I 



♦Hr'' Hi 




ItL^t 


*%, 
ST-V.i, 

f «*• . 




31 


LONDON 


EXCHANGE 


~r ■ ■ 




«ahl c Jv 


FT-SE-A AH-Stwre Index 






r *K* !i,.* 
'feu,,; r 
♦V'tasj-. 


'Uns 


i« 


*Wi.. 

>•*!*&«* iV: 

5g* J w » «* i», 

■m Tha i ( - 

S* ftSr’r, M . 
"l* 1 ? , , -‘Kr«4 iti 3 . 

* «ivt. 




.■ ^-r 
l -tv s. 

’ll? 



■".I 

I" 1 

' r i ' ■ ^‘-"h ^vO 

• - 1 ■ V- ^ JL,lk 

■ J vi.. m t- 


5V>'rt^l^ v- - 
ri* ?„ Vr ;/ ; 

J^4i4;;,g n 

“**«*. Tfc* : f . ii . i ^.' 

lMApfei*} 

* • mtttAtrfr ‘ r ? ', ( . 

tft. 4tut**b» fv,' r 
*?'** *V<T t., j*. 

tum it; 

f**** ’-* ;;«i r . 

tfcfi tbc tfL-v. r.; 

ill- tJJf’Jef :ri..<.|ji7 t ‘,i 


fc» • 


'••* :l . . ' lf 
..... Tw 

e .^:V| 


By Steve Thompson 

News that merger discussions 
between 8. G. Warburg and Mor gan 
Stanley had been terminated hit the 
DK equity market like a bombshell 
and eroded much of the recent ♦«*■. 
enthusiasm in I^ndon. 

The news, coupled with deter- 

marketmak- 
down ahead 
expiry of the 
her Footsie future, saw an 
early attempt by the FT-SE 100 
Index", to break through the 3,000 
barrier come to nothing. 

At the end of a session fraught 
with anxiety for some of the specu- 
lators that have -piled into the 
merchant banks and utiiwpc areas, 
the FT-SE 100 Index, settled 7JJ 
down at 2,973.4, only marginally 
above the day’s low of 2j973£ 


m 

expiry and bid failure upset equities 


f.,< r*Q ana ' 

% 

41 •:-.. . s ■* mined efforts by some 

:i ■* 'JVJ ears to drive the market 

‘ t,jc *SiSi of thi^ mcmiing's ex 

6 ■ . .« ^v,*' - t\aiwnwKa> ‘ IUL 


The late slide in the FT-SE 100 
also impacted on the market's sec- 
ond-liners, With the FT-SE Mid 250 
Index, which posted a l&potat gain 
in mid-morning, closing only &3 
ahead on balance at 3,413.9. 

, Adding to the peculators’ wor- 
ries was a sharp ail in shares of 
Northern Electric. However, many 
of the other regional electricity 
stocks continued to main* rapid 
progress amid a general fegimg that 
a spate of takeover bids in the 
sector could ma teriaUgft in mining 
months: Water stocks, too. were 
viewed as takeover targets. 

Mark et observers were surprised 
at the late sell-off, pointing out that 
European markets had b*»w> expec- 
ted to . take heart from another 
impressive showing from Wall 
Street, which shrugged off slightly 
disappointing news of the Philadel- 


phia index and powered ahead 
shortly after the opening when it 
was trading around 20 points 
higher. 

Brokers -were by no means dis- 
heartened by the day’s news. “UK 
pic is at just the right stage of the 
cycle to attract a surge of takeover 
activity; the stock market is not 
overbought, inflation is under con- 
trol and there are plenty of cash 
rich companies looking to expand 
and pick up good quality assets. 
January and February will be good 
months to be in the stock market," 
was the view of one senior broker. 

Earlier, the DK market had per- 
formed well, coming within two 
points of the 3,000 mark on the 
FT-SE 100, after news that retail 
sales remained sluggish in Novem- 
ber, news that was seen as consist- 
ent with trends revealed in the last 


Confederation of British Industry 
survey Of distributive trades. 

With the market still bubbling 
from talk of plenty more takeover 
bids to come in the near future, the 
FT-SE 100 was trading around 13 
points up when details of the 
aborted merger talks between 
S-G- Warburg and Morgan Stanley 
filtered into the market 

Dealers said many speculators 
simply panicked and there was talk 
of severe losses among private 
investors. 

Towards the close of business, 
however, there was keen support 
for Warburg shares amid stories of 
other potential bidders already 
holding talks with thg UK’s premier 
merchant bank. 

But with Morgan Stanley seen as 
keen to take in a top investment 
management group, there were 


good gains in that area of the mar- 
ket. groups such as Gartmore. Hen- 
derson Administration, Johnson 
Fry, M & G and Perpetual all 
attracting support. 

As Warburg tumbled, so did the 
FT-SE 100. It dipped into the red 
over the lunchtime period and con- 
tinued to slip away for the rest of 
the session. 

Although subdued by the day's 
events, dealers expressed satisfac- 
tion at the upturn in activity in 
recent sessions. Turnover fell Just 
short of 700m. with non-FT-SE 100 
stocks accounting for 59 per cent of 
the total The value of customer 
business this week is well up on 
recent trading sessions, with 
Wednesday's figure reaching 
£L5Sbn, compared with Tuesday’s 
£L6bn and the previous week’s best 

Of £L34hn. 


1.575 - 


1,550 

1.525 

ijs»- 

1,475 

1,450 



Equity Shares Traded 

Tixrwer by voium* (mflltanj- Cfr d b db'ig 
Intre-mariwrt btafrww ud 

IjQQO 


On 


Nor 

1904 


■ Key Indicators 

Indice* and ratios 

.FT-SE 100 2973.4 

FT-SE Mid 250 3413.9 

FT-SE-A350 1492.8 

FT-SE-A Afl-Shara 1479.60 
FT-SE- A All-Share yield 4.14 

Bast performing a a ete ra 



-73 

+&3 

-1.9 

-1.59 

&13) 


1 

2 

9 

4 

5 


Household 
G tA Distribution 
BUkfng& Construe 


+1-2 

*0.9 

•m +0*5 

Investment Trusts +0.4 

Food Manufacturers +0.4 


FT Ouflnary index 2289.7 -2J9 

FT-SE-A Non Fins p/a 17.58 <17.76) 

FT-SE lOOFut Dec 2974.0 -UJ 

10 yr Gift yield 8.58 (B. 62 ) 

Long gftfequity yld ratio: 2.08 ^.10) 

Worst performing sectors 

1 Merchant Banks — 

2 Life Assurance — — -1.3 

3 Dtetrfcutors -0.9 

4 Insurance -0.8 

5 Water 4X7 




Warburg 


V-s-t .. 


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SnSS. talks fail 

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The bull case for S.G. Warburg 
sagged yesterday as the mer- 
chant bank gnnflimflgH that its 
merger talks with Morgan 
Stanley, of the US, had 
foundered. 

The sticking point in the 
deal was Mercury Asset Man- 
agement, Warburg’s 75 per 
rant-owned fund management 
arm. Morgan Stanley said Mer- 
cury shareholders demanded 


too high a price and it was not 
prepared to take Warburg on 
its own. 

Many analysts were still 
looking confidently towards 
the next stage. They believe 
Warburg has put up the "For 
Sale" sign and expect other 
potential buyers to appear. 
They added that with a hostile 
bid out of the question, con- 
tenders will have to pay a pre- 
mium price to buy off the 
recalcitrant MAM sharehold- 
ers, and £12 a share was stfQ in 
sight. Others are mare cymcaL 
One leading analyst said: “ I do 
not see anyone coming to buy 
yesterday's merchant bank.” 

The news that the deal was 
off came when many dealers 


EQUITY FUTURES AND OPTIONS TRADING 


Stock Index futures moved 
narrowly in low volume, with 
trading mostly underpinned by 
profft-takfng on the back of 
Wednesday's strong gains. 


writes Jeffmy Brown. 

The FT-SE 100 December 
contract, which expires this 
-morning, stood at 2,974 at the 
dose of pit trading, down four 


ft-se wo apexFuruBBStun^ espy ftainctocpow 


(APT) 


Open 

Sett price 

Change 

High 

Lore Es L wot 

Open mt 

Dec 298X0 

2ST4J0 

-4,0 

SOOOlO 

2956.0 

16407 

25246 

Mar 3003.0 

290X0 

- 

301X0 . 

29673 

11002 

41980 

ten 3019J0 

3005.0 

- 

3021 JO 

300X0 

750 

2488 

■ FT-SE MD 250 MDEX FUTURES (LJFR^ £10 per Ml Meoc point 



Dec ■ 3420uQ 

3414^ 

MS 

34200 

342X0 

45 

1774 

Mar 3451.0 

3445J) 

4-100 

345X0 

34514) 

190 

3892 

■ FT-SE ABD 250 DOEX RJTtlRES (OMLX) £10 per fcj Indax point 



Dec 

34100 

- 

- 

- 

- 

287 

K 

i 

f 

f 

eflloretawtat Ex 

aot wtene i 


- 


■ FT-SE 100 MJEX OPTION (UFFQ f2075) £10 par U Men point 



Jan 

Feb 


C P C P 
175 1 125 1 

B&l 194 IQ 2B 
222*2 30 >2 \Bh 44 


C P 
75 1 

128*2 43 
151 S9 
IBB 74 
107 


C P C P c 

27 3 2 28 1 

95 S2^| Bfh 85 4B 

122 8Pz 83*2 109 79 

149 85^118^11712 8812 
” 148 


9100 3150 

P C P C P 

7B 1 126 1 176 

HSljnPz 149 15^ 188*2 
131 4812 1fi0>j 902 1874 
148 BTb 176 a ZIH 2 
105*2 205*2 


Jmf zn 72h 

(B*8y457 M0a38 

U BKIO STYLE FT-SB WO BBEX OPTION OLfFE) £10 per &S hdax point 


2775 2B2S 2875 2828 2075 3025 9076 9125 

M 1 148 1 99 1 50 1% 11% 12>z -1 Sft 1 lOlh 1 ISI^ 

JB 226 13 178»| 2\h MD“a 33 167 48 78 70 54^ 96 1 ? 36^12712 23 164 

m M 271:20112 35 1864 50 1324 65 MS 87 79 11045541404 42 1724 

far 834364 2M 46 182 6241504604 1221014874 IE 76 15345741844 
JUrf 256 814 166 1174 M24 182 9942154 

Q* wsa te 3.498 * uwalyte Wn uiua Itatan atnm era brad on tettomt prten. 
t l»e M w&n monea 

■ BURO STYUE FT-SE WD 250 BPEX QPTIOW (OMLXl CIO par fid Indax point 

9700 


OK MV 
0*0 Mae 


V 214 BV 2V 374 


were at lunch and sent War- 
burg's share price spiralling 
downwards. The sadden shift 
of the price at which dealers 
were prepared to offer stock 
prompted a sharp backwarda- 
tion - a situation where bid 
and offer prices are technically 
reversed. The shares tumbled 
80, bounced and then dropped 
back to close 99 off at 699p 
with 4.9m traded. Mercury 
Asset Management, fell 67 to 
678P- 

The news took the shine off 
the other perceived bid targets 
within the sector. Smith New 
Court lost 12 at 415p and Klein- 
wort Benson abed 22 to 519p. 

Profit-taking in bid target 
Northern Electric gathered 


points. The March contract 
was three points easier at 
2,994. 

The December contract was 
right in fine with the cash 
market, white March closed at 
a 19-point premium - broady 
in the middle of dealers' range 
of far value premiums. 

In contrast to Wednesday 
when the session was marked 
by steady buying, activity was 
flat, with less than 15,000 
contracts traded and 
substantial spread trading into 
the March contract. 

Where there was business it 
was mostly ge nerated by . 
profit-taking, although expiry 
influences and year-end book 
adjustments were ctealy also 
factors at play. The best of the 
day for the March contract 
was 3,000,. 

-Option turnover was also 
duH, tailing away to 30,668 lots 
from 43^29 on Wecfaiesday. 
Put volume had the edge on 
calls, white FT-SE and Euro 
FT-SE trading accounted for 
just imder 22.000 contracts. 

Abbey National was the 
most active stock option, 
followed by Scottish Power 
and Cadbury-Schweppes. 
Abbey National saw 2,020 lots 
transacted. 


pace after the Department of 
Trade and Industry empha- 
sised that it would hold an to 
its golden shares in DK utili- 
ties until March 1995. 

Trafalgar House confirmed 
market speculation on Wednes- 
day that it was considering a 
bid for Northern. Analysts 
were not completely surprised 
by the DTI announcement, but 
one said: "Tins is just prolong- 
ing the inevitable." 

Shares in Northern reversed 
Wednesday's strong rise and 
slipped 26 to 964p in busy trade 
of 2.4m. The company also said 
it had requested a stock 
exchange en quiry into the rise 
in its shares before Trafalgar 
stated its intentions. 


TRADING VOLUME 


VtoL Ctaaino D*"s 
000s prto eftm 


&» 


amt 


AMDofVMOqt 


Argo* 





BAA+ 

BAT tods, t 


BOCf 


879 

7 JD 00 

331*2 

64 


2200 

407 

+i 

546 

45 

*i 

8300 

537 

+3 

662 

400 

-e 

urn 

330 

-i 

4JOOO 

245 

it 

4/300 

237 

■ a ? 

161 

557 


1300 

m 


2400 

464 

-4 

W 

430 

-1 

384 

1,700 

*s 

49 

531 

700 

-3 



MOO 

1,100 

*700 

4200 

1.200 


3 

204 


-1 

-1 

-£ 


sreu 



BuraOmal UMs 
RO 


& CoL LT. 


FT - SE Actuaries Share indices 



2J0D 

662 

+1 

1,700 

517 

-a 

X5Q0 

266 


1 SOD 

401 

■»c 

4*700 

uS 

485 

419 

46 

-1 

642 

428 

♦J* 

2500 

356*2 

*15 

11JOQO 

305 

43 

1500 

345 

-4 

7e400 

157 

♦Jl 

9 pan 

156*2 

4% 

649 

7 02 

-6 

asoo 

66 

-a*a 

9L700 

366 

1 3,600 

306 

-6 

- 4300 

240 

46' 

1300 

648 

w t , 

1500 

ISO 


318 

510 

-3 

171 

840 


1500 

443 

48 

240 

417 

Jf 

655 

804 

48 

■ 876 

178 

*f2 

&400 

766 

42 

4400 

70B 

429 

1400 

484 

-3 

1400 

342 

42 

1/400 

379 

-1 

241 

256 

-6 

1/400 

150 


1,700 

113 



Tr-c. rJK 

- - I «_■ v_- r \ \ * 


Ghvpnd 
Omdttt 
Grand Mott 


DOC 15 


Dmfa 

cngwi 


Deo 14 Doc IS Dec 12 


Year 

480 


Dfv. 
yield 9f 


yfefcftfc 


P/E 

mSk> 


Xd tod). 

ytrf 


Total 

Reiun 


ms ioo 


FT-SE Md 290 BX bw Tkwto 


FT- 


« tov Tmtt* 
~MUL-8HARE 


2973^4 
3413J 
3412 JO 
1482J8 
173061 
1089.70 
147060 


-02 29606 2B4B.4 294B4 33112 

+02 34062 33732 3372.4 3874.1 

-M2 340SL0 3370.7 3370.7 3B67.6 

-0.1 1464.7 14782 1477.0 1648.8 

402 172728 172821 1732.76 179124 
402 189728 189824 17U3J39 174823 
-01 1481.19 1466.10 1466.19 162824 


423 

3.74 

320 

4.19 

3JS 

3.66 

4.14 


7^49 

627 

620 

721 

5.12 

6.71 

726 


1&7B 12426 113323 
1925 130.11 1282.48 
1728 13522 127926 
1&42 81.15 116323 
2475 5527 1351.17 
2257 5724 1331X0 
1823 5828 117326 


■ FT-SE Actuaries AU-Share 


Dafe 


Year Dtv. Earn P/E Xd4 Tool 


IQ mstM. BCTRACmONtiq 
12 Bcbactfw InduaMsffD 
18 CMe btogndM(3)' 

16 01 &Btofattori 8 Prodf!!) 


Dec 15 chgeK Dec 14 Dec 13 Dec 12 ago 

yteW96 

ykrid% 

ratio 

yfd 

Rehen 

2*1X47 

387X78 

259X38 

180X45 

-X2 261X21 250X21 258245 246X04 
-0j8 370X64 3867-51 S855L95 350X09 
-XI 259X09 256X75 2552.71 2419LB4 
*X1 1802/42 179226 160X13 177X06 

X04 

X49 

X76 

X72 

X23 

X58 

XOO 

i. 

