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FINANCIAL TIMES 




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Bonn drops threat 
to ban imports 
of British beef 

Germany has dropped threats of a unilateral 
ban on. imports of British beef after the EU veteri- 
naiy committee recommended tighter restrictions 
on the sale of beef which may be contaminated 
with bovine spongiform encephalopathy. 

“There will be no unilateral action because 
we achieved a satisfactory solution in the agricul- 
ture council and in the veterinary commi ttee “ 
a spokesman for the German delegation said.’ 

US sees end to HIdeast conflict: US 

secretary of state Warren Christopher triumphantly 
said the Arab-fcraeli conflict, “one of the most 
tong standing and most intractable" of the century, 
was drawing to an end. He was sp eaking after 
meeting Israeli leaders on the first day of Middle 
East diplomatic talks. Page 16; Desert tribes meet 
to bury differences in the sand. Page 4 

CHase Manhattan and HatfonsBank, two 

of the OS's biggest commercial banks, comfortably 
beat market forecasts with post-tax earning* 
gains of 32 per cent and 43 per cent respectively 
in the second quarter. Page 17 

Twelve die In Buenos Aires Mast: At Wst 

12 people died and 50 were injured in an explosion 
that ripped through the Buenos Aires offices 
of two Jewish organisations. 

Synergen: The Colorado based company, once 
a star of the US biotechnology industry, has 
dropped research of its biggest product Antril, 
and announced a restructuring of the business 
and its possible sale. Page 17 

Canada eases internal barriers: Canadian 

prime minister Jean Chittien and leaders of the 
10 provinces signed a long-awaited deal to ease 
internal trade barriers. Page 5 

India and China to reopen trade route 

India and China agreed 
to reopen an ancient 
trade route after 32 
years, as Qian Qichen 
(left), China's vice-pre- 
mier and foreign minis- 
ter, said during a visit 
to New Delhi he hoped 
border disputes between 
the two countries would 
be resolved soon. An 
ancient trade route 
through the g hipkfla 
Pass on the border of Kfnnanr district in Himarhal 
Pradesh was formally restored with the signing 
of a protocol by biu two governments. Page 4 

Black businessmen plan SA Hating: A 

group erf black South African businessmen plans 
to establish a new R7bn ($1.9 lbn) company and 
list it on the Johannesburg stock exchange next 
month. If successful, the company will become 
by far the largest black-owned and run commercial 
enterprise in South Africa. Page 17 

Bank of Montre al : Canada's third largest bank 
is to pay up to C$403m (US$29Qm) in cash and 
shares for Burns Fry, a Toronto securities firm 
which is 26 per cent owned by Bank of America 
and 74 per cent by its employees. Page 17 

Bosnia involvement ‘to Increase*: The 

US and Nato can be expected to deepen their 
Involvement in the Bosnian crisis, regardless 
of the fate of the peace plan which the warring 
parties ace now considering, according to senior 
Western officials. Page 2 

Coca-Cola: The US soft drinks group, increased 
net profits by 13 per cent to $Tf58m in the second 
quarter in spite of competition from private label 
colas in several of its biggest markets. Page 20 

Call for wider DUF rota: The International 
Monetary Fund needed to play a larger role as 
a manager of the international economic system, 
white increasing its efforts to promote sustainable 
growth in former communist countries and the 
developing world, manag in g director Michel Cam- 
dessus said. Page 5 

Hymn to television: A Chinese Communist 
party hymn written in honour of Chairman Mao 
Zedong has been reborn as an advertising jingle 
glorifying a television set Page 16 

Shipbuilding deal attacked: French 
shipbuilders co ndemn ed the weekend agreement 
on eliminating subsidies in the shipbuilding indus- 
try, claiming their competitors would benefit 
from indirect subsidies. Page 6 

Death toll rises: The death toll from floods 
in parts of south, east and northeast India has 
risen to at least 330. the Press Trust of India 
reported. 



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UK drive to end rift within EU 


By Lionel Barber In Brussels 

Mr Douglas Hurd, the UK foreign 
secretary, yesterday launched a 
campaign to end Britain’s recent 
diplomatic isolation in Europe 
and persuade its partners that 
the UK views the European 
Union as more than a free trade 
area. 

In remarks aimed at breaking 
the stranglehold of the Conserva- 
tive party's Eurosceptics on UK 
policy toward Europe, Mr Hurd 
pledged British support for a 
stronger common foreign and 
security policy, including an offer 
to pool sensitive political intelli- 
gence reports in Brussels. 

He told EU foreign ministers in 
Brussels: The European Union 
cannot be simply a Free trade 
area or even a single market We 
need to develop a system fur con- 
structing our foreign policy bet- 
ter internally, and projecting it 
better externally 


Hurd urges firmer Brussels foreign policy 


Mr Hurd’s intervention 
appeared aimed in part at easing 
tensions with France and Ger- 
many over Britain’s veto of Mr 
JeanrLuc Dehaene, the Belgian 
premier backed by Bonn and 
Paris for the European Commis- 
sion presidency. 

But it was also an effort to 
recoup lost ground after the row 
over Britain’s unsuccessful cam- 
paign to maintain Its power to 
block EU legislation once the 
Union expands, as planned, from 
12 to 16 members. 

"We need to talk less exclu- 
sively about British interests and 
more about Europe's interests,” 
said a senior UK official. 

Mr Hurd suggested that the 
ElTs newly established relation- 
ship with Ukraine could serve as 
a trial run for a more coordi- 


nated foreign policy approach 
among the Twelve, starting with 
foreign ministers sharing intelli- 
gence and analy sis. 

There was a need for a "strat- 
egy” for relations with central 
and eastern Europe combining 
expanded trade and closer secu- 
rity ties leading to the ultimate 
goal of EU membership. 

Ministers moved in this direc- 
tion yesterday with the signing of 
free trade agreements with the 
Baltic states. They also welcomed 
a new European Commission pol- 
icy paper which aims to help the 
East Europeans prepare for ED 
membership by integrating 
their laws and trade prac- 
tices with those of the Union. 

A Commission official said har- 
monisation of competition law, 
trade practices and other legisla- 


tion would, in effect, expand the 
single European market east- 
wards. 

This would create a new mar- 
ket of about 450m people, includ- 
ing the EU, Baltic states. Slo- 
venia, and the six countries 
which have concluded associa- 
tion agreements with the Union 
- Poland, Hungary - , the Czech 
republic, Slovakia. Romania and 
Bulgaria. 

The Commission paper also 
suggests that both west and east- 
ern Europe must make radical 
reforms to lay the groundwork 
for membership. It says former 
communist countries should cut 
capacity in smokestack indus- 
tries. modernise banking and 
promote small businesses. 

Similarly, EU members need to 
brace themselves for changes in 


the hugely expensive system of 
farm price supports under the 
Common Agricultural Policy and 
the regional aid budget known as 
structural funds. 

The UK is pressing this agenda, 
but is conscious that opening the 
question of CAP reform prema- 
turely could trigger a confronta- 
tion among EU member states 
which would delay the expansion 
of membership. “The timing is 
crucial,” said one UK official. 

Meanwhile British officials 
believe that it might be possible 
to invite the east Europeans to 
join meetings of EU foreign min- 
isters or interior ministers with 
the power to speak but not to 
cast a vote. 

Although -France and other 
countries were hostile to this 
idea two years ago, UK officials 
believe they might be more 
receptive today to the idea of 
"partial membership” in a "mul- 
ti-speed” Europe. 


Split in Italy’s I Rwandan rebels in peace gesture 

coalition hits 
stocks and lira 


By David Lane to Rome 

The Italian lira and the Milan 
stock market fell sharply yester- 
day as Mr Silvio Berlusconi, the 
prime minister, tried to prevent 
his right-wing coalition govern- 
ment splitting over a decree lim- 
iting the judiciary's powers of 
arrest 

The fafig camp despite al ta i | i la 
by Mr Berlusconi to play down 
the threat to his wmlitinn 

The lira touched a record 
LI, 003 low against the D-Mark, 
and lost ground against the 
French franc, falling from L289.9 
to L292.L But it remained virtu- 
ally unchanged against the dollar 
at just over L1547. 

Milan’s Mibtel share index 
closed 2J32 per cent down on Fri- 
day, though it had earlier slipped 
by 2.61 per cent in the afternoon. 

Mr Berlusconi, who provoked 
the crisis last Thursday by 
approving a decree that has 
allowed dozens of leading sus- 
pects in Italy's corruption investi- 
gations to leave prison, appeared 
an television last night to defend 
the move and quash speculation 
about the fffture of his govern- 
ment. 

“We are absolutely not a step 
away from a government crisis,” 
he said. The decree is not an 
amnesty for anyone. We need to 
have civilised debate, not scream- 
ing in the piazza.” 

The decree led to the immedi- 
ate resignation of the popular 
team of Milan magistrates who 


have been largely responsible for 
attacking civil service and busi- 
ness corruption in Italy In the 
past two years. But it has also 
rfmkan Mr Beduscozii's two coali- 
tion partners, the Northern 
League and the neo-fascist MSI/ 
National Alliance. Both parties 
campaigned in the spring elec- 
tion on strong anti-corruption 
records and both want the decree 
repealed. 

The subsequent infighting 
between Mr Berlusconi's Form 
Italia movement and the other 
two partners has already led to 
the senior League mpHihar of the 
government saying he had been 
duped over the decree. Forza 
ministers came dose yesterday to 
accusing him of lying. 

The row has further poisoned 
already poor relations between 
the coalition partners, particu- 
larly between the League and Mr 
Berlusconi, and although threats 
by both sides to either resign or 
provoke new elections seem 
unlikely to come to a head, scope 
for compromise is limited. 

Analysts believe the govern- 
ment, whose popularity has been 
dented by the affair, may be able 
to reach a quieter compromise by 
the time the decree is discussed 
in parliament, which has to ratify 
it within the next three months. 

But there was little evidence of 
an improvement in the political 

Continued on Page 16 
Lex, Page 16; Currencies, Page 
32; World stocks, Page 36 



Bank looks 
at Asian 
link to 
missing 
gold coins 

By Robert Peston in London 

Standard Chartered is 
investigating the disappearance 
of $10,000 of gutd coins, allegedly 
given by its Mocatta bullion divi- 
sion to a Malaysian minister as a 
“trade sample”. 

The disappearance of the coins 
has emerged as part uf a wide- 
ranging probe by the London- 
based international bank into 
allegations that Mocatta execu- 
tives may have paid commissions 
to officials in the Philippines and 
Malaysia to obtain business. 

The investigation into what 
happened to the gold is still 
going on.” commented a banker. 
“There may be a perfectly inno- 
cent explanation, though it all 
looks very odd.” 

The disclosure of the disappear- 
ance of the coins comes at an 
embarrassing time for the British 
government, which had been 
hoping that Malaysia might soon 
announce a lifting of its ban on 
UK participation in Malaysian 
government contracts. 

The ban was put in place 
because of the Malaysian govern- 
ment's fury with the British 
press over the Pergau Dam 
alleged arms-for-aid deal and alle- 
gations of bribes paid to Malay- 
sian politicians. 

The Bank of England has been 
kept closely informed of Standard 
Chartered's investigation and is 
understood to be concerned 
about its implications for diplo- 
matic relations between the UK 
and Malaysia. 

Hie Malaysian High Commis- 
sioner in London, Mr Abu 
Kamaradin, yesterday met Stan- 
dard Chartered’s chief executive. 
Mr Malcolm Williamson, to dis- 
cuss the bank's probe. 

Last night Mr Kamaradin had 
no comment to make on the alle- 
gations. 

Standard Chartered has also 
uncovered evidence that pay- 
ments may have been made to 
officials at the Philippines cen- 
tral bank in order to win busi- 
ness. 

The bank said yesterday that it 
had uncovered "a small number 
of unusual transactions" involv- 
ing the Far Eastern operations of 
Us Mocatta subsidiary, as part of 


Continued on Page 16 


A French medic helps a 
Rwandan orphan wounded in the 
weekend mortar attack at the 
Zairean border. Tutsi rebels 
named a Hutu as president in an 
apparent attempt to reassure the 
Hutu majority that they have 
nothing to fear under the new 
regime Report, Page 16 


Microsoft settlement an end to 
‘distracting battle’ says Gates 


By Loutse Kehoe 
to San Francisco 

Microsoft’s settlement of 
anti-trust charges with the US 
Justice Department and Euro- 
pean competition authorities will 
have “no material impact” on the 
rftware company's financial per- 
>rmance, Mr Bill Gates, its 
haii-man and founder, said yes- 
;rday. "Any effect will be de 
unwuis. 

Hie settlement, which requires 


am 

“I Hke to spend my time work- 


■ 

The company's success m seu- 
ig operating systems programs 
ir PCs “is based on end-user 


sing terms but strong end-user 
demand”, he said. Microsoft's 
future success remained depen- 
dent upon the ability of the com- 
pany to "continue to come up 
with great products”. 

The settlement provides Micro- 
soft with an opportunity to do 
that without the burden of a dis- 
tracting and costly legal battle, 
he added- 

lndustry analysts said Micro- 
soft “got off easy” on charges 
that it “built a barricade of exclu- 
sionary and unreasonably restric- 
tive licensing agreements to deny 
others an opportunity to develop 
and market competing products”. 

Microsoft’s share price rose in 
reaction to news of the agree- 
ment . Microsoft was trading at 
$50% in mid-session yesterday, up 
from Friday’s dose of $48%. 

Competition authorities exam- 
ined a broad range of issues 
raised by competitors, Microsoft 
said, but the settlement cavers 
only two of those issues - licen- 
sing practices and non-disclosure 
agreements. 

In particular, the settlement 


agreement did not address the 
widely held concerns in the soft- 
ware industry that Microsoft 
gains unfair advantages as a 
developer of both operating 
systems, which control the basic 
functions of a computer, and 
applications programs, such as 
word processors, games and 
spreadsheets. 

Microsoft is the largest seller of 
applications for use with its own 
Windows operating system. This 
dual role is Microsoft’s principal 
advantage, according to software 
industry executives, because 
Microsoft’s application develop- 
ers have earlier and fuller access 
to details of next generation oper- 
ating systems than their competi- 
tors. 

For the next six and a half 
years, the duration of the settle- 
ment agreement, Microsoft's 
business activities will be moni- 
tored by the Justice Department 
and European competition 
authorities. 

Editorial Comment, Page 15 
Lex, Page 16 


CONTENTS 


.16 Guide. 


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© THE FINANCIAL TIMES LIMITED 1994 No 32.422 Week No 29^ 


LONDON ■ PARIS ■ FRANKFURT ■ NEW YORK ■ TOKYO 



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NEWS: EUROPE 


FINANCIAL TIMES TUESDAY JULY IP 1994 




Ruhe raises 
Polish hopes 
over Nato 


By Brace Clark, Defence 
Correspondent 

Mr Volker Rfihe, the German 
defence minister, has said 
Poland could join Nato by the 
end of the decade, while he 
sees no prospect of Russia or 
Ukraine ever doing so. 

Mr RObe’s remarks were 
quoted in the Polish media as 
he began talks with his French 
and Polish counterparts on 
Warsaw's role in the Nato- 
inspired Partnership For Peace 
programme. 

The German minister also 
said that his country and the 
US were the only existing 
Nato members that were 
enthusiastic about the idea of 
extending the alliance 
eastwards, and some members 
were cool towards the idea. 

“Not alt countries are in 
favour of expanding Nato,” he 
was quoted as saying. 

Mr R&he's comments were in 
line with the strident 
declarations of unanimity that 
were heard in Berlin last week 
from President Bill Clinton and 
Chancellor Helmut Kohl over 
east European questions. 

His remarks were an 
unusually blunt ack- 
nowledgement that, although 
all c andi dates are supposed to 
join PFP on equal terms, not 
ah of them can look forward to 
full acceptance as a Nato 
member. 

Russia, after considerable 
hesitation, last month became 
the 20th country to sign up to 
PFP, a programme that 
promotes joint military 
exercises and defence 

p lanning 

Mr Andrei Kozyrev, the 
Ru s sian foreign minister, raid 
at the signing ceremony that 
the aiHanra> sh o u l d not alienate 
Moscow by rushing to 
incorporate countries to its 
east 

Nato officials bailed the fact 
that Mr Kozyrev did not 
unequivocally denounce the 
notion of expansion. However, 
Russian sensitivity over the 
strategic orientation of Poland 
remains extremely high. 

Moscow has made it clear 
that it feels unhappy about its 
former east European 
“satellites” being admitted to 
any arrangement from winch 
Russia itself is barred. 

Mr ROhe’s comments follow 
a vote in the US Senate to 
facilitate the transfer of 


surplus western defence 
equipment to Poland. Hungary 
the Czech Republic. 

The resolution, approved by 
76 votes to 22, was intended tor 
its sponsors to accelerate the 
process of making the arsenals 
of those three countries 
compatible with Nato 
equipment. 

It has already drawn a 
complaint from the Slovak 
republic that distinctions are 
being drawn between central 
European countries in a way 
that could undermine stability. 

Senator Hank Brown, one of 
the amendment's sponsors, 
said it was intended to ensure 
that “reasserting control over 
Poland, Hungary and the 
Czech republic will no longer 
be considered viable by anyone 
in Russia" 

Opponents of the measure 
argued that, by singling out 
three countries, it would create 
jealousies within eastern 
Europe and foster nationalist 
forces in those countries which 
were left out 

In Warsaw, Mr RQhe said 
Russia would have no 
influence on Poland’s 
eligibility for Nato 
membership. 

Poland has been the keenest 
of the east European countries 
to take advantage of the PFP, 
and it will host the PFP’s first 
full-blown military exercise in 
September. 

Poland has also held a series 
of bilateral war games with 
west European countries and, 

' in October, it will send troops 
to France for a training 
exercise with the French and 
German armies. 

Warsaw has also asked to 
join the Franco-German 
Euro corps, the Strasbourg- 
based unit which is seen by its 
supporters as the core of a 
mobile European land army. 
This proposal has so for been 
treated with, caution in 
western capitals and it is likely 
to be viewed with deep alarm 
in Moscow. 

Senator Brown said his 
resolution bad been supported 
by such veterans of the US 
foreign establishment, and 
advocates of a tough line with 
Russia, as Mr Zbigniew 
Brzezinski and Mr Henry 
Kissinger. Sir Brzezinski has 
called for the formation of a 
"common security area" 
grouping France. Germany and 
Poland. 


Western officials discuss options as warring parties consider partition 

US and Nato likely to expand role in Bosnia 


By Bruce Clark, 

Defence Correspondent 

The US and Nato can be 
expected to deepen their 
involvement in the Bosnian 
crisis, regardless of the fate of 
the peace plan which the war- 
ring parties are now consider- 
ing, according to senior west- 
ern officials. 

They were speaking as Bos- 
nian Serb representatives in 
Pale, and the Moslem-domi- 
nated Bosnian parliament in 
Sarajevo, began considering 
the partition proposals drawn 
up by four western nations and 
Russia. 

The Bosnian Serb leader, Mr 
Radovan Karadzic, told the 
Pale meeting that acceptance 
of the ideas would be “less 
honourable” than rejection. 

Mr William Perry, the US 
defence secretary, said as he 
began a tour of seven Balkan 
countries that the US was 
ready to send a “significant 
number” of troops to Bosnia if 
the peace plan won acceptance, 
whQe Washington would also 
accept an expanded military 
role in the event of renewed 
fighting. 

US officials said that, if an 
agreement were to take hold. 


President Bill Clinton would 
propose despatching at least 
15,000 US troops, to make up 
about half a peacekeeping 
force. 

In the event of the plan’s fail- 
ure, the US air force would be 
involved in tougher policing of 
no-fly zones and safe areas. 

At Nato headquarters in 
Brussels, officials said they 
woe considering three scenar- 
ios for deeper involvement, fol- 


lowing their talks with the 
senior members of the UN 
operation to former Yugoslavia 
over the weekend. 

One was a heavy Nato 
engagement on the ground in 
implementing a peace plan 
which had won broad accep- 
tance by the parties. 

The second was an increased 
use of Nato air power to min- 
imise the extent of the fight- 
ing, while retaining some UN 


presence on the ground. 

This would go ahead If the 
outside powers which have 
been working for a settlement 
in Bosnia resign themselves to 
a less ambitious goal than 
full-blown peace. They may 
attempt to confine the fighting 
to thinly populated areas 
where thou is less risk of civil- 
ian populations being held 
trapped. 

For the past three months. 


Nato has reserved the right to 
establish “total exclusion 
zones” - where heavy weapons 
would be subject to air strikes 
- in the UN-designated safe 
areas of Zepa, Srebrenica. 
Turin and Bibac. 

This would mean extending 
a principle that has already 
been applied in Sarajevo and 
the enclave of Gorazde. 

Nato could also establish an 
exclusion zone in the bitterly 


disputed area round the town 
of Brcko, a key point in the 
corridor that links the Bosnia 
Serbs with their kinsmen in 
Serbia. 

But that move would require 
a new resolution of the UN 
Security Council 

In a Hurd scenario, the UN 
may decide to pull its troops 
out of Bosnia and it might then 
require help from Nato, includ- 
ing air cover, to carry out the 
withdrawal 

All three scenarios were dis- 
cussed at weekend talks 
between Admiral Leighton 
Smith, Nato's commander in 
southern Europe, and the two 
top UN officials in former 
Yugoslavia; Mr Yasushi Aka- 
shi of Japan and France's Gen- 
eral Bertrand Lapresle. 

In the past, high-level discus- 
sions between Nato and the 
UN about Bosnia have been 
abrasive affairs. Nato nffirtafo 
have chided the UN for being 
too soft on the Serbs, white the 
UN commanders have branded 
Nato with foiling to realise the 
vulnerability of their peace- 
keepers and relief workers. 

However, alliance officials 
insisted that the two institu- 
tions were now working in 
much better harmony. 


Moslems expelled across frontline 


the other side. . . with some shots fired 
over their heads.” 

Up to 4,000 Moslems remain in BijeMna. 


By Laura Saber Sn Belgrade 

Bosnian Sob fighters have rounded up 
hmyireds of Moslem civilians In Bijefina, 
north-eastern Bosnia, imprisoning many 
and expelling some over toe frontline, 

UN officials and eyewitnesses said 
yesterday. 

The Serb Population Exchange 
Commission, in concert with the 
Panthers, a Bosnian Serb paramilitary 

group, rounded up and imprisoned 800 
Moslems, said witnesses in the town 
on Bosnia’s frontier with Serbia. UN 
spokesmen said at least 135 women, 
children and elderly men were also forced 
across the frontline near Tuzla, the 
biggest Bosnian govern m ent stronghold 


in the north-east, alter being robbed 
and beaten. 

"We fear far our lives," said a non-Serb 
woman speaking by telephone from 
Bijellna ainld the biggest wave of farced 
expulsions in aver a year. 

“This Is just Eke the Gestapo in the 
second world war," she added, speaking 
on condition of anonymity out of fear 
of reprisal 

Mr Kris Jfcnowski, spokesman of the 
UN H i gh Commissioner for Refugees 
is Sarajevo, sard: “They were told that 
they were being exchanged [far Serbs] 
or seat abroad and they had to renounce 
cUnms to their property. 

“Thai they were robbed at the 
co nf ron tat ion fine and poshed over to 


Moslems comprised the majority of the 
population of 35,000 before Serb 
paramilitaries, with the Yugoslav army, 
waged war against Bosnian independence 
in April 1992. All but a handful lost their 
jobs, property and homes. 

“It is now terror on the streets. They 
are trying to dear out the last Moslems," 
said a 28-year-old Serb inhabitant 

The expulsions are another sign of 
Serb refusal to abandon their 
seU-prodaimed state and endorse a plan 
to preserve Bosxda-Hercegovina as a 
unified country composed of two loosely 
joined ethnic mini-states. 


Spain and France tighten controls on drift nets 


Spain and France have 
welcomed a decision to give 
ETJ inspectors greater powers 
to check fishing boats for 
oversized drift nets after 
skirmishes on the high seas 
between Spanish and French 
fishermen at the weekend, 
Reuter reports from Madrid. 

Spanish agriculture and 
fisheries minister Mr Luis 
Atienza said: “I think we have 
achieved a notable 
strengthening of the processes 
of inspection and control 


which will be carried out by 
EU inspectors." 

After a meeting of EU 
agriculture ministers in 
Brussels yesterday, Mr Atienza 
said France and Spain had 
agreed to let EU inspectors 
travel on national inspection 
vessels to check fishing boats. 

“[The decision! will reassert 
the credibility of the inspection 
process. Until now, inspectors 
came from individual countries 
and practice showed that 
French patrol boats... were 


not sufficiently diligent,” Mr 
Atienza 

On Saturday. 60 Spanish 
boats clashed with five French 
vessels 700km off the northern 
coast of Spain in the latest 
drirmifib in the sooaBed “tuna 
war". A French trawler. La 
Gabrielle, was rammed and set 
alight with petrol bombs. 
Spanish fishermen claim it 
carries oversized nets. 

Spain’s 300-strong fleet 
headed frame on Monday with 
La Gabrielle in tow. Atienza 


said the trawler would be 
returned to France after 
riipcfcg by Spanish authorities 
and EU inspectors. 

The French agriculture 
ministry welcomed the 
Brussels agreement but 
stressed that France “would 
never and in no way accept 
Spanish constraints imposed 
by force". 

Mr Alain Panes, president of 
the French fishermen's 
national federation, said he 
would demand that France 


lobby Spanish authorities for 
compensation for the La 
Gabrielle Incident 

“We’re going to demand 
compensation for the material 
riamagw and for the financial 
cost of lost catches," Mr Panes 
said before a scheduled 
meeting with French 
agriculture minister Mr Jean 
Puech. Mr Parres said he 
would also urge better 
protection for French 
fish ermen at sea. 

EU rales forbid the use of 


nets longer than 2 -5km and 
Spanish fishermen have 
consistently accused French 
boats of contravening these 
norms. 

France has retaliated by 
saying Spanish fishermen are 
trying to drive the French out 
of the water. 

The environmental group 
Greenpeace reiterated its call 
for a total ban on drift nets. It 
said the existing ban was 
insufficient and regularly 
violated by EU fleets. 


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By Michael Undem an n in Bonn 

The four east European states 
making the most progress with 
their economic reforms should 
be invited to future European 
Union summits. Chancellor 
Helmut Kohl told Hungary’s 
visiting prime minister, Mr 
Gyula Horn, yesterday. Hun- 
gary, Poland, the Czech Repub- 


lic and Slovakia should attend 
at least one summit a year, he 
said, citing President Boris 
Yeltsin’s recent attendance at 
the Group of Seven summit in 
Naples as an example of how 
this could be done. 

“It is incredibly important 
that the [four countries] 
receive a message which has 
some meaning for the popula- 


tion,” Mr Kohl told journalists. 

“I know that the opinion of 
my [EU] partners differs but 
that does not affect the fact 
that I think it is right" How- 
ever, a government official said 
there was no timetable for 
such a measure. The matter 
would be given more attention 
alter the four new members of 
the EU - Austria, Sweden, Fin- 
land and Norway - had com- 
pleted the accession process 
next January. 

Germany assumed the EITs 
rot a ti n g presidency on July 1. 
and Mr Kohi said he would use 
the opportunity to work for a 
closer partnership with eastern 
Europe. The chancellor also 
said he “passionately” sup- 
ported Hungarian membership 
of the Union. 

Mr Ham, on his first official 
visit after being confirmed as 
premier last Friday, called an 
German industry to step up its 
Investments in his country, 
particularly with regard to the 
p ri v at isation Of hanky and (Jug 
development of infrastructure. 

Hungary received the most 
German investment of any east 
European state last year - 
some DMGOOm (£24&n). 


Chancellor Kohl and prime minister Gyula Horn at ceremonies 
to mark the latter's arrival in Bonn yesterday 


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NEWS: EUROPE 


EUROPEAN NEWS DlfiriCT 


Mitterrand has 
prostate surgery 


Odessa flexes its old 
mercantile muscles 


E!SS Eg* ex s ected tomomw to 

The president TT '*?'***!&* Prostate surgery, 

the operation yesterday to remnfrr h ° Spi ? 1 i 011 Sunday 31111 had 
thra which was affecting hiskSn^ ^ o bstrnc tion to his ure- 
him two years The sl ?® BQn * who treated 

operation had 5n iLSSSt 5“SJ- said “ yesterday’s 
president's ttafthe 
iefle, underwent . *?T MJtterrand's wife, Dan- 

perdstently ruled out ^ Mitterrand has 

health permittinehTSETo * b t *** ton S masted that, his 
term in office. ^ rematnder of his 

UK companies pay bills latest 

to a survey commisslone^by a . a * Pdln S 

debt collector. It poiledjast o?S?ToS^^^f 0pe s lai T st 
and found that paymrate to nSLlf? European companies. 

£=Ss=S«Ss£i5a3 

■ gggpgHSHSig 

?T“ W . p “ iem * they know they can set a wav mtifir 
^ ^ British go^nSn?^ 
jSuti lariating on late payment, but Intruni 
S™. 5™! ^ 88 per cent of companies in the DK 
fovoured the idea of a statutory right to interest on overdue 

JEf Ti 1 ^ “^ orit y a^so wantedthe 
ngnt to compensation for the costs involved in nhnrfnn - dphts 
as well as simpler legal procedures. Re^LmS^ ’ 

• EU and Baltics sign trade pacts 

•nifi Union signed free trade agreements with the 

£j!®S **“**■ The accord which provide for 
free trade in industrial goods and limited concessions in aEri- 

rSF B ^ ltic s ^ a ! es cIoser to their goal of joinfo^ 
the EU. German foreign minister Mr Klaus Kinkel said atthe 
siting ceremony that increasing trade was the most impoS 
e ? on ? mic reforms in Estonia, Latvia and 
Lithuania. Estonian foreign minister Mr Juri Luik said his 
all EU membership requirements by 
welcom ed the European Commission's 
propwal to hold initial talks by the end of this month an an 
assooation accord similar to those with other east European 
countries. Reuter. Brussels uiupean 

Poland tries to halve debt 

Poland yesterday sought to encourage international creditors 
to commit themselves to financi n g proposals which will allow 
^ complete a 46 per cent reduction on its S13.2bn 
(£8.hbn) London Club debt in the first half ctf September. Mr 
Krzysztof Krowacki, Poland’s chief debt negotiator, said he 
was “extremely dose" to obtaining the consent ctf holders of 95 
per cent of the debt needed for the deal to be im P l»m, CT ^ m 
its entirety. Mr Krowacki said bearers of over 55 per cent of 
the debt want to change it into discount bonds at a 45 per cent 
reduction rate, while holders of 26 per cent of the debt have 
agreed to a Polish proposal to buy back their paper at a price 
of 41 cents to the dollar. The exchange of debt into discount 
and par bonds would go ahead even if the 95 per cent rmu^n t 
I to* - buy-back is not achieved, as agreements from only half the 
debt holders are needed in this case. One London-based debt 
trader commented yesterday that the government's decision to 
I hold a press conference showed that “agreement was slow in 
coming at the end" but saw no reason to doubt that the 95 per 
cent target would be reached, especially as the buy-back 
element was “generously priced” Poland will be fmanHng the 
I reduction from its own reserves and loans from the Interna- \ 
tional Monetary Fund and the World Bank. Christopher I 
| Bobmski. Warsaw ( 

E German incentives extended j 

I Investment grants and tax incentives for enterprises in east- 1 
j era Germany, which were due to end next year, will be L 
I extended until 1998, Mr Gfinler Rexrodt, the German econom- p 
Ics minister, said yesterday. He said a further DM5bn (£2hn) in 
I addition to the annual DMIObn would be put aside for invest- s 

I ment grants, or subsidies, while companies will be allowed to g 

I continue to write off against tax 50 per cent of capital invest- p 

ment in equipment In addition. DMU2bn will be allocated to o 

I research and development in the five eastern states. The east d 

German economy is expected to grow by about 8 per cent this o 

I year, but any growth is coming from a low base - the region’s a 

I gross domestic product fen by over 30 per cent between late n 

I 1990 and 1991, and unemployment, officially at 16J2 per cent, is b 

| slowing down not as a consequence of the availability of new h 

I jobs, but, according to economists, because the unemployed, 

I particularly women, are no longer being registered on the ir 
unemployment register. Judy Dempsey. Berlin bi 

tl 

Bangemann set for new term £ 

| Mr Martin Bangemann, EU industry commissioner, will have pi 
j his term as one of Germany’s two European commissioners 
I extended next year, the liberal Free Democratic Party said 
yesterday. FDP general secretary Werner Hoyer said Chancel- 
I lor Helmut Kohl had agreed to renew Mr Bang emann ’s 
j appointment in talks on Friday with foreign minister and FDP 
j leader Klaus KinkeL The renewal of his appointment would 
I depend on Mr Kohl’s 12-year-old centre-right coalition retain- 
[ ing power in elections on October 16. There bad been specula- 
I tion in Bonn that Mr Bangemann and his colleague Mr Peter 
I Schmidhuber. a member of the Christian Social Union, would 
I be replaced when their current term expires. Political and 
| diplomatic sources said last month that Mr Kohl, the Christian 
Democrat leader, and Social Democratic (SPD) opposition 
I leader Rudolf Scharping had agreed that members of their two 
I parties should take up the commission posts. The maiti candi- 
I dates were said to be Mrs Birgit Breuel, president of the 
Treuhand privatisation agency, for the CDU, and deputy SPD 
I leader Heidemarie Wieczorek-ZeuL Reuter. Bonn 

ECONOMIC^VATCH 

Swedish jobless rate climbs 

Sweden's unemployment rate 
} Sweden climbed to R5 per cent of the 

workforce in June from 7.1 
I Urwrotoymant rate (per cent) per cent in May, according to 

I io the central bureau of statis- 

I A... . tics. The latest figure was 

I Vi , swollen by school-leavers and 

8 was in line with market 

] hi V expectations. It was lower 

I than a year ago when 9 per 

fl AJ- cent of the workforce lacked a 

J job. Economists say that, 

/ adjusted for seasonal factors, 

4 -i»~ — ’ — ‘ the unemployment rate is 

-J steady. This may disappoint 

.>/ the centre-right government, 

Z ‘ — : — — which is anxious for clear 

tflW 92 S3 M gjgog of economic revival just 

Source: oocastmm two months before a general 

election. An encouraging sign is that the number of people in 
jobs rose in June to 4.05m from 3.88m in May. The number of 
people participating in special training schemes was also 
down, falling to 177,000 from 240.000. Christopher Broum- 
Humes, Stockholm 

■ Finnish unemployment rose to 19.9 per cent in June from 
19.0 per cent in May, the Labour Ministry said yesterday. 


jmm 

mm 

Europe’s 
changing 
cities 


1901 92 

Source: Ottastraam 


' Even 70 years 

of communism 
failed to tarn* 
Odessa, estab- 
lished by Cath- 
erine the Great 
in the 18th cen- 
tury as the 
. , Russian 
Empires most bustling warm 
water port. 

Soviet rule pushed some of 
Odessa’s sharp traders into the 
black market and others, from 
the Jewish community which 
accounted for a third or the 
population before the revolu- 
tion, into emigration. But with 
the collapse of communism 
Odessa, part of independent 
Ukraine, is again flexing its 
never entirely atrophied mer- 
cantile muscle. 

Well appointed, if somewhat 
flamboyant, Greek, Jewish and 
Itelian restaurants and bou- 
tiques are beginning to bring 
back some sparkle to the dilap- 
idated tsarist mansions that 
line Odessa's main boulevards. 

The men in shiny suits who 
dine there while their body- 
guards and BMWs wait out- 
side, are engaged in the busi- 
ness which has always been 
Odessa's natural main- 
stay - trade. 

The flagship of Odessa's 
traders is Blasco. the Black Sea 
Shipping Company which is 
the largest merchant fleet in 
the former Soviet Union. In 
moving to the market Blasco 
enjoys an advantage shared to 
a lesser degree by Odessa as a 
whole and by other former 
Soviet port cities, sucb as 
Vladivostok and St Petersburg. 

“Regardless of whether we 
were part of the Soviet Union 
or in independent Ukraine, 
we've always been a marine 


company which has worked 
100 per cent on the world mar- 
ket" says Mr Pavlo Kudiukin, 
president of Blasco, whose 
office is decorated with antique 
furniture and shiny western 
gadgetiy. “Every single one of 
our sailors has worked in a 
market economy every day of 
his life." 

This early exposure to the 
market means that Blasco is 
responding to the new realities 

The city can do 
again what it 
always did 
best, writes 
Chrystia 
Freeland 

of economic life in Ukraine 
with a nimbleness unusual in a 
massive state-owned company. 
It is ordering new vessels from 
shipyards in Ukraine, Slovakia 
and Germany to revive its 
rusty fleet has set up a com- 
pany in Cyprus to help attract 
foreign business and, within 
the next few months, is to be 
privatised with the help of the 
International Finance Corpora- 
tion, the World Bank's private 
sector arm. 

Mr Kudiukin is reluctant to 
disclose exact financial figures, 
but says Blasco 's profits over 
the past five months were in 
the tens of millions of dollars. 

However, for Blasco ] as for 
the other large Ukr ainian com- 
panies, the transition from the 
centralised Soviet economy has 
not been entirely smooth. 

To start with, they were cast 
financially adrift with the col- 


lapse of the Soviet Union. At 
the time Blasco had Sioom on 
deposit in Vnesheconombank, 
the USSR's foreign trade bank. 
“Now that the bank is outside 
the borders of Ukraine it is 
unlikely we will get our money 
back," says Mr Kudiukin. 

Under the old regime, 70 per 
cent of BLasco's business camp 
from central planners in 
Mosc ow. Now a third comes 
from Ukraine and the rest from 
Germany, China and Russia in 
that order. 

Blasco ships the metals, 
sugar and grain that are 
Ukraine's traditional exports. 
An emerging new breed of 
Odessa merchants, such as Mr 
Mikhail Chertkov, head of 
Karolina-Nord, a private finan- 
cial company, deal in more liq- 
uid assets. 

Mr Chertkov, whose spartan 
office is decorated with lists of 
countries in which it is easy to 
set up off-shore accounts, 
caters to those Odessa busi- 
nessmen who need help negoti- 
ating the financial labyrinth of 
the former Soviet Union with 
its various, non-convertible 
currencies and who wish to 
keep their hard currency earn- 
ings safely abroad. 

“Given our anarchic hwnfc-mg 
system, our clients find it con- 
venient to use our company to 
make swift bard currency pay- 
ments for them within the for- 
mer Soviet Union," Mr Chert- 
kov explains. “The old 
command economic structures 
are gone, but no effective new 
mechanism exists.” 

One result of Ukraine’s 
financial chaos, according to 
Mr Chertkov, is capital flight 
which he estimates at $15bn, 
between $6bn and 7$bn of 
which he believes has left 
Ukraine over the past two 


. V -. 

rSsS3v#£ > . 





•fly. 





The statue of Odessa's first governor, the Duke de Richelieu, looks out across the port 


years. “This is all because of 
the idiotic tax policies oT the 
government." Mr Chertkov 
says. 

“If the investor climate 
changes all that capital will 
flow back and the EBRD [Euro- 
pean Bank for Reconstruction 
and Development) and the IMF 
[International Monetary Fund] 
will be superfluous.” 

However, Mr Chertkov says 
his clients are prospering and 
redirecting their businesses. 
Russia, once the dominant eco- 
nomic player, now ranks 
behind the Baltics. Israel. 
Greece, Germany and the US 
in his clients’ trade. 

“Spiritually, we are very 


close to Russia, but in business 
we’ve very quickly reoriented 
ourselves," Mr Chertkov says. 
p/Ve’ve found better partners 
in the world market." 

Mr Chertkov hopes that 
Odessa can become “the great 
wholesale bazaar for the entire 
former Soviet Union". 

It is a dream shared by Mr 
Edvard Gurvitz. who survived 
an often implicitly antl-semitic 
campaign to be elected Odes- 
sa’s mayor in elections on July 
10. A free-wheeling business- 
man who is credited with spru- 
cing up Odessa's centre when 
be was a city councillor, Mr 
Gurvitz hopes to establish a 
free-economic zone in the city. 


Mr Leonid Kuchma. 
Ukraine's new president and 
one or Mr Gurvitz's political 
allies, supports the idea and 
consultants, funded by the 
EBRD, are already in Odessa to 
help work out the details of the 
plan, which, barring adminis- 
trative obstacles, could come 
into force late next year. 

Mr Gurvitz is hopeful that, 
with the added fillip of a free 
economic zone. Odessa's trad- 
ers will be able to help pull the 
rest of the nation out of its 
economic doldrums. 

“It's like what the Americans 
say about General Motors." Mr 
Gurvit2 says. “What’s good for 
Odessa is good for Ukraine." 


John Murray Brown reports on Ankara's difficulties in realising its critical privatisation 


M r Tezcan Yaramanri 
is fond of remarking 
that privatisation is 
now a buyer’s market As the 
man in charge of Turkey’s 
sell-off programme, he still has 
to convince the buyers. 

For Turkey's privatisation is 
at a critical juncture. With 
access to the debt markets cut 
oft, the government would 
appear to have little choice but 
to push ahead with rapid asset 
sales to bolster the balance of 
payments and see off a possible 
debt rescheduling. 

Yet. only this month, the 
government has had its way 
blocked. The constitutional 
court invalidated its use of 
decree powers to speed up the 
programme, with the effect 
that parliament’s approval will 
have to be sought for any legis- 
lative changes to prepare com- 
panies for sale. 

The Turkish programme is 
suffering from a credibility 
gap. The latest wrangle over 
pricing in the oil industry, one 
of the sectors earmarked for 
disposal, merely points up the 
confficting policy objectives of 
a government desperate to 
raise revenues for the budget, 
but also keen to keep a grip on 
headline inflati on 
The companies on offer 
i nc lude oil r efining and distri- 
bution, telecommunications, 
the state airline Turk Hava 
Yollari and a steel concern. 
Back in May, Mr Yar amanri 
predicted privatisation receipts 


Turkey finds it hard to sell idea 
of buyer’s market in state assets 


programme 


would reach around $2.5bn 
(£L6bn) in 1994. Today, he is 
less confident. “It’s still the 
target we’re r unning after. But 
if you consider we only man- 
aged to raise $1.7bn, in 10 years 
since the programme was 
launched, you know what 
we’re up against," he says. 

For few developing countries 
have talked about privatisation 
for so long with so few results. 
In some respects. Turkey's pri- 
vatisation effort is a casualty 
of what a US banker called 
reform fatigue. Even today the 
government is engaged iu little 
more than a revenue raising 
exercise - the Thatcherite tar- 
gels of spreading share owner- 
ship and increasing economic 
efficiency are no longer men- 
tioned. Indeed, in the current 
financial chaos, public offer- 
ings have been abandoned, 
with Mr Yaramanri concentrat- 
ing instead on block sales of 
strategic stakes to industrial or 
trade buyers. 

The programme faces three 
main challenges. First, the 
international market is abrim 
with privatisation offers from 
eastern Europe to Latin Amer- 
ica and the Far East 
Second, it is all but impos- 


sible to put a value on Turkish 
assets, with the lira having 
depreciated by around 50 per 
cent since the start of the year. 
Exacerbating the problems, the 
government has yet to clarify 
key issues like labour restruct- 
uring and pricing, without 
which buyers are not able to 
forecast future earnings. 

Third, there are any number 
of special interest groups who 
need to be won round to the 
programme, from labour 
unions concerned about redun- 
dancies. civil servants and poli- 
ticians worried about loss of 
status and patronage - even 
some private sector companies 
fear increased competition that 
might result from divestiture. 
For example, it was on an 
appeal from Social Democrat 
deputies that the constitu- 
tional court on July 6 over- 
ruled the government's fast 
track legislation. 

In today's conditions, bank- 
ers also point out that any dis- 
posal is likely to have to be at 
a large discount This could 
play further into the hands of 
those who charge that this is 
little more than a distress sale 
“It's the destiny of the m a n 
sitting in this chair," concedes 


Mr Yaramanri. “As you cannot 
possibly make an auction 
where all 60m Turks partici- 
pate, there will always be criti- 
cism. " 

Labour issues remain partic- 
ularly sensitive. The govern- 
ment has made some progress, 
introducing a job loss insur- 
ance fund which win compen- 
sate workers laid off for up to 
eight months after their dis- 
missal The catch is that finan- 
cing for the fund has to come 
from the sales proceeds from 
privatisation. 


A s for labour restructur- 
ing, there are signs 
that the government 
may be backtracking on its 
earlier pledge to close down 
the loss-making Zonguldak 
coal mines and the Karabuk 
iron and steel works. Mr Yara- 
manri now talks of a “partial 
closure, laying off some per- 
sonnel”. 

Only two weeks ago, the gov- 
ernment had a foretaste of the 
sort of battle to come, when it 
publicly invited domestic bids 
for its 51 per cent stake in Ere- 
gli Iron and Steel company 
(Erdemir). Mr Yaramanci’s 
comments to reporters that the 


company was probably not 
worth its replacement value, 
pitched him into a slanging 
match with one of the compa- 
ny’s directors, who called his 
comments “criminal" and 
called for a stock exchange 
inquiry. 

The decision to go to public 
tender for Erdemir is under- 
stood to have been against the 
advice of the consultants CS 
First Boston. The move is seen 
more as a measure of the pres- 
sure Mr Yaramanri is under 
from the politicians, motivated 
by the need to show the World 
Bank and others supporting 
the privatisation effort that the 
programme is still on track. 
Moreover, by inviting local 
bids, the government is also 
hoping to see off the criticism 
that domestic investors have 
been ignored - a problem 
which led to court action on 
earlier sell-offs. 

Mr Yaramanri is understand- 
ably frustrated. However, not 
all the problems are within his 
control. The telecommunica- 
tions sector has been 
embroiled in an embarrassing 
legal tussle. In April, TeJeta? - 
a joint venture with Alcatel 
Bell and Turkey's first privati- 


sation - was forced to seek 
court protection from its credi- 
tors. as a result of the failure 
of th e state telecom monopoly 
PTT to pay for its equipment 
supplies. The issue has since 
been resolved with Citibank 
last week lending $l65m to the 
government to allow the PTT 
to settle its debts. However, 
the incident can hardly have 
helped the planned PTT priva- 
tisation. 

Conflicting policy objectives 
are equally apparent in the 
petroleum sector. Here, the for- 
eign oil majors, now being 
courted to take a stake in the 
industry, complain that the 
government is using its control 
over the state run Tupras refi- 
nery. to hold down domestic oil 
prices, causing additional 
losses at both Tupras and the 
state-run retailer Petrol Ofisi. 

Mr Yaramanri insists that 
with privatisation of Tupra$. 70 
per cent of refining capacity 
will be in private hands, ensur- 
ing a level playing field. “We 
will offer comfort and security 
to investors," Mr Yaramanri 
declares. However, in the next 
breath, he reveals that the gov- 
ernment may seek certain 
industrial conditions "to pro- 
tect employment and secure 
some capacity increases or 
additional investments". 

As one banker put it "He 
may talk about a buyer's mar- 
ket, but then be seems obliged 
to introduce all these seller’s 
conditions." 


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NEWS: INTERNATIONAL 


FINANCIAL TIMES TUESDAY JULY 19 1994 


Nigerian protesters claim 20 killed in clashes 


HK notes 
to mature 


By Paid Adams m Lagos 

Nigeria's striking oil muons said 
yesterday their leaders had disap- 
peared, as witnesses to clashes in 
the commercial capital Lagos 
between demonstrators and security 
forces reported a number of deaths. 

The Campaign for Democracy, 
which is seeking the removal of the 
military government, said 20 people 
wore killed. One witness said a man 
in military uniform had been left 
dead by a rioting crowd, while 


another unc onfirmed report said 
eight people were shot by armed 
security forces. 

The oil workers are demanding 
that General Sam Abacha's regime 
uphold the result of the June 1993 
presidential election - which was 
annulled after Mr Moshood Abiola 
emerged as the apparent winner - 
qpd reverse its cuts in investment in 
the oil industry. Mr Abiola has been 
arrested and faces trial for treason 
at the end of this month. 

Nnpeng* the junior oil workers 


union which is entering the third 
week of its strike, says its leader Mr 
Frank Kokori is under arrest, which 
is denied by the police. Peogassan, 
the senior staff union which joined 
the strike a week ago, says it does 
not know where its two top officials 
are. 

The oil workers yesterday ruled 
out an end to the strike until the 
military government hands over to 
civilian rule and denounced as a 
sell-out talks at the weekend 
between the government and other 


trade anions over an end to the 
strike. 

Some of the 41 nnions which 
make up the Nigeria Labour Con* 
grass (NLC) began a two-day meet- 
tug in Kaduna yesterday to consider 
a national stoppage in support of 
Nupeng, especially if any of the 
strikers were badly treated. The 
NLC has sided with the government 
in previous crises and avoided 
all-out strikes, hut as an umbrella 
for the labour movement it does not 
control individual unions. 


Factory workers have been on 
strike in support since last week in 
Lagos, where most of the industrial 
area is shut either because of strikes 
or the lack of electricity and fuel. 

Some multinationals operating in 
the Lagos area say they have 
between a week's and two weeks’ 
supply of industrial fuel, diesel and 
petroL The strike has stopped deliv- 
eries of petroleum products to till- 
ing stations and big industrial 
users, mainly in the south-west of 
Nigeria. 


Shell, which produces half of 
Nigeria’s estimated 2m barrels of oil 
a day, said: "It is affecting produc- 
tion in a small way but we are meet- 
ing tanker delivery schedules. 
Gradually the strike is taking 
effect" 

Senior management and expatri- 
ate staff, who are not union mem- 
bers, are trying to maintain essen- 
tial services. Bengassan has warned 
of reprisals against strike breaking 
but were not specific about the 
action they intend to take. 


Desert tribes meet to 
bury their differences 


By Julian Ozanrte and 
James Whittington on the 
teraoK-JorttarUan border 

L ike two warring desert 
tribes, Jordan and Israel 
met yesterday in a mod- 
em version of a Bedouin tented 
camp on their disputed sun- 
baked border to settle old 
scores and draw up a peace 
treaty. 

Sheltering from the 40°C des- 
ert heat in an air-conditioned 
white and yellow striped tent, 

Israeli and Jor danian officials 
and arm; generals sat at a 
table straddling the border and 
Shook hands. 

The bilateral talks, the first 
to be held publicly in the 
region, focus on bonier, water 
and refugee issues and aim to 
lay the groundwork for peace. 

Tight security ringed the 
sandy area where Israel, amid 
isolated palm trees and scrub, 
cleared away barbed wire and 


land mines and constructed a 
small encampment complete 
with generators, portable toi- 
lets and. dozens of telephone 
linp« an d faxes. In the back- 
ground loomed the chocolate 
brown hills of Wadi Rum from 
where Lawrence of Arabia 
descended to capture Aqaba in 
1917 and spark the Arab revolt 
against the Turks. 

Both sides emphasised the 
significance of the site. Mr 
Elyakim Rubinstein, head of 
the Israeli delegation, said: 
“This meeting takes place in a 
tent The tent is tentative, but 
peace should and wifi, be per- 
manent. We are at a very 
warm spot of our two coun- 
tries - it is only natural to 
express the hope that tsraeti- 
Jordanian peaceful relations 
will be warm forever." 

Ambassador Fayez al-Taraw- 
neh, head of the Jordanian del- 
egation, said: "We hope that 
our location which bears testi- 


mony to the imperatives of 
geographic proximity and 
inter-dependence will inspire 
us to arrive at tangible results 
so that the fruits of our com- 
mon endeavours may be felt by 
ordinary men and women in 
our long-suffering region." 

Israel put up a white iron 
gate in the border fence and 
many Israeli officials, soldiers 
and journalists who passed 
through were taking their first 
steps on Jordanian soiL 

Several Israelis posed for 
photographs to capture the 
sense of history. Outside 
Israeli soldiers milled around 
sipping cola at a portable 
snack bar set up by Shechem. 
the Israeli army caterers. 

On the Jordanian side, 
guests at the Aqaba Holiday 
Inn watched an Israeli TV jour- 
nalist talking in Hebrew on a 
mobile phone to Jerusalem 
while issuing instructions to a 
Jordanian camera crew. Mobile 



Jordanian delegation head Fayez al-Tarawneh (right) looks to his Israeli counterpart Elyakim Rubenstein as peace talks start m* 


phones and Israeli citizens are of Eilat with a special state- called for urgent cooperation presence in this region we 
banned in Jordan. ment from the town’s mayor, and sharing of facilities such have dreamed of peaceful reia- 

On the exit road an Israeli Gabi Kadosh - a long-time as airports, transport and tions with our next-door town 

dished out a glossy promotion enthusiast of Jordanian-Israeli water resources between Eilat of Aqaba. Eventually this day 

brochure on the tourist resort co-operation in tourism. He and Aqaba. "Since our first has been reached." 


Murayama promises a more 
gentle and humane Japan 


Mr Tomiichi Murayama. Japan's new 
socialist prime minister, yesterday 
sought to improve the weak popular- 
ity of his government by promising a 
more gent le and humane Japan, 
writes William Dawkins in Tokyo. 

The fourth administration of the 
past year will be "people friendly. . . a 
government you can feel at ease 
with" and will strive to make Japan 
"not to be a powerful country but a 
caring country" Mr Murayama told 
parliament in his inaugural policy 
speech. He promised tax cuts, “trust- 
worthy politics,” no change in defence 
policy, and a more discreet interna- 
tional profile, in an attempt to 
assuage popular anxiety over the 
coherence of the left-right coalition, 
which seized power in a pa r liame n t 
tary coup three weeks ago. 

Mr Murayama openly confirmed for 
the first time yesterday that he would 
abandon some of his Social Demo- 
cratic party’s more extreme policies, 
such as seeking to disband the mili- 
tary. so as to fell in line with the 
dominant coalition partner, the con- 
servative Liberal Democratic party. 

Policy rows with the left wing 
helped destroy the previous two cen- 
tre right-led coalition governments, 
but Mr Murayama’s socialist col- 
leagues appear readier to suppress old 
ideologies to stay in power now their 
leader has become prime minister. 

Mr Murayama took care to avoid 



Murayama: will value kindness 

controversy yesterday. He made no 
direct reference to a rise in sales tax, 
which the finam» ministry insists is 
needed to fund the drop in income tax 
and pensions. 

However, Mr Murayama planned to 
“seek the understanding of the peo- 
ple" to reform the tax system by the 
end of the year. He aimed to put gov- 
ernment finances, where the state has 
over Y200.Q0Qbn (£l.3i0bn) of out- 
standing bonds, on a “sound footing." 

On the economy, he promised to 


strive for exchange rate stability and 
for a “highly significant decrease" in 
the current account surplus, which 
reached a record $60.01bn (£3&5bn) in 
the first half of this year. To that end , 
Mr Murayama’s government will 
press ahead with deregulation, to cut 
prices and to dismantle barriers to 
new businesses. 

On defence, he promised to uphold 
the US-Japan security treaty, under 
which 24,000 US troops are deployed 

in J apan apij to maintain a minimum 

defence capability. This will help 
assuage widespread public anxiety on 
Japan's readiness to face a threat 
from North Korea, but implies a steep 
climbdown by the SDP's left wing 
when the party holds its next policy 
conference in September. 

On foreign affairs, Mr Murayama 
toned down Japan's bid for a perma- 
nent seat on the UN Security Council 
and said he wanted a “thorough dis- 
cussion of the rights and responsibili- 
ties" involved. His call for a nation of 
peace that does not flaunt economic 
or military power marks a contrast to 
the previous two governments’ desire 
for a higher world profile. 

On domestic politics, Mr Murayama 
confirmed that he would not call an 
election until after new constituency 
boundaries have been drawn, the final 
stage of a five-year campaign to curb 
corruption and make politics more 
responsive to the electorate. 


MONEY SUPPLY GROWTH FALLS 


Growth in Japan's money supply 
slowed in June for the second succes- 
sive month due to stagnant bank 
lending, as the sluggish economy con- 
tinued to affect demand for foods, 
writes Braiko Terazono in Tokyo. 

The Bank of Japan said M2 
plus certificates of deposit grew 1.5 
per cent from a year earlier, down 
from 1.7 per cent for May. Money 


supply grew 3LZ per cent in April. 

While recent hot weather has 
boosted retail spending, spurring 
hopes of an imminent economic 
recovery, demand for funds for capi- 
tal investment remains weak. Bank 
lending in June feD 0.1 par cent from 
the previous year compared with the 
0.3 per cent rise in April and the 0.1 
per cent rise in May. 


Brokers Barclays de Zoete Wedd 
said growth of M2 plus certificates of 
depostt could recover to 3 per cent by 
(he year-end if currency markets sta- 
bilised, prompting a modest economic 
recovery. 

However, deterioration of balance 
sheets at banks may curb credit cre- 
ation once recovery is under way, in 
turn limiting the economic rebound. 


Sino-Indian trade 
route reopens 


By Shiraz Sdhva fri Mew Delhi 

India and China yesterday agreed to 
reopen an ancient trade route after 32 
years, as Mr Qian Qichen, China's 
vice-premier and foreign minister, 
said during a visit to New Delhi that 
he hoped border disputes between the 
two countries would be resolved soon. 

Mr Qian and Mr Manmoban Singh, 
the Indian finance minister, signed an 
agreement for the avoidance of double 
taxation and the prevention of fiscal 
and tax evasion. The agreement pro- 
vides for lower rates of taxation for 
income generated by transfer of tech- 
nology and investment, with guide- 
lines to resolve tax disputes and pro- 
visions for exchange of information 
on tax evasion. 

An ancient trade route through the 
Shipkila Pass on the border of Kin- 
naur district in Himachal Pradesh 
was formally restored with the sign- 
ing of a protocol by the two govern- 
ments. 

The route, which, was closed in 1962 
after the occupation of Tibet by China 


and the Indo-Cbina war, will be ser- 
viced by trading complexes at Chha- 
pan on the Indian side and Jueva on 
the Chinese side. 

Mr Qian said he hoped bilateral 
trade, which increased to 3675m 
(£433m) in 199394 from 3220m the pre- 
vious year, would register further dra- 
matic growth. The two countries also 
agreed to strengthen economic and 
technical co-operation in the steel sec- 
tor. India's iron ore exports to China 
touched nearly 4m tonnes in 199394. 

Mr Qian's visit is the latest in a 
series of talks aimed at improving 
relations between Asia's two largest 
countries. Mr P V Narasimha Rao. 
Indian prime minister, visited Beijing 
last September, when an agreement to 
maintain peace along the 4,000km Sin- 
o-Indian border was signed. 

However, the two countries have 
been unable to reduce troops along 
the border or resolve several 
long-s tanding disputes, inrinding Chi- 
na’s refusal to accept the merger of 
Sikkim, a state between Nepal and 
Bhutan, with India in the 1970s. 



Indian police arrest Tibetans in New Delhi yesterday during a demonstration 
against the visit of Chinese foreign minister Qian Qichen 


Central Vietnam wants to join high-flyers 

Provincial officials are tired of being passed over by investors, writes Victor Mallet 


US firm 
over lifting 
sanctions 
on Iraq 

The US last night took a firm 
stand against lifting the 
embargo 'against Iraq even as 
Baghdad sought improved 
relations with its Arab neigh- 
bours and boasted of co-oper- 
ating with the United Nations, 
writes Michael Littlejohns, UN 
Correspondent, in New York. 

As the Security Connell con- 
ducted its periodic review of 
sanctions Ms Madeleine 
Albright, the US ambassador, 
asserted that this M )imited 
co-operation” was sporadic, 
selective and opportunist 

She said Baghdad was frying 
only to escape sanctions while 
ignoring other reqnirements 
imposed by the Council. 

The US was convinced that 
what co-operation bad been 
seen would cease once Iraq 
was enabled to sell ofl. While 
Baghdad still had not revealed 
folly its mass destruction 
weapons programme, it was 
already contacting former sup- 
pliers or middle-men to pur- 
chase new armaments. 

Although France, Russia 
and some third world states 
are eager to have the Council 
acknowledge that Iraq has 
made progress towards imple- 
menting Council resolutions, 
Ms Albright said it was prema- 
ture to discuss either the 
terms or the timing of modify- 
ing sanctions. 

Mr Tariq Aziz. Iraqi deputy 
prime minister, who is in 
New York, has accused some 
states - implicitly the US and 
Britain - of obstructing an 
easing of the embargo. 

Both countries have veto 
powers. 

Pepsi-Cola 
may face 
boycott 

Pepsi-Cola feces a threat of a 
boycott from consumers in the 
Philippines’ main sugar-produ- 
cing Island of Negros because 
it is using Imported sugar for 
its production of soft drinks, 
writes Jose Galang in Manila. 

The boycott is being insti- 
gated by Negros-based Confed- 
eration of Sugar Producers 
Associations and National Fed- 
eration of Sugar Planters, and 
bas gained support from 
Negros representatives is the 
Philippine Congress. 

The dispute stems from the 
import of 15.000 tonnes of 
refined sugar worth $l.9m 
made by Macondray, an affili- 
ate of Pepsi. Macondray 
imported the sugar due to a 
reported shortage of the com- 
modity In the local market 

However, sugar growers in 
Negros insisted that the 13 
sugar mills on the island were 
holding sugar stocks of some 
240,000 tonnes. The local 
sugar industry directly 
employs some 500,000 people. 


F rom the moment the 
communist government 
began liberalising the 
economy in 1987, the inhabit- 
ants of central Vietnam com- 
plained that almost the only 
signs they saw of foreign inves- 
tors and tourists were the 
glinting wings of aircraft 30,000 
feet up shuttling between 
Hanoi and Ho Chi Minb City. 

Of the $Sbn in foreign invest- 
ment projects approved 
throughout the country, only 
25, valued at $163m (£104m), 
are located in Quangnam-Dan- 
ang. the most important of the 
central provinces sandwiched 
between the South China Sea 
and the mountains on the Lao 
border. 

And of that 5163m, only a 
quarter has actually been 
spent so for. according to local 
officials. Investments include a 
gold mine, a granite processing 
factory, seafood and furniture 
export businesses, and a Ger- 
man-Italian-Vtetnamese ven- 
ture making freight containers. 
"We have a lot of investment 



in Ho Chi Minh City and Hanoi 
and not enough here,” says Mr 
Doan Ngoc Dau, a member of 
the c ommunis t provincial peo- 
ple's committee in Danang. 

After years of neglect, the 


national government is 
attempting to revitalise the 
stagnant economy of central 
Vietnam. Foreign investors fac- 
ing stiff competition elsewhere 
are also looking at the region’s 
opportunities for industry and 
tourism with renewed interest. 

Among the main obstacles to 
economic growth were the con- 
servatism and corruption ot 
the communist cadres and 
army officers who control the 
region, scene of the fiercest 
battles in the Vietnam war. In 
May, however, the Hanoi gov- 
ernment cleared out some of 
the dead wood 

According to Mr Dau, the 
chairman of the provincial 
people's committee was 
retired, the regional Commu- 
nist party chief was replaced 
with someone more dynamic, 
and the chairman of Danang 
city people's committee and 
one of his deputies were fired 
for making "mistakes in land 
distribution". 

The reshuffle was welcomed 
by the emerging private sector 


in Danang where most busi- 
nesses in the area are still con- 
trolled by the armed forces or 
the Communist party and 
where official discrimination 
against those whose relatives 
fought on the American side 
was only recently ended. 

“Leaders here have been 
frightened of making derisions, 
because they are afraid they 
will be responsible for any 
problems," says Ms Truong Thi 
Rim Anh, of the Danang 
branch of the Vietnam Cham- 
ber of Commerce and Industry. 
“But now the bureaucratic sys- 
tem is improving a lot-" 

Although state companies 
remain dominant - only 20 of 
the chamber's 200 member 
companies in the central 
region are from the private sec- 
tor-entrepreneurs have grad- 
ually begun moving into 
import-export businesses, 
retailing and tourism services, 
including small hotels. 

Many such individuals are 
former government employees, 
including one of Ms Anh's col- 


leagues. who recently decided 
to set up his own business 
exporting furniture. 

For potential foreign inves- 
tors, tourism has been the 
main focus in central Vietnam. 
The area around Hue, the for- 
mer imperial capital, has many 
tourist attractions, not least 
the Vietnam war battlefields 
now frequently visited by 
Americans. 

Danang is close to the pictur- 
esque old town of Hoi An and 
to many beaches, including the 
one known to Americans as 
China Beach- The annual num- 
ber of foreign visitors to Dan- 
ang trebled to 33.000 between 
1992 and 1993. and some 28,000 
have already arrived in the 
first half of this year, many on 
cruise ships. 

A Hong Kong company has 
begun work on a $24m beach 
hotel due to be completed at 
the end of next year, and an 
American consortium has 
plans to build a $250m resort 
with several hotels and a golf 
course; both projects are joint 


ventures with the local author- 
ities. 

On the industrial front, a 
Malaysian- Vietnamese venture 
has started to build a $24m 
export processing zone near 
Danang. Quango am-Danang 
province atone wants to attract 
$lbn in foreign investments by 
the end of the decade. Boasting 
of Us mineral, agricultural and 
marine resources, the province 
has draws up a list of more 
than 70 possible projects. 

Foreign investors, some frus- 
trated by bureaucracy and cor- 
ruption in the past, are likely 
to remain cautious, but ther e 
are signs of more activity. 
Shipping companies are open- 
ing offices in Danang and the 
number of cargo vessels calling 
at Danang port has risen to 
about six a week, says Ms Anh. 

An attempt to make Danang 
an international air gateway 
with flights to Taiwan faded 
but at least some of the domes- 
tic flights packed with tourists 
and investors are landing at 
Danang these days. 


after 

handover 

By Sbnon Hefoerton 
In Hong Kong 

Hong Hong’s Monetary 
Authority, the colony’s central 
bank, Is to test investor senti- 
ment towards the transfer of 
sovereignty to China when on 
Monday it offers HK$500m 
(£41,5m) of three-year notes 
that mature on July 23, 1997. 

The authority said yesterday 
that Beijing’s approval had 
been obtained to conduct a 
borrowing programme, even if 
repayment was beyond July i, 
1997, the day sovereignty 
passes to China. Through Mr 
Joseph Yam, its chief execu- 
tive, the authority has estab- 
lished close working relations 
with the People's Bank of 
China, Beijing’s central bank. 

The authority said it expec- 
ted the notes would be well 
received. They carry a coupon 
rate of interest of 6.95 per 
cent “We believe the market 
has discounted the 1997 fac- 
tor,” an official said. 

The issue of three-year paper 
is part of the authority’s 
attempt to establish the basis 
for a debt market In Hong 
Kong. It now issues securities 
with maturities ranging from 
three months to three yean 
and Is considering the Issue of 
a five-year note. 

The notes and bills are 
sought after by banks. The 
authority operates a discount 
window at which banks can 
cash notes and bills for over- 
night funding. 

Bills have been issued since 
1992. The value of outstanding 
notes and bills at the end of 
June was HK$44bn. These 
securities are backed by Hong 
Kong’s exchange fond, a gov- 
ernment reserve established to 
maintain the value of the 
Hong Kong dollar, which the 
authority manages. 


China’s 
economic 
growth 
rate slows 

China’s economic growth rate 
tapered off in the six months 
to June from last year's unsus- 
tainable levels but inflation 
was high, according to official 
statistics yesterday, Our Bei- 
jing Correspondent writes. 

Real gross domestic product 
rose 11.6 per cent compared 
with tiie same period last year, 
according to the State Statis- 
tics Bureau. This compares 
with 12.7 per cent growth for 
1993 against 1992 and 139 per 
cent for the first six mouths of 
last year compared with the 
same period in 1992. The slow- 
down reflects the Chinese gov- 
ernment's credit restrictions 
and other measures to prevent 
overheating. 

The consumer price index to 
the 36 biggest cities was up 
22.7 per cent for the six 
months compared with the 
corresponding period last 
year. For all of 1993 the rise 
was 19.6 per cent 
The latest growth rate for 
fixed Investments was 262 per 
cent sharply down from toe 
runaway rate of 61 per cent a 
year ago. 

Consumer spending was 
growing at a real rate of 4A 
per cent according to yester- 
day’s figures, compared with 
21.6 per cent a year ago, Indic- 
ating that a wave of panic buy- 
ing last year bas ended. 

Indonesia offers 
East Timor talks 

Indonesia yesterday marked 
the 16th anniversary of Its 
annexation of East Timor by 
offering to negotiate with 
guerrillas opposing the take- 
over, but the authorities 
warned that they would come 
down bard on lawbreakers, 
Renter reports from Dill 
Bast Timor came under 
renewed Internationa] scru- 
tiny after hundreds of mainly 
Catholic protesters were 
beaten bad: last Thursday by 
police. It was the most violent 
confrontation there since 
troops gunned down up to 2W 
demonstrators at a funeral to 
Dili in 2991. 

Palau to end UN 
trust status 

Palau will end its status as the 
last United Nations frost terri- 
tory in the Pacific on October 
1 and win be formally Hnto* 
to the US, said Palau President 
Kuniwo Nakamura, . Reuter 
reports from Guam. 

Under an agreement witn 
the US approved by Patou s 
voters, the Islands will ban#® 


external defence. 


self-governing, with waauus- 





* *1 


•• > 

Ilk ' FINANCIAL TIMES TUESD AY JULY 10 1994 


■'.' Nabisco and Pfizer 
ln d 0 , launch fat substitute 


l v. i L‘ 


By Victoria Griffith 
in Boston 

/■ Nabisco Foods Group and 
Pfizer Food Science yesterday 
. .. v announced the launch of a &t 
substitute. Salatrim, to be used 
in low-fat chocolate bars, ice 
cream and cheeses. 

. Nabisco, a unit of Rjr 

- } Nabisco, hopes to launch the 

.. .. product in chocolate bare by 

. mid-1995, breathing new life 

" • into the faltering fat 

■ substitutes industry. 

Satisfactory fat substitutes 
. . ' ‘ have been difficult to develop 

without destroying the taste of 
■■•y products, as fct carries taste to 
the mouth. 

• Those that have been 
developed have " also 
experienced difficulty in 
gaining Food and Drug 

■ v. V Administration approval. 

■ Procter & Gamble's Oleslxa has 

been mired in the approval 
process for years. 

: However, Salatrim is 

. . ' unlikely to get delayed by the 

• FDA, according to Mr Hank 
Sand bach, a spokesman for 

Bargaining 
: .v;=l setback for 
pulp unions 

. * : 'i The British Columbia Labour 

Relations Board has ordered 
the province's pulp and paper 
"" u unions to negotiate with com- 
parties individually, reversing 

- ■4 a 50-year tradition of Industry- 

■ • wide bargaining, reports Rob- 
- ert Gibbens from Montreal. 

The unions have been with- 
out a contract for several 
months and , with surging com- 
pany profits, had insisted +frat 
industry-wide bargaining be a 
precondition of serious negotia- 
. * ting. 

c . The board ordered the 

V i i i i I tl N unions to proceed with negotia- 
ting new labour contracts with 
..... . a dozen big companies. It said 
v v, V ' liOIl unions’ stand for industry- 
'* wide bargaining flouted cur- 
• . • . .... I, rent labour laws requiring bar- 
J ; V ' I ! . gaining in good faith. The com- 
*. “ parties ended industry-wide 

1 bargaining last January. 


Nabisco Foods Group, because 
it is made from, na tural 
substances. 

It has also solved the 
problem of taste, its makers 
claim, by comb ining fat 

substitutes with fat 

Derived from short-chain 
acids found in vinegar and 
cheeses, and steric adds found 
in vegetable oils, Salatrim 
contains fewer calories than 
traditional fats because it 
contains more large molecules, 
which are not so easily 
digested. 

Salatrim contains five 
mo l ecules of fat per gram — 
more than competing fat 
substitutes, but less than 
traditional fat. 

The market for low-fat 
products in the US is 
potentially great, with 
Americans showing tnrrwnging 
concern about their weight, as 
evidenced by the explosion of 
the diet industry. 

Americans also seem to be 
fighting a losing battle with 
fat. The number Of obese 
adults in the US has surged 


dramatically over the last ten 
years, according to a recent 
study by the National Center 
for Health Statistics, part of 
the Centers for Disease Control 
and Prevention. 

Between 1960 and 1980. a 
quarter of all American adults 
were judged obese. By 1991, 
that had jumped to one 
third. 

“The government and health 
organisations have been 
pushing Americans to lower 
their fat intake for years,” said 
Lyn Nabors, executive director 
of the Calorie Control Council 
in Atlanta. “But the message is 
not really getting through. 
Consumers don’t wm to want 
to sacrifice taste at all, which 
is why a good-tasting fat 
substitute is so important” 

Pfizer Food Science says it 
hopes to launch ice creams, 
cheeses, and baked goods made 
with Salatrim soon. 
Margarines and spreads will be 
introduced later. So far. the 
company has not found a way 
to use the product for 
frying. 


-’VWii; 


Canadians ease 
internal barriers 


By Bernard Simon in Toronto 

Canada's prime minister, Mr 
Jean Chretien, and leaders of 
the 10 provinces yesterday 
signed a long-awaited deal to 
ease internal trade banters. 

The agreement faiig short of 
the federal government's aim 
of dismantling the plethora of 
non-tariff curbs maintaWiMfl by 
the provinces but business 
groups have welcomed it as an 
important first step. 

Yesterday's signing cere- 
mony in Ottawa was also 
designed to send a message to 
Quebec, where the ruling Lib- 
erals are about to embark an 
an uphill election campaign 
against the separatist Parti 
Quebecois. 

Mr Daniel Johnson. Quebec’s 
outspokenly federalist premier, 
needs to show voters that the 
francophone province will fare 


better as part of Canada than 
by breaking away. Mr Johnson 
is expected to call an election 
later this week for September 
12 . 

The PQ leader, Mr Jacques 
Parizeau, has scoffed at the 
inter-provincial trade agree- 
ment, noting that it falls short 
in many respects of the North 
American Free Trade Agree- 
ment (Nafta) multilateral 
trade pacts to which a sover- 
eign Quebec would he a signa- 
tory. 

Among areas covered by the 
package are government pro- 
curement, labour mobility, 
transport licences and product 
standards. The deal also 
includes a weak dispute settle- 
ment mechanism. However, 
Ottawa and the provinces were 
unable to agree on contentious 
areas stub as energy, alcohol 
and agriculture. 


NEWS: THE AMERICAS 


Probe of 
Mexican 
group 
widened 


By Damian Fraser 
in Mexico City 

The office of Mexico's 
attorney-general has widened 
its investigation into Grupo 
Finandero Havre, a financial 
services group in Mexico City, 
for alleged embezzlement of 
more than $100m (£65m) Gram 
state development banks. 

The government alleges that 
Havre set np more than 70 
phantom companies which 
illegally borrowed more than 
$lOOm (some in pesos, some in 
Foreign exchange) from 
Nafmsa and Bancomext, two 
state development banks. 

The money was alleged to 
have been diverted into other 
companies owned by the fam- 
ily of Mr Julio Mariscal, the 
Hhvre chairman 

He is one of Mexico’s most 
prominent businessmen. In 
addition to controlling Havre, 
he owns the Mexican conces- 
sion to sell General Motors 
cars. 

In 1992, Mr Mariscal bought 
the brokerage Casa de Bolsa 
Mexico for about $60m. 

Havre is Mexico’s 18th larg- 
est financial services group, 
with Insurance, brokerage, 
factoring and leasing subsid- 
iaries. Government officials 
have now assumed supervision 
of the group. 

Last month, Havre's insur- 
ance arm was accused by the 
finance ministry and the 
national banting co mmission. 
a regulatory body, of failing to 
report financial information, 
of alteration of financial 1 
records and over-reporting its 
level of capitalisation. j 

The attorney-general is tak- 
ing legal action against at [ 
least 24 Havre executives, | 
including Mr Mariscal, his 
son, the company's top legal 
officer, Mr Ricardo Nevdrez, 
the vice-chairman of the insur- 
ance arm, Mr Jos£ Antonio 
Aguilar, and the company's 
entire board of directors. 

Mr Mariscal is reported to be 
in hospital in the US, with pro- 
ceedings under way to extra- 
dite hbn to Mexico, while Mr 
Nevdrez has is reported as 
having disappeared. 


IMF ‘facing a busier future’ 


By Michael Proviso 
ki Washington 

The International Monetary 
Fund's second half-century will 
be buster than its first, if Mr 
Michel rtamdugs us, the manag- 
ing director, has his way. 

Setting out his vision of the 
IMF's fixture at a Washington 
news conference, he said it 
needed to play a larger role as 
a manager of the international 
economic system, while 
increasing its efforts to pro- 
mote sustainable growth is for- 
mer communist countries and 
the developing world. 

He said big changes in the 50 
years since the IMF and World 
Bank were created, at Bretton 
Woods in New Hampshire, 
included the greater mobility 
of international capital and the 
bigger role of developing coun- 
tries in the global economy. 

The Mobilisation of economic 
activity brought about by capi- 
tal mobility made n a ti onal 
economies more inter- 
dependent mate af tH i ro 
central co-ordination of poli- 
cies more necessary than ever. 
However, he signalled that the 
consultative process of the 
Group of Seven leading indus- 
trial countries was not ideally 
suited to the task because it 
excluded developing countries. 

It was “crystal clear that we 
must try to promote more par- 
ticipatory decision-making”, 
with developing countries 
playing a role annmensurate 
with their economic impor- 
tance. 

The IMF's interim commit- 
tee, which meets twice a year 
and h»chirt*>» 24 fimmte minis- 
ters from industrial and devel- 
oping countries, provided a 
“remarkable framework for 


participatory decision-mak- 
ing.” Its role should be 
strengthened to reflect the 
challenges posed by globalisa- 
tion of the world economy. 

Mr ftamtessng brushed aside 
a suggestion by the Bretton 
Woods Commission - an inde- 
pendent group of experts 
headed by Mr Paul Volcker, a 


1969s to supplement global 
stocks of gold and foreign 
exchange reserves, 

Mr Camdessus said countries 
p lanning to implement strong 
adjustment programmes under 
stand-by or extended fund 
facilities should be able to bor- 
row up to 90 per cent, rattier 
than 68 per cent, of their quo- 


increase in SDRs to all mem- 
bers to increase global liquid- 
ity when inflation was low. 

Mr Camdessus said he would 
continue to press all members 
to make their currencies fully 
convertible on current account 
transactions. At present, only 
93 of 179 had achieved this. 

But it was time “for the IMF 



IMF chief Michel Camdessus: Looking forward to the fund's second half-centnry pnnbiyWM 


former chairman of the US 
Federal Reserve Board - that 
flip IMF should focus on its 
global monetary responsibihes 
and not duplicate the work of 
the World in promoting 
growth in developing coun- 
tries. 

The fund, he -win, needed to 
do more, not less. It was work- 
ing on a package of measures 
to increase economic support 
for clients, especially ex-com- 
munist countries, involving 
increased access to its loan 
facilities and a new allocation 
of special drawing rights 
(SDRs), the fluid's artificial 
reserve asset created in the 


tas with the fund. (An IMF 
quota is akin to the member- 
ship fees paid when Joining a 
club.) He also favoured 
increased access to the sys- 
temic transformation facility, a 
loan facility designed far for- 
mer communist countries. 

On SDRs, two options were 
being discussed. Equity consid- 
erations justified a restricted 
allocation to the 37 countries 
(including some eastern Euro- 
pean countries and the former 
Soviet Union) which had joined 
the fund since the last alloca- 
tion in 1981. However, he 
believed there was also a 
strong case for a general 


to go an extra mile” and insist 
that members also liberalise 
transactions on capital 
account, which had not been 
envisioned by the fund's foun- 
ding fathers. Free capital flows 
would promote greater effi- 
ciency in resource allocation. 

However, although greater 
capital mobility was desirable, 
it also raised the "risk of sud- 
den crises”, even in countries 
with sound policies. So, Mr 
Camdessus would continue to 
press for the creation of a new 
IMF facility to give members 
resources with which to defend 
themselves against speculative 
attacks in financial markets. 


Bomb attack on Jews kills 16 


At least 16 people were killed yesterday, 
and dm»n fi injured, by an explosion in 
Buenos Aires which leveled a seven-storey 
building bousing two Jewish- groups, 
agencies report from Buenos Aires. 

hi Jer usalem. Mr SMmnn peres, TgrapK 
foreign minister, said he was sure the 
explosion was a terrorist attack, while the 
World Jewish Congress in New York 
called on all Jewish organisations to take 
immediate security precautions. 

An estimated 100 people had worked in 
the bmUting, which housed the Delegation 
of Argentin e-Israeli Associations, the 
country's principal Jewish community 


organisation, and the Argentine Israelite 
Mutual Association, a charity group- 
The cause of the blast had not been 
determined by yesterday afternoon, but 
Argentine President Carlos Menem said be 
believed it had been an attack planned 
“from abroad and helped by people here”. 

He immediately seeded Argentina’s land 
borders, ports and airports to try to pre- 
vent the escape of any suspected bombers. 
Passengers who had already boarded 
flights were brought back to airport termi- 
nals while investigations took place. 

In March 1092 , a bomb destroyed the 
Israeli embassy in central Buenos Aires, 


killing at least 28 people and injuring more 
than 220. Responsibility for that blast has 
not been determined, despite fears of fur- 
ther attacks. A rash of telephoned threats 
to Jews in Argentina for about a month 
afterwards led to police being stationed at 
Jewish schools, cemeteries and cultural 
centres. 

There are 250.000 Jews in Argentina, 
most of them in Buenos Aires. 

Mr Yi tzhak Rabin, Israeli prime minis- 
ter, called the new attack “a cowardly, 
criminal and evil act”. He vowed that 
Israel will continue to chase the perpetra- 
tors of terrorism to the end”. 



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6 


FINANCIAL TIMES TUESDAY JULY 19 1994 


NEWS: WORLD TRADE 


France urged 
to block 
shipyard pact 


Subsidies deal signals softer 

capacity increases in the absence of 


By Our Foreign Staff 

The agreement on eliminating 
shipbuilding subsidies readied on Sun- 
day follows five years of negotiations, 
chiefly at the insistence of the US. 

Two wain issues that nearly scup- 
pered the discussions earlier this year 
were hammered out at last week's 
talks: European objections to the US 
Jones Act, under which a fixed propor- 
tion of cargo passing through US ports 
must be carried in vessels built in US 
yards; and concern about South Korean 
plans to increase shipbuilding capacity 
by 40 per emit over five years. 

Mr Stafian Sohlman, the Swedish 
chairman of the OECD committee over- 
seeing the talks, made clear that last 
week's meeting was "make or break”. 

Under the agreement, the Jones Act 
stays in place but its scope is limited. 
France is still objecting to this part of 
the deal, although it could be overruled 
in a European Union vote. 

There is still some concern about 


subsidies, but other concerns helped to 
concentrate minds in the final days of 
the OECD talks; the US threats of uni- 
lateral action over subsidies, and the 
prospect that a trade war could follow. 
The Clinton administration made clear 
earlier this year it was ready to back 
legislation enabling penalties against 
subsidised vessels. The Gibbons bill 
before Congress would have authorised 
sanctions on subsidied foreign vessels 
entering US ports. 

U was realised that failure to secure 
agreement could threaten a ruinous 
price and subsidy war and remove any 
chance of controlling dumping. In these 
circumstances, retaliation could have 
brought about a wider trade war. 

Details of the agreement are still con- 
fidential until discussed in the EU 
Council of Ministers. However, the 
main points are: 

• All subsidies, direct and indirect, 
except for research and development, 
will be banned from January 1 1996, 


when the agreement takes effect. Subsi- 
dies already granted will be permitted 
after the tern comes into effect, but lim- 
ited to ships for whic# contracts are 
signed before the end of 1995 and which 
are delivered by the end of 1998. Some 
experts fear that this allowance may 
produce a last-minute subsidy rush. 

• Export credits for ships are brought 
under the “Helsinki rules'*, the disci- 
plines already agreed in the OECD for 
the application of general export cred- 
its. Disputes procedures have been 
agreed, so that suspected breaches can 
be challenged judicially. 

• A mechanism has been established to 
prevent “injurious pricing", such as in 
cases of dumping. This was an impor- 
tant concession, especially by the 
Koreans and the Japanese, who had 
long resisted the idea. It will be 
enforced by disputes panels, similar to 
those in the General Agreement an Tar- 
iffs and Trade, which will have the 
power to award damages. 

• Tbe US has agreed to a cap of 250,000 


US line 


gross tonnes annually on the capacity 
built under Jones Act provisions. If the 
US exceeds tins ceiling, disputes proce- 
dures may be opened against it 
• Countries may provide domestic 
credits on terms equivalent to export 
credits. 

Talks were conducted within the 
OECD, rather than Gatt because the 
normal Gatt principles do not apply to 
ships, which technically are never 
imported. 

The agreement, which will be moni- 
tored. covers 75 per cent of world ship- 
building. Tbe rest is carried out mainly 
by Russia. Ukraine, Poland, China and 
Brazil. 

Efforts will be made to extend the 
agreement to these countries. In 
Poland's case, its accession may be 
linked to its planned membership of the 
OECD. Prospects for Russia. Ukraine 
and China appear less hopeful How- 
ever, the OECD participants plan wider 
talks on the industry with these coun- 
tries is the next 12 months. 


‘No clear winners and losers’ 

Industry cautiously welcomes OECD shipbuilding deal, writes Andrew Baxter 


By John Ridding on Pats and 
Emma Tucker fri Brussels 

French shipbuilders yesterday 
condemned the weekend agree- 
ment on eliminating subsidies 
in the shipbuilding industry, 
cl aiming their competitors 
would benefit from indirect 
subsidies that would be left 
intact. Shipbuilders also urged 
the French government to try 
to block the accord. 

“It is a very bad agreement,” 
said Mr Fabrics Theobald, gen- 
eral secretary of the Chambre 
Syndicate des Constructeors de 
Navires, tbe French shipbuild- 
ers’ association. He compared 
it to the Blair House agree- 
ment on agricultural trade 
between the European Union 
and the US. which reduced 
farm subsidies and was bitterly 
opposed by French farmers. 

The French government was 
alone in rejecting the agree- 
ment reached after a week of 
negotiations at the Organisa- 
tion for Economic Cooperation 
and Development in Paris. 
France said it wanted negotia- 
tions to continue - to reach a 
consensus “which respects the 
interests of all parties". 

According to Mr Theobald, 
the principal French industry 
objections relate to indirect 
subsidies which, he says, are 
left intact under the agree- 
ment. He cited home credit 
schemes, under which ship- 
owners get preferential inter- 
est rates for ordering ships at 
domestic yards and develop- 
ment and research grants. 

The French industry also 
opposes the Jones Act, under 
which US coastal trade is 
restricted to vessels built in US 
yards. “We see no reason why 
this act should receive a bless- 
ing in the agreement,” said Mr 
Theobald. 


Foreign ship orders received 
by Japanese shipbuilders dur- 
ing the first six months of 1994 
rose to 5.2m gross registered 
tonnes (grt), a level attained 
for the first time in four years. 
Renter reports from Tokyo. 

“The major reason was the 
mass order of nine very large 
crude carriers (VLCC) in that 
half of the year,” a spokesman 
for the Japan Ship Exporters’ 
Association said. 

A large part of those orders 
was for the Saudi Arabian 
National Shipping company's 
orders for five double-hulled 
VLOCs, signed with Mitsubishi 
Heavy Industries. 

The last time Japan's ship 
orders for a first half were at 
this level was in 1990, when 


The CSCN said that the 
Fbesch government could and 
should block the OECD agree- 
ment by invoking vital 
national interests. 

Mr Theobald said that the 
French industry had. restruc- 
tured as far as possible and 
that over the past IQ years, the 
number of big shipyards bad 
been reduced from seven to 
two. while the number of ship- 
yard workers had fallen from 
20,000 to 5.00 0. “We have no 
more fat left, only nerves and 
muscle,” he said. 

France yesterday played 
down suggestions that it would 
invoke special powers to pro- 
tect subsidies paid to its ailing 
shipyards which have come 
under threat from the new* 
international agreement 

At a meeting of foreign min- 
isters in Brussels, the French 
reiterated their opposition to 
the deal between tbe US, EU, 
Japan. South Korea. Finland. 
Norway and Sweden to end 
direct and indirect subsidies to 
shipyards in these countries. 

The French argued that the 
agreement would not ensure 
fair competition because it 
allowed certain countries - 
notably Spain. Portugal and 
Belgium - to continue pairing 
subsidies linked to existing 
programmes. France was 
offered a similar deal but 
turned it down, preferring to 
hold out for total exemption. 

Suggestions that France 
would evoke the so-called Lux- 
embourg compromise - which 
allows a country to veto an 
agreement - were dismissed as 
premature. The matter is likely 
to be discussed a gain at the 
next foreign ministers’ council 
meeting. The agreement must 
be ratified by all participants 
and is due to take effect at the 
b eginning of 1996. 


5.5m grt of orders were 
reported, the association 
spokesman said. Total aiders 
for aD of calendar 1990 stood at 
8.6m. 

However, orders for June 
were down from May, at 
635,586 grt. May registered the 
largest Increase this year when 
orders peaked at 1,649.910 grt 

Japan produces about 40 per 
cent of the world's ships and 
there are virtually no direct 
subsidies to the Japanese ship- 
building industry. 

Even so, Japan, provides indi- 
rect subsidies in the form of 
loans to shipowners through 
the Japan Development Bank. 
In fiscal 1992. such loans 
totalled Y53-3bn, according to 
the transport ministry. 


T he world’s main ship- 
building countries and 
shipowners yesterday 
welcomed the multilateral 
agreement to scrap subsidies, 
but differed on who would be 
the winners and losers. 

Observers said that while 
any thing that removed a dis- 
tortion of free trade was a posi- 
tive step, other factors such as 
the industry's manufacturing 
capacity and tbe state of the 
shipping market were more 
important influences on the 
supply and demand balance 
that dictated prices. 

“We are very pleased. This is 
a solution that the US has been 
working to bring about for five 
years,” said Mr John Stocker, 
president of the Shipbuilders’ 
Council of America. The agree- 
ment (which was negotiated at 
the Organisation for Emnnnnic 
Co-operation and Develop- 
ment) was not perfect, but 
would reduce government 
interference in shipbuilding 
and impose discipline on the 
industry. 

Large shipowners, he said, 
would benefit as marginal own- 
ers would not be supported by 
subsidised prices. On the other 
hand, overall prices would 
have to rise, as they would 
have truly to reflect shipyard 
costs. 

Shipowners accepted this 
was a likely consequence, but 
remained unflustered. The 
UK’s Chamber of Shipping, 
which represents shipowners, 
.■aid excessiv e subsidies caused 
too much ship-buying, which 
lead to “over-tonnaging” - too 
many ships chasing too little 
freight business. 

Mr Nick Granger, director of 
the UK’s Shipbuilders and 
Shiprepairers Association, said 
the effect on the UK shipbuild- 
ing industry would be broadly 
neutral so long as the agree- 
ment worked as it should da 
It would not have been in 
anyone’s interests to allow a 
spiral of state aid to the indus- 


try, he said. “But unless there 
is more or less a balance 
between supply and demand, 
you will not have conditions 
where zero subsidies can 
stick.” UK shipbuilders, there- 
fore, were worried by the “mas- 
sive amount” of shipbuilding 
capacity increases being 


Scute* UEtfdaftegMe-ol 8tHx*v 

planned by South Korea. 

Mr Granger also warned 
that, unless countries were in 
the OECD, their ships would 
not be covered by the agree- 
ment’s mechanism to prevent 
injurious pricing. “The Chi- 
nese, Malaysians and others 
are all putting ships on to the 
market at cut-throat prices, 
which I don’t think have much 
to do with reality 

According to Mr Simon 
Quarrell, a consultant at 
KPMG Peat Marwick and 
author of a 1992 report on the 
competitiveness of European 
Union shipyards, the winners 
in the European shipbuilding 
industry would he the low-cost, 
high-efficiency yards which 


could compete on a fair and 
equal basis with other yards, if 
that was allowed 
“These would be some yards 
in Germany, Denmark and the 
Netherlands, and individual 
yards across Europe, including 
Italy and France, where some 
yards are world-class in certain 


market sectors. 

“But there are other yards 
which are effectively being 
buoyed up by subsidies that 
should be given the chance to 
go bankrupt” 

Kvaerner, Europe’s biggest 
shipbuilder, saw itself as a win- 
ner from the deal. "If this 
agreement is fully imple- 
mented, it will boost our ship- 
building potential signifi- 
cantly.” said Mr Diderik 
Schnitler, head of shipbuilding 
at the Norwegian company. 

Kvaerner claimed its compet- 
itive position would be 
enhanced because the average 
subsidy for its yards - six in 
Norway, two in Finland. Govan 
in Scotland and Wamow Werft 


at Rostock in Germany - was 
already considerably lower 
than many competitors. 

The Furnish yards, for exam- 
ple, in effect get no subsidies. 
However, the new regime 
could makp the gntng tougher 
for Kvaemer’s Govan yard, 
which traditionally bene- 


fited from high subsidies. 

The group also said it 
believed the OECD accord 
would enhance prospects for 
stability in the notoriously vol- 
atile shipping markets, 
because generous subsidy lev- 
els would no longer entice 
shipowners to order new ves- 
sels in the fece of adverse mar- 
kets. 

There were contrasting 
views an what the agreement 
would mean for the US ship- 
building industry, which has 
been trying to reduce its 
dependence on defence work 
bnt has found it difficult to 
match subsidised prices offered 
by rival commercial yards. 

Mr Quarrell said the US ship- 


builders had over-estimated 
the effect of subsidies on the 
market, but under-estimated 
tire productivity gap between 
themselves and the world mar- 
ket level. So the removal of 
subsidies would not provide 
the US with a cure-all. 

But Mr Stocker believed the 
deal at last gave US shipbuild- 
ers - which bad not received 
subsidies for the past 10 years 
- toe opportunity to enter a 
market which is forecast to 
improve “fairly dramatically” 
over the next five years. 

He contended that the agree- 
ment would radically shift toe 
industry away from the Japa- 
nese shipbuilders which, with 
the added problem of a strong 
yen. would find it hard to keep 

making ships. 

But the view from Tokyo is 
different The deal was expec- 
ted to work in Japan's favour, 
as direct subsidies to the Japa- 
nese shipbuilding industry 
were virtually non-existent a 
transport ministry official 
noted. 

At the same time, toe anti- 
dumping code - together with 
specification of what consti- 
tutes dumping - is looked 
upon favourably in Japan as a 
measure that will help to pre- 
vent severe pressure on Japa- 
nese shipbuilders to reduce 
prices during recessions. 

However, toe view is that toe 
agreement would not necessar- 
ily act to the disadvantage of 
Japanese industry alone, since 
other countries also provide 
huge indirect subsidies, but 
would help to make the market 
fairer. 

The relaxed reception of the 
OECD agreement reflects toe 
confidence felt in toe competi- 
tiveness of Japan's shipbuild- 
ing industry. In toe first six 
months of this year, toe indus- 
try managed to imTpas e orders 
by more than twofold to 130 
vessels. Additional reporting by 
Christopher Brown-Bumes and 
Michiyo Nakamoto 


European 
groups 
win dam 
contracts 

Impregilo of Italy, Zflhlin of 
Germany and Drama of France 
have won contracts worth 
Yn7.Sbn (£54lm) for a dam 
project on China’s Yellow 
river, agencies report. 

The Xi&oiangdi water con* 
trol project contracts for the 
main body, the flood-discharge 
structure and hydroelectric 
structure were awarded to a 
Yellow River joint venture. 
This comprises the three Euro- 
pean groups and tbe Xia- 
olangdi joint venture. 

The dam site is 40km north 
of Lnoyang city io Henan 
province. China has borrowed 

$57Qm (£375m) from the World 
Bank, including $46 Qm for 
construction and SllOm as a 
soft loan to resettle thousands 
of residents. In total China 
plans to borrow about $ibn 
from toe World Bank. 

Taipei unveils parts 
deal for F-16 

Taiwan will begin production 
this year of parts for US F-16 
fighters under a $40m contract 
with Lockheed, with more con- 
tracts expected to follow, Reu- 
ter reports from Taipei 

Tbe US government had for 
the first time approved tech- 
nology transfers by Lockheed 
for eight different parts tor the 
F-16, said Mr Jack Tang; dep- 
uty director of toe cabinet’s 
Committee for Aviation and 
Space Industry Development. 

Software pirates 
jailed in Taiwan 

Authorities in Taiwan have 
sentenced convicted software 
pirates to jail for the first 
time, the industry watchdog 
Business Software Alliance 
said, agencies report from 
Hong Kong. 

Three computer dealers have 
been sentenced to 14 months 
by the Taiwan High Court 
after losing their appeal for 
selling illegal software. A 
fourth defendant received a 
seven-month sentence 

Taiwan’s software was more 
than 80 per cent pirated at a 
cost of $600m a year to soft- 
ware firms, the Alliance said. 

Honda to export 
from Canada 

Honda has begun exporting 
Canadian-made Civic cars to 
Latin America and Asia. Reu- 
ter reports from Tokyo. Honda 
of Canada in AlKston, Ontario, 
wifi export 350 Civics to Brasil 
and 650 to Taiwan in the year 
to March 1995. tbe company 
said. 

This is the first time Honda 
of Canada will export to mar- 
kets outside North America. 
The company produces 100,000 
Civics per year, of which 
80.000 are exported to the US. 


Japanese orders 
at four-year high 


Loading s Wpbug dhg nations 

Order boofc totals stS? M a r ch 1994 (m#ona of gross tonnes) 



K E L E A D E R S £ 1 1 P T R U S T G l' I D H T O M A X A G E M V. X l 


i.TheW/iim of\ron 
Manager. 


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Our 5‘/= day residential 



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lecturing since you will see very clearly 
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For a detailed brochure about The 
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Chief Executive. The Leadership Trust, 
Weston-under- Pen yard, Ross-on-Wye, 
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767667. Fax 0989 768133. 


LEADER Sill? T RE S 




••••• ••• • 

m m TO SAVE ALL - 
^ THESE TREES WE \ 
•• HELP CHOP • 
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World Wide Fend For Nature 

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INTERNATIONAL ECONOMIC INDICATORS: PRICES AMD COMPETITIVENESS 

Yeariy figuK are shown tn Max taro vrtft the u o n m un bam yasr of 1985. The real acc c hanaa rate h an Max throughout; after quarterly and monMy figures ahow fte paroontagt 
change war the corraaponcfing period fe> the previous year and are positive unless otherwise stated. 



■ UNITED STATES 



1 jrAJJ.M 




FI 








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btar 



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pmm 

BMbgfi 

sorts 

irti 

prim 

met 

Bntae* 

carts 

art 

Ntea 

priew 



a* 

1985 

1000 

1005 

1005 

1005 

1005 

1005. 

1005 

1005 

1005 

1005 

1005 

1005 

1005 

100.0 

1005 

1988 

101.9 

98.8 

1022 

99.4 

8S5 

1005 

953 

101.4 

103.4 

118.4 

995 

975 

1035 

1035 

107.4 

1887 

105.6 

100.7 

1035 

96.7 

782 

1012 

925 

103.1 

1005 

1223 

100.1 

953 

106.0 

107.1 

1103 

1988 

109.9 

1032 

1085 

99.1 

715 

1022 

09 3 

1075 

982 

1315 

101.4 

982 

113.0 

1065 

110.0 

1989 

1155 

1085 

1105 

101.1 

745 

1045 

942 

1145 

96.1 

1235 

1042 

093 

1173 

1085 

1073 

1990 

T21.5 

1135 

1135 

1045 

73.4 

1082 

85.7 

120.1 

883 

1083 

1073 

1015 

1235 

1103 

110.7 

1891 

1208 

1185 

1175 

1075 

745 

1)15 


1242 

1015 

1142 

110.7 

103.4 

1313 

115.0 

106-1 

1982 

130.4 

117.7 

120.1 

108J 

742 

1135 


12S5 

1115 

1165 

115.1 

104.9 

1385 

1215 

1063 

1983 

134.3 

1192 

123.4 

1055 

785 

1153 

943 

1255 

1165 

1345 

1193 

1045 


1253 

1102 

3rd qhr.1893 

2J8 

0.7 

25 

-2.6 

782 

15 

-15 

0.4 

4.4 

140.7 

42 

-02 


15 

1093 

4th qtr.1993 

2.7 

05 

35 

-35 

76.7 

12 

-2.1 

-0.1 

5.1 

1375 

3.7 

-02 


-1.7 

1093 

1st qtr.1894 

2J5 

02 

ao 

-1.7 

77.1 

1.4 

-22 

2.9 

43 

1375 

S3 

02 


-2.7 

107.1 

2nd qtr.1904 

2.4 

-03 



755 

05 




140.0 

35 


aa 


1075 

July 1993 

06 

15 

25 

-25 

77.3 

15 

-1.7 

-12 

5.4 

138.7 

43 

-02 


32 

1082 

August 

28 

05 

25 

-25 

755 

2.0 

-15 

23 

28 

1445 

42 

-02 


05 

1093 

September 

7.7 

0.4 

25 

-2.7 

75.4 

13 

-2.0 

15 

5.4 

1393 

45 

-03 


15 

1112 

October 

2 * 

02 

35 

-25 

755 

12 

-2.1 

05 

75 

7385 

35 

-02 


02 

111.1 

Nworapw 

2.7 

0.4 

25 

-22 

775 

05 

-2.1 

1.7 

3.4 

138.7 

35 

-02 


-23 

1093 

December 

28 

02 

35 

-35 

775 

13 

-22 

-1.1 

42 

13S5 

3.7 

-0-1 


-23 

1095 

January 1884 

as 

02 

25 

-IS 

775 

1.4 

-2.1 

45 

42 

1345 

35 

03 


-05 

1072 

February 

25 

02 

a3 

-15 

775 

1 A 

-22 

1.7 

5.1 

139.4 

3.4 

02 


-55 

106.6 

March 

25 

02 

35 

-15 

785 

13 

-23 

2.4 

35 

139.4 

32 

03 


-25 

1075 

Apr* 

2-4 

-04 

2.4 

-25 

76.4 

OS 

-22 

15 


141.4 

3.1 

0.1 



1083 

May 

23 

-0.4 

2.4 

-2.4 

755 

0.6 

-25 



1392 

35 

a4 



107-6 

June 

25 

05 



75.1 

05 




1393 

3.0 




108.1 


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1985 

100-0 

100.0 

1005 

1005 

100.0 

1005 

100.0 

1005 

1005 

1005 

100.0 

1005 

1005 

1003 

1005 

1985 

1025 

972 

1045 

101.5 

103.4 

106.1 

1002 

1045 

102.7 

1013 

1034 

101.4 

107.7 

104.1 

942 

1967 

1 05-9 

975 

1075 

103.0 

1045 

1115 

1032 

1115 

1055 

102.0 

107.7 

1045 

1163 

1065 

943 

1968 

1065 

1025 

111.1 

104.0 

1022 

1163 

1085 

118.4 

10B.7 

1002 

1135 

108.7 

1282 

1085 

1025 

1889 

112.6 

108.4 

115.4 

1055 

995 

1242 

113.1 

1253 

1123 

1035 

1215 

1135 

1372 

114.4 

1013 

1890 

1165 

107.1 

1205 

1095 

1035 

1315 

1175 

134.7 

1185 

1062 

133 3 

121.0 

15011 

122.7 

1023 

1981 

1202 

1055 

1255 

1135 

1022 

1403 

121.7 

1475 

1313 

1055 

1412 

1275 

162.4 

1315 

1005 

1992 

123.1 

1045 

1305 

iias 

1055 

147.7 

1245 

1553 

1365 

101.9 

148.4 

1315 

173.1 

1345 

1035 

1890 

12S.8 

10U 

133.7 


1085 

1535 

128,7 

1612 

139.4 

673 

146.7 

1363 

180.9 

1345 

852 

3rf qtr.1933 

22 

-3.4 

aa 


108.5 

43 

43 

4.1 

2.1 

675 

15 

43 

4.4 

"“l3 

97.1 

4tfi qtr.1883 

21 

-22 

aa 


707.7 

4.1 

3.9 

18 

-1.4 

65.7 

15 

35 

33 

1.7 

37.1 

1st qtr.1S84 

1.7 

-1.5 

aa 


1075 

42 

33 

42 


85.1 

2A 

33 

45 


98.5 

2nd qV.1994 

1.7 


IU. 


1073 

45 




B73 

16 

2.1 



968 

July 1993 

21 

aa. 

- 

aa. 

106l7 

4.4 

42 

4.1 

oa 

88.7 

1.4 

42 

&0 

15 

07.4 

August 

22 

rUL 

- 

oa 

105.4 

4.4 

4.4 

4.1 

oa 

87.9 

1.7 

45 

35 

1.1 

972 

September 

23 

UA 

25 

ns 

1075 

42 

4.3 

42 

oa 

67.0 

1.8 

43 

45 

15 

963 

October 

22 

aa. 

- 

aa 

107.4 

43 

4.1 

3.9 

oa 

865 

1.4 

4.0 

3-8 

22 

862 

November 

22 

nj. 

“ 

aa. 

1073 

42 

39 

3.9 

oa 

85.6 

1.4 


4.0 

1.9 

97.1 

December 

8.1 

ni 

22 

oa 

1083 

4.0 

3.7 

35 

oa 

84.7 

1.9 

4.0 

4.0 

1.1 

973 

January 1994 

15 

aa. 

- 

oa 

1075 

42 

3.5 

4.0 

aa 

852 

25 

3.7 

45 

1.8 

. 998 

February 

15 

aa. 

- 

aa. 

1065 

42 

35 

43 

oa 

855 

2 A 

3.4 

4.4 

15 

962 

Mach 

1.5 

Hi 

25 

na 

1073 

42 

32 

45 

oa 

845 

23 

25 

53 

26 

975 

Aprt 

1.7 

aa. 

- 

aa 

108.5 

4.1 

35 

4.8 

aa 

87.4 

23 

22 

4.7 

0.8 

983 

May 

15 

aa 

- 

oa 

1073 

45 



na 

87.7 

2.S 

2.1 

ao 

1.7 

98.7 

Jure 

1.8 

aa. 


oa 

108,1 

3.7 



rva 

865 

25 

25 



963 

Siatnttca tar Germany apply orfy to western Gorrtiny. ttete nsVUed by DataSraojTi and WEFA bom notional government and IMF osuftta. and bv JP Moraarx New YoriLCoriH®*^ 

prices: noi seaacnaliy agisted. Producer pHoU rttf seasonrfy abutted, US - finished floods, -fcpen - mmrfactured goods. m _ bw—wni i.nurt. Prance - Wtomrid* ,Tn 

yods, Italy - mat producer puces, UK - nremtetoBd pwdatt. Eamtega ftdos: not saaacrMfly mfimted. refers io aanlnga In and fiaW flaags nd? 

ittUsby). Howly except Japan (mcnftttf and UK fw wMtf. Unit Mow costa; semen My acfcwtad, maasusd In domestic arwdKAmMnrTffltan wsl mndwtwino, 

countries - manufacturing ndurtry. MM exchange rate: JP Morgan real effective exchange rate Max 



wtofettie price of domestic mmtactma. A fafi in the Max indexes Improved fcaamnMond canvrfitivmn. 





_, u 

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8 


NEWS: UK 


FINANCIAL TIMES TUESDAY JULY 1* 1994 


Irish government annoyed by Sir Patrick Mayhew’s comments over territorial claim 

London and Dublin clash on Ulster 


Britain in brief 


By Ton Co one in Dublin 

Sharp differences have emerged 
between the British and Irish govern- 
ments over whether the Irish Republic's 
territorial claim to Northern Ireland is 
now the key obstacle to the stalled 
Northern Ireland peace process. 

The Irish government has responded 
with annoyance to an interview pub- 
lished yesterday in a British newspaper 
by Sir Patrick Maybew, the Northern 
Ireland secretary, in which be empha- 
sised that the Republic's territorial 
claim to the province was now the cen- 
tral issue to he resolved in drafting a 
joint "framework document" designed 


to encourage Northern Ireland's politi- 
cal parties to return to the negotiating 
table. 

An Irish government spokesman 
emphasised that any new constitutional 
arrangement for the province must be 
“balanced". He said “What we are seek- 
ing is a balanced constitutional accom- 
modation as expressed in the (Downing 
Street] declaration, not some constitu- 
tional one-way street" 

Last Friday in Brussels, the Mr John 
Major and Mr Albert Reynolds, the Brit- 
ish and Irish prime ministers respec- 
tively. agreed to postpone a planned 
July summit on Northern Ireland until 
the autumn to allow themselves more 


time to resolve their differences in 
drafting the document. 

Mr Dick Spring, the Irish foreign min- 
ister said yesterday he was "surprised” 
at the comments attributed to Sir Pat- 
rick, and that he did not agree that the 
Republic's territorial claim was now the 
central issue. 

He said a "number of issues remain 
to be resolved, and all of those will 
have to be resolved together. I don't 
think it is helpful to highlight one 
aspect of negotiations .. there is little 
point in solving problems on one side if 
you leave more problems on the other 
side”. He said “a far wider" solution is 
needed. 


Dublin has repeatedly emphasised 
that the 1920 Government of Ireland 
Act. which establishes Westminster 
rule over Northern Ireland, should be 
modified as a “quid-prcwiuo" for modify- 
ing the Republic's territorial claim. 

Mr Dermot Ahem, the Hanna Fail 
co-chairman of the Anglo-Irish joint 
parliamentary body, yesterday accused 
Sir Patrick of trying to “chanr-pick" 
aspects of last December's Downing 
Street declaration. 

Sinn FSin. the political wing of the 
IRA, announced that its special dele- 
gate conference, at which a formal 
response to the declaration will be 
decided, will be held on Sunday. 


British 
Gas plans 
cut price 
incentive 


By Robert Consne 
and David LasceUes 

British Gas intends to cut 
prices to its best residential 
customers daring the run-up 
to the introduction of competi- 
tion in 1996 in a move which 
could also result in higher 
charges for millions of other 
households. 

The price differentials 
between customers are likely 
to emerge as the company lifts 
cross-subsidies. British Gas 
claims that 2m -3m of its most 
profitable domestic customers 
subsidise much larger num- 
bers of problem payers and 
those who use relatively small 
amounts or gas. 

It is thought that 5m cus- 
tomers might benefit from 
lower prices, but as many as 
8m households could be hit by 
increases. 

Company officials say the 
“re- balancing” of costs might 
occur abruptly if the govern- 
ment sticks to the present 
timetable for ending its 
monopoly over the sale of gas 
to 18m households beginning 
in 1996. with full liberalisation 
due in 1998. 

A six-12 month delay in the 
first phase of competition, 
which British Gas has pro- 
posed In order to ensure that 
its computer systems have 
been upgraded and tested 
prior to deregulation, would 
enable it to introduce price 
changes more gradually, offi- 
cials said. 

It might also be able to offer 
packages to induce a change in 
behaviour among the 2m-a- 
year late or non-paying cus- 
tomers. These could include 
incentives for customers to 
pay by direct debit 

Officials say the late pay- 
ment problem is so large 
because disconnection proce- 
dures are cumbersome. They 
say that gas bills get paid last, 
after electricity. 

The company yesterday said 
it was committed to competi- 
tion, and wants to see the nec- 
essary legislation included in 
the Queen's Speech this 
autumn. But it also wants to 
ensure that the re-balancing of 
its cost base Is completed 
before its monopoly is lifted. 

Ofgas, the gas industry regu- 
lator, yesterday said a rebal- 
ancing of costs between con- 
sumers would require its 
approval. R would also have to 
take place within the complex 
pricing formula set by the reg- 
ulator - a cap based on the 
retail price index minus 4 per- 
centage points. 

But the regulator confirmed 
that British Gas has a right to 
raise prices for different mar- 
ket segments if it can show 
that it is not recovering the 
costs of serving such custom- 
ers. 

British Gas executives say 
they have little faith in Ofgas’ 
ability to prevent independent 
gas marketers from targeting 
its best customers, while 
avoiding the millions of small 
customers or problem payers 
presently unprofitable. 


Treasury on course to cut 
public borrowing to £36.1bn 


By Peter Norman, 

Economics Editor 

The government's budget 
deficit fell to a lower than 
expected £2j36bn in June from 
£4^bn in May, indicating that 
the Treasury is well on course 
to achieve its recently set tar- 
get of £36.Ibn for the public 
sector borrowing requirement 
(PSBR) in the financial year to 
the end of March 1995. 

The Treasury and Central 
Statistical Office reported yes- 
terday that the PSBR fell to 
£ll.4bn in the three months to 
the end of June from £13.4hn in 
the first three months of the 
1993-94 financial year. 

Yesterday's figures had no 
impact on financial markets. 
But economists were 
impressed. Mr Michael Saun- 
ders, UK economist for Salo- 
mon Brothers International, 
said that the scale of improve- 
ment in the fiscal deficit is 
likely to be sustained over the 
rest of 1994-1995. “Assuming 
that the November Budget 
does not shift the fiscal stance, 
the PSBR could be down to 
£25bn or 3.5 per emit of GDP in 
1995-96" compared with £45-9bn 
in 1993-94. he said. This would 
be “among the smallest deficits 
in the European Union". 

Excluding last month’s pri- 


Retailers look to build on year’s best sales 

sales were up compared with a year ago. 21 per 
cent said they were down and about 30 per cent 
said they were unchanged. 

The resulting balance, which the CBI 
considers a good guide to the trend of sales, 
was a positive 27 per cent compared with 12 per 
cent in May, and the highest since December 
last year when on balance 34 per cent of 
retailers said sales had risen. 

In the previous s ur v e y, a balance of 22 per 
cent of retailers said they expected sales to rise 
in June. Only motor traders appeared to 
experience less than buoyant trading conditions 
last month. 

Elsewhere, a balance of 64 per cent of 
wholesalers reported sales up on a year. 


British retailers achieved their best sales so far 
this year in Jane and are looking fur further 
robust sales growth this month compared with 
a year ago, the Confederation of British 
Industry reported, Peter Norman writes. 

Tim latest distributive trades survey from the 
employers’ organisation, suggested that April’s 
tax increases have yet to make a significant 
adverse impact on consumer spending. 

The survey of 502 retailers, wholesalers and 
motor traders between June 14 and July 6 
found that retail sales volumes bounced back 
from a disappointing performance in May and 
increased more than expected last month 
compared with June last year. 

Of the 302 retailers polled, 48 per cent said 


vatisation proceeds of £180m 
from the sale of Northern 
Ir eland Electricity shares, the 
PSBR in June was £3.04bn. 
Without privatisation income, 
the deficit shrank by £3bn to 
£U.9bn in the three months to 
the end of June from £i4.9bn in 
the same period of last year. 

The June deficit was mark- 
edly lower than tire £3.7bn con- 
sensus forecast The Treasury 
said early tax payments by the 
self-employed ahead of a July 1 
deadline boosted government 
revenues. Income tax receipts 
jumped to £5.53bn in June from 


£4.l8bn In May and £4.8bn in 
June last year. 

The overall improvement in 
the government's finances so 
for this year reflects relatively 
strong revenue growth and 
only a small rise in govern- 
ment outlays. 

Cash receipts were £t7.l6n in 
JUne and £5G.5bn in the first 
three months of 1994-95 to 
show a 4.3 per cent rise com- 
pared with £48.4bn in the same 
period last year. 

Inland revenue receipts, at 
£17.3bn in the quarter, were up 
9 per cent compared with the 


same three months a year ago, 
while customs and excise 
receipts advanced by 7 per cent 
to £i7.ibn. 

Cash outlays were £20.6bn in 
June and £62.4hn in the first 
three months of the financial 
year, up 1.6 per emit on spend- 
ing of £61.4bn in the equivalent 
period of 1993-94. However, 
these were boosted by higher 
interest payments and lower 
privatisation proceeds, which 
count as negative expenditure. 
Net departmental outlays in 
the three months fell per 
cent compared with a year ago. 



Sailors from the State Marine Academy of Russia adjust the sails or the “Sedov”, a four-masted, barque built in 1921 which is entered 
for the Tall Ships race. The race begins in Weymouth on Britain’s south coast tomorrow 



Hardboard 
factory for 
south Wales 

A £40m hardboard factory is 
to be built in south Wales in 
the largest UK manufacturing 
start-up yet to be backed by 
venture capitaL 

Tech-Board, the new 
company, will make the first 
hanflwani in Britain for five 
years, since the closure of UK 
Paper's elderly factory at 
Kerosley, Kent. The new plant 
is expected to create 200 jobs 
and will use home-grown 
wood. 

With a capacity of 88,000 
tonnes per year, the factory 
could meet about half of the 
UK’s current requirements 
for hardboard, which is 
principally used in the 
furniture, automotive and 
building trades. The company 
also intends to export to 
continental Europe. 

Mr Malcolm Graham, the 
general manager of UK 
Paper’s hardboard division, 
spent at least five years since 
the Kenxsley plant closed 
putting together the financing 
package that was agreed 
yesterday. 

A syndicate of UK and 
international banks and 
venture capital houses 
includes 3i which will be 
represented on the board. 

The Welsh Office is 
providing a £3. 4m grant and 
additional finance comes from 
Gwent county council and 
£250,000 of loan and equity 
from British Coal Enterprise, 
the corporation's job creation 
arm. The 12-acre factory rite 
is reclaimed mining land on 
an industrial estate near Ebbw 
Vale. Male unemployment In 
the area is 20 per cent. 


Ulster cable 
plan refloated 

The Independent Television 
Commission is planning to try 
again to bring cable television 
to Northern Ireland more than 
10 years after the first 
experimental licence was 
awarded. 

The ETC is expected to 
advertise a licence, or licences, 
in the autumn and has not 
ruled out the possibility of 
advertising a single licence 
covering aU of Northern 
Ireland and not just Belfast 
and its surrounding area. 

If a single licence is 
advertised covering the more 
than 500,000 homes in the 
province It would be one of 
the Largest cable television 
franchises in the UK on a par 
with other major franchises 
such as the West Midlands. 


Protests stop 
Bronte project 

Plans to erect wind turbines 
in the heart of the moors made 
famous by the books and 
poems of the Brontfi family 
country have been dropped. 

Nine were planned for 
Haworth Moor - setting of 
Emily BrontS classic 
Wuthering Heights and where 
she often played with her 
sisters and brother. 


Government backing for use of teleworking 


By David Goodhart, 

Labour Editor 

The British government yesterday gave 
its most enthusiastic endorsement to 
date of teleworking - using information 
technology to work from home - and 
promised to review any regulations and 
restrictions which prevent its growth. 

Mr David Hunt, the employment sec- 
retary. said: “We need to know of any 
areas where legislation or its interpreta- 
tion is creating special difficulties for 
telework so that we can deal with 
them”. 


He also revealed that Whitehall has 
established a Teleworking Special Inter- 
est Group to serve as a contact point for 
all with interests in the subject 
Mr Hunt who was speaking at a sem- 
inar organised by the Social Market 
Foundation and 3Com the US telecom- 
munications company, said that a 
recent Department of Employment sur- 
vey found that one in 20 British compa- 
nies employ teleworkers. 

The Henley Centre for Forecasting 
has estimated that there will be 33m 
teleworkers in Britain by next year, or 
about 4.6 per cent of the workforce, and 


some estimates say that 10-15 per cent 
of the workforce in many developed 
countries wifi be teleworking to some 
degree by the end of the century. 

Mr Hunt said: “Teleworking can have 
great benefits but it can also have pit- 
falls. We need to learn from experience, 
so the pitfalls can be identified and 
avoided." 

Mr Hunt said that the employment 
department survey found a high level of 
satisfaction among teleworking manag- 
ers. with over three quarters “very sat- 
isfied" with their present teleworking 
arrangements. 


The main reasons they gave for this, 
according to Mr Hunt, were higher pro- 
ductivity. higher reliability and work 
quality, high staff loyalty and lower 
staff turnover. 

Ms Janice Roberts, vice-president of 
3Com, speaking at the same conference, 
said that studies in California had 
found that teleworking increased pro- 
ductivity by between 15 and 20 per rant 
She also said that if it was necessary to 
mix working from home with coming 
into an office, the best balance is usu- 
ally three days at home and two days in 
the office. 


Review aims to build constructive relationship 


Andrew Taylor on plans to overhaul Britain’s building practices 


W ide-ranging propos- 
als to reduce con- 
tract abuses and 
improve services could cut con- 
struction costs in Britain by 30 
per cent by the end of the cen- 
tury. according to a radical 
review of the industry pub- 
fished yesterday. 

The independent review 
sponsored by the industry and 
government called for new leg- 
islation to improve payment 
and and disputes procedures. 

A Construction Contracts 
Bill would require independent 
adjudicators to be appointed to 
resolve conflicts reducing the 
need for costly litigation. Trust 
funds would hold contract cash 
to protect companies should 
customers or contractors faiL 
The bill also would allow 
sub-contractors to charge puni- 
tive interest For late payments. 


The measures would be expec- 
ted to become standard fea- 
tures of all construction con- 
tracts. 

The Environment Depart- 
ment, which is thought to 
strongly support the recom- 
mendations. is due to publish 
its response next week. The 
review, led by Sir Michael Lat- 
ham, a former Conservative 
MP and ex-director of the 
Housebuilders Federation, was 
the biggest inquiry Into the 
industry since the Branwell 
report in 1964. 

It calls for the formation of a 
powerful new industry steering 
group - led by the environ- 
ment secretary - which would 
assist in the development of 
new contract forms and man- 


agement practices. 

A new code of practice to be 
sponsored by the environment 
department would act as a 
guide to private and public sec- 
tor customers establishing a 
well defined framework of 
management and contractual 
responsibilities for a wide 
range of jobs. 

A plan to establish a new 
agency Id oversee the imple- 
mentation of the proposals, 
s imilar to the Australian Con- 
struction Industry Develop- 
ment Association, could be 
considered, says the report 

The Australian agency 
which has representatives 
from the government. Indus- 
try, building owners and occu- 
piers and unions, has set a sim- 


ilar cost-reduction target from 
improved efficiencies. 

The almost universal praise 
with which the construction 
industry and Its customers 
greeted the Latham Review 
indicates broad support for its 
proposals. 

The cost of building an office 
block fa estimated to be 30 per 
cent higher in the UK than in 
the US. Repeated arguments 
between different parts of the 
UK industry, over whose fault 
this is, reflected the atmo- 
sphere of conflict 

It was in a bid to encourage 
a less adversarial climate that 
the independent review of con- 
struction management and 
practices, the first for 30 years, 
was sponsored by the Industry 


and the Environment Depart- 
ment last year. 

The department is expected 
to play a central role in devel- 
oping new contract forms and 
codes of practice intended for 
adoption by public and private- 
sector purchasers. 

Legislation would be sup- 
ported by a new code of prac- 
tice, backed by construction 
employers and customers and 
sponsored by the Environment 
Department Its aim would be 
to promote closer co-operation 
between various construction 
disciplines and to provide a 
checklist of management 
responsibilities which could be 
incorporated into contracts. 

Public bodies would be 
encouraged to introduce more 


efficient tendering procedures. 
Companies and consultants 
would be required to complete 
a single form to qualify for 
public-sector contracts. If 
accepted they would be placed 
on a national register of 
approved companies. A star 
system based on performance 
might be incorporated, said Sir 
Michael. 

The move would bring 
Britain into line with continen- 
tal European countries which 
require companies to be regis- 
tered with an EU approved 
body before they can tender for 
work. Companies appearing on 
registers would pay a small 
levy to pay for the cost. 

The target of the review says 
Sir Michael is to reduce con- 
struction costs by 30 per cent 
and end the climate of mistrust 
in the industry. 



The government announced plans to restore the skyline of 
Westminster to its Victorian glory by demolishing three 21- 
storey ministerial buildings which stand behind parliament m 


Bat after objections flooded 
in from as far afield as 
America and Japan, 
councillors In Bradford. West 
Yorks, rejected the proposals. 


Thabo Mbeki 
to visit London 

South Africa’s deputy 
president Thabo Mbeki is to 
visit London on Wednesday 
and Thursday. He will meet 
John Major and lunch with 
the Queen, according to the 
Foreign Office. 


Pupils ‘lose 
day a week’ 

Some pupils lose the 
equivalent of one day per 
week in the classroom because 
of variations In the length of 
the school day, according to 
school inspectors. 

They found the total time 
spent in school varied by 4.1 
hours per week in primary 
schools and by eight hours 
in secondary schools, 
according to a report by the 
Office for Standards in 
Education. Recommended 
taught school weeks are 21 
hours for five to 
seven-year-olds, 23.5 hours 
for those aged eight to 11 and 
24 hours for secondary school 
pupils. 


Company code 
for Exchange 

The London Stock Exchange 
unveiled new rules designed 
to make it easier for small 
companies which have been 
listed on its Unlisted Securities 
Market to obtain a full Stock 
Exchange listing. 

The new rules are necessary 
because the USM Is slated to 
close at the end of 1996 and 
will not accept any new 
companies from the end of this 
year. The decision to close the 
USM followed the recession 
in the early 1990's during 
which trading in the smallest 
companies came almost to a 
standstill. The Exchange 
agreed in early 1993 that the 
USM was not a viable 
mechanism to ensure 
investment in smaller 


companies. Earlier this year, 
the Exchange announced a 
seven-point plan to encourage 
interest in small companies 
but rejected a call from one 
of its own advisory panels for 
an small 

companies exchange. 


Motorway toll 
plan still on 

Mr Stephen Darrell, chief 
secretary to the Treasury, told 
a select parliamentary 
committee on transport that 
the government definitely 
intended to proceed with 
direct charging for motorway 
use, probably through 
electronic pricing. 

However, he could not put 
a date on when charging 
would come into effect or how 
much it could be expected to 
raise. 

He told the committee, 
which was chaired by Mr Pan] 
Chanson, the former 
Conservative transport 
secretary, that the charges 
would be in addition and 
separate from existing taxes. 
He said the hope was the 
charges would be riag-feneed 
and spent on motorways. 

A government discussion 
paper earlier this year issued 
by Mr John MacGregor, the 
minister for transport, said 
that direct charging for 
motorways could raise £llbn 
a year although this would 
depend on the level of tariffs. 

Mr Ian Wilson, a Treasury 
official, also speaking to the 
committee, said that taxes on 
transport raised £22.4bn a 
year, including VAT on fuel 
and road tax. This was far in 
excess of the money spent on 
motorways alone but the 
£22.4bn went into an 
integrated budget 


Asda pledge 
in price war 

Asda, the UK’s fourth-Iargest 
grocery retailer, is stepping 
up the supermarket price war 
with a new promise to refund 
the difference on a basket of 
goods if customers can buy 
the same goods more cheaply. 
The pricing initiative will be 
backed by a national 
advertising campaign. 


Building society 
bars sales staff 
pending training 


By Alison Smith 

Nationwide Building Society, 
the UK's second largest yester- 
day barred its 1,300 authorised 
financial services staff from 
giving advice in this area until 
a re-training programme has 
been completed. 

The ban will affect staff at 
around two-thirds of the soci- 
ety’s 1,000 outlets. Nationwide 
is planning to launch Its own 
life insurance and unit trust 
subsidiaries next year, but cur- 
rently acts as an agent for 
Guardian Financial Services, 
part of Guardian Royal 
Exchange. 

The move follows a routine 
inspection visit by Lautro. the 
life insurance industry's regu- 
lator. to Guardian Financial 
Services and its agents. 

On the day that Lautro took 
a further step towards extinc- 
tion as the Personal Invest- 
ment Authority - the new 
watchdog for the personal 
investor - became operational, 
the announcement was a 
reminder that the existing reg- 
ulator had been growing in 
effectiveness. 

Nationwide said yesterday 
that the Lautro visit had 
revealed some shortcomings in 
its supervision of financial ser- 


vices staff, and that it was tak- 
ing the opportunity to enhance 
training more generally. 

Mr Brian Davis, chief execu- 
tive designate, said Nation- 
wide’s action had been taken 
voluntarily, and was a sign of 
its commitment to high Stan- 
dards of service. 

In March, Norwich Union, 
one of the UK’s largest insur- 
ers, suspended its entire life 
and pensions sales force for a 
month after Lautro identified 
breakdowns in management 
controls. 

The 650 or so Nationwide 
staff dedicated entirely te 
financial services products will 
go through an intensive train- 
ing programme, and the first 
groups to go through this pro- 
cess will be able to offer advte* 
again from early August. The 
Ml process is expected to take 
eight to nine weeks. 

Plans for the remain big 
authorised staff, such as 
branch managers, have not yet 
been finalised, but it Is possible 
that the numbers who are 
authorised will be reduced- 

Mr Davis said he did not 
believe that Nationwide nan 
misled any of its financial ser- 
vices customers, but that any 
customer who was couceraea 
should contact the society- 








™®s Tuesday jtuly 19 


F rom tiie beginning of nqy* 
year, telephones in the 
office and in the home 
could be l eaking informa- 
tion about our lives as we sleep. 

The information they wffl relay js 
likely to concern our energy con- 
sumption and how much water we 
use, and. the callers they will be 
“ talkin g to" win be the utt fi ti gg *"hafc 
bffl customers for these services. 

Up to 150 residents in Doncaster, 
in the north of England , are taking 
part in a trial in which their tele- 
phones are used to read their elec- 
tricity and water meters. The trial, 
which runs until the end of the 
year, is a Joint project between 
Yorkshire Water, Yorkshire Elec- 
tricity, British Telecommunications 
and Scbhnnberger Industries. 

The latter supplies the meter 
interface unit (MIU) which converts 
the data from the meters to a cen- 
tral database via the toiap h o n** net- 
work. A subscriber lin« access con- 
troller (Slac) calls the MIU when 
instructed by the companies' com- 
puters bo read the meters. Four 
ports on the MIU enable four differ- 
ent meters to be read. The York- 
shire trial Is using Just two. 

The trial uses technology devel- 
oped by BT which enabl es the tele- 
phone lines to convey data without 
ringing. The a nn is to leave custom- 
ers blissfully unaware that their 
telephone hues are involved in any 
activity. If a customer uses the tele- 
phone while the meter is being 
read, the call from the utility will 
automatically end. No call from an 
electricity company will delay a call 
for an ambulance, for mrampig 
The introduction of the no-ring 
facility, which negates the usual 
ringing current of normal rang, has 
required a big investment by BT 
and involved large-scale infrastruc- 
ture changes. The costs of Installa- 
tion have been kept down because 
the facility has been installed at the 
same time as other BT develop- 
ments, such as being able to iden- 
tify a caller. Changes both to the 
telephone exchanges and the soft- 
ware used in digital exchanges have 
been implemented. 

BT plans to install this “no-ring'’ 
facility an most of its 25m lines 
before the start of next year when it 
will be available for commercial 
use. Future applications could 
jnelrydA e quipment rannifrii-mg nnrt 
control for photocopying machines 
and a “home automation'’ system 
whereby beating, lighting and secu- 
rity can be checked automatically. 

But, says Andrew Batchelor, ser- 
vices devdopmoit manager at BT. 
“We are focusing an the utility sec- 
tor as our first market This is 
because the utilities have a more 
pressing requirement to have some 
technology available to help them 
out of a commercial difficulty." 

This “pressing requirement” felt 
by the water and electricity indus- 
tries is the need to cut costs before 


TECHNOLOGY 



CaMng foe water: Doncaster realdortfa wB be the tins* to use the now mater system 

Dial M for 
meters 

Jane Martinson reports on a trial 
scheme to measure water and 
energy consumption by telephone 


forthcoming large-scale reviews by 
industry regulators. Both reviews 
will consider pricing controls and 
will take into account the compa- 
nies’ ability to cut costs and 
improve efficiency. 

The onus after the reviews will be 
on both industries to prove to inves- 
tors that they can still increase divi- 
dends based, among other things, 
on continuing to cut costs. 

The Yo rkshir e trial is one of a 
number involving utilities, particu- 
larly electricity companies, and 
automatic meter reading. Joint ven- 
tures such as the one in Yorkshire 


also point to a move towards multi- 
utilities with one company provid- 
ing both electricity and water. 

A few smaller multi-utilities in 
the US are testing the use of tele- 
communications for meter reading. 
But Peter Barrie, marketing man- 
ager at Schlumberger Industries, 
says the scale of the potential mar- 
ket in the UK - which has same of 
the biggest utilities in the world - 
makes the Yorkshire trial particu- 
larly BTrfting- 

The City appears to be watching 
signs of such closer cooperation 
with great interest Robert Miller- 


Bake well, utilities analyst at Nat- 
West Securities, predicts that there 
mil be seven multi-function utili- 
ties in the UK by 1997. “We will see 
a move towards more multi-func- 
tion utilities in the UK, perhaps 
along the Kn« of those in the US 
but probably bigger. One of tbe 
thing s driving this forward is the 
need to cut costs and eliminate the 
overlap." 

Nigel Hawkins, analyst at Boare 
Govett, also foresees closer 
cooperation at both operating and 
ma n agement levels. “In terms of 
billing, for example, telecoms must 
be in a pole position for utilities." 

But there are still a number of 
questions concerning the cost-eSec- 
tiveness of automatic metering. Tbe 
meters used in this system are more 
expensive than traditional ones and 
costs will not come down until they 
are produced and used in bulk. 

Most industry analysts accept 
that the “man in a van" system 
with an engineer making regular, if 
infrequent, readings will remain 
cost-effective until “special” reads 
need to be carried out. These 
Include returns to homes where 
nobody was in or an address 
changes. 

Having a qualified member of 
staff visiting premises has other 
advantages, although as Harrie 
says: “Some people find it difficult 
arranging a convenient time for 
their meter to be read and others 
don't like strange people coining 
into their homes anyway." 

Proponents of the scheme argue 
that “added value services" should 
be added to any cost benefit analy- 
sis. For utilities' customers, 
improvements could include the 
elimination of estimated bills, 
immediate informed response on 
queries and complaints, and flexible 
tariffing ami hiTHng The electricity 

industry already sells energy to big 
industrial users in 30-minute lots 
that could be accurately gauged 
wiffi such advanced, metering. 

Tbe system will also enable water 
companies to detect leaks more eas- 
ily and to prepare load profiles of 
customers. 

A shared billing system between 
the water and electricity companies 
could lead to shared information 
about bad-debt customers. In the 
Yorkshire trial, each utility has 
access only to its own meters but 
the possibility of utilities sharing 
information is likely to cause alarm. 

“This is certainly a complex sub- 
ject, which is why nobody is rush- 
ing into it and why we’re having 
trials to see how customers react to 
having their phones used in this 
way," says Batchelor. 

“We’re taking this fairly slowly, 
although we have been impressed 
by the reaction so for,” he adds 

Yorkshire Water is also tentative. 
“Our main aim is improving ser- 
vices. We are not doing this purely 
for the sake of new technology.” 


Technically Speaking 


When IT fails to 
measure up 

By Tom Foremski 


The value of 
information tech- 
nology is rarely 
questioned by 
users these days. 
In schools and 
** businesses, the 
belief is widespread that comput- 
ers make classrooms more effec- 
tive and offices more productive. 

The uncomfortable fact that 
vast investments in computers 
have shown only modest or, In 
some cases, no productivity 
increases is often dismissed as an 
irritating measurement problem. 

The US National Research 
Council said at the end of last 
year that US service companies 
spent at least $750bn (£493 bn) on 
communications systems, com- 
puter hardware and software in 
the 1980s. During this period, 
their annual productivity gain 
was a mere 0.7 per cent. Many 
other studies also indicate that 
the correlation between IT spend- 
ing and productivity increases Is 
barely measurable. 

The general reaction to such 
studies is that the data is wrong 
or has been misinterpreted; or 
there is serious mismanagement 
of IT. It is true that the economic 
data is often difficult to collect, 
but it should be difficult not to 
notice an impact on the economy 
from such a large investment 

This has become known as the 
productivity paradox, and there 
have been many attempts to ana- 
lyse economic data in different 
ways to reveal the productivity 
that such large investments in 
computer technology most have 
made possible. 

If it is difficult to discern what 
the broad benefits of IT are, bow 
can tbe smaller issues be evalu- 
ated? How does a manager decide 
whether investing to upgrade a 
company’s PC systems to faster 
computer models, or to install 
improved software, will be 
rewarded through greater produc- 
tivity? 

It is this lad; of effective mea- 
surement of the benefits of invest- 
ing in computer technology that 
forces many companies to make 
the equivalent of a leap in the 
dark when making significant 
investments in IT. One senior 
executive at a leading US bank 


describes the decision-making 
process as being based on a "gut 
feeling”. It seems strange that a 
Fortune 100 corporation would 
make important business deci- 
sions by instinct but, lacking 
other measures, ft may be as good 
as any other yardstick. 

The computer industry rarely 
mentions tbe productivity para- 
dox. Computer companies rou- 
tinely talk about increases In pro- 
ductivity, but these claims are 
made within the context of the 
technology. A new word processor 
is described as performing more 
quickly or data from a large data- 
base as being retrievable In less 
time. These measures of produc- 
tivity are reassuringly self- 
validating but do not address tbe 
larger question of how IT should 
be used to increase productivity. 

Clearly, this question can be 
answered only by IT users. And 
the answer to the productivity 
paradox lies within itself. The 
paradox begins with tbe assump- 
tion that IT improves productiv- 
ity and yet we do not sec the 
results. Surely the answer is that 
IT Is like any tool and its effec- 
tiveness is determined by the 
user. 

Lester Thnrow, tbe US econo- 
mist believes that many corpora- 
tions have misapplied IT. They 
have made large investments In 
IT without fully understanding 
how that technology should be 
used within the organisation. 

Many organisations allow 
departments to buy PCs and soft- 
ware with little control over 
which software packages are used 
and how those systems are 
applied. Thus employees find that 
computers allow them to do more 
work of different kinds. Bnt there 
is often little or no distinction 
made as to whether that work 
should be done in the first place. 

Unless IT is managed with dis- 
cipline and serious rethinking by 
companies about how they oper- 
ate, its effects on the bottom line 
win not only be negligible but 
may be harmful. Organisations 
which solve the productivity para- 
dox by focusing on strong man- 
agement and appropriate use of 
IT will gain competitive advan- 
tage and unleash the true power 
of computer technology. 












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10 


FINANCIAL. TIMES TUESDAY JJLY 19 1994 


MANAGEMENT: THE GROWING BUSINESS 


Smaller companies may be about to get a shock when 
they fall within the scope of new environmental laws 

Weighed under by 
green tape 


J ust as smaller companies 
might hflvp thnn ght the 
burden of red tape was to be 
lifted from their shoulders 
by a concerned government, the 
spectre of environmental 
legislation is looming large on 
tbs horizon. 

Many larger companies are 
successfully implementing 
measures brought in by the 1890 
Environmental Protection Act, 
fn particular the concept of 
integrated pollution control (IFC) 
which covers air, water and waste 
emissions. But smaller companies 
have been less affected by the 
legislation. That is changing. 
Within the next 18 months, many 
more of them wlU fab within the 
o rb it of environmental protection 
legislation. 

AD the signs are that managers 
of these companies are confused 
and frightened by the complexity 
of the rules and the cost of 
compliance. Whatever the merits 
of the legislation, it is introducing 
new areas of expertise that busy 
owner-managers must master. 

Last year the Greater 
Mawhwst ff Business Innovation 
Centre set up Envirotech with 
local sponsors and funding from 
the Department of Trade and 
Industry and the European 
Union's Regional Development 
Pond to offer companies a free 
environmental audit The uptake, 
though improving, has been 
disappointingly low, says business 
manager Adele Neale. 

“For those companies that know 
about the legislation the reaction 
tends to be one of fear and *what 
is it going to cost nsT,” she says. 
“Many smaller companies are 
adopting a stick the bead in the 
sand attitude.” 

Ttus fear is not entirely 
surpris in g: Take the principle 
at the beast of the Act which says 
companies must adopt the “best 
available techniques not entailing 
excessive cost" - a concept that 
labours under the clumsy acronym 
Baineec. 

This principle is applied by Her 
Majesty's Inspectorate of Pollution 
when issuing companies with 
authorisations for certain 
prescribed industrial processes. 
Regulations in this area already 
cover most heavy industries such 


as mining, power supply and 
^igmiralK. Now tixe inspectorate 
is drawing up regulations and 
guidelines, winch will be available 
next May, to include the 
industries not yet covered. 

These include paper making, 
timber treatment, coatings and 
animal and vegetable matter 
processes. Many of the companies 
in these industries are small- and 
medium-sized enterprises (SMEs). 

The trouble is that the 
guidelines, being drawn up after 
consultation with trade 
organisations, are necessarily 
vague. Batneec is site-specific, 
the inspec to ra te says. What is 
an “available technique” at one 
factory may not be available at 
another w it h in the same industry. 
And what does “excessive cost” 
mean? 

While the inspectorate accepts 

Many smaller 
companies are 
adopting a stick the 
head in the sand 
attitude 

this definition is not clear, It says 
it is not trying to put companies 
out of business. 

According to HMIP, smaller 
companies need not be too 
disconsolate. Inspectorate officials 
say the Initial confusion in 
companies first covered by the 
1PC was fairly quickly resolved. 

More generally, while larger 
industries were Initially critical 
of the Act some of the hostility 
has subsided. “Our impression 
is that by and large big industry 
has done an excellent job in 
getting its act together from quite 
a low start” says Robin Bidwell, 
managing director of 
Environmental Resources 
Management a consultancy. 

S mall er companies are also 
increasingly likely to find 
themselves affected by waste 
manag ement legislation. With 
some exceptions - in feet no fewer 
than 43 categories of exception 
- any company that keeps, treats 
or disposes of waste will need 
a licence. Many have already 
applied for licences. What may 


not be widely recognised by SMEs 
is that companies exempt from 
needing a licence must register 
that exemption by December or 
risk paying a fine of up to £5,000. 

The welter of legislation has 
meant a growth market for 
consultancies. Some, such as ERM, 
say companies are beginning to 
realise that the environment need 
not be a threat but can save 
money. 

And as the scope of Integrated 
Pollution Control has spread, so 
has Interest in BS 7750, the 
environmental management 
equivalent of the BS 5750 quality 
standard. From April next year, 
companies wiB also be able to 
register under the EITs equivalent 
standar d, the eco-management 
and audit system. 

The question being raised, 
however, is why companies 
already inspected by the pollution 
inspectorate should go through 
the additional cost of seeking and 
nmhifeiinfag BS 7750. 

The DTI says there may be 
additional value in BS 7750. While 
IPC focuses on processes, BS 7750 
is more concerned with ensuring 
an environmental management 
system is in place. What is more, 
the officials say, BS 7750 is better 
than its quality assurance cousin 
because it clearly encourages 
continuous improvement 

Nevertheless, the DTI stresses 
that accreditation is not a badger 
of quality or greenness, only a 
management tool to help achieve 
a corporate goal. 

While the government may not 
yet have stopped the spread of 
environmental red tape, It Is at 
least aware of the problem for 
SMEs. As one DTI official said. 

“In the SME sector there is 
probably a misunderstanding or 
lack of knowledge about legal 
requirements. There are no dear 
channpfc for communicating our 
intentions or planned changes." 

The DTI and Department of the 
Environment plan to improve the 
way they communicate the impact 
of environmental l egislatio n to 
smaller companies. Unless they 
are successful over the next six 
months or so, some companies 
are going to have a nasty shock. 


T he announcement yester- 
day that a venture capital' 
backed start-up will revital- 
ise the US’s moribund 
hardboard industry should have 
been a cause for rejoicing. 

The £40m project wffl be the big- 
gest manufacturing start-up backed 
by institutions in the UK. The plant 
will create at least 200 jobs in 
Gwait, South Wales and should cut 
the UK trade deficit by substituting 
large quantities of imported hard- 
boant 

But the story of how Malcolm 
Graham, chief executive of Tech- 
Board, and his advisers raised the 
equity and debt is not encouraging 
to entrepreneurs seeking start-up 
finance. When the deal was finally 
signed yesterday morning, more 
than six years had elapsed since 
Graham first sought backing. 

During this he spent all his 
savings. He also learned what many 
others have learned - that with 
some exceptions venture capitalists 
and wimmpmgi hanks are reluctant 
to back start-ups. 

The venture capital industry is 
frequently criticised for this. But 
the brickbats are often Hi-aimed. In 
the first place, many venture capi- 
talists manage funds raised 
expressly for investment in manage- 
ment buy-outs - not start-ups. Ask- 
ing them for start-up capital would 
be ashing a car insurance sales- 
man to sell cars. Second, the indus- 
try has learned from bitter experi- 
ence that many start-ups fan 
Graham points out that the Tech- 
Board project -was different “Most 
start-ups fell because there is no 
market” he says. “Here was a proj- 
ect with an established process and 
market, but it still did not get a 
good reception.” This was in spite 
of the fact that the corporate 
finance department of KPMG and 
lawyers at Steggles Palmer said 
they would work for Graham on a 
contingency fee basis. 

Graham had become general man- 
ager of UK Paper's hardboard divi- 
sion in 1986, just before its manage- 
ment led a buy-out from Bowater 
Industries. Its Eemsley plant in 
Kent was designed to produce 5,000 
tonnes, but it was operating at 
three time*: this level and was fell- 
ing down. 

Yet this mill constituted the UK's 
hardboard manufacturing capacity. 
Not surprisingly, 90 per cent of the 
UK’s 200,000-tonne annual demand 
was imported. 

In 1887, Graham received board 
approval from UK Paper to build a 
new plant, but by 1988. when the 
company was floated and later 
acquired by Fletcher Challenge of 
New Zealand, the plan had been put 
on the back burner. 

At this point, armed with little 
more than plans for a new plant, 
Graham decided to raise the money 
himself. 

“I met 3i who told me l needed a 





Juggling the 
finances 

, ' j#-' ' - 

Arranging start-up funds was like being in a circus act 
for Tech-Board's chief executive, writes Richard Gourlay ,*■ 


finance director, a managing direc- 
tor and a complete management 
tram if they were to support the 
deal," says Graham. “It was not an 
easy route to satisfy." He spent two 
years knocking on doors looking for 
equity hadrmg . Then he met Peter 
Learmond. the former steel trader 
who in the early 1970s went through 
similar hoops to raise money to 
start Sheemess Steel, a nurd-mill. 

After three months - and another 
KPMG review of the business plan 
- Learmond said be would back the 
project and found an offshore inves- 
tor, Persis. who put up £500,000 of 
Interim f unding . “What attracted 
me was that there were no other 
producers in the UK,” says Lear- 
mond. “Every tonne is imported 
and costs money to transport If we 
had a plant that could deliver on a 
just-in-time basis we would have a 
tremendous edge on imports." 

With the backing of Persis. Gra- 
ham headed back to his contacts at 
3i - after they had been wanned up 
by KPMG. “Start-ups are extremely 
rare - nothing quite like this has 
ever been done before as an indus- 
trial start-up " says KPMG’s Nick 
Theakston. “I went to 31 on my own 
so that they would not say no at the 
first mention of start-up." 


By April 1992, with 3i on board, 
success seemed much more assured. 
But most other potential equity pro- 
viders either wondered why no one 
else had set up a plant could not 
believe the margins or wanted to 
buy into something that would gen- 
erate an immediate yield. 

As a result it took until July 1993 
to agree the equity layer of the 
funding - £2m of pure equity and 
£13.5m of subordinated loan stock. 
Even then the consortium included 
a number of foreign investors - 
alongside 3L Persis, Rothschild Ven- 
tures and RIT are Tinicum Inc of 
New York and Heffernan of 
Toronto, a group that backed Lear- 
mond's Sheemess Steel 

What Graham had not counted 
on, however, was the difficulty 
he would face raising £15m of 
debt 

As soon as the equity was in 
place. Nat West which is also a sub- 
stantial shareholder in 3L withdrew 
its commitment to put a loan pro- 
posal to its credit committee. The 
hank says it was not fully informed 
of the progress towards raising 
equity and that its circumstances 
bad changed. 

Graham says the process of keep- 
ing the equity suppliers happy 


while it rased the debt was like 
keeping plates spinning in a circus 
act. Eventually Tech-Board found 
two merchant banks, NM Roths- 
child and Henry Ansbacher, and 
one commercial bank, the Midland 

The resut is that this August 
civil works will begin in Gwent. 
The new plait will have a capacity 
of 88,000 tomes a year and supply 
the automotve, furniture, toy and 
bed-malting hdustries. In theory, 20 
per cent of oitput will be exported 
and the plait will displace £25m 
worth of impute. 

Only after hree years will Tech- 
Board's assunptions about market 
penetration aid margins be prop- 
erly tested. Bj then the memory of 
so many presntations to largely 
unenthusiastic City audiences will 
have laded. Bu the experience has 
left many peoile including Lear- 
mond disiHusioied by the UK finan- 
cial communitys capacity to raise 
finance for ordinary industrial pro- 
jects. 

“With the grot exception of &, 
the greater part of British institu- 
tions are terriflecof green field pro- 
jects," he says, rod has it became 
easier than whn he started-up 
Sheerness Steel? Vo. Probably it b 
worse today." he ays. 


HEADgtSftREWEOOMMBCtPTOl 

| As a leading European manuheturar of products mainly maikatad In the 
| oral care area al over Europe, we have recently implemented further 
modernized equipment which enables us to addMonaUy offer our knov*- 
how and fealties as 

Third Parly Manufacturer 

for mixing and HSng of cosmetica738 and pharmaceutical 

Powders 

(espedafy into snraft-sfzed (tems/botfes). 

Our highly specialized plant is located In the heart of Flanders 
(Belgium). Initial contact is established by short notice to the reference 
made below. 

A highly motivated working team wfi be gratafei to explain its production 
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flotibffity combined with quality standards of an internationally acting 
consumer good company. 