24.16 3X83 
22.15 9X62 
21.47 9X44 
t 3X03 

105X11 

101X57 

106X72 

104X44 



1/400 

i-eo 

2JOO 

4000 

1.100 

1200 

IjBDO 

3200 

1.100 

1,100 

3200 

BB 

4200 

aooo 

2200 

3200 

1,100 

2,100 

1,100 

105 

31100 

140 

3,100 

1200 


131b 

231 

GOB 

264 


335 

497 


522 

174 


430 

097 

304 

228*2 

U5 


175 

318 

738li 


546 

410 

531 

152 

564 


Ubpfc Abbey 
Ucydi BanKT 
LASMO^H 


30 QPt MAHUFACT UflE R Sp g^ 1782.78 

. 21 BuU^ 4 OmtnjCtkinCSQ 94646 

& BuBdtog Mate 6 Mm chaOS) 170324 

23 Cfianta b B 2223.44 

24 OteSad Indusrtotofiq 169020 

25 taonb 6 Bad 6quW34) 178621 

26 EnglnMrtng{71) 1771 JO 

,97 B^toMrinA VMteM(19 216451 

M Ptoer 6 PckoC2Q 268664 

20 Twdtea 6 AppmoPOI 149322 

30 OOWWDOODSm 271122 

31 l>awari<it17) 215621 

3 2 SpW*, Wlnaa & CMn(tO) 263622 

33 Food ItetedaMp) 224127 

34 Houtehold Good«(l9 2333LB3 

38 HorfQi Cara(21) 164121 

37 Ptema c a u BoatoCia 814820 

38 Toteabom 3803,11 


178321 1773.48 1783124 1967.18 426 525 2CL48 75L61 91522 

402 94124 94523 85422122627 4.13 &16 21.45 37.70 74724 

170223 169624 171B27 214126 429 6.03 1926 7429 61021 

402 2218.14 2190L18 220729 2243.14 425 4.85 25u71 9427 98326 

-02 188S2D 169020 168521 1982.09 5.48 6.62 1723 8325 87421 

178828 1765.56 1766.74 2001.73 427 726 1627 8224 87826 

177128 175224 1786.19 1756L52 a41 525 ‘ 21.18 60.16 102026 

-02 2170.12 215420 216323 2081.79 4.63 129 80001 9329 105824 

2680222686.112701.19254125 327 522 1928 8450 1080.11 

+0.1 149125 1487.78 1496L4S 1826.12 422 6,64 19.56 8621 65427 


London 


BA 


MaS 


(Mtoq 


2710.19 287629 2065.93 2904.06 4.47 7.44 

-02 216029 213422 213&L10 231121 44S 625 

-ai 263726 260027 2602.78 2963.10 423 721 

•*02 223321 221663 220429 239024 4 AO 7.88 

+12 230521 2282.16 227327 289320 321 7.77 

403 153526 153537 153&42 171825 326 330 

-0.1 315128 3103L04 307524 3125.49 428 624 

-023011.50866926355627 436223 6Jtt 924 


1529 11729 
14,45 6626 
1621 11326 
1524 10025 
1521 9045 
3926 5120 
1621 13327 
1123 217.07 


94a71 


P i/ wf 
IMlUMWMerf 

i am u mm o w. 
rOimi rKKcy 


ZfiOD 

116 

TJ30D 

3,100 

1200 

3,100 

3200 

507 

4,200 

1200 

5200 

1200 

310 

1200 

2200 

3200 


424 

316 

.546 

138 

738 

140 

107 


113*2 


S7B 


136 

160 


461 


891.46 
QgggB PS Of 

84527 


10iai3 

82120 


RMCf 

RTZf 


40 SCR0(CC3(2ia 

41 EteMiutoapQ) 

43 Itew 6. HBtea 
43 utodtem . 

-44 Rattn, FoodTIQ 
45 Rstotera, OonenfM 

48 Suoparf Sb M bbKI) 

49 Transportfl^ 

51 Otter Servtoea 6 BurtnaarfO 


182626 

2467.12 
2058.78 
2740.48 

1063.12 
150728 
144050 
216026 
122122 


-03 1832.73 182128 182129 202227 
-09 248014 248827 250343 291017 

2058.76 204029 205329 2052.68 

-06 27S328 2751.45 275128 285^44 
-05 167121 168524 1666.41 172820 
-Ol 1509.42 1499.42 148520 181222 
-02 1443^44 1441.14 145421 161629 
-04 216827 213327 213925 253421 
403 1217^49 121047 122044 113123 


X44 

7.00 

1722 

64J38 

904:90 

X91 

7.50 

1X79 

92.80 

86184 

X46 

X39 

21.70 

5X11 

101X07 

2/50 

X58 

2092 

71.49 

85423 

X95 

9-58 

1X80 

65^4 

100X68 

X56 

7^9 

1X22 

6X66 

82X13 

2J08 

XB1 

17.20 

4160 

681.45 

X96 

X45 

16L24 

72 JM 

66X17 

X55 

X96 

3X17 

3X11 

10SXB0 


'i 

nT'Satomiit 



1^00 

2X00 

1.700 
1,100 
1300 
1200 

2.700 
3U600 
2300 

924 

2,100 

IjGOO 

1300 

1300 


905 


-1 

-7 

-1 

■8*2 

43 
-2 
-1 

44 
~2 
-B 
-1 

45 

4-1 

44 
*1 
*2 

-*a 

-i 

-10 

-3 

45 
40 
-6 
-3 
-3 
+1 
44 

Ja 

-1 

*i 

-3*2 

424 

-2 

432 


-3 

-3 

43 

-1 


212 

701 

557 

SOI 

1J» 


941 

812 


575 

434 


548 

634 

2300 

6700 

1300 

IJBDO 


ONew.f 


bo unurEspe) 

82 BecoidtynT)- 

84 On otstrtoufenp) 

96 TSeconwiurtcrtonaW 
86 


2335.17 

2491.79 

201724 

190724 

172044 


40:1 2333^ 2284.79 228040 296720 
+QJ3 2483.42 240028 23872B 2457.49 
+0.9 1998.12 1977.11 1 99 9-55 237527 
•4X2 191222 189125 1695.14 235128 
-0.7 173320 1875-53 164427 211929 


4.66 

X13 

14J96 9X90 

909X8 

3jB6 

9.96 

11j96 112-37 104X50 

X64 

t 

t 119X2 

947X1 

4 M 

X23 

1X79 57-29 

61X45 

SJB2 

14J29 

7X1 99X6 

874X7 


43 

4S8 

465 

1^400 

MJSO 


HOH+MHOALSKM 


1Sff.B3 -0.1 159629 1S8240 1581.70 173425 4.13 922 1738 64,01 1138,49 


70 FMANCULStlO^ 

71 

79 temndT) 

74 UhtewwH 
73 Ma rcia* BbhImIQ 
77. Olhar RrundM(?4) 

i&jasEsfflfia 


279127 

1162.37 

2278.19 

281Z02 

160625 

1323.49 


-03 2105.77 208321 208CX4O 247925 
+02 2785.09 275622 274525 320820 
-08 117123 1139.76 113079 147047 
-12 2307.47 2283.15 227820 2647.71 
-52 308027 3060.19 306062 322821 
-0,4 181321 181727 1823188 184729 
+0.1 1322.74 1315l79 132625 180428 


4.60 

9X0 

1X20 9X79 

837X6 

4X5 

1X47 

1X9412X90 

84X79 

5X0 

10X0 

1X86 6X13 

80X73 

5X1 

X1B 

14X1 127X2 

861X8 

3.57 

9X7 

12.17 10X78 

684.44 

4X5 

X73 

1X75 7054 

972X8 

ASS- 

5X4 

24.73 59X7 

767X0 


SMEfiltedt 


pwg. 


3200 

1200 


*4 

-S 

-12 

S 

+1 

-29 

-7 

-6 

™1*2 

*10 

-1 

-0 

-3 

-7 

-2 

-20 

-2 

-1 

-6 

-1 


463 445 


217 

468 


279 


1418 


337 

104 



712 


501 

681*9 

537 


1/400 

4JB00 

2/000 

910 


440 
131 >2 
445 
414 


681 

1,000 


792 

684*2 


80 KVBTMENT TRUSTSf124) +IU28S7.07 2646,97 2643.40 289060 2^9, 200 S0J4 61.14 90004 

89 FT-SE-A ALL-SHAR6C864 

■ Homtir i m we ment s 

Opan 9u00 


cw&t 


1479u80 -0.1 1481 .19 1466.10 1465.19 162&54 414 708 1603 59^8 117326 


to jOO 11 jOO 1200 ■ 13 M .1490 15L00 1210 HjflhftMy lOWtfday 


FT-SeiOO 
FT-SE MM 250 
FWA-850 


2993.7 

34152 

15005 


3421.0 

15023 


29947 

3421^ 

1501.7 


34230 3421.9 

15022m 1501.2 


34215 

1501^ 


3423.1 

1501J 


2979.6 

3418L5 

1495J6 


2975.1 

9412L9 

14934 


&lyfe 

vWNdnv 


4.100 
577 

13» 

1.100 
1J00 
4400 
3A00 


214 


150 


Z4223 

1503.1 


3413B 

1492.7 


IhomaSp 0 ^ 

To rdB a f 


166 

2,100 

1,206 

1JOO 

1,300 


411 

121 


Hmt of FT-SE 100 TW* tiSft &5lvn D wf* lam: 4271pm. FT-SE in T904 WflTc 3S20-S( ft® ) Low: 28746 (M/A 

Indusby 


458 

WTO 

2D7*} 


UH 


Opw 


9 JQ 0 moo 1100 1200 laoo Hoo ISOO ISjO goas Prwfam Changa UMua {SOJt 


BMbA Otetai 


Woter 


881.6 
3W3 A 
ITCH 


861.2 

3142.1 

1732.4 

2834.8 


. 879L9 
3141 A 
172 22 


3l4ai 

1728.4 

28949 


31372 

1717.1 

2837.4 


8900 

31366 

17182 

2841.0 


6900 

31346 

17200 

28410 


88M 

3122J] 

171SL1 


8804 

31244 

17106 

2627.7 


8804 

31212 

mu 

2827.5 


8814 
31202 
172a 8 
28206 


+7.0 

-SlO 

-130 

4 80 


1,000 

2,100 

1,300 

1,100 

6lCOO 

4900 

1JB0 


1123 

317 

479 

197*2 


-Ah 

+2 

-1 

*6 

+1 

*h 

-3 

46 

♦7*2 

-4 

*44 

+13 

-a 

-a 

-7 

*1 

-1*2 

« 

-1 

-a 

-e 

■a 

-3h 
41 >2 

t79 

-e 

t*2 


671 





aim 

8ST 

asm 

1100 

62? 

1J00 

13» 


273 


37Q 

138 

127 

na 

747 


1,300 858 


-1 

417 

4 1 

42 

-7 

*3 

49 

48 

-8 

46 


100 


awt 60 M IW diwn. t WM* ta. 


The view taken by some ana- 
lysts is that there Is better 
value elsewhere in the sector. 
Mr Kevin Lap wood at Smith 
New Court was among those 
that back such a view and he 
said: “On a break-up value we 
would rate Northern at USOp. 
But we value Norweb at 1280p, 
Bast Midlands at llOOp and 
South Wales at 1250p.” 

Norweb also suffered from 
profit-taking and retreated 9 to 
79lp, but East Midlands 
jumped 29 to 79 3p and South 
Wales moved forward 7% to 
834%p. 

Other big moves included 
Manweb. up 24 at 855p, and 
Midlands, 82 higher at 836p. 

Trafalgar, which advanced 
1% to 73%p, was boosted by the 
release of favourable foil-year 
figures which saw the com- 
pany turn a £347m loss last 
year into a £45 .6m pro fit this 
year. Tbe group also ruled out 
a rights issue should it decide 
to go ahead with a bid for 
Northern. 

Pharmaceuticals stocks 
received support in the US 
with some feeling that the sec- 
tor will receive a fundamental 
re-rating next year. There was 
some technical London selling 
ahead of futures exp iry in the 
UK hut there was specific 
interest in SmithKline Bee- 
cham, up a penny following a 
well-received presentation ear- 
lier In the week, and Zeneca, 
which is perceived as a possi- 
ble bid candidate and which 
gained 6 to 858p. Wellcome, 
has attracted steady takeover 
speculation but the shares 
were restrained yesterday as 
the market reacted to a story 


NEW HIGHS AND 

LOWS FOR 1994 


TO!— « * V t L ECTWCTTY 


FOOD iwnriu 
n rn wn — rrrunnrTtr py iwrin m 

ra 


Ann Emmy. PHTMQ. MKR 8 PMCMQ (t) 
Potato. Hn% ftabor. TRAMBPOUT fT) 


UMMSMl 

3»t0 


m 


WVm. 


Bfc, Or), rape nt, Dymn p A A 
a H—im. 


« 


n 

MeMKitota, SW. ENB. VB4KUB 


IMM, 


m 


HEALTH CAR! flj 


InTL. 


(0 


Ha WVEETMEKr OOWAMeS (I) 
MMtoonmk UMH A HOTELS (l| Homey; 

(IJiMe^WOtAn 


Oi. EXPUXWDON X PROD (1) SMng 


CtoCrot, OlHB) RNANCWL B OTHER SOWS 
« 8 USNS J 1 ) wn Hnigw, tan. 
PHARMACEUTICALS fO 


al Lwxta, HMrtno 


W 


sehkb (i) SKufe. lexnLEs a 

APnvn. m Afctak TRANSPORT P) LjOP» 

14 


in the US which was critical of 
Aids drug com hi nations. WeU- 
come manufactures the Leading 
Aids treatment AZT or Retro- 
vir. 

Positive clinical trial reports 
from Scotia Holdings over its 
cancer treatment saw the 


shares jump 21 to 274p. 

Asda's strong interims 
helped push the shares up to 
64p but turnover was relatively 
modest at S.fim and the rest Of 
the sector was mostly turned 
easier. J. Sainsbury dipped 2 to 
38%) and Tesco shed 3p to 234p. 

The results were comfortably 
ahead of City expectations and 
most securities houses 
ungraded frill year profit fore- 
casts. although reduced depre- 
dation accounted for most of 
the unforseen gains. 

BZW's full year estimate was 
moved up by £15m to £23Qm 
with the investment bank tak- 
ing a shine to like-for-like sales 
growth of 7 per cent over the 
first 28 weeks of 1994-95. 

Standard Chartered rose 13 
to 275p as various houses 
stressed their positive views 
following news that the bank 
is to reduce costs through staff 
cuts. 

Abbey National improved a 
penny to 407p as James Capel 
published a buy recommenda- 
tion arguing that the former 
building society would benefit 
from lower cost base and 
Increased market share. 

Media conglomerate Pearson 
dropped 12 to 557p on unwind- 
ing of fprhnirai long positions. 

Yorkshire TV foil 7 to 373p 
on turnover of 3m with invest- 
ment fund M&G believed to 
have contributed heavily to the 
selling. 

Food manufacturers were a 
mixed bag. Unilever rose 13 to 
1123p following a buy recom- 
mendation from NatWest Secu- 
rities but Cadbury-Schweppes 
eased a further 9 to 395p for a 
two-day decline of 14 as wor- 


ries built up over the possibil- 
ity of soft drink demand 
looking sick against warm- 
weather inflated 1994 volumes. 

News that A.G. Barr, num- 
ber three In the soft drinks 
league, had gained the 
take-home franchise for Oran- 
gina International helped lift 
Barr shares 13 to 383p. Gdiible 
oils specialist Acaios & Hutch- 
eson jumped 14 to 264p on tbe 
back of strong prelims and an 
extra penny on the dividend. 

A complex deal Involving a 
steel mill disposal, an effective 
share buy-back, a rights issue 
and a French acquisition led to 
heavy trading in ASW which 
closed 20 higher at 2l5p in 1.7m 
turnover. 

Motor components group 
BJS.G. International also met 
with big turnover. Following 
boardroom, moves and a meet- 
ing with analysts the shares 
rose 111 to 55Kp In 7.1m traded. 

Housebuilders managed a 
modest rebound with Barrett 
Development improving 6 to 
151p in 1.8m turnover and Bry- 
ant adding 3 Vs to 122p. The 
improving sentiment was 
helped by a return to profit at 
Y.J. Lovell which bounded 
ahead by 12 per cent - rising 7 
to 60p. 