Wtte Box B3261. FvwicW Times, One Souftwark Bridge, London St! 9HL 


BUSINESS OPPORTUNITIES 

D TO SEEK emOPRATE PDOFESSKXML ADVICE BEFORE BCTBWQ KTO COMHTMENTS 


BUSINESSES WANTED 


INVESTMENT OPTORTUNTTY 

Motor and Commercial Group holding a prestige franchise 
with substantia] shareholding by a major pension fund, 
require further funding by way of 10 year variable rate 
preference shares to develop Autopark on a prime dty site 
in the North West to complement existing operation. 

Interested parties please write to: 

Box B3254, Financial Times, 

One Southwark Bridge, London SE1 9HL 


FOOD 5c SEAFOOD PROCESSING 
PARTNERSHIPS IN EASTERN CANADA 


FTC EMTEKHuses Ltd, a corporation of the Government of Prince Edward 
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of your husness, and acoeas to new marfccb in North America. 

Participants may qualify for Canadian dtuenshtp through the Canadian 
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Please enquire: 

Colin R. Mark v Richard P AbletL PhD 

Director ^ Fmanong & Dmkpmenl Eueufiaf Director 

TeL- 0101-^02-566-1725 F*c 0101-902-566-5627 


Fully furnished offices 
Trafalgar Square 




Secretarial services 
Photocopier, put, WJ*. 


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• Persona) Telephone Answering • Immediately Available 

Tel: 071 872 5500 

Your Futmf in oxer 80 Inirnulional Btatoeu Lanliou 


RARE OPPORTUNITY FOR BUSINESS 
ANGEIVPRIVAXE INVESTOR 

Machinery manufacturer exporting 70% to 80% of output all over tbe world, 
fed up with their fomle is looking for a £1.5 million mortgage. Willing to pay 
fitted interest of 12VW& over 15 years (Lc. £18^45.40 per moalb by bankers 
order). Total repayments amount to £3,392,190. 

Security will be given. Private investors only. 

Write Box B3269, Financial Tunes. One Southwark Bridge, 

London SEl 9HL. 


The Directors of 

ESTABLISHED AMD PROFITABLE 
INSURANCE INTERMEDIARIES 

watt high quaffly branch network in Homo Counties locations. Seeks strategic 
alliance with Insurance Company or similar to develop mutual commercial 
interests. 

Fuily computerised with EDI, proven management and profitable insurer 
accounts. Approx. El 4m unaudited mostly personal lines P.I., currently 
increasing at 20% p.a plus. 

Principals only write to Bax 2999. Hn en c ia i Times, One Southwark Bridge, 
London SEl 8HL 

TOUR OPERATING COMPANY 

Our client, established in 1991, specialises in holidays to tbe USA. 

Current annual turnover is reaching £2m. Capital requirement is restricting 
growth and profits. 

Tbe Directots wish to discuss this investment o pp or tu nity in the company 
with interested individuals or companies. 

Wrist toe D J Bonriefc & C*, 6§9 Roofer* Road. Manor Park. Leadm E12 SAD. 
Fuc 081 5147662 Tel: 681 478 1226 


Diversification 

Requirement 

A UK based sad internationally 
respected Engineering Company 
engaged in tbe design and supply oC 
capital plant, with a committed 
diversification policy, is looking to 
acquire established technologies! 

possibly assodoed 
with the eovimaatental engineering 
field. 

Interested parties should send their 
company profiles and supporting 
financial Un 

Box B3264. FisttadaS Times, 

One S o a ftwid Body. London SE1 9HL 


FUNDS AVAILABLE 
TO PURCHASE 


• Letters of Credit 

• Bank Gu aran tee s 

• Other Acceptable Collateral 

• Backed By Private Investors 
THRU MAJOR INTL BANKS 

GAPfUU. SUPPORT CORP. 
US. (714)757-1070 • Fax 7S7A270 


NON-EXECUTIVE 

HEAVY 

Former Chfct Executive of major 
advertising agency offers grey fans and 
wisdom, business tfcvehjpmem skills, 
creative resources rod wrclc 


to companies nesdrag weight without 
overhead. From a day i month. 
Write to Bus B2U5. Financial Tunes. 
One Southwark Bridge. 
London SEl 9HL 


TsEnt n p nmBf Manhdswn 
Basinas Owners 

Oa |em mom WGe^swy be Aflkaied is 
AmmtfafNcw 7rahndT 
Ija efafcsw we maM lib *> torn we 
w* sc « r«| •vcsctffcd Aaenlia PLC 

wM HVTnmnn UK npnriWrtn a 
We *wU We. tksMy. 4 say prepm-l 
Write Box B3773, Fa*BCtal Thn. 

Oo» Sowfc —fc Bridge. UmtenSElWfl. 

CoaweRCuu. FINANCE VowmCoi** 
awriotio torn €260000 upsorts. Sredblo 
Bates. SwrtWa Fooc. Broker eoquWaa 
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tat (OSH) ajues, paaq zmarr 


WELL FUNDED 
FOOD AND 
COMMODITY 
COMPANY 

based in USA/Canada seeks well 
established agents with food and 
o fiHnifl if.iiar experience m wori on 
commission basis la northern 
Europe. Middle East. Cyprus and 
Kong Kong. Pax style and details 
Kx 

Cartagteu Sates Company 
F«: 519-944-828* 


CHARTERED 

ACCOUNTANT 

Having disposed of practice seeks 
opportunity to invest in existing 
business with growth prospects. 
Ready to take part In management 
in concert with existing owner and 
to contribute oommerd at foduBtrial 
expertise. 

YW» « 8« B3B68, Ftnondai Timas. 
One Safhoak Bridge, London SEl 9HL 


CONFIRMABLE DRAFTS 
BACKED BY CASH 


• issued fn four Name 

• Conferred by Major Inff Banks 
to Prow AnfeMRy of Rut* 

« Backed by Mvato fnwqctoa 




[w ' - ii 'mrl ii> -ji 


i CORPORATION 
US. (714)757-1570 • Fax 757-12T0 


Partner or Agent Wanted 

Old estabfsdwd. tight engineering 
company baaed fn Pertferrishire 
With irieho market and tecfcoM 
ttxjxrtiat Svelte partner to hdp dndsp 
tbehomaoM 

Twnorer mUmaiied X2MMM0 
Ftxuzm availably. 

Writs Bar B3266, nnandsl Timas, One 
goaUmarit Bridee, London SE! 9BX 


‘BUSINESSES FOR SALE* • 


Appnar h Rnandai Times 

on Tuesdays, Fridays and Sawrtayx. 
For further hfamation 
or te advoRM In Vda section 


CHANNEL 

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Offshore Company 
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Total offshore facilities 
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Tet 0534 7877<, Fu 0534 JS*II 
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Specialists m F.S.U. business offer 
their services id bdp establish 
your goods or services or registered 
companies formed, trading partners 
location. 

TEU 87X7171222 PAX: 8717171225 




Our client is a felly listed pic. The company has undergone \ major 
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amount of cash. It now seeks to expand by making a sizeable acquisboo or 
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Potential candidates should be able to demonstrate their ability to gneraie 
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Details of potential candidates should be sent to: Lindsay Budawn, 
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Fax: 0344422681. 

— ■ •-f.'V --|f— - j I 




£3-4 MH-LiON PROPERTY 
COMPANY 

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WISHES TO ACQUIRE 
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Wits Bqk B3274. RnareSai Tbtiee, 

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BUSINESS SERVICES 


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Strategic and Financial Project Management 

Lmowumtstrasse t24 
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Tel.: 449/89/721 30 25 
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11 


financial times Tuesday July 19 1994 


PEOPLE 











a 1 

ce 


f » : t ' ; '^ C *S; 

nur dr^ 


John Richardson collects his 
ticket from Sketchley 

J * 


Sketchley. the dry cleaning 
and photo processing group, 
yesterday announced that 
Jobs Richardson, joint execu- 
tive deputy chairman, would 
leave the company when hia 
contract expires at the end of 
October. 

Richardson, 51, and Tony 
Bloom, the other joint execu- 
tive deputy chairman joined 
Sketchley in 1990 when it was 
losing £800,000 a month and 
heavily overborrowed. The two 
axe credited with bringing it 
back from the brink. 

Richardson says he is leav- 
ing because “the job is done” 
and because he wants to return 
to Asia. Australian-horn, he 
spent 18 years in Hong Kong 
with Hutchison Whampoa. He 



■ Triplex Lloyd, the 
Midlands-based engineering 
group, completed a manage- 
ment reshuffle with the 
appointment, announced yes- 
terday, of Graham Lockyer 
(above) as group operations 
director. He put his feet under 
the desk on Monday last week. 

Lockyer, 47, is an experi- 
enced engineer who was man- 
aging director at Dowty Aero- 
space Landing Gear. He joins 
the ranks of Dowty senior 
executives, like Bruce Ralph, 
now managing director at 
Glynwed, who have wandered 
off into Midlands manufactur- 
ing posts since the takeover by 
TL 

His appointment at Triplex 
Lloyd follows the departure 
last December of Norman 
Price, development director 
but in charge of operations. 
Since then. Triplex Lloyd has 
swept away a her of divisional 
management and Lockyer will 
have responsibility for all 
operations, reporting to John 
Foley, the managing director. 

■ The London Securities 
board of directors has effec- 


wffl be returning to Hong Kang 
to join BZW and Barclays Rank 
as chairman of their Asian 
operations. 

Richardson says he end 
Bloom worked in tandem, sell- 
ing off businesses with no 
future, rationalising the com- 
pany’s structures and introduc- 
ing stricter controls on work- 
ing capital. But most 
important, he says, was that 
they introduced a strong man- 
agement team. 

Through the successful man- 
agement merger of dry 
cleaning and Supasnaps, which 
involved the closure of many 
unprofitable shops, they signif- 
icantly reduced the groups’s 
retail operating costs. Supas- 
naps, the photo processor, was 


tinrely beat turned over to its 
29 per cent shareholder; yes- 
terday an extraordinary gen- 
eral meeting pot forward a 
third No-Swift director to its 
four-man board. 

Andre Ghudnoff. a long-time 
associate of No-Swift's major- 
ity shareholder Jacques Mur- 
ray, was voted on to the board 
at a meeting which was ini- 
tially called to vote on the 
removal of the company’s 
chairman and e xecut iv e direc- 
tor. 

This move was forestalled by 
the resignation earlier this 
month of David Pearl and 
Richard Pricketi. Chndnoff 
said London Securities did not 
expect to pay any compensa- 
tion for their resignations. 

Michael Evans, a director of 
No-Swift, was appointed non- 
executive chairman last 
Wednesday, and Jean-Jacques 
Murr ay, another Nn-Swtft 
director, joined as an execu- 
tive director earlier in July. 

No-Swift, the parent com- 
pany, was only privatised In 
March, but it is planned that 
London Securities will act as 
its listed property arm. 

Proposals are currently 
being finalised for the acquisi- 
tion of a number of Nu-Swift 
properties by London Securi- 
ties, in order to reactivate ft 
from Its current position as a 
rn«h shell. 

Two independent directors 
are due to be appointed to the 
board later this mouth. 

■ Wellman, the specialist engi- 
neering company, yesterday 
announced a management 
overhaul as part of its £4fin 


acquired for a total cash pay- 
ment of 2&n in 1993. 

During the past financial 
year, Supasnaps offset a diffi- 
cult year in the core dry 
cleaning business. In June 
Sketchley reported pre-tax 
profits up by 6 per cent before 
exceptional to £5.1m in the 
year to April L 

The sew division contributed 
£1.4m to operating profits of 
£6.6m. Excluding Supasnaps, 
sales fell by 3 per cent to 

glftl 4m. 

Bloom will remain as an 
executive deputy chairman but 
will step into a nonexecutive 
role once a new chief executive 
has been found. He says he has 
no immediate plans to leave 
Sketchley. 


acquisition of three subsidiary 
businesses from F KL the elec- 
trical engineering and compo- 
nents group. 

Geoffrey Hey, the 64-year-old 
non-executive chairman, said 
the six-man Wellman board 
would be augmented by three 
new executive directors to 
oversee the expansion. 

They will be led by Barry 
Jameson, 49, currently group 
managing director of FKTs pre- 
cision controls division. Jame- 
son, who has ove rall control of 
two of the FKI subsidiaries 
being sold, has been named 
managing director of the trans- 
port and technology division at 
W ellman. 

He will be joined on the 
board by Tony Fletcher, 44, 
who replaces Jon Smith, 46, as 
finanw director. 

Fletcher, who was recruited 
from his own consultancy busi- 
ness, is a former finance direc- 
tor and company secretary at 
Mono Group, the pumps busi- 
ness. Smith, meanwhile, is to 
become a divisional finance 
director within the Wellman 
group. 

The company has also pro- 
moted Roger Hancox. 45, cur- 
rently manag in g director of 
Wellman Furnaces and Well- 
man Process Engineering. As a 
board director, he will oversee 
the process engineering divi- 
sion. 

The shake-up is thought to 
have been masterminded by 
Alan Baxter, who joined Well- 
man last November as chief 
executive. 

Baxter, 43, was an FKI direc- 
tor Tinrii June 1992. 

Acquisition, Section U 


Non-executive 

directors 

■ David Jones, chief executive 
of Sharetink Investment 
Services, at the LONDON 
STOCK EXCHANGE. 

■ Peter Davis, director general 
of the National Lottery, at 
PROVIDENT FINANCIAL. 

■ Keith Ackroyd, md of Boots' 
retail division, at TAKARE. 

■ Hugh Fteedberg, chief 
executive of HOI Samuel, at 
MACQUARIE BANK. 

■ John Bishop, former chief 
executive of Eagle Star, at 
DOMESTIC & GENERAL 
GROUP. 

■ Janies Rawson has resigned 
from JAMBS WILKES. 

M Keith Ackroyd, md of the 
division of Boots r espon sible 
far Halfords, at COWIE 
GROUP. 

■ Ch arles Clarke has retired 
from SHIRES INVESTMENT. 

■ Jim Bu tler, retired senior 
partner of KPMG Peat 
Marwick, at NICHOLSON 
GRAHAM & JONES. 

■ Wolfgang Wefler, a member 

Of thi» managing board of 

HuK-Coburg Insurance Group, 
at EUROPEAN SMALLER 
COMPANIES; Olivier Lacoin 
ha« resigned. 

■ Tan Sri Raja M Alias, 
chairman of the Federal Land 
Development Authority (Felda) 
in Malaysia and of the 
Ma laysian international 
Shipping Corporation Berhad, 
at YULE CATTO; Mason 
Nelson has retired. 

■ Andrew Davison has 
resigned from MOSAIC 
INVESTMENTS. 

■ Sr Richard Morris, 

, chairman of UK Nirex and 
former ehalrman and chief 
execu tive of Brown and Root 

1 (UK), as rh airman Hwrignata 

at NORTH SEA ASSETS on 
the retirement of Sir Jeffrey 
Petersen. 

■ Ken Manley, former 
chairman of Freshbake Foods 
n d Campbell lfo od s , as 
chairman at GLOBAL GROUP; 
Ke nn e th Dfbben hag resigned. 

■ Roy Pendle ton at 
GREENWICH RESOURCES. 

■ Midmd W nn fam has 

resigned from SYCAMORE 
HOLDINGS. 

■ John Fender, md of the 
property advisory service of 
NatWest Investment 
Management, at TRUST OF 
PROPERTY SHARES; Harold 
Pasha has retired. 

■ Peter Moriey, retired 
personnel director of Tesco. 
at CRT GROUP. 

■ Peggy Czyzak-Daimenhaum, 
md smd co-founder of La 
Fo maia, at THORNTONS. 


FT CONFERENCE 

WORLD AEROSPACE AND AIR TRANSPORT 
1 &2 September 1994, London 

This conference, which has the support of the Society of British 
Aerospace Companies, is the latest In the Financial Times' international 
series of high level aerospace meetings. It wfll focus on the challenges 
facing the industry In the next century, how it is restructuring for the 
future to achieve growth, together with the impact of government policy. 
Speakers induce: Professor Herman Da Croc, Comite des Sages; Mr 
Dick Evans CBE, British Aerospace; Mr Robert Ayfing. British Airways; 
Mr Hans Mirica, American Airlines; Sir John Egan, BAA; Mr Juan A 
Saez, Iberia. Lineas AAraas da Espana, SA and Mr Brian H Rowe. GE 

Aircraft Engines. 

THE NUCLEAR INDUSTRY- INTO THE 21 ST CENTURY? 

14 ft IS S epte mber 1994, London 

This high-level meeting win examine the outlook lor nuclear power in 
North America end western Europe, considering the impact of current 
government moraioria and the role of nuclear in me fuel mix, and 
review growth potential in the Asia-Pacific region. The challenges of 
Improving efficiency and safety at nuclear plants in eastern Europe and 
Is&ues related to managing the fuel cycle will also be addressed. 
Speakers wifl include: Ftemy Carte, EdF; The Honorable John Reid. 
Canadian Nuclear Association; Dr Thomas S Cochran, Natural 
Resources Defense Council. USA; Dr Yih-Yun Hsu. Atomic Energy 
Council, Taiwan; Michael Fofger, United Kingdom Nirex Limited; 
Professor Jurgis VHemas, Lithuanian Energy Institute; Thierry 8 audon: 
EBRD; John Guinness CB; British Nuclear Fuels; Mr JeanOPiene 
Rougeau, COGEMA and Dr Rachel Western, Friends of the Earth. 

RETAILING TOWARDS 2000 - COMBINING VISION AND 
EFFICIENCY 

London, 21 & 22 September 19S4 

This year's meeting wtD focus on the need for the retai industry to 
exploit fUy the opportunities that new markets and new technologies 
offer white, at the same time, dealing with the fundamental business 
challenges • maximising profitability; controlflng costs; managing the 
property porttoBo and 'crime busting. Winning retail formats wit be 
those that successfully combine vision with efficiency. Speakers at the 
conference, arranged jointly with Coopers & Lybrand, include: Teh Ban 
Uan, Emporium Holdings (Singapore) Ltd; George Beeton, Edgars 
Stores Limited; Jack Walker, Meg a foods Stores Inc; Mark UBy, The 
Disney Store Limited; Robert Miller, Galleria 21 (UK) Lid end James 
May, British Retai Consortium. 

INTERNATIONAL BANKING 
Madrid, 29 ft 30 Septem be r 1994 

This major forum, tmmedteialy prior to the annual meetings of the IMF and 
the World Bank, w9 debate the outlook for banking in the mid-1990s and 
address a wide range at issues of current concern to the international 
financial community. Speakers taking part include: Emilio Botin Rios, 
Banco Santander; Richard J Boyle, Chase Manhattan Bank NA; Dr Josef 
Acfcermann, Credit Suisse; Egfcfio Giuseppe Bruno, Credito Rafiano and 
Dr Horst Kohler, Deutsche Sperkaseen und Gboverband. 

WORLD MOBILE COMMUNICATIONS 
London, 17 ft IB October 1994 

The Financial Times *94 con f erence w91 focus on the growth of mobOe 
communications, the various technologies being adopted and new 
operator strategies. Speakers include Dr Herbert Ungerer from the 
European Commission, Mr Chartes Wigoder, Managing Director of The 
Peoples Phone Company, Dr Joachim Dreyer, Chairman of Debits! 
Kommunikationstechnlk, Mr Barry A Kaplan, Vice President of 
Goldman Sachs ft Co. Mr Tomas Jufin, Managing Director of Uitisouce 
Mobile, and Mr Jan Neels, President & Chief Executive Officer of 
AirTouch International 

INTERNATIONAL INFRASTRUCTURE FINANCE- 
BUlLD-OPERATE-TRANSFERjBOT] 

Londorv* ft 5 October 1994 

This major FT conference wifl focus on bufideoper ate O hun stertBOT) 
opportunities fn key growth markets, to Include Eastern Europe, South 
Africa and the Middle East The chalenge of financing and managing 
SOT contracts wfll be highlighted in recent case studies of major 
projects In the power, telecommunications and environmental 
Infrastructure sectors. Speakers Include; Sir Alistair 
Morton.Eurotunnel.Thferry Baudon, EBRD, John Fletcher.Trafalgar 
House LMJnder Sud.The World Bankjohn Hafihen ID, Morgan Stanley 
ft Co Lid, Michael Heath, Nynex Network Systems Company.George 
Kappaz, KMR Power Corporation. 

Afi enquiries shoiid be addressed to: Financial Times Conferences, 

PO Bax 3651. London SW 1 2 8 PH, UK. Telephone: 081-673 9000. 

Fax: OBI-673 1335. 


hxiTTTTT: 


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BUSINESSES FOR SALE 


\ * ■: •: ? ^ -’['fa. 

-kt, . « a. :/?! llv 


■ *>-/ ■ '.yi- 




mm ■ 
: 


PAINT 

FACTORY 

UK facility required 
now for production of 
Industrial Coatings- 

Write to: Box B3258, Ffmodal Times, 
One Sowtrvnuk Bodge, London SE19HL 


FORSALE 

MODULAR SHELVING 

Product IbiCy tooli, 

nlea Htman and castoner Ka 
avallaMe ai toon notice n ttetorj spco 
is t g ea dy noeded for other protfaction. 

AmmanVOttOjDOOL 
Write la Box B3260. Financial Times. 
One Southwark Bridge LondoaSEl 9«L 

100+ LIVE BUSINESSES FOR SALE 

■Idaitatf 8BHlBfc|M0%OT1 2BZ1184 

FbcOTT 7DB348* 


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Large choice of veneers, melamine and/or laminate finishes 


London Showroom for viewing: 

Ariel House, 76 Charlotte Street, London W1 
Tel: 0374 741439 
Fuff camcad and planning services. 


BUSINESS 

SERVICES 

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customers who don't pay 
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talk to professionals in 
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save youfsett by contacting 

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London SE19HL 

CALL USA 
ONLY 17p/min 

First 30 mins FREE 
Dial Int. Telecom 
Tel: 081 490 5014 
Fax; 0S1 568 2830 


BUSINESSES 
FOR SALE 


FOR SALE 
Specialist Aluminium 
Section Bender 

Established Architectural 
and engineering section 
bender, specialist market, 
hitfi GP, profitable. 
Excellent growth potential. 
Principals only please. 

Wile toe Bax 02906. HnaraUTtm, 
One Satfimk Bridge, London SCI 0HL 

KNIGHTSBKmGE 

Prestige family busmefis. 
Est. 36 years 
Prime site 

Specialist Chandeliers, 
Period Lights + Furniture. 
7b include etc freehold 
premise*, a* a whole 
or separate. 

Tel/Fax: 071 589 8306 

FLOORING 

DISTRIBUTION 

COMPANY 

OpptstnnifyloiwrefuBC |nuClibk 
wdLestabtidud tmszness amvcnieia 
for M2S. PuqxKC befit warehouse. 
Excellent potential for devetopOKat. 
Principals only. 

Wi&c kk Box B3255, Rsuxisi Tines, 
One So^bwMfe Bodge. LiandooSEl 9HL 

COACH BUS 
TOUR RETAIL 
Home Counties 
I t/o 5m net 237k ine 
Directors fees/divs 

Wite Bai B3271. Ftamcid Tfmo. 
One Soottwart BodgE, Lcndoa SE1 9HL 


ESTABLISHBD AND WELL RESPECTED 
INJECTION MOULDMAKING COMPANY 
Situated in Ho*<e Counties. 

THe Company supvuBSQUAirrYTOOiiNG to a vakied and 
EXCELLENT CUSTOMER BAS. 

Annual turnover approaching 1m. 

Apply to Bax BStXftRmntanl'finies, Out Souihwaik Bridge, 

London SE15IHL 


WHOLESALE 
WAREHOUSING & 
DISTRIBimON COMPANY 
FOR SALE 

Long e?r abushbd m the ophce 

PAKimCWINC A SfiraHIDKD G0UNG 
U^nXBTKT VITTH LABCE cusnwBR 
Ilwx. r eply to 

Bat rvii BSlS. Rnmrnid Times 

CteSoufiwek ItidpliirteiSarHL 


Press Shop for Sale fidjy 

equipped- Ready to nm. 

QlOl qualify standard. 
No work. £300,000 
leasehold. 

Wrir Bm B3Z7S. itonad Tta. 
0»SaifrrotBriV,lmfn«SElSBL 


AD Advertiscincnl bookings are 

Terms and Cbocfitoos, copies 

The Mserisanesti WL 

The 

TcL 071 875 3000 Fax; 071 S73 3064 


r ForSale 

r Supplier of industrial fastenings, com- 
pression fittings and copper tubes 
m Turnover £1.4 million 
m Highly profitable 
m North of England 

Write to Kathy Clarke, Ernst & Ybuqg, 
Bee fee! House, 1 Lambeth Palace Road, 
London SE1 7EU. 

HI Ernst & Young 

bt tee ktsUtoze efOBrttnxl Scauaisam to fxgtanS 

critNiaanyalHntoWtoslMM. 


FORSALE 

Long established and reputable UK based manufacturer of metal 
houseware products with secure and expanding customer base. 
Extensive and growing product range 
Available capacity for substantial growth 40+ employees 
For further details, please contact: (in writing) Kidd Rapinet 
Solicitors (Rcfc PDT) I4/L5 Craven Street, London WC2N 5AD 



HI FROZEN FOOD AND DRY GOODS 
KffSliTil WHOLESALER AND DISTRIBUTOR 

The Joint AdmHskoflVB Rscehros of Duncan Lacay Food Savlcs Lfinted, Hark Shires and Nigel Vooght 
otet tor sale os a going concern t» btafcwss and asseb of this h^ihly regaidod business, wt** operatas 
tram mm Heodcom In Kml. 

Principal fwdores of tte bariMss taeforia: 

• wi nb teh eti customer hose 

• odMisiw disMMlan opemfion covering London and AeSoufiiEast 

• curiBnl nmuafisEd tornowr of approximately El .Sm 

• 5,000 sq ft caU skxago toeffly . . 


For farther data Is cortnct Mark SMres or Nick Edwank at 
TO Aiiton Ptaea, Maidstone, Kant UE14 5DZ. Tstaphona 


ft Lybnnd, Orchard Housa 
677110. Fax: <0622)662053. 


Coopen ft Lytmd a attakrf by fte IiwWii of ChaimJ Atcmn^wn* in Enjjnad Md Wric» p carry an 


PRIVATE COMPANY 
r i arilBni b i wwr ra gs gt d In 
Maartretnrc and Contract 
Pacfatgfag of a range of prodacte 
In the toOetrfcs and hamthokl 
field. Located in Soutlia a 
Eagfaud with exfxflent 
woridbree, fiKiBties and 
premises. HfgUr profitable 
bnsiaess. Rcttreneot Sale. 

Prfadpab oiriy. 
wtaa bd* Bxm. hh 

CtaDScatfnnitBrid^ Loedea SE1 f«L 

TBCTafcgASCBKMaff SQQgMEfrr - 

SBAUR a CAUBRATRM 
LABOSATOBY 

(Ehrtriot gtoxmfa; Hht irr Ufrt—lral 


B$ 5790 AND LLP toady lor NAMAS 
N«M anaowt BOOk*. gMaf mt CO* GP. 

fre* HUd nflaacr !■», penriding idUbie 

rpoa tacaern. O^dealtlcpDiBtoal - 


WtSeBfcBCTUfai irfalffaM. 

Qbd SoKkrat Bridge. Looika SlffiL. 

OFFICE 
RELOCATION 
BUSINESS FOR SALE 

Based in Scab East with Blw Chip 
dleai lisL Turnover cnrrently in 
excess of £lm with eacdtaff profits 
and inspects ter tether growth. 
Priacapnhoely. 

Wdia «k Boa 8320, Ftaaadd Tines. 
Obb Sandwnft: Bridge. Loadon SB1 9RL 

WASTE TRANSFER STATION 
SKIP HERE BUSINESS 
LONG ESTABLISHED 
WEST MIDLANDS LOCATION 

Write Kltepmlirifed 
SL Jweph's Coar^TihoBe Ktod, 
Dedky DV27AU 


FOR SALE 

U.SA. - HO IISTON /DALLAS /FT. WORTH 

20 -jbbi ala caacsiy. ewm M la (pea haun and pal K«lnnwrt apt mksB Ml csneBny 
WELL ESTABLISHED • EXCELLENT CREDIT • EXCELLENT REPUTATION 
AopodRBMf 1000 up (peer to*™ aodudnQ aa aW BB a. {fas 5 moon sqnn tat rt PRaa 
friWnB i LUA a wn riffs itasry uuniss ki toca. 

PLUS: > PrepBtr MBageaaM Qxrtary 

Ntn«h or OSed stock I US 57S.000.000) 

BRoes/AsafTs nmasd mb 3 ms 0 D>tn*suin 
SERCUS COMTOmAl POABtfS 0W.Y. FAX (713) 4M-1M6 

HUMAN RESOURCES GROUP 

Profitable Human Resources Group providing a variety of services for an 
established bloc chip client base, looking for disposal ro hilcresied parties 

Turnover in excess of £Skn. Net assets Elm. Excellent opportunity to add 
value to non Human Resources related business, as well as competitor 
interest. 

Write Baa B3276, Ffaaicfel Times, On Sastbawk Bridge, Letfdaa SEZ 9BL. 


FORK UET TRUCK 
DISTRIBUTOR 

South East Based company 

established in industry for many 
yean. Ttunover £63 million from I 
sales, service and rental contracts, 
established workshops and very 
strong aHtomcxAervicE base. Good 
reparation in indostry with strong . 
management structure. Trading ; 
profitably, 

Write to: Bos B3257, Ffcanrial Times, i 
One SeaterekBri^F. London SEX WL 


GREETINGS CARD 
FRANCHISE 

indo ding Croydon, Horsham & 
Tunbridge Wells areas. Business 
run from home with car. 
Currently generating GP £2JJ70 
per month from two weeks 
Marcfaadftang work. 

£58,500 

Call Paul Thomas on 
Tel: 0813326506 
Fax: 081 332 1286 


FORSALE 

On instructions LPA Receiver 

HOTEL ROMANO 
CHESTER 
Styfish town hotel within 
Roman vrate. 28 en suite 
bedrooms, restaurant (72), 
cocktal kxsige, residents' 
lounge, busy pizzeria (104), 
car parking. 

OFFERS OVER £750 JQO 
FREEHOLD COUPIETE 

ROBERT BARRY & CO. 
HARROGATE (0423) 566362 

FOR SALE " 

Long established whoksaiet 1 
of food and provisions. 
Turnover in excess of £lm. 
Freehold premises in London. 
Ownere wish to rerire. | 

Please write to Box B3267. I 
Financial Times, OncSootfawark \ 
Bridge, UhkJod SE1 9HL j 


SHOPFITTING AND SHOP 
DISPLAY PRODUCTS 
MANUFACTURER 

London 

The Joint Administrative Receivers offer for sale, on a 
going concern basis, the business and assets of the 
Abstracts Group, whose activities include: 

• Hie design and manufacture of shopTitting units. 

• “Woking Tube’ Division - The manufacture uf decorated 
cardboard display and packaging products. 

• The design and manufacture of bespoke furniture for hoard 
rooms and city dealing rooms. 

• Good customer base and sound order book. 

• Total turnover in the 5 months to May 1994 of 
approximately £303,000. 

For further details please contact by facsimile: 

Simon Fneakley or David Lawler at Buchlcr Phillips Group, 
84 Grosvenor Street, London WIX 9DF. 

Facsimile 071 629 9444. 


Buchler Phillips 

CHARTERED ACCOUNTANTS 

Amhoriacil by ihc liwlimlr of C l CTi CT f d Acrounliipi. in 

BqfaJ and Wolca b> carry on inv uam m hiantw 


In the matter of ADS LIMITED (Abattoir Disposal Services) 
Far Sale On Assets Basis 
ABATTOIR 
(Now ceased trading) 

Near Dudley. West Midlands 

Assets inclnde:- valuable Occupation Lease of modern building, 
installation and equipment on 1 acre industrial site. Customer list, 
vehicles etc. 

Further enquiries to STEVENS, CHAMPION & SLATER, 48 
Temple St. Birmingham B2 5NJ, Tel: 021 643 1942. 






BUSINESS AND THE LAW 


FINANCIAL TIMES TUESDAY JULY 19 19<>4 


Pregnant woman 
illegally dismissed 


A woman who 

/]\ 9 A was dismissed 

f3?5|L from her job for 
becoming preg- 
^ na5a * was unlaw- 

fully discriminated 

BuaopeAN against on 
grounds of her sex, 

— 225 2 — the European 
Court of Justice held last week. 

The case concerned the employ- 
ment and dismissal of a British 
woman, Mrs Webb. She had been 
hired to replace another employee 
who would be taking maternity 
leave. This leave would not begin 
for six TT^mthg, and it was planned 
that Mrs Webb sbould undergo 
training during that tune. It was 
envisaged that Mrs Webb should 
continue to work for the company 
after the return of the other 
employee from leave. Some three 
weeks after starting work, it was 
confirmed that Mrs Webb was 
pregnant A week later, she was 
dismissed for becoming pregnant 
i Mrs Webb brought proceedings 
before the industrial tribunal, 
alleging sex discrimination com 
trary to the Sex Discrimination 
Act 1975. 

The industrial tribunal dis- 
missed Mrs Webb's case, finding 
that there had not been direct sex 
discrimination, in that the real 
reason for her dismissal was not 
her pregnancy but the anticipated 
inability to carry out the primary 
task for which she had been 
recruited - to cover the job of the 
other employee while the latter 
was on maternity leave. 

According to the industrial tri- 
bunal, if a man had been recruited 
for the same purpose and he had 
told the employer that he would 
be absent for a comparable period 
to the likely absence of Mrs Webb, 
he too would have been dismissed. 
The tribunal also found that there 
had been no indirect sex discrimi- 
nation. Although more women 
were likely to be unable to do the 
job for which they had been 
recruited because of the possibil- 
ity of pregnancy, the employer 
had shown that the reasonable 
needs of its business required that 
the person recruited be available 
during the other employee's 
maternity leava 

Mrs Webb’s appeals to the 
employment appeal tribunal and 
court of appeal were both unsuc- 
cessful, Mrs Webb then appealed 
to the House of Lords. The court 
decided on the basis of ECJ case 


law that it bad to construe the 
applicable qwHftnaT legislation, so 
as to accord with the provisions of 
the relevant EC directive. It 
sought a preliminary ruling from 
the European Court of Justice. 

The Court first emphasised that 
the purpose of the relevant EC 
directive was to put into effect 
throughout the European Commu- 
nity the principle of equal treat- 
ment for men and women as 
regards access to employment. 
The directive made it clear that 
equal treatment meant there 
should be no direct or indirect sex 
discrimination. 

The Court reiterated its juris- 
prudence in this area: first, that 
the d ism i ssal of a female worker 
on account of pregnancy consti- 
tuted direct sex discrimination 
and, second, that the directive in 
question recognised the legiti- 
macy, in terms of the equal treat- 
ment principle, of both protecting 
a women's biological condition 
during and after pregnancy and of 
protecting the special relationship 
between a women and a child in < 
the period alter childbirth. 

The Court further held that 
notice should also be taken of a i 
recent directive, which was not 
due to be implemented into 
national law unto October 1994. ! 
This directive prohibited the dis- , 
missal of pregnant women in the , 
period from the beginning of their , 
pregnancy to the end of their | 
maternity leave. , 

The Court then held that there 
was no question of comparing the 
situation of a pregnant woman 
incapable of fulfilling the task for 
which she was recruited with that 
of a man similar ly incapable for 
medical or other reasons. Preg- 
nancy was not comparable with a 
pathological condition. Further, 
the protection offered by Commu- 
nity law to a woman during preg- 
nancy could not be dependent on 
whether her presence at work dur- 
ing maternity was essentia] to the 
functioning of the company. 

Thus termination of a non-fixed- 
term contract on grounds of an 
employee’s pregnancy could not 
be justified by the fact she was 
temporarily prevented from per- 
forming the work for which she 
was employed. 

C-32/92 Webb v BMO Air Cargo 
(UK) Ltd, ECJ 5CH. July 14 1994. 

BRICK COURT CHAMBERS, 
BRUSSELS 


B efore the summer is out, 
new product safety regula- 
tions will impose onerous 
and costly obligations on 
unsuspecting British businesses 
selling products to consumers. The 
lack of awareness among businesses 
reflects the minimal publicity given 
by the Department of Trade and 
Industry to the regula t io n s. 

The impact of the regulations will 
be exacerbated by the absence of a 
transitional period. Although they 
are still in draft, and therefore sub- 
ject to change before they pass into 
law, businesses should be ready for 
their impending arrival. 

The regulations, which imple- 
ment the European Community's 
general product safety directive, sig- 
nificantly extend “the general 
safety requirement” in the Con- 
sumer Protection Act They create a 
criminal offence of placing on the 
market a product which is not “a 
safe product”. 

However, as has been the case 
with other commercial law direc- 
tives made by the European Council 
of Ministers, the drafting of the 
directive is poor and the language 
vague. The regulations will be 
superimposed on existing product 
safety legislation, thereby creating 
a complex web of legislation cover- 
ing the same subject but in differ- 
ent terms. 

Only products intended for - or 
likely to be used by - consumers 
are covered. A consumer is some- 
one acting otherwise than in the 
course of a commercial activity, 
such as a business or trade. Goods 
used exclusively in the coarse of a 
trade or business (such as produc- 
tion equipment and capital goods) 
are therefore excluded. However, 
products which are used mainly in 
the course of a trade or business, 
but which might be used by a con- 
sumer for private use, are covered. 

Hie regulations place obligations 
on “producers" and “distributora'’. 
In each, case the nomenclature is 

mi.ulPBrijTig 

A wide definition is given to “pro- 
ducer”. It includes the manufac- 
turer of the product within the 
European Union or someone who 
presents himself as the producer by 
affixing to the product his name, 
trademark or other distinctive mark 
(for example, retailers selling prod- 
ucts under their own label). If the 
manufacturer is outside the EU. the 
representative or importer will be 
treated as the producer. 

The definition also includes any 
other professional in the supply 
chain, insofar as his activities affect 
the product's safety properties. 
However, there is no definition of 
“professional". Any person who 
reconditions the product will also 
be a producer. 

The same problem arises in 
respect of a distributor. This means 
any professional in the supply chain 


Stay secure 
on safety 

Stephen Sidkin and Nigel Miller 
explain costly new product regulations 


NftCT T7ME 

n^PgAQNSTRffm 

tfoWSRFEOUR 

tools we, 
FPRSOtfS' 


whose activity does not affect the 
product's safety. 

No guidance is given by the regu- 
lations as to what constitutes the 
supply chain. It clearly includes 
manufacturers, importers, own- 
branders, wholesalers, distributors, 
retailers and leasing companies. It 
could extend to transporters, pack- 
ers and warehouses 

The general safety requirement is 
that no producer will place a prod- 
uct on the market unless it is a safe 
product For this purpose, a safe 
product is one which, under normal 
or reasonably foreseeable condi- 
tions of use, does not present any 
risk, or only the minimum risks 
considered acceptable and consist- 
ent with a high level of protection 
and the safety and health of per- 
sons. Risk is assessed on the basis 
of a number of factors, including: 

• The product’s characteristics, 
including its composition, packag- 
ing and instructions for assembly 
and maintenance. 

• The product’s effect on other 
products. 

• The product’s presentation, 
labelling, instructions for use and 
disposal, and other information pro- 
vided by the producer. 

• The categories of consumers who 
would be at serious risk when using 
the product. Particular consider- 
ation is to be given to children. 




The producer must provide con- 
sumers with information to enable 
them to assess the risks inherent in 
a product throughout its period of 
use. This could be, for example, 
through the use of warnings. The 
withdrawal of a product from the 
market could be the end result This 
obligation is continuous. 

In turn, a producer must ensure 
that he is informed of the risks that 
the products might present. Post- 
marketing surveillance departments 
will have to be established. 


T he regulations give nan-ex- 
haustive examples of the 
steps a producer might 
take. These include mark- 
ing a product so that it can be iden- 
tified. sample testing of marketed 
products, investigating complaints, 
and keeping distributors informed 
of such monitoring. 

The regulations also impose 
duties on distributors. By defini- 
tion, distributors are not able to 
influence the safety of the product 
Their duties are: 

• To help ensure compliance with 
the general safety requirement 
• Not to supply products to any 
person that they know, or should 
have presumed on the basis of infor- 
mation which they had and as pro- 
fessionals, are dangerous products. 
• To be involved in the monitoring 


of the safety of products placed on 
the market, distributors must pass 
on information on the products and 
cooperate in action to avoid risks. 

Where the safety of a product is 
already governed by specific SC 
law, the regulations will sot apply. 
This is subject to a proviso: if EC 
sectoral directives do not caver 
every aspect of safety, the regula- 
tions will still apply to those 
aspects not covered. This can be 
expected to cause difficulty to busi- 
nesses and has been criticised by 
the Institute of Directors. 

There are criminal penalties for 
breaking the regulations. An 
offence under the regulations can 
result in a maximum of three 
months* imprisonment or a maxi- 
mum fine of £5,000 or both, it will 
be a defence to show that the defen- 
dant took all reasonable steps and 
exercised all due diligence to avoid 
ccBnmitting an offence. 

Local weights and measures 
authorities will enforce the regula- 
tions. They have the power to 
inspect goods and enter business 
premises, to require production of 
business records, to seize and 
detain goods and records, to require 
the opening of any container or 
vending manhwiw anri. if refused, to 
break it open. 

The regulations impose an oner- 
ous duty on producers and distribu- 
tors to become involved in actively 
and continuously monitoring the 
safety at products. Relying on mea- 
sures taken and procedures adopted 
to comply with the Consumer Pro- 
tection Act win be insufficient Pro- 
ducers must adopt proactive, rather 
than reactive, procedures. 

The regulations dictate that pro- 
ducers and distributors review their 
arrangements with suppliers and 
customers. In each case, suppliers 
will need to include provisions in 
their agreements requiring the 
other party to participate in product 
safety monitoring and marking pro- 
cedures. This wfll enable informa- 
tion to be obtained. 

But obligations cannot stop there. 
The other party should be contrac- 
tually obliged to provide informa- 
tion to customers and be required 
to participate in product recall cam- 
paigns, as well as investigating 
complaints. At the same time, buy- 
ers should included provisions pro- 
tecting them from any failure by a 
supplier higher up the chain to 
comply with the regulations. 

Penalties for offences may be 
avoided or reduced if these courses 
are followed. They may also provide 
some contractual relief if claims are 
made by consumers. 

The authors are commercial law 
partners at City law firm Pox Wil- 
liams and specialise in advising on 
trading agreements. Free briefing 
note available firm Fax Williams, 
City Gate House, 39-45 Finsbury 
Square, London EC2A lUU 


LEGAL BRIEFS 



Setback for 
private claimants 
in the EU 

P rivate claims brought by 
individuals in the European 
Union cannot rely directly 
on EC directives where member 
States have not passed 
implementing legislation, the 
European Court of Justice has 
reaffirmed. 

In Facdni Dori v Recreb, the 
Court upheld the current position 
that only public sector employees 
can rely directly an EC directives 
where national legislation has yet 
to be passed. 

The case concerned a Miss 
Facdni Dori, of Milan, who 
cancelled a language course 
contract She claimed protection 
under the EC’s directive 85/571 
concerning consumer rights over 
contracts. No legislation has been 
passed In Italy to implement this 
directive. The Coart ruled that 
consumers such as Miss Dori could 
not rely on directives, but added 
that, in the application of national 
laws, these have to be interpreted 
in the light of the directives. 

However, the court also 
reaffirmed the principle established 
in ta Francovich” that individuals 
could seek damages from national 
governments for breaches of a 
state’s obligations. The case had 
been watched by UK employment 
lawyers concerned that, had the 
Court supported Miss Dori’s 
application, it could have prompted 
changes in employment law where 
implementing legislation differs 
from directives. 

US firm eyes UK 

S idley & Austin, a US law firm, 
is to expand its UK law 
practice with the appointment 
of three prominent City solicitors. 
Joining its London offices will be 
John Edwards, formerly head of 
information technology with 
CHfford Chance, and Howard 
Waterman and Graham Penn, both 
formerly hanking lawyers with 
Cameron Markby Hewitt 
















FINANCIAL TIMES TUESDAY JULY 19 1994 


13 



ARTS 


The triumphant return of the Empire 

Clement Crisp on an inspiring triple bill worthy of Edinburgh's refurbished theatre 



ti: 


have two vivid memories of 
the old Empire Theatre in 
Edinburgh. Festival habitues 
still speak of the terrible 
washings and ill-muffled 
cries that attended scene-changes. 
(Gang warfare? Burke and Hare 
recruiting fresh bodies?) 

During a Royal Ballet visit to the 
1362 festival, Kenneth MacMillan’s 
recent Bower dehxJSe, with glorious 
decors by Kenneth Rowell, was 
presented. Lynn Seymour, as the 
Bride, made her first appearance 
through an arch. As she did so, the 
structure keeled forward, and 
O* nearly guillotined Donald 
' MacLeaxy, bet waiting beloved. A 
••'•c '■ decade later, de-CQmmissiQned as a 
theatre, the Empire was pressed 
into service for the festival, when 
' % John Cranko brought his Stuttgart 
Ballet for its first visit 
,<* Somewhere there is a photograp h 
■ of Cranko and BlacMfflan 
- . either sad© of the notice which had 
been so graciously provided by 
" patrons: “The management regrets 
the inconvenience to patrons. Bingo 

• will resume in three weeks.” Ah. 
4 ‘ "*■ the Athens of the North! 

Edinburgh’s need for another 
lyric theatre - larger than the 
pretty Kings; less tike Moscow air- 
7 port than the dour Playhouse - has 
at last rescued the Empire from Its 
fallen state. As David Murray 
J - reported from its Wagne rian open- 
ing last month, we now have the 

• revised, refurbished, re-thought 
Edinburgh Festival Theatre, and 

'■* jolly good it is, too. 

It is especially good in its stage - 
broad, deep, well-equipped - and in 
: ~ - % its gleaming glass and steel fac ade 
and spanking new front-of-house. 

*■ (Gone are the dingy days of 
' . crowded foyers, strange side-doors 
through which people could sneak 
> ;; 1 in, and a lingering whiff of some- 
. tiling tnKlainty.) 

•* The entrance is bright, spirit-re- 
joking, with glassed-in promenades, 

: I bars, balconies, and a sense (as at 
the Opera Bastille) of an immedi- 
ately welcoming and user-friendly 
location. 

About the auditorium I have res- 

• V' ervations. The policy has been to 

restore the old and familiar setting 
that bad existed since 1924. Such 
nostalgia accepts the dreary colour 
scheme - omnipresent mulberry for 
. seats, walls, curtain; a good deal of 
cream paint with a built-in hint of 
„ grime - that may recall the good 
" old days, except that 1 doubt if they 
were in any way decoratively good 
: at alL But the house is spacious, 

-i " r with a fine acoustic and sight-lines. 

It offered an admirable showcase 
for English National BaBet, which 
has just completed a two-week sea- 
son. (Several more dance visits are 
scheduled, which is good news.) 

Were anyone to seek concrete evi- 
dence of the transformations 
wrought by Derek Deane in the 



Joanne Clarke, Simon Cooper and Lacy Smith in ENB's ‘XNTri cities': holding oar interest by choreographic means as well as its menial imagery 


year gtnm he assumed artistic con- 
trol of the troupe, it was there in 
the triple bill 1 saw in company 
with a large and enthtnria«tir- audi- 
ence. 

Triple bills are notoriously hard 
to sell nowadays. ENB played an 
even more dangerous game by pro- 
gramming three less than surefire 
pieces: the Shades scene from Bay- 
adere; the new XNTricities; and 
Etudes. AH are plotless. All malm 
big demands on their casts. The 
audience reaction was, clearly, one 
of delight 

'Hie evening was, on these terms, 
inspiring. And no less so on terms 
of most of the dancing The Bayad- 
ere showed a corps of 18 girls who 
understood the nuances and aca- 
demic grace of Petipa's sublime 
inventions: they made complete and 
beautiful sense of every moment 


Margaret TTimann, a guest with 
the ENB, does not yet have the sty- 
listic c ommand to show US Nfitiya’S 
transcendant purity - in drama as 
in step. Her partner was Thomas 
Edur, and with him we see classic 
dancing whose dignity and emo- 


sure, luscious - and emotionally 
true. 

XNTricities, by the young Italian 
choreographer Mauro Bigonzetti, 
has settled well into ENB's reper- 
tory. Its imagery combines sexual 
and physical challenges. Its players 


ENB played a dangerous game. All three 
are plotless. All make big demands on their 
casts. The audience reaction was , clearly , 
one of delight 


tional power is uniquely satisfying. 
He is a rare balletic being: an 
authentic, pur-song aristocrat, able 
to give noblest utterance to every 
role he assumes. His Solor was 
princely in technique - the dance 


strut and race, and are riven by 
curious tensions and confronta- 
tions. Its great merit is that Bigon- 
zetti holds our interest by choreo- 
graphic mean* 

No less real is the brilliant 


response of its cast to their tasks, 
led by Yat Sen Chang, who tears 
through the action like a well- 
guided mianAe. 

Etudes, still fascinating as a por- 
trait of dancers in class, seemed to 
me under a bit of a cloud. I must in 
all fairness record that I lately saw 
it in brilliant performance by the 
Paris Opera Ballet ENB’s dancers 
work with a will, and I salute the 
18-year-old Giuseppe Picone, who 
whipped through a leading role 
with exultant clarity and a joie-de- 
danser that presage wonderful 
thing * to come. 

A second evening brought Swan 
Lake in Raissa Struchkova’s version 
of the old Bolshoi staging. 

It is effective, and the company 
dance it with much goodwill: the 
first act waltz had a pleasing swing 
to it Margaret fflmann and Rex 


Anthony Cndaimy 


Harrington were guest principals 
from the National Ballet of Canada. 
Their interpretations were 
well-meaning, and Harrington is a 
fine partner, but their manner 
suggeked the emotional basics of 
soap-opera - Santa Barbara, per- 
haps - rather than the s ublimi ties 
of this predictable but still-hallowed 
text 

As a traveller's note, let me rec- 
ommend to anyone visiting Edin- 
burgh the upper rooms of the 
National Gallery of Scotland, where 
the French paintings are a small 
but marvellous treat C&zanne. of 
course, bnt also two miraculous 
Boudins, and a stunning Manve, 
Vaut le detour. 


English National BaBet win open a 
week’s season at Urn Coliseum on 
July 25. 


B rad Fraser is the Canadian 
playwright whose 
award-winning Unidentified 
Human Remains And The True 
Nature Of Lone made sach an 
impact in Edinburgh and London 
last year, and coincidentally 
reaches the cinema screen this 
week. 

The Ugly Sian, brought to last 
summer's Edinburgh Festival by 
a Canadian company, was a huge 
disappointment - a dose of 
Tennessee Wiffiams baroque 
turgidly combined with Cold 
Comfort Farm. 

Now the same city’s Traverse 
Theatre, where Fraser had his first 
UK success, presents Poor Super 
Man- A Play with Captions. The 
writer is back on the territory he 
knows best: the isolation of the 
city-dweller, the disorientation 
of the emotionally lonely, the 

odyssey of the unattached, 
eternally seeking the ideal 

relationship. 


Theatre/Martin Hoyle 


Poor Super Man throbs with power 


In Human Remains the shadow 
of a serial kina' darkened the 
lyricism, comedy and pathos in 
this study of a small group of 
friends. In the new play the killer 
is id entified from the outset: the 
HIV virus. 

Shanno n is denied a sex-change 
operation by his worsening medical 
condition. His eventual suicide 
focuses and sharpens the 
self-analytic gropings of the play’s 
four other characters. 

Chief among these is his flatmate 
David, an established painter, who 
(like the hero of Human Remains) 
takes a job as a waiter to dispel 
terminal jadedness - professional 
and personal. He falls in love with 
Matt, the married owner of the 


cafe: a development that echoes 
the central relationship of Remains. 
David (as In the earlier play, a 
questing seeker of love, assailed 
by self-disgust) has a loyal if 
possessive woman friend, the 
rueful, wisecracking journalist, 
Kryla; another throwback to 
Remains. 

If much of this seems like a rerun 
off Fraser’s most successful 
materia], there is no denying he 
does it extremely welL 

The reality of urban life nags 
like a throbbing tooth throughout 
The characters live on a knife- 
edge between self-mocking 
buoyancy and suicidal despair. 

And the use of projections, the 
“captions” of the title, reveal the 


floundering beneath the 
brittleness; the urgency under the 
badinage. 

Thus when David tells his new 
employers in the cafe that he is 
gay and they hastily confirm that 
tills is “not a big deal”, the word 
“queer” appears. “Do yon dislike 
me?” asks the cloying Kryta to 
her dismissive friend; his denial 
is countered by a projected 
“maybe*. The titles are used 
naturally to note time and place, 
to encapsulate a scene 
(“lie”, “revelation”) and sometimes 
as a descant to the spoken dialogue 
(“me me me"). 

Even more than Rem ains the 
play’s central thread is the stuff 
of homosexual wish-fulfilment 


fantasy: the gay who makes 
straight men fall exclusively for 
him: “There's something about 
you, things yon say, the way you 
look at me,” says the capitulating 
heterosexual. 

In Ian Brown’s direction of the 
European premiere such passages 
escape the trap of novelettishness 
thanks to the production’s rhythm 
and pace - but without the 
external threat of a killer as in 
Fraser’s previous success, the 
tension is finally diffused by the 
short, cinematic takes of the play's 
construction. 

The piece is uniformly well-acted 
though Ian Gelder’s David is rather 
unfocused, uncertain how much - 
his actions are rudderless 


bewilderment, how much simply 
the result of selfishness. 
Christopher Simon’s Matt is a fine 
study of puzzled sexual 
self-discovery. Elaine Collins is 
a lovely wry Kryla, and Kathryn 
Howden makes more of Matt’s 
hurt, loving wife than one suspects 
the part is worth. 

As Shannon, dying without 
achieving his ambition to become 
a woman, Jude Akuwudike goes 
through the play in dress and wig 
looking like one of the Snpremes, 
in a beautifully judged blend of 
delicately camp self-parody and 
increasing anger. 

The production returns for the 
festival, then transfers to 
Hampstead. Fraser’s fans will 
recognise the expertise of his 
variations on favourite themes, 
but may well begin to wonder what 
else he can do. 


Traverse Theatre, Edinburgh. 


Theatre 


Tricks or 
memory 
treats 


T be more I watch Harold Pin- 
ter’s plays, tbe more I love 
the way he plants images in 
the air and lets them grow there. A 
simple example in his 1978 play 
Betrayal is Jerry's recollection of 
picking up young Charlotte one 
Christmastime, of lifting her high 
and down and up, of bow she 
laughed, of how everyone present 
laughed. Charlotte (never seen in 
the play) is the daughter of Robert 
(Jerry’s best friend) and Emma 
(who was/is. for some years, Jerry’s 
mistress). “Everyone" present at 
that Christmastime includes Jerry's 
own wife and children. 

The first irony about this memory 
is that Jerry and Emma evoke it 
when they are alone together. Thus 
they moke it an image of the inno- 
cence that existed around and 
between them once, before their 
affair began; before they betrayed 
it The second irony is that Jerry 
twice remembers the event as hav- 
ing occurred in Emma’s kitchen; 
and that she twice corrects him - 
his kitchen. The deceptiveness of 
his (or her) memory has an ah-yes- 1 - 
reznember-it-well charm, and yet 
also becomes poignant. Mem on’ 
matters, but plays tricks. 

And it is this image that Matthew 
Warchus makes luminous in his 
new production of Betrayal at the 
West Yorkshire Playhouse. Between 
Mfh of the nine scenes, different 
clips of a film of a child - like a 
home movie - are projected on to 
the ceiling above the stage. (The 
audience, seated on four sides of the 
stage, can all see.) 

The child's radiant smile, tum- 
bling hair, constant motion all 
make an impression. At first, we 
watcb her objectively; later, when 
she looks directly at the camera, we 
are touched; gradually, as -we see - 
like the close-ups in Antonioni's 
film Blowup - increasingly near but 
blurry views of areas of her hair 
and face, we are confused. 

Which works brilliantly. For one 
thing , it reminds us that Jerry ami 
Emma have betrayed not only Rob- 
ert but also their children. For 
another, it shows us the paradise of 
that bygone innocence: a paradise 
that is not a fact but an idea. And. 
further, it catches the method of 
Pinter’s play, which moves to and 
fro in time but basically backward, 
from 1977 to 1968, from the time 
when the affair is wholly ova- to 
the point when it began. 

The production reveals that. In its 
small-scale way. Betrayal operates 
as a Proustian effort to rediscover 
lost time. But lost time is lost. We 
never actually see Jerry lift Char- 
lotte. We merely return to thinking 
about it, from changing distances 
and perspectives. 

Warchus is strong an such poetic 
use of visual Imagery: as in his 1991 
National Youth Theatre CorioUmus 
and his current RSC Henry IT. In the 
matter of shaping individual perfor- 
mances, his touch is not so sure. In 
Betrayal, Leslee Udwin Is a surpris- 
ingly un enigmatic Emma. Richard 
Hope is an amiably unquestioning 
Jerry, and Timothy Walker is a Kar- 
enin-like Robert. Intelligent inter- 
pretations, with fresh touches that 
reveal new facets in the play. And 
Laura Hopkins' designs help them 
effectively to shed years as they 
move back in time. 

But all three performances need 
more fine-tuning. There are actorly 
effects of pacing and dynamic con- 
trast that do not convince, strokes 
of characterisation that should be 
developed. Surely all three charac- 
ters, moving in artistic circles, 
should be more sophisticated? 

Alastair Macaulay 


At the Courtyard Theatre, West 
Yorkshire Playhouse, Leeds. 


Internationa l 

Arts 

Guide 


■ AMSTERDAM 

Concertgebouw Tonight David 
Shalfon conducts Jerusalem 
Symphony Orchestra in works by 
Mendelssohn, Kopytman and 
Schumann, with viola soloist Tabeo 
Zmimermarm. Tomorrow: Borodin 
Quartet with pianist Biso Virsaladze. 
Thurs: Ton Koopman and Tini 

Mathot, harpsichord and organ 

recital. Sat Ross Pople conducts 
London Festival Orchestra In 
Copland, Vaughan Williams and 
Tippett Next Mon: Lev MaiWz 
efirects New Slnfonietta Amsterdam 
in Mendelssohn and Schubert, with 
violin soloist Vadim Repin (Q20-671 
8345 ) 


■ ATHENS 

ATHENS FESTIVAL 
Cristina Hoyos Ballet gives 
perfomtances at the Odeon of 
Herodos Aftlcus on Sun and Mon. 
Gw* National Opera Ballet 
Presents Rudi van Dantzlg’s 
Production of Prokofiev’s Romeo 
end Juliet on July 27 and 28. 
HUdegard Behrens, Dmitri Sgouros 


and Mstislav Rostropovich are 
soloists in a Sakharov memorial 
concert on July 30 (Athens Festival 
box office. 4 Stadtou Street, in the 
arcade. Tel 01-322 1459/01-322 
3111. Open Mon-Sat 8.30-14.00 
and 17.00-19.00. and Sun 
10.30-13.00) 

EPIDAURUS FESTIVAL 
The annual festival of andent drama 
in the 1,400-seat amphitheatre at 
Fpiriaurus hosts performances of 
Greek classical drama on most 
weekends throughout the summer. 
National Theatre of Greece presents 
Euripides’ Hecuba on Sat and Sun. 
peter Stein brings hfe marathon 
Moscow production of The Oresteia 
cxi July 30 and 31. Tickets are 
available dally at the Athens Festival 
box Office (01-322 1459) or at the 
theatre of Epidaurus on Fri, Sat and 
Sun ( 0753 - 22006 ) 


CHICAGO 


slight Music: Michael 
*s this Sondheim 
das the perfect 
steal comedy, "fill Aug 
312-443 3800) 

I the Code: Hugh 
1986 play about loyalty, 
sefiency and 
y Is in repertory with 
voe's The living, a 
iut the London plague 
j week (Interplay 
5) 

■leads: Steppenwolf 
famed character actor 
*y directs the American 
Uan Bennett's 
iries of monologues. 

(Steppenwolf 312-335 


• Jeffrey: as part of their Pride 
Performance series of gay and 
lesbian theatre, Baffiwkdc Repertory 
presents the Chicago premiere of 
Paul Rudnick’s hit comedy about 
love and dating In the age of Aids 
(Bailiwick 312-327 525 2) 

RAVTNIA FESTIVAL 

Tonight Victor Borge. Tomorrow: 

John Denver. Thuis: Jane Olivor. 

Fri: Eri Was conducts Chicago 
Symphony Orchestra in works by 
Nielsen, Grieg and Sibelius, with 
piano soloist fcGsha Dichter. Sat 
Was conducts a Russian 
programme, with ceHo soloist David 
Gerfngas. Mon: Beaux Arts Trio. 

The festival runs till August 2a To 
order tickets by phone, cafl 
312-ravinJa. Outside the metropolitan 
Chicago area, call 1-80P-433-8819. 
Tickets can be ordered by tax 24 
hours a day: 708-433 4582. 


■ LONDON 

THEATRE 

• The Miracle Worker: Richard 
Olivier directs William Gibson's true 
story of the development of a 
teacher's relationship with a deaf, 
dumb and blind girt. First produced 
In 1959 with Anne Bancroft, this 
new production stars Jenny 
Seagrove, William Gaunt and Judi 
Bowker. Opens tonight (Comedy 
071-369 1731) 

• Saint Joan: GaB Edwards’ 

TTieatr Cfwyd production of Bernard 
Shaw's classic comes to the West 
Bid with Imogen Stubbs as Joan 
of Arc. caught between her rebellion 
against the feudal state and the 
authority of the Church. Previews 
start tonight, opens on Thurs (Strand 
071-930 8800) 

• Lady Windermere's Fan: Philip 


Prowse directs and designs Oscar 
Wilde's 1892 comedy. Previews 
start tonight, opens next Mon 
(AJbery 071-369 1730) 

• The Seagull: Judi Dench stars 
as Arkadina In Pam Gems’ new 
version of Chekhov's play about 

cf sap pointed aspirations. John Caird 
directs (National 071-928 2252) 

• The Tempest Alec McCowen 
heads the cast in Sam Mendes’ 

RSC production, in repertory with 
King Lear starring Robert Stephens 
(Barbican 071-836 8891) 

• Home: Paul Eddington and 
Richard Briers in a revival of David 
Storey’s 1970 play (Wyndham’s 
071-369 1736) 

• She Loves Me: a highly 
successful West End transfer of 
Scott Effls' Broadway revival of the 
charming 1963 musical by 
Masteroff, Bock and Hamick (Savoy 
071-930 8800) 

MUSIC 

Royal Atoert HaS This week’s 
Proms feature the CBSO under 
Simon Rattle tonight, the BBC 
Philharmonic under Vernon Handley 
tomorrow and Yan Pascal Tortelier 
an Thurs, the BQCSO under Haitink 
on Fri, the Australian Youth 
Orchestra with Yakov Kreizberg 
on Sat, Bach's B minor Mass 
conducted by Joshua FUfkin on Sun 
morning, the RPO with Vladimir 
Ashkenazy on Sun evening and the 
8 BCSO under Mark Eldar on Mon 
(071-589 8212) 

Barbican Kronos Quartet is in 
residence till Fri, followed at Sat 
by the Labeque Sisters. Sun: Nevffie 
Marti ner corelucts ASMF in a 
Beethoven prog ra m m e, with piano 
soloist Till FeSner (071-638 8891) 
South Bank Centre This week is 


devoted to the JVC Jazz Parade, 
including George Shearing Duo and 
Diane Schurr tonight, and B.B. King, 
Roy Rogers and the Delta Rhythm 
Kings on Sun. Next week is devoted 
The American South, a festival of 
music, literature, theatre, visual arts, 
dance and food from the southern 
states of the US (071-928 8800) 

' OPERA/DANCE 
Covent Garden The Royal Opera 
ends its season with Aida tonight 
and Fri. La fanckiRa del West 
tomorrow and Sat and Manon on 
Thurs. The Royal Ballet returns on 
July 27 (071-240 1066) 

Coliseum English National Ballet 
opens a week of performances next 
Mon, featuring a mixed bifi and 
Ronald Hynd’s new production of 
Steeping Beauty (071-836 3161) 


■ MILAN 

Teatro a Ha Scafa Tonight, 
tomorrow, Thurs, Fri, Sat John 
Cranko’s ballet Onegin. End of 
season (02-7200 3744) 


■ MADRID 
Teatro Lirfeo La Zarzuela Thurs, 
Sat next Mon: Alberto Zedda 
conducts final performances of Pier 
Luigi Pizzi’s production offltaliana 
in Afgeri, with cast Including 
Ruggero Raimondi (01-429 8225) 


■ ROME 

Angelin Pretojocaj and the Paris 
Opera Baflet present choreographies 
by Prelfocaf tonight tomorrow and 
Thurs at Museo degS strumenti 
musicafi. There are piano recitals 
by Ingeborg Bafclasztt tomorrow 


at Istrtuto Austriaco di Cuftura, and 
by Rosa Torres Pardo on Thurs and 
Jean Claude Penretier on Fri, both 
at Palazzo Famese. Villa Medici 
hosts contemporary music concerts 
daily tin Sat focusing on Xenakis 
and Nono (tickets 06-361 2682/ 
06-372 0216/06-291 0335 
information 06-4890 4029) 


■ STOCKHOLM 

Dratfninghofcn A fantasia on the 
opera world of Handel, entitled 
Heavenly Handel, opens on Friday, 
with cast headed by Anne Sofie 
von Otter and Barbara Bonney. 
Repeated July 25, 27, Aug 5, 7 
(08-660 8225) 


■ VENICE 

Teatro La Fenice Tonight: first of 
nine performances of La boheme. 
conducted by Marcello VTotti and 
staged by Giorgio Marini (041-521 
0161) 


■ WASHINGTON 

• The main summer show at the 
Kennedy Center is Miss Saigon, 
the musical love story set during 
the Vietnam war. Dally except Mon 
(202-467 4600) 

• AJan Ayckbourn’s farce A Small 
Family Business runs till Aug 7 at 
Ofney Theater (301 -924 3400) 

• David Zinman conducts the 
Baltimore Symphony Orchestra in 
aU-Mozart programmes with piano 
soloist Barry Douglas on Thurs and 
Sat at Oregon Ridge (410-783 8000), 
and on Sun at Wolf Trap. This 
week’s bill also features Santana 
tonight, and Peter Paul and Mary 

on Fri and Sat (703-255 1860) 


ARTS GUIDE 

Monday: Performing arts 
guide dty by city. 

Tuesday: Performing arts 
guide dty by city. 

Wednesday: Festivals guide. 
Thursday: Festivals guide. 
Friday: Exhibitions Glide. 

European Cable and 
Satellite Business TV 

(Central European Time) 

MONDAY TO FRIDAY 
NBC/Super Channel: FT Busi- 
ness Today 1330; FT Business 
Tonight 1730, 2230 

MOMMY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

Euro new s : FT Reports 0745, 
1315. 1545, 1815, 2345 

WEDNESDAY 

NBC/5uper Channel: FT 
Reports 1230 

FRIDAY 

NBC/Super Channel: FT 
Reports 1230 

Sky New* FT Reports 0230, 
2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 

Sky News FT Reports 0430, 
1730; 






14 


FINANCIAL TIMES TUESDAY JULY 19 1994 


M r Victor Chzhen, 
deputy prime 
minister and pri- 
vatisation minis- 
ter of the ex-Soviet republic of 
Uzbekistan, had saved his 
bombshell until the last 
moment. 

Executives of the UK-based 
tobacco and financial services 
group BAT Industries, meeting 
ministers in the capital Tash- 
kent, were expecting to clarify 
details of a preliminary agree- 
ment to acquire a majority 
stake in Uzbekistan's tobacco 
industry. Towards the end of 
the meeting, however, Mr 
Chzhen made a "suggestion’'. 
Might BAT perhaps buy not 51 
per cent, but 97 per cent of the 
industry immediately - involv- 
ing an extra up-front payment 
of some S54m? 

BATS chairman Sir Patrick 
Sbeehy said he would discuss 
the proposal with his team; 
within 24 hours a carefully 
warded tetter was despatched 
to Mr Chzhen informing him 
that his suggestion was 
“regretfully unacceptable". 

Such are the uncertainties of 
doing business in Uzbekistan. 
Although its former commu- 
nist president, Mr Islam Kari- 
mov, has embraced market 
reforms, the country has a rep- 
utation for being a tricky place 
in which to operate. But in 
spite of bureaucratic wran- 
gling, and poor infrastructure 
and communications, compa- 
nies such as BAT are showing 
that it is possible to do deals 
with a republic which for cen- 
turies straddled the Silk Road 
trading route, and has ambi- 
tions once again to be a centre 
of east-west trade. 

The 22m-strong state is 
starting to attract interest 
from both east and west The 
first products of a joint venture 
between Coca-Cola and a local 
company appeared in Tashkent 
last month; US mining com- 
pany Newmont has a gold-min- 
ing project; and Daewoo, the 
South Korean conglomerate, 
has a joint venture to produce 
cars from next year. 

The BAT deal, which should 
be completed within weeks, is 
Uzbekistan's biggest privatisa- 
tion. BAT is spending S60m on 
its 51 per cent stake in Uz 
Tobacco, a state enterprise 
comprising the republic's only 
cigarette factory, in Tashkent, 
and tobacco-processing plants 
in the second city Samarkand, 
and in Urgut, a tobacco-grow- 
ing centre. 

BAT plans to invest a far- 
ther $232m over five years, 
refurbishing the Tashkent 
plant, building a cigarette fac- 
tory in Samarkand, and install- 
ing new equipment in UrguL 
Within five years it hopes to 


BAT-man’s 

opening 

Neil Buckley on the tobacco 
giant’s strike into Uzbekistan 



increase domestic cigarette 
production from 4bn cigarettes 
a year to up to 25bn - outstrip- 
ping the republic’s estimated 
demand of 20bn a year. BAT’S 
equity holding is set to 
increase to 97 per cent over the 
five years as it puts money 
into the venture. 

“This is the first time we 
have agreed such a large joint 
venture, and in effect handed 
over a whole industry to a for- 
eign partner,” says Mr Ismail 
Jurabekov, Uzbekistan’s first 
deputy prime minister. 

Getting to this stage has, 
however, taken eight months 
of negotiation and been 
fraught with difficulties. BAT s 
team in Tashkent says operat- 
ing in Uzbekistan can be more 
frustrating t h a n in the third 
world. Its biggest complaint is 
the bureaucracy. “In Africa, 
you may be kept waiting, but 
usually you are rivaling with 
someone who can make a deci- 
sion, and after a while they 
will make a derision,” says a 
team member. “Here, nobody 
wants to make a decision.” 

One reason may be the politi- 
cal struggles going on inside 
the government, where minis- 
ters jostle for position and 


appear anxious not to make 
political mistakes. 

Another problem is the lack 
of proper legal and tax frame- 
works. Land-leasing is 
unknown in central Asia, and 
in establishing the rent for its 
99-year leases on its factory 
sites, BAT is setting the bench- 
mark for future investors. It is 
urging the government to 
equalise the tax treatment of 
imported cigarettes, winch are 
excise-free, and those produced 
domestically, which are subject 
to an excise tax of 900 per cent 
- a relic of the Soviet era when 
imports were small. 

While some difficulties have 
been surmounted, risks 
remain. The ruthless political 
efficiency of the ruling People’s 
Democratic Party, which has 
outlawed the main opposition 
movement, has not been 
matched by economic perfor- 
mance. Inflation was r unning 
at an annualised 1.500 per cent 
in the first quarter of this year; 
there are negative real interest 
rates and cheap credits are 
propping up near bankrupt 
state enterprises. There is little 
hope that the som, the new 
currency introduced this 
month, will hold its value any 


better than its predecessor. 

If the value of Uzbekistan’s 
currency is questionable, so is 
the worth of its industrial 
assets. At the Tashkent ciga- 
rette factory, the most modem 
equipment dates from the 
1960s; the oldest from 1322. In 
the factory, electric cables dan- 
gle from the ceilings. Subjected 
recently to a standard BAT fac- 
tory safety inspection. Taskent 
scored 2.3 per cent. The pass 
mark is 70 per cenL 
“The machinery and build- 
ings in these places really have 
negative value.” says Sir Pat- 
rick. “What you are buying is 
the business, and the market. 
You have got to have a lot of 
confidence that you are buying 
this negative base, but you can 
make money from it" 

Sir Patrick is confident that 
his deal will make money for 
BAT, and for Uzbekistan. BAT 
gets a monopoly of domestic 
cigarette production for five 
years. It acquires the rights to 
local brands, and the opportu- 
nity to manufacture locally 
“value-added” international 
brands. It gets a skilled, but 
low-cost workforce (average 
wages are about S10 a month) 
and manufacturing capacity 
that should eventually enable 
it to export cigarettes to other 
former Soviet republics. 

F or its part, Uzbekistan 
gets much-needed dol- 
lars, and an industry 
rebuilt. The new fac- 
tory in Samarkand will create 
500 jobs, and the government 
can look forward to increased 
excise and value-added tax rev- 
enues as cigarette output rises. 

It should also earn more 
from tobacco exports - cur- 
rently more than 30,000 tonnes 
a year - as BAT will provide 
technical assistance to Uzbeki- 
stan's fanners, and hopes to 
introduce, alongside the exist- 
ing “Oriental” tobacco crops, 
the Virginia and Burley variet- 
ies needed for producing inter- 
national-quality cigarettes. 

Some evidence that such 
ventures can succeed in former 
Soviet republics can be found 
2.000 miles west, in eastern 
Ukraine. In Priluky. BAT 
bought 65 per cent of a newly- 
privatised tobacco factory last 
year, in a republic whose econ- 
omy is arguably in a worse 
state than Uzbekistan’s, and 
selling cigarettes for the equiv- 
alent of a few US cents a pack, 
the Priluky plant made a profit 
last year. New technology has 
enabled it to introduce a 
hi gher -quality brand. 

“These areas may be risky," 
says Sir Patrick, “but if you 
take a long-term view, the 
opportunity is there to get in 
at a low price, and add value.” 




Joe Rogaly 


Shake to the right beat 



Whatever his 
shortcomings, 
Mr John Major 
is not politi- 
cally stupid. Or 
is he? The UK 
prime minister 
must know 
how dangerous 
it would be to allow his Con- 
servative coalition to be led by 
the hard right He has recently 
been urged to avoid this pitfall 
in speeches by Mr Douglas 
Hurd, Mr Kenneth Clarke and 
Mr David Hunt to name all 
three. Thanks to the first two. 
the Tories' fragile concordat on 
Europe holds, but, as to domes- 
tic economic and social poli- 
cies. a reversion to the harsh 
theme music of the 1950s may 
seem tempting. There is so 
much internal discord. Will 
this noise never cease? Not 
while the government stays 
divided. If you cannot beat 
the That cherries, Mr Major 
might reason, then for the 
party’s sake allow them to 
win. 

If he succumbs, we must 
ascribe his failing to weakness. 
He will not have the excuse cf 
ignorance. The Tories belted 
out the anthems of the narrow 
right at their conference last 
October. Look where that got 
them. The promotion this week 
of minis ters who are at their 
merriest when singing songs of 
purple patriotism and perverse 
parsimony would raise the 
spirits of some, but dismay the 
gentle English soul What the 
uncompromising right tends to 
forget is, not that the party to 
which they have attached 
themselves won the last four 
elections, but that in 1979. 1983, 
1987 and 1992 Labour lost. It 
cannot be relied upon to do so 
a fifth time. 

We voters are motivated by 
self-interest. But altruism, a 
sense of concern for others, is 
also part of the general 
make-up. Many years ago, the 
late professor Richard Titmuss 
wrote The Gift Relationship, in 


which he demonstrated that 
the blood given for free by 
English donors was better, less 
prone to infection, than the 
blood sold to hospital services 
by the poor in the United 
States. This has not changed, 
much- The American blood- 
buyers are doubtless more 
picky than they were, hut in 
England a brand-new quango, 
the National Blood Authority, 
headed by a gentleman fanner, 
still collects the fluid from vol- 
unteers' arms. Cash does not 
come into the equation. 

It is possible that the elector- 
ate is shrinking from 
Not so far that it wants a 
return to the 1 970s, but that is 
not on offer from any source. 
The potential appeal of the 
Labour party, 
tamed as it has 


line are undiluted. There is no 
provision for altruism in the 
cash-ist revolution. 

Here I sympathise with the 
Right Reverend Murk Santer, 
Bishop of Birmingham. In his 
recent address to the British 
Medical Association, he 
acknowledged that change in 
the management of the health 
service is Inevitable, but spoke 
also of practitioners “fulfilling 
a vocation . . . offering a service 
of love and duty to their fellow 
men and women”. This kind of 
declaration is pointless if it 
denies the need for simple fis- 
cal prudence. That Is not. how- 
ever, at issue. Voters under- 
stand, if the brainless 
bean-counters do not, that a 
sense of vocation has driven 

the NHS since 

194$. Destroy- 


been by 15 Middle England is ing that win- 
years of frus- uneasy about ingness to 

everything - 
unemployment, 
house prices, 
crime and the 


tration, is that 
it will offer the 
voters reassur- 
ance as to their 
self-interest, 
but add a dash 
of altruism - 


serve could 
be costly. 
Subtle mar- 
ket reformers 
would under- 
stand this. 

The elector- 


ULUU151U “ , - _ M W • KUK CLCLLUL- 

not too much. Steady, unceasing ate may also 

mind you - hammer of change dimly appre- 
to the for- ° v»»./i 

mula. Middle m—mmmmmmmmmam—mm 


England is uneasy about every- 
thing - unemployment, house 
prices, crime and the steady, 
nriz-gflcing - hamme r of change, 

change in schools, hospitals, 
local government, police 
authorities, the judicial sys- 
tem, all the institutions ttiat 
once seemed so familiar, so 
reliable. If the Conservatives 
will not conserve, anxious vot- 
ers will ask themselves, why 
not dismiss them? 

This is not to say that the 
government's market reforms 
are wrong. They are, mostly, 
an improvement, or a promise 
of one. The process is, how- 
ever. too crude, too naked. The 
British polity is being reformu- 
lated by accountants sitting in 
quangos managed by Tory pup- 
pets. The values of the bottom 


hend the rela- 
tionship be- 


tween the polarisation of our 
two nations and the increase in 
anti-social behaviour. Two 
nations? Of course. In ours, 
you have a job. own a house, 
run a car, keep in with your 
bank manager, take foreign 
holidays, and know, deep in 
your heart, that you could, at a 
stretch, buy your family's way 
ahead in the health queue, or 
change your children’s school. 
In theirs, they have none of 
these things. British society is 
becoming more divided every 
year. The evidence is in 
“Households Below Average 
Income”, published last wed; 
by the Government Statistical 
Service. 

It shows the proportion of 
the population living on below- 
average income as 59 per cent 


in 1979, when this government 
First took office. In 1991-92, the 
latest period far which num- 
bers are available, the equiva- 
lent figure was 62 per cent. 
Some 9 per cent of our people 
scratched by on less than half 
average income when the then 
Mis Thatcher arrived; 13 years 
later the figure had risen to 25 
per cent Yes that's right A 
quarter of us. The sums look 
much the same if you exclude 
housing costs. The worst off 
fared worst. Average net 
income rose by 36 per rent in 
the period, but none of the 
extra fat went to the lowest 
fifth of the population. 

As to the lowest tenth, real 
median income actually fell by 
17 per cent. The poorest indi- 
viduals in 1979 may have been 
replaced by others by 1992. but 
that observation, among many 
other explanations in the 
accompanying commentary, 
does not feed the children. 
Undeclared black economy 
income may have helped some 
of the underclass get by, but 
the overall picture is likely to 
have deteriorated since 1992. 
The family expenditure survey, 
on which the government’s fig- 
ures are based, excludes people 
in institutions and those living 
rough or in bed and breakfast 
accommodation. 

The harsh truth is that 
nobody has a satisfactory 
answer to any of this. The pro- 
ponents of one-nation policies, 
be they Conservative or 
Labour, do at least show some 
inclination to try. Whatever 
their protestations, however 
generous their personal behav- 
iour, the Tory right cannot eas- 
ily persuade us that kindness, 
the essence of charity, figures 
in its calculations. Clear away 
those beggars! Deny those an- 
gle parents! Forget the pood 
Exclude! Banish! Despise! 
Their slogans are depressingty 
easy to caricature. If Mr Major 
allows those who purvey them 
to prevail, he, and his party, 
will deserve to lose. 


i 


LETTERS TO THE EDITOR 

Number One Southwark Bridge, London SE1 9HL 

Fax 071 873 5938. Letters transmitted should be clearly typed and not hand written. Please set fax for finest resolution 

Cultural trends in German equity markets L 


From Mr Jim Platts. 

Sir, On July 14 I attended a 
manufacturing engineering 
conference where discussion 
centred on the competitiveness 
of European industry. We con- 
sistently heard examples both 
from the speakers and from the 
floor of long-term views and 
solid investment in Germany 
(and elsewhere) and the lack of 
such investment and vision in 
the UK 

It was typical that on the 
same day I should find a report 
in the BT, by David Waller, on 
the lack of a share culture in 
Germany, as if it were some 
kind of disability (“Resisting 
the bait of equity ownership”). 


I think wbat be meant was 
that they don’t have a share 
trading culture - because they 
recognise that wealth creation 
is a product of custodianship 
in which share trading can 
only ever be secondary. 

Do we get a balancing article 
on the lack of an ownership 
culture in the UK? 

Jim Platts, 

department of engineering. 
University of Cambridge, 

Mill bane, 

Cambridge CB2 IRX 

Pram EH Clausson. 

Sir, David Waller's report 
misses two aspects when he 
lists actions required for over- 


coming the lack of an “equity 
culture" in Germany. 

First, the leading German 
banks, including Mr Rolf 
Breuer's Deutsche Bank, must 
create incentives for young 
people to become involved in 
stock exchanges. 

For decades, these banks 
have erected ever higher barri- 
ers for young newcomers to 
these exciting markets. I guess 
the bankers consider the 
short-term costs for such pro- 
grammes too high and they 
have failed to recognise their 
primary long-term responsibil- 
ity. Without a broadly based 
participation, starting with the 
young, I cannot see an “equity 


culture” developing in Ger- 
many. 

Second, several decades ago, 
the German government cre- 
ated the "Volksaktie” when 
selling, for example, Volkswa- 
gen. If the government finally 
decides again to sell off state 
enterprises such as Lufth ans a, 
Telekom, etc. I hope it looks to 
the UK and learns from the 
series of successful privatisa- 
tion programmes. Sid could be 
useful in helping the German 
government and banks to 
develop an “equity culture”. 

E H Clausson, 

The Penthouse, 

176 Leigham Court Road, 
London SW16 2RF 


House price 
trends and 
recovery 

Pram Mr Peter Miller. 

Sir, Samuel Brittan is right 
to point out that soaring house 
prices are unhealthy for the 
economy (Economic View- 
point, July 7). But he fails to 
comment on the problems 
caused by a depressed housing 
market 

Without a strong housing 
market - remembering that 
the phrase refers as much to 
the number of transactions as 
to prices - the economy cannot 
reap the benefits of the 
increased outlay on goods and 
services that go with moving 
house. 

The “wealth effects” that a 
modest rise in residential prop- 
erty prices create cannot be 
measured, but without their 
reassuring presence to the 
home-owner, consumer spend- 
ing is unlikely to play a large 
role in facilitating the eco- 
nomic recovery. 

Peter Miller, 

Royal Institution of Chartered 
Surveyors, 

12 Great George Street, 
ParUament Square, 

London, 

SWIPSAD 


All you need is love . . . and dress sense 


Prom Mr Shbgi Ebnum. 

Sir, Further to your coverage 
of the Takaiazuka Revue (Arts: 
“Cross-dressing Japanese 
style", July 13), please aBow 
me a brief word in reply. 

Is it really necessary to take 
everything in fife so seriously? 
Or do people in England not 
feel that there are moments 
when you can say “It may be 
crazy but 1 love It”, or “It may 
be kitsch but it’s fun . . .*? You 
see, all that l am trying to do 
through my work is to bring 


a little more light into the 
world. 

And if we do have to be seri- 
ous, please at least remember 
that, unlike some people, we do 
not set out to hurt anyone. I 
believe that it was your coun- 
tryman John Lennon who said 
it best “All you need is love.” 
Shinji Kimura, 
artistic director, 

Takarakura Revue, 

1-57 Ichome, Sakaemachi, 
Takarazuka, 

Japan 


From Mrs Arm Turk. 

Sir, Bravo, Clement Crisp 
(Arts: “The decline and fall of 
elegance”, July 18)! In my 
stalls seat at the Royal Opera 
House (not paid for by corpo- 
rate hospitality) J have rubtwd 
thighs and shoulders with a 
ma n wearing shorts with an 
Hawaiian shirt 
Ann Turk, 

119 Bamfield Avenue, 

Kingston upon Thames, 

Surrey, 

KT2 5RG 


‘gei 


Essential that green belt remains strong 


From Mr William Walton. 

Sir, Paul Cbeeserigbt's 
article (Property, July 15) 
noted that a number of devel- 
oper interests bad expressed 
the wish that the environment 
secretary should relax the cur- 
rently defined West Midlands 
green belt when issuing his 
forthcoming strategic planning 
guidance for the region. 

However, they should under- 
stand that the secretary of 
state is constrained in the mat- 
ter by his more general advice 
on green belts contained in 
Planning Policy Guidance Note 
number 2 issued in 1988, cur- 


rently under review, which 
states the need for “excep- 
tional circumstances” when 
proposing alterations to 
established green belt bound- 
aries. 

Given that it is most 
unlikely that the secretary of 
state will delete this policy 
requirement from the emerg- 
ing policy advice on green 
belts, any proposed relaxation 
of the West Midlands green 
belt must be supported by very 
convincing reasons. 

While it is undeniable that 
potential investment in hous- 
ing and commercial develop- 


ment that is prohibited boa 
Us preferred location on the 
urban fringe by green belt pol- 
icy will not necessarily take 
place in inner city areas where 
it is needed most, it remains 
that a strong green belt polk? 
is required as part of an overall 
strategy far government pohj 
cies on urban regeneration ana 
sustainable development. 
William Walton. 
lecturer ; 

Department of Land Sammy. 
University of Aberdeen, 

SI Mary's, King's College, 

Old Aberdeen 
AB9 2UPL 


No point to government proposal on delegating pay bargaining 


From Mr Barry Reamsbouom. 

Sir, Publication of the white 
paper on civil service reform 
continues the depressingly reg- 
ular process oT the government 
announcing the introduction of 
new policies, while quietly sig- 
nalling the demise of others 
(“Whitehall faces sweeping 
reform". July 14), 

The delegation of pay to all 
departments and agencies by 
April 1 1996, the latest ministe- 
rial fad, will only result in both 
a massive extension in costs, 
as well as in the actual num- 
bers of people who will now 
need to be employed on annual 
negotiations exercises. 


National pay bargaining 
arrangements, by and large, 
have worked very welL In their 
place will come 150 bargaining 
units and an increase in nego- 
tiators and back-up staff from 
a handful based in the Trea- 
sury to an estimated 3.000 
across every department and 
agency. 

There is. of course, no evi- 
dence that the fragmentation 
of pay bargaining will either 
reduce the overall pay bill, or 
ensure that particular groups 
of staff will have better perfor- 
mance rewarded. 

All that has happened this 
year, for instance, in those 


areas that already have dele- 
gated pay, is that the hundreds 
of extra hours of negotiations 
in different agencies have 
resulted in remarkably similar, 
if not exactly identical, pay 
deals. And, as in the case or 
Railtrack, the potential for dis- 
putes will mushroom because 
Treasury ministers will still be 
breathing down the necks of 
these 3,000 negotiators. So 
what on earth is the point? 

The birth of a new policy 
also sees the timely death of 
another - market testing. Bur- 
ied deep within the white 
paper is the announcement, 
quite unthinkable at the start 


of this year, that the Treasury 
will no longer insist on depart- 
ments establishing marker 
testing programmes with o® 
trally set targets. Market test 
ing has been an enormous! 
costly disaster, which minis 
ters now admit , even if 
still will not say so in so matt 
words. 1 have no doubt tea 
within a few years delegate 
pay is likely to go exactly tD* 
same way. 

Barry Reamfibottom. 
general secretary. 

CPSA. 

160 Falcon Road. 

London 
SWll 2LN 




lit 


VI 


financial times 

Bridge - London SEI 9HL 
Tel 071-873 3000 Telex: 922186 Fax: 071-407 5700 

Tuesday July 19 1994 


Antitrust and 
global markets 


Whatever the Impact on the 
computer industry of this week- 
end's settlement of monopoly pro- 
ceedings against Microsoft, the 
world’s largest software company, 
it marks a milestone in antitrust 
law. The unprecedented coopera- 
tion between authorities in Wash- 
ington and Brussels which it occa- 
sioned seems bound to add to the 
growing debate about how compe- 
tition policy should be adapted to 
the realities of global mar ke ts. 

Admittedly, it is still n mrertato 
how Ear the case will set a pattern 
for the future. The international 
coordination involved was possi- 
ble only because Microsoft author- 
ised the two authorities to 
exchange information - an 
arrangement which their own 
rules would normally preclude. 
Yet the fact that such co-ordina- 
tion was deemed desirable under- 
lines the growing propensity of 
competition issues to spill across 
frontiers. 

Concern about how to respond 
to this trend has taken a variety of 
f onus since the 1970s, when many 
developing countries clamoured 
for tighter international controls 
on multinational companies. In 
the 1980s, the focus switched to 
averting conflict due to the extra- 
territorial application of US a™ i 
European competition policies - a 
problem which led to the conclu- 
sion of a bilateral treaty. 

In the 1990s, two more issues 
have emerged. One is the world- 
wide spread of national competi- 
tion laws, introduced as part of 
market-based economic reforms. 
This proliferation of different 
rules and procedures thrMtamt to 
impose a heavy compliance bur- 
den on companies which operate 
internationally, and to create a 
regulatory minefield. 

The second issue is the growing 
interplay - and potential cnnfur* 

- between antitrust and trade pol- 
icies, as economies become more 
exposed to global competition. 
That has prompted demands that 


the matter be placed on the 
ag end a of the Work! Trade Organi- 
sation, the successor to the Gen- 
eral Agreement on Tari ffs and 

Trade. 

Some experts believe tfrasp pres- 
sures will ultimately lead to the 
creation of a global cartel office. 
But the surrender of sove reig nty 
which that would require ntafc^a it 
improbable in the foreseeable 
future. A more realistic way for- 
ward is through closer coordina- 
tion of national policies, bflater- 
afly and within regional economic 
blocs. 

That should reduce the risk of 
regulatory and procedural dispari- 
ties between countries. However, 
closer co-ordination is unlikely to 
solve all the problems arising 
from the complex linkages 
between competition and trade 
policy. Indeed, it could exacerbate 
them it for example, it encour- 
aged the US and the EU to try 
jointly to impose their competition, 
policy precepts on other countries 
in an attempt to prise open their 
markets. 

Such tactics have already been 
invoked by the US in its trade 
dispute with Japan. They repre- 
sent an unacceptable intrusion by 
one government into another’s 
domestic affairs, which thrBatwnfl 
severe international friction. 

That is the strongest argument 
for p laci n g competition and trade 
policy on the WTO agenda, so as 
to ensure that the debate is 
anchored in a multilateral frame- 
work. The first priority should be 
to Identify precisely bow the two 
policies inter-act. Among the 
issues to be resolved are the Hnks 
between competition policy and 
antidumping measures, and how 
for alleged market barriers are 
doe to deficient competition laws, 
as opposed to cultural mid con- 
sumer preferences. 

The US and the EU should build 
on the mutual understanding evi- 
dent in the Microsoft case to fur- 
ther these objectives. 


Pressurised gas 


There signs that the government 
may be hesitating about deregulat- 
ing the British gas industry. A 
long-awaited Gas Bill has yet to 
emerge, and reports suggest that 
the Cabinet may have decided to 
demote the subject on its agenda. 

If this is the case, .something 
must have deflected the govern- 
ment from the coarse it adopted at 
the beginning of tins year when it 
set a clear timetable for reform of 
the gas market One guess is that 
ministers have taken a closer look 
at the price implications of 
deregulation, and heeded the 
warnings from British Gas that 
millions of households would end 
up with higher gas bills as a result 
of greater competition. This is 
because an open market would 
drive out the cross-subsidies 
which have kept the bills of more 
modest consumers of gas low at 
the expense of larger users. 


But ft is late in the day for a 
chimp q[ heart Last year’s thor- 
ough report by the Monopolies 
and Mergers Commission con- 
cluded that deregulation would be 
in the national Interest. And 
although the arguments have 
received a further airing since 
then, no fresh problems have sur- 
faced that could not be dealt with 
by the market regulator. 

ft is true that, from the govern- 
ment's point of view, there is Httie 
short-term mileage to he had from 
deregulating gas: there are no pri- 
vatisation proceeds, and any price 
rises that do occur will be unpopu- 
lar. But this anxiety has to be set 
against the longer term economic 
benefits of improving the effi- 
ciency of Britain’s energy infra- 
structure by encouraging competi- 
tion. Ministers not give up 
just as they are entering the last 
lap. 


Algeria’s agony 


“The status quo is no longer 
tenable.” That remark about 
Algeria was made some weeks ago 
by Alain Jupp6, the French for- 
eign minister. It is the nearest 
France has come, in public, to 
admitting the failure of its policy 
in that country - a policy of hack- 
ing the present military regime on 
the grounds that, whatever its 
faults, it is preferable to the 
Islamic alternative. 

The thfnkmg behind that policy 
is easy to follow. Islamic milit ants 
have been increasingly ruthless 
and indiscriminate in their use of 
violence, and increasingly intoler- 
ant in their social attitudes, espe- 
cially towards emancipated 
women and secular intellectuals. 
Some of their leaders have openly 
rejected democracy as incompati- 
ble with Islam. Otters’ espousal of 
it may be purely tactical or, if 
sincere, might not survive once 
they were in power and facing 
serious opposition. An Islamic vic- 
tory even by democratic means - 
such as was about to happen in 
January 1992 - could easily be a 
case of "one man. one vote, once”, 
as an American diplomat has said. 
It could also trigger the flight en 
masse of Algeria’s westernised 
middle cl a ss , most of which would 
head for France. 

But the policy is not working: 
Two and a half years after the 
elections were cancelled. Algeria 
is further than ever from civil 
Peace. Foreigners, including diplo- 
mats, have become regular targets 
of terrorism, and the regime 
seems powerless to protect them. 
Attempts at dialogue with the 
imprisoned leaders of the Islamic 
Salvation Front (FIS) have been 
abortive, even though those lead- 
ers have now more or less aban- 
doned the conditions - release of 
all political prisoners and new 
elections - on which they were 
Insisting earlier in the year. 

Many observers believe Presi- 
dent Liattijn p Zeroual is prevented 


from pursuing this option by the 
the hardline group of “dradica- 
teurs” around the chief of staff; 
Gen M chained Lamar! The meth- 
ods favoured by that group may 
be said to have “worked” in Syria, 
when President Hafez al-Assad 
destroyed the ancient city of 
ffama and kilted tens of t.hnufiands 
of people in 1982. It is highly ques- 
tionable whether they can work in 
Algeria, or if they can whether the 
price is wrath paying. For the 
moment they have produced a 
civil war in which no quarter is 
given, in which terrorists enjoy 
the legitimacy of frustrated demo- 
crats, and in which Algerians of 
liberal persuasion are as likely to 
he victims of one side as of the 
otter. Many have already fled to 
France, ostensibly as visitors, or 
are trying to get visas to do so. 

Unpleasant facts must be faced. 
The longer Mr Juppe’s untenable 
status quo is maintained, the more 
bitter and uncompromising an 
eventual Islamic regime is Ukdy 
to be. French, European, and 
indeed western policy should now 
be directed at ending the violmce 
ami ensuring a smooth transition. 
Further economic aid to Algeria 
should be made conditional on the 
early holding of free elections, 
with this time firm guarantees 
that the result wxU be respected 
whatever it is. 

If the result gives power to the 
FIS, its leaders will then have 
both instruments *md incentives 
to curb extremist violence, which 
at present the? bask. They would 
also have a strong incentive to 
maintain good relations with the 
EU. (The EU takes 70 per cent of 
Algeria's oil and gas exports, on 
which in turn the country depends 
to feed and employ a population 
growing at 2.7 per cent annually.) 
Algeria would not for some time 
be a liberal democracy, or a para- 
dise for westernised intaflectoms. 
But it could stop being the heu for 
all its inhabitants that it is now. 


A s the latest UK business 
statistics tumble on to 
d esi st , economists might 
hear the echoes of a 
small corporate squeaL 
Official figures in the past week 
have shown that raw materials 
pices are rising but retail prices 
are not Caught in the middle are 
manufacturers winch face the same 
unenviable choice confronting 
retailers: can they carry on as 
before, planning to pass on price 
rises? Or must they knuckle under 
in a new business environment in 
which sale volumes, not profit mar- 
gins, will distinguish winners from 
losers? The decfat<ms manufacturers 
wialra will influence the inflation 
rate in earning months and signal 
whether the government has been 
successful in persuading industry to 
develop a tow- inflation psyche. 

The sums behind the dilemma 
f a rin g companies are stark. Figures 
from the Central Statistical Office 
last week showed that the price of 
raw material!? and fuel for manufac- 
turers had risen by 0.8 per cent 
between May and June, and by 4.4 
par cent since January. The mafn 
cause appears to be the worldwide 
surge in commodity prices. 

Prices of goods leaving factory 
gates, by contrast, did not rise in 
June, and have risen by a mere 0.8 
per cent since January. 

Survey evidence suggests most 
companies expect the pinch to con- 
tinue. A British Chambers of Com- 
merce survey on Thursday is expec- 
ted to list input costs as the biggest 
business worry. But a recent Con- 
federation of British Industry manu- 
facturing survey showed that 79 per 
cent of manufacturers expected 
prices to remain flat, or fall, over 
the nmrt. four months. This is in 
spite of a pick-up in retail sales, as 
shown in today's CB1 distributive 
trades survey. 

The mate reasons manrrfai^ Trw-g 
have decided not to increase output 
prices are competition from over- 
seas and the continuing price sensi- 
tivity of consumers. A Gallup sur- 
vey last week showed April's tax 
rises had not significantly dented 
rmwiimw mnflitenftn hut it is Well 
below pre-recession levels. 

Consequently, as Ms Kate Barker, 
chief economist with the CB! says: 
"Companies are not getting margin 
growth that everyone thought we 
would this year. Unit labour costs 
and commodity prices are clearly 
less favourable than last year ” 

But as she points out, input prices 
represent only a small part of the 
business balance sheet Commodi- 
ties, for instance, are estimated to 
account for about 5 per cent of over- 
all manufacturing costs, whereas 
labour accounts for up to 40 per 
emit At the same time, as Mr Ian 
Shepherdsan, economist at brokers 
Midland Global Markets points out 
profit margins are still at a high 
level compared with the past 15 


Feeling the pinch 
around the middle 

Gillian Tett and Daniel Green explain why some - but 
not all - manufacturers’ margins are being trimmed 

UK manufacturing: the big squeeze 



AB manufacturing prices 
ft change over previous year . 

^ 


Manufacturers' margins 
ft unit vafee of sates 
2494 




years. He estimates manufacturers* 
margins - defined as the p r oport i on 
of final prices accounted for by 
profit - ware just under 22 per cent 
last month _ 

Some economists believe this 
means that many companies can 
bold prices down. As Mr Robin 
Aspinall of broker Panmure Gordon 
argues: “UK companies have had a 
pretty easy time of it so for. 
Demand has been picking up, they 
have trimmed costs, and so you 
have seen big profit growth,” 

But others are voicing concern 
about specific sectors. Economists 
at brokers Kfeinwort Benson, for 
example, say they are warning their 
customers to avoid companies 
dependent on commodities, such as 
metals, because of the fears of a 
price squeeze on. profits. 

The problem, though, is that the 
trail of products in the metal indus- 
try - from iron ore through metal 
package manufacturer to a can of 
baked beans on a supermarket shelf 
- shows margins under pressure in 
some areas, but not others. 

British Steel, for example, says 


1060 

Smut HSBCGreonoal 


that its raw materials - principally 
coal and iron ore - have, if any- 
thing, become cheaper in recent 
months, partly because most are 
priced in dollars, a currency down 
5.7 per cent in value against sterling 
since January. 

But British Steel has apparently 
decided that the market can with- 
stand a price hike, after what it 
describes as "a disastrous fall in 
steel prices in 1990” that reduced 
average prices by 20 per cent Brit- 
ish Steel product prices have risen 
by an average of about 13 par cent 
since January. 

British Steel's customers are 
unhappy about this. For example, 
the cost of tin-plate, made by Brit- 
ish Steel and sold to packaging 
makers such as remand Metal Box, 
the Anglo-French group, and 
France's Pecbiney has risen this 
year by 8 per cent, says the OK 
Metal Packaging Manufacturers 
Association. Mr Robin Davis, the 
association's director, says: "Conti- 
nental tin-plate suppliers also raised 
their prices by about 8 per cent this 
year and our members are not find- 


-I~ -J 1496 
NM 


ing it possible to pass on that 
increase In totaL" 

The main reason manufacturers 
cannot pass it all on, he says, is the 
heavy competition in international 
packaging. Consequently, tin can 
prices have risen by only about 5 
per cent this year, says Mr John 
Nichols, managing director of HL 
foods, a subsidiary of the Hfllsdown 
food manufacturing company. 

Similarly, the buyers of cans - 
the food "packer-fillers”, such as 
Hillsdown - have not been able to 
pass on all of their increased costs. 
"Can prices have gone up, bean 
prices have gone up, but our prices 
have not yet gone up,” says Mr 
Nichols. He says cheap imports of 
canned foods and supermarket price 
wars have all acted to constrain the 
prices his company charges. 

But if the steel products manufac- 
turing chain provides some evi- 
dence that a crunch on profit mar- 
gins has began in parts of the 
manufacturing chafo , the picture is 
not as clear in other sectors, such 
as oil-based products. 

The oil price has risen by about 


20 per cent in sterling terms since 
the beginning of this year, leading 
to similar rises in the price of the 
mate raw materials for the chemi- 
cals and plastics industries. 

German chemicals company 
BASF, which has plants In the UK 
and continental Europe, says raw 
material prices are rising faster 
ftan output prices, particularly for 
naphtha, used to make ethylene and 
some plastics, cyclohexane, used in 
fibre manufacture, and methanol, a 
raw material for glues. 

But Mr David Glass, of specialist 
chemicals industry consultancy 
Chem Systems, says these rises are 
not totting the profitability of the 
chemical industry, because demand 
is leading to rising volumes. In a 
capital-intensive industry such as 
chemicals, the cost of producing an 
extra tonne is low once a plant is 
constructed and running. 

"The chemicals industry is highly 
geared to volume, which is Improv- 
ing margins to spite of the fact that 
naphtha prices have risen so 
much,” says Mr Glass. 

I n fact, the i*t »pff | i«ik industry 
is having to rely on volume 
growth to preserve profits, 
because customers are 
unwilling to pay more. Mr 
Stuart Wallis, chief executive of 
Bo water packaging, a big plastics 
user, says: “We are big enough to 
say to our suppliers that, until we 
can raise our own prices, we will 
not pay more." 

Not all companies are big enough 
to gain from economies of scale and 
bargaining muscle. As Mr Richard 
Brown, deputy director of the Brit- 
ish Chamber of Commerce, points 
out, smaller manufacturers often 
suffer more than the largest groups. 

The message from the govern- 
ment and many economists is that, 
with inflation low. manufacturers 
large and small must learn to thrive 
without relying on price rises. 

To a large extent, that adjustment 
has been taking place for some 
time. Treasury figures show that 
the gap between the trend growth 
rate of input and output prices has 
been narrowing steadily over the 
past 20 years. 

But as Mr Eddie George, governor 
of the Bank of England, admitted 
last November, adjusting to tower 
prices and smaller profit margins 
will not be easy. Many businesses 
are still looking for returns more 
suited to a high-inflation era, he 
argued. These expectations needed 
to be reduced if Britain was to sus- 
tain a low-inflation economic recov- 
ery, he insisted. 

At the time, his comments piqued 
some manufacturers. But rising raw 
materials prices are forcing busi- 
nesses to think again. The next few 
months will reveal the choice marie 
by industrialists, and the effects of 
that choice on UK industrial health. 


Exports must drive UK recovery 



Today's new 
evidence that con- 
sumer spending is 
continuing to grow, 
in the June Confed- 
eratton of British 
lndastr y distribu- 
^ rive trades survey. 
— ZJSJZ . — will be welcomed as 
a further sign that the recovery 
remains on course. But to front of 
every silver lining sits a cloud. How 
long can a consumer-led recovery 
proceed, before the authorities take 
fright at tire inflationary risk and 
seek to dampen it down with an 
interest rate rise? 

The Latest official sales figures 
show volumes up by 4 per cent on a 
year ago. And the survey published 
today shows that sales grew more 
strongly in the year to June, after a 
slight slowdown in the annual rate 
of increase in the early {art of this 


Retailers report that sales growth 
is back on the improving trend seen 
to the second half of last year. And 
they are optimistic about the 
future, expecting the pace of recov- 
ery to be irm fotfltopd. 

Of course there are some sectoral 


differences. The strangest improve- 
ments to trade are reported by off-li- 
cences. shoe shops and furniture 
stores. Booksellers and stationers 
are doing wen, too, though hard- 
ware and do-it-yourself retailers 
report foiling volumes compared 
with a year ago. 

On these hot summer weekends 
we are sitting at home to a new 
chair with a can of beer and a good 
book, leaving the decorating to 
itself: the prime minister's image of 
a nation at ease with itself, perhaps. 

The bousing market remains to 
an uncertain condition, perhaps 
partly because there remain well to 
excess of lm households with nega- 
tive equity. The withdrawal of 
attractive fixed-rate mortgage offers 
has also set things back. But even 
there we see some signs of a 
slightly improving trend, and of 
associated increases in sales of 
household durables a nd carpets. 

The overall tone then, remains 
strong, stronger than many had pre- 
dicted to advance of the large per- 
sonal tax increases which began to 
take effect in April. Why have those 
increases had so little effect so far? 

Partly, we think, because not all 


of the effect has yet been felt The 
increases in National Insurance 
contributions, and the reduction in 
the value of mortgage interest 
relief; have dearly hit pay packets 
already. But the impact of 8 per 
cent VAT cm fuel bills will not be 
fully appreciated until later in the 
year when tod bills begin to rise to 
the cold weather and the toll 17.5 

The overall lone 
remains stronger 
than many predicted 
in advance of the 
personal tax increases 

par cent rate follows next ApriL 
Reductions to unemployment 
may also be helping to offeet the tax 
rises. Unemployment has now 
declined by more than 270,000 over 
the past year, giving a larger than 
expected boost to personal disposal 
income. Downward movements to 
the savings ratio, as interest rates 
fell, have also continued to boost 
consumption. And although con- 
sumer credit expansion has slowed 


a little to recent months the trend 
is a growth rate still higher than it 
was last year. 

ft is clear from aS this evidence 
that consumer spending has been 
the main engine of recovery for the 
last two years. Given the poor inter- 
national, especially European, back- 
ground that was perhaps inevitable. 
But if the recovery is to be sus- 
tained, we need to be looking over 
the next 12 months for a greater 
contribution from investment, and 
from net trade. 

So far, private sector investment 
has barely begun to pick up. Even 
now, the CBI’s Industrial Trends 
Survey shows only slightly more 
manufacturers expect to increase 
investment to plant and machine ry 
next year than to cut it This is a 
somewhat disappointing picture 
after nine quarters of expansion. 
Public sector investment has not 
taken up the sl ack , 

And. on the trade front while the 
figures for transactions with the 
rest of the European Union are 
more than usually suspect there 
are still no strong indications of a 
significant improvement to our 
trade balance. 


Anecdotally, there are signs that 
improved business confidence may 
soon bring a boost to investment. 
That is what companies tell me as 1 
travel the country. And the improv- 
ing tone of the UK’s leading mar- 
kets to Europe is producing a more 
favourable trading environment 
than for some time. 

But we need to see some more 
tangible results soon, or the author 
ities will surely take further action 
to dampen consumer spending and 
boost saving. 

Our hope - and expectation - is 
that the balance of recovery will 
shift towards investment and 
exports later this year, and that the 
Bank erf England will not need to 
tighten policy sharply to stop con- 
sumer spending growth accelerat- 
ing. But the next three months will 
be a crucial period, to which the 
shape of the recovery will be deter- 
mined. 

Howard Davies 


The author is director-general of the 
Confederation of British Industry 


Observer 


Brussels spout 
hacked off 

■ Who’d be a British hack to 
Brussels? Things could turn a shade 
un pleasant, now that Belgian prime 
minister Jean-Due Dehaene - 
vetoed by John Major as the man 
to succeed Jacques Defers as 
president of the European 
Commission - has publicly pinned 
the blame on an alleged British 
media conspiracy. 

Dehaene told the Belgian 


that “the British tabloid press 
turned me into a caricature”. 

Defers could have fold him that 
regrettable though it may be, such 
shabbiness went with the brief. 

More intrigumgly, Dehaene also 
wagged a finger at that supposedly 
objective institution, the BBC, 
which he accused of depicting 
TMgians as “some sort of European 
ayatoDahs" when Belgium held 
the European Union's rotating 


To imply today's British media 
is somehow in cahoots with John 


imagination. Maybe Dehaene 

should have got the job, after all 


No thanks 

What's tWs? A charity turning 
down donations? 

Shared interest, the 


lends money to disadvantaged 
groups to the Third World, is 
evidently a little particular about 
where its cash cranes from. 

Its International partner, the 
Ecumenical Development 
Cooperative Society, was recently 
offered a $10m interest-free loan, 
as well as a $450,000 grant to help 
its activities in eastern Europe. 

But the offer came from the 
foundation set up by market 
speculator George Soros. Shared 


the donation out of moral 
disapproval of the way Soros 
profited from the plunging pound 
on "Black Wednesday" to 1992. 

Being black-balled is probably 
a novel experience for Soros. SfflL 
the path to sainthood has never 
been easy. 


Rich pickings 

■ ft has its problems, but Mexico 
still spawns dollar billionaires, 
according to Forbes magazine, 
which reckons there are now 24 
Mexican billionaires, against 18 
last year and just two in 1S9L 

Topping the list, weighing in at 

an estimated gMJbn, is Carlos sum 
HeKi, head of the national telephone 
company. He’s closely followed 
by Bmflio Azcarraga, $5.4bn. 
chairman of the principal television 
network. 

Not far behind is the Zambrano 
family - gubn - which controls 
Cemex, Mexico’s main cement 
company, followed by a new entry. 



the Peraltas - &5bn - who have 
just sold a ch unk of their cellular 
phone business. 

Forbes' annual rich list is not 
universally adored: some of its 
Mexican members believe it saves 
Mexico's kidnappers from doing 
their awn. research. 

One irate member describes it 
as “total stupidity”. Not that he 
was afraid, he added - the bandits 
would be far better informed than 
Forbes. 


Piltdown purse 

■ And now, a wtrfd of warning 
to all those hapless European 
parents who have only just got 
around to junking Mutant Ninja 


Turtle, Batman, Jurassic Park (etc) 
T-shirts, pencQ cases, underwear 
and so on, accumulated by their 
children from bygone ages. Go into 
hibernation now - the Flintstones 
are coming. 

The whole world - apart from 
Ulan Bator maybe - is about to 
be swamped with Flmtstones' 
merdumdtetog ; miwririmg with 
the release of a film based on the 
cartoon caveman characters. 
Turner Home Entertainment owns 
the rights; and wild pterodactyls 
wont stop the onward march 
towards merchandising sales 
estimated at £640m. 

And the profits? Prehistoric, by 
some US corporate standards. 


Eggshausting 

■ Don't talk about roast chicken 
in Japan; it’s something of a 
problem right now. 

Some southern parts of the 
country are experiencing the driest, 
hottest summer for 20 years. Very 
nice for tourists perhaps, but tough 
On chickens . 

In the past three weeks, souk 
110,000 chickens have expired on 
poultry farms in Tokushima, a 
southern state where 6.4m, or about 
5 per cent of Japan's chicken 
population live. 

The problem is the heat Last 
week, local temperatures reached 
38.4 degrees Celsius - 109 
Fahrenheit - the highest since 
records started to 1929. 

If you can’t stand the heat, get 


out of the kitchen. Though hardly 
a useful motto for chickens. 


Count on me 

■ Ignoring the fact that nature 
helpfully provided most people with 
10 fingers, the London Stock 
Exchange tried to smooth the way 
to lfrday rolling settlement 
yesterday. It sent out an abacus 
to a select few investors. 

The gift - featuring black plastic 
beads on a steel frame - went to 
those to City firms who were 
involved in planning rolling 
settlement 

Of course, merely a bauble; no 
suggestion that some types actually 
need aids to tot up their takings 
- or otherwise. 


Tea interval 

■ A recent FT report on Everton 
football club obviously touched 
a sore spot The item suggested 
the chib betrayed a moan streak 
by not offering shareholders even 
a cup of tea at its annual general 
meeting: 

Now it’s not just tea, but gin 'n , 

T. At last week's shareholders 
meeting - to discuss the dub’s 
rights issue - chairman David 
Marsh said the Goodison Park bar 
would be open afterwards for free 
drinks "as a result of adverse 
publicity to the Financial Timss". 

If only other bars were so easily 
prised open... 


Israel- Jordan talks fuel 
hopes for Mideast peace 


By James Whittington and Julian 
Qzarme on the Israeli -Jordanian 
border 

"The Arab- Israeli conflict, one of 
the most longstanding and most 
Intractable conflicts of this entire 
century, is drawing to an end," 
Mr Warren Christopher, US sec- 
retary of state, said triumphantly 
yesterday after he met Israeli 
leaders on the first day of a Mid- 
dle East shuttle. 

Mr Christopher’s optimism 
reflected the rapid pace of the 
Middle East peace process as 
Israel and Jordan opened their 
first talks in the region yester- 
day, marking the beginning of a 
week of Intense US-Arab-Israeli 
diplomatic activity. . 

The Israel-Jordan negotiations 
came as Israeli and Palestinian 
delegates opened a new round of 
talks in Cairo and Mr Christo- 
pher arrived in the region for 
meetings with the leaders of 
Israel, Jordan, Syria and Egypt. 
Mr Christopher will shuttle 
among Middle East capitals seek- 
ing to further the Israeli-Synan 
peace process, start talks on eco- 


nomic co-operation and regional 
integration and prepare for next 
Mo nda y's summit in Washington 
between King Hussein of Jordan 
and Mr Yitzhak Rabin, Israeli 
prime minister. 

The optimism may prove to he 
misplaced in a region that has 
often defied prediction and has 
been in a state of war for almost 
half a century. 

However, Jordanian and Israeli 
delegates who opened talks in a 
tent in the Axava desert yester- 
day said they had had a "very 
fruitful” day and expected to 
announce results today, particu- 
larly on one of the key issues - 
demarcation of the disputed 
border. 

Both sides said there were diffi- 
cult obstacles to overcome but 
said they were determined to 
reach solutions to the other two 
issues - water resources and 
security - and finalise them in a 
treaty of peace. "The prospects 
for peace are good," said Mr 
Elyaiom Rubinstein, head of the 
Israeli delegation. 

The bilateral talks conclude 
tomorrow and the process moves 


to the Jordanian side of the Dead 
Sea where Israel, Jordan and the 
US are to discuss economic pro- 
jects such as regional tourism, 
connecting electricity grids and 
perhaps a transnational oil and 
gas pipeline. The US, expected to 
fund many of these projects, is 
considering paving- a road 
between Israel and Jordan via 
EUat. 

Mr Shimon Peres, Israeli for- 
eign minister, who tomorrow will 
become the highest Israeli official 
ever to visit Jordan publicly, said 
yesterday: "The main point 
is this peace will create 
unprecedented economic opportu- 
nities.” 

Mr Peres also said Israel and 
the Palestinians were determined 
to press ahead with peace efforts 
despite Sunday's bloody clashes 
in the Gaza Strip. "There's 
always a place for fear and 
there’s always a place for regret 
but that won't take away the 
necessity to go forward," he told 
Israel radio. 

Desert tribes bury ancient 
hatchet in the sand. Page 4 


Rwandan rebels name Hutu 
president in peace gesture 


By Leslie Crawford in Nairobi 

Tutsi rebels of the Rwanda 
Patriotic Front yesterday named 
a Hutu, Mr Pasteur Bizimungu, 
as president of what they say will 
be a broad-based government of 
national unity, in an apparent 
attempt to reassure Rwanda's 
Hutu majority that they have 
nothing to fear under the new 
regime. 

The RPF is due to install a new 
government in the capital Kigali 
today as the remnants of the old 
Hutu government and army 
joined the mass Hutu exodus into 
Zaire. 

As a long-time member of the 
RPF. however, Mr Bizimungu is 
not expected to inspire confi- 
dence among supporters of the 
late Hutu president, Gen Juvenal 
Habyarimana. 

The new prime minister, Mr 
Faustin Twagiramungu. is also a 
Hutu, but real power will almost 


certainly remain in the hands of 
Gen Paul Kagame, the military 
commander who formed an army 
of Tutsi exiles in 1990 to fight the 
Habyarimana dictatorship. 

The RPF is understood to be 
offering government posts to 
members of the old ruling party 
who were not implicated in the 
genocide of Rwanda's Tutsi popu- 
lation following the assassination 
of Gen Habyarimana in April. 

The new government’s chances 
of receiving international recog- 
nition are high, particularly since 
a special UN reporter on human 
rights identified the former gov- 
ernment as having been involved 
in directing tire massacre of hun- 
dreds of thousands of Tutsis. 

The US has given representa- 
tives of the old government five 
days to leave Rwanda. Their 
bank accounts have been frozen. 
Moves are also afoot in the UN to 
expel the Rwandan representa- 
tive on the Security Council. 


“The UN will have little choice 
hut to deal with the new govern- 
ment," Ms Alison Desfoges, a 
consultant with Human Rights 
Watch Africa, the US-based 
human rights group, said yester- 
day. "But the international com- 
munity will also be in a strong 
position to exert leverage over 
the RPF, as the new government 
will be heavily aid-dependent." 

France's position will be criti- 
cal to the success of the new 
regime. Its military Intervention 
in Rwanda came too late to save 
Tutsi lives, and now not even the 
“civilian safe havens" established 
by French troops in the 
south-west of the country have 
been able to stem the flight of the 
Hutu population into Zaire. 

The retreating Hutu army is, 
however, sheltering behind 
French lines, and there are signs 
that the French are uncomfort- 
able protecting perpetrators of 
genocide. 


Hymn for 
Mao hypes 
TV sets to 
the masses 

By Our Beijing Correspondent 

A Chinese Communist party 
hymn written in honour of 
Chairman Mao Zedong has been 
reborn as an advertising jingle 
glorifying a television set 

The song, rendered reverently 
throughout China after the Cul- 
tural Revolution, begins: "The 
sun is reddest Chairman Mao Is 
dearest" But hi a national tele- 
vision campaign, this has 
become: "The sun is reddest 
Long Rainbow Is newest" 

The shock to Chinese ears of 
recycling the revolutionary in 
the name or commerce can 
hardly be imagined. Mr Wang 
Xiren, a navy propaganda writer 
who penned the original lyrics 
soon after Mao's death in 1976, 
said yesterday he would protest 
at the commercialisation of his 
song. He wants the advertise- 
ment banned. "This distortion is 
irresponsible." he said. "It shows 
disrespect to the broad masses." 

Mr Wang's song is famous 
among Chinese youth as well as 
those old enough to remember 
life under Mao. Three years ago, 
it was featured on a new cassette 
of Mao music, played on modern 
western Instruments with the 
addition of a funky beat 

Television viewers, neverthe- 
less, are wondering who would 
dare tamper with the once sacred 
words, and how they could get 
the jingle past the censors. 

The answer Is hardly surpris- 
ing in the emerging business cul- 
ture of modern China: the Peo- 
ple’s Liberation Army. Long 
Rainbow is owned by the PLA’s 
commercial arm, Norinco, and 
the factory, at Mianyang city In 
Sichuan province, is a converted 
military plant and uses Japanese 
technology under licence. 

Ironically, the Long Rainbow 
plant came into existence 
because of one of Chairman 
Mao’s follies. In the late 1950s, 
he ordered that industries be 
relocated to the interior from 
areas vulnerable to attack dar- 
ing a war that never happened. 

China is trying to revive many 
of these isolated enterprises by 
upgrading their technology and 
turning military equipment fac- 
tories to civilian uses. Long 
Rainbow is one of the more sue- 
cesstoi examples of this policy. 


Rift in Italy’s coalition hits markets Bank probe 


Continued from Page I 

atmosphere yesterday. The 
League said that it would today 
ask a parliamentary commission 
for the decree on the custody of 
corruption suspects to be with- 
drawn. 

This tension will continue to 
worry the markets, analysts say. 
Mr Paolo Azzoni, a Milan stock- 
broker, yesterday described the 
situation as dangerous. Foreign 
investors with positions in Italian, 
stocks were liquidating them and 
Mr Azzoni said that markets need 
a clear sign that the split in gov- 
ernment has been resolved. 


Lara against the DM ftire per DM> 

980 



Equity irxJfoas (rebased) 

• ?30 


120 


Sowok DutuOwm 


--FTA^exctUK^ 

-l-..— ...... _ - 

-AM J J 

. 1984 


Continued from Page 1 

its attempt to improve controls in 
the group. More recently, it has 
uncovered "discrepancies in 
expense claims". 

It said that reasons given for 
the expenses “included gifts to 
individuals in certain countries 
to facilitate business, a practice 
contrary to bank rules and proce- 
dures’'. 

The bank has not proved that 
the specific gifts were passed on 
to the alleged recipients or that 
the expenses were genuinely 
incurred, but the Investigation Is 
continuing. 


FT WEATHER GUIDE 


Europe today 


The warmest air will retreat south of the Alps as 
a result of a strengthening ridge ot high 
pressure over the western part of the continent 
However, it will be sunny with comfortable 
temperatures in Denmark, Germany, and the 
Benelux. 

The British Isles will be sunny, but Ireland and 
Scotland will have cloud with light rain or 
drizzle. 

Heaviest rain will fall in the Alps, where there 
will be thunder storms and torrential rain at 
times. The Balkans wiU also have thunder 
showers. 

Scandinavia wilt be sunny, dry and warm, but 
Finland will remain cloudy with occasional 
showers. 

Five- day forecast 

Sunny and tranquil summer weather win persist 
over southern Scandinavia, Germany, and the 
Benelux. France will have plenty of sunshine, 
but thunder showers may occur at the weekend 
The Mediterranean will remain sunny and hot, 
but cooling thunder Showers as expected 
around the Adriatic. 


TODAY’S TEMPERATURES 




v 


iy?: 


-V,. -a* 






36"- 






-.38.. ; 


V i 


J.r 

f- .. ■ — . Warm front 


Cotd front A. A. Wind speed In KPH j 


Situation at 12 GMT. Temperatures maximum for day. Forecasts by Metoo Consult ol the Neitortands 



Maximum 

Bailing 

Mr 

34 

Caracas 

cloudy 

27 

Fare 


Gaisfus 

Belfast 

cloudy 

21 

Cardiff 

doudy 

22 

Frankfurt 

AbuDhaOl 

sun 

aa 

Belgrade 

fair 

33 

Cosatitanca 

out 

30 

Geneva 

Accra 

cloudy 

29 

Berifn 

sun 

25 

CWcago 

thund 

35 

Gfarafta- 

Algiers 

SUn 

35 

Bermuda 

fair 

32 

Cologne 

ft* 

25 

Glasgow 

Amsterdam 

fair 

24 

Bogota 

cloudy 

19 

Dakar 

fair 

30 

Hamburg 

Athens 

sun 

33 

Bombay 

shower 

31 

Dallas 

sui 

39 

Hetattfd 

Atlanta 

thund 

32 

Brussels 

Mr 

25 

Delhi 

shower 

38 

Hongkong 

B. Aires 

drzd 

22 

Budapest 

Mr 

29 

Dubai 

an 

40 

HonoMu 

e.ttam 

fair 

23 

C.hagen 

swt 

2S 

Dublin 

cloudy 

21 

Istanbul 

Bangkok 

ro* 

33 

Cairo 

Sun 

35 

Dubrovnik 

aim 

32 

Jakarta 

Barcelona 

sun 

28 

Capa Town 

Mr 

IS 

Edinburgh 

fair 

21 

Jersey 



Latest technology in flying: the A340 

Lufthansa 


Kiwcfa 

Kuwait 

L Angeles 

LasPafma 

Uma 

Lisbon 

London 

Urtboutg 

Lyon 

Madeira 


sun 

31 

Madrid 

Ml 

35 

Rangoon 

drzri 

29 

fair 

tfwnd 

28 

25 

Majorca 

Malta 

aun 

sun 

32 

33 

Reykjavik 

Rto 

rain 

fab- 

15 

28 

Sun 

34 

Manchester 

(dr 

21 

Rome 

sun 

31 

fair 

22 

Mania 

thund 

29 

S. Fraco 

tar 

29 

an 

25 

MoBjoume 

shower 

13 

Semi 

lair 

33 

shower 

22 

Mexico City 

cloudy 

19 

Singapore 

cloudy 

32 

tbund 

30 

Mart 

thund 

32 

Stockholm 

far 

25 

shower 

32 

Mian 

Tab- 

30 

Strasbourg 

thund 

25 

Sim 

30 

Montreal 

fair 

2B 

Sydney 

(dr 

17 

dowdy 

32 

Moscow 

shower 

22 

Tangier 

SW1 

32 

fair 

22 

Munich 

(fund 

22 

TaMvfv 

sun 

3i 

fair 

34 

Nairobi 

fair 

26 

Tokyo 

fair 

31 

sun 

45 

Nodes 

sun 

32 

Toronto 

sun 

29 

fair 

25 

Nassau 

sun 

32 

Vancouver 

aun 

27 

fair 

28 

New York 

fair 

32 

Venice 

fab 

30 

cloudy 

19 

Mce 

fair 

28 

Vienna 

cloudy 

25 

SU) 

31 

Nicosia 

sun 

38 

Wareaw 

fair 

24 

fair 

25 

Odo 

Ml 

27 

Washington 

thund 

33 

thund 

24 

Paris 

fair 

24 

Wellington 

shower 

9 

(fund 

26 

Perth 

fab- 

S3 

Wtodfig 

rain 

21 

Mr 

25 

Prague 

fair 

24 

Zurich 

thund 

22 


THE LEX COLUMN 

Gas mask slips 


What is British Gas up to? In its 
public statements, the company says 
it wants the government to press 
ahead with legislation this autumn to 
open up the domestic gas market to 
competition. But at the same time. 
Gas is planning to "rebalance” its 
prices to bring them in line with costs 
- a phrase that conjures up the idea of 
higher gas bills for little old ladies. 
The government is already dithering 
about whether to abolish Gas’s domes- 
tic monopoly. Hints about higher bills 
could be all that is needed to scupper 
legislation. 

The Machiavellian interpretation Is 
that this is precisely what Gas Is after. 
If so, it is being foolish. So long as Gas 
i retains its monopoly, it will face tight 
regulation. Thecompany may feel the 
current regulatory burden is suffocat- 
ing, but matters could get worse under 
a Labour government Gas should, by 
, contrast, embrace competition and use 
its advent as a spur to change the 
organisation’s still rather moribund 
culture. Since Gas is gradually getting 
this message, a Machiavellian inter- 
pretation of its latest moves seems 
unlikely. The more plausible explana- 
; turn is that the company has yet to 
craft a new and internaily-coherent 
public image. 

This is not to suggest that Gas has 
nothing to fear from the abolition of 
its monopoly. Although its regulator 
has promised to create a level playing- 
field, until the rules are set in stone 
there remains the possibility that 
rivals could "cherry-pick” its most 
attractive customers. But the best way 
to protea itself from such an eventual- 
ity would be to fight for fair compac- 
tion rather than to scare the politi- 
cians. 

Microsoft 

Microsoft has escaped the nightmare 
of being broken up. But its weekend 
deal with the US Justice Department 
a nd the European Commission is more 
than a slap on the wrist. To avoid a 
lengthy court battle over claims that it 
behaved anti-competitively, the soft- 
ware giant has had to accept restric- 
tions on the way it conducts its busi- 
ness. While the detailed terms 
certainly do not spell an immediate 
end to its near -monopoly in supplying 
personal computer operating systems, 
rivals should find it easier to pene- 
trate the market 

Even more serious is the risk that 
close monitoring by the competition 
authorities for the next six and a half 
years will cramp Microsoft’s style. One 


tIK Gills 

15 year redemption yields (per cent) 


8 V 


1992 93 94 

Source; FT Graph !* 

of the secrets of the group's success 
has been an aggressive no-bostages- 
taken approach to competitors. It may 
now feel it has to tone down this 
aggression. 

Mr Bill Gates, Microsoft’s founder, 
was playing down such risks yester- 
day. According to him, the deal elimi- 
nates the possible distraction of a 
court case and allows the company to 
focus on devising new products. Cer- 
tainly, Microsoft’s main challenge will 
be in the marketplace. Computer tech- 
nology is advancing at such a pace 
that the group will need to innovate to 
retain its dominance in desktop oper- 
ating systems. As Microsoft seeks to 
establish itself in other segments of 
the software market such as network- 
ing and multimedia, the need for inno- 
vation will be even greater. 

UK economy 

Since the UK economy has survived 
April's tax increases better than 
expected, it stands to reason that the 
Impact would be felt on government 
finances. The gratifying feature of the 
first quarter of the current financial 
year is the buoyancy of revenues: 
Inland Revenue receipts are up 9 per 
cent, those from Customs and Excise 7 
per cent Since low inflation has also 
helped keep spending under control, 
the PSBR for the frill year could turn 
out lower than the government's cur- 
rent forecast of £36bn. 

This is reassuring for a bond market 
which has been inclined to worry 
about oversupply. The ease with 
which the market absorbed last week's 
£800m tap is testimony to the renewed 
international appetite for gilts. So is 
the Bank of England's decision to auc- 


tion conventional stock this month, 
even if the expected 2010 maturity 
only just foils within the definition of 
long. By comparison with other coun- 
tries, such as Italy of which more 
below, UK government finances ore 
starting to look in good order. 

There is no guarantee yet, though, 
that the gilts market can simply 
resume its bull run. Yields have 
already fallen some 90 basis points 
from their recent peak and there is 
always the risk of a weak dollar trig- 
gering further international upset. 
Above all. cyclical improvement in the 
PSBR does not mean the structural 
problem Is solved. The market would 
still look askance if the authorities 
used the opportunity to ease up on 
spending or yielded to pressure for tax ! 
cuts. ! 

Italy 

Before Mr SUvio Berlusconi rode on 
to the political stage promising radical 
change, investors used to fret about 
Italy's political volatility and Us public 
debt-GDP ratio - the second highest in 
the industrialised world. Three 
months later, those same worries are 
merging. 

There now appears a real risk that 
the coalition government will unravel 
Given the unpopularity of bis current 
stance, it is not certain that Mr Berlus- 
coni would profit from any ensuing 
elections. The Comit index yesterday 
dropped 3 per cent on the uncertainty. 
The currency and bond markets shud- 
dered too. 

The markets seem likely to continue 
punishing Italy until the political 
uncertainty is resolved. A convincing 
plan for correcting the budget deficit 
is also needed. The worry is that a 
strong political will is essential to 
make inroads into the 1995 deficit 
given the need for structural reforms 
to pension and health spending. The 
task grows harder as the yield spread 
of Italian bonds over bunds widens. It 
is now 415 basis points, making the 
deficit ever costlier to finance. 

Italy's underlying economy is recov- 
ering well. Inflation has fallen to its 
lowest level for 25 years. The weak 
dollar will help ensure Italian inflation 
remains suppressed while the strong 
D-Mark makes Italian exports all the 
more competitive. The economy is 
forecast to grow at about 2.5 per cent 
next year promising a strong rebound 
in corporate earnings. Mr Berlusconi 
must make sure that, after Italy's 
promising build-up. he docs not shoot 
the gains over the bar. 


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Specified 
Worldwide 

IJg LBiPtasBcs United 

W Tel: 0773 852311 


FINANCIAL TIMES 


COMPANIES & MARKETS 


©THE FINANCIAL TIMES LIMITED 1994 


Tuesday July 19 1994 





5?" 


Group. 

[most in Quality 


MOMES«PBOPESTltS-CONSTBOCTlON 

021 711 1212 


IN BRIEF 


Time Warner cuts 
losses to $23m 

Time Warner has reported a $23m secomkraarter 
net loss, down from the $83m loss of a year ago 
The US entertainment group benefited from record 
eanmigs m its publishing, music. Aims and cable 
television programming businesses. Page 20 

Ruthless reversal at Kugeffischer 

FAG KugelGscher claims that the severity and 
speed of its recent restructuring are without paral- 
lel in Germany. Two years ago, the ball-bearings 
group, was heading for bankruptcy. Now it is 
predicting a small profit for the current year 
after halving its workforce and debts, and shrinking 
turnover by 13 per cent Page 18 

Santa Fe strikes it big 

Santa Fe Pacific Gold Corporation was virtually 
unknown to international investors a year a go 
but it is now the sixth-largest producer of primary 
gold in North America. Page 19 

m 

Lac board snubs takeover bid 

Shareholders in Lac Minerals of Toronto have 
been advised by the company's board to reject 
a C$2bn (USS1.45bn) takeover bid from Royal 
Oak Mines of Vancouver. Lac described the offer 
as inadequate and opportunistic but the rationale 
behind the bid has already won support from 
several large Lac shareholders. Page 20 

Anti-clot drag helps Genentech 

Genentech, the US biotechnology company, hn« 
recorded a threefold jump In post-tax profits in 
the second quarter. Product sales rose by more 
than a third spurred by a 32 per cent rise in Acti- 
vase, a drug that prevents blood clots. Page 20 

Strong gains for American Barrick 

Gold output has risen 24 per cent at American 
Barrick Resources during the North American 
group’s first half. The company, which is mr psiqding 
internationally, posted strong profit gains for 
the first half and second quarter. Page 20 

Wellman pays £46m for FKI units 

Wellman, the specialist engineering group, is 
buying three businesses from FKI, the electrical 
engineering and components group in a £46m 
($71. 6m) expansion. The deal is funded partly 
by a £32m placing and open offer. Page 23 

Acquisitions boost WMI profit 

Waste Management International, the UK-listed 
arm of WMX Technologies of the US, has lifted 
its second-quarter profit by 17.5 per cent before 
tax. The advance was underpinned by volume 
growth and acquisitions. Page 23 

Zeneca poised for growth In China 

Zeneca is positioning itself for a fairly rapid expan- 
sion in China. The UK agrochemicals and pharma- 
ceuticals group, is investing $ 100 m in the country 
over the next five years. It aims to "treat each 
market as a domestic market and develop from 
within,” says chief executive David Barnes. 

Page 23 

Buoyant start for 3S 

Shares in 3i jumped KHAp to 29S%p on their first 
day of trading. The flotation was one of the UK's 
latest share offers this year. Page 23 


Companies in this Issue 


oi 

23 Lease Wise 

22 

American Barrick 

20 Unotype-HeO 

18 

Amicable Smaller 

22 London Securities 

11 

Archer 

23 Low (Wm) 

23 

Arco 

20 ML Laboratories 

23 

BBA 

18 Medeva 

22 

BSG Inti 

22 Methold 

17 

Bank of Montreal 

17 Nall 

17 

Banpafs 

18 NationsBank 

17 

Brewin Dolphin 

23 OtS Inti Inspection 

23 

Bums Fry 

17 Patron 

19 

Chase Manhattan 

17 Pfizer 

5 

Coca-Cola 

20 President EnTprises 

19 

Cowl Cavendish 

22 FUR Nabisco 

5 

Daewoo 

19 Rohm & Haas 

20 

Davids Holdings 

19 Royal Ode Mines 

20 

Ebwfck 

22 Salisbury (J) 

23 

FAG Kugeffischer 

18 Santa Fe GoW 

19 

FKI 

23 Shanks & McEwan 

23 

Fitch 

22 Skandta 

18 

Fleming American 

22 Sketchley 

11 

GEC Atethom 

18 Synergen 

17 

Genentech 

20 Tosco 

23 

Grupo DESC 

18 Ttata Warner 

20 

Grupo Etektra 

18 Transport Devetopmt 

22 

Grupo Sldek 

18 Triplex Lloyd 

11 

Havre 

6 Unipalm 

23 

Independent Holdings 

19 Upjohn 

20 

Inspiotiona 

22 Utd Micro Bectr'lca 

19 

Jessups 

22 Walt Disney 

20 

KLM 

18 Waste Manangement 

23 

Lac Minerals 

20 Won man 

2a ii 

Lancs Enterprises 

22 Zeneca 

23 

Market Statistics 

Aflmual reports servica 26-27 Foreign exchange 

32 

Benchmark Gmi bonds 

21 GMs prices 

21 


Bond futures and options 2t 

Bond prices and jrtekte 21 

Commafitfes prices 24 

DMfcnta announced, UK 23 

BIS currency rams 32 

Eurobond prices 21 

Rued interest fcrdfces 21 

FT-A World Indces Back Page 
FT &fd Mines Indm Back Page 
FT/1SMA fog bond sk 21 

FT-5E Actuaries indices 25 


UffiaequBy options 

London trad options 
Managed tints service 


26-27 

kPWB 


Meney mstorts 

32 

Naw Inti bond Issues 

21 

Recent issues, UK 

25 

Short-torn tad rales 

32 

US tonrest rates 

21 

World Stock Markets 

33 


Chief price changes yesterday 


FRANKFURT PW 


Hemet) am 

1210 

♦ 

14 

Wksaogen 

Ml 

468 


122 

ABnu 

BBS 

- 

12 

AM 

1020 

- 

11 

uawt 

660 

— 

10 

Undo 

323 


12 

MEW YORK m 



n*M 

CKusCtad 

26 


K 

One Toctogfagy 

22K 

+ 

irt 

Hcnnoff 

SOU 

+ 

14 

fuKHKHnK 

ss 


K 

UPjHlMI 

30U 

+ 

U 

m* 

US West 


- 

11* 


PAtasgni 


Mum 

Cast Plus 

919 

+ 

40 

Coxa Hinder 

999 

+ 

40 

Creamed 

4155 

4* 

205 

Quotas Woo 

458 

+ 

27 

IHM 

929 

+ 

20 

GMptydwe 

TOKYO lYortJ 

547 


21 


716 

+ 

49 

Usan Resort 

ISO 

+ 

110 

NftnnSfaMo 

44S 

+■ 

30 

Tanarato Bank 

Mi 

594 


34 

Fame 

4190 

- 

300 

IHfka 

37S 


15 


Nn York prices at 1£30pm. 


LONDON 



Renan 

Kmm 




tMD Securities 

HO 

+ 

6 

Perprad 

BrtMi Borneo 

216 

+ 

0 

9 MB* 

DMmfimup 

133 

+ 

26 

8 dm 

350 

♦ 

20 

Toes (Mm) 

Brans N&torr 

454 

+ 

11 

Me 

Forts 

Gaea 

230 

225 

+ 

+ 

8 » 

17 

Bstttnws 

Janes Stiwd 

208 

T 

10 

Boots 

LatoWse 

a 

+ 

4 

Henson 

U&G Grow 

m 

+ 

37 

otS rad 

Mercury tent 

568 

+ 

26 

Mttrut EqiBss 

320 


16 

SkatcMry 


660 + Z 2 

1023 * 44 

278 + 25 

79 a! + 71 * 

79-6 
538 - 11 

168 - 7 

36-18 
106-9 


US banks easily beat expectations 


By Richard Waters in New York 

Chase Manhattan and Nations- 
Bank, two of the US's biggest 
commercial banks, comfortably 
beat market forecasts with post- 
tax earnings gains of 32 per cent 
and 43 per cent respectively in 
the second quarter. 

Both benefited from one-off fac- 
tors, though the results also dem- 
onstrated stronger than expected 
underlying earnings growth 
against the backdrop of rising US 
interest rates and turbulent 


financial markets. 

At Chase, post-tax profits of 
$307m, or $146 a share, were up 
from $233m, or S1.20 a share, 
while NationsBank's net earn- 
ings rose to $437m, or $158, from 
9306m, or $1.20. 

Chase reported a $55m gain on 
the sale of Its Arizona bank, 
higher mortgage banking fees 
due to an acquisition and a fillip 
for trading income from an 
exchange of its Brazilian loans 
for bonds under the country's 
debt-reduction agreement How- 


ever, earnings growth was driven 
mainly by lower credit costs, 
higher fee income and an 
increase in net inter est income, 
despite tighter margins. 

Fee income jumped by $98m to 
$480m, with contributions from 
consumer and investment bank- 
ing and the trust business. Trad- 
ing income, though down $36m at 
SlSlm, held up in the face of diffi- 
cult markets. 

The provision for bad loans 
dropped to $150m, from $225m a 
year earlier. 


Chase said it had substantially 
put its commercial property prob- 
lems behind it just 18 months 
alter announcing plans to sell off 
S2bn of properties, only S45m 
remains. 

NationsBank's earnings were 
boosted in part by takeovers. 
Non-Interest Income of $629m 
was 31 per cent higher than a 
year before, and would have 
risen by only 7 per cent had it 
not been for acquisitions. 

Average loans during the 
period jumped 23 per cent to 


S92£bn. with half of the growth 
coming from increased loan 
demand and the rest from take- 
overs. The bank's net interest 
margin remained largely un- 
changed at 4.15 per cent. 

The earnings advances lifted 
return on equity at Chase to 16.1 
per cent, from 15 per cent a year 
before, and at NationsBank to 17 
per cent, from 14.7 per cent. 

First-half net income rose to 
$671m from $386m at Chase, and 

to $S54m from S587m at Nations- 
Bank. 


Bank of 
Montreal 
seeks US 

expansion 

By Bernard Simon in Toronto 

Bank of Montreal plans to 
expand its investment banking 
operations In the US and Canada 
with the acquisition of Burns 
Fry, a Toronto-based securities 
firm. 


Tracy Corrigan reports on rising funding costs and falling investment values 

Treasurers battle with 
the double whammy 



T he reversal in the interest 
rate cycle and resulting 
turmoil in the bond mar- 
kets this year has hit corporate 
treasurers with a double 
w hammy , as funding costs rise 
and the value of investments 

faTl* 

In recent years, many compa- 
nies have raised fixed-rate 
finance but swapped the proceeds 
into variable-rate debt. When 
interest rates rise, these swaps 
are likely to become costly. 

At the same time, companies 
with large amounts of cash to 
invest may also have been hit by 
the fall in bond prices. Glaxo 's 
£100m (SI 56m) loss - mainly on 
structured bonds and collateral- 
ised mortgage obligations - has 
focused corporate treasurers' 
attention on the potential risks in 
their investment portfolios. 

Like the losses on derivatives 
incurred by companies such as 
Procter & Gamble and Metall- 
gesellschaft, the lesson seems to 
be that unless controls, on both 
the investment and liability sides 
of the business, are tightly 
drafted and strictly enforced, 
there is no guarantee that indi- 
vidual traders will act responsi- 
bly or that risk will be managed 
effectively. 

“Our philosophy is to have a 
floating-rate portfolio, which will 
not substantially alter in value 
[as rates go up and down] since it 
might be needed by the com- 
pany," said Mr Stephen Cramp- 
ton, director of treasury at Smith- 
Kline Beecham. The Anglo -US 
healthcare group sold its Invest- 
ment portfolio before the acquisi- 
tion of Diversified Pharmaceuti- 
cals Services in May. 

The rapid reversal ot interest 
rate trends this year has created 
an extremely difficult environ- 
ment for corporate treasurers. 
"The violent reaction of US rates 
has made us reconsider the bal- 


ance of fixed versus floating 
rate," said Mr Doug Rees, financ- 
ing director at Merck, the US 
pharmaceuticals group. 

The company, which has out- 
standing commercial paper bor- 
rowings, would like to reduce the 
floating-rate component of its 
debt portfolio. However, because 
of the steepness of the yield 
curve in the US bond market, it 
is not a very attractive time to 
lock into longer-dated fixed-rate 
borrowings. 

“It shouldn't be regarded as the 
treasurer’s role to chop and 
change tpe interest rate profile of 
assets and liabilities around 
short-term considerations,” 
argues Mr Derek Ross, partner in 
charge of treasury at Touche 
Ross. “That’s the route to run- 
ning into problems, on invest- 
ment portfolios and on deriva- 
tives.” 

G laxo is unlikely to be the 
only company to have 
suffered substantial 
investment losses. One pharma- 
ceuticals and chemicals analyst 
knew of several European compa- 
nies suffering from toe effects of 
turmoil in the flna nriwi and cur- 
rency markets. 

"Obviously companies that are 
cash-rich and asset-rich are the 
hardest hit at a time when there 
is a spike upwards in interest 
rates." said one dealer at a large 
London-based corporate treasury. 

Many companies are loath to 
discuss what their policies are. 
and many analysts are struggling 
to factor in potential losses made 
cm investments this year. Further 
complicating such calculations is 
uncertainty about how fully com- 
panies with substantial US sales 
have hedged themselves against 
the decline in the dollar. "My 
experience is that most compa- 
nies seem to give their treasury a 
lot more flexibility than I would 


expect them to,” said Mr Archie 
Donaldson, a director of the MTM 
Partnership and former treasurer 
ofICL 

Mr Ross also thinks there is 
some room for companies to 
tighten up procedures. "The area 
where there is weakness is that 
very few companies have a clear 
strategy of what the mixture of 
fixed-rate and floating-rate liabili- 
ties Should be for a minimum 
risk profile,” he said. 

The Association of Corporate 
Treasurers, of which Mr Ross is 

c’hairmgri L is pre paring guidelines 

for companies dealing in the 
derivatives markets, which are 
likely to he similar to the Group 
of Thirty's recommendations for 
dealers published last year. 

In some cases, the issue comes 
down to the conflict over how to 
run a treasury division, in partic- 
ular, whether it should operate 
as a profit centre or a cost centre. 

"If management puts toe trea- 
surer under pressure to achieve 
returns which are out of line 
with market rates, then inevita- 
bly a higher degree of risk will be 
assumed,” Mr Ross believes. In 
some cases treasurers have a 
package which relates to their 
contribution to the business, and 
may encourage them to seek 
profits more aggressively, even if 
this involves greater risk. 

However, Touche Ross recently 
completed a survey of 50 UK com- 
panies which showed that only 7 
per cent treated treasury as a 
profit centre, and only 10 per cent 
allowed companies to trade 
rather than just hedge positions. 

For the derivatives specialists 
at investment banks, the prob- 
lems of corporate treasurers have 
brought in some fresh business. 

“There are plenty of corporate 
treasurers who got themselves 
into trades which started to look 
pretty ugly," said one investment 
banker. “Those who are running 


treasury operations as profit cen- 
tres have had a good run in the 
last couple of years and had 
started to get more adventurous." 
For example, he says that corpo- 
rate treasurers who undertook 
“ 18086 " trades - taking the view 
that interest rates or currencies 
would remain within a certain 
designated range by entering 
swap transactions or buying 
structure notes - found that 


instead of owning higher-yielding 
investments, they were left hold- 
ing loss-making and often illiquid 
positions. 

As for company treasurers, per- 
haps they will take comfort from 
toe fact that those worst hit by 
toe turmoil in the financial mar- 
kets this year are banks and 
securities houses, whose first- 
half results have shown more 
than a dent already. 


The bank. Canada's third larg- 
est, will pay up to C$403m 
(US$290m) in cash axkl shares for 
Burns Fry, which is 26 per cent 

owned by San Francisco-based 
Bank of America and 74 per cent 
by its employees. Bank of Amer- 
ica will receive just over C$1 00m 
in cash. 

Burns Fry, which has equity 
capital of C$200m, will merge 
with Nesbitt Thomson, Bank of 
Montreal's wholly-owned securi- 
ties subsidiary. The deal is 
expected to close before the end 
of AugnsL 

The merged firm, to be known 
as Nesbitt Burns, will employ 
about 3,700 and. along with RBC 
Dominion Securities and Wood 
Gundy, will be one of Canada's 
dominant securities dealers. All 
three are owned by banks, which 
were allowed to enter the securi- 
ties business in 1987. 

The Nesbitt/Burns deal is 
expected to increase pressure on 
ScotiaMcLcod, a subsidiary of 
Bank of Nova Scotia, to expand 
through an acquisition or 
merger. 

Nesbitt and Burns have several 
overlapping businesses and out- 
siders predict a large number of 
lay-offs, although Mr Brian 
Steck. Nesbitt chairman, said 
yesterday that redundancies 
would be minimal. 

Executives of both firms iden- 
tified opportunities in the US as 
one of the main benefits of the 
merger. 

Mr Steck said Nesbitt Bums 
would “aggressively” expand its 
research capability south of toe 
border, build up an institutional 
salesforce based in Chicago and 
New York, and seek a retail secu- 
rities base. 

Bank of Montreal has been the 
most active Canadian bank in 
the US. It owns Harris Bankcorp 
of Chicago, and has set a goal of 
earning 50 per cent of total 
income from US operations. The 
bank employs 160 people in its 
US investment banking division. 