Among building materials 
Bine Circle shed 5 to 265p in 
contrast to Rugby which 
gained 37» to lQGp. BMC slid 23 
to 941, although in each case 
trading volume was n ominal 


Peter John, Joel KJbazo, 
Jeffrey Brown. 

■ Other statistics. Pegs 21 


LONDON EQUITIES 


LIFFE EQUITY OPTIONS 


USES AND FALLS YESTERDAY 


Gsflw 


tea ter M J* 


Ms 

Hf 


Jot OpOon 


HbHflf teg 


Pi* — 

Mtt* mg 


un&sn hunac 


rS37) 

*gyl 

rwsj 

ASOA. 

na> 

BrttMraqs 

f357) 


500 

550 

240 


60 

70 


41 54* BZ 
8 23*38* 
12 311* 24 
31* 12 18 
51* 7* 9 

Itt ZK 4tt 


T44S) 

Boob 

T485) 

BP 

r«i5j 


330301* «481* 
360 nm 
420 30% 41 
460 81* 20 
31 44 


2 7 12 

19 25 33 
4% 8 14 

16 IB* 25% 
1 2 4 

7% 0 9b 


1% 


t“22B) 

LVOV 

H37) 


H57) 


480 

600 

390 

420 

140 

160 

500 


6 13* 
81 111* 20 26* 
49 3Mt 12* 181* 
28 21 31* 38 
90 3* 9 15H 


P97 ) 
PA 0 

rgg) 

run) 


4 8 11 

14 18* 22 
4 6* 7 

8 11 11 * 
2* 63* 9 

10 1517* 

19 36* 43 


r«7i 

Critttta 

(-356) 


T443 ) 


8* 21 28* 20* 28* 35 

29 37* 46 2* fl 14 
10 20 S 13* 20 26* 
1822*26* * 3 5 

4 10* 14 7 10* 13 

18 30* 30% 8* 18* 30 
1 11 10* SQM 51* 58* 


330 20* 41 47* 2* 0* 15 
380 10 23*30*13* 22 28 
420 28 43*' 40 4 13 19* 

460 7 22 28 22* 31* 39 


("306 ) 

mz 

P8T2) 


r<34) 
Rose loco 
faaoj 

Ton 

P233) 

VodJfm 

n«) 


union 
CSii) 

m 

(-738) 

KhBfcter 

T409) 

Lmd Soar 
1-564 ) 
Iterta&s 

fOT) 


483 26* 30 - 

543 4* 13* - 

700 40% 00 70 
750 15 31*43* 
390 27* 41 44* 
420 TO* 23 28* 


5 21* - 
34 53 - 

S 22* 28* 
24 48 53* 
4 12* 20 
17 28 36 


CX9) 

Qpflon 


14 17 20* 

240 4 8 11 

130 11* 18*18* 

140 610*13* 

180 21 20* 30 
200 8* 14 10 

60028*35* 48 
650 7* IS* 2851*69*74* 
140 21* 25 27* - 2 4 

160 7* 12 15* 5 8* 12 

300 17 21* 27 6* 18 20 
330 9* 9 14 27 37 38* 

800 37 40*60*18* 34 41* 
85914*26*42*45* 63 60* 
420 28* 36 41* 10 23*20* 
460 8* 17* 23 31* 40 52* 
280 14*21* 27 12 2D* 22 
300 7 13* 19 

220 tf* 26 27 
240 8* 14 16 
183 16 - - 

200 7* 14 18 
300 17*25*28* 

330 4 11 14* 

ten Apr tel 


Mkvi’ii Extraction 
Geneva Mnutaotum 
Consumer Goods 


Utitteo 


Investment Trusts —— — 


57 

2 

82 

139 

51 

77 

18 

108 

151 


4 

0 

31 

99 

35 

82 

18 

64 

23 


9 

12 

63 


100 


9 

193 

291 


Others.— ... . , 

63 

11 

47 

Totals 

748 

875 

1456 

Otoe bred on tvw compoto— hesd on Um London Shore Service. 

TRADmONAL OPTIONS 

Rret Deefcigi Decembers Expky 

Last Dealings December 16 Sectiemnt 


Mach 9 
March 23 


B rackanfaridfla, Ro m eo Enemy, Btok Om, Royti 
Scot WdooLoglc. Pute & Cate T teMg— House. Vklo o ljojlc, 


24 33 34 

2 6 TO* 

10 17* 2D 
2* - - 
9* 13* 16 
5* 14 15 
23 31* 32 

Jto 4pr j* 


LONDON 

Issuo Ant MhL 
price paid cop 
P UP PnJ 


-1994 
Wgh Low 


price 
P 


■#/- 


Not 

tfw . 


Dhf. 

aw. 


G IS 

V« 


P/E 


BM 450 2254* - 4 9*- 

f465 ) 475 8 20 - 15 20* - 

tan* 420 41* 54 60* 1 8 U 

T458 ) 460 13* 29 35 12*30* 32 

Opdm see Mar Jno Dk Mar JUn 


f4S8) 


C387 ) 


f2T4 J 


550 21* 37 43 4 11*21* 

600 3* 14 18*38* 39 50 
360 21 32 37* 3 7* 13* 

390 5* 18 21 17* 21* 27 
480 45 93* 60 2* 15* 19* 
500 16 20 38* 15 34 38 

360 32 43* 49 1* fi IS* 
380 H* 24* 31 12* 18 28* 
660 38* 48* 55 3 13* 18 

700 8*28* 20 28*38* 41 
20014* 2021* 2* 6 9 

220 3 9* 14 11*15* 19 


tow M 

f407) 


(*132 ) 

Bactop 

f501) 

Sim (Mb 
(-285) 
firm teft 

rsos) 


30018*28* 30 1 14 20 

420 2 12* 2D* 14* 30* 36* 

125 7* 13 17 1 5 8 

150 - 3 7 18 20* 23 

550 41*57* 65 * 13 19 


600 

298 


4 27 37 15* 35* 42 


P79) 


(-74) 

UUMV 

(11221 


rasa) 

Option 


70 

80 

1100 

1150 

850 

600 


6* 10*12* 
2* 8 8 
4! 84 78* 
15 38 58 
3 48 59 
8* 21 37 


2 4 5 

8 9* 10* 
10 31 43 
34 57* 6B 
16 36* 45 
47 67 74* 

Feb fttof Aag 


ri74> 

lovho 

rna> 


14 

1 

i* 

1 


r46D 


tend Uet 

360 

32 

40 45* 6 11*16* 

r»8) 

39Q 

13 23* 88 21*25*30* 


140 

17 19*23* 1* 6* 

8 

ns2) 

160 

6* 

9 14 10* 17 

18 

UriBbctes 

900 

24 

29 34 3* 12 

16 

ni7) 

330 

8* 

12 20 17*29* 

32 

Option 


Dec 

liar Jre Dk Mar 

JBQ 

Runs 

110 

4* 

13 15* 1* 7 

10 

nw) 

120 

* 

8* 11* 7* 12* 15* 

Opdon 


Ml ter Ate Rb Ubj tag 


(*357 ) 


nw) 

fats 
(*231 ) 


(117) 


300 
33 
160 
180 

160 
180 
140 
160 

460 
SOD 

330 
360 
100 
110 - 
22011* 
240 * 

110 8 
128 1* 
100014* 


8811*28* 
* 1218* 
6* 18* 25 
- 6 It 

18 2227* 
310*18* 


2* 

15 

2 


10 18 
21 28* 
9 17* 
27 36 


- 3* 
4* 11* 


6* 

15 


19 22 
7 11 
14 18* 


8* 

1 


2 

10 

5* 


S 9* 11* 18* 


8* 25* 38* 
- 18 21* 

9 21* 33 

- 9 20 

4* 9 11 

- 5 6* 

20 24 

913* 

14 17 
8* 12 
43 


5 17* 
88 42* 

2* 17* 
23 35* 

* 3* 

6 

* 

9* 


* 

4 

ID* 


Brit Aero 
(“427 ) 

BAT tods 

(“<») 

m 

(“276 ) 

fttTefem 

(-372 ) 

CafluySdi 

P3B4) 


409 34* 46* 
448 15*28* 
42024* 34 
460 7* 16 

260 23 26 


- 11 23 - 

- 31 44* - 

11 24 30* 

20 34* 50 H 


(-1010) 
TSB 
(“230 ) 

Tooths 

(-208) 


11*0 * 21 * 
220 11% 18* 
240 1 8* 

200 
m 


5* 
17 
8 
19 

27 
51 

23 
40 
6 

0 11* 
5* 11* 
15 22 

5 7* 
8* 13 
32 37* 
62 65* 
9* 12 


150 

F.P. 

SIX 

151 

145 Ashbourne 

151 


WN3-0 

XI 

2-5 

1X9 

100 

F P. 

4.79 

95 

90*2 Asset Man inv 

95 


- 

- 

— 

. 

- 

FJ*. 4X99.1 

258 

256 BSkyB 

256*2 


N- 

- 

- 

— 

- 

FP. 

6X1 

173 

133 Oydeport 

16S 


RNX51 

- 

2.7 

— 

- 

-F.P. 

X33 

Ik 

\ Oregon Oi Wta 

Uz 

* 

- 

- 

- 

_ 

100 

FP. 

2X4 

130 

101 Eudkflen 

102 


- 

- 

- 

_ 

141 

FP. 

2X0 

143 

140 Eumton 

140 


WNX2 

IX 

5u5 

112 

- 

FP. 

mn 

495 

468 Hteflty Spec Unto 

468 


- 

- 

— 

- 

100 

FP. 

1X6 

101 

98 Fnebuy SvNr C 

96 


- 

— 


• 

910 

FP. 

37X 

625 

615 Rkst Russian Fr 

oso 



— 

- 

_ 

100 

FP. 

46X 

94 

91 Raffing Nto R» 

92 


- 

- 


_ 

100 

F.P. 

2BX 

106 

00k For & Crf Erreg C 

104 +14, 

- 

- 

- 

_ 

100 

FP. 

3X3 

102 

96 Horn Govett 1000 

101 


- 

. 

- 

_ 

80 

FP. 

10X 

63 

83 Hydro bdL 

83 


RN- 

- 


33X 

- 

FP. 

26X 

100 

90 WESCO Korea C 

96 


- 

- 

— 

- 

120 

FP. 

25X 

123 

123 bmewatea Tecta 

123 


N- 

— 

— 

_ 

215 

FP. 

6X4 

232 

228 JJ0 Sports 

228 


ms x 

2A 

X3 

1X9 

100 

FP. 

27X 

103 

100 KBnOarM 

100 


F4j0 

— 

5u0 

- 

too 

FP. 

600 

101 

100 Leg 8 Gen ffeevry 

100 


- 

- 

_ 

_ 

100 

FP. 

4X6 

94 

82 Maiheaon Ltoyde 

87 


- 

- 

- 

— 

100 

FP. 

sax 

92 

68 Muvta Stwg Boon 

92 

41 

- 

- 

- 

_ 

- 

FP. 

5X0 

42 

37 Do Wananto 

40 

tl 

- 

- 

- 

_ 

- 

F.P. 

14.7 

145 

138 RAPQroiv 

138 

-6 

RN4J65 

XI 

42 

106 

175 

FP. 

3X2 

210 

203 RM 

209 


H4X 

XI 

ZO 

1X5 

- 

FP. 

X75 

108 

105 Reaktaitito Prop 

105 


— 

- 

- 

_ 

120 

FP. 

6X5 

144 

120 SefiPerfBct 

129 


- 

- 

- 

_ 

115 

FP. 

23X0 

135 

117 TUG 

132 


WNX5 

2J> 

X3 

192 

170 

FP. 

1X2 

173 

163 Ttoe-Qne Ccti 

163 


RNX44 

22 

42 

112 

162 

FP. 1/46QX 

IBB 

177 Tetevest 

179*2 


- 

— 

- 

_ 

100 

FP. 

17X 

102 

102 VVoAnglon Da 

102 


— 

- 

- 

- 

RIGHTS 









Kaeue 

Amount Latest 





dotting h 

hot* 

price 

pold ftenun. 

1904 




price 


P 

up 

date 

HSgh Lore Stock 




P 




42 51* 

22 * 

13 10 20* 23 

10 18* 23 1 7 10* 

1 7*13*12*17*20* 


190 

Ml 

25rt 

30pm 

16pm 

Conte 

16pm 

100 

ra 

25/1 

23pm 

18pm 

DMtoanQrp 

23pm 

37 

Ni 

3/1 

5pm 

2pm 

OM 

2pm 

12 

ra 

3/1 

Ikpai 

kpm 

Satte 

Vpm 

25 

ra 

Ifirt 

4pm 

%pm 

Usboma 



cm) 

opdftfi 


650 24* 
700 2 


52 87* 
27 44* 
Apr JN 


3* 27 39 
31 54*56* 
tar Jto 


FINANCIAL TIMES EQUITY INDICES 

Dec IS Doc 14 Doc 13 Pec 12 Dec 0 Yr ago High 1i» 

OtimyShm 2289.7 2292 £ 2287 J) 2285.7 2293-3 2490LO 271X0 2240 l6 


360 

390 


r»j 

tent 

r<29) 


r»> 


420 

750 

800 

420 

460 

260 

280 


31 3* 10* 13 
11 14* 21 11* 2D* 23 
10 28* 33* 9* 13 19 
4* 13 19* 29 30*36* 
1925* 31 7ft 19 21% 
7* 13 18*26*38* 40 

40 81 7Z* 25 41* S3 
19 38* 58 54* 69Wft 
22 30* 35* 7 18* 20 

6 T2T7H31* 4143* 
T1 18 22 7 10 15 

3* 8* 13 20* 22 27 


cm) 

IBCTSpte 

COT) 

Routes 

(MSB) 

Ogdon 


ODD 3853* 70 
650 12*28*49* 
650 0* 73 83 
TOO 23 44 0 
40 42 51 99* 
480 14*27*36* 

mu* Jto 


7* 24* 32 
31 50* 57* 
8* 25*31* 
23 40*0* 
2 9*14* 
14 25 31 
Abtata 


Old. dv_ yield 

4X5 

4X5 

4X0 

4.81 

4X5 

X74 

4X1 

3X3 

Em. yld. % lui 

X67 

xer 

6.75 

X7S 

6X7 

426 

6.75 

3X2 

WE ratio not 

1729 

17.31 

17.11 

17X9 

17X0 

2X56 

33X3 

16X4 

P/E ratio nil 

16X7 

16X9 

1X68 

1X67 

1X87 

27.44 

30X0 

1X67 

Tor 1094. Oten me Indw torn COfflpiltion: Mtoi 271 Xfi 2UMM: tow 4X4 2BI8M0 


FT Orthrey Shore fey 

teteae 

late 1/7/35. 








n«) 


in 

in 


14 

4 


18 21* 3 
BK 1213* 


7 

16 


m 

0 


Onfcavy Stare heurfy ctangos 

flLOO 1000 1100 ixoo 


1X00 14jOO 15L00 16L00 High Urn 


2304.2 230X8 230X3 230X9 230X9 23009 2306.6 229X2 229X0 23073 22893 


• itaetang aeoita price, tali— tan are 
on Ndmn prioes, 

1 Motto contract: 30,769 
1*101 ta 14978 


FT GOLD MINES INDEX 


*Cbfl 

so teg 



Doc 15 

Dec 14 

Dee 13 

Dee 12 

Dec 9 

Yr ago 

SEAOfaagata 

19X70 

19X30 

16267 

19X13 

20,147 

33465 

Equity turnover (Enflt 

- 

157X3 

156X3 

139X4 

1130.9 

185X7 

Eqirity bregtonsf 

■ 

27.756 

26X96 

27X06 


35X23 

Shane traded (mOt 

- 

69SL4 

602.1 

577.7 

497X 

779 J 


ICxUng toua-norket biatoass and 


14 


18 


V yhto % a# lam 


MnM IttkA toU) 18BIJBI 184X45 »7525 133 23CTJte 178U02 


Atoftfi) 




4.78 

227 

088 


+01 294194 290730 306735 
4X4 221233 218X38 269X88 
(11) 151X98 +13 149X9? 1482J7 10*23 

CtpptaX Thfl Ftacri Ylnies Lknsed 1994. 

h breclttos show nuntoor of campantos. Bate U8 Octal 

Geld Ntom hctec Deo 19c 26X8 ; te]^» tovngs: tX9 ptovte; Ywr son 28X8 1 POrttoL 
for Sito edMo n. . 