Under the deal. Barns Fry 
shareholders will receive C$283m 
in cash and stock exchangeable 
over four years into a maximum 
of about 5m Bank of Montreal 
shares. 

Burns Fry shareholders can 
choose to receive up to C$30m of 
the cash payment in additional 
exchangeable stock. 


Black businessmen propose 
R7bn Johannesburg listing 


By Mark Suzman 
in Johannesburg 

A group of black South African 
businessmen . have announced 
plans to establish a R7bn 
($i.91bu) company and list it on 
the Johannesburg Stock 
Exchange next month. If success- 
ful, the company wifi become the 
largest black-owned and run com- 
mercial enterprise in South 
Africa. 

The new company will be built 
around Methold, to be renamed 
New Africa Investments Limited 
(Nail), a holding company under 
the control of Dr Ntbato Motlana, 
a medical doctor by training who 
until recently served as President 
Nelson Mandela’s personal physi- 
cian. and several other promi- 
nent black businessmen. 

Methold’s main Investment is a 
10 per cent controlling stake in 
Metropolitan Life. South Africa's 
fifth biggest life insurance com- 
pany. 


Nail will be 51 per cent owned 
by Corporate Africa, an invest- 
ment vehicle controlled by Dr 
Motlana and his partners. Other 
leading shareholders will include 
Afrikaner-controlled insurance 
giant Sankorp, the original owner 
of Metropolitan Life, with 20 per 
cent and trade union federation 
NACTU with 9 per cent There 
will be no public share offering. 

Before the listing, Methold will 
acquire a Anther 20 per cent of 
Metropolitan. This will increase 
its stake to 30 per cent the larg- 
est part of the new company. 
Methold will also acquire 100 per 
cent of Prosper Africa, another 
company under the control of Dr 
Motlana. which has a controlling 
interest in The Sowetan, South 
Africa’s largest daily paper, and a 
7 per cent effective stake in MTN, 
one of the country’s two main 
cellular phone providers. 

To finance the transaction 
almost R500m has been raised 
from black business, pension 


funds, provident funds and for- 
eign and domestic institutions 
including Morgan Stanley, the US 
merchant bank. 

Dr Motlana will become exec- 
utive chairman of the new group, 
which he hopes will lay toe foun- 
dation for a significant black 
presence in the South African 
economy. 

“Our mission is to encourage 
black economic advancement by 
promoting black-led partnerships 
with loading black businesses, to 
maximise black shareholder 
wealth and ensure that black 
entrepreneurship is fostered,” he 
said. 

Other board members will 
include Mr Enos Mabuza, a for- 
mer “homeland” leader, Mr Jonty 
Sandler, a white businessman, 
and Mr Sam Motsuenyane, the 
founder of the National African 
Federated Chambers of Com- 
merce. Dr Motlana and his part- 
ners are currently in the US pro- 
moting the venture. 



This announcement appears only as a nutter of record 

£12m MBO of 
Gradekit Ltd 

Structured and arranged by 

3i pic 

Equity provided by: 

3i Group pic 
3i ’94 LMBO Plan 

Senior debt and working capital facilities provided by: 

4^* Bank of Scotland 

Legal advisers to management: 

Boodle Hatfield 


Synergen drops its main product 


Advisers to the transaction: 

KPMG Peat Marwick 


By Daniel Green in London 

lergen* mice a star of the US 
technology industry, has 
pped researching Antril, its 
gest product, and announced 
^structuring which could lead 
the company’s sale, 
lore than half of the group's 
i employees will lose their 
s as Synergen reverts to a 
ilness with no products in the 
a Htip for the medium term. 

Tie company, based in Bonl- 
■ Colorado, had built a manu- 
turing plant for AntriL This 
1 be closed and put op for 
e. Selling the entire company 
s also a possibility, said Mr 
« Abbott, chief executive, 
vneruen shares feU yesterday 


by $4 to $4%. They were at a 
peak of 966 % in December 1992. 

Antril, the company’s main 
drug, was intended as a treat- 
ment for the complex and dan- 
gerous condition called sepsis. It 
fe toe fastest in a series of poten- 
tial treatments to have failed 
and casts doubts on whether the 
condition can be successfully 
treated by any single drag. 

Other companies researching 
similar sepsis treatments include 
UK biotechnology companies 
CeUtech and British Biotechnol- 
ogy, Wellcome of the UK and 
Japan's Fujisawa. 

Mr James Noble, finance direc- 
tor of British Biotechnology, 
conceded yesterday that no 
one drug would ever be able 


to cure all sepsis patients. 

Earlier this year, Californian 
biotechnology company Chiron 
abandoned its sepsis research 
programme. Other failures in 
recent years include Centocor 
and Xoma, whose share prices 
collapsed when, like Synergen, 
they abandoned research in 
Phase HE development, the last 
and most expensive of the phases 
iff clinical trials. 

Synergen had disappointing 
results from it first round of 
Phase HI trials in early 1993. 
Yesterday’s announcement came 
after a second round of Phase m 
trials showed no clear improve- 
ment in prospects for patients 
with sepsis. 

Genentech results, Page 20 


Price Waterhouse Corporate Finance 
<£3$Bank of Scotland Legal Services 


3iplc 

91 Waterloo Rood 
London SE1 8XP 
Tel 071 928 3131 
Fax 07 1 9280058 


3i Group pk and 3i pk are reguhKt! in the conduct of bwincsi by SIB 






IS 


FINANCIAL TIMES TUESDAY JULY I*) 1994 


INTERNATIONAL COMPANIES AND FINANCE 


Mexicans trim new issues 
to match tough conditions 


Kugelfischer’s ruthless survival route 

The ball-bearings group says its shake-up is unparalleled, writes David Waller 


By Ted Bardacke 
hi Mexico City 

Four Mexican companies have 
overcome difficult market con- 
ditions and placed equity offer' 
mgs worth USS450m on Inter- 
nationa] markets in the past 
two weeks, bringing to 20 the 
number of Mexican companies 
listed on the New York Stock 
Exchange. 

The companies were forced 
to lower the number of shares 
offered and the selling prices. 
Brokers involved in the offer- 
ings say that concern about 
Mexican political stability and 
failing capital flows to emerg- 
ing markets in general made 
their job difficult 

“The new issue environment 
is difficult in general and quite 
difficult for Mexican compa- 
nies right now. You have to be 
very selective about how you 
go at investors and try to sell 
to those who know particular 


Linotype-Hell, the German 
printing machinery manufac- 
turer. said its net loss in the 
first six months narrowed to 
less than a quarter of the 
DM57m (S35.6mj loss a year 
earlier, AFX reports from 
Escbborn. 

The group said the result 
was in line with its aim of 
breaking even in the full year. 
Sales in the six months were 
on target while new orders 
exceeded expectations. 

Linotype- Hell said more pre- 


By Christopher Brown-Humes 
in Stockholm 

Skandia, the Swedish 
insurance group, said yester- 
day it had agreed in principle 
to sell Skandia Texas Group, 
its Texan direct non-life opera- 
tion, to Omni Insurance Carp, 
a (JS company based in 
Atlanta, Georgia. 

The move continues the 
Swedish company's efforts to 


industries," says Mr Justin 
Mansen, co-ordinator of the 
offering of paper maker Grupo 
Industrial Durango for the US 
brokerage house Morgan Stan- 
ley. Durango was forced to 
lower its issue price by 14 per 
cent to raise S123 m. An addi- 
tional $I50m was raised 
through a 7-year, 12 per cent 
Yankee bond issue, the first 
private Mexican company to 
use the market this year. 

The other companies with 
successful equity offerings, 
mid-sized bank Banpais, real 
estate developer Grupo Sidek, 
and industrial conglomerate 
Grupo DESC, suffered price 
reductions of 21 per cent, 5 per 
cent and 10 per cent respec- 
tively. DESC also reduced the 
share offering by 44 per cent, 
while Sidek cut the number by 
34 per cent. 

Banpais, which needed the 
new capital to pay off expen- 
sive short-term debt, related to 


else data on the company’s per- 
formance in the first half 
would be published at the 
beginning of August. It said 
the next six months should see 
further improvement after the 
completion of its restructuring. 

The group said the planned 
break-even in 1994 would be 
achieved on a “slight sales 
growth compared with last 
year”. 

The company's restructur- 
ing, initiated in 1993, was 
largely responsible for the nar- 


disengage from direct non-life 
business in the US, where it is 
giving greater emphasis to 
reinsurance. It has sold two 
other direct non-life groups in 
the US over the last year. 

Skandia said Us Texan 
operations, which generate 
about $5Sm in annual premi- 
ums and were mainly focused 
on motor insurance lines, had 
not been profitable enough. It 
said there were no plans to 


its recent purchase of insur- 
ance company Asemex from 
the Mexican government, was 
hit particularly hard as it was 
forced to borrow again to meet 
payment obligations. 

Grupo Elektra, the home fur- 
nishings chain, which had sub- 
stantial obligations related to 
its participation in the pur- 
chase of the privatised televi- 
sion network Television 
Azteca, was forced to cancel its 
planned equity offering when 
executives judged that poten- 
tial investors were valuing the 
company too low. 

Mr Kenneth Pryor Jones, the 
Sidek finance director, 
shrugged off the price reduc- 
tion, saying the new capital 
raised was not as important as 
the New York listing itself. 
"When we securitise $20Om in 
receivables this summer, just 
the fact that we are listed will 
enable us to offer those notes 
50 basis points lower,” he said. 


rower net loss in the first six 
months. In this period, Lino- 
type-Hell's US operations saw 
the strongest improvement in 
earnings to post a net profit 
after a "significant loss” a year 
earlier, the company said. 

While new orders from 
Japan and the UK saw “consid- 
erable growth rates . . . there is 
no sign of an economic upturn 
at home”. The company 
reported a 1993 net loss of 
DMl53.4m after a net profit of 
DM32. 1 m in 1992. 


divest its remaining US direct 
non-life businesses, located in 
Oregon and Florida. 

Skandia said the Texan sale 
would have a marginally posi- 
tive impact on its profit and 
loss account and balance sheet, 
but would not disclose precise 
terms. 

Skandia America Reinsur- 
ance Group will continue to 
act as the main reinsurer of 
Skandia Texas Group. 


Net profits 
improve 7% 
at French 
power group 

By John RidtHng in Paris 

GEC Alsthom, the transport 
and power engineering com- 
pany jointly owned by 
France's Alcatel Alsthom and 
GEC of the UK, yesterday 
announced a rise of 7 per cent 
in net profits for the year to 
the end of March, to Ecu329m 
(5279m) from EcnSQSm. 

The net result was achieved 
on stable sales of Ecu7.93bn 
and operating profits of 
Ecu640xn, a rise of 15 per cent 
over 1992-93. 

The company, which was 
formed five years ago, said it 
had maintained its rate of 
growth of new contracts, 
receiving orders worth 
Ecu9.32bn during the year. 
This took the year-end order 
book to a record Ecul?bn, 
GEC Alsthom said. 

The figures for last year’s 
orders do not include the 
$2.1 bn contract to supply 
high-speed trains and related 
equipment to South Korea. 
The contract, which was 
signed in June, followed sev- 
eral years of negotiations and 
was won in the face of compe- 
tition from a German consor- 
tium beaded by Siemens. 

Since the end of the last 
financial year, GEC Alsthom 
has expanded through the 
acquisition of a controlling 
stake in Linke-Hofmann- 
Busch, a German manufac- 
turer of rail equipment The 
acquisition, announced last 
month, is an important step 
into tbe German market and 
strengthens GEC Alsthom's 
presence in urban, suburban 
and inter-city rail equipment. 

Dutch airlines 
to break record 

Dutch airlines are expected to 
transport a record 3m holiday- 
makers this summer compared 
with 2.6m in 1992, charter 
company Transavla Airlines 
said. Reuter reports from 
Amsterdam. 

Transavia, which is 80 per 
cent owned by KLM Royal 
Dutch Airlines, is market 
leader in holiday air travel to 
and from the Netherlands with 
a market share of 46 per cent 


M r Peter-JQrgen 
Kreber. chief execu- 
tive of the FAG 
Kugelfischer ball-bearings 
group, chuckles when he 
recalls giving a lecture to busi- 
ness school students about the 
principles of crisis manage- 
ment 

“They sat there with their 
mouths open as 1 explained 
that the most important thing 
was to do a daily check of your 
bank balance." he says. “You 
must always know whether 
you've got any cash - or 
whether you've gone broke" 
Such nitty-gritty details tend 
to be overlooked in Germany's 
academically oriented business 
schools, Mr Kreher says. Had 
he not paid attention to the 
daily fluctuations in cash flow 
when he took over at Kugel- 
fischer early last year, the 
group would not have sur- 
vived. 

As it is, Mr Kreher has 
implemented a restructuring 
plan which he claims is with- 
out parallel in the Federal 
Republic of Germany - in 

terms of the speed with which 
the plan was executed and the 
severity of the measures taken, 
to turn the group round. 

At the heart of the group's 
restructuring was the near- 
halving of the workforce - to 
16,000 people at the beginning 
of 1994 from 31,000 a year ear- 
lier. 

Debts were halved to DMlbn 
13625ml from DM2bn and turn- 
over shrunk 13 per cent to 
DM3.12bn from DM3.56bn, 


By Tim Burt in London 

BBA, the UK engineering and 
motor components group, yes- 
terday said a senior manager 
was leaving the company over 
a fundamental disagreement 
with Mr Roberto Quarto, the 
chief executive recruited last 
year to conduct a root and 
branch restructuring. 

In a move described by ana- 
lysts as ruthless, Mr Peter 
Crawford, chief executive of 
the group's automotive divi- 
sion. was told yesterday morn- 
ing that Mr Quarta was taking 
over his responsibilities and 
that his tier of management 
was being abolished. 

Mr Quarta. who earlier this 


reflecting the sale of a clutch 
of subsidiaries identified as 
□on-core businesses. 

“We have achieved some- 
thing gigantic here.” Mr 
Kreher boasted recently. He 
predicted that the group, the 
second largest ball-bearings 
manufacturer in the world 
after Sweden's SKF, would 
make a small profit in the cur- 
rent year - a reversal from 
heavy losses and near bank- 
ruptcy at the end of 1992. 

The precarious position was 
in part due to worldwide reces- 
sion which led customers, espe- 
cially car manufacturers, to 
cut luck purchases of bearings. 
But KugeUlscher's problems 
were compounded by heavy 
indebtedness and tbe ill-fated 
acquisition of DKFL Deutsche 
KugsUagerfabrik, an east Ger- 
man bearings manufacturer 
which Kugelfischer bought in 
1990. 

In a microcosm of the prob- 
lems of eastern German indus- 
try, DKFL suffered a large drop 
in sales as former markets in 
eastern Europe evaporated 
aver 199L-S2. When the deal 
was done in the heady days of 
German reunification the 
assumption was that sales 
would reach DMIJRra a year - 
but turnover in the years alter 
the acquisition was never more 
than a third of that level 

Recognising the gathering 
crisis Mr Fritz Schafer, a 
descendant of Kugelfischer's 
founders who still owns a 
majority stake in the company, 
called in a well-known corn- 


year announced plans for a 
dividend cut and 2,000 job 
losses, said Mr Crawford’s 
departure was part of a review 
of group management He did 
not rule out further job losses 
among senior executives. 

The 44-year chief executive, 
who arrived from BTR last 
November with a mandate to 
revive BBA, said be had given 
management six months to 
respond to new objectives. 

“I spelt out the aim to 
achieve double digit growth by 
1996, and the automotive divi- 
sion was the key to that 
improvement'’ he added. 

Profits in the automotive 
division fell 42.3 per cent to 
£21.5m (S32.6m) in the 12 


pany doctor in December 1892. 
This was Mr Ka)o Neukirehen. 
a former chief executive of the 
Hoesch steel group who was 
hauled in by Germany’s big 
banks last December to sort 
out the mess at MetailgeseU- 
schaft, the metals, mining and 
industrial group which which 
came close to bankruptcy. 

Mr Neukirchen became 
chairman of Kugelfischer's 
supervisory board, devising the 
ruthless blueprint for the com- 
pany’s survival. Mr Kreher. 
who was appointed chairman 
of tbe management board, put 
the plan into practice. Mr 
Kreher sums up the plan with 
a simple slogan: “focusing 
replaces diversification". 
Important measures included: 

• The sale of all businesses 
which did not belong to tbe 
core activities: these were 
defined as rolling-bearing man- 
ufacturing, sewing technology 
and materials handling 
systems. 

By January this year the 
group had sold 13 subsidiaries 
in sectors including hydraulic 
brakes, textile machinery 
accessories, metrology and 
industrial gauging and control 
systems, businesses which gen- 
erated sales of DM720m in 1992. 
The quick-fire sales brought In 
DM740m and 5,200 jobs were 
shed in the process. 

• In June last year, the group 
pulled out or Its engagement in 
the Leipzig-based DKFL, put- 
ting the subsidiary into liqui- 
dation and shedding 1,300 jobs. 


months to December 31 last 
year, while its turnover of 
£574. im against £62Um repre- 
sented 40.5 per cent of the 
group total 

Following that disappointing 
performance. Mr Quarta is said 
to have clashed with Mr Craw- 
ford over strategy. 

Mr Crawford is understood 
to have called for increased 
investment in product develop- 
ment in the hope that the divi- 
sion would exploit an upturn 
in motor manufacturing. 

Mr Quarta was keen to cut 
the cost base in line with its 
shrinking turnover. "I decided 
it would be better off dealing 
directly with the businesses in 
automotive,” he said. ”1 believe 


pest producers of bearings in 
the eastern bloc had lost about 
DMyOOm in 1992. The engage- 
ment cost KugPlfischer DMlbn 
in total. Mr Kreher says. 

• Personnel reduction. On top 
of the jobs lost as a result of 
divestments. Kugelfischer has 
made 8.200 employees redun- 
dant and plans further cuts 
this year and next The group 
has achieved annual net 
savings of about DMlbn as a 
result. 

• Kugelfischer has cut costs 
further by using fewer materi- 
als, cutting investment and 
stream-lining production. Man- 
agement layers have been 
thinned and the number of 
product-tines made by the 
group has been slashed to 
23.000 from 320,000. 

T he net result of these 
measures was that 
Kugelfischer reported a 
sharp reduction in losses last 
year. At the parent company 
they were DM9-lm after 
DM 630m in the previous year, 
although the losses would hare 
been more substantial but for 
DM35m in extraordinary prof- 
its. 

Kugelfischer's restructuring 
is symptomatic of the kind of 
rationalisation set In motion at 
dozens of big German compa- 
nies during the recession. 
Among German companies 
with a stock market listing, 
analysts expect large increases 
in earnings for the current 
year os rationalisation takes 
effect. 


in short lines of communica- 
tion." 

Mr George Cartwright, chief 
executive of the friction mate- 
rials business, and Mr Bob 
Gaunt, managing director 
responsible for power trans- 
mission systems, will now 
report directly to Mr Quarto. 

Mr Crawford, who earned 

about £150,000 a year on a two- 
year rolling contract, was yes- v \\ 
terday said to be discussing his “ v 
severance terms. 

Although he has been a 
director of the divisiou and its 
predecessor Automotive Prod- 
ucts for almost 10 years, 
sources dose to the company 
said he was unlikely to receive 
the full £300.000 pay off. 


Linotype-Hell reduces deficit 
to DM57m in first six months 


Skandia agrees to sell US unit 


What had been one of the big- 

Automotive operations chief quits BBA 


June 1994 



MCEL 


Comunicacion Celular S.A. 

(a Colombian cellular telecommunications company formed 
by Bell Canada International, Empresa deTelecomunicaciones 
de Santafd de Bogota and Empresa Nacional de 
Telecomunicadones) 

U.S.$ 150,000,000 

2-Year Eurodollar Loan Facility 

Agent & Sole Arranger 

Chemical Bank 


Lead Managers 

Bank of Montreal 

Union Bank of Switzerland 

Managers 

BHF Bank 

Banco Internaciona) de Colombia (Nassau) Ltd (Citibank) 

Co-Manager 

West Merchant Bank Limited 


Lead Participant 

ABN-AMRO Bank N.V. 


Participants 

Banco de Venezuela International 
Banco Cafetero-Colombia 


Chemical 


Bank of Greece 

Oun.-.-di wO n 4, HrCws 

ECU 300.000.000 
Floating Rate Notes Due 1997 
In accordance with the provisions of 
the Notes, notice ts hereby given 
that the Raw of Interest tor the 
three month period ending 13th 
October, 1994. has been feed at 
b.875% per annum. The interest 
accruing for such three month 
period will be ECU 175.69 per 
ECU 10.000 and ECU 1,756.94 per 
ECU [00.000 Bearer Nate, on lijth 
October, 1994, against presentation 
of Coupon So. 10. 

Union Bonk of Switzerland 
London Branch Agent Bank 
14th July. 19W 


Wells Fargo & Company 
US$100,000,900 
Floating rate subordinated 
notes due July 1997 
The notes wUl bear interest at 
5.0625 % per annum lor the 
interest period 19 July 1994 
to 19 October 1994. 

/merest payable an 19 October 
1994 mill amount to US$129.38 
per US$10,000 note and 
US$646.88 per US$50,000 note. 
Agent; Morgan Guaranty 
Trust Company 

JP Morgan 


pdanstofwtiifsh 


l 




on. 

' November 9. 


With ever ten years of 
economic and poetical reform to 
its credit sod the recent 
Inauguration of Its third 
success! vo democratic 

government. Bolivia la an 
increasing strength In Latin 
/tattHtca. The savoy wfll report or 
the cooirtTy a economy, potitteaf 
scene, financial markets, 
privatisation policy and mom. 

For more information on 
editorial content and detafisof 
sdiwtiahg oppcwadtlw enraOabh 
InttJtoswwy, pleas# contact 

Penny Scott In Now Toric 

TcLpunwaeMo fiarau) ess 8239 

Samantha Borg hi London 

Tel: I *44 7IJ873 J 810 

^(♦44 71)8733696 

FT Surveys 


All of these securities having been sold, this announcement appears as a matter of record only 

July 1494 

1,250,000 American 
Depositary Share Units 

XENOVA 


Each American Depositary Share Unit Consists of 
One American Depositary Share 
Representing One Ordinary Share 
Together With One ADS Conversion Right 


450,000 American Depositary Share Units 
PaineWebber International 

Lehman Brothers 

Cowen & Company 

James Capel & Co. 

This tranche was offered outside the United States and r.«^ 


800,000 American Depositary Share Units 
PaineWfebber Incorporated 

Lehman Brothers 

Cowen & Company 

This tranche was offered in ihe United States. 


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19 


Santa Fe Gold undergoes transformation 

Kenneth Gooding reports on the changes which have promoted the US gold producer 


S anta Fe Pacific Gold 
Corporation was virtually 
unknown to international 
investors a year ago. But since 
then it has emerged as the 
sixth-largest producer of 
primary gold in North 
America. 

In addition, it has listed 14.6 
per cent of the company on the 
New York Stock Exchange on 
. terms which gave it a total 
value of nearly S2bn, and 
immediately became an 
important element in the new 
Financial Times Gold Mines 
Index. 

Its parent, Santa Fe Pacific, 
the railways group, is to 
distribute the remaining 85.4 
per cent of the gold 
company to shareholders on 

September 30. 

From then on S anta Fe Gold 
will have no big contro llin g 
shareholder but its equity will 
be widely held in North 
America and Europe - about 7 
per cent of the company was 
snapped up by European 
investors in the recent share 
sale. 

Santa Fe Gold includes some 
of the assets Hanson, the 
Anglo-American conglomerate, 
acquired with Consolidated 
Gold Fields of the UK and 
swapped in June last year for 
Santa Fe's coal and aggregate 
operations. 

That deal transformed Santa 
Fe Gold into a producer with 
an anticipated 1994 gold output 
of 900,000 troy ounces. It also 
has among the lowest costs in 
the world: $187 an ounce cash 
costs and $267 total costs in the 
last reported quarter. In North 
America only American 
Barrick, the Canadian group, 
has lower costs. 

And, like American Barrick, 
Santa Fe Gold has one of the 
biggest gold reserves in North 
America, amounting to 14.1m 
ounces. However, these were 
estimated using a gold price of 


$400 an ounce, which some 
analysts feel was optimistic. 
With gold at $350, Santa Fe 
Gold's reserves fall to about 
123m ounces. 

Santa Fe Gold, with 
headquarters in Albuquerque, 
New Mexico, has about 1,500 
n on-unionised employees and 
three min es. These arm Twin 
Creeks (a combination of 
H a n son's Chimney Creek and 
Santa Fe’s Rabbit Creek 
merged to produce the 
third-biggest primary gold 
mine in the US) and Lone Tree, 
both in northern Nevada, and 
Mesquite in southern 
California. 

It is one of the biggest 
holders of mineral lights in the 
western US, controlling more 
than 6 -8m acres of private 
mineral rights, including more 
than l.gm acres in northern 
Nevada where most US gold is 
produced today. 

Mr Dick Zittlng, Santa Fe 
Gold chairman, recognises that 
investors in gold companies 
look for growth and measure 
that growth by ounces 
produced. 

He can promise no 

Immediate large increase and 

says output will be static far 
the next year or so. There are 
projects in the pipeline but it is 
taking longer to bring them 
into production - the 
permitting process in the US is 
now a long, drawn-out affair, 
he points out 

Santa Fe Gold intends to 
grow mainly by its own 
exploration efforts, Mr Zittlng 
insists. Both the old-style 
Santa Fe Gold and Gold Fields 
had good exploration records 
and the merger produced an 
experienced exploration team 
of 140 people. “You get so 
much more added value when 
you find your own gold rather 
than buying it from someone 
else,” he points out 

Nevertheless, “we recognise 


Santa Fe. Pacific Gold . 

GoWprcxtutttion (thousand ounces) . - 

soa- 



tWO 1881 ■ 
Cash and total costs $pet ounce}- - - 


1993 



Cash cost 
Total cost ;r r 

■wij y rrm . 


1890. 


Pookk Corppettf npat 

that to maintain output or 
grow we will have to make 
acquisitions”. 

Santa Fe spent $22m on 
exploration last year and will 
spend between $2Sm and $3Qm 
in each of 1994 and 1995. About 
75 per cent will be spent in the 
US and the rest in other 
countries where the group is 
searching for gold, Canada, 
Mexico, Chile and Uruguay. 

Mr Siting says exploration 
efforts outside the US will 
gradually build until spending 
there accounts for about half 
the budget 

S anta Fe Gold has agreed 
a joint venture with 
Codelco, the statoowned 
Chilean group, on the Cerro 
Goya gold property near El 
Salvador. This project, high in 
the Andes to Hamestake’s 
El Hueso mine, will be dimed 


1892 


1803 


when the spring weather 
comes to Chile. 

Back in the US, Mr Zitting 
suggests Santa Fe Gold will by 
the year-end decide whether to 
go ahead with the Mule 
Canyon advanced exploration 
project, acquired in the Gold 
Fields exchange. This is 12 
mflfis east of Battle Mountain, 
Nevada. 

Last year Santa Fe Gold 
spent $11.3m developing Its 
mines and this will rise to 
ytiftn in 1994. The 1994 capital 
budget is about $75m, 
including Ji4An to complete 
the Lone Tree mine ggpansinn- 

Since 1992 the company has 
spent $U2m on this scheme, 
which enables it to extract gold 
from refractory (difficult) ores 
at Lone Tree. Most of the 
money went on an autoclave - 
similar to a huge pressure 
cooker - used to oxidise ore. 


Mr Zitting says the 
autoclave, completed in 
February, is "going like a 
jewel” and already processing 
at 110 per cent of rated 
capacity. The project lifted 
Lone Tree’s annual gold output 
to 200,000 ounces and increased 
the mine's life by nma years to 
14 years. 

Santa Fe Gold is now 
considering putting a dmilar 
autoclave into operation at the 
Twin Creeks mine at an 
estimated cost of $200m over 
two or three years. 

Mr Zitting points out that 
Santa Fe Gold might not be 
able to recover op to 57 per 
cent of the reserves at Twin 
Creek without the autoclave go 
"it would have to be very 
harsh circumstances for us not 
to go ahead”. 

The $235m net proceeds of 
the recent share sale have been 
used primarily to repay Santa 
Fe Gold’s debts. It was left 
with $22m cash. Pro forma 
accounts for 1993 show net 
income of $4&2m or 34 cents a 
share. The company produced 

847.000 ounces of gold and sold 

825.000 ounces at an average 
realised price of $377 an ounce. 

A gold hedging 
programme enabled 
the company to do 
better than if it had sold its 
metal an the London Bullion 
Market where the average last 
year was $360. Hedging will 
continue . “when deemed 
appropriate”, says Mr Zitting. 
At March 31 It had sold 
forward 646,000 ounces at an 
average price of $395 an ounce 
and also bought "put” and 
“call” options on another 
127,500 ounces. 

Mr Zitting says Santa Fe 
Gold’s capital outlays this year 
can be covered from 
operations. And it intends to 
pay a regular dividend of 5 
cents a share. 


' ' The Financial limes 
plans to publish a Survey on 



on 

Wednesday 14th September 


91% of Professional Investors in Europe regularly read the 
Financial Times and 75% consider the FT to be most 
Important or useful In their work.* 

19% of all Senior European businessmen read the 
Financial Times: more than any other International 
publication.** 

For editorial synopsis and Information on advertising opportunities please 
contact: 

John Roll ey or Simone EgH 
In Geneva 

Tel: +41 22 731 1604 Fax: +41 22 731 9481 
or 

Ernst Jenny In Schwanden 
Tel: +41 58 813 070 Fax: +41 58 813 076 
or 

Lindsay Sheppard in London 
Tel: +44 71-873 3225 Fax:+44 71-873 3428 


■ tmua Button RnMKNg Sarny IN 


FT Surveys 


Daewoo plans Europe network 


By John Burton in Seoid 

South Korea's Daewoo group 
yesterday said it would estab- 
lish next year an independent 
distribution network to market 
its cars in eight western Euro- 
pean countries. 

Daewoo Motor, South 
Korea's third-largest car pro- 
ducer, was prevented from sell- 
ing its cars directly in Europe 
under Its joint venture con- 


By Bruce Jacques in Sydney 

Directors of Independent 
Holdings (IHL), the Australian 
wholesaler, yesterday rejected 
the A$133m (US$97.7m) bid for 
the company launched on Fri- 
day by its rival Davids Hold- 
ings. The managing director of 
IHL, Mr John Patten, said he 
supported rationalisation in 
the industry, but the Davids 


tract with General Motors of 
the US. 

But under the terms of the 
agreement ending the partner- 
ship in 1992, Daewoo was 
granted the right to market zts 
cars in Europe in 1995 and in 
the US in 1996. 

Daewoo produced the Opel 
Kadett under licence for GM. 

The car sales subsidiaries, to 
be managed by the group's 
trading company Daewoo Car- 


bid was “grossly inadequate". 

The bid, at AS4.25 cash a 
share, is the latest in a flurry 
of corporate activity in the 
fragmented and incestuous 
Australian grocery industry. 

It follows last month’s 
A$501m move on wholesaler 
Foodland Associated by New 
Zealand rival. Rank Commer- 
cial. and Australian retailer 
Coles Myer. The bid for Food- 


poration, will be in the UK, 
Germany, France, Switzerland, 
Austria, Belgium, Luxembourg 
and the Netherlands. 

Daewoo will be the first 
South Korean car manufac- 
turer to establish an indepen- 
dent sales network in Europe. 
Hyundai and Kia, the country’s 
first and second biggest car 
com panie s, sell their vehicles 
through local dealerships 


land, which controls 18 per 
cent of IHL, has been blocked 
in the Australian courts follow- 
ing intervention by the Trade 
Practices Commission. 

The TPC intervened in the 
IHL bid at the weekend, 
extracting an undertaking 
from Davids that, if successful 
it would sell IHL’s 30 per cent 
interest in wholesaler Compos- 
ite Buyers. 


Opposition 
fails to halt 
Petron sale 

By Jose Galang in Manila 

The second stage of the 
Philippines' largest privatisa- 
tion, a public offering of shares 
representing 20 per cent of oil- 
refiner Petron, got under way 
yesterday in spite of attempts 
in the Supreme Court by the 
government opposition to 
derail it 

Petron is the Philippines’ 
largest oil refining and market- 
ing company, with an esti- 
mated 45 per cent share of the 
local market for petroleum 
products. The latest offer of 
lbn shares is intended to 
reduce the government’s hold- 
ing to 40 per cent 

Last December, the Saudi 
Arabian Aramco oil group 
bought a 40 per cent stake with 
a bid of $502m. 

The new offer is being made 
in two batches. The first on 
offer from yesterday until 
August 5, is for 700m shares, at 
a price of 9 pesos a share. This 
batch will be restricted to Fili- 
pino investors. 

The remaining 300m shares 
will be offered in blocks of at 
least 6,000 shares, with a mini- 
mum tender price of 9 pesos a 
share. 

Opposition members of Con- 
gress have initiated a case in 
the Philippine Supreme Court 
to stop the sell-off which, they 
say, puts local investors at a 
disadvantage. 

The minimum price of 9 
pesos for the current stock 
offering is higher than the 
equivalent 8.70 pesos paid by 
Aramco for the 40 per cent it 
won last December. 

Taiwan food 
group ahead 
at half-time 

By Laura Tyson tn Taipei 

President Enterprises, 
Taiwan's biggest integrated 
food processing and retaffing 
conglomerate, posted prelimi- 
nary pre-tax profit of T$1.65bn 
(US$82m) in the six months to 
June 30, up 53 per cent from 
T$L07bn in 1993- 

The increase was attributed 
to tile T$525m sale of a south 
Taiwan pig farm to be con- 
verted into a condominium 
development Pre-tax profits in 
core operations, minus the 
land sale gain, rose 4J per cent 
on the year. 

Total first-half . revenues 
edged up 2.6 per cent to 
T$llfibn from T$U-5tm in the 
first half of last year. 

• United Micro Electronics, 
one of Taiwan’s leading inte- 
grated circuits and semicon- 
ductor manufacturers, saw pre- 
liminary pre-tax profit more 
than double in the six months 
to June 30 to T$2.71bn 
(US$101m) from T$818.9m a 
year earlier. 

First-half revenues rose 65 
per cent to T$6.64bn. 


These jecwriactbove net fcrffl registered under the Smruiei AaafSii and mm nmbe offered m sold In the United Sraces 
aurpt in actcntmce wuhthe resale restrictions appikriJe thereto. There securities having been 
peeviemstj sold. tWsamManumea appears as a mater tfncaed only. 


July 1994 



GoldStci 


GOLDSTAR CO., LTD, 


3,741,314 GLOBAL DEPOSITARY SHARES 
REPRESENTING 1,870,657 SHARES OF NON-VOTING STOCK 


Global CaonBmtttm 

Nikko Europe Pk Lucky Securities Dx, Ltd. 

11244,790 Global Depositary Shares 

77*3 patiiartctf the offering hot told outside tke Unued Stales try tke mdenigaed. . 

International Offering 


Nikko Europe Pic 
CS First Boston 

Hyundai Securities (Europe) Ltd. 

Baring Brothers & Col, Limited 

Deutsche Bank AG London 

KEB International Limited 

Korea Merchant Banking Corporation 

Paribas Capital Markets 

Shanghai Shenyin Securities (H.K.) Limited 

Soci&e Generate 


Lucky Securities Co^ Ltd. 
Goldman Sachs (Asia) Limited 

Barclays de Zoete Wedd Limited 
UBS Limited 

Jardine Fleming Securities Limited 
Kkinwort Benson Securities 
Nomura International 
j, Henry Schroder Wagg & Co. Limited 
South Barney Inc. 
Sumitomo Dust International pic 


L496^24 Global Depositary Shares 

Tlttxponum of the cffering to 

priiHttr if/ervifp that incbulrd Ufa* pursuant to Rule M4A under the Setwiact Act dfnvJ- 

US. Offering 


The Nikko Securities Co. International, Inc. 

Lucky Securities America, Inc. 


Morgan Stanley & Co. 


BT Seen ri ties Corporation 
J.R Morgan Securities Inc. 


Merrill Lynch & Co. 
Salomon Brothers Inc 


S.G.Whrburg & Co. Inc 


under contract. 

IHL rejects A$133m takeover bid 


Mof these securities having been soki, this announesment appears as a matter ol record only. 


u 

Endesa 

Empresa Nacional de Electricidad, S.A. 

Global Offering 
of 

22,609,183 Shares of Capital Stock 
by 

TENEO 


Globa! Coordinators 

Argerrtaria Goldman, Sachs & Co. Infoinvest, S.A. 


9,174,751 Shares of Capital Stock 

Spanish Retail and Employee Offerings 

Argentaria 

Banco Bilbao Vizcaya, SJL Banco Central Hbpano Banco Santander de Negodos, SJL 

Banco Urquf)o, SJL Bilbao Bizkaia Kutxa 

Caja de Ahom» y Panslonea de Baroetona “La Calxa" Cafa de Ahorros y Monte de Ptedad de Madrid 

Confederacton Espaflota de Ca/as de Ahorro “CECA" Mercavaior Sociedad de Valores y BoJsa, SJV. 


8,956^88 Shares of Capital Stock 

International Institutional Offering 


spam 

BBV Meractivoa, SVB. 

ABAaesores Argentaria Botea,sy.B, SJL 

Banco Central Mspano Banco Sant a nder de Negodos 

Beta Capttal, SUB* SJL FG kiveratones BunSttfles, SJL, Sy.0. 
Benito & Montmtin, S-A, SYB. Ibeiagentes Balsa, SVJB* SJL 
knerban.SV.B. Notbofsa.S.m.SJL 


Continental Europe 
Morgan Stanley & Co. 

ManiQttOVMl 

Gofcbnan Sachs International Santander Investment 

AW AMRO Bank MV. Argentaria Boisa 

BBV Interactive*, SYB. Carnegie Crecfit Lyonnais Securities 
DresdnerBank FG Inversfones Bursdtfles, SJL, SV.B. 

M rlfenp — i 

Istituto MobiHare ttnfano S.p.A. UBS Limited 


Rsalo/Woftd 

Morgan Stanley & Cg 
MHiaBonaf 

Gofcbnan Sachs International Santander tmestment 

Banco Central Mapano Data Europe Limited 

ktdosuez Capital RBCDamWon Securities Inc. 

Swiss Bank Corporation 


United Ktngdom 

S.GLVtartourg Securities 


Goldman Sachs International 

AJ.Aa c sor e s 

James Capet & Co. 

Robert Fleming & Co. LfmKed 
NatWfest Securities LimSed 


Morgan Stanley & Co. 

IMm wIbi m I 

Banco Central Htopano 
Cazenove&Co. 

Kteunwort Benson Securities 
Santander Investment 


4,478,144 American Depositary Shares 

United Stines Offering 

Goldman, Sachs & Co. 

CSRrst Boston Lehman Brothers Merrill Lynch & Gp- NatWBSt Securities Limited 

Prudential Securities Incorporated Salomon Brothers Enc S.G. Warburg & Co. Inc. 

June 1994 





FINANCIAL TIMES TUESDAY JULY \9 1994 


INTERNATIONAL COMPANIES AND FINANCE 


Lac rebuffs takeover bid 
from Royal Oak Mines 


By Bernard Simon 
in Toronto 

Lac Minerals, the Toronto- 
based mining group, has scath- 
ingly rebuffed Royal Oak 
Mines' C$2fcn (US$l.*n) take- 
over bid, describing the offer 
by the Vancouver-based gold 
producer as inadequate and 
opportunistic. 

Lac's board unanimously 
advised shareholders to reject 
Royal Oak's cash-and-s hares 
offer, which was made on July 
7. 

Royal Oak had no immediate 
response. Investors and ana- 
lysts have given the Vancouver 
company credit for drawing 
attention to Lac’s shortcom- 
ings. Several sizeable Lac 
shareholders have gone on the 
record in the past 10 days to 
support the rationale behind 
Royal Oak's bid. 


Nevertheless, many outsid- 
ers doubt that Royal Oak will 
emerge victorious. A compet- 
ing bid is widely expected. 

Lac is about three times big- 
ger than Royal Oak. But its 
share price has under-per- 
formed other North American 
gold producers, despite the 
high quality of its assets. 

Ms Peggy Witte, Royal Oak's 
pugnacious president, has esti- 
mated that she could chop at 
least USS40m from Lac's 
annual operating costs. 

Mr Jim Pitblado, a non-exec- 
utive director of Lac who will 
act as the board's spokesman 
in the unfolding takeover bat- 
tle, said yesterday Royal Oak’s 
offer would leave the proposed 
new company “saddled, with 
significant interest expense, 
stripped of cash, highly lever- 
aged and strapped for invest- 
ment capital just as Lac is 


ready to move ahead with sig- 
nificant new mine develop- 
ment programmes." 

Mr Pithlado described Royal 
Oak's offer as “a blatant 
attempt to rob Lac's sharehold- 
ers of the true value of their 
investment with a low-ball 
offer that provides no real pre- 
mium and flj intftg their interest 
in Lac's significant growth 

potential." 

He drew an unfavourable 
comparison between the Lac 
and Royal Oak mines, claiming- 
that the latter bad high-cost 
operations with unknown envi- 
ronmental risks. Royal Oak 
has an average cash cost of 
$315 per oz, compared to Lac's 
$180 an oz. 

In a bid to support its claim 
of the inadequacy of the offer, 
Lac yesterday raised its esti- 
mate of its gold reserves from 
8.6m to l&5m ozs. 


American Barrick profits jump 


By Robert Gibbons in Montreal 

American Barrick Resources, 
the North American gold pro- 
ducer expanding internation- 
ally, has posted strong profit 
gains in the second quarter 
and first half. 

Gold output rose 24 per cent 
to 947,535 ounces in the first 
half; with most of the gain at 
the Betz e-Post mine in Nevada. 

Average realised price was 
US$404 per oz sold, against the 

Domtar to spin 
off Quebec mill 

DOMTAR, a big Canadian 
forest products group, will spin 
off its northern Quebec kraft 
pulp mill into a separate unit 
partly held by employees and 
the public, writes Robert 
Gibbeus. 

Domtar will spend C$250m 
(US$182m) at the Quevillon 
mill to put in secondary treat- 
ment. a new boiler and a coge- 
neration plant Capacity will 
rise from 250,000 tonnes yearly 
to almost 300,000 tonnes. 

QueviOon, 400 miles north of 
Montreal, ships high quality 
pulp to Domtar 1 s fine paper 
nulls and also to outside cus- 
tomers. 


average spot price of $383 and 
with higher output, operating 
costs dipped to $162 per oz, 
compared with £172 per oz. 

Net profit in the June quar- 
ter was 362.4m or 22 cents a 
share against $57.2m or 20 
cents a year earlier, on gold 
sales of $207m, against $175 m. 
Gold sales were 513,412 oz. up 
from 427.741 oz. 

First-half net profit improved 
to $122.8m, or 43 cents a 
share, from $i03^m, or 36 


Algoma Steel rebounds 
strongly to C$33.2m 


By Robert Gibbons 

Algoma Steel, restructured in 
1992 at the height of the reces- 
sion. is rebounding strongly. It 
has been boosted this year by 
rising demand for sheet and 
most of its other products, 
higher prices and a lower 
Canadian dollar. 

In the second quarter to 
June 30, net profit was C$33.2m 
(US$24.lm). or $1-26 a share, 
against a loss of $L5m, or 17 
cents, a year earlier. Revenues 
rose 7 per cent to 3262m. 

It was the fourth consecutive 


quarterly profit for Algoma, 
which produces about 2m 
tonnes annually. In the first 
half the group recorded net 
profit of $49.2m, or $1.87 a 
share, compared with a loss of 
322.3m, or 85 cents, a year ear- 
lier, on revenues which 
advanced to $528m from S446m. 

Algoma said rolled products 
continued to perform strongly 
and volume was improving in 
tubular products and structur- 
als. “The first half is indicative 
for the rest of the year," said 
Mr Glen Manchester, finance 
director. 


Brown Brothers Harriman & Co. 

PRIVATE BANKERS 


Business Established 1818 

NEW YORK BOSTON' PHILADELPHIA CHICAGO LOS ANGELES 

□ALUS HOUSTON NAPLES PALM BEACH 


LONDON 

TOKYO 


LUXEMBOURG 

HONGKONG 


PARIS ZURICH 
GRAND CAYMAN 


STATEMENT OF CONDITION, JUNE 30, 1994 

ASSETS 

Cash and Due from Banks $161,941,365 

U.S. Government Securities 

Direct and Guaranteed 152.714,361 

State and Municipal Securities 65. 1 92,303 

Federal Funds Sold - - 180,500.000 

Loans and Discounts 835,667.584 

Customers’ Liability on Acceptances 28,397 .204 

Interest and Other Receivables 58,051 ,704 

Premises and Equipment, net 47,750,005 

Other Assets..... . ....... — ..... ................................. 15.034.333 

$1 ,545,248. 859 


$1,322,708,830 

Federal Funds Purchased and Securities 

Sold Under Agreement to Repurchase 6.490.000 

Acceptances; Less Amount in Portfolio 28,625.675 

Accrued Expenses 26,371 .632 

Other Liabilities 1 6.852.922 

Capital $48,000,000 

Surplus 96,000,000 144,000,000 


PARTNERS 

J. Eugene Banks 
Peter B. Bartlett 
Brian A. Berris 
Walter H. Brown 
Granger Costikyan 
Douglas A. Donahue. Jr. 
William R. Driver, Jr. 

Anthony T. E riders 
Alexander T. Ercklentz 
T. M. Farley 
Elbridge T. Gerry 
Elbridge T. Gerry, Jr. 

LIMITED PARTNERS 

Ferdinand CoUorodty-Marvsfeld 
Gerry Brothers & Co. 


John C. Hanson 
Kyosuke Hashimoto 
Noah T. Herndon 
London Hilliard 
Frank W. Huch 
R. L Ireland HI 
Michael Kraynak, Jr. 

T. Michael Long 
Hampton S. Lynch, Jr. 
Michael W. McConnell 
William H. Moore ill 
Donald B. Murphy 


John A. Nielsen 
Eugene C. Rainis 
William F. Ray 
A. Heaton Robertson 
L. Parks Shipley 
Stokley P. Towles 
Lawrence C. Tucker 
Maarten van Hengef 
Douglas C. Walker 
Laurence F. Whfctemore 
Richard H. Witmer, Jr. 


Robert E. Hunter, Jr. 
Kate Ireland 


COMPLETE BANKING FACILITIES AND INVESTMENT SERVICES 

Deposit Accounts ■ Commercial Loans and Discounts 
Commercial Letters of Credit and Acceptances • Foreign Exchange 
Domestic and Internationa] Corporate Financial Counseling 
Merger and Acquisition Services 
Global Custody of Securities 

Domestic and International Investment Advisory Services 

Institutional Investment Services 

Personal Financial Services 

Brokers for Purchase and Sale of Securities 

Members of Principal Stock Exchanges 


Fiduciary services are provided through Brown Brothers Harriman Trust Company. New 
York, Brown Brothers Harriman Trust Company of Florida, Naples and Palm Beach. Brown 
Brothers Harriman Trust Company of Texas. Dallas, and Brown Brothers Harriman Trust 
Company fCaymanJ Limited. 


Licensed as Private Bankers arid subject to exarnnatxin and rniUon by ft* Supennterdert o* Banks of d» State o! 
New York and by tfi® Oepanmem of uj the Ccnvnor»eaeh al Pemaybuna. Sutnect io supervision and eaanwr- 

ation by the Cunmasjonar of Banks of the Conmamreateh ot MessechuaeBa. The taataes of the Chkaoo. Los Angelas , 
Gatos. Moufflon. Naples and ratn Etescft offices are (rtrited to nvettment management, brofcarace and financial 
advisory senncea me feobtios of me TUkm office and the Paris and Zurich substhanes art Rfritafl m arranging 
brokerage and findnosl advisory services Brawn Bremers Harrvnan Limited. London prowtes financial advisory 
and bmfarage services and a a member The SecunnaG and futures Authority urrared IS FA) Brown Brothers 
Harrimen Imestmem. Management Unwed. London provides Investment management services nine member 
of die investment MjnmemfWt Regulator? Orgencsaoon Lmted UMRO). 



Time Warner ahead at halfway 




r -l . II 


cents, an increase of 19 per 
cent, on gold sales of 3395m, 
against 5319m. 

At June 30, Barrick had 
$382m in cash and short-term 
securities and little debt 

According to Goldman Sachs 
and Salomon, Barrick will pass 
Placer Dome, Newmont and 
Homestake to become North 
America's biggest gold pro- 
ducer with output of L84m oz. 
It also holds one of the largest 
gold reserves. 


Michael Eisner, is expected to 
return to work in few weeks 

Walt Disney 
chairman 
has heart 
surgery 

By Martin Dickson 
in New York 

Mr Michael Eisner, chairman 
of Walt Disney and the prime 
engineer of its strong growth 
record over the past decade, 
underwent quadruple coro- 
nary bypass surgery at the 
weekend, raising a question 
mark over the depth of man- 
agement at one of the world's 
most successful entertainment 
companies. 

Mr Eisner, 52, is expected to 
leave the Los Angeles hospital 
in several days and return to 
work in a few weeks. 

In a statement released by 
Disney, his surgeon said the 
operation was a “normal by- 
pass procedure without any 
complications’’. 

The illness comes at a deli- 
cate time for the company. Mr 
Eisner has been operating 
without a □ umber two since 
April when Mr Frank Wells, 
president of Disney and Mr 
Eisner's closest associate, was 
killed in a helicopter accident 

Disney is rumoured to be 
considering a bid for CBS, the 
television broadcasting net- 
work which made itself a 
potential takeover target by 
agreeing to merge with home 
shopping channel QVC, a deal 
now abandoned. 

Many analysts think CBS 
would make a strong fit with 
Disney, which already owns a 
cable television channel and 
makes programmes for the 
broadcasting networks. 

Disney is also locked in bat- 
tle with a group of eminent US 
historians over its plans to 
develop a historical theme 
park, called Disney America, 
on a civil war site in Virginia. 

Mr Eisner’s condition w!U 
likely lead to calls Tor him to 
appoint a number two quickly. 
One candidate is Mr Jeffrey 
Katzenberg, who heads the 
company’s film studios. He 
came to Disney with Mr Eisner 
from Paramount Pictures and 
has built the studios into one 
of the most successful in 
Hollywood. 

Disney shares were little 
affected yesterday by the news 
of Mr Eisner, rising $Vi to 
$41% in morning trading in 
New York. 

S&P lifts Czech 
bank’s rating 

Standard & Poor's has raised | 
its implied rating on the Czech 
National Bank's senior foreign 1 
currency debt to triple-B pins 
from triple-B, writes Antonia 1 
Sharpe. The rating outlook | 
remains positive. S&P s aid the , 
upgrade and ontiook reflected ] 
the Czech Republic’s smooth 
transition from a planned to a 1 
market economy and that the 
rating was supported by the 
country’s position as a net 
international creditor and pru- 
dent economic management 


By Patrick Hanrerson 
In New York 

Time Warner, the CS enter- 
tainment group, has reported a 
second-quarter net loss of 
SZSxtt, sharply reduced fro m the 
S83m loss a year ago due to 
record earnings at its publish- 
ing, music, fihns and cable TV 
programming businesses. 

During the quarter, com- 
bined earnings before interest, 
taxes, depreciation and amorti- 
sation fEbitda) for the group 
and its Time Warner Entertain- 
ment subsidiary reached $74Sm 


on revenues of $3.7bn, com- 
pared with Ebitda of STllm on 
revenues of S3.4bn a year ago. 

Earnings in the first half 
were S1.3Sta, up from $L34Im 
in the first six months of 1993. 

The group, which was left 
with a heavy debt and depreci- 
ation burden following the 1989 
merger between Time and 
Warner, tries to focus attention 
on Ebitda as a measure of its 
underlying performance. 

Its Time Warner Entertain- 
ment unit (comprising the film, 
HBQ cable channel and cable 
systems businesses) reports its 


operating results on a deconso- 
lidated basis. 

Mr Gerald Levin, Time 
Warner’s chairman, singled 
out the contribution of the 
group's publishing business, 
where Ebitda in the quarter 
jumped 19 per cent to a record 
Sl25m. Gains in advertising 
sales and circulation of its 
large stable of magazines were 
behind the improvement 

Time Warner's music unit 
made second-quarter Ebitda of 
$l50m, also a record, up 10 per 
cent from a year ago due pri- 
marily* to improved operating 


results at Warner Music Inter- 
national. 

Record operating earnings 
were also posted by the group's 
filmed entertainment and HBQ 
cable channel units, where 
Ebitda reached &67m and 
SSTm. respectively. 

Cable operations, however, 
did not fare so well in the quar- 
ter. reporting Ebitda of $256m. 
down from S270m a year ago, 
as the Impact of the reduction 
in rates imposed by Congress 
last September offset gains 
achieved from customer base 
growth. 


Genentech income jumps threefold 


By Richard Waters 
in New York 

Post-tax profits at Genentech. 
the US biotechnology company 
majority owned by Roche, the 
Swiss drugs group, jumped 
threefold in the second quarter 
as product sales rose by more 
than a third. 

The company reported net 
income of S33.4m or 28 cents a 
share, up from S10.4m or 9 
cents the year before, and 
broadly in line with market 
expectations. 

Behind the growth in prod- 
uct sales, to S152m, were a 32 
per cent rise in Activase, a 
drug used to prevent blood 
clotting, to STSim, and an 11 
per cent advance by the com- 
pany's two human growth hor- 
mones, to 559.5zzl 

Sales of Pulmazyne, taken by 
cystic fibrosis sufferers. 


launched in the first quarter, 
reached $16.7m. 

Mr Kirk Baab, president and 
chief executive, said Activase 
sales growth could be further 
reinforced by a recent recom- 
mendation from a Food and 
Drug Agency advisory commit- 
tee. This could lead to larger 
dosages of the drug being 
taken in the treatment of heart 
attacks. 

Research and development 
spending, at $73m. was down 
from S$4m a year before which 
a one-off charge of Si&Tm was 
included. 

Spending on R&D would 
increase in the second half of 
the year as later-stage clinical 
trials started on a number of 
additional products, Genentech 
said. 

For the half-year as a whole, 
net income rose to $72m on 
sales of $394m, up from 


$25m on sales of $323m. 

• Sales at Upjohn, the US 
pharmaceuticals company, 
slipped in the second quarter 
on growing generic competi- 
tion to some of its biggest prod- 
ucts. The slowdown, however, 
was not as rapid as some 
industry observers had expec- 
ted. 

The company reported post- 
tax earnings of $12Qm on sales 
of $89im, down from $125m on 
its sales of $895 m the year 
before. 

Earnings per share, at 67 
cents, were three cents lower 
than the corresponding period 
but comfortably ahead of mar- 
ket expectations at around 60 
cents. 

Upjohn said US sales of 
Xanax, the anti-anxiety treat- 
ment which is its biggest-sen- 
ing drug, had fallen 64 per cent 
to $8Qm during the period. US 


Coca-Cola shrugs off private 
label competition with 13% rise 


By Richard Tomkins in New 
York 

Coca-Cola, the US soft drinks 
group, increased net profits by 
13 per cent to S758m in the 
second quarter in spite of com- 
petition from private label 
colas in several of its biggest 
markets. 

Last month PepsiCo, manu- 
facturer of Pepsi-Cola, warned 
that its second-quarter profits 
would be virtually flat, partly 
because of price competition in 
the US soft drink market and 
because of poor results from its 
East food operations. 

Coca-Cola said its soft drinks 


volumes grew by 6 per cent in 
North America in the second 
quarter, helped by the Intro- 
duction of new “contour” pack- 
aging for classic Coca-Cola and 
Diet Coke, and a successful 
Sprite advertising campaign. 

It did not report separate 
profit figures for North Amer- 
ica. But the company tends to 
be less directly affected by 
price competition than PepsiCo 
because price cuts hit the bot- 
tlers first, and unlike PepsiCo, 
Coca-Cola does not own its bot- 
tlers. 

Internationally, Coca-Cola 
saw zero volume growth in the 
European Union countries and 


only 1 per cent growth in 
Japan. It blamed poor eco- 
nomic conditions for these 
results. But rapid growth in 
developing markets produced 
total international volume 
growth of 7 per cent 

Group revenues rose by It 
per cent to 5L34bn and earn- 
ings per share, as predicted by 
the company last month, rose 
by 13 per cent to 59 cents. 

Half-year net income was 14 
per cent ahead at $l.28bu. 

Coca-Cola bought back 6m of 
its shares in the second quar- 
ter, taking the year-to-date 
total to 10m. There are now 
1.291m shares outstanding. 


Job cuts and $150m charge at Arco 


By Richard Waters 
in New York 

The shrinking of the US oil 
and gas industry continued 
apace yesterday as Atlantic 
Richfield announced a further 
$15Gm aftertax charge and a 
plan to cut its workforce by 
2.000 more people by the end of 
next year. 

Late last year. Arco took a 
$450m charge and announced 
1.500 job cuts as part of a reor- 
ganisation of its US oil and gas 
business outside Alaska, the 
location of its biggest US pro- 
duction activities. 

Taken together, these moves 
will leave the company with 


annual costs which are $400m 
lower by 1996, Mike Bowlin. 
Arco’s president and 
chief executive, said 
yesterday. 

Like others, Los Angeles- 
based Arco is attempting to 
channel a greater share of its 
capital spending into interna- 
tional ventures. Which hold out 
the prospect of bigger discov- 
eries and higher profits mar- 
gins. 

Two weeks ago, Texaco 
announced it was cutting 2,500 
workers and selling half of its 
US oil-producing properties, 
while Chevron last week said it 
had found a buyer for its San 
Francisco headquarters build- 


ing, though the name and 
likely sale price were not dis- 
closed. 

Among the latest round of 
job cuts at Arco, the company 
said it would reduce its 
workforce in Alaska by 
750. At the end of 1993, the 
company employed 25,000 
people, 20,000 of them in the 
US. 

The latest charge, to be 
taken in second-quarter figures 
due shortly, results from 
improvements In the 
retirement and benefits pack- 
age for former workers. Much 
of the earlier, $450m charge 
reflected writedowns in US 


sales dropped 8 per cent over- 
all, to 5500m. 

Outside the US, however, 
revenues rose II per cent to 
$39lm, buoyed in part by 
higher sales of Xanax. 

Mr John Zabriskie, the com- 
pany's recently appointed 
chairman and chief executive, 
pointed to recent registration 
filing s in 25 countries for Free- 
dox, a haemorrhage treatment, 
as a sign of Upjohn’s attention 
to the development of new 
products. 

Patent expiries on a number 
of its drugs in the US and the 
takeover of US rival Syntex 
have pushed Upjohn to the top 
of most analysis' lists of poten- 
tial takeover candidates in the 
pharmaceuticals industry. 

For the first half as a whole, 
net income fell to $355m or 
$1.43 a share from $253m or 
$1.55 the year before. 


EBRD set to 
launch Ftlbn 
bond issue 
next week 

By Graham Bowtey 

The European Bank for • - - 
Reconstruction and Develop- 
ment is due to launch its first ^ - 

issue of public debt in an east- 
ern European currency on 
Monday with a FUbn ($Ukn) 
bond issue, the first public 
bond in Hungarian forint 
issued by an international bor- 
rower. 

It is a move the EBRD hopes 
will lead to more funds being 
raised in regional currencies, 
which would eliminate foreign 
exchange risk for borrowers 
and assist the development of 
the country's capital market 

Hie issue, open to both Hun- 
garian and foreign investors, 
and the first tranche in a pro- 
gramme of up to Ft5bn ($5QraX . ' 
will help finance the building _ 
of a toil motorway between i-' 
Budapest and Vienna. 

“If this programme Is a suc- 
cess we hope to extend it as a 
standard bank product to other 
eastern European markets 
such as the Czech and Slovak 
Republics, and Poland," said 
Mr Louis de Montpellier, direc- 
tor of funding at the EBRD. 

The initial Ftlbn tranche v . . 

will be launched at par with a 
maturity of five years and a 
coupon of 27.75 per cent per 
annum for the first six months 
followed by a floating-rate coo- ^ ;•••• 
pon. 


ill i * a - • 4 “ 


Rohm & Haas expects big earnings rise 


Rohm & Haas, the US chemicals group, 
yesterday reported that its 1994 results 
will be substantially above 1993 earnings 
and may exceed the company's record 1988 
performance of $230m. Renter reports 
from Philadelphia. 

However, currency changes and the cur- 
rent upward trend in raw material costs 
could influence the third-quarter results. 


Rohm & Hm»j said that price mrrpfl<y^ 
in key feedstocks, including ammonia, 
methanol, acetone and styrene, would hit 
its third-quarter costs and force it to raise 
prices for certain product lines. 

The company reported earnings for the 
second quarter of $93m, or $1.37 per com- 
mon share, up from 961m, or $0.90 per 
share in the second quarter of 1993. 


“Earnings are up - that’s good news," a 
said Mr J. Lawrence Wilson, the compa- . 
fly's chair m a n and chief executive ^ 
“But they still are below the levels vie 
feel we need to achieve to do well in an 
industry where competition is becoming 
more and more fierce," 

He added that his company would have -■ 
to do more to control internal costs. 


i 


Postipankki Ltd 

US $50,000,000 

Subordinated Floating Rate Notes Due 2000 

For the interest period 18 th July. 1994 io 18 th January. 1995 the Notes 
Will cany an interest race of per annum with an interest amount 

of US $143.75 per U5 $5,000 Now, payable on 18th January, 1995. 


All «* these securities tawing been mid. Oils unounmaatt wears u« mna ot reetwdortj 


New Issue 


$342,935,000 


BankersTrust 


Company, London 

Agent Bank 




REPOLA LTD 

(formerly in ihe name of United Paper M3k) 

US$100,000,000 Floating Rate Notes Due 1995 

Notice is hereby given that the Rate of Interest has been fixed at 
5.40% and that the interest payable an the relevant Interest Payment 
Date January ?9, 1995 against Coupon No. ?0 in respect of 
US$100,000 nominal of the Notes b© US$2,7dO.OO. 


JJy 19, 1994,london 

By: Citfconk, NA (Issuer Services], Agent Bank CfTI 0AfV(O 


£ 200 , 000,000 
MFC Finance No. 1 PLC 

Mortgage Booked Hosting Rota Notes Doe October 2023 

In accordance with the Terms end Conditions of the Notes, 
notice is hereby given that the new fntorem rales and periods in 
respect ol the subject Notes ere as roMowx-. 

he..* ha* fl*h* n yt m ow iwx. 

CeMA KJu*f»taiMapeHM tap SmkU SXB 

SofesB BiJdrffH-WhpnHM MO BetaaC J*1»»-l!l»iAuQu*T»H jas 

S**C S3K SahiF Wi My SM-CfeMesim us 


Videotron Holdings Pic 

Senior Discount Notes due 2004 


Merrill Lynch & Co. 


Goldman, Sachs & Co. 


Citicorp Securities, Inc. 







21 


INTERNATIONAL CAPITAL MARKETS 


Treasury prices edge higher in quiet trading 


?! 



By Frank McGurty in New York 
and Conner Nfidddmam 
In London 

US Treasury bonds edged 
higher yesterday morning in 
quiet trading. By midday, the 
benchmark 30-year bond was & 
better at 85, with the yield slip- 
ping to 7.522 per cent The two- 
year note was up £ at 100, to 
yield 5.981 per cent 

There was no fresh economic 
news either to dampen or rein- 
force the upbeat mood estab- 
lished last Thursday and Fri- 
day. Prices for gold and other 
commodities held steady, and 
the dollar was enjoying a rela- 
tively painless day. 

However, activity was 
restrained, and bonds were 
unable to break out erf their 
tight trading ranges. Traders 
were delaying any substantial 
new commitments until after 
tomorrow's Bumphrey-Hawk- 
ins testimony by Mr Alan 
Greenspan. 


In his semi-annual briefing 
On the state of the economy, 
the Federal Reserve chairman 
is expected to tell a Senate 
committee that the central 
bank's recent tightening of 
monetary policy has succeeded 
in slowing growth without 
short-circuiting the recovery. 

Technical factors, however, 
were partly offsetting the san- 
guine view of the ftiririawim - 
tals. The heavy fafln* of newly 
issued securities scheduled in 
the coming weeks was already 

having an inflromnn 

Tomorrow, the Treasury will 
announce details of its regular 
two-year and five-year note 
auctions. 

hi early August, the govern- 
ment’s quarterly refunding 
operation wQl bring billions of 
dollars In new three-year, 10- 
year and 30-year bonds iw+n the 
market, only days before the 
next meeting of the Fed’s poli- 
cy-making open market com- 
mittee. 


■ After a soft start, most Euro- 
pean bond markets ended 
higher, supported towards the 
close by stronger US Trea- 
suries and late short-covering 
in the futures markets. Italy 
was the only excep ti on, with 
mounting political tensions 
weighing heavily do bonds and 
the currency. 

GOVERNMEirr 
BONDS 

Traders said many investors 
remained sidelined ahead of 
impending supply in Germany 
and the UK, this week’s Hum- 
phrey-Hawkins testimony by 
the US Federal Reserve chair- 
man and the Bundesbank 
Council meeting an Thursday. 

■ Italian bonds opened sharply 
lower on the deepening politi- 
cal turmoil over Prime Minis , 
ter Mr Silvio Berlusconi's 
recent decree barring preven- 


tive detention in corruption 
investigations. 

In an effort to control price 
fluctuations, Italy's clearing 
house made a selective call for 
intra-day margin payments, 
while the London Clearing 
House marift an intra-day mar- 
gin call on the Lille's Eurolira 
futures contract 

The September bond future 
was supported by technical 
support around 102 and 
recouped some of its early 
losses on late short-covering. 
However, political uncertainty, 
in addition to this week’s 
release of the government's 
medium-term fiscal package, 
are likely to make for contin- 
ued volatility. 

■ German government bonds 
rose nearly % point undaunted 
by the prospect of this week's 
10 -year bund issue. The first 
portion of the bonds will be 
placed today by the federal 
band consortium, with the sec- 


ond tranche to be auctioned 
tomorrow. It is the first bund 
issue since the central bank 
cancelled two issues due to 
lack of demand. 

"The bund auction will be 
crucial.’’ said Mr Adrian 
James, European bond strate- 
gist at NatWest Markets in 
London. 

He expects it to go “reason- 
ably well", supported by 
increased demand for long- 
dated paper by investors shift- 
ing funds from the short end to 
the longer end of the yield 
curve. 

Bunds were boosted by talk 
that June M3 money supply 
numbers, due to be released 
this week, may show a signifi- 
cant decline and by the Bund- 
esbank’s arevmtt«>TTn»n t that 
its council mating would be 
followed by a press conference. 
This fuelled hopes that the 
German central bank might 
cut official Interest rates on 
Thursday. 


B French bonds rose sharply, 
catching up with last week’s 
gains in neighbouring markets 
when France was dosed for a 
national holiday. The Septem- 
ber notional bond futures con- 
tract on Matlf rose 0.88 points 
to 117.1 S. 

■ UK gilts were pulled up by 
the stronger continental mar- 
kets, with the September long 
gilt future gaining £ to IQ3£. 

“After their recent rise, gilts 
are is consolidation mode, but 
on a robust base." said Mr Ian 
of Midland Global 

Markets. 

The Bank of England today 
is to announce the terms of 
next week’s auction of conven- 
tional gilts in the 2007 to 2011 
maturity Tange. Most market 
participants expect the auction 
to meet healthy demand from 
UK institutions with a natural 
demand for longdated assets 
like life insurance companies 
and pension funds. 


Poor conditions 
check issue flow 


Two leading US retail names beat dollar funding targets 


Uk‘ 


L y fc 


;'brd, 

Clinch ft: 

bond 

n -'> "et! 


By Antonia Sharpe 

Two top US retail names 
tapped the Eurobond market 
yesterday in arbitrage-driven 
transactions which enabled 
both issuers to beat their dol- 
lar funding targets by a com- 
fortable margin. 

A three-year 5200m zero-cou- 
pon offering from Merck, the 
big US pharmaceutical group, 
was designed to appeal to dis- 
tressed holders of floating-rate 
notes structured with mini- 
mum and TtiHTXTninp coupons. 
This market has virtually col- 
lapsed In value in recent 
months due to the volatile 
interest rate environment. 
Lead manager JP Morgan said 
Merck's bonds offered these 
investors, mainly from Switzer- 
land and the Benelux region, a 
way to recoup their capital. 

Mr Doug Rees, Merck's finan- 


cing director, said the proceeds 
were swapped into floating-rate 
dollars at a rate well below its 
normal US commercial paper 
borrowing level. Syndicate 
managers estimated that 
Merck had made a saving erf 
around 20 basis points. 

JP Morgan said about half 
the deal had been placed yes- 
terday, though it bought back 

INTERNATIONAL 
BONDS 

around $30m worth of paper. 
When tiie bonds were freed to 
trade, they rose to SL 82 from a 
re-offer price of 82.765. 

However, other houses 
reported slower than expected 
sales, which suggested that tha 
aggressive pricing of 8 basis 
points below the US Treasury 
strip yield curve had put off 


investors not caught in the 
so-called “mini-max” trap. 

AT&T also made a consider- 
able saving, thought to be 
around 10 basis points com- 
pared with its dollar funding 
levels, when it swapped the 
proceeds of its EculSOm four- 
year eurobond issue into dol- 
lars. SBC said the Ecu’s good 
performance against the 
D-Mark had prompted the 
issuer to pick that currency for 
its first non-dollar eurobond. 
AT&T had also considered lire, 
HawarWan dollars n+»H D-Marks. 

The European Community Is 
expected to tap the Ecu sector 
later this week, raising 
Ecu30Qm through an nffiwrng 
of seven-year eurobonds. The 
yield on the bonds Is likely to 
substantially less than the 
French government’s 10 per 
cent Ecu bonds due 2001. Fed- 
eral Hhmp lAwni TbmV System 


NEW INTERNATIONAL BOND ISSUES 


US DOLLARS 
Merck 8 Co. 


Amount Coupon 
m. % 


200 


Maturity Pen 


Spread Book rumor 


% bp 

8Z.765R Aug. 1997 0.T66R +5 (BH%-87) JP Morgan Securities 


YEN 

westLB Rnanca CunactoXa) iSbn 

Oogem RnonceM* lObn 


2JBS 100. IS Nov. 1996 0.15 

3.15 100.00 Fob. 1397 mSad. 


MBsutatV Franco WL 
Ymrwtchk ifflUEwupM 


ecus 

AT5TW 


7.25 9B.89H Aug. 1996 026R *0 (7K9b-9CQ Stubs Bank Cap. 


Hnel tarns and non cWNa unleaa stated. The yMd spread (over i Movent government band) at Imran * suppQnrt By me Mad 
manager. *tintoracJ. a- fixed re-offsr pries; foes era s poon at die rattier ievaL a) Short let coupon, b) Spread relates to Frentfi Ecu 
BTAhTa. 


is also due to raise |lbn 
through its offering of two-year 
global bonds later thiw week, 
via f-ghwum Brothers mih Mor- 
gan Stanley. 

Elsewhere, Salomon 
Brothers, on behalf of the UK 
Treasury, said the following 
privatised companies had 
repurchased their bonds 
nf fa rari in a mto h el d yester- 


day: British Telecom, London 
Electricity, Manweb, National 
Power, Scottish Hydro and See- 
board. In addition, SG Warburg 
Securities has been appointed 
to sell a £37m Manweb bond 
due 2008. 

The total proceeds received 
by the Treasury will amount to 
around EIBbn while total pro- 
ceeds from the sale of debt in 


privatised companies this year 
will be some £1.8bn. 

National Power said the 
repurchase would result in a 
charge to its profits of £29.5ro, 
which will be reported as an 
exceptional item in the current 
financial year. Scottish Hydro 
Is to charge about £I8.8m 
against current year pre-tax 
profits. 


By Tracy Corrigan 

Adverse market conditions 
have checked the flow of inter- 
national and foreign bond non- 
issues this year and reduced 
the average maturity of bonds 
launched, according to the lat- 
est Financial Market Trends 
survey by the OECD. 

Also, the proportion of fixed- 
rate bands has shrunk in rela- 
tion to floating-rate notes, par- 
ticularly since interest rates 
began to rise in February, 

New issues totalled $130bn in 
the first five months of the 
year, which implies a year-on- 
vear decline of some $29bn. 
according to the report. 

However, a large proportion 
of this activity was concen- 
trated in the first two months, 
when, new Issue volume 
totalled almost $100bn, with an 
unprecedented S62bn raised in 
January alone. 

While long-dated bonds were 
easily placed even at the turn 
of the year, when several bor- 
rowers issued 20-year and 30- 
year paper, the maturities of 
new issues have since declined 
due to the change in market 
conditions, the report notes. 

Straight bond issues totalled 
SlUbn in the first five months, 


a contraction of almost 3*4 per 
cent, while total offerings of 
floating-rate notes reached 
SM.6bn. 

Straight bonds accounted for 
only 62 per cent of the market 
The market share of straight 
bonds has traditionally been 
around SO per cent. 

For currencies perceived by 
the market to be near the bot- 
tom of the interest rate cycle 
there was a marked shift in the 
first two months from issuance 
of straight bonds to offerings. of 
floating rates, the report said, 
citing the dollar, yen and ster- 
ling sectors. 

Overall, the dollar sector of 
the international bond market 
remained the most important, 
with a 34 per cent market 
share, but the D-Mark sector 
fell back sharply from 143 per 
cent to 6A per cent 

The OECD says secondary 
market turnover of bonds and 
floating-rate notes totalled 
Sl.SO0bn in the first quarter, 
citing industry sources. 

The report estimates sched- 
uled redemptions and early 
repayments at some S115bn in 
the first five months. Implying 
net issuance of some S65bn, 
which represents a decline of 
around 20 per cent. 


Czech group plans placing 


By Vincent Boland in Prague 

Bon ton. a Czech entertainment 
group with interests ranging 
from record stores to video pro- 
duction, is to raise up to $15m 
in a private placing of shares 
with international institutions. 

The transaction will be one 
of the first of its kind in the 
Czech Republic and could 
value Bonton at up to 570m. 
Proceeds will be used for acqui- 
sitions and to reduce debt 

Bonton also runs an invest- 
ment fund with stakes in other 


media and entertainment 
groups, and owns 5 per cent of 
Patria Finance, a Prague 
investment bank. 

The company had turnover 
last year of over S8m and made 
profits of Kc837,000 (S30.000), 
according to CS First Boston 
Prague, which Is arranging the 
placing. Turnover this year is 
estimated at Kc600m ($21.4m) 
following acquisitions. 