3711 J7 230X45 
301X88 217138 
203X6S 1417J30 

10ODJX) 3V12/B2. 


A Prime Site for your 
Commercial Property Advertising 

Advertise your property to approximately 
1 million FT readers in 160 countries. 

■■ For details: '* T 
Call Emnrva^unaty on +4471673 3574 
or Fax; 444 71 873 3098 


W 

*mv 


ni cZ tij 


3 


*1 


^ * 









LONDON SHARE SERVICE 




BZBKVSM 06 


U 83 





“58*30 

-373 281 

389 218 


S 18 
198 19 

100 46 

46 17 

BOO 4a 
669 627 

143 05 

6 IS 

223 IS 

"sw 

606 727 

IS 178 

nth m 
m ot 

85 48 

408 29Z 

m ioo 

t20 61 

SSA S2D« 


2JB61 25 04 

MB 06 - 


TMBY-XI 


TattT^Q 


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- Ugh bv 

-i 127 m 

„ 201 161 

+13 575 259 


575 259 

n 44 

3! 21 

in ii4 

6 3% 


& 


YU 

QTt RE 
14J 28 
04.105 
06 173 
34 1&£ 
73 - 

4w4 208 
IB 108 
68 - 
4B - 
4T 178 

08 808 

78 103 

42 302 
28 108 
44 102 
21 - 
08 188 
SB 108 
78 112 
58 

2 J 108 
4J SOS 
2 B 313 
8.1 102 
08 174 
08 

48 142 
08 * 
6-5 98 

12 302 
12 *13 
38 117 
3JQ 17.1 
68 108 
34 182 
38 V&B 
28 152 
28 218 


YU 

an m 

42 4 

3B f 
94 72 
U 

38 118 
64 201 
14 SOB 
4.4 1&1 
68 A 
42 10J 
11 15 
4.7 192 
IB - 
84 - 


Rto - JMi to 

» 

103 — Hi TQ2 

14Z « 118 

Wft W 141 

3»T H "3K ' SS 

MO MO 730 

88 188 3 

44 -1 95 44 


44 -1 

87 


119 -0 

240 

35 iHMa 

* « ^ 

1? = 

au -i 


m zo 


n 63 

K 74% 

eziv EJ4 
DIB £0ft 
m 200 


4V 

BO 

2BD -6 

45 

121 

10 ft 
239 42 

»% 

£24% *7fl 

a h 

■9 * 

38 

882 44 

ft 

■ft it 

■ 91 -4 


447 +3% 


«40 70 

128 V 
— W% 17% 
88 63 

8% 4% 

383 in 
2N 187 
83 33 

133 1» 

a to 

m » 

88 15 

DIB £211% 
B 34 

■f "9 

184 38 

447 264 

*4 

nn 51 
341 191 

248 133 

987% 
"900 215 


9 

89 tf 


YU 

81 M 

8 

13 732 
US - 
4B 11B 

14 33S 

36 1SB 
10 4TB 
06 - 

15 - 

1-4 807 
IB 18B 

2.7 114 
- I7B 
IB 70S 
03 - 

OB * 

21 IU 

37 A 

78 22J 
52 20J 
IB 8B 
SB - 
IB 842 
12 227 
19 - 

17 103 


IB 17B 
27 T7B 
13 123 
21 112 

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Die tar 

Jun 

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003 

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9131 

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4004 92.74 92.70 
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& banking Mfeilon. 8 

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To (ha Holders of 

ffastnieturad Obffgaftaa 
Backed by Senior Assoto, av. 

Pursuant to the Indenture dated 
May 1. 1990, as amended and 
restated as of June 15, 1990 , 
between the Issuer and State 
Street Bank and Trust Company, 
as Trustee, notice Is hereby 
dvan that for lie Interest Acoua) 
Period December 12. 1994 
threogh Msnsh 9, 1995, the rates 
applicable to the Secured Senior 
and Secured Senior Subordinated 
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7.12S respectively. 


The Agent Bank 

KratSetbank SA Uwambourgeoise 


To the HaUcrs cf 

YanateU Socwttles 


US $48408,000 
4 Far tat. Barista 1998 

This is to notify that.Asahi 
Bank (BeigUun) SA. wfll cease to 
actas Flying Agent and Warrant 
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asnber, 1994 . 

® Bjp The Baric of Tokyo 
Tnat rnrep—y - 

reTntdeeoR 


h ; 


Ued: 16th Osoembet; 1994 



lyrjH (r 








































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Name:.... 

Address: 


Postcode: Tel:. 





























































































































38 


FINANCIAL TIMES FRED AY DECEMBER 16 1994 




4 pm CkarOooBmbgr 15 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 



17$ 11% MR 
16$ U$ALLMA 
7B$ 57*| MV 
72$ 46$ MR 
5 3$AH 


ift ii%AMUPr 
2ft 1AMMU 
18 11% take* 

31 3ft MS Ud 

12% 9 ACM (Mil x 1X9 IIX 

1ft ft ACM Mtfx OWIIX 
1ft ft WfM«X 096112 
12 7%rafe8ix 1X11*1 
7 % ram* ixbizs 
* 0l72 8.6 


TM. Pf m 

ok * e 

048 3.8 22 146 12% 
CUB 141 40 68801ft 
1.68 23 22 1936 78 

107 3716 S1% 
12 95 
200 44 29 433 
0.76 24 170164 32 
050 8.7 12 108 1 
0X2 22 14 
10 

0L44 IT 20 
B 


& 


to 1 


Hi 
ft 

15 % 

ift 

3ft 

1ft ft 

1ft 1ft 
1ft Tft 
64 4ft 
3144 1 ft 
ft S/lMQp 
20 19 AM be 

64 4ft to« ADR 
6ft 42%AmL 

aft 2ft me 

2ft ift tan 
4 ft mate 
3ftJkFiC 
iara»Rt 
ift ton he 
17 ift raw 
21%A*rTdi 
13% Mo At 

Tft tar u 

13 Atari* 


044 4.1 21 
13 

OBO 24) 15 
030 17 2 

271840 
068 M 0 311 
3X0 08 19 



ss 


MCuhrA 




± 

£ 
+2$ 

1 
| 

030 1207 223 2ft 2ft 2ft ♦% 

1X4 IX 53 2548 5ft 574* 5ft +1% 

070 2.4 5 458 2ft 2ft 2ft ft 

OIO 05140 401 IB 

048 25 70 Ml I 

1X4 7X 11 512 2T 

020 08 21 809 

044 IX 16 1570 

0 306 *2 

1X4 01 10 088 18 

010 01 86 ft 

090 88 13 2 2ft 

067 2X 124160 3ft 

084 08 48 ft 

098 03 18 361482ft 
M 1711 ft 
14 2379 27% 

1X0 2X480 3880 82 

* 

a 

20 



10012X 72359 
016 3X 15 125 
QUO 06 16 238 1ft 
M7 22 12 120 6ft 
278 OX B 1343 
046 IX 12 710 
088 94 9 3110 1 

0 271 ft 

098 22 229522 4ft 4ft 
030 IX 8 938 
31 91T 
1X8 122 11 

1216101 
020 IX 28 1342 
OS 10 231786 

O20 IX 17 408 
028 1.1 10 78 
02B 12 17 110 
^ 044 IX 18 8541 

2ft ift MM 
4ft raft 
2ftta*QHVl 
14 raw 

24% ntogMAd 
iftmoPx 
IftAtaOmx 
30% 20Mam 
ft %atim 
27% ift m» c? 
ftAtaft 
2l%AUhtel 

1ft 

2ft 24 AM Grp 

7% ft MM* 

33 21% Am 
9ft BftAfeQO 

3ft 77 Ala Q» A 40 1438 

11% 7MMCX 086135 395 

ft ft Jut Pratt 025 3X 17 S 
ft 5%/tafiA 0X6 1X111593 
25% Iftraatftod 052 2X10 97 

S2H 4ft Anvkfk 060 IX 59 1386 44% 

9% ftAntoRx 024 26 230 ft 

XllftMiBtaL OIO 0X2B8Z75 22% 

MAvd 200 5.7 10 4553 3ft 

16% AatePrd 080 07 12 145 21% 

8 8% Am Cap hex 065 07 225 ft 

2ft 16 Am G9p Nx 1X4 02 29 65 

23% 16 Am to cv 1X8 09 0 19 

37% 27% ADS’* 240 7X 11 4895 

33% 2ft AmE* 090 21 11 8916 

3ft 24% AmGeol 1.16 41 18 1315 

Am&Mtax 077 12X 280 

AmMBlR- 230121 45 480 
Aafetfex 065 26 10 51 

AnHra 3X0 46 13 3222 

AnUtas 07527X 45*100 

AmM 046 05 14 7856487% 95% 96% 

A« Opp hex 1X0 140 453 7% 7% 7% 

30 21% AmPraa 1X0 43 11 1819 2ft 22% 23% 

54 lOAmPMt 0X0 IX 9 370 22% 21% 22% 

8% 7%AnME9 044 6X 4 57 7% 7% 7% 

27% ZI AmSfcr 048 IX 11 TS6 26% 2ft 

22% 76%taVttir9* 1X5 72 *100 17% 17 

32% S%ArnWtt 1X6 42 11 

43% 3ft Amttt 1X2 48 20 4895 41% 41 

29%A*mUnC 1X8 43 4 48 30 29% 

0X4 IX 64 197 17% 17% 

2X0 26 16 3808 62% 81 
OIO IX B 49 7 

012 26 51 246 4% 

1X2 5J 6 529 27 

16 79 2 

07 45 2555 42 

22 1477 33% 

28 16 62 25% 

32 13 1973 66% 

25 IB 17481 ' 

41 11 1396 31 
1.1 37 2232 

070 04 784 8% 

25% 14% APH • 271722 2% 

7% 2% AffUMflO 1 815 2% 

012 OS 17 565 23 

OTO OX 1912*88 810% 1 
350 06 16 234 44% 4 
450108 9 

127 2375 
2.10 104 18 

1X8 35 11 2513 
121444 
1 142 
076 32 13 403 
0X0 1.5342 2053 
046 1X32 414 
1.10 33 IT S382 

027 IX 439 

03216X 5 220 
012 03 31 864 
1X2 26 1620506 
2X0 1.1 2 

2X8 6X 12 173 

028 46 7 4 

1X4 36 9 
5X0 




18% 11% 

84% 50% 
ft 6%A«mn 
3% Ann be 



1% Amcoap 
37 Aetata) x 
23% Analog 
2ft 24%AngeBax 
55% 47% Attach 
17% 14 Antony in 

35% 29% to Cp 
29% 22%Apactato 
10% 7% ApnMmF 
25% 14% APH 
7% 2% Appld Mag 
25% 1ft ApplPw A 
1ft 14 %ArM* 1 
51 43% AmoQta 
51% 42% Am 47 
7% 4% Ann 
29 ift Aimco ZIP 
57% 38i 


030 

0X4 

1X0 

0X4 

T2B 

028 



16% 17% 
31% 31% 

gal. opI. 
cr4 ur| 

8*8 83 , 

a$ ah 


453, 33*, AflW 
7$ 3$fttnBp 
33$2Z$*rtilnd 
34% zi$ahico 
SI 1 * SfeMridCad 
31$AttCi 
13$A*P6cF 
130 1.81 Aswthvr 
38$ 28$ AxNSEta 
57>, 47$ H2T 
Stfj 228$ MM2 

38% »$ 

0 $ B$ 

21% leunfeEayx 
ii2% ah mra 

10 2«f» 

20$ IGttnsEpgy 
12$ 8$ABBfeMR 
24$ 16 Hug* 

13$ 7$ Aostita Fd 
SB’S 47$MMax 
an$ 13 $ flwpco 
19 7$Addx 
45 28% Amt* 
63% WhunPr 
1*% 10$*doG»p 
7$ 5%Azar 


aS«n& 

38 37%. 
34% 33% 



1! 

2 

38*2 
51% 

248 248 248 
30% 30% 30% 
B% 6% 6% 
18% 17% 18 

5l4 61 2196 103% 102% 102% 

I 1764 2% d2 2$ 

082 63 IB 84 17% 16% 

034 17 71 230 0% 0% 

016 09 13 727 17% 18% 

OIO 1.2 3167 6% 9 

1.1 23 2322 56% 55% 

13 11 84 13% 1! ' 

05 17 1811 8% 

1.7 13 721 35% 

12 17 14B8 61% 81% 

10 57 10% 10% 

II 682 3% 5% 


OBO 

044 

004 

OBO 

100 



38% 31% BE* 

9% 6% BET ADR 
5b 3 tarn 
17% 13% BahvFart 
22% 17 BahoH 

27% 21% Bator Bex 
31% 24% tap 
1ft 8%BttUx 
9% ftta 
2ft 2ft8ttSEx 
38 24% take* 

26 % 2 ftfimav 

Tft _ 

3ft 24% 

%! 

6ft AftBBttQX 
50%3ft8**Acn 
tt8D%fe*Btel 
2ft 22% 6h8B&t 
4ft 44BkBuhiP 
33% 2SEMHY 
5ft 4ft BanhAmA 
95 TDtonMmB 
64% 54%taZtf 
40 308** 

3ft 22% Bartt(CR) 
39% 29%Etems<kp 
48% 37% BlfTftk 
13 8% MM 
53% 30% BMCh 
2ft 2l%BWars 
25% 22% to SI 
22% 1B% BdTf 1S38 
23% 14% Bom Sons 
50% 43BM9PM 
37% 2ft tarings 
32% 23Becfcmta 
46% 34% BSCOtDk 
7% 4 7 i BadPr 
58% 48% Bata 


272 85 13 763 
0X3 3X 15 164 
0X0 5X 57 113 
0X0 22114 334 
0.48 26 21 1869 
146 IX 19 56 
0X0 20 80 760 
(LOG OX 20 091 
9 2621 
1X2 0X 121562 
1X4 4.6 8 6731 
094 *7 9 87 
(L72 01 8 29 

1X4 4X 8 817 
18 115 
0X0 IX 18 707 
1X0 39 7 6545 
5.48 6X 
1.08 19 
3X0 EX 
1X8 45 
125 79 
5X0 6X 
160 62 
1.08 28 12 49 
060 23 12 2575 
1X0 44 16 41 

1X4 41 8 2524 
005 05518 5393 
0X8 IT 19 1203 
1X5 19 42 4123 
1 46 62 12 121 
1.72 90 41 

OS 17 6 7827 
123 74 6 

172 22 18 178 
140 1.4 S 129 
082 1.7 IB 3200 
OXB 03 IT 338 
2.76 14 15 2902 


a a 




3ft 37% 
28% 3ft 

Ml. 



•a 


BE OlIR 
GUEST. 



QRACAN PALACE HOTEL 
Kempinski Istanbul 


When mhi suy with us 
in ISTANBUL 

stay m I ouch - 

with your crari^urtemary copy of (he 


FT 


FINANCIAL TIMES 


22% 13% Min 
' 5ftH8h 
43% B* A 


44 

86 % 21 

^ $ 

2013% 

2006015100 B«W 

T1% 6BHrP*X 

45% IBBtttDbf 

2 ft 2 ftM 6 l 2 . 

5ft 4a%Ba8taPf 

1ft Baltt 

42% BAZL 

i1%Bbcttl 
IftHUto^nS 

g iftBDedtv 

17%BUcHR. 
BktodcMvx 
BUritox 
SBtttfOVx 


S ftBhito 

9% BMC to x 
60% 42%BDttg 
30% IBBotaaC 
21% 10BORB6H 
26% 9% Bonmcom 
TB% n Born 
TB%8mcaftx 
ZftfioKrirx 
Tft tad FM 
29% BREPrap 
45%30 %WbSI 
33% IftMntoU 
mrt( 90$ Buy9u 
70% 54$ Br Hrx 
aWGB 


& 


Z7i5%BPftnta 
Z7% 18B8MX 
71% 53% Bt 
21%BHvnU 
_ 31% BnniQpx 

B ftBWRSta 

32 _ 

24%Bri=rrj 
ft ART 
f 

ift i: 

41 3 DuchayaW 
BtflCto 
Butt 

BwtiReocx 
Bontaltax 



ft SB 

9k W E Si 

(WO IX 13 03 

278 11 T0 3T17 
0X0 1.1 18 737 

154 23 17 181 

480 ax run 

1.72 4.4 9 1606 
147 2.1 13 16 
0X4 18 8 67 
0X8 14 131393 
27 1 

140 4X 64 33 
2810377 
2J5Q 9X 9 
5X0 IS to 
040 2.1 7 5060 
1X4 12 21 469 

18 1037 

110 081 50 445 
140 28 IB 1083 
040 IX 19 4709 
1X2 13 12 178 
a?3 11 246 

175 11X 1171 

170 12 393 

1X5 13 23 3461 
112 IX 23 
106 OX 15 305 
1X0 2.1 16 6450 
150 2.4 5 867 

aos ox 28 m 

2X6 13 11 2244 
104 13 979GB 
1X0 7X 8 5 

160 2X 28 18GB 
127 16 925 

240 7J7 15 106 
1X0 12 8 1039 

19 1948 
198 5.1 14 6960 
1X9 13 12 2109 
140 0X183 57 
1X8 14 47 1840 
1.74118 9 507 
158 14 481290 
177 15 13 918 
1X5 11 11 739 
1X0 5X796 282 

132 « 3 232 

0X9 12 15 140 
168 2L4 18 4662 
34 123 
144 28 13 1895 
182 20 14 161 
2X0 14 8 82 
10 785 
1X0 2.4 12 2299 

155 IX 30 2444 
1j44 HLB 15 897 


2 ft 2 ft £% 

64% 6ft 6ft 
54% 53% 54 

2ft 23 23 

«% 

„ 

21 ' 


B 


14% 

28% 20^ 


12% 


5ft 
22 
31% 

sss 

2ft 27% 2ft 
ft 3% 3% 

17% 017 T7 

18% 15% 

33% 32% 

10% 1ft 

51% 80 61 

85% 3ft 39% 
1ft T3 13% 


- c- 



148 

140 

184 


1X6 

156 

1.78 

0X0 

142 


2.1 28 617 
17 IS 1743 
3.7 11 967 
174 72 

Z£ 2 
2X26 106 
25 12 135T 
2.1 T2 30 
25 15 917 
24 5575 
21 13 IBB 
1.1378 33) 


is 


CNARl 
CPC 

14 CR Dorp 
63% CSX 
3T 19% CIS Carp 
24% 16%0mBM 
S3 33Cabtan 
29 24% ClbatC 105 
23%14%Gtt0tOft6 116 
21% ift CBdncaOflpi 39 

59 3ft (tarn ST 14 

2% 1%CdEtaalE 120113 1 
15$ 9$QdpanQn*ai6 13 28 
19$ 15$ OEnoj 
15$ 9$CSfW 
25$ 17$ CRH OB* (L4Q 
48 34$ tapUS 124 
H $CmpURi 
16$ 14 CanRK 052 

85% 60% CapCft 120 
14% lOtoMIXB 1X8124 
37% 16 to* IX 1X0110 

2X8 114 5 380 
104 12 18 2219 
OBO 24 15 109 
11 410 
2.1 10 311 
6X 12 1636 


1ft 



1ft tflft 
1ft 10% 1 

17% 17% 1 
43% 42% 4 


42% 17%' 

2ft 15% Grata 
»%3ftCMCto 
% ift CantaQ 
13 ft Canto Fr 
30 22% QxPSL 
' SftCpnhT 
. ftCatoW 
18% 12% CtontoHG 
21% IftCtaCp 
10% 7%CBMiAnar 

60% SOCta 

T9 IftCDIQxp 
58% 2B% CtaFUr 
13% 6% Canto 
45% 20%Caatox 
30% 22% CartrHki 
25% zftGanrLto 
15 1ft Caxrlkftn 
30 24% canr KMp 
22 12 % Ctatat 
30% 20% (MSB 
32% 21% Canbry H 
27% TftCktt) 

40 2SCtatax 
12% 6%Cha*itf 
15% ftCtotHn 
40 30% QmnM 
6% 1%QauaD 
21% 10%CM9y 
36% 30%Qwnad 
42%3ftOmB( 
11% 7%Cta1fctt 
35% 22% 


0X0 

1X8 

240 

133 

196 

120 

105 

1X9 


47% 3ft Ctara 
56% 40% Oft Fin) 

ift 11 % Ota 

8% 5 CtodcRfl 

41% 32001 

34% 24%ChrMtana 
63% 43% Or>Mr x 


83% 

74 


MG tax 
57 ton x I 


1X2 11 J 
120 2.1 
10 B 1.1 
112 


ft ftqpaHI 

37% 28%(8bnih 
20% 15%CknM 
27% 18% CMS 
2% CtoepInO 
20%Ctar 
_ 25% Ctao 
27% IftCtni&Ct 
40% TAGnasOr 
47% aftaaqp 

26 % aftOBcpl12 

96 7fttoPDM 
100% 83CfcpPQA6 
17% 12% C&nUDA 
17% 12% On USB 
12% 7%Qty Ktotf 
12 % ft CKE 
23% 9%CUmSt 
71% 50% OariCq 
21% 12%GbtaM 
11% ft Clunk S 
BB 64 0ow7XBx 
45% 34CM8X 
86 57CMie 
50% 47 am 
26 % 21 % tom 

13 ftCNAtaaa 
Tft 11% Ooadmo 
is 12% Cato Sw 
3ft 24% CaM 
53% 38% Cdc&C 
19% UCbca&ix 
23% ift Doom Bto 
36% 2%C0knap 
6ft ftC«Pl 
11% ftCttnbwx 
ft ftCtatoH 
7% 5%Cototall 
8% OCDtoWU 
30% 21% Calta 
45% 33% MCA 
21% l7%OoHt 
24% 17% Cunalaui 
31% SContax 
20% 12 QonMIc 
29% 21 Ooaol Mol 

25% 20CMMH1X 
26 21% CbmCdSUn 
19 ftOamnuUtayOXB 
42%M%Gtopaq 
i% %CoavmBm 
50%27%totosx 120 

S 31% tops* 

ftCbftoT^i no 

30 1 ft Comas 178 

33% 25% Ota 183 

31% 21% OntaNQi 148 
25 IftCkractBuc 1J0 
20% 10% Oo w ta r 
71% 63Cta4X5 
32% 230ontfd 
75 57% cm Ml PI 
29% 18Qmftt 
47 33% OWE 
52%4l%QDdPap 
89% 48% OnM 

20 % ii% cm sm 

6ft 3ft Cameo i ISO 
60 47% 0%r 4.18 b 4.16 
100 80 Ctor 7.45 x 745 
100% 83% Ctan P7XB a 7X8 
12% GOontMedO 
20% 12taCp 1X0 
in ft Convkkb 104 


45 11 227 

2.7 20 425 

15 21 44 

IX 11 2233 
OX 76 260 
IX 18 6255 

20 243 

7.7 10 242 
10 1 1171 
na 5 BS 7 
IX 9 586 
04 11 173 
7X 9 661 
22 15 ST 
6 X 10 215 
7X 12 3833 
1.1 18 394 

140 683 
OX 36 4654 
29 13 63 

19 114 
4X 518464 
1 137 
54 436 
15 16 297 

4.7 7 8104 

XT 31 632 
XI 26 297 
42 20 7684 
3L0 93 

IX 896 

7 Z74 
13 463 
36 7 

34 514348 
24 12 24GS 
4X 8 BIG 
0X01X9 404 

240 7X 12 302 
4X 20 1GQ 
IX » 730 
39 882 
7.4 53 5750 
72 11 473 
OX 14 7727 
13 4270 


0X0 

nan 

2X8 

1.46 

090 

056 

180 

1JD 

022 

020 

120 

1X0 


104 

1.78 

020 

072 

1X5 

145 

0X0 


1X0 

1X4 

3X4 


18 +1% 
29% +1% 


10 % 


18% 10 
87% 81% 31% 
37% 


17 




17 
6 

13 
50 

IX 10 640 
8 1803 
0X8 16 13 7110 
026 42 118 

7X6 T1X 4 
120 17 10 108 
740 119 ZTOO 
1X2 32 16 1438 
130 IX 11 110 
1X811.1 43 

024 T.7 8 74 

X4287 291 
1X 13 937 
IX 2816314 
02 37 3839 
12110 408 
24 39 

XB 17 2885 
72 472 

82 699 

267 
284 

fiX 41074 
02 17 8462 
8X 86 861 

1.7 18 574 
5.1 7 8031 

2.7 IS 348 

XQ 14 67 

17 13 

17 2 5 

3X 42 691 

1331245 

18 115 

04 235537 4ft 
29 2081114ft 
TX 3 972 6% 

42 10 1368 18% 

16 179967 82% 32% 
64 12 SB 23 22% 

17 11 40 19% 19% 

7 6400 10% 810% 

BX 2 54% 54% 
7X 8 2625 
84 S 
XI 18 8321 
58 161022 
ZX 27 256 
OX 15 4355 
18 908 
IX 5 913 
15 2 

92 run 
OX z40 
5 747 
52 2 907 
04 146 


022 
040 
178 
106 
115 

1X4 
105 
160 
170114 
DXB 14 
222 
112 
1X0 
026 
1X8 
0X0 
048 
1X0 
2X0 


ft 


£ 


10 % 


10 % 


4X5 

2X0 

5X0 

140 

1X4 

1X0 

1X0 


27 26% 
59% 59% 
19% 18% 
35% 34% 
45% 44% 
51% 4ft 

77% 17% 
«% 41% 
49 40 

80% 80% 

Its its 


«$ 


lOGomHPf 
4$ Oran Cun 
ikcnmcu 
52$ 31$CUcpix 
29$ 2t$ OMpvlW 
1S$ AQnMl 
29$ 22$ BB 
35 Z7$Olto||x 
16$ 11*2 CDunnTlB 
19 12 $CDUI»tO’ 

18 15$CUM¥l 
13$ 9$ eng 

29$ 24$ Om 
17 14$ OnM 
33$ 16$OB|Rt 
49$ 3&$Qxn 
12 7$ ON 
B$ 4$C»UqRB 044 
24$13$OrapMK 048 
41$ 33$ QWCS 


1.16113 




25 CUC H 
(Un 
Cunm^ii 
Qmrth 
37 33$OWfr 



30 


30$ 30$ 
13$ 13$ 
44$ M 
*1$ 1*$ 
36$ 34$ 



24% 18%Ch>Sn] 
3ft 28% C»pra 
41% 12 % Cyme 


in nr Bk 
Bk % e am 

1X81X0 8 a 
10 190 
9 1406 
180 3X 33 401 



21% IftDFLKra 


19% Eta 

SGOonmcav 
lODflBtalM 
12 6%DBkQl 

^ ft 



Dtfrti 
DOLE 

3 Do Sato 114 
33% 25% DonfWl 0X8 
‘ 31%DtaM> 0X0 
7% to tax 180 
61% ton 220 

T% % DMVMRl 

IftOatafl. 1X4 



2ft 2ft 
1ft H% 1 
21 % 2 


0X0 
040 

rw»Mi 748 

101 82M0745X746 

102 K% 08907X0x7X8 
80% 24% PifeGd X 108 

aTftimarQpx 188 
a4%17%Dtoaftta 140 
2419%DUM 160 

30 23%Dtamonf£h 056 
14 % 5%DtaCap 
48% 34DttoM 188 
3ft 10% Ota 

112 
130 
040 
2X8 
025 
0X8 
164 
1X4 
2X0 
0X4 
048 
x 1.78 

Etftp70p 

182 
188 

7%0rfpaFiSSx 188 
8%MmSl0x OLBT 
&% to 81 MX 173 
SBDoFonMX 4X0 
DttBPk 1X8 

Dtato 1X8 
64 51% DOOM 2X0 
48% Defalt 1X8 
23DnqjL4t1 x 2X5 
27% 2l%0taC78z 1X8 
29% 21%DutaX0x 2X0 
S 24% DUfi. 42 x 2.10 
2B 2% DuqalM.15 x 2X6 
100 63% Do*. 7,2 X 720 
47% 38Dimfl 188 

11 % 8mwisv 
21 130yvataa 020 



U 9 4311 
0 38 
13 ii ao 
04 4 1723 
4.1 16 255 
18 141352 
92 ZTOO 
87 2 

7.7 9 
4X T3 

1.7 S 700 
27T4 20B 
24 12T5T1 

7 75 
2X201044 
2 5130 
14121981 
17 21 8207 
1.7» 989 
7X 71 3133 

17 H 12Q 
12 17 ia 
22 172216 
2X16 1397 

18 a 7229 

2J 18 3330 
82 10 44 

6X TO 493 

a 1480 

10 5 70 
SX 9 4115 
7X 464 

ai 42 
BX 323 
74 6 

5X 1810202 
7X11 387 
49 20 3094 
34 1610514 
IX 230 
12 10 
BJ 5 
18 2100 
OLD no 
17 2100 

ZX a 1072 
23 108 

11 14 49 



22 $ 22 $ 



SZ$ S3 +$ 
S$ 54$ 54$ *$ 
23 dZ3 23 
23 22$ 23 

23 23 23 +1% 

24$ d24$ 24$ -1$ 
23 23 23 

83*2 083$ 83$ 

44$ 44 44$ 4$ 

10$ 10$ 10$ 

1B$ 18$ 18% -$ 



46$ 

27$ 21‘ 

27$ 22$EUp 

S BMOIX 

Boon 

62$ 43$EaSn 
35$ 

23$ 1< 

6txn Bn 



020 1J 17 55 

056 
120 
754 
140 
1JBO 
120 
120 
078 
0.44 
124 
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aw 

»$ 

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S 1$ 

24 12% BflSCop 0L52 
7Bmg Gmy ai2 
»$BanB U2 

7$ 5$En*x0475 a<7 
20$ 16$ Eon* Da 128 
16 B$EnferBai 
40$ EndnaADR (L65 
1B$Bam«0t 1.12 
31$ l2$EngMx 048 
16$ 11$ Ends Bon 05B 
455378$ EmallXSx 1822 
34$23%Bnn 080 

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2ft ift WybUbors 
24 1ft Mob W 


16 621 1ft 1ft 
102 70 11 147 2ft 27 
254 ISM 1ft 14' 
102 30 11 1870 Sft 
» MB 10 22 « 12 1ft 

9 420 4% ft 
OJS 10 18 2642 4ft 41% 
074 2.7 12 727 28 Zft 

0.17 00 2JWW5 2ft 2ft 
004 10112 275 ft «B>* 
2M 3? W 1670 7ft Tft 
LOO 70 6 017 1ft 1ft 
£02 OS 11 IM 3ft 3ft 
108 50 8 187 Iftdfft 
420 1017 7Z7 2403,22ft 
048 1.8 13 315 311. 3ft 
i am 7.i 3 to ft nip 
020 12 12 335 1ft 1ft 
Z0B BL5 21 Z7B 35 3ft 
064 70 12 802 ft ft 
078 11 14 01 2ft Zft 

-023 22 13 314 1ft 1ft 
024 08 21 1080 2ft 2ft 
400 £7 10 38514712 148 

004 1.7 18 3028 ift 1ft 
048 10 16 ZB 2ft 2ft 

am els ii iBZS ift ift 

22 341 3ft 38 
9 1550 1ft ift 
71445 1ft 
020 I .OtGO 273 1ft 
023 1.1137 10 22 

108 00 10 838 2ft 
020 1J 168464 ift 
032 04 0 ISO 8 
16 

058 34 5 27 Ift 1ft 

1.10 £0S4 15n 3ft 37% 
100 32 157420 38 

010 07 15 1574 14>2 
102 05 11 4108 
21 33 

034 £1 IB 1103 16% 18% 
17 2S 1ft 1ft 
100 08 12 218 27% Zft 
018 10 15 312 ft 8 
004 3.4 12 8396 Zft 24 
006 00 13 2 8% ft 

020 £4 71242 ft 3 
108 30 17 178 W% 51% 
010 10 14 1738 1ft ft 
1.41 50 16 1288 a Zft 
1.82 80 11 111 27% 27% 
040 £0 44 173 1A 13% 
1.12 4 0 251144 25%dZI% 
0100 £3 1620001 2ft 25% 
016 07 IS 238 22% 21% 
080 42 20 3217 14% 14 