Hie share placing is expec- 
ted to be completed in October. 
Bonton may seek a stock mar- 
ket listing in two years' time. 


| WORLD BOND PRICES 1 

BENCHMARK GOVERNMENT BONDS 

Red Day's Week Month 

Coupon Dele Price change YMd ago ago 

Italy 

■ NOTIONAL ITALIAN OOVT. BOND flSTF) FUTURES 

CUFFET Urn 200m lOOtfw of 100% 

FT-ACTUARffiS FIXED INTEREST INDICES 

Prio* Indoea Mon Day's Fri Accrued 

UK OH» Jii IB change % Jii 15 Intarast 

xd u* 
ytd 

— Low coupon yMd— -MaJum cn*xm yield Mgh coirexxi yMd — 

JU 18 Jii 15 Yr. ego Jul 18 Jii 15 Yr. ego Jul 18 Jul 15 Yr. ago 


\ti i *; 


Aue&aBa 

8.000 

08AM 

87.8400 

«0380 

833 

8.74 

8.02 

Belgium 

7.250 

04AM 

902400 

+0.040 

731 

732 

010 

Canada' 

830D 

D8AM 

833000 

-0350 

830 

032 

833 

Danmak 

7.000 

12AM 

823000 

-aiso 

6.12 

035 

046 

France BTAN 

84100 

05798 

1043250 

_ 

038 

080 

733 

OAT 

5JOO 

04/04 

88.0100 

+0380 

736 

7.44 

7.86 

Germany Tretdrend 

0.75O 

OfiAM 

003400 

-0410 

634 

007 

732 

Italy 

B.600 

OIAM 

68.1700 

-1330 ICLSOf 

1048 

1138 

Japan No IIS 

40OO 

am s 

1043880 

-a 010 

333' 

3.81 

333 

No 184 

4100 

12/03 

88.0020 

-0400 

440 

438 

448 

Nattwitands 

5.750 

OIAM 

823400 

+0180 

6.73 

0.81 *' 

738 

Spam 

8.000 

09AM 

86.7600 

-0250 

1037 

1077 

10.87 

UK Gits 

8.000 

06A» 

92-21 

+6/32 

7.78 

&10 

847 


0-75O 

11AM 

90-14 

+14/32 

8.13 

038 

078 


8.000 

UVDB 

106-02 

+15/32 

836 

841 

078 

US Treasury* 

7.250 

OSAM 

100-07 

+3/32 

732 

745 

7.18 

0-260 

08/23 

84-30 

*1/32 

733 

7.72 

747 

ECU (French Govt} 

aooo 

(MAM 

88.4300 

+0300 

7.73 

832 

028 


Sep 

Doc 


Open 

108.70 


Sett price Change 

nans -i.is 

10135 -1.15 


High 

103.78 


102.10 


Eat voi Open fett. 
35779 82479 

0 110 


■ ITALIAN OOVT. POND PTR FUTURES OPTIONS (UFFE) Ure200m IQOttre of 100% 
Strike ■■■ ■ ■ CAULS — PUTS ■■ 


1 

Up to 5 years (24) 

122.16 

-033 

12237 

138 

640 

5 yre 

738 

737 

8.78 

OIO 

009 

8.85 

015 

014 

7.14 

2 

5-15 yearn (22) 

143.44 

+038 

14333 

231 

6.77 

15 yre 

017 

018 

7.75 

838 

028 

7.B5 

054 

830 

oia 

3 

<>m is yam ft 

18037 

+019 

16007 

247 

837 

20 yre 

014 

017 

7.90 

838 

839 

7.94 

030 

043 

013 

4 

Ensdsemsbtos (6) 

18436 

+008 

18334 

132 

738 

brsd.t 

018 

023 

006 







6 

AM stocks (81) 

14042 

+037 

14038 

023 

8.84 



















M|. 

■mpuoo uw 

— 



(nflstlon 10 % - 

— 



Plfae 

' S»P 

Dec 

Sap 

Dae 

10900 

- '- 236 • 

237 

230 

432 

10300 

• 130 

2. 88 

235 

431 

10400 

137 

247 

232 

4.62 


Jii 18 JU 15 Vr. ago 


Jl 4 16 Jii IS vr. ago 


6k. voL wri. cat m Mi 1994. PreriM day's acre W. CMS 31933 Puts 21939 


6 Up to 5 yeend 

7 Over S years (11) 

& Af stocks (13) 

Debenture* and tom 


18722 44X07 187^9 1.40 233 Up to S yre 3.80 3.62 2.81 

17225 *023 172.17 041 325 Over 5 yre 085 3.86 3.45 

17221 4021 17223 051 3.16 


2.49 

334 


2.51 

3.66 


1-99 

3.26 


5 year yMd 15 year yMd 28 year yMd 

Jii IB Jto 15 Yr, aoo JuMB Jut 15 Vr, PRO Jti Ifl Jii IS Vr, ago 


9 Deb* 8 loans (78) 


132.03 -020 132.42 2.71 

• a* Ami 9 m. Capon Bnk Lea: 0%-TMW; 


524 920 1 8.47 925 921 

Madkrre 814-10**: Htfc 11* and oner. T Hu ytati. yto Year to dm. 


083 


920 018 


829 


London ctorirft -New York mkt-doy 
r Oman flnutrfng w W di J tafl « U 125 par care payU»» by 
Pncas UO UK h 3am. dhare In darirnal 

US INTEREST RATES 


YMdK ieori mariret MnL 


SerenK 4M8 MamuMf 


Spain 

a NOTIONAL 8PANBH BOND FUTURES (MffF] 


LucMme 


Owiwtfh. 
71, lYrereertn . 


TMBiy Ota and Bond YWfe 


Broker tarn rata - — 5*2 Tlaaemarth— 

fadfamfe ..... — 4L* 9x rarii 

Founds id MorwrttaL. • (Mayor 


4.18 

TVreyar 

aoo 

432 

Tine yea, 

63* 

437 

4J6 

Hna jew ..... — « 
ifrrea- 

■— ... Ml 
732 

534 

3 Oww 

733 


8-P 

Dec 


UK 


Open 

9000 


Saitprica Change 
9070 4022 

9020 


Hflh 

9089 


lew 

8820 


Eat voL Open ktf. 
60270 104,168 

314 


CULT EDGED ACTIVITY INDICES 

JiJy 16 July 14 JUy 13 


July 12 July 11 


FT FIXED INTEREST INDICES 

Jtoy 18 July is July 14 July 13 July 12 Yr ago HgT leer 

Govt Sac*, uq 04.03 83.91 B4.li 83.75 9322 9823 10724 9029 0*1 Edged bargain* 1372 1032 1432 97.8 79.8 

Fbtad Maraat 11223 11229 11227 11123 11120 117.15 133.67 10723 S-dey average 1122 1008 8U 83.4 81.7 

' Jar 1984. Oovuimar* SacuMee Woh rince c o maMWrv 1Z7.40 p/t/33), to* *8.lB prt/760. Ftood Mm N0i aaroo caimum 133JT7 pwk) . to* 5053 pn/75) . Baris 100: Oorenvnant SacwKM isnor 
99 red Aud Manat 1928. 8E aoMy Mna tabasad 1974 


■ NOTIONAL UK GAT FUTUHES {UFFET eSQQOO 32nda of 100% 


BOND FUTURES AND OPTIONS 
France 

■ NOTIONAL FRENCH BOND FUTURES (MATIfl 


Bap 

Dee 


Open 

103-13 


SoO price Change 
103-25 4009 

102-31 40-09 


HI* 

104-00 


lew 

108-27 


Eat vo) Open M. 
62900 113027 

0 1239 


FT/ISMA INTERNATIONAL BOND SERVICE 


Dated are Sn baa 


■ LONG QB.T RJTtUHEB QPT10N8 [UFFE) E50200 64the <8 100W 


Wamrefcnri bonda fcr uMtti Bd» b an 
Bd ONw Chg. 


■taM* eaoonttay markH LatMt prioaa at 720 pm on JUy 10 
YMd I— red Bd OBw Chg. 


laired Bid OBw Chg VMM 


Sap 

Dec 

Mar 


Open 

118.30 

11522 

11420 


Sell price Change 
117.16 4028 

11824 4026 

115.62 40.88 


High 

117.42 

116.44 

114.BD 


LOW 


11620 

11420 


■ LONG THWFRHICH BOND OPTIONS (MATTF) 


Ent voL 
110300 

Open M. 
124,721 

Strike 

Prtoe 

Sep 

■ CALLS 

Dee 

Sep 

718 

13480 

103 

1-60 

3-01 

1-10 


1,817 

104 

1-25 

3-35 

1-39 


106 

030 

2-09 

2-10 


PUTS 


Dec 

*03 

3- 37 

4- 11 


IU. DOLLAR 81RNQKT8 
Abbey M1Wauy6>2 03 1000 


*i , v: rni:er ,! 


Strike 

Price 

Aug 

- GALLS ~ 
Sep 

Dec 

Aug 

— pure 

Sep 

116 

. 

2.80 

> 

032 

0.BS 

116 

135 

327 

- 

040 

1.16 

117 

035 

130 

2.03 

0.75 

143 

11B 

044 

1.09 

131 

- 

1.84 

119 

0.1B 

0.72 

1.18 

- 

- 


Dec 

122 


Eat. ml loiaL Cato 21103 Pula 2DJ83 . Ito ato u s dayHi upan InL. Cato 948.190 Pria 991*61. 

Germany 

■ NOTTONAl OBWAN BUND FUTIWE3 (UFFET DM25ftOOO lOOtha cMOOX 

Eat vd Open Irn. 


Eat voL total. Call 1799 Pure 3988. Ha ra re do/i span rt. Odd 94*77 Pina 50007 


Ecu 

B BCU BOND FUTURES (MATIF) 


Open Sett price Change High Lew Eat vd. Open M. 
8424 8622 4U78 86.10 8424 1,496 6,458 

8428 40.78 .... 


Sep 

Dec 


Open 

93.76 


Sett price Ctiango 
9426 4028 

8325 4039 


«flh 

0428 

9325 


Lew 

83.44 

82.80 


990S2 

1468 


100579 

8880 


Sep 
Dee 

US 

B US TBEA3UHY BOND FUTURES CUB 9100200 32nds U 100H 


B BUND FUTURES OPTIONS (L1FFB DM260200 pob*» ^ 1«"t 


Sirfca 

Price 


Apfl 

9400 024 

9480 028 

9500 0.13 


1.15 

026 

0.85 


CALLS - 

i Oct 

Dee 

~ Aug 

Sep 

PUTS 

Oct 

Dec 

130 

1^5 

Q38 

090 

134 

1.80 

036 

131 

033 

1.13 

131 

2.16 

0.70 

0.88 

038 

1.40 

2.16 

244 

7*54. Preview day's open K Cato Pwn »012 



Sep 

Doc 

Mar 


Open 

102-15 

101-28 


100-28 

102-02 

101-02 


Change High Low Eat. voL Open Int 
40-10 1 0S-28 102-14 453284 391225 

40-09 102-02 101-21 8,183 57X173 

120 4283 


Japan 

a NOTIONAL LONG TERM JAPANESE GOVT. 
flJFFg VI 00m lOOttre of 10039 


BOND FUTURES 


■ NOTIONAL MEDIUM TERM GERMAN GOVT. BOND 
(BOBLKUFFEJ* OM2SQX100 lOOtha cri 10056 


Open 


Sep 


Sett price Change 
89.11 025 


Fflgh 


Lew 


UK GILTS PRICES 


Motto W M PHC9E4I9- 


._ 1994 — 
Hffi lea 


Eat voi Open Int 
0 78 


W 


Open Ctoee Change rtgh Low Eat vd Open ML 
Sep 108.72 - - 108.74 10922 1389 0 

Dec 108.72 - ' 108-77 108.72 204 0 

■ UTE cortreoa natod on APT. M Open trasreet Boa- are to areresre Cmt- 


rid- _1»f~ 

Rad BkeE 4Br- H» Ue 


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p} Prtw E 4 nr- Ugh Lav 


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Turn KfceLn.l99ct?_, 1000 

72.41 

TretoBpcISMtt 668 

13*1996 1120 

EmnapciNsin^s — u» 

imaoc ims am 

Titos 17Lncl995tt — 11.78 

1*06 IBM 1193 

i&toinsgL 


&dU3l*peiB66tt 118? 

CtmMon Iflpc 1996 840 

banCnTpciBBTtt — 

Trans I3\tfeifl87» — 1124 

6*2 lOljpC 1887 878 

fttto8\pc19B7tt 8-48 

Esb 15K 1967 12.38 

Mine 1988 8.18 

TrtB71*0Cia»tt 725 

faB8tet9K-48#_ 08S 

I0CW-1 11.70 

TnBiste-gs# 1219 

tehiacins 1047 

Treat WjpeinotJ 837 


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117A 110 A 
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117B 11M. 
1 USU 

100 s * 88,', 
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IMA 108B 
110.’, 



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£*rii ISLflc 1998 1054 

Into INsdc 1996 i56 

Thatai&E 848 

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teaooott^., 

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iHnaoi 825 

Tpevu* 7JJ 

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121,4 1 Oft 


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22 


FINANCIAL TIMES TUESDAY JULY 19 1 994 


BARINGS B.V. 

US$150,000,000 


Payment of principal and interest guaranteed by 

Barings pta 



BARJNG5 


I 

I 


In accordance with the provisions of the Notes, notice is here- 
by given that for the interest period from July 19. 1994 to Janu- 
ary 19. 1995. the Notes wiU cany on interest rate of 5.4375% 
per annum. 

The interest amount payable on the relevant interest payment 
date, January 19. 1995 against coupon 
No. 1 8 will be USS 277 ,92 The Agent Bank 

per Note of USS 10.000. /£&$& ^ 

[Luxembourg 



I 

I 


Mediobanca international Limited 

bncorporetad with firmed tafiSiy mi the Cayman Islands) 

A member of the M«£otanca Banking Group 

Notice to holders of Mecfiobanca International 
4 per cent Notes due 1989 convertible into 
ordinary shares of Afleanza AsaJcurazioni SjxA. 
(the «NotBS») 

Pursuant to the nonce published on May 6. 1994. notice is hereby 
given that the Subscription Rights to Afleanza Aasfeurazujni's 
shares may be exercised again as from July 20. 1994. 


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021 423 3018 

Powerline 


To Advertise Your 
Legal Notices 


COMPANY NEWS: UK 


The world is its jigsaw 

David Wighton on Medeva’s strategy of adding value to acquisitions 


W hen Medeva’s share 
price halved after a 
profits warning a 
year ago today. Mr Bernard 
Taylor, the acquisitive pharma- 
ceuticals group's chairman, 
said it would take time to 
rebuild investor confidence. He 
was dead right 
Although the shares have 
regained some of the lost 
ground relative to the market, 
they have recovered by less 
than io per cent. Yet Medeva 
has done much to calm inves- 
tors' concerns. 

Following the warning it put 
its acquisition plans on hold 
and used the pause to 
strengthen its management 
and controls. Its 1993 figures 
emerged comfortably above tbe 
City's (lowered) expectations, 
showing strong underlying 
growth, and its founder, Mr lan 
Gowrie-Smith, stepped down as 
manag in g director, amove wel- 
comed by some in the City. 

But still the share price 
failed to respond, suggesting 
there may be more fundamen- 
tal concerns. 

One is the general nervous- 
ness about the pharmaceuti- 
cals sector as a whole caused 
by pressure on prices around 
the world and in particular 
healthcare reforms in the US. 

Relative to tbe depressed sec- 
tor, Medeva's shares have per- 
formed rather better, perhaps 
reflecting the company's claim 
that it will be less hurt by the 
reforms than many of its 
rivals. 

This is partly because many 
of its products are low-cost 
rivals to branded market lead- 
ers, and may benefit from 
switching by purchasers. In 
addition, Mr Bin Bogie, chief 
executive, behaves that struc- 
tural changes in the industry 
will throw up more opportuni- 
ties for Medeva. 

“The majors have to cut 
costs and are looking bard at 


Inspirations 
cuts losses 
to £970,000 

Reduced pre-tax losses of 
£970,000 were announced by 
Inspirations, the vertically 
integrated package holiday 
group, for the six months to 
March 31. Losses last time 
amounted to £L39m. 

The group, which came to 
the USM in December, has 
increased Its wholly owned 
retail travel agencies from five 
at the time of flotation to 42, 
and Mr Jim Harris, chairman, 
said that by next spring tbe 
group expected to own more 
than 100. 

Turnover rose to £23 .9m 
(£14£m). Losses per share were 
at ZSp (4p); an interim divi- 
dend of OJSSg is declared. 

Lancs Enterprises 
rises 5% to £1.43m 

Lancashire Enterprises, the 
local economic development 
company, made pre-tax profits 
of £l.43m in the half year to 
April 30, an increase of 5 per 
cent 

The interim dividend rises 8 
per cent to 1.85p (L25p). The 
shares are traded on a matched 


Medeva 

Share price {pence} 



their product lines and sales 
forces in order to concentrate 
on their strengths." 

Mr Bogie predicts that they 
will sell on more of their 
smaller products, or at least 
put them through other compa- 
nies' specialist sales forces. 

When it comes to buying 
other people's established prodr 
ucts, even the sceptics cannot 
knock Medeva's record. In 
almost all cases the deals have 
been successful, in some cases, 
spectacularly so. 

In May 1991, Medeva spent 
{77m on MD Pharmaceuticals, 
a manufacturer of specialised 
generic drugs which has grown 
so last it has virtually paid for 
hself already. 

This has been the most suc- 
cessful aspect of the strategy 
developed by Mr Gowrie-Smith 
and Mr Taylor. The idea was to 
build a pharmace uticals com- 
pany that could generate 
growth without heavy invest- 
ment in research and develop- 
ment by acquiring products 
which were already established 
or in the final stages of devel- 
opment. 


Medeva would add value 
partly by building an interna- 
tional sales force that could 
push products w hich were only 
established in local markets. 

Pursuing thfc plan, it has 
built up a number of specialist 
sales forces around the world, 
notably in the US respiratory 
market. Now 220-strong, this is 
now picking up some promis- 
ing products under licence, 
most recently a new hay fever 
treatment from Wellcome. 

B ut there are clear gaps 
In its network. One 
close observer of the 
company says: “The profit 
warning caught Medeva in the 
middle of constructing its jig- 
saw and left It with some large 
holes. In some areas it has 
products but no sales force and 
in others a sales force but no 
products." 

The slump in the share price 
makes further acquisitions 
much more difficult, and 
though it has a reasonably 
strong balance sheet, without a 
recovery in its rating its 
options are much more limited. 


NEWS DIGEST 


Earnings per share were 5.4p 
(4.5p), after taking into account 


a share split and a l-for-l scrip 
issue in March. 

Turnover rose 22 per cent to 
£7.55m (£6JL7m), but profitabil- 
ity was affected by business 
development costs, including 
tbe launch of Partnership UK, 
which offers packages of 
employment and economic ini- 
tiatives to local authorities, 
and a consultancy service for 
developing countries, particu- 
larly in eastern Europe. 

Fitch sells London 
property for £3.8m 

Fitch, the design company, has 
exchanged contracts for the 
sale of its Crinan Street prop- 
erty in London to MacMillan 
for £3. 75m cash. The price 
reflects the value of the prop- 
erty In the accounts at Decem- 
ber 31. 

Directors said (hat £3.45m of 
(he proceeds would be used to 
repay part of the £6m term 
loan from NatWest 

Els wick completes 
£400,000 acquisition 

Elswick, the packaging, paper 
and printing concern, yester- 
day announced it had com- 
pleted the acquisition of 
Joseph Steinfeld tor £400,000 
cash. 

Steinfeld, a maker of woven 
labels and ancillary products 
for the clothing industry, 
Incurred a deficit of £59,000 on 


sales of £i.i7m in the year to 
end-January. Shareholders’ 
funds were £772,000. 

Amicable Smaller 
net asset value dips 

Amicable Smaller Enterprises 
Trust reported a net asset 
value of 137B4p as at June 30, a 
decline of per cent since the 
trust’s December year end. 

The benchmark Hoare 
Govett Smaller Companies 
Index fell 4.8 per cent during 
the same period. 

Net revenue for thB six 
months to end-June amounted 
to £605,000 (£356,000). The 
interim dividend is held at 
1.7p, payable, after a £77,000 
transfer from revenue reserves, 
from lows: earnings of 1-ffiLp 
(1.7lp) reflecting increased cap- 
ital after a £29m placing late 
last year. 

Net assets decline at 
Fleming American 

The Fleming American Invest- 
ment Trust, which seeks capi- 
tal growth through a portfolio 
of mainly listed US stocks, had 
a fhlly diluted net asset value 
of 29ZJ3p per share as at June 
SO. 

The figure compared with 
values of 326.4p at end-Decam- 
ber and 295J3p at June 30 last 
year. 

Available revenue for the 
half year improved to £845,000 


It has been suggested that 
Medeva is interested in Boots' 
pharmaceuticals division, but 
given that Medeva's market 
value of £375m is about half 
the likely price tag of the Boots 
business, buying all or a large 
part of it would be a very big 
step. 

Mr Bogie admits that further 
geographical expansion is on 
hold for now and that the focus 
is on building up the product 
portfolio. Although the group's 
sales are showing strong 
growth, most of its products 
have a limited life given their 
lack of patent protection. So 
die medicine cabinet will need 
some new blood before long. 

Yet a key part of the Medeva 
strategy, buying products in 
late stage development, has yet 
to bring any results. Most dis- 
appointing has been the year’s 
delay on tbe expected filing of 
the Hepatitis B vaccine 
acquired two years ago. 

Although many City ana- 
lysts are now positive about 
Medeva, some remain sceptical 
about the prospects for a 
stria li company in an industry 
where size and vertical integra- 
tion are seen as Increasingly 
vttaL 

One City observer says: 
"Medeva has still got a lot to 
prove. Maybe the strategy is 
sound and it will be possible to 
construct a significant pharma- 
ceuticals group along these 
lines. But maybe there was a 
window of opportunity which 
Medeva is in danger of missing 
because of the share price 
slump." 

Medeva has a number of 
attractive businesses, particu- 
larly in respiratory products 
and vaccines, but some ana- 
lysts question whether the 
whole should be valued at 
more than the sum of the 
parts. If not, perhaps more 
value would be generated by 
wiling them off. 


(£590,000), for earnings of 1.28p 
(Q.89p) per share. The Interim 
dividend, however. Is cut from 
0A5p to 0.4p. 

BSG to acquire 
rest of Jessups 

BSG International has sent out 
notices to non-assenting share- 
holders of Jessups, the vehicle 
distributor, to acquire the out- 
standing ordinary and prefer- 
ence shares. 

BSG, which has split its 
operations into two core divi- 
sions, Brltax International, the 
manufacturing side, and Bris- 
tol Street Motors for vehicle 
distribution and servicing, 
made the recommended £20m 
offer for Jessups in May. 

TDG sells stake in 
Portuguese offshoot 

Transport Development Group 
is selling for £ 1 . 6 m its 60 per 
cent stake in Transportes J 
Amaral to members of the 
Amaral family from wham it 
purchased the bidding in 1989. 

Based in Estarreja, between 
Lisbon and Oporto, Amaral is 
engaged in the transport of 
chemical products in Portugal 
and general international haul- 
age. 

In 1993 Amaral's profits 
before interest and tax attrib- 
utable to TDG were £250,000 
and attributable assets at the 
year end were £L42m. 


Medeva founder 
shows preference 
for privacy 


By David Wighton 

Mr Ian Gowrie-Smith, who 
stepped down as managing 
director of Medeva in March, 
is not really cut out for public 
company life. Apart from any- 
thing else, when things go 
wrong it is just a bit too public 
for his taste. 

He is a relaxed and outgoing 
Australian but also values his 
privacy and has not enjoyed 
the media attention he has 
received over the post year. 

It has been a pretty mixed 
press. Even before last year's 
profits warning there was talk 
of a whispering campaign 
aimed at ousting him from the 
board. After the share price 
plunged it was suggested that 
only his removal would 
restore City confidence. And 
coverage of bis move to a non- 
executive rale centred on the 
size of his pay-off. 

No whinger, he is neverthe- 
less clearly hurt by his treat- 
ment at the hands of (he press. 
He particularly resents the 
suggestion that he was respon- 
sible for the problems at tbe 
two US subsidiaries last year, 
pointing out that he was only 
briefly non-executive president 
of the American operations. 

He also attacks the sugges- 
tion that the problems 
revealed a fundamental flaw 
in the group’s hectic acquisi- 
tion strategy. “Every acquisi- 
tion has an element of gamble 
and It is the total result that 
determines success or failure." 

Although Medeva is a long 
way from becoming "one of 
the most successful companies 
In British corporate history”, 
as he predicted, he is proud of 
what he has achieved since 
founding tbe company in 1987. 


Then colled Medirace, Mr 
Gowrie-Smith brought it to the 
market with just the rights to 
a drug whose development has 
since been dropped. “The mar- 
ket was looking for Aids and 
cancer plays at the time and 
one thing l am good at is spot- 
ting opportunities and selling 
ideas. * 

Another thing he Is good af 
is doing deals. “He may not 
have gone down that well with 
everyone in the City but you 
have to admit be polled off 
some great acquisitions for 
Medeva." says one analyst 

He hopes to do more work- 
ing for Medeva on a consul- 
tancy basis through his com- 
pany Brightstoue. Formed 
with long-time business part- 
ner Mr David Lees, who 
resigned as Medeva’s finance 
director in March, the com- 
pany is looking at a number of 
projects as wen as searching 
out deals for Medeva. Mr Gow- 
rte-SmRh is particularly inter- 
ested in commercial pr o pe rty 
where he believes there are 
now many opportunities. 

He fa guaranteed consul- 
tancy fees from Medeva of 
almost £lm over the next 
three years. But he has an 
incentive to produce the goods 
as a large part of his wealth is 
tied up In Medeva shares. 

He admits to being much 
happier outside Medeva, which 
Is inevitably developing the 
big company culture he hates. 

As a result, he says it Is 
unlikely he will return to the 
public company scene; but 
then he pauses; “You can run 
quite a large property com- 
pany without a large head 
office. The real question fa 
whether being public fa worth 
the loss of privacy." 


Id 


Leslie Wise little 
changed at £1.24m 


Leslie Wise Group, the clothing 
manufacturer and distributor, 
reported static profits of 
£04m pre-tax for the six 
months to May 31, against 
£1.23m. 

The figure was struck after a 
£93,000 redundancy and trad- 
ing loss at the garment manu- 
facturing subsidiary and a 
£50,000 loss incurred in devel- 
oping the new import division. 

Turnover for the Leicester- 
based company rose IS per 
cent from £ 22 . 6 m to £ 28 .8m 


Court Cavendish in 
£4.2m expansion 


As part of its expansion 
programme. Court Cavendish 
Group, tbe nursing home oper- 
ator which came to tbe market 
a year ago, has acquired three 
care homes in Cambridgeshire 
for £4ul9m cash. 

Dr Chai Patel, executive 
chai rman, said the purchase of 
the homes, with a total of 108 
registered beds, gave a good 
start to the current acquisition 
programme which aims to aflfl 
about 500 beds. 

Two of the homes have the 


potential to add 35 more beds. 

The last financial statements 
of the two companies owning 
and operating the homes 
showed a combined operating 
profit of £385,023 and a pretax 
profit of £171,699. The three 
homes are now producing oper- 
a ting profits at an annualised 
rate of £875,000. 

In the year to April 30 1994 
pre-tax profits of Court Caven- 
dish rose from £194,000 to 
£3.09m before exceptional costs 
Of £600,000. 



Invitation to offer to purchase shares of Inca International SpA and the 
assets and the business PTA/PET related to the production of 
terephthalic acid and polyester resins. 


EniChem SpA. headquartered in Milano (Italy}. Piazza della 
Repubblica n.16, with subscribed share capital of Lit. 1,496 
billion, registered with the Milano Court Companies' Registry 
no. 293559, intends to receive and evaluate offers from single 
legal entities for the acquisition of both 100% of the issued share 
capi tal o f Inca International SpA and the assets end the business 
PTA/PET owned by EniChem Fin SpA, s ndskfiaiy of EniChem SpA. 
EniChem SpA la acting on behalf of EniChom Fibre SpA in 
relation to the assets and the business PTA/PET. 

Inca international SpA. with principal offices in Pfsticci (Matera- 
haiyl and facilities in Ottana (Nuoro-ftafy) and PistJcd, 
manufactures and sella bottle grade polymers baaed on PET, 
preforms and bottles predominantly used In the food packaging 
industry. The business PTA/PET with facilities located in Ottana, 
manufactures and sella purified taraphthelie add (PTAJ end PET 
resins. 

Inca International SpA and the business PTA/PET achieved a 
total sales of approximately Lit 276 billion in 1993. The total 
workforce was 337 employees at 31. 12.1993. 

For the purpose of th'm transaction EniChem SpA has engaged 
the services of Banque Paribas SJ\. 'Paribas', to whom interested 
parties should direct ait enquiries. The relevant persons at 
Paribas can be contacted at the following address: 

Bamnio Paribas SJV. - Advisory Service* 

33, mgtnore Street - London WIHOBN 
Dr. Pool Neflor, Korin HSghmd Mr. fMB gP b Fmaro 
TeL (Inti.) 071-3552000 T«L (IntU 01-42981234 

Fax flntL) 071-8952448 Fax tintij Q1-A2981331 

London 


This present announcement is directed to limited liability 
companies only. Interested parties should register their interest 
in writing no later than August 6. 1994 to Paribas by letter or fax. 
and apply for an information memorandum specifically prepared 
for the sale. 

EniChem SpA reserves the right at its sole discretion and without 

assigning any reason, to refrain from providing the information 
memorandum to any Interested party. 


This information memorandum will be sent after a confidentiality 
agreement has been validly signed by an officer or legal 
r e p res ent a tive of the company and returned to Paribas no later 
than August 12, 1994. 

Together with the canfldefitiaflty'agreement. interested parties 
must send financial statements for the last three years, a 
description of their activities and of the Industrial and economic 
rationale for the Investment 

Intermediaries or agents of any kind must disclose the identity 
of the company they represent mid also provide the aforesaid 
information on the company they represent 
This represent! an inv i t a tio n to offer but does rest 
re prese nt either « public offer ax art 1336 of tho Italian 
Civil Coda, or a solicitation to pa bile saving ex art. 1/18 
of Italian low no. 210/74, including all nuceasahre 
modifications and Integrations thereto. NeitW- thi* 
invitation, nor tbe receipt of any often by EnfChem SpA 
nriff create, with respect to EniChwn SpA. any obligation 
or com mi t m e n t to «afl to any bidder aid, with respect to 
any bidder, any right to demand any performance 
whatsoever by EtiCtam SpA (including, without 
TunHathm, tha payment of any intermediary or advisory 
fee* or expense*). EniChem SpA also reserves the right 
to terminate at any time and witho u t any reason or 
e xplanation whatsoever any ond all d iacu— io ne reganfing 
the possible sale o f laea ktarnathHttl SpA and the 
buamaas FTA/rer, «irlth abaobitaly no SabSty to any third 
party regardless of the status or stage of such 
discussions. 

Whilst every reasonable effort has been made to ensure that this 
announcement accurately reflects the Kalian text of the 
BirtOunoBmsnt appearing in Italian newspapers an July 19, 18SA in 
the svant of any discrepancy the Italian text Shall prevail. 

This advertisement and the sale procedure are subject to kalian 
law. In case of any controversy related to die above, the Court 
of Milan (Italy) shall have aole jurisdiction. 


A$92,000,000 



State Bank of New South Wales Limited 

Medium Term Notes due July 17, 1997 
Series No: 2 

Guaranteed by 

The Government of the State of New South Wales 

Notice la hereby given treat for the Internet Period from July 19, 1994 
to January 19, 1995 (184 days) the Notes will carry an Interest Rate 
of 5.8158% par annum. The Interest payable on toe relevant 
Interest payment date, January 19, 1996 wflf be A$267£5 per 
AS10.000 Note, ASl.488.28 pa* A350.00G Note and A9t4.862.eQ 

per AS500.000 Note 


By: The Chase Manhattan Bank, NA. 
London, Agent Bank 

July 19. 1994 


o 


CHASE 


INTERNATIONAL DEPOSITARY RECEIPTS 
REPRESENTING SHARES PAR VALUE SLS0 COMMON STOCK 
JJ. MORGAN & CO. INCORPORATED 

A cadi distribution of SO .68 per Depositary share will be payable on or after 
the 22od July 1994 upon precaution of Coupon No. 97 au- 

Morgan Guaranty Trust Company 
of New York 
35 Avenue Des Arts 
1040 Brussels 

Banquc Internationale a Luxembourg 
3 Boulevard Royal 
L-2953 Luxembourg 

At the designated rale less applicable taxes. 

Tins t&iiibatiou tv ia respect of die reguUr quanoily dividend payable on lbs 
ojnuoao dure* P.V. S2L5G JJ». Morgan & Co. tnc re p w i itc d on tSih July tW. 



ECU TMffitnwMl PLC 


29 Cbaatm Ptacs 


Brturwto 

( jFjfcSft 1 

London SWIxbhl 


TW <71 246 0088 


FVc<7ia)fln 


— 


-UTUPSS !. 0=T:OMo 3SQKEP.S 


$32 


ROUND 

TRIP 


EX=cijT: on 


U.S. $300,000,000 



Credit Lyonnais 

Subordinated 

Floating Rate Notes Due 2000 


Interest Rate 

Interest Period 

Interest Amount per 
U.S. SI 0,000 Note dua 
19th January 1995 


5.3125% per annum 

19th July 1994 
19th January 1995 


U.S. S271.53 


CS First Boston 

Agent 



European Investment Barrie 

ItaSan Lira 500 BBon 
Floating Rate Notes due July 1997 

Notica to the Holders 

htooce is hereby given that tfw Notes w31 cany an Interest Ha» o* 
8% per annum for the period 1907. 1994 to 13.10.1994. 

♦ m. 102.222 per I7L 5.000,000 nominal 

• ITL 1.022,222 per ITT. 50,000,000 nominal 

Luxembourg. July 21, 1994 


mainly because of tbe increase 
by the specialist design compa- 
nies. 

Earnings per share were 
unchanged at 2.38p and the 
interim dividend is held at 
L75p. 

Mr Neil Wise, chairman, said 
the second half had started 
well with turnover in June and 
July “significantly ahead" of 
last year. He added that the 
traditional trading pattern was 
moving towards a stronger sec- 
ond halt 


I] £ 


Uni 




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1 tii 




FINANCIAL TIMES TUESDAY JULY 19 1994 


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- 1 1 1 


COMPANY NEWS: UK 


Wellman pays £46m 
for three FKI offshoots 


By Urn Burt 

Wellman, the specialist 
engineering group, yesterday 
announced a large-scale expan- 
sion through the £4Sm acquisi- 
tion of three businesses from 
FKI, the electrical engineering 
and components group. 

The deal, funded partly by a 
£32zn placing and open offer, 
will increase Wellman’s mar- 
ket capitalisation from £i2m to 
£54m, with turnover predicted 
to Jump from 8223m to about 

Under the transaction. Well- 
man has agreed to pay FKI 
£30m from the placing and 
open otter - involving 88.9m. 
new ordinary shares at 36p - 
while also issuing to FKI £iOm 
of convertible preference 
shares and £6m of loan stock. 

Existing shareholders will be 
offered new shares on a 5-for-4 
basis, and 5-for-l for preference 
shareholders. The issue has 
been underwritten by Singer & 
Friedlander. 

Mr Geoffrey Qey, Wellman 
chairman, said the acquisition 
would transform the Midlands- 
based group from a lossmaking 


operation into one with the 
potential for profits and 
growth. 

“This deal gives us critical 
mass. Alter some pretty poor 
results, we had to make the 
existing business viable and to 
expand." 

It follows more than six 
months of talks with FKI, 
which has agreed to sell three 
subsidiary groups: Transport 
Equipment, comprising four 
businesses making equipment 
for the automotive, garage and 
car parking market; Data 
Recording Instruments: and 
Babcock Robey, the boiler and 
pressure vessel manufacturer. 

The FKI companies made 
operating profits of £3.14m 
(£3.61m) on turnover of £9L8m 
(£91m) in the year to March 31 
1994. Mr Qey said the figure 
had been dented by exceptional 
restructuring provisions of 
£2_07m which were “unlikely to 
recur in the future". 

For the same period, Well- 
man reported pretax losses of 
£L07rn (£681,000 profits). 

Wellman, however, said its 
performance had im p roved fol- 
lowing the arrival last Novem- 


ber of Mr Alan Baxter, a for- 
mer FKI director, as chief exec- 
utive. 

Mr Baxter. who first 
approached FKI with the 
acquisition proposal, has been 
credited with catting Well- 
man's costs by 16 per emit and 
winning record orders of £24m 
this year. 

Mr Iley also announced a 
dividend fear the cur rant year 
of not less than L44p. pending 
approval of the deal. 

For FKI. yesterday’s deal 
marked another stage in its 
phased withdrawal from non- 
core businesses. Mr Eric Bow- 
ers, finance director, raid the 
disposals would enable the 
group to concentrate on four 
main areas: au to motive compo- 
nents, hardware, Engineering , 
qnri materials handling 

“It was always our aim to get 
rid of peripheral businesses, 
and Wellman was the only 
group to make an offer for the 
lot" FKI plans to use the £30m 
payment to cut its £122m net 
borrowings, reducing gearing 
from 60 per cent to 44 per cent. 

See People 


Administration costs push 
ML Laboratories into red 


By Daniel Green 

ML Laboratories, one of the 
larger start-up healthcare com- 
panies quoted in London, saw 
a sharp rise in costs in the first 
half of 1994 as it moved 
towards marketing its first 
product, Icodial, a kidney fail- 
ure treatment 

Administrative expenses 
rose to £L4m in the six months 
to March 1994. from £894,742 a 
year earlier, pushing the com- 
pany to a pre-tax loss of 
£953,047, compared with a 
profit of £65,089. 

Sales fell from £467,242 to 
£385,851 because of deferred 
royalty receipts. 

Pre-tax profit was also 
affected by a foil in investment 
income from £737,792 to 
£339,561 as the company ran 
down its cash pile to pay for 
the increased administrative 
costs. The company ended the 


period with £lL3m (£14Am) on 
deposit 

Losses per share were 0.7p, 
a garnet earnings last time of 

cup. 

tcmWfll was launched in the 
UK l»«t month Mr Stuart Shr^ 
finance director, said there 
would be no significant sales 
until the next financial year. 

The company is tn tnik« con- 
cerning a detailed marketing 
agreement with Fresenius. the 
German specialist in dialysis. 
In March, an interim arrange- 
ment gave Fresenius exclusive 
rights to sell irmiiai in all mar- 
kets apart from Japan. 

ML Laboratories was floated 
on the Third Market in 1987, 
and moved to the USM in 1990. 

• COMMENT 

ML Laboratories is either 
wildly overvalued or one of the 
most extraordinary bargains 
on the London Stock 


Exchange. If its drug is a suc- 
cess, it should take a huge slice 
out of a £500m-a-year market 
and make its current market 
capitalisation of almost Mflftm 
look puny. Failure means a 
return to obscurity. The bull 
story is that ML Labs now has 
a product on the market, 
which means that two of the 
biggest risks - scientific and 
regulatory - have been over- 
come. The third risk is market- 
ing, which is bring addressed 
by the deal and continuing 
talks with Fresenius. Finally, 
can the entrepreneurs that 
launched a small rampen y 
tafcp the business into world 
market? Hie details of the 
Fresenius deal should not 
only sort oat any lingering 
doubts over marketing, but 
demonstrate whether top 
management has the skills to 
fight it out at the highest 
level 


Strong 
second 
quarter 
at WMI 


By Paul Taylor 

Waste Management Inter- 
national, the UK-listed aim of 
WMX Technologies of the US, 
reported strong second-quarter 
turnover and profit increases 
underpinned by volume 

growth and acquisitions. 

Pre-tax profit for the three 
months to June 30 increased 
by 18 per cent to £43.6m 
(£37. lm) on revenues ahead 22 
per cent to £28&9m (£234. 9m). 
Hie quarterly results lifted 
pre-tax profit for the first half 
to £82.2m (£71.5m) on turn- 
over up 19 per cent to £542 .9m 
(£4 55. 7m). Mr Nigel Wilson, 
i finance director, said volume 
! growth accounted far 14 per- 
centage points of turnover 
growth in the second quarter, 
price increases generated 2 
percentage points of the 
increase and acquisitions 
added 8 percentage points, 
while currency movements 
reduced growth by 2 percent- 
age points. 

Operating profits in the sec- 
ond quarter increased by 20 
per cent from £29m to £46.7m 
and from £7&3m to B gB 6 ™ for 
the first half. 

Mr Edwin Falkman, chief 
ex ecu t i ve, said the group had 
made "good progress” during 
the second quarter with sus- 
tained growth tn both revenue 
and profits. 

"These results have been 
achieved through a balance of 
new projects, acquisitions, 
productivity gains and cost 
reductions," be said. "While 
pricing has remained weak, we 
have experienced volume 
growth in some markets. In ; 
Europe, our business perfor- 
mance haw been nimd, in part 
reflecting the slow and uneven 
economic recovery in the 
region.” 

Daring the qaarter the 
group spent £i3m on 16 small 
acquisitions including pur- 
chases in Denmark, Finland, 
France, Germany, the Nether- 
lands, Sweden and the UK. 

Earnings per share 
increased by 9 per cot to 7.3p 
(6.7p) for the quarter and by 7 
per cent to 13.6p (12. 7p) for the 
half year, with higher minor- 
ity interests partly offset by a 
reduced tax rate. 


3i shares get off to buoyant start 


By Simon Davies 

The flotation of 3i, one of the largest of 
this year’s share offers, provided a pleas- 
ant surprise for subscribers yesterday 
when its shares jumped 20%p to 292%p on 
their first day of trading. 

The shares had been marketed as a qual- 
ity institutional shareholding rather than 
a s tagging opportunity, and the public 
offer was only 1.1 times subscribed. 

Analysts said that institutions, which 
had allocations scaled down, must have 
decided to buy more in the market, help- 
ing push the shares to a 7.5 per cent one 


day gain Hie institutional offer, valued at 
catfim, had been 1.7 Mims subscribed. 

“I am pleasantly surprised,” said Mr 
Hamish Buchan, director of equities at 
NatWest Securities. “But people should 
hear in mmH that small companies have 
been weak since March 31, and they have 
not participated in the latest stock market 
rally" 

The FT-SE Small Cap index has fallen 
59 per cent since 3i’s assets - investments 
in small companies - were valued on 
March 31. Analysts suggested Si's assets 
would have fallen in value by a similar 
degree. 


At the issue price, 3i shares were valued 
at a 13 per cent discount to their March 
asset value. Hie company ottered 45 per 
cent of its shares (261.6m in total), of 
which three quarters went to institutions 
and the remainder to the public. 

The institutional portion of the otter was 
well supported, but only a small propor- 
tion of the 385900 private shareholders 
who registered for a 3i share prospectus, 
actually applied for shares. 

More than 27.7m shares changed hands 
yesterday, representing 105 per cent of the 
share offer, and 4.7 per cent of the 
company’s total issued shares. 


Shanks & McEwan chiefs 
get £ 761,000 pay-off 


Wm Low responds to 
request from Sainsbury 


By Paid Taylor 

Shanks & McEwan’s farmer 
finance director and former 
chief executive, who both 
resigned from the Glasgow- 
based waste contractor unex- 
pectedly, received a total of 
£761,000 in compensation pay- 
ments. 

The payments cover Mr 
Roger Hewitt, the chief 
executive who resigned in 
January when the group 
issued a profits warning, and 
Mr Alastair Fowler, the 


finance director who resigned 
at the end of September. They 
are disclosed in the group's 
annual report 

The company, which last 
month cut its dividend by 43 
per cent after announcing a 
plunge Into the red with pre- 
tax losses of £6m for toe year 
to March 26, declined to iden- 
tify the size of the individual 
payments. 

According to the annual 
report toe compensation pay- 
ment includes the estimated 
£10,000 value of a car. 


By NeB Buckley 

Wm Low, the Scottish super- 
market group which is the tar- 
get of an agreed takeover bid 
by Tesco, the UK’s second-larg- 
est supermarket chain, con- 
firmed yesterday it had 
responded to a request for 
information from Tesco’s big- 
ger rival, J Sainsbury. 

Tesco, which in a deal worth 
£200m is offering 225p in 
for each Wm Low ordinary 
share and lOSV&p for each con- 
vertible preference share, is 


expected to issue its offer docu- 
ment this morning. 

However, speculation contin- 
ued to mount yesterday that 
Sainsbury was preparing to 
make a counter-bid for the 
retailer, which has 57 stores 
and 7 per emit of the Scottish 
grocery market 

Wm Low said it had 
responded to a list of questions 
from Sainsbury - and agreed 
the terms of a confidentiality 
letter - giving it the same 
information it had supplied to 
Tesco. 


7J«j notice a issued in c&nptiancr widt the requirement! of The Stock 

Exrkamteoftk* l>nard Km/jckm end the Keputilic oflrdend Limned tthe Lond on 
Stock Exchange" t It dots no! ctmxtHule an offer or wrvOaBon to any person to 
mtuctfbe for or purchase any of the N err Ordhuay Stare! 

AantkaeumhtobeenntoJetotkeLondooStockExcha^ 

f* » * ***** to Ar (Waal LM Jk 

the Cws Ordinary Share* and Eih atg Preferen ce Sum •rtrranmee^and 

wdnNer Ordinary S hara commence on Fritter, 12thAugtah 

WELLMAN pic 

(Intotpomcd m England -dh fte&nend No. 1SS58S) 

Acquisition of certain businesses and subsidiaries of FKI 

Placing and Open Offer 

of 88,888,889 New Ordinary Shares at 36p per share 

fully underwritten by 

Singer & Friedlander Limited 

Sha«cqi^unitioliatc^folto , ™ l S | l ,c “ , iP* e,neBl4, * 0,,< ^^ K *^ 0 * c P ro ^ 0SalK ' 

*™j“S "SB * 5 SK ,a KSS 

zjoonoojo iQuroaooo 15Qohou«> lupoonw 

Lbujie particulars arc available fm coUcdiov during dotum! office 
Stock E x c h ange. London Siock Eichanpc Tower, wpc 
holidays ciccped) op to nod including Itth August, 1 99* boat 
WcHnunpk ■ 

WnriC> F<~*M4HR EC2R8HP 

West Midlands EC2M 4HR 

1 9th July. 1994 


BishofKgau 

London 

EC2M4HR 


Notice to holders of 

U.S. $500,000,000 

Global Mark International Limited 

Exchangeable Bonds doe 1997 

Exchan^abte for Oidmaiy Stares of 

RT Xndofood Sukses Makmur 

Notice is hereby given that P.T. Indofood Sukses Makmur 
fTodofood") has effected an initial public offering {“IPO”) of its 
oitimary shares of Rp. 1,000 par value each (“Indofood Shares") and 

dial such IPO constitutes a Complying IPO as defined in Condition 
4(B) of die terms and conditions (die “Conditions”') of die U.S- 
$500,0001)00 Exchangeable Bonds due 1997 (the “Boads") issued by 
Global Marie International Limited. The registration aoiemeol for the 
IPS was declared effective by Baden Pfeugswas P&sar Modal 
(“BAPEPAM”) on 9&Jurw,J994 and the IPO Listing Date, as defined 
in Cuoditioo 4(B). was 14th July. 1994. Accotdingiy, under current 
Indonesian law and regulations the Exchange Date as defined under 
Condition 6(A)(i) wifl be9tb February, 1995. On the Exchange Dae 
Bondholders rmra mandttorily exchange all of the Bonds for felly 
paid Indofood Shares and/or sud) other property as may be available 
from time to time as described under Condition 7. 

Not later than 15th Januaiy. 1995, being 25 days prior to the Exchange 
Date. BoodhotdeamuM complete an Exchange Notice and deliver the 
sn frw to the specified office of any Exchange Agent as set out in 
Cpnrfmrai 6(B). The attention of Bondholders is drawn to the 
Conditicra of the Bonds, and Condition 6 in particular, for a full 
description of actions required to be taken in connection with the 
exchange of Baris far Indofood Shares and of the consequen ces of 
failing to submit an Exchange Notice- The current Exchange Agents 
are The Chase Manhattan Bank, N-A_ Woolgale House, Coleman 
Street, London 8C2P2HD and 4 Chase Metrolbch Center, Brooklyn, 
NY 0345 and Chase Manhattan Bank Luxembourg SJL, 5 me 
Plaetis. L -2338 Luxembourg. 

Global Mark International Limited 


Ready for China to westernise 

Tony Walker on Zeneca’s moves to exploit the changing market 

M r David Barnes, chief partner to produce paraquat, 
executive of Zeneca, probably in the Yangtze delta 
the agrochemicals within reach of its biggest mar- 


M r David Barnes, chief 
executive of Zeneca, 
the agrochemicals 
and pharmaceuticals group, 
believes his company is put- 
ting the building blocks in 
place for what will be a 
long-term and lucrative 
involvement in China, 
Speaking in Beijing recently 
after announcing plans to 
invest $100m (£66m) over the 
next five years in China, he 
said Zeneca's approach was to 
“treat each market as a domes- 
i tic market and develop from 
within”. 

In seeking to position itself 
in China, Zeneca has opted for 
a two-pronged strategy that 
rests on production locally of 
agrochemicals such as para- 
quat, the active ingredient in 
toe Gramoxone wide-appUca- 
tton herbicide: and on the 
establishment of cooperative 
arrangements in the marketing 
and eventual manufacture of 

pharmnfPirHrol g 

For a company of Zeneca's 
size and reach - 1993 turnover 
was $8-7bn - its involvement 
in China is modest Sales of its 
agrochemicals anH pharmaceu- 
ticals totalled just $44m last 
year. This repr e sents a negligi- 
ble share of regional sales, 
which account for about 15 per 
cent of Zeneca's global busi- 
ness. The company was floated 
in London and New York last 
year following its demerger 
from I CL 

But Mr Barnes is confident 
that, in spite of its limited pres- 
ence in China, Zeneca is poised 
for foirly rapid expansion. 
Within the next few weeks it 
will aniiMinrA an agreement 
with a ffliinegg joint venture 


partner to produce paraquat, 
probably in the Yangtze delta 
within reach of its biggest mar- 
kets. 

Hie company is also foirly 
close to agreement on the 

establishment of a plant in toe 

Shenzen special economic zone 
adjacent to Hong Kang to pro- 
duce specialty chemicals used 
in high value-added products 
such as dyes, printing ink and 
resins. 

At the same time Zeneca is 
in toe process of forming a 
joint venture consultancy to be 
known as toe Sino-Pharm 
Development Consulting Com- 
pany. Its partner in this ven- 
ture is Stno-Fharm. toe foreign 
trade corporation of the State 
Pharmaceutical Administra- 
tion of China. 

This strategic link with the 
state pharmaceutical market- 
ing authority is aimed at open- 
ing China to a number of Zene- 
ca's more sophisticated 
products, including Diprivan. 
its intravenous anaesthetic, 
Te normin, a heart drug, and 
Nolvades for toe treatment of 
breast cancer. 

The company hopes the con- 
sultancy trill lead to manufac- 
turing ventures as demand 
among affluent Chinese 
increases for “expensive” 
drugs. 

Indeed, Western-style medi- 
cines have been growing at a 
faster pace than traditional 
Chinese medicines and account 
for 65 per cent of the total Chi- 
nese p harmarg irti ffalc market, 
which was worth about $4bn in 
1992. 

Imports of pharmaceutical 
products account for about 10 
per ffnt of toe total and have 



FntaWRM 

David Barnes: Zeneca poised for fairly rapid expansion to China 


been achieving yenr-on-year 
growth in excess of 20 per cent 
for the past decade. 

Zeneca executives say an 
important new and helpful 
development in China is the 
fact that the Chinese now 
appear to be taking more seri- 
ously international concerns 
about infringements of intellec- 
tual property rights. 


D r David Jones, Asia 
Pacific representative 
for Zeneca agrochemi- 
cals, said that a “tightening 
up” on abuses of patents has 
“given us the confidence to 
bring in our best technology. 
Before we were not sure we 
could defend our technology”. 

Dr Jones said that in China 
these days there was “tremen- 
dous demand” for high quality 
herbicides. He expected sales 
of paraquat to “grow exponen- 
tially” as farmers sought more 


OIS shares fall 18p on warning 


By Caroline Southey 

A profits warning by OIS 
International Inspection, which 
provides technical inspection 
services to the construction, 
petrochemical and power gen- 
eration industries, knocked a 
third off the share price yester- 
day. 

Shares in OIS, winch cams to 
the market at the end of 1992 
at 5Qp, closed 18p down at 36p. 

Mr James Mayne, nbatrmfln, 
said reduced Tnnrghig and toe 
loss of a number of contracts 
meant the company expected 

Archer to 
acquire 
rival agency 

By Richard Lapper 

Archer Group, the Lloyd’s 
agency, is to acquire Cox 
Group, a rival agency. 

Cox’s principal operating 
subsidiary is the Cox Tndsbery 
& Wills members’ agency. 
The acquisition is one of a 
number of takeovers by bigger 
agents at the insurance 
market, which has been hard 
bit by five years of heavy 
losses. 

Under the proposal, Archer, 
which has a market capitalisa- 
tion iff about £l9m, wifi issue 
to Cox shareholders new 
shares equal to approximately 
5 per cent of Archer’s out- 
standing equity. I 

Subject to regulatory I 
approval toe deal will be com- 
pleted during October. 


BOARD MEETINGS 


The fo teMn n Cen tu ra* h— nodMd ctea at Mfn 

bead mattings n> 8tack EKftargo. Such 

nMnginunlrMtrihimwoi . 

camldartno cMctanb. oacW hooBani m nol Brlwnic MMn. 
MM&to a to <4«nar an AMsndi ara Marina g ***™*— " t - 

ty fcah »nd fta an Jv M oro ftwi br*o» bt» ranodafiftaryi — 


“no better than a break-even 
position” on turnover of £l9m 
when it reports interim results 
in September. 

Mr Mayne said the company 
had already acted to reduce 
overheads and achieve annual 
cost ravings of mare than eim. 

He said the directors 
believed the steps being taken 
would “result in a return to 
profitability in the second half 
of the year”. 

However, results for the 1994 
year were likely to be signifi- 
cantly lower than last time 
when pre-tax profits amounted 


to £2.2lm on turnover of 
£46.7m_ 

For toe six months to June 
30 1993 pre-tax profits were 
£l.44m on turnover of £24 .2m. 

Mr Mayne said most of toe 
company's operations had suf- 
fered from deferred contracts 
but that the losses had been 
most keenly felt in toe Aber- 
deen ami African locations. 

Shell. BP, British Gas and 
Nuclear Electric are among 
OIS’s customers, while its over- 
seas operations are concen- 
trated in the Middle East, east 
Asia and Africa. 


Unipalm exceeds its 
forecast at flotation 


By Graham Defier 

Unipalm Group, the Cam- 
bridge-based computer commu- 
nications company which was 
placed on the main market in 
March, yesterday reported pre- 
tax profits of £272,000 for toe 12 
months to April 30, exceeding 
the notation forecast 

The outcome, which, com- 
pared with profits of £605,000 
last time, came on turnover 
ahead to £10.8m (£8 .39m). 

As well as its Unipalm inter- 
connection software distribu- 
tion activities, the company 
has high hopes for Pipex, a spe- 
cialist in attaching commer cial 
customers to the Internet - a 
self-regulating global computer 
network. 

The distribution side 
reported profits of £716,000 pre- 
tax, partially offset by losses of 


£444,000 at Pipex, reflecting 
substantial investment in “peo- 
ple, equipment and infrastruc- 
ture” according to the com- 
pany. 

Mr Peter Dawe. managing 
director, said, however, that 
Pipex had had “a remarkable 
year”. Turnover jumped from 
£381.000 to £1.43m. It had 
achieved a growth rate of 10 
per cent a month with record 
orders in June. Public interest 
continued to grow, he said, 
with more than 250 organisa- 
tions now using Internet 
through Pipex. 

“We’ve shown that we've put 
the foundations in. Now we’re 
building the upper storeys,” he 
said. 

Earnings per share emerged 
at 0B9p, down from 2.9p, but 
again beating the company's 
own estimate at flotation. 


effective ways of reducing 
their workload. 

The new Zeneca agrochemi- 
cals plant will produce initially 
15m litres of paraquat, suffi- 
cient for the manufacture or 
3,000 tonnes of Gramoxone ■ 
more than enough for China . 

Zeneca pharmaceuticals 
expects that, in time, it wifi 
secure a “significant franchise 
in the nnti-cancer field m 
China. Among factors weigh- 
ing in the company’s calcula- 
tions is the likelihood of an 
increase in various cancers, 
including colon and rectal can- 
cers, as living standards rise. 

Mr David Nelson, general 
manager of Zeneca Pharma 
International, said the aim was 
to “build a broad purpose phar- 
maceutical company". The 
Zeneca Sino-Pharm consul- 
tancy was merely a first step. 
Planned initial investment is 
S20m. 

[ Brewin 
Dolphin 
tops £ 2 . 5 m 

By Simon Davies 

Brewin Dolphin, the private 
client stockbroker, pleased the 
market with a 94 per cent 
increase in pre-tax profits 
from £1.32m to £2. 55m for the 
27 weeks to June 17. 

The shares, which started 
trading on Jnne 9, rose 5p to 
149p, compared with the flota- 
tion price of 150p. 

The profits growth was 
aided by a full six month am- 
tri button from its Bell Lawrie 
subsidiary, which had pro- 
vided only two months input 
in 1993. 

In addition, the previous fig. 
ores were affected by a 
£330,000 provision, reflecting 
toe cost of toe cancellation iff 
Taurus. 

Total turnover increased by 
46 per cent to £ 16.8m (£lL5m), 
helped by strong trading vol- 
umes during toe first quarter 
of the year. 

Mr John Hall, managing 
director, said the advisory and 
execution-only business had 
been adversely affected by 
the slowdown in the stock 
market in the second quarter 
of the year, but profits were 
still ahead of the previous 
year. 

The company is paying a lp 
interim dividend, which was 
half the rate it would have 
paid if it had been listed for 
tbe entire period. 

It has undertaken, in the 
absence of unforeseen circum- 
stances, to pay a final 
distribution of 4p. 


DIVIDENDS ANNOUNCED 


Brewin Dolphin 
Inspirations § — 
LesSaWtoe 


Current 

payment 

□ate of 
payment 

Correa - 
poncBng 
dividend 

Total 

tor 

year 

1 

Oct 1 

. 


0.56 

Aug 25 

- 

. 

1.75 

Oct 3 

1.75 

_ 


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24 


FINANCIAL TIMES TUESDAY JULY 19 1994 


COMMODITIES AND AGRICULTURE 


London cocoa futures 


Economists urge US farm policy overhaul 


6V2-year highs 


jump to 

ByAfeon Maitland 

Cocoa futures sliot to their 
highest levels for six and a half 
years in London yesterday, 
fflhrtig over the baton from cof- 
fee on largely speculative buy- 
ing fed by fears that next 
year’s supply deficit could be 
worse than expected. 

The London market took its 
cue Grom New York’s perfor- 
mance on Friday, when futures 
surged to four-year highs an a 
burst of fund buying. Traders 
pointed to concern that the 
coming crop in the Ivory Coast, 
which produces a third of the 
world's cocoa output, could be 
hit by dry weather. 

The International Cocoa 
Organisation suggested in Feb- 
ruary that the deficit, the 
fourth in a row, could rise to 
209,000 tonnes in 1994-95 after a 
projected 110,000 tonnes this 


Cocoa 

Price {E per tome) 



JUO 1993 94 Jul 


SotnaDemmmt 

year. 

“Coflee has had an effect," 
said one analyst “People have 
realised how explosive things 
can become when you’re in a 
situation of structural deficit" 
He pointed out, however, 


that the likely size of the Ivo- 
rian crop would not be known 
for about six weeks. 

Buying interest in New York 
and London was also fuelled by 
concern that labour unrest in 
the Nigerian oil industry could 
spread, and that Brazil, 
another large producer, might 
suffer a port strike. 

The September position in 
London broke through the 
£1400 mark to a day's peak of 
£1,U2 a tonne but met profit- 
taking and closed £25 higher at 
£1,093. New York’s September 
futures position added to Fri- 
day’s advance in early trading 
but backed off to 5L508 a tonne 
in afternoon trading, down £14. 

Coffee trading, meanwhile, 
had a thin day in London, con- 
solidating last week’s record 
gains. The second position 
closed $53 lower at $3,775 a 
tonne. 


De Beers backs Canadian diamond rush 


By Kenneth Gooding, 

Mkwig Correspondent 

De Beers of South Africa 
yesterday put “a stamp of 
approval" on the diamond rush 
in Canada’s Northwest Territo- 
ries. It agreed to take share- 
holdings worth a total of C$4m 
(£1.86m) in two junior explora- 
tion companies and to arrange 
for up to C$500m of finance for 
a mine on the Yamba Lake 
prospect in the Lac de Gras 
area, centre of the diamond 
rush, if it proved viable. 

“Clearly this is going to be 
nmp of the premier diamond- 
produting areas of the world 
before the mid of the century," 
said Mr Nick Fuller, analyst at 


Credit Lyonnais Laing. 

Mr Charles MacDonald, pres- 
ident of Tanqueray Resources, 
which owns 50 per cent of the 
Yamba Lake project, said De 
Beers made the first approach 
and he believed that it wanted 
to move ahead as fast as possi- 
ble. “We are aligning ourselves 
with the best group in the [dia- 
mond] industry," he said. 

CLL’s Mr Fuller suggested 
that, although two other major 
companies, Broken Hill Propri- 
etary of Australia and the RTZ 
Corporation of the US. had 
about a one-year start, “De 
Beers wants to show them that 
it remains king of the itiamnnrt 
bumness". The two Canadian 
companies - Tanqueray and 


Mill City Gold - had extracted 
good terms and a tight time- 
table from the South African 
group. 

De Beers has 45 days to re- 
check in Sooth Africa results 
from exploration at Yamba 
Lake. If dl is well it will sub- 
scribe for C$2m of shares in 
Tanqueray at C$140 each and 
CJ2m of shares in MQl City at 
C$2.20 each. De Beers must 
evaluate the five “pipes" so far 
discovered by September, 1996, 
complete a feasibility study by 
the end of 1997, and, if it 
decides to bring a mine into 
production, will procure up to 
C$500m of financing to earn a 
51 per cent interest in the proj- 
ect area. 


MARKET REPORT 

Producer sales cap palladium price surge 


Sales of PALLADIUM believed 
to be from Russia - the biggest 
producer - capped prices after 
a rise to fresh five-year highs 
yesterday afternoon. 

Palladium was fixed at 


$147 JO a troy ounce, up $L05, 
helping its sister metal PLATI- 
NUM to a three-month high of 
$416.75. Dealers said the early 
price surge reflected invest- 
ment fund buying on the New 


York futures markets where 
the rally in the platinum group 
metals began on Friday. 

GOLD and SILVER silver 
benefitted from the trend. 
Compiled from Renters 


By Laurie Morse in Chicago 

Important aspects of US farm 
policy need a substantial over- 
haul tf the US is to preserve its 
competitive position in world 
agricultural trade, say Mr Alan 
Barkema and Mr Mark Draben- 
stott, economists at the Federal 
Reserve Bank of Kansas City. 

In a paper prepared for the 
bank's quarterly journal. Eco- 
nomic Review, the authors 
note that US farm export pro- 
grammes are heavily skewed 
toward bulk commodities, 
where global trade is declining. 


and ignore last-growing trade 
in processed foods. Further- 
more, entrenched export sub- 
sidy and credit programmes 
underserve countries with the 
fastest-growing demand for 
term products. 

After an intelligent discus- 
sion of changing trends in the 
global trade in Harm exports, 
the authors set out four rather 
surprising suggestions for US 
policy reform. They say the 
time for discussion of these 
alternatives is now, as policy- 
makers plan farm legislation 
for the next five years, as part 


of the 1995 US Farm BiiL 

Their paper suggests that 
rather than continue to devote 
substantial energy to wrestling 
down worldwide subsidies, the 
US should focus on stimulating 
demand in emerging markets 
for farm goods. “US agriculture 
has much to gain from eco- 
nomic and trade policies that 
boost economic growth in 
regions like Asia and Latin 
America," it says. 

The authors argue that US 
domestic farm programmes 
depress world bulk grain prices 
while reducing US farmers’ 


competitiveness in world mar- 
kets. “Eliminating commodity 
programmes may encourage 
US fanners to shift to products 
with h fflv? 1 * profit margins and 
brighter market prospects," 
they say. 

On a closely related Issue, 
the article concludes that pro- 
grammes that encourage US 
farmers to set aside acreage, 
and thus lower production, 
throttles the hlgbly-competl- 
tive US grain handling system 
and put the US at a worldwide 
trading disadvantage. 

Finally, the authors question 


whether the $5bn spent on US 
export credits in recent yean 
has been flowing to the mar- 
kets with the best long-term 
trading possibilities. The cred- 
its, they say, are often directed 
toward political, rather than 
trade, alliances. 

A New Agricultural PoUq/ for a 
New World Market, in The Eco- 
nomic Retnetn, second quarter, 
19W VoL 79 No, 2. No charge 
from the Federal Reserve Bank 
of Kansas City, 925 Grand Bou- 
levard, Kansas City, Missouri, 
wmooL 


UK’s overheated fields yield a crop of problems 

Early ripening is reducing harvests and hitting the quality of autumn-sown barley 


F or those farmers with a 
tendency towards hay 
fever and as thma the 
high pollen count was not the 
only frustration, to result from 
the recent heatwave. The long 
hot days also brought forward 
the grain harvest with some 
crops of autumn-sown bailey 
having ripeness forced upon 
them rather than acquiring it 
gently in the dull conditions 
we usually seem to get in July. 

It is not so much the earli- 
nes s itself that frustrates - in 
many ways it is a good thing to 
get some of the demanding 
harvest work out of the way. It 
Is the fact that because of pre- 
mature ripening most of the 
crops so far gathered are of 
mediocre quality and weight 
and therefore of low value. 

Admittedly the number of 
samples submitted to mer- 
chants is relatively low at this 
stage and come from the light, 
sandy land that is most suscep- 
tible to this kind of problem. 
But reports suggest that grain 
size is generally small - “like 
needles" one merchant said the 
other day as he admitted that 
from one exceptionally poor 
lorry load he had had to 
remove 38 per cent of screen- 
ings, the small grains that fall 
through a screen designed to 
remove nan-viable material 
Clearly this also implies low 
yields; few of the fields so far 
combined have apparently pro- 
duced above 2J> tonnes an acre 


FARMER'S VIEWPOINT 



By David Richardson 


(&25 tonnes a hectare). Produc- 
tion at this level is unlikely to 
leave a profit, even on farms 
with the lowest costs. Those of 
us with rather heavier, more 
moisture-retentive land, can 
only hope that our crops, when 
they are ready for cutting in a 
few days, will produce better 
results. But it would be unreal- 
istic to suppose that the early 
fields had not set at least an 
approximate pattern for the 
rest. 

There are two main types of 
barley, grown for distinctly dif- 
ferent markets, (hie is for ani- 
mal feed and here the farmers 
objective is to produce the 

marfmirm yield arid a hi g h pro- 
tein or nitrogen content Such 
barley attracts a low price but 
can be profitable provided pro- 
duction per acre is high 
enough. The variety is chosen 
accordingly. 

The second type is for malt- 
ing into beer, for which spe- 


cific varieties have also been 
developed. Here the objective 
is for a much lower nitrogen 
content and since this implies 
smaller applications of fertil- 
iser it normally means accept- 
ing a lighter yield. The price 
paid to the fanner should, in 
theory and usually in practice, 
compensate him for the lower 
yield. 

Ever-increasing emphasis on 
the need for better marketing 
of farm commodities together 
with the urge to add value, per- 
suaded rather more farmers 
th a n usual to plant 
barley last autumn. Many took 
advantage of merchants offers 
to sell it forward on contract at 
a fixed premium above the 
price of feed barley. One esti- 
mate suggests that up 40 per 
cent of the malting barley 
grows for harvesting this year 
has been sold in this way. Last 
year the figure was between 25 
and 30 per cent 

T here are this year, how- 
ever, two potential diffi- 
culties arising from this 
otherwise healthy move. The 
first is that because of the 
weather-related problems with 
quality, referred to above, a 
substantial proportion of the 
barley sold on contract may be 
of too low a quality to qualify 
for the full premium prices 
written into the contracts. Pre- 
miums over feed barley are 
usually between £20 and £30 a 


tonne, depending on variety, 
but for that the merchants 
specify a range of quality stan- 
dards. They are entitled to cut 
the price or even reject the 
grain if those standards are not 
achieved. 

The second problem is that 
the price of feed barley, at £95 
to £98 a tonne, is £10 to 03 per 
tonne M g hw at present than 
was expected when those con- 
tracts were agreed. Given that 
malting contracts are based on 
feed prices the merchants will 
have little choice but to pay 
the extra and to pass it on to 
the breweries. Cynical malting 
barley growers, as they deliver 
their crops over the next few 
weeks, will be watching very 
carefully to ensure any deduc- 
tions for lack of quality are 
genuine and do not reflect the 
buoyancy of the feed market 

The rise in the feed barley 
price and indeed for forward 
wheat sales (for the wheat har- 
vest will not begin in earnest 
for another month) can be 
attributed to two main factors. 
Planting conditions across 
northern Europe last Autumn 
were appallingly wet and the 
early spring was not much bet- 
ter. It had long been antici- 
pated that yields would be 
down this harvest and the 
probability of this has stimu- 
lated the mice. 

In addition the weakness of 
sterling against other Euro- 
pean Union currencies has trig- 


gered two small devaluations 
of the green pound since the 
beginning of July. These have 
resulted in compensatory 
Increases in UK guaranteed 
prices amounting to about a 
per cent And although open 
market prices for grain are 
well above support levels 
where they apply it all helps to 
create a firm tone In the mar- 
ket. 

Currency movements within 
the EU have been mainly 
favourable to UK arable farm- 
ers for the past two years, but 
they can, of course, go the 
other way. In order to “lock tn° 
an apparently attractive cur- 
rency position a few large 
farmers have taken out cur- 
rency options against forward 
changes in values. In most 
changes, so far, these have 
turned out to be expensive and 
in the event unnecessary 
insurance against events that 
have not happened. 

Nevertheless the big banks 
continue to offer such services 
and the Morgan Grenfell sub- 
sidiary, Record Treasury Man- 
agement. now offers a hedging 
facility for EU green rates. 

A few majm playere in the 
food Industry may well use 
them, but, unlike their Ameri- 
can cousins, few UK farmers 
are ready for the culture 
change such deals involve. As 
this year appears to have 
proved to them, once again, 
the weather Is the final arbiter. 


COMMODITIES PRICES 


CROSSWORD 








BASE METALS 


Precious Metals continued 


GRAINS AND OIL SEEDS 


LONDON METAL EXCHANGE 

(prices from Amalgamated Metal 'noting) 


■ AtUfrWWM. »7P«JBiryff par tonne) 



Cadi 

S mthfl 

O0M 

i5M-a 

1530-2 

PRMtajS 

152M0 

1644-46 

HlgNtow 

151371512 

154771525 

AM Official 

1513-3-5 

1533-4 

Kb* Ctow 


152B-&5 

Open IrsL 

290.944 


Total tiaiy turnover 

52X04 


■ ALUMINUM ALLOY (S per tore*) 


Close 

1610-20 

1535-45 

Rrovtous 

1515-25 

1535-40 

Hghflow 

151571610 

1545 

AM Offldri 

1510-15 

1535-40 

Kwtj dose 


1536-46 

Open Int 

2,730 


Total deity tumovor 

785 


■ LEAD (S per tome) 



Clcrati 

592.6-3.5 

004.4.5 

Previous 

591.5-2.5 

602-3 

HJgfvTow 


816*02 

AM Official 

592-3 

6025-3.0 

Kerb dose 


813-5 

Open int 

42X48 


Total da0y turnover 

0342 


■ IUCKB. (S per tome) 


Ooas 

6335-45 

6430-40 

Previous 

6370-80 

6460-5 

Ughflow 

6361 

0510/0410 

AM Official 

6350-2 

6449-61 

Kerb dose 


6430-30 

Open Int 

60X27 


ToCsl dgdy tunouer 

11,070 


■ TIN (S per twine) 



Ckm 

5435-45 

5506-15 

Previous 

5440-50 

5505-10 

t-frghflow 

5440/5430 

5540/5600 

AMOfflcW 

5430-40 

5600-05 

Kerb dose 


5520430 

Open W- 

18.680 


Total dnfry turnover 

4,132 



■ ZWfi^acMMgH grades par tonne) 


0099 

983-4 

1007-8 

Previous 

905.5-0.5 

10084 

Hkghtaw 


1012/1000 

AM Official 

884-5 

1008X-00 

Kerb dose 


1010-11 

Open mt 

103/073 


Total defy turnover 

9X02 


ta COPPSS, grade A (Spar tonne) 


Close 

24S3X-4X 

S484-& 

Previous 

24705-1 X 

24805-4.0 

Hghflow 

2481/2451 

248572483 

AM Offidd 

2462-3 

2473-4 

Kerb dose 


2472-3 

Open Ira. 

230163 


Total daffy brewer 

39X48 



■ UKE AM OffloU fate UM4 
LME Cteetofl K/S rate; 


5pOt1-562B 3 nattl.5612 6 mtbtl5G07 9 MttKI .5533 


■ MQH GRAPE COPPBfMCQMBQ 



ours 

Qbm dongs 

N* km 

Qgen 

fa 

W 

M 

moo 

. 

112X0 111X5 

2JJ33 

509 

tag 

112.10 

■TUB 

112.10 112.10 

760 

283 

s* 

112.43 

-osk 

11260 111X5 

32300 

B.BB9 

Oct 

112.10 

• 

- 

335 

11 

Nw 

111.70 

+0X5 

- 

243 

- 

DM 

I m 

111X5 

+0.10 

Ill JO 110X0 

9X01 

51X88 

774 

7X39 


PRECIOUS METALS 

■ LONDON BULLION MARKET 
PIOM auppied by N-M RnttacHRU 


OoW (Troy w.) 

Ctaoo 

Op**ig 

Morning Ax 
Altamoai (bt 
Day's High 
Day's Law 
Previous does 


S prim £ eqUv. 

386-30-386.70 

385.70- 388.10 

388.40 246.901 

386X0 247.044 

386.80-307.20 

385. 70- 30*110 
385.00- 385 »0 


Loco Ldn Mean Gold Landing Rates Q/S USJJ 

1 month 3,90 0 months -4.4ft 

2 months .4X6 12 months — 4X8 


3 maims 


Stater Fb 

Gp« 

3 months 

0 months 

1 war 


p/tray to. US eta squN- 
336X6 525X0 

340X5 531X5 

344X5 538.10 

365,60 563.75 


OoMCofrn 
Krugerrand 
Maple Leri 
mm Sovereign 


t prise E equtv. 
081-364 250-363 

397-40-360X0 

90-83 67-0Q 


■ GOLD COMEX (100 Troy at; $/tny Ofc) 



Ssd 

Days 


0|m 



price 

change 

Mgt> 

hM tat 

9U. 