010 07 29 14 13% 

02 118 ft 6% 
058 10 34 680 47% 48% 
028 10 18 198 1ft 17% 
044 £0 11 25 22% 21% 



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14BB7B 14% 13% 14% 4% 

8 8GB 16% 15% 1ft +% 

32 37 aft »% a 

17SZ38 22% ?1% Z2£ +% 
302115 41% 4ft 41% ft 
S 632 9 OB 8% •% 

010 18 IM 38% 35% 36% -% 
020 34 GG63 33% 32% 33% +1 

10 151 12% 12% 12% •% 
141 38 4% 4% 4% 

8 BSS 4% 4£ *A 
23M57 17% 15% ift -1% 
027 10 430 2ft » 28% -ft 
13 200 16% 15% 1ft ft 


C 

Mr logic 
Ads PUgn 
Atwrcum 
Adwnta 
Mljnat 

%**& O10 a 825 11% 10% 10R 




Mtxpr 

AknAOR 


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AHC00X 

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101 14 337 55 54% 54% ft 

008 132130 22dZ1% 22 ft 

11 1fl% 10% 10% 

a 3ft s aft 

913 6% B 8% ft 

143 14% 13% 13% -% 

183 12%dI2% 12% ft 
IS £% Z 2% ft 
AfaGdd Om 9 968 1% 1% 1^ ft 
Atm CD 33781 40 9 38% ft 

DiMb 022 B1302 24^* 23% 24% ft 
AmOltoy 016 351474 ift 12% 1ft ft 
Away Bp » 81001115% 15% 16% ft 

Am Una 18 723 16% 15% 18% ft 

AaiUadB 11 449 6% 5% 5% +% 

AuBt&m OS 611M8 ft dft 2% ft 
Anfttwj* 23 5755 19% 18 % 19% ft 

Anfirtt QSB 1430477 29 27 Z7 1 . -1% 

taW 21345 Ii Ii li -TO 

AmMAl 238 8 88 47% 48% 47% +1 

AmPMCtm 2Z13B47 1ft 15% 18% +% 
An TMs 101084 15% 14% 15% +% 
024 13 232 21% 20% 21 ft 

19 7458 55% 55 SS% ft 

MgMTOaOB 121862 ft ft 9% ft 
6 22 
15 7 

052 18 236 
10017 127 


DMQDMP 

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OHTedi 

OMB 
DtfM 
Dq Men 
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DNAPb* 

Mbtn 


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000 12 157 25%<Q«% 25% +% 
044 Tl 87 1ft 15S 16% +% 
15SB9B7 9% 37% 38% -1% 
030 a 714 29 TO% 28>i 

1.12 7 83 O 28% a 
020 S 52 ft 7% 8% ft 
16 142 23 22 23 ft 

020 18 19 21% 20% 21 -% 

14 103 17 16% 17 ft 

471 17% 1ft 16% ft 

888 2% 2% 2A 

773035 12% 11% 1l£ ft 
16 TO 37% 36% 37% 

020 33 450 7% ft 7% ft 

ZU ft SI ft 

30 29% 30 

12% If12 12% ft 

7% 6S ejj ^ 

ft ft «% ft 

B5 24% 24% 24% +% 

81 5% S 5% +% 

84 24 23% 23% -% 

192 17% 16% 1&SZ ft 


10 

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11 1456 29% a 29% ft 


Eagle RB 


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15 


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AsbmDr 


9 8 % 

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AnanmUoi 100 17 1Z7 15% IS 
AnfewiCp 281524 47% tft 47% +1% 
AackwAa 11 218 15% 15% 15% ft 
Apogee Ea 032 29 1101 ?5% 15 15% ft 

AW Bo 47 Z73 5% 5 ft ft 

APPUIM 1813322 44% 42 4Z% -1% 

APfMC 048 142D0B8 38% 3ft 37% ft 

1 005 27 818 1ft 14% 15% ft 

0 30 22 280 20% 1ft 2ft 

019 16 150 1ft 1ft 19% 

1.16 8 TO 28% 27% 27% 

064 17 195 20% 19% 19% 

044 15 717 1ft 018 18% ft 

19 MO 31% 30% 31 ft 

SOS 3820 X 24% 24% 

101 5510 1ft 15 1ft 
5 Z74 1ft 9% 9% 

032 82646 13% 13 13% 

024 a 7351 X 38% 37% 

9 15 2% 2% 2% 

002241 950 7% ft 7% 


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1 210 2% 2% 2% 

4 10 1 1 1 

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1791B88 10% 10% 10% 

0 925 Ii S I* 

161963 3% 20% 20% ft 

am 49 3 4ft 49 49 ft 

1913009 19% 18% 19 

18 434 4% 83% 4 

11% 1ft 11% 

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14% 72alfi 
27% 20%Znmftaft 
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16% 11%2md 
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13% lD%2nabAad 


014 3.7 12 129 
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O8813L0 
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20% 21 
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AMEX COMPOSITE PRICES 


4pm ctosa December 15 




T 5 V 


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Db. E 1808 

1 103 84 

ttltac 5 16 

AtaU 4 741 

talffh 18519 5 

teta 4x068 13 89 
Mill 0051441387 
tataqi • 21564 
tatoft 18 206 
Asnittvx 01018 198 
MU * 80 54 

AM t 342 

JtaCMfi 0 45 
MOftA 2 141 

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20 S3 
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10 87 
036 9 94 
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Gated RA 
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CnnaaCA 040 7 
Crown CB 040 ID 
Gtalc 053 31 


t£4 27 252 14 
11 1 


ta&xndx 


10 106 



DIMS 11 

[female 2S 

Dmmrun fl 

Dupfex 0.48 7 


Cb 048 11 _ „ 

■% 

032 8 53 9% 9% 9% 

tt « 5% «% 8% ft 

fl« 680 33% 33% 33% ft 
181458 12% 11% 12% ft 
13 153 20% »% 20% ft 


4 13% 13% 13% 
Ed* Bey* OH? 74 3023 10% 


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25 25% ft 
11 10% 11 +% 

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014 a 34 

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8 B2 3% 3% 3S 

9 156 3ft 29% »% 

094 TO 236 16% 16% 18% ft 
OBI 31 43 4$ 4$ 

OX a 2 17% 17% 17% 


nutadex 064 12 18 30% 30% x% ft 
nuA 400 19 8 87% 67% 5ft 

fwoganc ozd szioo io% 10 % 10 % 

FMbU 058 21 104 30% 29% 30% 

Forest La M 424 47 48% 47 , 

Fnmm 3 « 3a 3% 3% ft 

6m 000 B 42 1ft 15% 1ft 
Sent HA 072 142MB 21% 21% 21- .. 

8HM 078 80 304 15% 15% 16% ft 

&*JMd 1 TO 

&wn 10 21 

GutfCtfB 034 6 484 

Vtanttr 


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UtaL E into Mb* 

Hasbro 028 U1541 

HesISlGi 18 53 

MlCftfli 0 460 

Hefra 015 20 174 

Hmrfnik 11 7BB 5^4 



tastronCpx 012 18 72 
M.Cans 3 886 
ta tamapt 121 197 
Iw 006 161247 


21455 
10 44 
28 177 
31 251 


XtaafcCp 

KWv&p 

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11*2 H 1 ! 11b +b 

3% 3^ 3$ 

13*2 13 133* 4J 

in isb i6V *h 

4b d3H 4b +b 

3 b 7b 3b 
17b 1« 17b *b 
7b 7 7b +b 


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PffGm 
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IM 97 
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HMLd 23 

KtaogA 42 217 ^ „ _ __ .. 

iCHBid so 86 mb i£ ib 




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18 54 
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024 193572 
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55 55 55 +b 
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SMTOop 

ShBUta 


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Ttetabx 


Tbonnolas 

TW 

TteCntay 

Trta 

Tuta llox 

TUnvM 

Twnm 


itataPMs 
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18 2100 
31 83 

2.18 9 fl 
40 29 
3 996 

020 14 178 
036 49 507 

44 282 
25 40 

020 12 171 
2 2944 
1 210 
6 236 
007158 889 
Qjmvn 425 

5 21 
02045 25 

45 28 
m 138 

122 958 
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9b 0b 
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38b 3 “ 

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32 32 32 , 

7^ 7b 7b “b 



33b 33b 33b +b 
17b 17b +b 
♦b 


’14 ’S ’£ 


U2 12 27B 

am 0 215 


8% 8% ft ft 

43% C% 42% 

13% 12% 13% ft 
' 30% ft 
12% 11 % 12 
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1% 1% 1% 

5 4 % 4 % -% 

16% 15% 15% ft 
18 15% 16 ft 

ft 2% 2% , 

bS ^ +4 

30 30b *b 

40b 41b 
40 40 +b 
9b 10b , 
I 2 diib 12 +b 
26b 255 26 -b 


BateHwt 

Mai 
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Bo d antt 


BEL Bx 006 19 115 5 d5 5 

46 301 13b 12b 12b -1b 
1900 £dO02 002 

006 8 934 15bfi5b 15b 
024 4 8 15b 15b 15b +b 

13 875 21b 20b 21b 
BnfcSad&x 052 92287 17b 16% 17b +b 

048 B 663 13b 12b 19b *^1 
060 12 105 24b 23b 24b 
056 Y2 29Q3 27b & 27& -fr 
080 16 127 29b 2 9 29 -b 
165 18b 18b IBb -b 
395 52b 52b 52b 
603 26b 25b 26b +b 
583 7b d7 7b “A 
165 13b 13b 13b -£1 
115 12b 11b 12 b 
BatfeittR *044 20 155 34b 34 34 -b 
012 16 47B 12b 12b <2b +>• 
39 314 4% 4b <b -b 
214 13b 12b 19b -ib 
555 13b 13 13A fti 

0813965 37 35 35b 

205E3u12b 12 b 12% +b 
1iH 13 348 32b 31b 32-^8 
199920 49b «b « +b 
136 6 2326 27b 27 27 4% 
029 16 371 20% 20b 20b *& 
23 119 26b Mb 25b 
81871 BbtfSb fib +b 
QJE 5 210 26b 25 26b 
396331 13b 17b 19b +b 
080 18 13 48b <7 46b 
024 19 62 11b 11b 11% +b 
029 151681 3b Bb 9b -b 
036 9 31 28b 27b 2Bb +A 4 
048 2 175 2b 2£ 2b 
112814 9b 9b 9b -b 

14 171 11b 10b 10b 
20 120 13b 19b 13b 
14 124 33b 32b 33b fib 

040 7 


BqrVta 

Baytaria 

BBSTRn 

BE tan 

BaffMta 

Bon&Jsny 


BHA top 

»bx 

8MB 

BMerW 

toapai 


090 10 
IJO 10 
1.16 8 
27 
042 16 
21 


018 15 
008 13 


RfkM 
HUM 
HOyCW 
Route A 


Rad Am 


FsxSeay 

fMlanx 


tax 

nifitmiss 


Ttaht 

RtOdLA 

FadS 


Aft Rn 
FMFUx 
Fst HbkhJ 
Ala IB 
Adaffta 
Rim 

AdmaMOB 


51 

25 4 

97 15 
1 1098 
OTO 17 124 
046 294724 55b **b 
99 1056 7b 7 7 

33 189 13 12b 13 

14 537Q 2D 19b 19b 

7 533 5b 5b 5b +b 

15 294 16U 16 15b +b 

010 19 154 2D 19b 20 

822G7Z 12% 11% 12% +1% 


- F- 

11 873 5 t% 4% ■*% 

tL2* 38 45 6 % 8 % 6 % 

OW « 487 40% 40% 40% ft 
152738 27% 27A 27% ft 
10* IS BX 40% 47% 48 ft 

121114 3% 3% 3% ft 
5% 5% 5% ft 
25 23*2 S.1% 

Z7% 27 Z7% +% 

24% 23% 24% ft 
21 20% 20% ft 
24 73 23% ft 

41 40% 41 ft 

19 18% 18% 

123 31% 31 31% ft 

24 8 % 0% 8 % 

20% 20 20% 

*% ft ft ft 

5% dS 5% ft 
SAflft 5% ft 
99 33% 32% 33% ft 
20 12% 11% 12% 

201 3% 3% 3% 

527 31% 30% 31% ft 
138 14413% 13% ft 

995 24% 424 24% ft 


-K- 

OTO 8 1! 20% 19% 19% ft 
044 12 42 10% 9% 10% ft 
22TOB 4% 4% ft ft 
072 18 644 X 37% 76 ft 

an 3i im ft ds% 5 % ft 

QS4 14 ia 24 23% 23 % ft 

KLA ta* X 7438 51% X 50% +1% 

MIA 14228 ft % » +,*, 

Xonagtac 431453 25% 24g 3% ft 

KufekeS 161443 21% 20% 20% 


- L - 

Latxne 072 x a iftni 4 % 14% 
leddFten 0(2 24 2669 ft 6 ft ft 
LanRsdi 223129 41% 40% 40% +% 
unasferx 056 14 212 30% 28% 30*4 ft 
lAPCPIE 096 19 300 16% 17% 18>z 
LaDdrakCpP 460 392 ift 10 18i Wt 

LanDptfcs 13 23 6 5% 6 ft 

4% 3% 4 

17% 1ft 17% *fi 
25% S 25% 

19% 18% 18% ft 
4% 4 4% 

17 15% 15% 1% 

ft 
ft 
ft 


UBS 

LDlCp 


LcgnACp 

UtoTcdix 

UMoe 

Ujtatti 

LtaBr 

UncebT 

IMmW 

Itwarlae 


14 1032 
048 10 34 

1912392 
018 1 47 

144 22X 
201708 
OX 14 12 

15 371 
028 13 

127 
056 IB 
1* 


505 


X 29% X 
17% 10% 17% 

5% 5% 5% 

12 % 12 12 % 
324142% 141142% +% 

7W 1ft 15% 16% 

X 30% X 30% ft 
oa axis 43% 4ft 46% ft 
040 15 34 34 33*4 34 *1 

LaewiiGto am a 193 24% 23% 34% +,*. 

ImSM 13 3a 7 5% 7 

LOUD 400 7804 42 4 049 40% ■% 

LTXCp 3 23S * 3% 3% ft 

LAW 045 22 7 32% 32% 32% ft 


MCI CM 
US Cart 


03* 0 977 
20 1 05B 
100 7 511 
100 11 521 
080 17 209 
LM 91237 
108 9 452 
05B B 
104 ID 

a 

22 1380 
TO ITO 
000 144003 
000 912211 
100 12 
TO 
11 

UM 11 
0*0 7 
1.18 10 
05B17 
008 11 
DM 16 
13 


223 

68 

60 

X 


x a a 

IB 17% 10 

20% 19% 1B% 

2 % 2 % 2 % 


-1 

ft 


Blurt Org 
BMC Srtw 
BCB gMB a 
Bob Em 
Boota&B 


Tc 

BmftttA 
Brora x 
BvtttS 
BSBtocp 
BTSdpog 


BtetaT 
Bur Bran 


Buaoiffp 


14 33b 33 33b 


-c- 

Clec 4 78 20% 

CaMMed 6 778 4% 

CMSctnpg 100 13 X 25% 


a 20% -vi 

4% 4% ft 

da a ft 


CM&naCMBOa 19 34 16% 15% 18 % ft 


502177 17% 18% 16% 

£25 41809 7 6% 7ft 

24 1039 31% 30% 31% ft 
13 X 1% d1% 1% 
01372 IQ dt% 1% -ii 
053 71 X 85% 86% 85% +1% 
X 107 5% 5% 5% 
om 19 3 28% 28% 26% ft 

080 14 2 23% 23% 23% 

Casey S am 172007 14% 13% 14% ft 


Caere cp 

ftrtnnaa 

CM Mere 
CendriaL 
Gita 
Cant tec 


CtenCBi 


GlApp 

SAKServ 


eonMFta 

Grit Co 

GBdBtad 

tata 

GonfeaPh 

tainCfe 


33 

UP 20 
4 
ID 

DIB 9 
CM2 T7 
8 

11455 
<00 23 549 


- G - 

94 
182 


80 

32 

14 

481 


-b 

-b 


+b 

*b 


69KHA 
Uite 13 

GBodGte 11 

OxttPmp ODD 21 
81 

020 12 
024 13 


GmdWtr 

fin cap 
Gmrs«u 


2 ib 2 +b 
16 15b 16 fb 

ia 1 % i% 

3b »b 8b 
Bb 6b 6b 
IBb 16 18b 
3b d&b 3b 
4b 4b 4b 
21b 21b 21b 
tfb 6b 7b 
37 4794 27b 28b 27b +b 
040 14 616 14b 16b 14b -^b 
ai 2 is 1406 ubmsb 14 b +b 
080 8 102 13bfi2b 13b +b 
T2B fib fib 6b -b 

872 12 lib rib -b 

444 2Tb 20b 20% •& 

111 3b 3b 3b -b 

191 2Db 19b 20b , 

13 19b 18b 19b +b 

571001 2b 2h 2 4 -i 

16 138 13b ^3 13b 

161131 13b 12 19b 

24 354 8b 8b 6b 


1J8 14 
15 

are ii 

24 
102 
13 
ID 
2 
11 

IMtafcA044 10 
080 19 


641 


ltd Bat 
MneraCp 
Or 
Cp 


005 1388055 lB%d17% 17% ft 
18 1040 21% »% 20% 

oto a a 12 % i 2 }! i 2 J! -it 

18 32% 31% 32% 

37% 37% 37% 

18% 18% 18% 

10% 9% 1D*z ft 
8 % 9% 9% -*4 

ft 2% 3% ft 
*1 

1% 

7% 

10 


427 

177 

602 

54 

X 

ED 

2 

66* 

594 


41 

1% 

7% 

10 


«% 

ft 

7% 

10 

19% 19% 19*2 +% 
2S 594 u9% 9 9 

Motor Int 43 San34% 33 33% ft 

MMcr Cp 02831 5*2 5% 5% 
UcenOiR 044 10 152 171674 17 

UcCenrec 048 14 2478 19% 18% 19% ft 
016 13 388 14% 13% 14% ft 
056 12 277 23% 23% 23% ft 
024 73 TO 11 10% 10% 
Mentor CP 016 14 83 17 16% 17 ft 

HUG 0» 386700 13% 13% 13il ft 

MenanLB OTO 10 460 19% 18% 18% ft 

MneySiOTtll 3Z7 36% a a ft 

128 9 688 26% 25% 28% 

6 4878 7% 6% 7% +3 

Meta* A 0.12 15 305 14% 14 14% 

UfS On 21 1300 34% 33% 33% -% 

F 020 20 448 10 8% ID ft 

200 5 288 76% TO 76% ft 

HcraHKB 8 143 3% 3% 3% ft 

8 1494 10% 10% 10% 
614904010% 9% 10% ft 
« 680 8 5% 6ft 

34ia 0% 8% 9% ft 

3117883 64% 63 63% ft 

MdAdM 24 8 » 27% 20 

an 5 1G8B 25% 25% 25% ft 

OTO 14 13 28% TO 28% ft 

H 052 15 880 25% 24% 25% +1% 

622 20% 26% 27 ft 

1*0*01 15 41 14 13% 14 ft 

NtteTti 72 44X 18% 17% 1S% ft 

Mo&m Q) 020 19 60 7% 6% 7 

MtdoeUr OS 15 150 27% 27 aft 

IMkA 003 2325 32 23% M% +1% 

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WunM 42 284 5% 5% 5% ft 
WferttodSL OB4 7 1083 17% 17% 17% ft 
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W« One OTO 91587 25% K% 25% ft 
Wam one OTO 10 47 X% 30% 30% 
WriPto o tea ii 10 % *o% ft 
WtoSn 2 378 13% 18% 13% ft 
ttriSeaM 17 X 5 4% 4% ft 
dtanm 096 18 870 45% 44% 44% ft 
Wn£toan 42 2883 29% 20% 29% -£ 
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10 7 S3 34*2*03% 34% 




’ f 


40 




WORLD STOCK MARKETS 


AMERICA 


FINANCIAL TIMES 


Friday December 16 1994 




EUROPE 




Rates outlook Siemens boosts Dax ahead of triple-witching 

— 1 T\ - Some bourses were thankful rewards, the shares rising' a resnonse to the company 8 

I IllW U m ■ for the overnight rise in the farther DM1&80 to DM447 for a 

AJRV'A Dow, unites Our Markets Staff, threoday gain of 5.8 per cent dTZ~r>y«M* ont«u» lOPTanfl ftaeoraca 

X But at the end of the European PARIS managed a slight rise o«:is the bwopban seres supportedbya Gnat ansss ^L^ fortlJfi s 

1 • ~a • day, they seemed uuwlOfag to in a session characterised by Qgg» hub tub taw ram wn ism obm buy recommaMiaajwL op-Ato rise over the next 

If# move on the prospect that Wall mixed trading. The CAC-40 ft-se amta* too naue «»» issm issue tanas ism? rana ra»» _SMH rose MADRID down 

I II I I 1 1 1 1111 Street could rise for the second index added 1.08 to L93L10 in ■ isiwe nw 0 out rsn*r tans a xskm 137 m 1372 m with the announcemeat t&M n , <lt 

K/UUU VPE.R ^WAUVJ dviDOTcceBim. tunMiwafawadTOlm. ma tmu JTT expected a low er lW pHint 


US shares added to yesterday's 
gains on speculation that the 
Federal Reserve would not 
raise interest rates next week, 
writes Lisa Bramten in New 
York. 

By 1 pm, the Dow Jones 
Industrial Average was up 
17.83 at 3,764.12. The more 
broadly based Standard & 
Poor's 500 gained 0.76 at 455.73, 
the American Stock Exchange 
composite rose 1.15 to 424.22 
and the Nasdaq composite 
grew 3.49 to 729.16. Trading 
volume On the NYSE came to 
192m shares. 

A survey by the Federal 

NYSE v olum e 

■ 

Da9y (milSon) 

400 ' ** - — * nr ■ nn *- nnn - Mlnn - — ■- -nn«r_* ir-LT«_a 


vcftmtstt 

260,100000 


350 -h 



stock indices in the last hour 
of trading: 

Morgan Stanley shares fell 
?% at $60% after the invest- 
ment bank announced that 
merger talks with SG Warburg 
Group had been terminated. 

Shares in JF Morgan added 
to Wednesday's decline, drop- 
ping $% at $57%. The bank said 
on Wednesday that fourth 
quarter earnings would not be 
as high as those of the third 
quarter because of declining 
trading revenues, and yester- 
day an analyst at Goldman 
Sachs lowered Ms rating of the 
commercial bank from “market 
performer” to “market under- 
performer". 

Sprint shares lost $3% at 
$27% after the company 
announced It expected fourth 
quarter income to be below 
that of the third quarter. 

General Mills added to gains 
made on Wednesday afternoon 
after the company announced 
it would spin off its restaurant 
division. In the wake of that 
announcement, analysts at two 
securities firms raised their 
ratings on the stock. Share 
prices jumped $1% at $57% yes- 
terday morning . 


Some bourses were thankful 
for the o ver nig ht rise in the 
Dow, writes Our Maritas Staff 
But at the end of the European 
day, they seemed unwilling to 
move on the prospect that Wall 
Street could rise tor the second 
day in snccessitML 

FRANKFURT waxed on Wan 
Street's overnight gains and on 
short-covering ahead of today's 
“triple-witching” expiry of DTB 
options and futures contracts. 
The Dax' Index rose 27.82 to 
2jOGZ59<m the session, with 16 
points of that due to post- 
bourse gains on Thursday. 

Turnover was fiat at DMSbn. 
Alter hours, toe Ibis-indicated 
Dax held its ground, dosing at 
2,05423. Mr Jens Wieddng, at 
Merck Finch In DOsseldoif, 
said that 2,050 on the Dax was 
a crucial level for dealers 
ahead of the derivatives expiry; 
and that they had achieved 
this by bumping up toe price 
of a few index heavyweights, 
particularly that of Siemens 
which ended the afternoon 
with a gain of DM18.50 at 
DM624.50. The electrical 
group's results and prospects, 
laid out yesterday, were in line 
with expectations. 

Meanwhile, a better than 
expected report foam Degussa 
last Tuesday earned more 

ASIA PACIFIC 


rewards, the shares rising a 
farther DM3&80 to DM447 for a 
toreeday gain of 52 per cent 

PARIS managed a slight rise 
in a session characterised by 
mixed trading. The CAC-40 
index added 1.06 to 123L10 in 
turnover of around FFrsba. 

Following strength during 
the early part of toe day, weak- 
ness in toe bond market later 
reversed the tread. 

Peugeot lost FFr6 to FFr747 

after armnunring that second 

half results would be more or 
less in line with earnings dur- 
ing the first six months of the 
year. Renault eased 50 cen- 
times to FFr17920 as it can- 
finned that it was to cut 1,735 
Jobs, while Michelin moved 
FFr2.40 ahead to FFrlSiM. 

Euro Disney rose another 15 
centimes to FFr9.75, as it built 
on Wednesday's gains which 
came after the theme park 
operator said that it was to cut 
admission prices. 

AMSTERDAM took In 
another steep tail in Fakker, 
off a farther 16 per cent as the 
shares slid to a close of 
FI 1030. Not even news that it 
had secured an order for toe 
sale of throe of its 70 series 
aircraft, to an Austrian opera- 
tor could brake the downturn. 

Investors have been 


Hmfr Abqb Opw IMP 1100 OjO IMP KUO IMP Om 

FT-5E Bmfcack TOO T3MJ5 1325.19 1325J4 13ZUS 152535 1327.17 132559 132574 

FT-SE ants* 200 137X48 13742D 137438 137447 137458 137503 137X20 137X8 


mu me 13 Quit Qwo «n 

FT-SE Gsotradc 100 131522 1S&30 130X12 T3Z1J8 1UXBQ 

FT-SE ants* 200 . T36SJ54 139SS0 135X35 1367.17 135435 

miON einoMfc mm im - inus an ■ umn MW m - iwua *» - 137UB i mh 


unnerved by the announce- 
meat foam the air craft maker, 
in which Dasa of Gamany has 
a majority stake, that it would 
be unable to make progress on 
cutting its losses this year, 
partly as a. result of its expo- 
sure to the weak dollar. White 
FokkeFs costs are incurred in 
gufldars, toe a ircraft are sold 
in dollars. 

The AEZ index aided 0 JX) to 
407.69, down from a session 
high of 409.221. 

Unilever closed with a strong 
rise of FI 2.10 to FI 199 .30, 
helped by a broker's buy 
recommendation, while KPN 
remained actively traded, put- 
ting on a further FI 1.10 to 
F156.7D. 

ZURICH held an to most of 
its early gains, as fears of 
US inflation subsided after 
Wednesday's economic data. 
The SMI index finished 16.6 


stronger at 2£9&0. 


response to the company’s 
higher net profits and dm- 
«tand The share was further 
supported by a Credit Suisse 
buy recommendation. 

SMH rose SFrtO to SFrfilS 
with the announcement that it 
expected a lower 1994 profit 
coming as little surprise. 

MOAN moved ahead on bar- 
gain hunting fuelled by same 
foreign demand. The Comit 
index rose &92 or 1.5 per cent 


FurCbsr strength in phar- to 591-83* many investors 

maoeutical sector led &e mar-’ apparently ha^faf J“5 
ket higher. Roche certificates counted the early departure or 
added SFr80 to SFr6,08Q and Mr Silvio Berlusconi, the prime 

CEba, winch reiterated Its fore- minister, 
cast of a slight increase in Bargain bunting Imed iMue 
operating profits for m rose " chips, ‘ Telecom - Italia risUg 
SFrt to SFr772. LI® or 4.7 per cent to LS^E 

CS Holding eased SFT4 to and Fiat picking up L166 to 
SFrS29 on selling sparked by a L5.498, recouping all of 
newspaper report feat Orange Wednesday’s Eafl. . 

County, California planned to Credito Romagnolo added 
fQe a suit against its CS First L536 to L1S.347 as investors 
Boston sub sidiar y awaited news foam Cariplo on 

Swiss Re was SFrlO higher at whether it would launch a bid 
SFTT89 as investors awaited a to rival Credito Z taliano’s offer, 
press cooforcnce, after the Italiano picked up LSI to 

market dosed, at which the L1.62L 
insurer and CS Holding Cartiers Burgo jumped L275 
armrtnpnari a strategic alliance to U.0,118 as It received 
to develop financial derivatives another rec o mmend a tion , tins 
on r fi ’ i ffliP 111 ** products. time from Mr Nicho l as Potter 

Landis & Gyr extended at Credito Italiano Interna- 
Wednesday’s advance rising tional. With reduced energy 
SFr35 to SFr795, in a farther costs, more modem plant and 


an improving paper Brice. Mr 
Potter expected toe company 
to hit peak margins eastty fa 
1987 aid he forecast significant 

potential for the share price to 
rise ever the next two years. 

MADRID, down for its sixth 
trading day in succession, 
traded in line with a fflefawort 
Benson prediction that short 
term bond market weakness 
could push equities lower. ™ 

another L91 

to 297.43. - 

However, Ms Clare Miles of 
KB was still looking tor a 
medium term recovery, saying 
that bond market stability ami 
a recovery in consumer confi- 
dence, as well as stronger eco- 
nomic growth could take the 
index up to «5 by the end of 
next year. 

HELSINKI was lifted by the 
forestry and engineering 
group, Repola, and the tele- 
coms-based Nokia. The Hex 
index closed 13.0 ahead at 
1,318.6, Repola putting on 
FM&90 at FM&L90 on its plans 
to list its engineering subsid- 
iary, Rauma. Nokia rose FMB 
to FM680 following overnight 
gain* on Wall Street. 

Written and adttad by Wffitem 
OodniNi John PKt and Mchaal 
Morgan 



Ks w 

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i ir-flV 11 


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pv> r*r «• 


Contrasts in Chinese stocks as Nikkei tops 19,000 



2 SB 7 6 9 12 13 14 15 


Reserve Bank of Philadelphia 
showed December business 
activity declining to 2£L9 per 
cent it was the second month 
that the index, derived from a 
survey of businesses^ showed a 
drop in business activity. 

That news, combined with 
low inflation figures released 
on Wednesday, was enough to 
persuade the market that the 
Fed would not raise interest 
rates again at the December 20 
meeting of its open market 
committee. 

In addition to the change in 
sentiment, share prices were 
pushed up by technical trading 
and program buying in 
advance of tomorrow’s expira- 
tion of options and futures on 


Toronto stocks moved farther 
ahead fa active midday trading 
and dealers the underly- 
ing tonewas positive. 

The TSE 300 composite index 
climbed 25.31 to 4,104.16 in 
brisk trade oT C$30£lm. 

Industrial products were sent 
higher by advances in recently 
neglected high techulogy com- 
panies. Newbridge Networks 
appreciated C$l% to C$45% and 
Delrina moved up C$l% to 
C$20%. 

Brazil 

Shares in Sao Paulo were off 
2$ per cent m nervous midday 
trade ahead of the options mar- 
ket settlement an December 19. 

The Bovespa index dipped 
1,428 to 48JJ41 at 1pm fa tum- 
orcr of R$228Jm <$268d4m). 


Golds weaken in S Africa 


Johannesburg was mixed, with 
gold shares, which had earlier 
been in positive territory, 
turning back late: in the day 
to close with a loss of 60.3 
at 1,831.6. Brokers attributed 
the change in sentiment to 
technical trading related to 
options expiry. 

The overall index moved 


ahead 29.3 to 5,666.6 and 
industrials 73£ to 6J127.3. 

Dealers said the market did 
not respond to a stronger 
financial rand, which 
increases the pries foreign 
investors pay for domestic 
shares. Among golds, Dries 
fell R3 or &2 per cent to R55 
and Kloof RIJS to R54.75. 


Tokyo 

Stocks moved up in active 
trading as institutional players 
returned to the buy side, writes 
Robert Paxton in Tokyo. 

The Nikkei 225 average 
gained 189.63 at 1942UL2, its 
first close above 19,000 in a 
week. It ranged from a low of 
18,964.19 to a high of 19,177.54, 
profit-takers cutting hack some 
of the rise near the close 

Volume increased from 
219.4m to an estimated 269m 
shares. The Topfx index of all 
first section stocks advanced 
10.75 to L508.79 and the capital- 
weighted Nikkei 300 added 239 
at 279.06, while rises led fells 
by 694 to 275, with 198 issues 
unchanged. In London the ISE/ 
Nikkei 50 index put on 3.45 at 
U6L60. 

Futures-linked transactions 
were once again a factor in 
early trading; when overnight 
gains in Chicago futures 
prompted arbitrageurs to pur- 
chase Tokyo shares. Heavy 
buying by domestic financial 
institutions through Daiwu 
Securities and Goldman Sachs 
also pushed up prices in the 
morning. 

Life insurance companies 
continued to buy shares 
through domestic brokerage 
houses. Their ta r gets included 


Mitsui Marine and Fixe Insur- 
ance, up Y15 at Y742, and trad- 
ing house Marubeni, ahead Y5 
at Y530. Other trading compa- 
nies also advanced, Sumitomo 
adding Y15 at YUJ10 and Mit- 
subishi Y20 at Yl^OO. 

Boosted by a business daily 
report projecting a 32 per cent 
year-on-year increase in consol- 
idated pre-tax profits, automo- 
tive electronics parts maker 
Nlppoudenso firmed Yio to 
Y2.060. It is a major supplier to 
Toyota, Y1Q higher at Y2.070. 