Jd 

385.7 

-0.1 

- 

. 

« 

tag 

3882 

-02 

3873 

3862 66,781 16360 

S»P 

397J 

■02 

3895 

3890 

- 

Oct 

mo 

-02 

3304 

3892 MW 

552 

Dec 

3925 

-02 

3918 

3B2A 34,901 

1,482 

W> 

385S 

-02 

3063 

3963 9JX1 

125 

TeM 




19*781 19387 

■ PLATINUM NYMEX (50 Tiny oz.; Srtroy az_) 

Jri 

4190 

+48 

481 JJ 

4143 175 

_ 

Oct 

4205 

+48 

4243 

4160 19755 

3X97 

JM 

424.1 

+48 

4290 

422JJ 2346 

272 

Apr 

4Z7X 

+48 

431X 

425X 1,778 

11 

Jd 

4315 

+48 

- 

1 

1 

Oct 

4358 

+46 

- 

1 

1 

TKri 




23X56 

4X82 

■ PALLADIUM NYMEX (100 Thoy at,* SAray azj 

Mfr 

14950 

-ans uaxa mbjM 4,«z 

iei 

Dec 

147.75 

-005 

14830 

14900 872 

14 

taw 

14755 

-0.05 

14950 14950 119 

- 

Tew 




5X73 

196 

■ S8.VBT COMEX (100 Trey az4 Gents/bay okJ 

Jri 

524.4 

-ai 

SZ7X 

5243 2S2 

148 


526l5 

-93 

- 

- 

- 

Ssp 

527.2 

-03 

5323 

5253 79338 13X21 

Doc 

534X 

-03 

6400 

5305 24,813 

913 

JH 

5391 

-03 

- 

35 

2 

MV 

5415 

-03 

5463 

5413 35 

9 

lew 




123,158 14715 


ENERGY 

■ CBUOE OB. NYMEX (42X00 us gate. SAwral) 


Latest Day's Open 

price chaw) Mgk Ure lot W 

tag 1835 -054 18X4 18X0 58X52 45.749 

Sep 18.93 -04S 1838 1161 97X88 58X24 

Oct lues -0X5 18X8 18X6 44XGQ 17X88 

(tor 18.48 -033 18X8 1048 30,100 8,729 

Me 18L33 -033 18X4 11X1 40616 3.488 

Jan 18X3 -034 18X8 18X1 23X73 1X38 

Total 4MXS7140X9B 


■ CRUPE «L IPE (S/banri) 



uaett 

tart 


QpOT 



price 

cta«a 

w> 

lam tat 

IM 

tap 

17.45 

-032 

T7.E# 

17JO »3S4 

19X33 

oct 

172B 

-027 

1730 

17.17 17X85 

9141 

Ha* 

17.12 

-035 

1738 

17.12 9X30 

2X48 

Deo 

17.06 

-034 

1730 

17X3 13,183 

2X88 

Jm 

1998 

■034 

1734 

16X7 5,172 

098 

F* 

17.16 

-009 

17.16 

17.18 2333 

3 

TeW 




138X78 39X00 

■ HEATING OK. NVMEX (42X00 US fake; C/OS gafraj 


LriM 

tart 


OPte 



price 

dange 

u* 

lew tat 

Dot 

tag 

4090 

-0X2 

4080 

4450 23.838 10X15 

Sap 

45.75 

-0X3 

9050 

49.40 24X53 

4191 

Oet 

50X0 

-093 

51.10 

5SX5 10373 

1X26 

He* 

51X0 

-068 

5235 

51 JO 8X43 

538 

Dec 

5075 

41X8 

53.15 

5230 20.137 

1337 

Ju 

5330 

■038 

517S 

8 320 12,118 

450 

Total 




121/514 22X63 

m GASaLFEgfanq 




See 

nays 


PP* 



price 

ctaaga 


Low int 

M 

Aw 

15230 

-900 

15000 

15230 27,784 

7X81 

SM 

155X0 

-125 15960 15530 14.065 

0«t 

Oct 

158.75 

-3.00 

161X0 15950 19712 

1X25 

Hen 

180,75 

-3X0 16230 16030 7X62 

313 

Dec 

16230 

-3X0 16430 162X0 15,009 

488 

<M 

154X0 

•230 

165X8 163X0 5.735 

m 

ToM 




87.154 13,118 


■ NATURAL GAS MWBt (1QX00 write; StaMBIttJ 



Latest tart 



Opm 



price taawe 

W> 

lew 

tat 

vet 

AW 

1X68 +0X21 

1X75 

1X40 



sw 

2X25 +8X07 

2030 

2003 



od 

2068 +0005 

2080 

2055 



taw 

2170+0X05 

2175 

2180 



Dec 

2275 +0X05 

2280 

2270 



Jm 

2X86 +9003 

2283 

2275 



TeW 




IM 

KfA 

■ UNLEADED GASOLINE 




MMEX(«,0WUS(Bl9:eAJS(faft) 




Latest tart 



ap« 



pries Manga 

«9b 

Lew 

tat 

IM 

Mg 

S3JS -1X3 

54X0 

53X0 40X41 

16X32 

»P 

S3.90 -0X6 

54X0 

5170 29368 12X82 

Oct 

5255 -ftffl 

5210 

5245 

8.413 

3X36 

Me 

51.15 -an 

S1£0 

91X0 

7X42 

1.40 

DM 

5919 -971 

6940 

ccnn 

4.750 

1206 

JM 

6621 

- 

- 

1X64 

22 

TeW 




91X68 37X27 


■ WlffiAT LCE (E par mnraft 



taB 

Dart 


0P» 



price 

dwfl® 

Hp 

Low fa 

Vri 

Sep 

10935 

+1.15 

103X0 

10320 406 

40 

■w 

10420 

+120 

104.40 

103X0 2X33 

94 

Jae 

10625 

+12S 

10640 10600 1,456 

47 

Her 

107X5 

♦120 

108.00 

108X0 613 

30 

ffiw 

10930 

+125 

- 

- 589 

- 

Jill 

11I2S 

+125 111.75 111X5 1 3 


Tetri 




6334 

233 

■ WHEAT CUT (5,00Qbu min; ceiitaffiOBi bushoQ 

JM 

321/D 


32MD 

314® 2,370 

3,080 

Sep 

388® 

+7/2 

329® 

3?1® 103.1 40 12X55 

Dec 

341/0 

+7/2 

341/4 

334/4 151X« 12X35 

Star 

345/4 

+7/D 

346M 

338/4 39740 

1.156 

«*» 

333/E 

+6/4 

340(2 

337® 1X55 

110 

Jri 

324/0 

+4/4 

3Z4/D 

321/4 3X30 

135 

taw 




29^485 28X79 

■ frIABE COT ROOD bu min: OBntat56b bueheQ 

JM 

239/6 

♦Zffi 

239/4 

837® 23X85 

12X65 

tap 

226/2 

+1® 

226® 

224® 206X1 5 53X55 

Dec 

224/G 

+1/4 

‘eon 

223® 589135 75.100 

Iter 

233® 

+W2 

233 a 

232® 82X00 

7,100 


238/B 

+4W 

zxn 

238/2 29,840 

3L540 

Jri 

242/4 

+4M 

242® 

241/6 30X35 

4X70 

Trial 




L84W1S6XB0 

■ BARLEY LGE (E per tonne) 



tap 

10946 

+916 

_ 

- 201 

_ 

Nor 

10245 

♦945 

102X0 

102S 486 

33 

Jn 

103.75 

+0X0 

- 

a 

- 

He 

104X0 

- 

- 

a 

- 

«T 

10900 

- 

- 

1 

- 

Triri 




754 

S3 

■ SOYABEANS C8T pxottai nh; c*na/60ta laMfa 

Jri 

B17JB 

+3® 

622/2 

017/4 9X25 

axes 

tag 

812/4 

+1/2 

618® 

611/4 12BX40 66.740 

tap 

591/2 

+1/2 

597/2 

590® 65X25 

9425 

HOW 

57SIB 

-1® 

582/2 

574/4349.090 83X46 

Jan 

5B3/2 

-0/2 

589® 

563® 45X65 

5X85 

tar 

89U4 

-Of* 

99712 

581® 17X75 

4.140 

Triri 




669375182X75 


■ SOYABEAN OP. OBT (Ba.OOOIba: pante/to) 


Jri 

24X3 

+0.18 

24X0 

24X8 

1,133 

341 

Ate) 

24X5 

+Xl21 

2490 

24XS 19X79 

4X08 

%. 

24.74 

+0.14 

24X0 

24X5 

18X13 

2X38 

Oct 

24.13 

+906 

24X3 

74.00 

11X43 

1,000 

Dec 

23.75 

- 

9390 

23X1 

32JD7 

4X48 

Jan 

73 pn 

- 

23X5 

23X8 

1547 

171 

TeW 





93X14 1*520 

■ SOYABEAN MEAL COT (100 tons: t/uv 


Jri 

183X 

+9S 

1BS.2 

1813 


sea 

Meg 

1B1.6 

-93 

163.7 

181,1 23X04 

5X21 

tap 

lias 

-OX 

1890 

17SX 16X17 

1.721 

Oct 

177X 

■92 

1798 

1772 

9208 

1J22S 

Dec 

176.7 

-94 

1798 

1796 2SX12 

3X13 

*m 

I77X 

-OX 

1196 

177X 

ZX*J 

496 

Trial 





8SXM 13X28 

■ POTATOES LCE (CAome) 




Nov 

990 

. 

. 

. 

. 

. 

Ibr 

105.0 


te 

. 

. 

- 

Ate 

23X5 

+242 

23X0 

ZZ4J 

1XM 

306 

Hqr 

255X 

+390 

- 

- 


- 

in 

107X 

- 

- 

- 

- 

- 

Triri 





1X64 

395 

M FRSGHT (B/FFEX) LCE fflO/Indax poWl 


Jri 

1414 

+14 

1410 

1405 

305 

17 

AW 

1367 

+12 

1330 

1365 

754 

72 

Bqp 

1392 

+20 

1385 

1380 

103 

4 

Oet 

1408 

+14 

1405 

1400 

437 

6 

Jw 

1415 

+2 

1415 

1415 

255 

1 

far 

1435 

+5 

1430 

1*30 

101 

1 

Triri 

Ctoxa 

Prav 



2X74 

121 

m 

1416 

J412 






Tea 

There was good demand, reports the Too Bro- 
Kfrrt As&ettkm. Bright East Africans we 
msfl supported aftnugh prises were some- 
Bmsfr lower. Cdoury mw&ren were strong end 
often gained several pence. whHs pUnor Afri- 
cans tended easier. Brighter ooyfona were 
dearer, but plain bop's and poor leaf sorts 
ware easier. Ceytang were trrogufcvty easier, 
Out ootoury Africans ware firm to dearer. Quo- 
tations beat available 2BGp/kg. nom. good 
I58p/kg.. good medium I48pfkg., medium 
l24(Vhg., low medfam Sflpricg. The Wgllest 
price realised this weak was 285p for a 
Rwanda p l.i 


SOFTS 


MEAT AND LIVESTOCK 

LIVE CATTLE CUE (40j000tw; oants/tW) 


No.8,509 Set by ADAMANT 



Sril 

Dart 



opm 


sett nay* 

Open 



fan change 

Mflb 

im 

tat Vd 


price ctaaasa Bgb Lev 

lot 

Dial 

Jri 

1091 

+45 

1097 

1087 

1X08 122 

Aug 

89325 -9450 7965Q 89100 27,159 

5X88 

Sep 

1093 

+25 

1112 

1092 

16.639 4.448 

Oct 

71 675 -9100 72.475 71JOO 21 XK 

9592 

Deo 

1105 

+22 

1120 

1101 

2aB55 1756 

Dec 

71.150 -9500 72025 70X50 1JXD1 

1X56 

Mar 

1125 

+22 

1137 

1120 28.439 1,255 

tab 

79550 -9575 71X00 79300 

9116 

1,139 

1,2 

1129 

+18 

1145 

1130 

9X54 194 

■ri 

71X75 -9550 72X00 71.450 

6065 

288 

Jri 

113? 

+21 

1136 

1135 

3X51 10 

Jrii 

69500 -9350 69300 88500 

1.115 

43 

Triri 




102X52 9(912 

Total 


79X19 12X08 

■ COCOA CSCE (10 tonnes Vtorrees) 

■ UVE HOGS CME ( 40 . 0000 *; qonM/tos) 


tap 

1502 

-29 

15*3 

1495 37X8613X35 

Jri 

46300 -9225 46*50 46150 

912 

421 

Dec 

1546 

-11 

1580 

1532 16,742 5.073 

Aog 

44X00 9X75 44X00 44.175 

9X92 

2X71 

Her 

1545 

+7 

1800 

1565 

7330 490 

Od 

41.150 9275 41X25 41X00 

9X35 

1XS3 

■ter 

1585 

+7 

1812 

1585 

2X49 4 

Dee 

49750 9150 40960 40800 

4X» 

517 

Jri 

1505 

+7 

- 

• 

2X55 63 

tab 

40X75 - 49550 40X00 

1.1S0 

in 

Sep 

1625 

+7 

- 

- 

1.092 6 

Apr 

30.625 +6225 30.750 39X50 

926 

79 

TeW 





WX55 19X71 

Tetri 


27X81 

MM 

■ COCOA (ICCOI (SOfTs/toma} 


■ PGM saUES CME fWXOOfcs; csnta/fce) 

Jri 15 



MM 


free, fray 

Jri 

32X50 +9050 32X50 31X00 

202 

305 

0*7 _ 



10697B 


1040.61 

Aog 

32X25 9435 32X30 31X50 

5X54 

1X52 







tab 

43.100 9X50 44.400 42X00 

2,678 

574 

10 tiarai 

mage — 


— m 


m 

■fa 

42500 -0X00 43.750 42XC8 

IM 

55 

■ GOFFS LCE Ct/tonm) 



•ter 

43X00 -6800 44X00 43X00 

48 

4 







J« 

464Q0 -6790 - 46400 

26 

1 


Jri 3758 -57 3800 3760 H3 47 

Sip 3778 -50 3830 3785 19,105 2.796 

Mov 3773 -80 3836 3770 8.168 1X21 

Ho 3783 -55 3115 3765 10,685 1.160 

■w 3770 SS 3785 3735 3X19 172 

My 3790 -35 3790 3775 885 50 

Tout 43,168 5X75 

■ COFFEE ■C* CSCE (37.5000?.;, oritfs/feD) 


Totri 


8,1* rm 


Jri 

237.45 

+2J0 23600 237.00 

126 

16 

tap 

341.1B 

+220 24340 23525 24.198 6331 

Dec 

24425 

+9X0 244-25 23650 11X18 

593 

Bv 

244X0 

+600 24400 241.75 

5«w 

565 

Hay 

244.40 

+400 24440 24440 

1X99 

144 

Jri 

24540 

+9X0 245.10 24510 

315 

- 

TBW 



43X16 7X50 

■ COFFEE OCO) (US certa/pxxretJ) 



Jri 15 


Price 

Pree. Uay 

Ctacp. daffy 

_____ 209X5 

207X5 

15dw average — 

177.75 

171.82 

■ Ho7 PREMUM HAW SUGAR LCE (cents /»») 

Oct 

12X7 

+6X8 

1200 

. 

Jn 

11.82 

- 

- 

- 

■tar 

11X6 

+935 

90 

- 

Tetri 



1290 

- 

■ WHITE SUGAR LCE (Srtonrta) 



Oct 

am 90 

+1X0 32050 31600 11X99 

S2B 

Dec 

31630 

+1X0 31600 31500 

934 

42 

Her 

314X0 

+1X0 314X0 31250 

3.718 

67 

■fa 

31420 

+1X0 313X0 313X0 

363 

13 

tag 

313X0 

+1.10 31250 31250 

347 

fi 

Oet 

30020 

- 300X0 300.00 

172 

3 

Trial 



20X29 

877 


* SUGAR 11" CSCE ClianOOtoB; cwteflba) 

Oet 12.09 +004 12.10 11X6 66,13321X02 

Mr 11X3 +0X1 11X3 11.74 29X02 5.465 

ItV 11.72 +0.10 11.72 11X4 8X37 885 

Jri 11.83 +0.13 11.64 11XB 2X12 180 

Oct 11X0 +0X7 11.45 11.40 1X77 214 

Mr 11.47 +407 S3 

Total 105X4428,716 

■ COTTON NYCE (SgOOPtoe; cerda/lbs) 

tag 70X5 +2X0 5 

Od 71X1 +5LQ0 71X1 70X0 8X79 1.183 

On 71X1 +£Q0 71X1 70X1 30391 5X94 

tar 7275 +2X0 7275 71X0 7X23 153 

tag 73X0 +2-00 73X0 72.15 4,226 148 

Jri 74X5 +1X5 74X5 7100 2414 5 

Total 52783 ym 

■ CHANGE iAXCE WYCE ( 15.000ths; oenfaAbgjl 


JM 

n<B 

■645 

8675 

68X0 

40 

44 

sao 

91-25 

-675 

92X0 

9060 

14.439 1X82 

Bn 

94.75 

-025 

95X5 

94 25 

3X41 

433 

JM 

98X0 

■650 

9525 

97X0 

4.099 

202 

Ibr 

101X0 

■645 

1QZ50 101X0 

Z.414 

55 

May 

105X0 

445 106.00 106X0 

540 

15 

Tetri 





25X88 1X51 


VOLUME DATA 

open yiLereGt end volume data shown (or 
contracm traded an COMEX, NVMEX, CUT. 
NYCE, CME, CSCE and IPE Crude Oil era one 
day m sneers. 


INDICES 

■ REUTERS (Base: 18/V31 =100) 

<M 18 >4 15 month ago year ago 

*180.7 31794 30205 1T02X 

■ CBS Futures (Base: 4/9/5fcKM| 


-fat IS 
moo 


tat 14 
231.73 


month ego year ago 
239,38 215.10 


LONDON TRADED OPTIONS 

Strike price $ tome -—Cota Puts — 

■ ALUMINIUM 


<99.7967 LME 

Sap 

Dec 

Sep 

Dae 

1525 

56 

01 

52 

82 

1650 

45 

70 

66 

96 

157S. _ 

36 

SI 

81 

110 

■ COPPER 





(Grade A) LME 

Sep 

Dec 

Sep 

Dec 

8400 

lie 

136 

35 

87 

2450 

67 

110 

54 

111 

8500 

E2 

88 

78 

138 

■ COFFEE LCE 

Sep 

NOV 

Sep 

Nov 

3800. 

479 

820 

301 

447 

3650 _ 

454 

598 

326 

ta 

3700. 

429 

573 

361 

- 

■ COCOA LCE 

Sep 

Dec 

Sep 

Dec 

1000 

102 

151 

9 

46 

1050- _. 

66 

121 

23 

68 

1100 — 

38 

96 

45 

90 

■ BRENT CRUDE IPE 

Aug 

Sep 

A*g 

Sep 

1700 

- 

61 

_ 

29 

1750 

- 

53 

- 

57 

1800 „ 

- 

30 

- 

- 


LONDON SPOT MARKETS 

■ CRUDE OIL FOB (per baneUSep) -tor 


Dubai 

$16.03-6l08w 

-0.40 

Brent Blend (dated) 

$17X7-7X9 

-O.BZ 

Brent Stand (Sep) 

S17X7-7.M 

-0.40 

W.T.L |1pm coQ 

$1040-9.42 

-0X66 

■ OtL PRODUCTS NWEprampt deBvwy OF ftome) 

Premium GaaoOna 

5165-187 

-1 

Go3 on 

$140-151 

-3 

Heavy Fuel OH 

S96-88 

-1 

Naphtha 

$166-188 

■2-5 

Jet fuel 

3164-166 

-4 

Atatam Arpua EstimaM 



■ OTHER 



Gold (per tray 04$ 

S38&S0 

+1X 

Silver (per troy 

5265c 

*s 

ftatfnum (per Hoy ozj 

$416.75 

+6. SO 

Paltafrirei (per troy at) 

$147 JO 

+1-05 

Copper (US precL) 

116.0c 


lead (US pradL) 

37.7Sc 


Tin (Kuria Lumput) 

1 3.85m 

+0.11 

Tre (New York} 

2535c 


Bno (US Prime VY.) 

Una 


Game (tare wdghijr 

N/A 


Sheep (tare wtvgtittt* 

NfA 


Pigs (Bw weigttQ 

WA 


Ure. day sugar (rewj 

S30SX 

+7.7 

Lon. day sugar fwre) 

S34SX 

+1.5 

Tata & Lyle export 

£307.0 

+4X 

Barley (Eng. toed) 

E99X0t 


Maize (US NoG Yellow) 

$143.5 


Wheal (US Darts NortfV 

Cl BOX 


ftobter (Aufljf 

B750p 

+2X 

Rubber (SepflP 

asxap 

♦zx 

Rubber KLRSSNol Aug 

32i.5m 

+1.5 

Coconut Ol (PWOl 

sseaoi 

+5.0 

Prim Off (Ma<ay.)§ 

fcOS.Oq 

+5-0 

Copra PW§ 

3405.0 

+5.0 

Soyabeens (US) 

El77.0q 


Cotton Outlook 'A* index 

OT.TOC 


Woritopa (84s Suprit 

4CJp 




v , 


15 


ACROSS 

I Anything shout damaging her 
foot was premeditated (12) 

10 Hass in high-pitched quaver 
CD 

11 A menial changed the plates 
(7) 

12 Claim to be morally justified 
(5) 

13 At site of famous tomb I ran 
around In the fields (3) 

15 Tell about one cut out to cre- 
ate the network ( 10 ) 

16 Narcotic - costing a penny on 
the border? (4) 

18 Insubstantia) but excellent 
lines (4) 

20 A descant perhaps might be 
too taxing ( 10 ) 

22 Negotiate about cold drug (8) 

24 Right round the waist (5) 

26 Fails back again era the artist 

CO 

27 Bring about a New Order (7) 

28 Concerned with new students 
on the way back getting food 
02) 


DOWN 

2 Goods marked “Hutt**? (7) 

3 Steal from Stoic movement 
for dancing In the streets (8) 

4 The point came afterwards (4) 

5 Riot by gaol wreckers was 
considered a duty (10) 

6 Magazine coming up with 

mother’s letter (5) 

7 Capable of stretching the 
numbers that lie around (7) 

8 Begin to tear round other 
team and get top bating (4.9) 

9 Mean the girl is shop-lifting? 
(3i8) 

14 Black: market (8,5) 

17 King Cole in dramatic arena 
might lose the Dow (8) 

19 Lochs from Russia (3,4) 

21 Emergency transport on trial 
if there’s an explosion (3,4) , 
28 After tea the felkrws talk rub- 
bish (5) 

25 Car crash In front of hotel 
entrance (4) 


^ : , 




Solution to Saturdays prise puzzle on Saturday July 30. 
Solution to yesterday’s prize puzzle on Monday August l 


C per Maas otwna iWU p panoaftg. c omtsflO. 
i rre»itfl« m Mri^WBrt 1 o Auo. 2 Audi 

Sod. » Sap • V London RryWcaL J OF IbHWm. f 
BuMa mart tat dare. A Swap fUvo -o*g>rf prfcwf * 
Cfcngn «i «#*, pftmwond prim. 


Of broking and jabbing the Peiikan’s fond. 

See how sweetly he puts your word onto bond 


JOTTER PAD 






% ’ 
f •' *. 





» » + 


lie 


ov 


«n 


\ f^anoal times Tuesday jt n.v i 9 J994 


‘op 


l 1r °bk 


CROSSWORD 

■ ■ | ■ i 

■ ■ I ■ i 

■ ram 
• u man 

am U'i 

■ * i" i 

■ ■■■n 


LONDON STOCK EXCHANGE 


MARKET REPORT 


Shares turn higher on interest rate optimism 


By Tony Byfand, 

UK Stock Market Editor 

The London, stock market’s new 
10-day rolling settlement system got 
off to a smooth start yesterday 
with no sign that trading volumes 
were affected to any great extent. 
Share prices traced an uncertain 
pattern, taking their lead -from the 
bond markets, which turned tiigV r 
to the second half of the session. 

At the close the FT-SE 1Q0 index 
was 7.2 up at 3,082, and responding 
to activity in stock index futures, 
where the September contract on 
the Footsie was within 3 points of 
3,100. London markets turned 
higher in the second half of the 
session after comments from a 
member of the Bundesbank council 
raised hopes that the German cen- 
tral bank may decide to reduce its 


key interest rates when its policy 
council meets on Thursday. 

Equities opened nervously at the 
opening of a week which brings a 
heavy fist of economic data from 
the OK, Germany and the US. With 
investors stfQ nervous over the per- 
formance of the dollar and Euro- 
pean bands, markets are likely to 
focus on tomorrow’s testimony to 
Congress by Mr Alan Greenspan, 
chairman of the Federal Reserve 
Board, as well as on the German M3 
money simply news expected thfa 
week and the meeting at the Bund- 
esbank. 

hi early trading, the Footsie was 
down by about 14 points, unsettled 
by falls in British government 
boi)ds as they awaited details of the 
bond auction which was anno f tnvyd 
late on Friday. Traders iwnnimteii 
that the big securities bouses, hav- 


ing established some excellent 
paper profits over the previous 
three trading sessions, were 
inclined to hold back and watch the 
European bond markets for a lead. 

Shares began to steady after a 
member of the Bundesbank council 
suggested that inflation forecasts 
might be lowered. Later, the Bund- 
esbank said it would hold a press 
conference after its Thursday policy 
meeting, which is the last before 
the summer break. Both develop- 
ments were tahm optimistically by 
the bond markets and equities soon 
followed suit 

The i mp rovement in share prices 
was very modest but the Footsie 
crawled to a net gain of 10 points in 
the early afternoon before slowing 
down as Wall Street made an 
equally slu gg ish start - the Dow 
Jones Industrial Average showing a 


5-point fall in UK hours. 

However, support spread across 
the broad range of the market, lift- 
ing the FT-SE Mid 250 Index by 9 
points to 3,560.3. The final picture 
was still somewhat erratic, with 
media stocks standing out strongly 
as expectations of an upturn in 
advertising revenues bro ught deter- 
mined buying in relatively thin 
markets 

Optimism over the outlook for 
interest rates helped some retail 
stocks, as well as bringing sharp 
rises in those building and con- 
struction shares with exposure to 
the German economy. 

Rankin g shares, too, continued to 
respond to hopes that domestic 
interest rates can at least be kept at 
present levels until the end of the 
year; lower interest rates have 
helped the banks' bad debt lists as 


well as taking some of the pressure 
off their customers. The insurance 
sector appeared unaffected by press 
suggestions of farther problems 
with pension transfer policies, 
which already threaten the industry 
with significant compensation lia- 
bilities. 

Trading volume, as measured by 
the Seaq electronic network, 
totalled a respectable Siam shares, 
with around 58 per cent of the fig- 
ure coming from non-Footsie stocks. 
On Friday, 856.4m shares moved 
through Seaq, returning net worth 
of £1.57bo, comfortably at the 
higher aid of daily averages. 

• Following the opening yesterday 
of the Stock Exchange 10-day 
rolling settlement system, the 
Account Dealing Dates table, previ- 
ously carried in this column, has 
been discontinued. 


FT-SE-A AO-Shara index 
1.600 

1,425 

1*9 JUn 

Suo*FTCw>Me 1994 

II Key Indicators 

Indices and ratios 


Equity Shares Traded 

Turnover By vokrtA pnfflofi ExtiutW 
tatotaM tauabwee and ommu tumom 
1,000 



FT-SE 100 

3082.0 

*72 

FT OnSnary index 

2405.3 

+4.7 

FT-SE Mid 2S0 

3560.3 

+95 

FT-SE-A Non Fins p/e 

1956 

(1953) 

FT-SE-A 350 

1549.5 

+3.7 

FT-SEIOOFut Sep 

3098.0 

+7.0 

FT-^-A Al-Share 

1538.11 

+3.61 

10 yr Gift yield 

855 

(859) 

FT-SE-A AO-Shran yield 

3.86 

(3.67) 

Long grfT/eqmty ytd ratio: 

2.17 

C2-i« 

B««t performing sectors 


Worst performing sectors 




+15 


..-15 






-0.8 



. *1 0 



.—.-0.7 

4 Spirtta-Wmes & Ciders 

5 Leisure & Hoiets 

+1.0 

+0.8 

4 Eloctnctty 

5 Household Goods 

— 

-o.e 

-05 


Strong 
first day 
for 3i 


Venture capital group 31 was a 
sprightly performer on its first 
day of trading following the 
flotation of 45 per cent of the 
equity. Heavy institutional 
demand ensured that the stock 
closed well above its issue 
price on turnover of 27.5m 
shares 

The group is capitalised at 
£L7tm and consequently expec- 
ted to be an early ranriidare for 


entry into the FT-SE 100 Index. 
As such, it would be a vital 
component at in ves tm ent insti- 
tutions' portfolios. 

The bookbuilding process 
saw gi.gbn of demand for the 
£53Qm of stock issued to instir 
tutfons at 272p a share. The 
remaining £L80m of stock went 
to retail investors, and the 
shares, which began trading at 
283p, ended the day at 292Kp. 

Although the flotation was 
set at a I&5 per cent discount 
to net asset value, there was a 
certain ammmt of relief at the 
level of demand. Analysts saw 
the asset value was eaimTated 
at 314p a share at the end of 
March but had probably fallen 
since then, ftn« reducing the 


EQUITY FUTURES AND OPTIONS TRADING 


US buying support mid a rafly KBxao. 
in bonds combined to keep The September contract on 

stock index futures moving the FT-SE 100 Index opened 
ahead in a session noted tor at 3,086 and moved gently 
its low turnover, writes Joel ahead on sporadic buying from 

■ FT-SE 100 MPEX FUTUW3B (LIFFg £25 per ftS Indfl* point {APT} 

Open Sen price Chmga Ugh low &t vol Open fnt 
Sep 308&Q 3096-0 +7.0 3106-0 MMn 10737 40405 

Dec - 3108.0 +7-0 - - 0 1803 

■ FT-6EMP 280 MPEX FUTURES frJFT^ CIO pa- fu0 Mat pett 

Sep - 35600 +1O0 

■ FT-8E IBP 350 WDEX FI7TUHEB (OMUQ CIO porta MrapoW 

Sep 3£70 l0 

Al open Inme Spun «ra to prwvteua day. r Exact vetona earn. 


■ FT-SE 100 INDEX OPTION JJFFS} | 


ICIOpratulMexpott 


2000 SB60 3000 3050 3100 3180 3200 3280 

CPCPCPCPCPCPCPCP 
tag 203 11 168*2 17*2 12 ! 28*2 « 56^ 64*2 35*2 9«*i 28 130*a 8*a 170*2 

Sep 20 25*2 161*2 34*2 144*2 48 118^ 64 Stt| 84 Wj 110*2 37 141*2 2J 178*2 

Oct 234 37*a 198 51 183*2 64 134*2 84 IKfeKWfe 88 184 82*2 183 46*2187*2 

Nor 251 51 215 64 181 80 IS 100*2.124 122 191 feISfe life 100 S3 212 

Dect 283*2 m 184*2 91 131*2131*2 92*2 18Pz 

Cab aa» cm 7.U0 .... 

■ ~BURQ STYLE FT-SE 100 INDEX OPHOM (UFH3 CIO per ftS Mnpott 

2926 ‘ 2875 3025 3075 '3125 3175 3225 3275 

tag HV2l3*2l3a*zaHia3*i34*2 0*1 BZ *2 44*2 78*2 23*2110*2 14 148*1 Ws 190*2 
Sap 281 29*2 *2*2 40*2 127 55 83*2 74 78*2 96*2 49 125fe3ft 158* 2 21 190*2 
U 97 41 151 75 99 13 81 186 

Dec 243*2 64*2 178 98*2 124*2141*2 88 197*2 

Itorf 279 87 216*2 121 WJYl64*2 121 218*2 

Cab 93? Pan 2520 ♦ todBWna Mae taa. IWa ewe aaa braariaa ■ffl—rnr print, 
t lew (Pta etfky matt*. 

■ EUBO STYLE FT-SE MD 250 IVDEX OPTION (OfcOjq £10 par fiS Max pott 


3460 3500 S550 - 3800 36 

-M 131*2 474, MM, 67* 754, 92<* 

Cana Rb Sdbnan plan and wknra m Wen a 430p«. 


FT - SE Actuaries Share Indices 


3700 3700 


discount 

Mr Haxnish Buchan of Nat- 
West Securities said: “This is a 
very good result Maybe the 
market is beginning to see 3i 
as a small companies’ special- 
ist, rather than a venture capi- 
tal specialist" 

Mail reports 

Daily Mail & General Trust 
"A" bounced 7 to lOOOp as the 
market got wind of reports 
that it was poised to unwind 
its toss -making stake in US 
multi-media group Whittle 

fi pmmmriratinrm 

DMGT announced previously 
that this year's profits would 
be down by £2Qm because of 


US institutions for the next 
two hours. 

A sell order, together with 
a brief retreat In UK gilts and 
European bonds, saw the 
contract deefine to hit a day's 
low of 3,065 at mid-morning. 
However, this tuned out to 
be only a brief setback and 
September recovered to move 
ahead for the rest of the 
session, helped by the 
tomround in bonds. 

Bear closing and a lack of 
sellers were said to have 
contributed to a further 
advance by the contract In 
the afternoon. Having 
maintained a strong premium 
to cash throughout the day, 
September finished at 3,096, 
around 10 points above its 
far value premium to cash of 
about 6 points. Volume 
remained low at 10,737 lots. 

Tunover in the traded 
options was a healthy 3?.?91 
contracts, though lower than 
Friday's total. 

The FT-SE 100 option saw 
business of 10,716 lots and 
the Eiffo FT-SE 3,352. BT was 
the busiest stock option with 
a total of 3,145 contracts 
traded. The total Included a 
single trade of 3,000 lots in 
the August 420 puts. 


7 he UK Series 


Da/a Year Ov. Earn. PTE Xd ad). Total 

JU IB cftgrtt Jrri 15 JU 14 JuM3 ago yWdM yield*. train ytd tartan 


FT-SE 100 8082 

FT-SE Md 250 3660 

FT-SE Md 250 ex tm Tobb 3662 

FT-SE-A 350 .1649 

FT-SE StaraBCep 1800^ 

FT-SE BmMCap ax bar Trusts 17701 

FT-SE-A ALL-SHARE 15301 

■ FT-SE Actuaries AB-Stiare 


+02 3074a 30504 30063 284 Z9 4-05 644 

+03 36613 3529.7 3403.7 32113 348 531 

+02 35533 3634.1 34S&4 3226.0 332 028 

+02 15453 15342 1618.1 14222 3-92 6.60 

+02 178725 178821 178030 163323 3.12 432 

+0.1 176731 176034 175433 163321 330 4.78 

+02 1532-50 162125 1601.43 1408.73 328 044 


10 UMBUU. QCTRACnONflO) 

12 Extractive Industries^ 

15 OB. MagratodA 

10 OB Exploration & Prodfll) 

20 OBI MAMJFAC1URERSC3S4) 

21 BuBcUKtS Consmictton(32} 

22 BuUtaQ Matts & Merchspl) 

23 Chandcaisp2} 

24 OMraffisd Industrial 16) 

26 Betfrw*: & Bad Etytoflfi ) 

26 Englneereg(7C9 

27 Enokwarxe. VBhfctas(12) 

28 Pitting. Papa & PcfcgCM) 

29 Textflee 5 AocwralCOt 

30 CONSUMBt OOODSpT) 

31 aramries(17) 

32 Spirits. Wines & Ckfera(10} 

33 Food Mani ta awrat23) 

34 Household GootbflS) 

38 HesUi CarafZI) 

37 P h annace ut lcab(12) 

38 Tobsccofn 

40 aatwcEBpaoj 

41 OMbulors(31) 

42 Ubure & Hotels(24) 

43 MecflaPB) 

44 Aristas, Foodf17) 

45 no dB ara . Genenri(4S) 

48 Support SenriceefU) 

49 Transportf16) 

51 Other Setvteea & Bugtoemffl 

m ununEsm 

02 Sectrie*y(i7) 

64 Gas ObMbutlonO 
OB T eto c ommunlcaflona ffi 
68 WaMriia 


70 HNANOALSfKW 

71 BariontQ 

73 [nswanoe(1 7] 

74 UTe AsausncefBJ 

75 MtfChart Banks© 

77 Otar BrandaK24) 

7V Praperti<411 

60 rHVESTMBHT TRU8TB(1Zh_ 
BO FT-SE-A ALL-SHBRE(BB2) 

■ Hourly movements 


Dev’s Year Ob. Earn 

Jul 18 tihgaH JuMS JU 14 JU 13 ago yWd% yWdX 

266736 +02 265267 2850.71 261435 214030 3.42 431 
380533 +02379934376138367231 315530 335 528 

260638 +0.12602292604362573382064.70 333 4-54 

1981.18 +0.7 194838 196S27 184035 1773.70 246 124 

189634 1997.48 198332 1968-30 177270 330 435 

117334 +21 117220 115338 116&4S 102730 328 434 

2010.44 +06 200&72 196038 196636 164030 334 335 

2419.10 +03 240633 2365.02 2371.70 210730 333 338 
199299 -02 188738201137 198421 187430 436 438 

1868.77 -13 1914.17 182270 188541 2010.10 337 635 

1874.71 -ai 1875.77 1873.89 184131 157830 S03 437 

2333.12 -03 236038 238836 234834 1827.70 4.48 222 

286032 +03 284434 282738 278636 229L40 239 537 

1684.14 +0.7 167239 1BS431 184332 178630 334 635 

266726 +03 284736 2628.17 2S8937 257030 438 7.80 

>24048 +08222234 219832 2141.421999.10 422 7.72 

280052 +13 277SA2 275841 2723.13 271830 336 638 

221139 +02 220832 2187.78 216836 217430 438 831 

243430 -0:5 244637 246138 2438-30 2188.40 331 737 

150005 +03 158097 1682.15 158078 189130 337 3.17 

2834.66 +02 2829.1 fl 281 822 278739 2687.10 4.40 7.71 

M4S36 -02 3658.45 3S9832 366038 3778.10 078 934 

1963-41 +05 1954.57 1941.72 191438 177820 3.13 6.14 

273044 +02 2724.74 271633 270030 257820 327 042 

2153.45 +03 213S44 212630 208824 183830 331 438 

2909.06 +06 2881.10 2862/42 280334 2324.10 231 5.12 

165832 +13 1642.17 1841.56 168040 182S2D 336 839 

168070 168938 167075 188432 150090 3.07 6.40 

155428 +03 154932 154073 163233 154530 230 007 

2372.76 +03 2361372360.77 234034 207430 334 436 

nwa? +02 116339 115437 1141.78 1202.90 424, 335 

•268.76 -022273.102261.46 222237212430 4.64 028 

>163.44 -03217O5T 219036216057 177060 424 1137 

187336 -07 188006 184061 162138 196030 639 Jt 

1038-96 +0.1 2035.13 202230 198121 197930 4.06 7.73 

[702,14 +03 168082 167B31 163086 164000 6.71 13.75 

««>B1 +02 1867.74 165 *102 162005 150938 336 023 

>168.13 +03216063211134206019210380 428 OS 

>78334 +03 277073 269054 266060 2S7S60 4.10 079 

121937 +12 12K.44 120018 1177.16 144000 S® 1135 

365.49 -022368.78232131 2284.82 271030 0« 739 

!7BOS7 +07 276635 277230 275002 268130 059 1134 

185434 +1Jl627.re 1804.02 1777.60 1OT30 3.74 0« 

-Q.1 158046 157239 16 5037 143130 079 OS4_ 

>749.70 +04 a73Q31 271130 2004.45 238730 2J8 L®_ 

53011 +02 153230 1521.25 1501-43 140073 336 044 


1731 7033 1154.10 

20.71 6037 131092 
1028 8330 131040 
1738 3017 118012 
3033 31.64 138737 
2831 32.73 136737 
1052 3434 119821 

FVE XdadJ. Total 
ratio ytd Return 

2061 47.41 105012 
23-87 5424 103832 
2743 8034 1057 S3 
60301- 2034 1124-46 

2041 4432 100836 
2738 2034 B114S 
3135 4530 944.78 
32.17 6823 108433 
2625 5000 100730 
1010 6012 822.13 
2048 3018 108010 
6130 42.03 111056 
2324 4061 1117.19 
20.40 3025 947-30 
1539 7137 90053 
1086 6023 100331 
1086 8045 93031 
1448 8072 92634 
1076 52.15 88737 
64.73 3239 82030 
1434 6831 88732 
1221 12733 61138 

1833 35.77 95009 
1031 5030 94030 
25-43 2743 104830 
2235 49.16 1005.17 
12.75 4095 987.15 
1934 8326 90838 
1944 24.79 94060 
2333 3833 92331 
4742 1016 98054 

14.72 6001 866.14 
1030 7224 88531 

tt 6079 85041 
1076 1063 85130 
736 85.77 84828 
1936 3018 1183.73 
1330 5071 66077 
1233 7338 82730 
8.40 3083 82521 
1538 8237 88000 
934 6630 8 8737 
1432 4522 96031 
3232 3067 90079 

6332 3086 Q1PBS 
1052 3434 119021 


^ 1000 1130 tzsto 1000 is« iaio 

ft^eioo a^j *»z* 3SS Si Ss SI SI 

SS SII SS SS 3 S! S! 16408 w i« ^ «u *5400 

Tm d FT-6E 100 Hgh 2Mp« Us* lOfltai 

■ FT-SE Actuates 3 S 0 Industry baskets «««- 

OPM ftOO MLOO 1130 1230 1330 1400 1000 l OH? Owe Previous Chaw , 

1 " ,.«he +4 noa ++aoa Jlfl 


Bldg & CmtFcn 11283 11306 * 28093 zaffll 28103 28043 +05 
SSranceubta ^ 27602 ZMLA 27905 279|7 27^8 2^6 ^ ^ 1B ^ ? 

K SS Sf 55 ? 2 S JS Si S ^ 


Adtanri Momeficn en If p-pa^—d 

IxnfLI Staa ttrt uy tfy MarataWJ Stt* 


losses at Whittle, prompting 
S.G. Warburg to cut its full- 
year forecast to £62m. yester- 
day a US trade press article 
claimed Whittle was offloading 
its problem section to Beaters 

Holdings and selling half of its 
educational TV service to an 
investment fund managed by 
Goldman Analysts 
the move would not help this 
year's DMGT numbers but 
could provide a boost next 
year. Beaters lost 1 at 476p. 

DIY worries 

Stocks with home improve- 
ment interests weakened in 
response to reports of expan- 
sion plans by US DIY group 


TRADING VOLUME 


■ Ha|or Stocks Ymtmndbqr 
Vol cktae Oral 


Asmara** 


A*M». Bit Ports 
BAAf _ 

BAT faj+t 
BET 


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BTP/P04 

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aotoortt 
Brttsh Und 

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tantaf 

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3200 403 

460 46 

220) 904 

134 488 

2400 344 

6300 238>2 
1700 204 

W 691*2 
436 277 

1JOOO BS4 
3.100 43412 
3200 106 

401 
723 
MOD 400*2 
1200 394 

396 
8200 278 

8200 378*} 
584 104 

law S55 


790 447 

B04 480 

4.100 437 

S20C 231*3 

607 423 

6200 168 

1.100 183 

418 890 

2.W0 Oh 
T.100 <2T^ 
(.100 451*2 
408 205 

888 330 

.100 BBS 

730 221 

870 SSI 
3SM 3S4 
JVO 611 
86 438 

886 072 

42 18* 

BOB SOB 
828 567 

842 366 

334 430 

4200 278 

3200 IN 
373 141 

1.400 135*2 

3.400 230 
3fl» 570 
8200 276*a 
SJ500 667*2 


safs? 

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3.7D0 278 

910 167 

148 312 

2^*00 ST4 
1200 4 N 

23B 371 

1^00 327 

234 S2> 

2.100 176 

304 874 

306 748 

288 447 

1.400 3J7 

2200 568 

2.400 IN 

12» 563 

1200 181*2 
1200 1 » 

447 478 

1200 168 
142 872 

1,700 «2B*2 
314 604 

427 IM 
1200 187 

2200 473 

6200 436 

050 250 

B33 603 


705 526 

1.100 700 

073 239 

1,400 478 

1.700 IM 


Hore msmrcof 1.700 34 8 -1 

Snnabuyt 2200 507*2 ♦** 

SE+nxa™ 38 1235 *6 

ScocMi 4 Nea-t 701 617 +4*4 

Scot HrewBoct. 170 361 +4 

ScotalFtaVt 1,«M 372 +8 

Sant 1300 117 +** 

Sedtfwt* 1,100 104 «2 

S««bcwd 882 326 +7*2 

Bwsn Taotf , 363 801 -* 

Bhel Tmrapcrrf 4^00 707 -3 


SgWiWtaSBO. 


EtooghEsa 178 248 

MhWiUA . 333 481 

Snttl&NnMt 3200 IN 

SmfOBssdwif ZJW 394 

SmM Bsschan l*vt 1200 366 

arahsmeta. . i*t 

SgUhai, Bs(*.t 1,700 

SeWiWtaSect. 118 838 

SMhWtaVMar 23 SIS 

South WesL Ssot 622 67B 

SouttanUttHr 201 GD4*i 

staxtodcremt uoo 

BwWRlt 4600 328 

78M 407 236 

TlQwt 656 233 

TSBt 942 203 

Tarmac SOB 1E2 

TatsALyta 284 • 415 

TaytoWeodee 287 144 

■newt SfiBO 236*2 

ThmsVhegrt 078 474 

7lxnB6rt 2300 ION 

Tcmksat 4500 221 

Tntfaigrr Hours 4^00 84*j 

LMgtaa, 860 3N 

Urtast 1,40* 1003 

UUsdKseuast 1,100 306 

IMHHopn 733 538 

Vodsfaort 4,100 543 

tataapert 204 703 

VMfcont SJHJO 620 

Worth Wbkt 233 378 

W m a i T tato 427 383 

WttSrart 391 563 

WWsnTS HMgrit 1.100 304 

WiOnm i» 130 

Wtopsy 1,000 165 


391 GE3 
1.100 304 

*M 130 

imo kb 

B 13 846 

260 370 

433 493 

1.800 761 


YoriWika Bod 2S0 570 +5*? 

YoriahnWta 433 493 +1 

Terraat iSOO 761 4 

Bsssd an bodria «*sns to a statal Cf BMtfi 
sacuflMs dea( myi fto E£AQ spurn 
jestadv i*B 430pm Hades ol ens ntai ra 
am B8 nuxtoa ctosn. f httn sn FT*3£ 
100 IndM cenritam 


Home Depot Ladbroke, owner 
of the Texas chain, slipped 3 to 
175p, B&Q parent Kingfisher 
declined 7 to 527p and Do It AD 
co-owner Boots fell 11 to 538p. 
Boots partner WJL Smith was 
the one bright spot, managing 
a rise of 5 to 48lp. 

However, stores specialists 
were mostly sceptical over the 
US group's impact on the UK 
market One said that Home 
Depot was aware of the diffi- 
cult trading environment in 
UK DIY and would more likely 
be targeting the German mid 
French markets as the focus of 
its European strategy, hi addi- 
tion, the US company favours 
large store formats, which 
could run into planning diffi- 
culties in the UK 

Boots was further under- 
mined by weekend press 
reports that a consortium of 
institutions was considering 
bidding for the company’s 
drugs division. The suggestion 
was met with general incredu- 
lity by analysts, who pointed 
out that the offshoot was most 
likely to be bought by a kin- 
dred business, mid who also 
expressed surprise that the 
originally mooted price of £lbn 
had apparently dropped to 
between £600m to £?0Qm, 
according to the reports. 

Media conglomerate Pearson 
strengthened 22 to 660p, mak- 
ing a gain of almost £1 a share 
over the past two weeks. 
Recent underperformance has 
been redressed by a spate of 
buy recommendations and 
optimism that the conglomer- 
ate will have a significant 
voice in the new Channel Five 
television station. 


NEW HIGHS AND 
LOWS FOR 1994 

MEWMOHSm 

BUM MATLS 4 HCKTS (1) JahAEOT. 

DtsmeunDRS 03 Hcmarrtm. Rato. 

BfCTWC 8 ELECT GDUP 08 TCL Trapola 
TMMtoora. ENQMUJINJ m Ranald. EMO. 
wiBnnnMewitatarat 
EXTRACTIVE MDS M 4rgk> Am M Con* 
UnXm Drwte$BA Emm Transvaal QoM 
Holds BA. Impu te Ptoanuni Jotamteug Cm. 
Rand Miras, hmipig Pfettnaii FOOD 
MANUF a tony A. MOim (BJ. MVEsnaNT 
T7MSTS R LB9UR3 4 HOHU 09 Norttam 
Ora 08«1. Spear UWl MEDIA (l| Mraa Radio. 
OB. EmORAIION A pm) m MI Erragv. 
PRTMQ. PAPER 8 RACMO (Q Saool Snwfh gj. 
UTARERS. FOOD p) IM |WL Mimn 
SaiVS fl) Pwson. TEUCOMMUraCATIOMB 
tqSeomCQ. TEXTILES 8 «MKL (1) 
Waraura. TRANSFORT (It P 6 O 5Y*JC- PfCL. 
AMERICANS 09 Am>. CyjoKt Bn ii —r. 
SOUTH AHBCANS (+1 SASOL. 

NE«r lows pa*. 

BREWERE3 (1J AM CHEMCM5 08 
Cemorama. Itarta Cr ow n . Q M l iraU TO nfl H> 
BwndNto Rtefetraor. SAIML. unetalta. 
ELECTHNC ft ELECT EOUP fS} CcnOU TaetL, 
Tteimimnr rrvuhitl Tll-pf Tniiirit 
aOBCEMNO m QBE taO. EM. VCMCUB 
(9 Intfatn. EXTRACTIVE MM M BteWa. 

Mman 6pc Cnv , Northam Ptoanua Crtoo. 

TOGO MANUF C8 Gcriden VrtD. tam 
HEALTH CARE P) AraaONM taaateB. Baraah. 
Tapnri Da^MOea. MSURANCE (1) todteae*. 
PWESIMatr TRUSTS CT INVE S TMENT 
COMKUBBimi rtddnraN Equay. Ftethigri Pit. 
LSSURE 4 HOTB-S 08 Break forth* Bonto. 
Piran, MEDU PI Staring. WUGOl DS Wrts. 
OTHBX HNAHOALtri Toray Low. 
PHAraiACsmcAis H Oroa cte nco. 
GmnaiWL PROPERTY A Haramki0BSv 71+pc 
Ln. 2027, Pad. Ob Morgan. RETAILERS. FOOO 
08 Forrpto. Tosco Capoal flpc Crv, 2005. 
RETAILBtS, QBSUL M 8«oBte g) A 
Bramaa. CapraitfK. OS. SUPPORT SERA 
n Ba&OMB Piece. Imnrnh&Bumrt. 
Ucngm, 0«S brt. bc y ctcn. VkrusBy. 


(1) Hartstane. WATER P) Ooom A. Do B. York 
Wmwcrte. AMERICANS 08 Morgra IFL Ftep. 
NY. 

Wm Low delivered JSains- 
bury the information requested 
by the country's biggest super- 
market group - a move which 
could trigger the anticipated 
contest for the Scottish com- 
pany following the friendly 
£l54m bid from Tesco last 


week. Sainsbury's mulling 
gave the sector a chance to 
pause for breath after last 
week’s heightened activity, 
with Low's shares adding just 
3 to 25Gp. Tesco gaining 5V» to 
238Vsp and Sainsbury edging 
forward a half-penny to 397Vap. 

Strong half-time results from 
Coca-Cola and the continuing 
hot weather helped Cadbury 
Schweppes to a rise of 7Va to 
451 V»p, with sugar processor 
Tate and Lyle chipping in 5 to 
41 5p. Unilever slipped 5 to 
1005p as the soap wars saga 
with arch-rival Proctor and 
Gamble rumbled on. 

Buying of Wellcome, ahead 
of interim results on Thursday, 
was boosted by a revival of 
speculation that the company 
was a takeover or merger tar- 
get The company is changing 
its year-end and reporting fig- 
ures for the four months to the 
end of June. The shares lifted 
13 to 629p. Elsewhere in the 
sector, SmithSllne Beecham, 
which reports frill-year figures 
today, fell 6 to 394p on profit- 
taking. 

High street lending banks 
Barclays and Lloyds were pul- 
led in different directions on 
switch advice from one securi- 
ties house. Barclays was off 5 
at one stage after Lehman 
Brothers downgraded the stock 
from buy to hold. However, the 
shares picked up with the mar- 
ket to close a penny higher at 
566p. Meanwhile, Lehman 
upgraded Lloyds on the expec- 
tation that it wifi successfully 
merge with the Cheltenham 
and Gloucester building soci- 
ety and boost its earnings by 
12 pm* cent in the first year. 


Also, SC ST reiterated its buy 
stance on Lloyds and the 
shares rose 9 to 56tip. 

Several stocks with hotel 
interests benefited from recent 
news on the improving trading 
outlook. Forte put on 8Vk to 
230p. Bass 10 to 555p and Whit- 
bread 12 to 553p ahead of its 
agm statement today. 

Engineering group Wagon 
Industrial closed a penny 
ahead at 500p. as Nat West 
Securities said its rating 
remained undemanding, 
although the sticking point 
was the yield. 

A stock overhang, together 
with general profit-taking, left 
shares in GEN, trailing 11 to 
609p. It was also profit-taking 
that weakened Stebe. the 
shares closing 9 down at 59Sp. 
after trade of 1.8m. A two-way 
pull in FK1 brought volume of 
2.4m as the shares closed 
unchanged at I80p, after the 
group announced disposals of 
£46m. One market watcher 
said: “this is a good deal as it 
reduces debt and enables it to 
pursue its acquisition policy." 

Negative weekend press com- 
ment left conglomerate Tom- 
kins 3 off at 221p. 

Confirmation from dry 
cleaning company Sketcfaley 
that one of its two executive 
deputy chairmen is to leave 
the company cast a shadow 
over the stock. The shares 
eased 5 to 105p. 

MARKET REPORTERS; 

Poter John, 

Chris to pher Price, 

Joel Kbazo. 

■ Other statistics. Page 21 


LONDON EQUITIES 


LIFFE EQUITY OPTIONS 


4 Cafii Prts 

♦a Qpftn JN Pet Jra JN Oct JNi 

m MtaHjnra 540 48 BZH -18- 

f«) 5807H2BM- 12 27- 

M AflBS Z20 2K4 2B* » 2 B 11H 

Bh rZ38 ) 240 SIB* 2* S»14M20tt 

ASDA 50 SK 10 12 1 3 4 

jt* rs7i nmffi mk i i 


Bril Attep 420 20HS7»4Stt 3 14M Z2» 
P437 ) 460 2 17M 26 25K X 43M 

MBBtaA 380 12 26% 35 8 23 28* 

(-394 ) 430 2Mm 22 28H39M 47 

BOOtl 500 «2 55% 83 1 8 16 

fS38 ) S5D 4H 2CM m 15H 28tt 38 

BP 390 1»t 30 36 3 14 20 

<-4°2 ) 420 ZH 15* 24 21 31 35* 

BftaSM 140T7V4 22 29 1 4 7 

(-1SB) *60 3 10 It m 12 15S4 

Ban SO 12 33K42it 8 22M 37 
(*554 I sag 1 U »1t 48M 54M 70H 

Qtrtlta 425 1 st - - 8 - - 
f«aj 450 3- -2BH-- 

COdrtNta 500 15H SB 4BM 4 19H 28 
(*511 ) 550 1 14 23K 43K 9DH 57 

CttalUn 530 ItVtZEV, 38 7W 30 3314 
rSSO) 800 1 8 18 58 87 » 

C 800 19 42 81 7»3Stt 44 

rs*0 | 850 1 »» S7K 43 COt 73 

firm-** 500 35 80 «H 2 II 23 
(*628) 550 4* 24 35% 25* 43 48 

lnk* snr oso 26 46* sot 2* 14 a 
CB73) 700 2* 18 20* 29* 38 46* 

tala 4 5 420 12 ta 35 3* 13 20 
(*20 1 460 1 « t7 3S* 37 42 

NaWnt 460 19 34 44* 3* S 25 
P474 ) 600 2 16 28 20* 46 47* 

Sotttuy 300 12 29 87 8 17* 2B 
r»7 ) 420 1* 15* 23* 26* 34* 42* 

Start Tara. 700 14 3V* 41* B* 26* S 
(*706 ) 750 1 11*20* 48 60 63* 

Stettss 200 38* - - 11* - - 

(-214 ) 220 19 - - SM - - 

TMafear 79 7* - - 1* - - 

P84 ) 06 2 — - 5* - — 

Utaer 1000 17 50 83* 11 30* 42* 

noon 1050 z 939 * 52 * 60 * eo 

2NMC8 750 14* 85* 5Z» 10* 34 45 

f751 ) 800 1* 15* »* 52 87* 75* 

OjNOa Mia Ora ta Hfj ta FN) 

Brand ta 420 17 34* 43* 8 21 2S* 
r<26 ) 480 3* 17 25*37* 45 5TK 

Udtnte 160 a 26* 31 2 8 9* 

H73 ) 180 5* 14* a* B* 18 19* 

IMflBCta 300 14* M 31V. 6* 18 26* 
(-306 ) 330 3 1218* Z7 38* 38 

OpOBP sra ta ta Sep Dra ta 

Ream 140 11* 15* n 8* 11* 14 
(-141 ) 180 4 7* 14 2ZW 27* 28* 

252 Ita ta Rrt tap 0o» ftb 

BrtMn 46039*59* 77 B 28* 37* 
(-490 ) 500 15*38* 58 2> 47 68 

BUT 08b 420 22 34* 47 8* 3124* 

(*436 ) 488 4* 19 2827*44*47* 

BIB 380 22* 31 38 3* 13* 16* 
(■377) 390 815*0*17* 2882 

BA7UE0B 390 11 S 26* 12* 21 28 
(-396) 42D 1* 8* IS 36 40 47 

MOT SOI 420 33* 42 51 ZH 12 14* 
r<S0 ) 480 7 20* 30 10* V 33* 

Esta Bee 550 S3 72* 02 2* 14 22* 
rS98) BOO 10 41*52* 17 34* 44 
taaen 420 SB* 38 48* 3 14 IB* 
T442) 480 4* 17* 3 21*34*36* 

GS 260 22* a 33* 1* 5* 9 

P27B ) 280 7* W* 22 7 16 17* 


C363) 

Option 

8M 
rsse J 
haras ** 
r<74» 
Opttan 
Atarta 

T403 ) 


— cm pub — 

Optfac Jim ta Ftrt Aag Mnv FeO 

(tensor 240 18*28* 28 1* 7* 10* 
("255 ) 280 5* 13 17* 9 17 21 

Hsu (34 9 18 - 3 9*- 

nOB) 154 1* 7 - 17 S - 

Lone Ml 180 14* 22 24* 3 11* 14 

n8B ) 200 4 12 15 13* 23 26 

P * 0 850 83 9 60 933*42* 

P672) 700 BZ7*4Z»35* 63 70 

Ptagon 180 0 1818* 5* 12 15 

(182 1 200 2 811*20* 24 27* 

Pruteotta 300 12»a* 28 BH17*a* 
(-305) 330 2* 9 15* 20 36* 39 

mz 800 S3 74 91 5* 26 32* 

C641 ) 850 19 48 - 64 24* 49 56* 

Ftetnj 500 38 50 59* 5 20* 27 

(■528 > 550 7 24* ant 26* 40 54* 

Rqa tae 240 13 23 20* 5* 10* 18 

(*246 ) 200 4* 14 10 17* 28 29 

Teas 220 a 27 32 2 8 11* 

(“237 ) 240 B 16 a 9 17* a 

Vo dri c na 500 SB* 73 81 Z* 13 22 

1-540 ) 550 18 42* 52 16* 33 43* 

ntaee 354 18 25* - 5* 16 - 

f-363 ) 384 3* 11* - 24* 33* - 

Option Jrt pet Jra M OB Jen 

BAA 950 16 48 E 11*31* 43 
("954 ) 1000 2* 26* 42 49 61 89* 

hones IW 460 10 35 40* 3 13*23* 
("474 l 500 2* 15*20* 29 37 48 

Opttan Sep Pee ta Sep Dec ta 

Atfiqr Natl 390 25* 34* 46 12* 18 26* 

(■403 ) 420 11* 20* 32 30 34* 43* 

Aettad 25 5 0* 7 2 3 3* 

C28 ) 302* 4 6 4*5*6* 

BaRttfs 550 20* 41*69* 23* 32 42* 
rsss ) 600 11 a 29* 59 84* 73 

Bra Ckde 300 30* 38* 48 B 13* 18* 

(*321 ) 330 13* 21 30* 24* 29 31* 

Brthta ta 2B0 15 IS M 11 18* 20 

n»1 1 300 0* ID 15* 23 32 33 

tans 180 19 2S 29* 8* 13* 15 

(184 ) 200 8 T7 20* 19 22* 25* 

«U0M 160 14* 18* 73 6 8* 10* 

(187 ) 180 6* 9* 18* 17* « S* 

Lontn 130 9* 14 17* 9 12 15* 

Ha ) 140 5* 10 13* 15* 18 22 

MO Pram 420 39* 49 49* 13* SI 25* 
(■432 | 460 10* a 29* 35* 43* «7H 

Sent Pont! 360 24* a 36* 15 20* 26 

(■372 ) 300 10* 18 28* 33* 38 43 

Sean 110 12 14 18 3* 5* 7 

(117 ) 120 5* 8* 11 7* 10* 12 

Fora 220 a* 25 30 7 12 15 

(*230 ) 240 11 15 20*16* 23 25* 

tame 180 14* 18 22* 10* IS 18 

na ) 180 8 BW 14* 23 28 30* 

Ttaorn D9 1050 43 MM* 47 82 78* 
(10681 1100 23*49*64*77* 91 (OB 

TSB 200 12 10 23 11 14* 19* 

ran ) 220 5* 11 14* 25 Z7 32 

tattra 220 11 16* a* 14 17* a 

f-220 ) 240 5 9 14 20 31 33* 

SWchtk 600 54 69 84H22K34* 44 
(■628 ) 650 a « 69 49 81 69 

Optten Jnl Qa J— Jal Od Jen 

BSD SO 24 44* B 5* 34 44 

{*567 J 600 3 18* 33 37 66 73* 

HSBC ftp M 700 40* 74 M 6 30 53* 

(731 > 7U 11* 48* TO 28* 64 ' 79 
Roden 475 11* 31* - 11 26* - 

(-476 ) 487 6* 25* - 18 32* - 

Option An ta HP Aug NM Ftt 

fefefejn 180 14 si a 2* 8* 12 
(193) 200 3 14 18*11* 19 22 

’ Uhderiyrtg seamy petn. Plenu m shorn* » 
fanMtf en cMng oBv pitas. 

•toy 18 Total contracte: a .70S Cta lijGOi Puct 
20198 


Rtoee 

Frito 

Seme 

41 

23 

a 

0 

2 

13 

63 

64 

73 

163 

83 

385 

54 

39 

97 

127 

79 

298 

29 

11 

5 

61 

94 

184 

158 

27 

281 

38 

54 

40 

784 

466 

1394 


RISES AND FALLS YESTERDAY 

B 

British Funds 

Otar Fixed merest - 

Mheral Extraction - 

General Mmtate — i 

Consumer Goods 

Swvfces — 1 

UMta 

financMta 

Investment Trusts 1 

Otais — 

Totals 1 

tae brara en ttmaa csrnpratee MMd on ft* London Brae Semcm. 


TRADITIONAL OPTIONS 

Cate: Acorn Consular, Auto See 0% Prf. Christie taxip. Tiritow 09, Wlagta. Puts & 
Cads Weenrtlejr. 


LONDON RECENT ISSUES: EQUITIES 

rtaus Amt MM. Close 

price pNd cap MM price 

_P up (On) Hgh Low Stscfc p 


100 

F5. 

32.1 

105 

99*2 BAGUStnC 

1O0z 


540 

FP. 

149 

45 

41 feiocue 

41 


105 

FP. 

9.79 

114 

105 Boomatxry Pb 

114 


150 

FP. 

175 

180 

156 CPL Aromas 

15B 


- 

FP. 

4.44 

24 

» Carnal 

24 


100 

FP. 

55J2 

106 

06 Chaatarton M 

100 

+2 

220 

FP. 

1079 

22S 

220 Euradotor 

220 


- 

FP. 

- 

35* 

301* Hw Arrows Mb 

32*4 

+*i 


FP. 

KL1 

166 

161 J9A 

181 

-1 

- 

FP. 

- 

77 

63 JF H Japan Wrts 

67 


3 

FP. 

1.73 

3*4 

3 John Mans&eld 

3'+ 


120 

F.P. 

345 

IX 125*2 Ncxcor 

127 


100 

FP. 

685 

98 

84 CM Mutual SA 

« 

+1 

- 

FP. 

6.16 

45 

43 Do Wararta 

44 


- 

FP. 

175 689^ 087 U Oryx Ftrd 

6871* -2b 

- 

FP. 

1189 

65 

a Schtodar Japan 0 

KPz 


- 

FP. 

12JD 

48 

42 Do Warranto 

48 



FP. 

445 

92 

08*2 Scudder LaUn 

89 


— 

FP. 

892 

44 

42 Do Hbts 

43 


100 

FP. 

245 

99 

06 Shtns HY Snter C 

99 



Not Dw. Gra 
dhr. cm. ytd 


WN234 2.7 32 
LN3-0 2.4 2.4 


RN3J 1-fl 3A 
WT9L5 OB 4J 


LN2.4 4.1 1J 


W4J8 25 45 


- FJ». 155 13 11 8th Country (tens 

100 FP. 352 97 97 TR Euo Gth Pig 

- FJ». - 14 B>2 TR Prop WriS 

272 F.P. 1,7005 282^ 280 31 

FP. 215 BB 86 IMmX Ceraato 

150 FP. 525 150 129 VO 

- F.P. 635 49 30 VUeotoQlc 


RIGHTS OFFERS 


13 

97 

iriz 
2B2h 
SB +3 
135 +1 
30 -2 


Issue 

price 

P 

Amount 

Pi** 

ito 

Latest 

Renun. 

date 

18M 

Hgh Low Stock 

47 

Iti 

197B 

tom 

S 1 2pnt ^Antariey 

410 

W 

18m 

54pm 

39pm Carer Aten 

“ 

Ml 

i3« 

125pm 

61pm Charter 

40 

Ml 

25« 

tom 

3'2 pm GaceSHr 

13 

M 

22m 

itan 

i> 2 pm taycart 

24 

» 

Tsn 

2^tpm 

2pm Helene 

70 

M 

ism 

13pm 

2pm jArasmortte & Brcho 

70 

N8 

1 am 

t2pm 

372pm London ML 

105 

M 

2W7 

10pm 

3pm Oriel 

9 

Hi 

am 


^pn> Pansnauri 

15 

M 

25/7 

7pm 

1*2 pm Quflgotti 

IX 

N2 

14/7 

2Epm 

Bpm tasido 

73 

M 

5m 

3pm 

\un» Wfflos City ofLon 


FT GOLD MINES INDEX 



Jd 

*** 

Jri Jri Tpr 

ton rite 

52 n* 


U 

on ta 

14 n m 

ytaUK 

M0I IM/ 

toM toll! fcilx, pH 

16S397 

+20 

101693 1911.17 195358 

ua 

236700182296 

■ tomteta 

AStadQ 

302398 

+35 

2918J2 28B3E6 2S4SJB 

<43 

344058 190223 

AutoMin 

20398 

+19 

246058 2488.64 2433.16 

297 

301309 1893. IB 

Marti tonria ( 12 ) 

12655 

+1.1 

153852 154556 168155 

a 68 

2B3906 138390 


CeppWx. ta ftraicrt Iknes Urrtted ISBt. 

Hcpw in tHEtab rtew nrabor of ccnverfea. Bxsk U3 Data Bern tar 100050 31712TO. 
taderaeser Gets Mira Mnc J% 18: 2305; dra's tanoK +1.7 pofera; Ye* an« 2ZO 
Lata prices mrairataoie to He adkkn. 


N654 1.1 25 
LN3.75 15 45 
WN55 15 &1 


CtoNng +or- 

P 

5pm 

47pm +1 
124pm 
8>2pm ^2 

l^pm 
2pm 
2pm 

3vpm 
8pm -i 
} Wpm 

5*2 pm -1 
Bpm 

Mpm 


FINANCIAL TONES EQUITY INDICES 

-My te *tl 15 Jj^r M is Ju» 12 Yr ago tfigh 

O n*nwy Sbara 24055 Z4005 23814 23585 2332.1 22345 2713.8 

Old. dv. yWd 4.10 «.19 450 455 450 4.14 458 

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P/E radio not 1856 1852 19.07 1852 1859 2559 3353 

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Eqiity bargatnsf - 38539 29535 27,792 24,148 

Shams traded (mOt - 673.4 6615 6432 4874 

T Stag Hra+nata btaess rad onnaes unaer. 


T • - 






FUsiANClAL TIMES TUESDAY JULY 19 1994 


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-4 f 




FINANCIA L TIMES TUESDAY JULY 19 1994 















































































32 


FINANCIAL. TIMES TUESDAY JULY 19 1994 


CURRENCIES AND MONEY 


MONEY MARKET FUNDS 


MARKETS DEPORT 

Cabinet row hits lira 


The fall-out from the cabinet 
squabble In Italy dominated 
foreign exchanges yesterday as 
the lira fell to a 1994 low, 
unites Philip Garntfi 

The first serious schism 
within the two-month old gov- 
ernment drove the Italian cur- 
rency to a low of LI ,003.60 
against the D-Mark before 
recovering to finish slightly 
firmer in London at Li,QQ 2 , 
from L993.3 on Friday. 

Traders were concerned 
whether what appeared to be 
Mr Berlusconi's first serious 
policy error might not spill 
over into problems in manage- 
ment of the economy. 

Elsewhere, the dollar had a 
quiet day. Dealers said the US 
currency was in a consolida- 
tion phase after its recent 
sharp fall. It was firmer 
against the yen, closing in Lon- 
don at Y9&355Q from Y97 .9050, 
but lost ground against the 
D-Mark to finish at DM1.5428 
from DM1.5558. 

The D-Mark was stronger on 
the back of political uncer- 
tainty in both Italy and France, 
where the communications 
minister resigned over the 
weekend in connection with 
corruption charges. 

Sterling hpri an uneventful 
day, with the market ignoring 
the June public sector borrow- 
ing figures which were below 
expectations. 

Consistent with the recent 
pattern. It was firmer against 
the dollar - closing at 3L5644 
(Torn SL5586 on Friday • but 
weaker against the D-Mark, 
finishing at DM2.4135 from 
DM2.4248. 

■ Analysts are currently 
playing down “apocalyptic" 
scenarios for the lira, but none 
rule out the currency testing 
the historic Vow of L1.010 
against the D-Mark, touched in 
December 1993. The next 
important development will be 
the parliamentary hearings 
into file constitutionality of the 
contested decree. 

Mr Giorgio Radaelli, senior 
economist at Lehman Brothers 
in London, said the dispute 
between Mr Berlusconi and his 
coalition allies was the first 
open rift since they entered 
government. He said he 
doubted, however, whether 
there was a “great risk" in the 
next few weeks of a break-up 


Lira 


Aosinst the DM 0Jre per DM) 
94Q 



Source: FT CS'apWta 


■ Pound jw M— i Yotfc 


Jill 18 

* — 

-Pm. data -- 

Sspot 

12620 

1J610 

inUi 

1-5612 

>4603 

3 rath 

1.5604 

1SS92 

lyr 

1.5586 

1.5500 


of the government. 

But If this perception 
changes, it is likely to be 
accompanied by heavy selling 
of Italian assets by foreigners, 
which would depress the lira. 

At the moment. Investors 
seem to be standing back from 
selling the lira. Mr Radaelli 
said this might be explained by 
parliament going into recess 
on August 4. 

The parliamentary recess is 
normally a good time for Ital- 
ian financial markets. There is 
also hope that when parlia- 
ment reconvenes, it will be to 
pass a budget which gets to 
grips with the Italian deficit 
problem. 

Mr Radaelli said the market 
was reluctant to push the cur- 
rency far beyond the important 
pyschological level of LX, 000, 
for fear of nhlnaRhing " mas , 
sive" intervention from the 
Bank of Italy. 

He predicted, however, that 
so long as the currency did not 
fall too quickly, the Bank 
would stand back until it 
reached a level of Ll,02S-Ll,030 
before intervening. Mr Radaelli 
said there was currently tittle 
risk of imported inflation. 

The bearish mood in Italian 
markets was evident in the 
Eurolira three-month interest 
rate future contracts. After los- 
ing 16 bads points on Friday, 
when the crisis first emerged, 
the September contract fell 
another 35 basis points to fin- 
ish at 91.11. Volume was also 
heavy, with the September 


contract trading 12,418 lots. 

Mr Netl MacKinnon, chief 
economist at Citibank in Lon- 
don noted that Italian financial 
markets were used to political 
uncertainty, adding that lira 
weakness “tends to be quite 
short-lived." He said the lira 
was also suffering from the 
current environment of general 
D-Mark strength. 

■ The mam influence on the 
dollar was the comments of Mr 
Fred Bergsten, the Washington 
economist with close ties to 
the Clinton administration. A 
long time dollar bear, Mr 
Bergsten told the Wall St Jour- 
nal that “the yen is close to its 
peak, and its probably going to 
turn around.” 

He said it could go to Y90 
against the dollar, but would 
not stay there long if it did. 

Mr MacKinnon said the mar- 
kets saw Mr Bergsten “rightly 
or wrongly, as the mouthpiece 
of the US Treasury." Mr 
Bergen said the markets would 
soon realise that Japan's trade 
surplus was going to shrink, 
a nd this would allow the dollar 
to stabilise at Y100-YU0. 

The market is now looking 
ahead to the Humphrey Hawk- 
ins testimony of Mr Alan 
Greenspan, the Fed chairman, 
tomorrow. But Mr MacKinnon 
said any references to the dol- 
lar were likely to be too bland 
to be useful. 

■ Overnight money traded 
between 4 and 6 per cent in the 
UK as the Bank of England 
provided 8792m assistance to 
the money market after fore- 
casting a shortage of 2900m. 

In Germany, call money 
rates finned slightly to 4 JO per 
cent from 4.80/4.85 per cent. 
Analysts said they still antici- 
pate a further decline in the 
repo rate this week. 

Volumes were low and price 
movements small in the inter- 
est rate futures market. The 
December eurosterling con- 
tract closed at 93.99, while the 
euromark contract finished at 
95.13. 