Most other auto makers 
strengthened. Nissan moved 
up Y5 to Y810 in the day’s 
sixth highest volume of 3-Sm 
shares. Honda gained Y20 at 
Y1.710, but Suzuki Motor was 
Off Y10 at Y2.U0. 

Privatised stocks were 
mixed. Japan Tobacco rose for 
the second straight day, adding 
Y7.000 at Y914.0CW. Nippon 
Telegraph and Telephone 
gained Y7.000 at Y848.000, but 
East Japan Railway slipped 
Y2,000 to 7467,000. 

Steelmakers advanced on 
active buying by investment 
trust ftrnd managers. Nippon 
Steel, the day's volume leader, 
climbed Y6 to 7363, Sumitomo 
Metal Industries Y7 to Y315, 
Kawasaki Steel Y8 to Y405 and 
NEK 74 to 7268. 

Shipbuilders also firmed. 
Hitachi Zosen was up 77 at 


FT- Actuaries World Indices 


At its last quarterly meeting, 
the FT-Actuaries World bids 
Policy Committee confirmed 
the change in procedures, 
announced after the last quar- 
terly meeting in September 
1994, governing the six- 
monthly rebalancing of the FT- 
AWI Large and Medium-Small 
Cap Indices. The effect of the 
change will be that the next 
rebalancing and constituent 
changes to the Large and Medi- 
um-Small Cap Indices will take 
place on the new basis in 
March, effective April 3, 1995. 

The [oUowing constituent 
changes to the indices were 
agreed following full market 
reviews, to take effect on Janu- 
ary 2. 1995: 

Ireland. Additions: DCC 
(Industry Sub-sector 406); Baxio 
(591); IWP (406). Deletions: 
Jones Group (561). 


Japan. Additions: NTT - 58 
per cent weighting of listed 
shares (223); Japan Telecom 
(223); EDD - 20 per cent 
weighting (223); East Japan 
Railway (304); Sony Music 
Entertainment (461); Autobacs 
Seven (571); Eokusai Securities 
(121);. Rohm (551); Japan 
Tobacco (excluding govern- 
ment holding - 425); 77 Bank 
(112); Nichido Eire & Marine 
Ins (151); Yamaguchi Bank 
(112); New Japan Securities 
(121); Fukuyama Transport 
(304); Mabuchi Motor (571); 
AT&T Global Information 
Systems Japan (533); Shima 
Seikl Manfg (566); Heiwa (461): 
UNY (492); Dai to Trust Con- 
struction (614); Yakult Honsha 
(451); Hankyu Dept Stores 
(491); Hitachi Chemical (621); 
Best Denki (534); York-Beni- 
maru (493); Shimachu (492); 


' Sato Kogyo (613); Terumo (433); 
Toyota Tsusho (671); Kissei 
Pharmaceutical (433). Dele- 
tions: Nippon Shinyaku (433); 
Ando (613); Fuji Spinning (412); 
Janome Sewing Machine (402); 
Dai Nippon Toryo (621); Ake- 
bono Brake Indukry (571); Jeol 
(571); Ikegami TsushinfcL (533); 
Nihon Parkeriztng (621); Kyodo 
Shiryo (454); Nippon Denko 
(633); Godo Shusei (422k Nip- 
pon Soda (621); Eyotaru (464). 
Sector changes: Hino Motors 
(573 to my, Hitachi Maxell (551 
to 461); Brother fads (402 to 
534); Minolta (463 to 534); Nis- 
san Diesel Motor (571 to 401). 

Sweden. Additions: SSAB 
Svenska Stal A & B Free (633); 
Ericsson A Free second line 
(533); Skandinaviska-En5kUda 
Banken A Free (112k Svenska 
Handelsbanken A & B Free 
(112); Mo och Damsjo A & B 


Free (652k Indus Lrivarden A & 
C Free 0-71); NCC A & B Free 
(613); Securitas B Free (4S1); 
Maricberg A Free (481). Dele- 
tion: Esselte A & B Free (534). 

The following routine quar- 
terly changes to c ur g enl FT- 
AWI constituents will also take 
effect an January 2, 1995: 

Addition: 3i (UK - 181). Sec- 
tor change: GenbeL (South 
Africa - 641 to 131). 

The FT-Actuaries World Indi- 
ces am jointly compiled by The 
Financial Times Limited, Gold- 
man Sachs & Co and Nat West 
Securities Limited in coryunc- 
tion with the Institute of Actu- 
aries and the Faculty of Actu- 
aries. All enquiries should be 
made to Symcm Bradford, Nat- 
West Securities Limited, on 
031-243-4258, or to Barbara 
Mueller, Goldman Sachs A Co, 
on 0101-212-9020777. 


Y532, Mitsubishi Heavy Indus- 
tries 79 at 7723 and Kawasaki 
Heavy Industries 75 at Y442. 

In Osaka, the OSE average 
moved up U2-S7 to 2035L46 fa 
volume of I4&5m shares. 

Roundup 

The region was very active 
yesterday. 

HONG KONG was lifted 3.2 
per cent as both domestic and 
foreign investors made selec- 
tive purchases of blue chips. 
The Hang Seng index rose 
262.21 to 8^59^56 fa turnover of 
HK$3.6bn, compared with 
HK$3£bn on Wednesday. 

Brokers said previously over- 
sold property and banking 
stocks were the most sought 
after. Swire P acific “A” led 
gainers, adding HK$2.60 or 5B 
per cent at HE$47.30. 

Wing Lung Bank forged 
ahead 4£ per cent to HK$53, 


China Light 5.9 per cent to 
HK833. 70 an d Wharf 6.6 per 
cent to HK$24J90. 

The H-share index of Chinese 
stocks listed fa Hong Kong was 
also pushed up, jumping 7332 
or 7.3 per cent to 1,077.13. Bro- 
kers attributed the gain to a 
technical rebound after being 
heavily oversold fa the past 
few days. 

SHANGHAI saw a contrast- 
ing performance between the A 
shares, available to domestic 
investors, and the B shares, 
which are traded by foreign 
institutions. While the B 
index closed L6 per cent down 
at a year's low of 59.898, the A 
index surged 7 per cent to 
689J561. 

Brokers put down weakness 
fa the B index to the disap- 
pointing performance of 
Shanghai New Asia Group, the 
hotel and restaurant concern 
which made its debut this 


week. It tel 7.42 per cent from 
an issue price of $6350. 

Analysts said the New Asia 
listing had come at a time 
when some foreign investors 
were repatriating funds follow- 
ing the recent round of rises fa 
US interest rates, and expecta- 
tions that the US Federal 
Reserve would lift tales again 
fa the short term. 

Regarding the interest fa 
domatic stocks. Credit Lyon- 
nais remar ked that thfa was a 
result of unconfirmed reports 
that the total share Issue quota 
in 1996 would be reduced from 
Rmb53bn to Rmh2hn. 

In Shenzhen, the A index 
gained KLS per cent at 152.43 
and the B Index feB 356 per 
ce nt to 89.90. 

SYDNEY closed sharply 
higher, boosted by Wall 
Staffs' strong overnight per- 
formance. The All Ordinaries 
index rose 3L2 or 1.7 per cent 


to 1,895.0 is turnover of 
A$472m. Gains were concen- 
trated fa industrials. 

The futures contract en d e d . 
at a 14 -point premium to the 
cash market, with a rally of 2JI" 
per cent. 

SINGAPORE rallied sharply 
on bargain bunting following 
recent losses. The Straitl 
Times Industrial index added 
66.23 or 3.13 per cent at. 
2,180.23. - 

KUALA LUMPUR built an 
Wednesday’s 4 par- cent- 
advance. The composite fate 
put on 13-62 or 1.45 per can* at 
.950.77, after fatting a high, of . . 
96432 in the mamfog. Profit- : ' 
taking fa the afternoon gener- 
ally pared rises. 

WELLINGTON gained., 
momentum In the afternoon, .. 
helped by a rise In forestry - 
stocks. The NZSE-40 capital 4 
index finned l(X5 to 2 JXML22 in 
turnover of NZ$54. 7m. 








- 


- J- 




■» - ■- -s 










. I *■' 







, ■ : * 


" " y 


This annoucement sq^ears as a matter of record only 

Banque Comiiierciale du Maroc, 
lead manager , 

Society Generate Marocaine de Banques, Wafabank 
A1 Wataniya, Royale Marocaine d’ Assurances, Mamda/Mcma, 

Lafarge Coppde, 

Cie Africaine d 9 Assurances, Samba Finance S A., Pictet & Cie, GP Banque, 
The Morocco Fund L.P., Quantum Emerging Growth Fund N.V., 
Framlington Maghreb Fund, The Africa Emerging Markets Fund, 

and other institutional investors, 


! i t. 


have acquired for 


US $ 189,700,000* 


-ACTUARIES WORLD INDICES 


Jointly emptied by The F ina ncial 
NATIONAL Am 


Timas Ltd-, Gukhiun, Sacha A Co. and N o t W oo t Securities Ltd. ki oontunction uridi the Instftuto of Actuaries and the FacdKy of Actuaries 


RgiaBS In p arenthe se s US 

mow number of Inea Dote 

of slock Index 


Australia (66) 168-Q2 

AuSKl (IQ 175,46 

BaigteiPSi lasjze 

Brazil pa).^ iBOOe 

Canada (103) 12CL0S 

Oomwft 2 3 fl .42 

Finland (24) 174.73 

Ranee (1Q2) 164^5 

Germany — 136 j41 

Hong Kong ^6) 31B^2 

Mand (14).. 105L34 

Italy (59) <87.47 

Japan (466) 150.46 

Malaysia 167) 463J3 

Marfcop6) 1965.72 

Netheriand (19) 20^98 

Now SMM (14) 7058 

Norway (231 201.24 

Singapore (44) 351 jB4 

South Africa m 318^2 

Spam (38) ^13037 

Sweden (36) 226.72 

Swmrtand (47) 159JB9 

nuoavf (4Q MMHHNR f4r.a 

United Kingdom (20^ 186JI7 

USA (514) 16621 


Day's Pound 


monc inosx 


DECCIlBER 14 168* - 

Ljooal Local 
i DM Currency % chg 

x Index bdn on day 


TUESDAY OCCSEMBSV 13 1994 


a7 

-02 

0-3 

12 

02 

1.1 

02 

0.7 

02 

22 

-02 

-12 

02 

42 

-02 

04 

-03 

12 

22 

-ai 

ao 

-05 

02 

1.1 

1.1 


15945 

16621 

15623 

17020 

12020 

227-21 

16621 

156.16 

12646 


18628 

6423 

14221 

43023 

1685.47 

19927 


19028 


10649 

11120 

104.73 
114.13 

8027 

181.73 

110.73 
10428 

66.45 

202.12 

12320 

42.76 

9527 

1 245L79 
133.08 
44.72 
12724 


13727 
143.13 
134.81 
14620 
10322 
19521 
14253 
13423 
11128 
26a 17 
16926 
5624 
122.76 
37727 

760324 

171.29 

5750 

164.16 

28722 


144,16 
143.10 
13124 
28142 
127.19 
20051 
17929 
13923 
11128 
31 622 
17828 


Americas (883) — 

Etaopo (FOB) 

Nonflc (11Q 

Ppoftc BaMn (792} 

Euro-Padflcfl901) 

Mortfi America (617) - 

Europe Ex, UK (504) 

Pacific Ex. Japan (32 9 

World Ejl US (1709) 

WOfW Ex. UK (2019) 

World Ejl Japan (1755) ^ 


— 17326 
—16425 

21653 

157.84 

1—16025 
—18222 
. — 14720 


The World 


(2223).. 


—16225 

—16724 

—18021 


—169.17 


30227 

13121 

215.16 

161.73 

13956 

17943 

176.72 


165.08 

155-68 

2Q540 

146.79 

152.17 

17221 

13950 

219.46 

16327 

158.71 

171.68 


201.93 

8729 

14358 

101.33 

0320 

11922 

11621 


11025 

10326 

13723 

10023 

101.62 

11557 

93.16 

14656 

10223 

10529 

11425 


11227 

18425 

13043 

119J96 

15424 

15120 


14121 

13322 

17824 

126.76 

13080 

14620 

11921 

188.85 

13225 

13642 

14758 


9527 

457.00 

7420.18 

16828 

56.77 

187.13 

23725 

26657 

13826 

293,77 

13149 

743.82 

17943 

18621 


144.72 

14746 

206,74 

104.16 
12125 

162.16 
12625 
202.78 
12429 
14005 
172.17 


0.7 

-a4 

ai 

22 

&7 

02 

02 

Ol5 

05 

22 

-02 

-22 

ai 

42 

-02 

0.1 

-02 

12 

22 

-05 

-ai 

-02 

05 

-12 

1.1 

1.1 


16627 

17521 

164.78 

17624 

12520 

236.74 

17426 

16348 

13529 

31159 

10527 


15826 

16624 

15628 

16721 

11946 

22426 

18547 

155.14 

12&49 


Gross US Pound 

DKr. Dote Starflng 

YWa Endax Index 


420 

1.13 
4.19 
0l73 
ZTi 
148 
0.78 
327 
126 
321 
327 
121 
021 
124 
128 
343 
456 
1.77 

150 

229 

4.13 
128 
155 


Yon 

index 


10520 

11127 

10457 

11228 

7920 

16023 

11085 

103.74 


DM Dunwncy 62 week 52 weak ago 
kidax Index High Low (approo fl 


13646 

143.76 

134.74 

14458 

10224 

10357 

14257 

13367 

1ia71 


143.18 

14358 

18148 

27423 

12835 


17825 

18920 

nan 


189.15 

19859 

17724 

14521 

276.70 

20141 

18627 

18040 


157428 

167.46 

159.64 

12054 

23428 

11655 

16924 

12827 


16019 

44421 


185LB9 

65.18 

14228 

42127 


19723 

124.18 


258 

3.18 
143 

1.19 
225 
224 
222 
026 
2.05 
2.17 
3.01 


209.19 

7076 

19073 

34355 

319.10 

13841 

22750 

15628 

16029 

18727 

16428 


172.18 

16324 

21628 

157.11 

15950 

18061 

14047 

22651 

16141 

166.10 

17924 


67.16 

18850 

32031 


13125 

21629 

15020 

14262 

17753 

17454 


18328 

154.72 

20624 

148.10 

16128 

17740 

16920 

21524 

153/18 

157.63 

17010 


9621 

281.78 

12405? 

132.75 

4421 

128.11 

21821 

20260 

8753 

14453 

10051 

0927 

118.72 

11622 


10926 

10346 

13722 

9071 

10122 

11452 


14420 

10243 

10541 

113.75 


16020 

56.16 

12251 

66327 

160027 

17125 

9726 

16250 

281.16 

26022 

113.17 

16626 

12950 

72259 

15227 

19064 


14077 

13321 

17623 

12047 

13042 

14758 

119.77 

18525 

13128 

13552 

14626 


17027 

8427 

9551 

43847 

743649 

168.14 


18628 

43242 

28825 

13849 

26422 

13063 

14040 

17753 

18423 


14321 

146.75 

20640 

103.79 

12076 

78023 

12825 

19846 

12428 

13921 

17066 


21650 

97.76 

17010 

62153 

264728 

22320 

7759 

211_74 

40128 

34220 

155.79 

24251 

17658 

21 4 JOB 
19004 


17858 
23351 
17656 
175.14 
192.73 
158.12 
29621 
17655 

17859 
19520 


177JSB 

6557 

127.18 

43071 


156.47 

18006 

18010 

13253 

23554 

11926 

16628 

13554 

41081 

16056 


13357 

54055 


19128 

62.05 

18011 

29456 

20555 

13251 

185-22 

14951 

161.11 

17856 


16059 

16006 

14124 

15254 

T7557 

142.17 

224.17 
16421 
161-50 
17624 


192.07 


17055 

34250 

24009 

13556 

19622 

16059 

19559 

16851 


18320 

18025 

14044 

152.72 

185.16 

142.71 

154.49 

16122 

16251 


16054 10751 138.00 14354 


157-56 15640 10&59 137-34 14X71 18X80 164^9 164.89 



5 1 % of Moroccan national holding company 

Societe Nationale d’lnvestissement 

(S.N.I) 


r ^ L , k _. 




In this transaction, the undersigned acted as an advisor to the, group of buyers. 



Casablanca Finance Group 


MAD 1,668.975,000 


ryv *-. 




L-* I -..; - :