■ OTHBH CUIWWCBS 

M 18 £ S 

MOT 156.783 - 156388 100230 - I0O33Q 
tea 7722X0 - 272SJJC 174000-178000 
NMrt a <823 - 04638 02 SSS - 02963 

3M 347SL9 • 348203 22225J) - 2Z25&0 
tom 315030 - 318008 201720 - 202000 
UA£ 52343 - 07458 18715 - 18735 


- POUND SPOT FORWARD AGAINST THE POUND 


Jui 18 


Cteufig Chance BttL'dUe Day** MW One worth TOe* imSN 
mW-pcaa cn qay agga d h^h tew RSe 3£PA %PA 


Om year Banket 
R tta MBA Eng. Index 


Europe 

(Sen) 

16.9696 

-0 0693 

819 - 972 

17.1160 16.9533 

T83SSS 

A3 

1&S9CZ 

oz 

. 

. 

IIW 

BeKpum 

IBM 

49.re2Q 

-02535 

196 -<W 

SC. *510 439432 

45 7S7 

-06 

43822 

-05 

49877 

-as 

1)09 

(OKrJ 

S.4926 

-O.OMT 

87 ? - 974 

9.5433 34767 

94596 

-03 

05*47 

-0.9 

3 5597 

-a? 

117.3 


[FM} 

7J954 

-&045 

B58-CSC 

B.csso r-sasa 


- 


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02834 

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[FFri 

8 i8£6 

-a 0362 

788 - 913 

S.3IE5 82703 

82899 

-06 

82974 

-0.0 

ao 

iio.o 

Germany 

(DM) 

2.4135 

-0.0)13 

125 - 145 

34103 7.4291 

24188 

-0.1 

2412 

as 

Z3BZ 

09 

1214 


ICrJ 

36063 

-1S32 

724 - 201 

363328 354JMS 

- 

- 

" 

■ 

" 


■* 


iiq 

1.0141 

*00007 

133 - NS 

tots: ijct: 

15144 

-3.4 

10)54 

-03 

1.0184 

-0.4 

1C4.4 


fU 

241982 

4983 

973 - C90 

2422.SS rJiats 

242632 

-3J 

243237 

-as 

2490 37 

S3 

722 


IU=|J 

49.7620 

-02525 

196 - OM 

fOTSlC 456422 

49 78? 

-06 

49.822 

-as 

49647 

OS 

noe 

Netiwtands 

Pi 

2.70&4 

-00112 

070 - 057 

2.7165 2.7C23 

2.7C36 

-C.: 

2.7373 

02 

2.688 

as 

i2i a 


INKO 

105735 

-0.0333 

684 - 766 

136ES3 1CM90 

10570 

CJ 

1C SSI 

-03 

10.567 

0.1 

86.7 


(&) 

245.810 

-0 878 

STS - 943 

251.211 J48.572 

250 54 

-83 

2S3.72 

«r.s 

- 

* 

- 


(Paj 

193.533 

-0.825 

410 • 655 

aasji '99.155 

2CCC33 

-30 

rnosa 

-27 

20068 

-2J 

06.4 

Sweden 

/sxri 

120223 

-0.0)51 

737 - IKS 

12CSS3 5I.9ES* 

ISMcS 

-2.3 

12-!003 

-2^ 

123253 

-2.5 

732 

Swnrertares 

UK 

(SFr) 

153 

203S8 

-Q.0093 

346 • 368 

2.0579 2.C3S1 

JO« 

03 

20313 

08 

20077 

1.4 

1212 

79A 

Ecu 


12649 

-00037 

653 - 654 

-.2719 17&1Q 

1 X6B 

-1.0 

15677 

-09 

12895 

-04 

- 

SORT 

America# 

- 

0.933642 

- 


1i640 1 560 


* 

' 





Argertina 

fPssa) 

1JSS20 

*OJX>73 

624 - 633 

- 

• 

■ 

- 

- 

■ 

~ 


l«) 

1.4560 

*O.Ct&4 

561 - 

1.48CS 1.4581 

* 

- 

- 

■ 

“ 

“ 


Canada 

(ca 

2.1550 

*0 0331 

541 - 553 

2.1665 2.1512 

2.1568 

-03 

2.1538 

-as 

2.1824 

-1.3 

8 S.8 

Meiuco fttefe Pose) 

5J227 

-0.0228 

17B - 278 

S 227B SSt 4S 


- 

■ 

- 

■ 

■ 

- 

USA (SI t.£6« 

Pacfflc/MkfcOe Emt/AMca 

-0.0053 

640 - 647 

1.5656 15657 

T463? 

0.5 

:-5«ra 

0.4 

t.sa? 

03 

62.4 

Awsirada 

IAS 

2.1355 

*0.0139 

343 - 36? 

2 1337 11315 

2.1255 

0.0 

2)368 

-02 

21S48 

-0.9 

- 

Hong Kang 

(HKS) 

12.0845 

*00448 

610 - 873 

izcssa izceas 

12 CSJ6 

C.4 

120735 

0-2 

120866 

0.0 

- 

imfia 


49.00M 

*0.1824 

549 -646 

49.1C3C 48.S91C 

■ 

- 

• 

• 


• 

“ 


(V) 

153862 

-1267 

788 - 325 

isaeso 152.523 

15i4fi7 

32 

152.707 

00 

140822 

04 

190.4 

MaJaysa 

(MS) 

40579 

*0.0)41 

562 -596 

4.06C9 4C6)0 

- 

- 

- 

- 

- 

- 

- 

New Zealand 

(N2S) 

2.6149 

*0.0124 

132 - l£6 

2.6197 2-6C83 

2.B191 

-2.0 

2X277 

-10 

2.6502 

-IS 

- 

PMBppines 

(Peso) 

4U772 

-0.1521 

763 - 775 

41.7775 40.5757 

- 

- 

- 

- 


■ 

- 

Saufi Arabia 

pm 

5 5871 

*0.0216 

655 - 636 

£.8715 5 3573 

- 

- 

- 

• 

• 

* 

- 

Snoscore 

fSSJ 

awn 

*0.0043 

613 - 632 

2.2642 2 2524 

- 

- 

- 

- 

* 

* 

- 

SA«ta [Com. 

1 W 

5.7280 

*0.0117 

225 - 284 

5.73ES 67122 

- 

- 

- 

- 

- 

- 

- 

S AMcaF'nJ 

P) 

83848 

*0.0295 

67B • 020 

70077 8.9665 

- 

- 

- 

- 

- 

- 

- 

South Kama 

Taiwan 

Ttaland 

(Won) 

era 

m 

1262.66 

41.5887 

39.0306 

*4.4 

+0.1642 

*01435 

220 - ZC2 
683 • C33 
06 2 - 549 

1263.6C 1260S5 

- 

- 

‘ 

- 

* 

■ 

“ 

39 0830 36S800 

- 

- 

- 

- 

- 

- 

- 


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tfw ^ Socf ttBe i CerfwxJ (tom THE YflJUFEUTSFS CLCSN3 SPOT RATES Sent* tBUa are nanM Cy 0M FT. 


DOLLAR SPOT FORWARD AGAINST THE DOLLAR 


Julie 


dosing 

Change 

BM/oTnr 

D«y*a mid 

One prromh 

Three months 

One year IP Morgan 


mid-oofrtt 

on day 

spread 

fign 

lew 

RSa 

MPA 

Rate 

MPA 

Rata 

MPA 

index 

Europe 

Austria 

Ocbl 

1Q.BS35 

-0.C345 

560 • 630 

10.9335 10S38S 

roses 

*0.5 

10.673 

-05 

108105 

05 

1043 

Belgium 

(SFr) 

31J10O 

-0.28 

900-200 

32.C2O0 31.7010 

3184 

* 1.1 

3168 

-0.9 

3138 

-05 

1063 


PKi) 

6.0681 

-0.0468 

£63 - esa 

60846 

6.0590 

40741 

-ta 

6.0851 

- 1.1 

01221 

-09 

1053 

Finland 

(FM) 

5.1110 

-0.0464 

060 • 160 

5.1380 

E.1C55 

5.114 

-07 

5.1165 

-0.4 

5.1555 

-09 

77.1 

France 

(FFri 

52965 

-0.0428 

940 - 933 

541C5 

55835 

53013 

-t.i 

53077 

-06 

52828 

03 

106.1 

Germany 

< 0 J 

1.5428 

-0.013 

425 ■ 43) 

T-54S0 

15400 

13133 

-04 

7.5433 

-Ol 

13338 

as 

1008 


(Dr) 

231300 

-Z 1 

SCO - 430 

23ft TOO 233 l0C0 

234.65 

-8.9 

2355 

-IB 

2373 

-1.9 

062 


m 

1^*27 

*0.0047 

419 - 43S 

1-5525 

15417 

1-5413 

0.7 

1-5338 

0.8 

1.5328 

08 

- 

Italy 

IU 

1S4&6S 

*06 

650 - 722 

154&75 154125 

1551.6 

-3.7 

15602 

-3l5 

158535 

-02 

77.4 

Luxembourg 

(LFi) 

31.8100 

-028 

SCO - 3CQ 

32.C8O0 31.7040 

31.64 

- 1.1 

31.68 

-09 

31M 

-05 

1053 

Netherlands 

<Pi 

1.7313 

-00126 

303-3)3 

1.7383 

1.7275 

1.7318 

-0.4 

1.7309 

0.1 

1.7223 

0.5 

105.7 

Norway 

(WO) 

6.7591 

-0.0462 

573 - 6 C 8 

68375 

47453 

07826 

-06 

6.7871 

-05 

8.7425 

02 

963 

Portugal 

(Es) 

159.050 

-1.15 

COO ■ ICO 

160.600 158.770 

16028 

-9 3 

162-32 

-62 

169.45 

-63 

943 


(Pta) 

127.550 

-1 

ECO - 6 CQ 

126350 127.35C 

127.925 

-3.5 

12053 

-3.1 

130J1 

-28 

813 

Sweden 

(SKr) 

7.6852 

-O.C355 

814 - 685 

7.7263 

7.6435 

7.7022 

-2.7 

7.7367 

-28 

73832 

*27 

78.5 

Switaariond 

( 8 Fd 

1.3013 

-00107 

008 • 016 

:30*a 

J5933 

1.30C8 

04 

12994 

0.8 

13963 

1.1 

1005 

UK 

(S3 

1.5844 

*00053 

640 - 647 

13656 

1.5617 

1.5637 

05 

15628 

04 

1.5587 

03 

873 

Ecu 


12388 

*0.0082 

265 - 370 

1.2330 

1Z345 

18353 

1.4 

12331 

1.2 

13446 

-06 

- 

SORT 

- 

1.48321 

- 

- 

• 

- 

- 

- 

- 

- 

- 

* 

- 

Americas 

Argentina 

(Paso/ 

0.9991 

*00009 

9S0- 991 

a 5991 

08990 

. 

* 


. 

* 

to 


Blisa 

« 

0.9320 

• 

310-320 

03340 

09310 

• 

- 

- 

• 

• 

• 

- 

Canada 

(ca 

13775 

*0.0008 

773 - 778 

1.3735 

1.3755 

1J792 

-1.4 

1382 

- 1 ^ 

13994 

-13 

822 

Mexico (New Posol 

3.4025 

* 0.002 

000 - 050 

3.4050 

34000 

3.4035 

-0.4 

3.4053 

-03 

04127 

-03 

- 

USA 

(S) 

- 

- 

* 

- 

- 

• 

- 

* 

~ 

- 

* 

083 

Pecttc/Mfefc** EnVAMca 











802 

Australia 

IAS) 

1-36S! 

*0.0039 

646 - 656 

1.3683 

1.3839 

1.3663 

- 0-2 

1^»8 

-03 

13734 

-08 

Hong Kong 

(HKS) 

7.7249 

-0.0CC2 

244 - 254 

7.7ZS5 

7.7240 

7.7247 

0-0 

7.7254 

0.0 

7.7404 

-02 

- 


(R3) 

31.3675 

*00012 

eso - too 

315700 31-3650 

31.4526 

-33 

315975 

-20 

• 

- 

- 


(V) 

98-3550 

*0.45 

300 • 800 

98.4500 97.8500 

98.14 

2.6 

97.715 

28 

6539 

Ol 

1503 

Mafeyta 

(MS) 

ZS3UJ 

-0.0305 

935 - 345 

2.5345 

2.5923 

2.5846 

4J 

25735 

02 

2847 

-23 

- 

New Zealand 

(HZS) 

1.8715 

*0.0018 

703 - 732 

1.8736 

1.6892 

1.8724 

-0.7 

1.8743 

-07 

1.8796 

-05 

- 

PtvBppinea 

Peso) 

28.45 CO 

- 

000 - GCO 

26.700) 26.1000 

• 

to 

- 

• 

- 

- 

“ 

Seuifi Arabia 

(sre 

3.7505 

. 

503 - 508 

17506 

37503 

3.7518 

-04 

3.7559 

- 0.8 

07745 

-06 

- 


(SS) 

1^101 

-00024 

098- 103 

15125 

1.5090 

15Q37 

1.1 

1.5068 

08 

1.5001 

07 

- 

S Atrica (ComJ 

1 (RJ 

3.6603 

-0.006 

595 - 610 

3^650 

36555 

3.8758 

-5.1 

3.7041 

-4.8 

07808 

-03 

- 

SAWcafFH) 

« 

4.4650 

*0.0025 

550 • 750 

4.4S00 

4.4550 

4.4987 

-9.) 

4.5575 

-03 

- 

- 

- 

Scum Korea 

(Won) 

607.150 

-0.15 

100 - 2 C 0 

807.800 808300 

810.15 

-4.5 

813.85 

-02 

832-15 

-Ol 

- 

Taiwan 

(TS) 

28^853 

*0.0073 

7B0 - 925 

26.5350 28.51 EC 

26-6C53 

-0.9 

26.6453 

-09 

- 

• 

- 

Thailand 

(BO 

24.9600 

- 

400 - 600 

2457C0 24.9400 

25.0225 

-3.5 

25.15 

-02 

25.63 

-27 

- 


130H tM tor Jul 11 MfaMr sewed* In Om Oota Eeoc as* mo* <jrt» bm tax enema AM Rnwd ions are not tatty quoted loth* ftfeta 

Out «e rtpta fly eunont Jrttaiwt rates. UX. fretori 4 ECU araquoMd ii US ajnwicy JP. Mcrpm nMMtoXw JM i& Bssa m h o ItetalM 


CROSS RATES AND DERIVATIVES 


EXCHANGE CROSS RATES 


4id 18 


bft 

DKr 

FPr 

DM 

S 

L 

Ft 

NKr 

Ea 

Pta 

8 Kr 

SFr 

£ 

C$ 

% 

Y 

Ecu 

IMohan 

(BFr) 

100 

18.08 

1065 

4351 

2033 

4863 

5.442 

213* 

5003 

4009 

2416 

4382 

2010 

4331 

3.143 

3093 

2.5*2 

Danmark 

(DKr) 

5242 

10 

8.729 

2543 

1.088 

2649 

2383 

11.13 

2821 

2103 

1236 

2145 

1.063 

2270 

1.646 

182.1 

1.333 

Franca 

(FFi) 

8005 

11.48 

10 

2913 

1324 

2921 

2288 

1276 

3(to3 

2403 

1431 

2457 

1307 

2801 

1388 

185.7 

1327 

Germany 

(PM) 

2061 

0932 

3.432 

1 

0420 

1002 

1.122 

4379 

mi 

8284 

4.979 

0343 

0414 

0893 

0.848 

63.75 

0524 

inland 

00 

49.07 

9382 

8.172 

2 381 

1 

2387 

Z371 

1042 

2404 

1007 

1135 

ZOOS 

0386 

2125 

1342 

1513 

1348 

Italy 

w 

2056 

0392 

0342 

0.10 0 

0342 

100 . 

0112 

043 7 

1028 

8344 

0497 

0084 

0 . 0*1 

0369 

0.055 

8.380 

0052 

Nattarianda 

m 

1838 

0506 

0080 

0891 

0374 

8933 

1 

3303 

9138 

7337 

4.439 

0752 

0369 

0798 

0378 

56.83 

0487 

II, nil m, 

IWWJ 

(NKi) 

4738 

8.981 

7339 

2284 

0359 

2289 

2562 

10 

2304 

188.7 

1137 

1326 

0348 

2039 

1.480 

1453 

1.197 

Portugal 

(Es) 

2000 

0816 

0330 

0370 

0.408 

9727 

1.088 

4346 

100 . 

8018 

4331 

0818 

0.402 

0886 

0329 

81.88 

0508 

Spain 

(PtH) 

2434 

4.758 

4.153 

1310 

0308 

1213 

1367 

6398 

124.7 

100 . 

6.025 

1.021 

0501 

1.080 

0784 

77.14 

03S4 

Sweden 

(S») 

41.40 

7398 

8394 

2008 

0844 

2013 

2263 

0794 

2073 

1600 

10 

1384 

QB3? 

1.793 

1301 

1283 

1.052 

Swteariand 

(SFr) 

24,44 

4388 

4370 

1 . 1 B 6 

0498 

1189 

1330 

0192 

1223 

9739 

5.904 

1 

0491 

1358 

0788 

7539 

0021 

UK 


48.78 

9.483 

0286 

2414 

1314 

2420 

2708 

1057 

2483 

1993 

1202 

2038 

1 

2.155 

1384 

1533 

1285 

Canada 

(CS) 

2009 

4406 

3346 

1.120 

0471 

1123 

1357 

4305 

1183 

9268 

5378 

0845 

0484 

1 

0728 

71.42 

0587 

US 

CD 

8132 

8370 

6396 

1343 

0848 

1547 

1.731 

6.758 

153.1 

127.6 

7.865 

1302 

0639 

1378 

1 

88.40 

0809 

Japan 

« 

3233 

8138 

5334 

15.09 

0589 

16724 

1730 

e&ee 

1617 

1296 

7010 

1333 

0488 

1430 

1018 

1000 

0220 

Ecu 


39.34 

7304 

6360 

1308 

0302 

1913 

21*1 

0356 

1907 

157.7 

0502 

1.809 

0791 

1.704 

1338 

121.7 

1 


Von par 1.000; OnUi Mow, Ranch Flare, N w wg tei Kroner, and D e min Kronor par 10 ; Moton Franc. Escudo, Ua and Paaaea par 100. 


■ O-IHAItK WTURgg(iM&qPM 126^rapqrOM 



Open 

Latest 

Change 

Hgh 

Low 

Em. vol 

Open kiL 

Sap 

03463 

08477 

*00046 

08490 

08468 

34,633 

90332 

Dec 

0848*1 

06482 

+00054 

03433 

03482 

182 

8368 

Mar 

- 

06451 

- 

- 

- 

1 

890 


■ WOTS WWMC WmWBS ( 1 M^ SfM26UtW per SR 


Sep 

0.7670 

07883 

+0.0044 

07707 

0.7670 

17,782 

45387 

Dec 

07711 

0.7712 

*00058 

0.7723 

07711 

189 

1345 

Mar 

• 

07888 

+00008 

- 

- 

8 

0 


■ WM — TM KfTURW JMU) Van 1X5 par Yen 100 



Opm 

latest 

Change 

Htoh 

Low 

EsL vol 

Open InL 

Sep 

13278 

1.0220 

-03040 

13285 

13215 

22342 

89.828 

Dec 

13300 

1.0299 

-00038 

1.0310 

1.0299 

349 

4389 

Mar 

- 

1.0422 

- 

- 

- 

3 

711 


■ awim»ig romwea omm] eaz.eoa per g : 


Sep 

13620 

1.5828 

+0.0032 

13646 

13680 

8380 

39370 

Dec 

13636 

13640 

*00062 

13660 

13634 

197 

877 

Ma 

- 

1-5840 

- 

13840 

- 

8 

tfil 


EMS EUROPEAN CURRENCY UNIT RATES 

Jte 18 Ecu cci Rato Change % «J- from % spread Dtw. 

raea against Ecu on day can, raw » weteaet Ind 


Nattarianda 

2.19872 

2.14758 

-000249 

-224 

437 

• 

Belgium 

402123 

303663 

-00532 

-138 

4.67 

14 

Germany 

1.9496* 

191482 

-030275 

-1.79 

4.48 

- 

Ireland 

0808628 

0303842 

*0.0<B4S8 

-068 

324 

« 

France 

A 53883 

0.57431 

-000558 

034 

237 

-6 

Danmark 

7.43679 

793017 

-000759 

126 

135 

-8 

Portugal 

192354 

197291 

-0.128 

230 

032 

-16 

Spain 

15*250 

1S&300 

-0.081 

233 

030 

-18 

NON ERM MEMBERS 






Greaca 

284.513 

289.637 

-0398 

930 

-628 

- 

Italy 

1793.19 

192081 

+1233 

7.11 

-4.18 

- 

UK 

0.788748 

0.783815 

*0302616 

037 

1.74 

- 


Ecu mural raw* set by gfe5repseiC umn to*fa".OiwmtatoitataQmtelB rta»eaevng N. 

Pe icn naBachanoaaanitoEcmpcdihtatfMnpad— iaaeaiaafcQMa nqf.Da iMBarea «heya BM 
redo haerean two acmaaanna paroamapa dBwanca bs t * a w Bi s store m— t ie Bai mtrtrta toss 
for a currency, and tea meehaan pam wd paicanavi derfadanoT testtsita^tafltorteorea somite 
Ecu ew end ntts. 

n 7/VOSi taring aid Man ure suspend'd Man OK Aqureror* ctareiod by «m ftasrote Vmm. 


■ PWUUBUPHASKC/SOPTIOm 01.260 (caroa per pcxawQ 


SWw 


- emus - 



— PUTS — 

*■ 

Price 

Aug 

Sop 

Oct 

Aug 

Sap 

OCt 

1375 

8.78 

834 

9.10 

- 

018 

039 

1 J 00 

8.42 

838 

732 

035 

043 

0.78 

1325 

4.17 

4.73 

5.17 

030 

090 

IM 

1350 

91U 

3.08 

330 

031 

1-73 

231 

1378 

1,06 

136 

2.42 

2.12 

234 

330 

1300 

ma 

132 

133 

3.89 

439 

5.08 


Rmitaua dayre y*. Cdto 31 JW PUB 11^64 . Prea. drer*! span Inl, C«aa 08M83 P«a araaOB 


WORLD INTEREST RATES 


MONEY RATES 

July 18 Over 

night 

On® 

month 

Three 

mths 

Six 

mths 

One 

year 

Lcrnb. 

Inter. 

Ota. 

rata 

Repo 

rate 

Belgium 

4g 

54 

5ft 

SA 

ea 

7.40 

430 

_ 

week ago 

5 

54 

6 

6 ft 

6 ft 

7.40 

430 

- 

Franco 

SM 

5K 

GQ 

6 B 

°4 

6.10 

- 

8.76 

wsak ago 

5H 

6 M 

5S 

6 

6 ft 

5.10 


6.76 

Germany 

4.83 

4.86 

4.8S 

4.90 

436 

630 

4.50 

4.91 

week ago 

5.03 

*35 

4.9Q 

435 

MO 

630 

430 

433 

Ireland 

5 

5a 

3% 

OA 

6 ft 

-. 

- 

62S 

weak ago 

6 4 

Sft 

s# 

64 

64 

- 

- 

62S 

Italy 

8 M 

8 M 

84 

B5 

9M 

— 

730 

a is 

week ago 

8 M 

BM 

8 ft 

as 

9ft 

_ 

730 

830 

Netherlands 

4.65 

436 

4.87 

4.99 

5.18 

_ 

525 

_ 

week ago 

4.85 

4.88 

435 

636 

524 

- 

525 

_ 

Switzerland 

4 

44 

4ft 

4M 

44 

8.825 

050 

— 

week ago 

4 

4i 

4* 

4ft 

4ft 

0626 

33Q 

— 

US 

*4 

«4 

48 

5ft 

5ft 

_ 

330 


weak ago 

4H 

44 

4ft 

5& 

6 ft 

- 

330 

_ 

Japan 

2 

2 

34 

2 ft 

2 M 

— 

1.75 

- 

weak ago 

2 

2 

2 ft 

2 ft 

2 ft 

- 

1.76 

- 

■ $ USOR FT London 








Interbank Fixing 

- 

4 » 

4ft 

Bft 

SB 

- 

- 


week ago 

- 

4Vh 

48 

5ft 

6 ft 

- 

- 

- 

US DaUto CDs 

- 

4.37 

4.83 

430 

8.46 

- 

- 

- 

week ago 

- 

437 

437 

538 

5.88 

- 

- 

- 

SOU Linked Os 

— 

3M 

34 

3« 

4 

- 

- 

- 

week age 

- 

3ft 

34 

3ft 

4 

- 

- 

- 


ECU Unfcsrt Da mk) ntw 1 mac 50: 3 msec B ; 8 mSn 9J; 1 year 81. 3 LOOP MMbenk 
retea are rtlsred men fw Siftn Md to ore marttre by taw re to a nca bv*a st Ham each orating 
day. The bonks an Scnfasm Trust Sank at Tt *w, Scretaya end NaOonal W aaon tu cai . 
kU retea are ahoan tar toe domestic Manny HAto, US S Cd oat SOB Unhad OspeeRs ®*L 


EURO CURRENCY INTEREST RATES 


Jui IS 

Shot 

7 days 

One 

Three 

Sfa 

One 


term 

nodes 

month 

months 

montha 

year 

Belgian Franc 

S-4% 

5ie-5 

6ft -5ft 

ft-8k 

eft-sfi 

ft - ft 

Dsnbh Krone 

S^g -5J« 



ak-6 

ft _ ft 

efi-eft 

D-Mfiric 

4B-4JJ 

4% -4* 

4% -4k 

4 % -4k 

4a-^3 

6t< - 48 

Dutch adder 

4% -43, 

4% -4* 

4k : 4k 

4%-*H 

51 l-ft 

6ft-5ft 

French Franc 

bA-gA 


ft- ft 

6t4‘5ft 

5H-5H 

eft- 8 Q 

Potuguesa Eac. 12 ^- 11 % 

13 - 12 131, - 12k 13ft - 12k 

13 - 12k 

12 k - 12 k 

SeMsh PWBto 7k • 7*8 

7 f, ■ 7,i 

7ft -?ft 

7H-7tt 

ft - 8 

aft -ft 

Staring 

5»«-5 

8 ft -4H 

5ft-6ft 

Eft-Sft 

Sk'ft 

ft -SB 

Swiss Fiww 

4l«.3% 

4k -Ok 

41,-4 

4k -41, 

4k -4k 

ft* ft 

Can. DcBw 

SS|.S% 

5k -ft 

5k ■ ft 

5U-5H 

eft -eft 

7k -7k 

US Dote 

4tfl.it, 

4k-4k 

4>2-ft 

*k -4k 

SA -6 ft 

sfi-ft 

ttalan Ure 

a -7*8 

0 k - 8 k 

ft -ft 

aft -aft 

all - 88 

»k-Bk 

Yen 

21 ,. Zi 

2 k - 2 ft 

2 k - 2 ft 

25 -2ft 

2 ft - 2 k 

2 U* 2 fl 

AstaiSStng 

a%-2\ 

3%-3k 

4ft -4ft 

4k - 4k 

W-sft 

«*«J 

Snort tarni rates ero edi tar tfw 

US aaar end Y«v mum tea nays’ node*. 


■ THROB UOMTH PfBOR FVtURBS (MATTF) Paris tntartiank offered rate 



Open Seitptoa Change High 

Low 

EsL vol 

Open InL 

Sap 

942* 9426 +034 9426 

94.18 

12.541 

85.725 

Dec 

84.16 9420 +039 9422 

94.07 

133*5 

34.828 

Mar 

9330 9437 +014 94.11 

9330 

11.158 

32305 

Jun 

93.72 9338 *014 9332 

83.71 

2372 

24.960 

■ THRU MOUTH SUROOCLLJUl (UFFE)* Sim points Of IQOft 



Open Son price Change High 

Low 

EsL vd 

Open InL 

Sep 

9436 9438 331 

9485 

9434 

697 

2589 

Dec 

94.18 9423 332 

! 94.19 

04.18 

199 

2100 

Mor 

9330 8335 -002 

9332 

8330 

131 

1241 

Jim 

93.60 93.06 -OOf 

9330 

9830 

15 

299 


■ HW MOUTH MOMAWt PUTOHBS (UFRg)* PMIm pdnte ot 10096 



Open 

Sett price 

Change 

High 

Low 

EsL vd 

Open M. 

Sep 

95.18 

85.19 

♦am 

96.20 

95.17 

12963 

173803 

Dec 

95.08 

95.13 

+033 

95.15 

95.08 

14087 

1B8B63 

Mar 

94,91 

9437 

*0.04 

94^9 

9450 

16220 

157512 

Jun 

04.65 

04.73 

+005 

94.77 

9434 

8843 

02116 

■ TORES 

Mami 

BUKK4RA 

INT-KATS 

nimn 

0 JFFQ LTOOOm points oMOOM 


Open 

Sett price 

Change 

HOh 

Low 

EsL voi 

Open InL 

Sep 

91. IS 

91.11 

-036 

81 so 

9039 

12448 

30887 

Dan 

9080 

90^8 

-028 

9092 

0032 

8051 

44518 

Mar 

9030 

90A2 

-027 

9033 

9028 

980 

12383 

Jui 

8086 

9003 

-028 

9001 

8930 

1786 

0987 


■ W MOWTM BUWO —MS WlAHC FUTUtWS flJFFq SFrtm pgfrrta of 10O% 



Open 

Sett price 

Change 

HKHi 

Law 

EaL voi 

Open ML 

Sep 

85.78 

95.78 

+001 

95.78 

95.74 

2740 

24183 

Dec 

B&.54 

96^5 

*008 

96.66 

9534 

973 

9024 

Mar 

06.35 

93A6 

+ 0.10 

86-45 

SS35 

101 

0424 

Jun 

as. 09 

96.10 

*0.08 

05.11 

9538 

290 

1718 

■ TI 1 MH aaOKTH KU PUTUHB9 (UFFE) Eculm points at 100% 



Open 

Sett price 

Change 

High 

Low 

Eat voi 

Open ML 

Sep 

0336 

94 JO 

♦OOl 

9433 

8335 

894 

10475 

Dec 

83.78 

9331 

*002 

33,83 

83.70 

440 

8889 

Mar 

93-58 

83.62 

*003 

8330 

93.57 

78 

4162 

Jun 

33^S 

8334 

*004 

8334 

0326 

66 

1011 

* uffe (nm 

heded on APT 






■ TWm Moamf MMD0U3R (JMNQSlm points of 100% 




Open 

Latest 

Change 

rtgti 

Low 

Eat. vol 

Open W. 

Sep 

0435 

9430 

*003 

8430 

9433 

177,887 

iflnrwfl 

Dec 

0430 

84-24 

♦034 

8434 

94 24 

281,887 

437369 

Mar 

03.91 

93.99 

+005 

90.98 

0000 

135,428 

322.150 

■ US TREASURY BU FtfnfftSS (TMM) Sim per 10OM 



Sep 

0531 

9634 

+001 

9S.34 

96,30 

W16 

22,279 

Dec 

94.75 

94.00 

+004 

9430 

94.75 

415 

0.938 

Mar 

9430 

9432 

+ 0.02 

9432 

0450 

225 

1,780 

ai Opoi tamest Bp. ora ter pravtaus day 





■ BUBOMAHK OPTHHia (UFFQ OMIm pointa at 100% 



Strike 




ill 11 











Prtee 

Jui 

Aug Sep Dec J«4 Auq 

Sep 

Dec 

9300 

0.19 

020 022 028 

0 031 

n rw 

015 

0825 

0 

am ao7 0.10 

• 036 009 

0.13 

02 a 

9650 

0 

031 002 om 

031 032 

033 

046 

Sat rat. tafeJ. C mm vm PUB VH. Pt «WUI *v« Cpen H, Cats 2272)3 Puts 1SBB7S 

M WRO WM*SS nWMG QPIKM (UFFHJ SFr 1 m poktts of 100% 


Strike 

Price 

Sep 

CALLS 

Dec Mar 

Sep 

PUTS — 
Dec 

Mar 

8576 

012 

016 

031 


008 

026 

031 

9800 

034 

037 

013 

nog 

0.42 

068 

0026 

032 

003 

007 

048 

063 

037 


Bsl vat, toM. Cab in Puts 100 , favtoua tfc/s open K, Ca«b 30B Fun 1035 


UK H4TEREST RATES 


LONDON MONEY RATES 

jid 18 Over- 7 days 

rtght 


One 


Throe 


Stx 

months 


Om 


Martcrtt starting 
Staftng CDs 
Treasury B*a 
BsnkBb 

Loom author4y Oape. 
CUacount Msmat deps 


6-4 SU-Bi, Sit-6 
6i,-5 
4B-4« 

«a-« - 4jj S-lJj 

S^Z - 5 51*. 5 


- 5% S>3 - 5H 6>* - 6 
ag-^ 5M-SB 6H-SB 

SA-SA - 
5A-4fl 613 -Sti 


UK deartng Oar* base fending rata S 1 * par cent torn February 8, 1094 

Up to 1 1-8 W Sf 

null) month nonto nm the i ww 

Cart* or Tot dap. (ClOtWOO? t>z 4 s* SL 3h 

Cora or Tu dap. wafer Ei HVCOO B itwc. OaooatB MtOtfrsMi tarcam Vpc. 
tom. Mndar naa at (Dacounl 4J37Bpo. tXXD toad naa Sag. Export Ikanoa, Mahaup Qmr Jung 30, 
1004 Aomocf rata tor pmtad Jui 26. 1394 ta Aug 23, ia«. flerremaa 1 6 m OMpa. AaBrnre m tor 
paned Jun i, i«94 to June 30 190*. SdNmoa r* a V 8-lB70po. ptaanea Hogaa Bow Rtoa 6 >apo tmen 
Myi. ia&» 


■ THSOH MONTH aTBaJIQ FtmglP OJfFq esogoog point) ot 10096 



Open 

Sett price 

Change 

High 

Lnr 

Eat vol 

Open bit 

Sep 

9443 

9436 

ooi 

84.58 

94.62 

6279 

108860 

Dec 

83.95 

8309 

+0 01 

94 JW 

8381 

16480 

138701 

Mar 

9342 

9346 

-001 

0347 

9338 

5085 

07982 

Jun 

92.91 

92.83 

- 0.01 

92. S3 

92.86 

1608 

51068 


Traced an APT. M Open btareai tgs. are tar prortouS day. 


■ aiwwT arawjwQ omota (uffs) csoo.ooq points at ?oow 


Strike 

Price Sep 

- CALLS - 
Dee 

Mar 

Sap 

pure 

Dee 

Mv 

8480 014 

OIO 

o.oe 

aoe 

a«i 

1.14 

0475 004 

005 

OJOS 

0-23 

aw 

1.35 

9500 0 

0.02 

0.03 

044 

1 *03 

138 

Eat. «eL naa. Cdb 730 Pun 3094. Ptomm ita 1 , flpan K- Cate 223rn 

putozismz 



BASE LENDING RATES 


% 

Adam 4 Company .... 5 J 5 

AfledTruaBank „£ 2 S 

A© Bank 525 

*HsreyAflabacter S2S 

Sank at Banda — 625 

Banco SbaoWacajD^ &2S 

EJarkci Cyprus 52B 

Bar*ortretend 525 

Bankofinda 5JB 

BsnkofSootand .525 

Bardap 8 ar* 525 

BABiafMdEaR-.- 525 
«iwn SMjtoy 4 Co US A25 
CLBmkNadreland— S25 

C aw*MA ....ASS 

OyderetBtoBB* _326 

The Co-opamhrs Berk. 52S 

Cote&Oo 52B 

Crack Lyamofa sjs 

Cfi*us Popular Bank .,225 


% 

□mean Lawrta 523 

£ffiWBor*L>7taK}_ 62S 
ftandai 4 Gon Bank _ 6 
•flobert FtatOng 4 Co 525 

Ghta*.. 625 

•admass Mrtn s& 

HWtoBankAQ2Wch.526 

•Hembree Bank 52G 

HertMfe4GenbwBc.525 

•HiSamuat, S25 

C.Hoare40o ,42S 

Horgtarg&Shsngh* 625 
JJten Hodge Bank.... 526 
•Uoepoid Jo«ef*i 4Sons 52S 

UoydsBak __525 

Meohraf Bartclld 525 

MkSand Bank 928 

* Mount Bart*ig___ 6 

HaW/BStmlnaar 626 

•floaeraffiare 525 


% 

* flotougM (toarentea 
CorpoatonLMtodtsno 
longer euforbed as 
abareW g lnaB u ton. 8 
Royet Be ol Sootond - 625 

•STWiCumranaaca . 628 

7SB..~ - 52S 

•Urked Bkonto«6 525 
Unfty Trust BorkRc— 525 

Western Trust _S23 

IWoareyLaiJar — 625 
Vortotko e&rtk 520 

• Members of London 
Imaatment Banking 

■ kiacwnwaion 


Money Market 
Trust Funds 


tow ma sa( mo 

Gaults 4 Cd 

440!7*4loMMto=BCto afl-OiMj 

rww r wpM h i « ic i . a to d M h ■— y 

, a/r trims 


■BraarecctoDascta 


-I -I 


M 6M BfOr 


Oh Hong Bade JUndaolPlC FMte to 
ID * 0 * CM IM* *» an «w ini* 


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CARiPLO 

Cassa d« Rfsparmio 
deHe Provituae Lombarde S.pA 

Grand Cayman Branch 
US$ 150000,000 

Floating Rata Depositary Receipts due 1999 

In accordance with the Conditions of the Receipts, notice is 
hereby given that for the Interest Period from July 19, 1994 to 
January 19, 1996 the Depositary Receipts wi cany arv Interest 
Rata of 5 %% per annum. 

The Interest Amount payable on the relevant Interest Payment 
Date, January 19, 1B95 wil be USS 281.11 per USS 10.000 princi- 
pal amount of Depostacy Receipt and _ 

US$7,027.78 per USS 260,000 Pn Agent Bwk 

priodpei amount of Depos- 
itary Receipt. 



U.S. $ 100 , 000 ,fX )0 

Lonrho R nance Public Limited Company 

rwcgBoitoM wtoBiM ataofeyMereto^MfetodMitaBroBMtMdi M MarirefcPO 

Floating Rate Notea due 1907 

Uncondfflonaly and Imavocabfy guaranteed by 

Lonrho Public Limited Company 

iraapv^^InMIM^rEnolMlKltUaaM.rMMWI'HM'WM 


Notice is hereby given that for the three months Interest period from 
July 19. 1994 to October 19. 1994 the Notes wtt carry an mrerert rate 
of 8.0625% per annum. ^ The Interest payable on the relevant Ware* 
payment data, October 19. 1994 wW be U.S. $154.93 and OS- 
$1,549.31 respectively for Notes In denominations of U.S. StftOOO 
and U.S. 5100000. 


By: The Chase Manhattan Bank, N, A 
London, Agent Bank 

July19, 1994 




CHASE 


* 

c> 



T>m FT reedia# mow tioaHiw poepfe wtth prapwty i881M)#q*bJ" 

tta UK ttan nqr aaw iwmmmpm and man 

maker* Ota bnslnei* preail*e*/*lta* reading E»Bh* h ^* tt 4 BB * a 


For# fW ydwM ajmopri* am d detail# of avaBaM* adwiUNBiMt 
peeWane, ptaaomewtaot 

PAT LOOKER Tel: 061 834 9381 Fax : 001 832 9208 
tewed** WW, AhaaBdre Pawing#, Q ue en Street. Mam i l io atw Wf. 

■s*m oinc i». edm an 


FT Surveys 











» funds { 


FINANCIAL TIMES TUESDAY JULY 19 1994 


WORLD STOCK MARKETS 




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— Mh£ 



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10205 -455 - 


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5,350 -230 13® (.065 13 


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4.150 


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31 2250 10 
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23 $0 21 .50 32 
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4 « ^( ■ TOKYO- HOST ACTIVE STOCKS: Monday. My 18, 199* 

1B.32 15® 17 

3X0 2.55 ZB 

135 2® 27 

♦36 1230 7® 21 
+35 5.70 43? 4X 
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+35 936 630 52 
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12469? RogCmB 
551349 ttoyfiVC 
7036ft toyOM. 


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75 -1 675 75 
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ask -iiak’jj U 4 ** 

C $ 8 *, $i ks a* 



Stocks 

Ctoemg 

Change 


Stocks 

Closing 

Change 


Traded 

Prices 

on day 


Traded 

ITIWS 

on day 

Mitsubishi Hvy 

1i.7m 

808 

-a 

Sumitom Chemical ... 

2.6m 

526 

+8 

Mitsubishi (M 

10.4m 

1200 

+10 

Te*in 

13m 

567 

-17 

ACC 

Sftm 

1220 

-20 

A^ppon Sled 

2.2m 

344 

♦2 

Mitsui Sugar 

3^m 

617 

+31 

Kawasaki Steel 

2.1m 

409 

+5 

Toray Ind 

3.4m 

772 

+5 

Toshfca — 

2.1m 

777 

-5 


ZSSS: 


_ 13 

13 


-1 

-13 1.110 

_ 1,240 ___ _ _ 

+^ailsc zssSg 

_ 1.500 1«D IX _ EDUffll 
-13 744 650 _ _ Kktan 
-W4X202300 04B52 LravAx 


303 __ 


+3 536 
-1 77Y 60* 1.1 

-20 3240 2,410 _ 
♦3 582 3® OS 
-12 610 440 1J 
♦1 1,020 705 
-10 4350 3230 — 
+10 1.7® 13® _ 
♦3 658 447 _ 

— 1X40 1230 — 
♦3 70* 519 ... 

— 2X6D2.11D 14 
-30 2150 1310 _ 
-10 2J70 2010 _ 

-1 13® 666 — 
-10 609 415 — 

+1 1.0® 870 

4 ® 72® 63® 08 
-W9X40 7J1D — 
+20 4X50 3370 — 
-1013® IX® 06 
— U40 1X60 _ 
+10 1X1012® - 
+ 101,1® BS8 — 

— 1 A® 12X0 LA 
-10 612 361 1.1 
♦max® 7.430 — 
-M 1310 1X20 


— UonN 


9NMk 


_ TNCW 


— 1X0 
♦33 MS 

♦35 321 _ 

-31 137 038 54 — 

+.02 230 233 03 123 

+36 160 227 B-0 

— 1.78 1.12 23 22 

♦ XB 1.78 124 73 — 
♦33 2X5 20* 7.1 73 
+XB 202 1.12 22 ._ 

— 2JP 1X5 .... _ 

— 11X0 975 23 442 
+ 35 ( W P-fiS 62 
+.02 16X4 15.70 4 2 312 
+.13 140 2-45 4.9 — 

— 3X9 2.55 IX 7BX 
-32 1034 T3B 17 233 
+36 421 116 AO — 
-3Z 1106 1042 4.4 132 
+.15 7X0 625 20 _ 
+.10 1080 635 03 62 
+.1S 628 334 32 _ 
-34 2-79 1® 23 _ 
-03 4.15 1® 153*8 
♦36 5X7 4.13 4.7 — 
+31 215 138 — — 

— 24) 1X3 _ _ 
—32 142 2X0 4.7 132 
+.07 ISO 2.49 13 — 
-.05 925 530 03 — 
+36 430 233 32 — 
♦.10 036 4® 19 
-31 1.74 1.15 6X _ 

♦ 15 625 428 OX — 
+32 7.13 531 7.1 04 

4X2 188 6.6 9X 
+.14 7.10 535 42 — 
+20 10 no 51 _ 

190 265 _ 

+32 170 235 83 212 
-3* 235 131 ._. ... 
+33 4X0 142 4.7 _ 


INDICES 


US INDICES 




-198* 


JU 

15 


-1994 


HBB 


Bran* 09/12/77) 

Aft OntatasfUlfflOl 
M M*f|(l/T/90l 


QhK AtortXVI 2/841 
TtaM »dB<Z71«T) 


BB20 (OlAH 


pan 385 


HMBta AMsfflSK} 
CDRtete> (10751 
MUo§§ (U1JB3) 

CMa 

PGA Gen (31/I2M)) 
Q**j)BH«fi83/t/B3) 


M 

Itn^sr 19*7130 75COAB 16/2 

1715990 3W 

FCjteisra 

M 

3381 23 

228278 

2881.17 8/2 

185733 3» 

20723 

rotas 

MSIft 

T0I3L7 

20077 

9913 

2549® 30 
TURK) 30 

1937 AO 276 
90430 515 

as nBtnQnCntf 83) 
as ® STr (Eod 83) 

Hop 2>MhMd 

4173 

4843 

4194 

2043 

4123 

262.1 

454® 31/1 
4MS0 197 

40930 ZU5 
5573 0 2M5 

40033 

408X7 

40BX0 

460X5 2/2 

38987 226 


2D3V46 

8HZ51 

1974.10 

2438X4 3/2 

104531 1V7 

1062.75 

105735 

1055.12 

122225 1/2 

181138 E6 

to*® 

Orta SE0mSP/l«3) 

100632 

108502 

107935 

121V10 20/2 

98091 2t« 

141535 

14163* 

1404® 

1542X5 02 

1388® m 

Atefc'itep (2/1 /8S 

285031 

200190 

255733 

350837 4 ft 

258733 K3 

M 

407SL0 

*01550 4B79930 15/7 

3809 ® an 

Pratote 









BTXfI877) 

27513 

27340 

27197 

322BX0 192 

261286 206 


rex EHKaVViasq 


SBF 2S0 (31/1ZS0 
fx«xsinm\ 


«Z adtapl/1338) 

CanmaraarH1/12fi3) 

Dmpmamtf 


SJ 


ABn SEpn/IMKQ 

N Kaos 

Hang SmoPlAW) 

tad) 

BSE Serofl 979) 


44 

3820.49 

384231 

387959 193 

329936 aW 

Sktepora 





U 

41 8540 

419570 

4GOUO 230 

3859® 34* 

sesAi-ftteraowm 

54927 

545® 

54937 

6*1® 4/1 

M 

1962.18 

196434 

218239 1/2 

1868 ® aw 

Starib Mte 










JSE oak) (ZBS/Tq 

Z1540V 

21600 

21020 

2381® 4/1 

W 

43553 

43583 

488730 40 

3981® if* 

JSEKL (29878) 

64050? 

03873 

0307 a 

6737® 1543 






So®, ten 





36904 


365® 

41579 20 

368X0 22*5 

Ka«0npe(4/isar 

9443 

95024 

65Z72 

87*28 32 

178*7 

17633 

17553 

1372® 40 

1001.10 3/1 

MM SE (3912S5) 

304® 

30279 

30236 

35931 31/1 






Srarate 





134437 

M 

« 

150S2D2O 

120636 4/7 

MtasaRhGm (1/2/371 

14309 

14195 

14044 

160590 31/1 

2025.13 

« 

« 

23933 20 

10BLf8 iff 

Pidiratad 










SMB®>d01/12Sn 115737 

1171® 

117835 

1CSJ4 3171 

79906 

7BRBS 

78138 

85827 IBS 

75731 27S 

SBC GBOirai (1MS7| 

mam 

89914 

801.11 

10BU9 31/1 

226250 

22451 

22203 

8*5558 95 

Z14BJ0 27A 

Mb® 





209919 

209531 

205532 

2Z7I.11 ICS 

186932 2016 

WstfiBtFrCOWSBr 

653548 

640750 

630431 

8533® 197 






1MM 





83978 

829.10 

82470 

119L5B 13/1 

BOBS 25S 

BX&* SET pawn* 

134520 

1344.17 

130137 

T7S173 4/1 


4/4 


17*830 142 
5*4830 iarr 


Dow Jowes 

M 

15 

JL* 

14 

Jd 

13 

196* 

M® LOM 

anGonptadm 

Mgh Ura 

taiBtrte 

37S581 

373B2S 

370425 

3979® 

<nnj 

3583.35 

(4/4) 

3679® 

ovm 

4122 

cn/33 

Hm Bonds 

9732 

97® 

96.75 

18531 

P/ll 

«® 

HMi 

W977 

(16/1993) 

5199 

n/iow) 

Ttaapuil 

1601® 

1587.15 

1582® 

UB2J9 

on 

16*632 

UB2J9 

wm 

1232 

(9W3Z) 

mm 

11023 

1»i1 

17U7 

ID® 

evij 

1TW1 

7S£M 

pi/m 

1050 

DJ Ind. Dark Ngn 578035 (3783ft) ) Low 371237 (3637.48 ) (nroorattaft^ 
Day's 37X531 074836 ) Low 3731.15 (170331 ) (Actudt) 

DhmifAiJ and Poem 


QropraBat 

45415 

*5341 

448.73 

462® 

(2P) 

43932 

(4H) 

482® 

cam 

4 >5Q 

0/M3 

tateOtt? 

52997 

S2201 


BED® 

m 

51005 

pwi 

580® 

02M> 

182 

mm 

Reseda* 

45.09 

4536 

443B 

493* 

(1«I 

41® 

m 

4940 

mm 

834 

(W074) 


2M 


291 x 3 a n 


133430 67 


T15737 18/7 
899.10 13/7 


619433 ISO 


TWR59 V* 


NYSE Comp. 

251® 

250® 

247® 

267.71 

02) 

2*3.14 

m 

28721 

COM 

4® 

(2SMW) 

Mar Wt® 

*31® 

4303* 

427.73 

487® 

(Z/2) 

42267 

(296) 

487® 

(2 raw 

2931 

wnm 

WEDfOCnp 

■ RATIOS 

721® 

721® 

719® 

83133 

(193) 

69179 

mi 

90S® 

5437 

(31/1079 


919333 911732 8806-26 fiSDIJB 4/1 
*096.1 4121.4 <0816 4332X0 3X1 


JNata QfigMUVHa 481X3 4G029 612X8 6/1 


8S6BA4 4S 


3454X0 5/1 


44372 12/7 


-f-1 



r. 


- hf 


EED 0Mn3f*/lAS) 

m 

Baoe? comm Sal (1973 
M fisnad (4/liM 
jhm 

MM 225 (1E/5MG| 
«M300n/lMQ 
■6® (4/1/64 
2nd Sftdkn (4/1/68) 


179633 179154 1778.49 20X2» 2W TW4.14 1/7 


mao 


711.1* 

11483 


70121 *17.17 106 

11323 WTW» <0» 


2071734 25770.15 207110* ZUB2X1 
wm 30333 302A7 ItIJI 136 
1B8531 166*47 1B64S 17E73 1M 
2S0B81 2512X3 230532 2542X5 6/7 


ftSE CwgM4WB$ 1005JH 1012.11 1810X0 TM4X8 5/1 


ion 

944X0 ion 

179BB74 4/1 
2BBJ2 4 fl 
HOST 4/1 
UBS -VI 

32933 «4 


ttto* CBWte 1996) 228*93 230328 22246329BSSXB I3fl 

MOD 

IC ca(M K (1/1/7C9* 6303* B293 6273 6*U0 U2 

W B H MB 

Euterak IDOCSnOOT 1349.11 13*932 133733 1S4919 31/1 

Em Tcp-100 PBB®) 11873 1187^7 117137 131101 X 

XmJtewpinZfflS) « 31134 30436 899.19 5fl 

Bavqs EsmJTri/BZ) 15948 19989 196X3 WX 

m Cftff-dn STOCK BBW DIMM (MATTE) 



Jlft 15 

JU 8 

JU 1 

Year ago 

Dow Jones Ind. DM. Yield 

271 

274 

278 

296 


JU IS 

JU 6 

Jun 29 

Year ago 

S 9 P Ind. DM. yWd 

247 

248 

249 

2-56 

S 9 P tad. P/E ratio 

22-83 

2272 

23.10 

24® 

■ STTAranARD AND POORS BOO NDCX FUTURES S500 Dmea Index 

Open Latest 

Change 

H®*, 

Law Eat voL Open bo. 

Sap <5430 45430 

+0.10 

45520 

45420 48,61 9 203ft36 

Dec 457.60 45730 

+025 

457.60 

45730 

782 12,064 

Mar 46130 401 JO 

+0.50 

481.30 

461-30 

44 2JQ3 

open koras ogou are tor pravtaua dey. 





1302*8 21« 
114336 2UB 
29021 2V3 
141X5 ZV4 


■ NEW YORK ACTIVE STOCKS 



Open 

Sett Price Change 

Hfeh 

Low 

Eel voL Open bn. 


201 OlO 

2038.0 

♦ 59.0 

2039.0 

1999.0 

20348 

33 J 84 

Aug 

Sep 


2046 ft 

♦ 58.0 

2035.0 

2008.0 

- 

535 

200&5 

2054.5 

+593 

2051 J) 

201 BJ) 

1.479 

25 JW 1 




Opan trtarosl flcim tor pwetora tof- 


1 1® racape AraoaSo Aft OnSoaiy and 



Stocks 

Cbm 

0 *agB 

• VDtme taUort 




traded 

pria 

on dzy 


JU 15 

JU 14 

JU 13 

Mart 

1352100 

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34 


FINANCIAL TIMES TUESDAY JULY 1«J 1994 


4 pm dose July is 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


?% 

}Sh 

3*1 

28% 

9*8 


MM 

MOT Lot Sock 
17*8 13% AM 
16% imUMA 
73 57*0 AMP 
72% 53*8 AMR 
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20 iSAOTOhc 
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H5% 49%«C»L 
35 25% Afiec 
20% i6%AHimsn 
4 1% Affeen he 
48% 36% AkPfC 
39% 28% Alms Fit 
38% 19% Aegsitoc 
16% 14% Arte** 

26% 21% ASTch 
106>] 101 61aP.iB.10 
1B% 13% AbshsAr 
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17% 13% ACkM 
25% 19%MjCuB 
21% 17% AlCulff A 

30% 25%«JEn 

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40% 33% AldSg 
29% 24 ABM Cp 

6% 4% Alnssta 

2B% 21% Humax 

B2 64% Alcoa 
30% 20% flt2 Cp A 
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25% ZOAfflCetiM 
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27% 21 Anew 

22*2 18 Am War 5% 

32% re%Amtttt 
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457 a* 28* 28* 

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31 31% 

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AaocComui 266 

18 24* 

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10 2019 IS* 

IS IS* 

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18 

82 10% 

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AaSEta 

032 20 

887 27* 

27 27* 

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Ailttfc 

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10 

165 3ft 

2% 3ft 


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82 Bft 

7% 8 

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B- 


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8 6 10* 10* 10* 

Ml *A 1% A .. 

008 11 254 10% 18% 19/c ft/, 
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044 12 2380 19% IB* 19* 

44 14% 13% 14% 

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DrecoErcy 

9 

5 9 9 9 


taortam 

10 

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ftft 

Dray CD 

OK 20 

329 C3 22* 23 

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Drug Emm 008 50 

79 S* 5 5 

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109 17 

157 30 29* 29* 

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4 

68 3* 3 3* 

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2 

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B PasaB 

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380 10% 10 10% 


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20 

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271442 6* 06 6% 


EngyVoto 

49 

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2 

597 2* 2% 2% 

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SquayOa 

010 15 

33 3% 3% 3% 


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100 5* 5 K? 

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17 

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- L - 

012 41 247 7* 


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Vmftsli 333479 30* 26* 

Unasm OK 21 1160 48 47* 48 

Lax* Lie 096 19 996 70* 18* 19 -1»« 

LsndmUjpii 42 7BB 33* 32 33 -% 

Lancpces 9 71 6*2 6 8* 

Laserscpe 52 159 5 4* 4* -* 

LomcaS 15 5209 19% 17% 18* ft* 

Laoonft 048 17 135 24 23* 23% -% 

LDOS 77516018 19* 18* 19,*, *l/, 

LUCp 016 1 BO 4 3% 3* 

Leeds 16 15 13% 13* 13% -% 

LfiOertCu 14 304 24 3* 23% ft* 

LteyMSc 079 14 155 30* 30 30* ■% 

Lite Teen 070 15 36 18* 18 IB,*, *A 

Uteim M 185 4% 03* 37, 

UbfMA DM 12 85 13* 13 13* 

tm 9 TOG 2078u125*l?4%i2S* 

LmcrtnT 052 16 378 16t| IS* 16* 
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BMMyWR 044 14 
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to n h*. itemte Mrin n »* 


AMEX COMPOSITE PRICES 


4 pm &33B Ju/y i3 


stack 


p; 


Db. E 100a Hgh Inri Oopi drag 

AdvMapi 454 60 14% 13% 13% -% 

AHnhc 3 10 1* 1* 1* +% 

Alpnabid 3 157 u<% 4* 4% +* 

Am hr Pa 1D4 13 ? 45* 45* 45* J? 

AnMaoeA ttWlBl 122 20* 20* 20* -* 

AmdaM 005 1 956 6 5* 5% -% 

Am EM 2 7B1 1* lA 1* +A 

AmpahABlA 44 84 8% 8 8 

ASRhK on 4 roe 2 A 2* 2* 

AsHtaCh a 12 ■ 

Atari 4 378 

AUasCH B 0 5 

AudbnA 6 145 


BSH Ocean 055 0 12 

BadprMr 0.73 19 62 

BattamT A 104 a 232 

Barry RG IS 377 

BATInd 029 12 314 

Beard G 7 

BkWHan 040130 278 _ 

BtafladA 53 160 18% 1 


2 * 2 * 
u25 22* 

4% 

ICO 18% 

7* 7% 

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Bhxcd A 050 45 43 4fl 

BmVatay TO 2 all 1 

BranftJr 29 74 

030 10 137 22* 21’ 

UK 14 S 13% 135] 




CDmtna 
Computroc 0 
Caned FbA 5 
CTtSSATA OD45S 
CroanCA (MO 40 
Crown CB 040 14 
CutK 053 82 
nuwom ata 14 

01 Ink 
Q kiark 
Duumiui 


Dkr. E 100* Mtfi Mw arm etna 

030 21 12 15% 15* 15% +% 



PBgaeuaG 040 802801 15*d14* 14* -1% 


ph wap 
pnam 
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neswep 

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snreorp 

StmUnbn 

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dm 

TiB Prods 
Teuoaa 
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IK 9 20 17* 17 17* 

024 151188 57 56% 57 

050 18 8 34% 33% 34 

M2 25 728 20% 19% 

0D2 17 25 15* 15* 1 
O10 1 SO 1* 1* 

31 4 a* 29 29* 

3 10 5* 5* 5% 
0(100 1% 1% 1% 

Z10 9 5 35*d3S* 35* 

15 18 17% 17% 17* 

OK 13 117 " ‘ 



TotPNA 

TteraCnsy 

Trim 

Tuta* Uex 

TurorScA 

TunrBrB 


7 SlSti% 

020 « 30 ^ ^ 

0J8 55 839 37* 38% 37* 

83 128 14% 13% 14 

30 1B3 28* 27% 28* 

030 17 32S 12% 12% 12* 

91 29 2A £A ZA 

1 108 J g $ 


37 

OD7 68 90 18* 

0071812 443 18* 

5 54 2^8 
UtfaxhS 03)108 20 2% 2% 2% +A 

Unhflnts 25 30 6* 6% 6% +% 

USOeU 89 123 26% 25* 25% 

12 5» 36*i 35% 38* 
VheemB 5007 32% 31* 32% 

WMtiata 32 1002 13* 13% 13% 

*080 24 313 28* 78% 28* 

WBET 1.12 20 109 14% 13% 14% 

060 13 78 29% 29* 29% 

Xynnb 3 BT 3J2 3% 3{J 


_ -% 

Barte Beat 052 151018 32* 31 A 32 -* 
F 080 15 B5 28* 28 28* ♦% 
080 14 8 25* 24* 25* ft* 

1.40 14 1327 83 62 63 +1 

IDB S 132 31 30% 30% -% 

70 IK 8* 8* BA -A 
028 34 77 15* U* IS* ft* 
T5 100 15* 15* 15* -* 
40 36* 37* 37* 

54 9* 9* 9* -* 
92 23 5 4% 4% •% 

OT6 16 57 11* 11* 11* 

008 13 Z4B 11% 11* 11* -% 
342830 32 30* 37 ft% 

171286 9% 9% 9% 

104 11 13 31* 30* 31 

15 H70 48* 46* 47% *% 
Boatmens 12* 11 7790 34% 33% 34 ft* 

BoDEcare 027 19 788 21% 21% 2lA t't 
BoohSB 14 58 27% ®* 27% +% 
Boriand 31924 10% 9% 10% 

BotenBk 076 5 37 34* 33* 34* +1* 
43 521 9% 9% 9* 

068 19 5 U4S 48* 49 

020 29 146 13* 12% 12% 

024 15 506 7* 7* 7% 

07B 8 33 Z7* 27 27 
048 6 120 2* 2% 2% 

» 837 20* IB* 20* 

25 46 15 14% 14% 

31 65 9* 8* B 
59 13 31* 31* 31* *1* 

7 278 Z7* 27 27* •* 


- c- 

CTec 190 57 24d22* 22* 

CBMttd 6 400 E 5% 5* -* 
CadSrincps 1D7 16 103 28% 28% 28% *% 
CadnuKComOro 21 234 17% 17* 17* -* 
Caere CD 129 1684 B% 7* 7* 
Crignna Z25 6 2220 11% 10* 11 ft% 

CriWcro 21 395 23* 22* 22* -* 
CanbrSbi 1 1035 1% 1% lA 
CendataL l 92 3% 2% 3% +% 

Cnaa 3 7 1% 1% 1% 

Canontac 080123 Z7 89% 89 89 -* 

Carwm 2 37 4% 4% 4% 

Canto 012 25 144 46* 46* 48* 
CBrtDnCmxODl 23 52 28% 2ft% 2B* +.74 
060 21 4 22* 21* 22* 


- F - 

Fe. Grp 10 22 4*2 4* 4* 

Farr CD OK 11 11 S 4% 4% 

Fastenri DO* 57 7K9 36* 34* 36 ft* 

FWInd 15 943 24* 24 24* 

«thTW 124 IS 190 51* 51* 51% •% 

RflyOfl 6 269 4 3% 4 +% 

RggieA OK 0 110 10* 10 10* 

FBteH 27 1620 3D>« 19% 194? -* 

FriMtnma IDO 121652 35% 35% 35% 
RWAm OK 8 GS3 32 31* 32 ♦% 

FsSBcOhJo IDO 11 14 24% 24* 24% «% 

FstCoBk Q£0 21 390 3* 23* £3* ,* 

Frifeoy ID* II 168 30 29 1 , ZB 1 ? 

fid Tern IDB 101404 44* 43* 44* +A 
FstWBStn 036 7 49 9 8* 9 *% 

PsttadUc 052 7 HO Z4l 2 24* 24* -% 

Ruder IJH B 70 S3 33* 32* 

ftsoniss 38 318 6% 6* 6% -08 

Rem 23 410 19* 18* IS* 

ftarihl 181159 6* 6% 6% -% 
Foo&Ax 009 164351 6% 5% 6% 
FcoZDs 009625 503 6% 6»4 6* 

Foremost IDB 10 17B 31* 30* 31* -* 

Foridmer 13 1758 14* 13* 14% +% 
Faster A 41 70 3* 3* 3* +% 

FrtftRn 1D4 12 320 30* S* 29% +1% 

Fane 040 B 3SB 16 15* 15t 2 ft* 

FriHto 1.18 12 228U31* 30 1 ? 30* -% 

FufcrFfi 058 24 1560 39 38 38* ft* 

FUtaaFbi 0.S 12 54 22 71* 22 ft* 

ftson. 02* E 374 19* 17* 17* -* 

FuteWtAOB 26 167 4* 4% 4* 


Laewen Gp 006 29 272 24* 24% 24* -* 

inn* set 20 tare ? bjj -i 

Lotus!) 31 6922 3B* 38 38* -% 

mep 2 1064 3% 2% 2% -% 

LVWH 076 4 12U31* 31% 31% •* 


- M - 

UQCoi 005 Z029Z2Z 73* 22* 23/, *A 
MS Car’s 18 502 22% 20* 207, ■% 
IkM 060 42 59 13*13551355 -DA 
KdooGF 106 14 24 33 32* 33 

Magma Pm 13 414 29* 28* 25j^ -A 
Magna Up Q76 12 500 20 19% 19% .ij, 


- R - 

HiuntXM 13 Z33 14% 14% 14% ■* 

BsBV5 5 787 5% 64% 4% -% 

flosteroos 2 356 4* g4 4 ■* 

Raymond 26 30 W* 18* 18* 

Rantm 21 415 22* 23* 32* 

Relic A 13 2967 14* 13* 14* -% 

Rapdgrn 2 858 3* 63% 3* ■% 

BCD Waste 4 71 3,‘. 3 3/, ft,* 

RwrWnd U 34 B% : 7 3 
[iaiten 124 15 1933 44% 44* 44% * 

Rmanhc I 50 6% 5* 5* -* 

UrtJ Fa CU 10 4 36* 36* 36* +1* 

RdOfnSt l« 20 2616 ST 59* 61% »T% 

R8N011 012 13 29 6* 6* 6* 

HocnSvBt 050 4 77d 19% 10* 19-* +% 

Itawvdi 015 3 6793 17* lfi% 17% *% 

Rax. Sir 020 i; 785 IS* 15* <5* 

FtmachMrd 24 1325 19* 19* 19* 

Rowe 068 62 H9 u30 19* 70 


VMK.5 052 1*3185: 17916* 17 

RSFM 046 13 26 72* 21* 23 

ByxiFirty 13 3792 7% 67 3 : 


ft s - 

SateCJJ 136 B 511 5D 56* ba"; 
Sonorroan 030 13 -M la* 17% 13* 
SaembgiA OJf Id un 25* 25* 25* 


-* 

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ft* 


SfIMML 

snsmm 

Sens 


7 no: 29 a 33* 
13 725 167 a |fi% 16* 
6 All C7, 6* 6* 


■% 

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MarcsnGp 

MsnnaDr 

UriMCp 

■WM 

Manxsta 


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Mrotaki 
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ItadmVnc 
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BoatenTc 

BrodyWA 

Bronco 

BrunoS 

BSSBncp 

BTShhng 

Ritas 

BtAtereT 

Bur Brwn 

Bu^lOGSfl 

BUKrtfe 


ft* 

-% 


ft* 

-% 


Casey S 

008 16 4166 11% 11% 11% 

ft% 

Colgate 

5 815 7% 7% 7% 

+ft 

CHAiar 

8 334 19* 18% 19% 


CEMCp 

15 168 10* US* 10 

-% 

Centoeor 

4 2464 11% 10% 11% 

-* 

CntnRd 

1.12 12 893 33 a* 32% 

-% 

0*1 Spr 

20 11 11*010* 10* 

•1* 


GET YOUR FT DELIVERED TO 
YOUR HOME OR OFFICE IN GERMANY. 

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(JUSSI 



Qanter 8 2 4* 4* 4* 

Chaporl 080 81171 22% 2121% +1 

Orn& QD9 13 1285 9* 0l 2 9% 
Oanstegn 42 47 i«i 2 6,% 8i 2 

ClriRrtati 17 21 12 10* 12 

Ownftt 1 290 * d% * 

Chafapowar 12 12 3% d3* 3* 

CltaaiTe 8 633 4* 4* 4,*, -A 

CMrooCp 57 2832 GO 58* 59% -* 

Can F%l IDB 12 94 52*51* 52 -* 
GbSasCp 017 31 196 32* 32* 32* -* 
Omstflc 336910 33 31* 31* -1% 

CSTete 115 772 2% 2ft 2ft 
CfsooSy* 1113*12 20% 19* 20% +1* 
OzBancp IDB 16 64 29 28* 29 

CfcanMir 26 584 7* 7% 7% ft 1 , 
dm* Or 43 80 12% 12 12% +% 

QoMM 7 394 4* 4* 4* ■% 
CocaCoU IDO 17 72 26* 27* 27% +% 
CodaEngy 1453401 u7* 7 7* 

CodeAlara Z8 £6 11% 11* 11* 

CognUCp 291215 10*19*18* -* 

CflfiflOB 100 204 11% 10% 11 

Coherart 16 276 13* 12* 12* 
Cofegai 040 74 315 18* 17* 18 * +* 
CoMGbb 125 14 93 21* 2012 21*+* 
Cowarp 060 10 40 28* 27* 28 <■* 
Com* OK 16 336 Z4 28* 23* -% 
QncriA 0X8 169960 16% 15% 16% -% 
OocriAta ODB 39166S0 16* 15* 16% +% 
ComnOohoMB 1i 35 30^2 30 30* +* 
CorroaO 070 90 103 17* 16* 17* -* 
toprtJta 387 1202 12% 11% 11% ft* 
CcmriWB jo 13 12 11 II -% 

ConaocW 47 610 4% 4% 4* -% 
CdnPSg 131 23 825 44* <1% 43* ■* 
Conston 8 63 6* 5% 5* 
CDB9BI IK 18 5026 ull % 10% 11 

ConWDd 33 191 17% 1Bl 2 17 4* 
Crtrfflsa 13 106 B% 9% 8% 

Coosa 050 21 SOI 19% 19 19% ft* 
Copytao 72 2435 10* 9% 1D% ■* 
COdbCP 20 3486 45* 44* 45 -% 

Cop 0! A 44 20 IS* IB 18 -* 
cwterB ore a rsiS w 23* 2 a 
Creytaap 0 824 U !l -% 

Crown RB 28 £07 4% 4% 4% 
Cj«BBn 32070 5* 5 5 -% 


DSC Cm 
tatfcw 
DMaSriteti 
Dataln 


■ D “ 

1514464 23% 22% 23* 
0.13 19 5 70*d70* 70* 

11 139 2ft 2ft 2* 

30 9 7% 7% 7% 

13 52 14* 14* 14* 


GIB 4pp 

GSKServ 

Cantos 

tana Rs 

GeMCo 

GartBtad 

fertyte 

GenstaPh 

Centex Co 

GeoBtac 

Gerayme 

Gtasan^ 

QddlngsL 

GtatelA 

SshBto 

Good Guys 


6 

007 21 
0 
11 

016143 
040 18 
17 


-G - 

10 4 d3% 3% 

14* 14 14* 


4 2% 2% 2% 

15 4 4 4 ■* 

9 6 5* 5* +* 

45 17* 17 17* -* 

B 4* 4* 4* 

32207 9* d8* 9* 

44D 40 974 24* 23* 23* 

1331600 4% 3* 4 

802102 26* 25* 25}J 
040 S IS27 14% 13* 13 U -ft 
012 12 1805 16* 16*4 16ft 
080 16 62 15*614* 15* 

10 47 4% 4% 4% 

17 960 13* 13 13* 

tatfaftta ODD IS 419 21* 20% 21 
GndeoSys 39 23 2ft 2% 2% 
Grande 020 65 29 20* 19* 19* 
GroanAP OK 10 6 16*816* 16* 


-% 

•* 

-% 

-IS 


+* 

-% 

-% 

-A 

•1 


11 CSC 7>4 Hi ’a 7% ->D 

77 102 10 9* 9* -* 

151169 5% 5% S‘i -Ai 
9 22 42* 41* 41* •* 
3 14 1% 1% 1% -ft 

19 77 S* 8% 8* +% 

Itarifilrtu«>a44 ID 167 10* 10>? 10* -»t 

UWal am 11 2236 21* 20% 21% ** 
9 71 8 7* 8 

42 2008 55* 53* 55* 

0 526 4% 4* 4* -% 
i OM 12 65 16 15* 15% -% 

048 17 1240 21* 21 21% -% 

49 9409 53% 52% 53% 
01615 2 12 12 12 •% 

048 13 70 22* 22 22* 

OK 9 600 u7* G* 7* *1 

016 45 20 14* 13* 13* 
Monro 034 21 2150 to* 10% 10* ft% 
UenatB OS8 11 158 20% 20% 20% +ft 
MenuyG 070 7 725 M 27* 27* -* 
Meridian US12KC2 31% 31 31% +* 
Monsri 83514 8* B% 8* -% 

Meoicde A itL12 16 290 16* 16 16>« +* 

irSCm 54 1475 29*; 26* 28* -% 
MrtodF 020 151346 10% 10% 10* -ft 
Mchtafi 2DQ340 426 75 74* 75 +% 

UcnMUi 16 91 3% US* 3* -% 

Mronage 712767 10* 9* 10ft *ft 

Wcnmn 61288 7% 6* 7 +% 

Mograb IS ® 6 6 

Miopata 2 550 6 5* 5J2 *ft 

Mksn 1431732 51* 49l 2 50>? +1% 

IWAUM 41 3902 47% 45* 47* +1* 

Uttar** 1X40 12 5451 30% 29% 30% *% 

Mdritabi 050 29 44 3S% 35* 35% ft% 

MBiorH 052 20 581 26% 28% 28* +% 

Mlcm 334 23* 23 23% -* 

Ifetoh 18 327 12* 11* 12 +* 

MaHaTH 46 306) 10* 19% 19% -* 

Modem Co 020 17 36 7 6* 0% +% 

ItatoW 052 19 376 ZT* 25* 27* ft* 

Malm 004 395 U3B3B* 38 ♦% 

Matabic 004 31 16101141* 40* 41* ft* 
Itaxom 004 B 426 5* 4* 5* +* 
MnaneePxODB 23 6 31* 31* 31* -1* 

M Codec IB 310 15% 14% 14% 

MTSSys 056 104100 2fi 26 26 
13 239 29* 29* 29* 
Myoogen 4 1054 10* 8* 10* +* 


Safer Cp 

BW H 

65? 18% 17* 13 


Scare ted 

s 

2145 

3 7U Tl* 

•* 

Setedd 

1^0 Jb 

4 

33 30 38 


Coup 

11 814? 

25 ?4% 24"* 

.% 

Silty 

016 23 

861 13% 17* 13* 

.% 

seated B 

036 1 

4/& u?% r. :% 

*% 

Stdecths 

1 1Z 14 

26 

25 24* Z4* 

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S«**ni 

bl! 

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13% 12% 12% 

■* 

Sapirta 

27 

1585 

4|t *ft 4ft 

♦% 

tavTcrt 

12 

ty 

a* 3* 0* 

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5unFraci 

21 

41 

4 J"g 4 

+* 

SOVMCU, 

17 

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18* Id IB* 

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034 17 

5*6 

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SitSyrim 

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381 

6* a 0 


Shaemnl 

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18 lli% 17% 

ft% 

SimtVP 

10 

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Strom On 

15 

395 

17% 17* 17* 


StemTiK 

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30 

J* 3,'. ift 
391? 38* 33* 

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SKta 

033 IB 1656 

•■'a 

SignuDn 

1 

732 

7 6* 6* 

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SdaWK 

005 53 

14 ID* 111* 10* 

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SricrAlip 

37 4386 

13 12* iCi 

♦1 3 

Snapan 

056 23 

08 

<9 19* ia% 

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Smflrtd 41 I4?4u30% 23 ZS'j -* 

SrapnfcBv 55 WOT Z1* ID* 21 -* 

Sumwrf 0 1428 3* m* 3ft ftft 

Sosoco 0S6 15 T» 21* 20* 21* 
SauWSI 069 10 11J7 20% ?oh 20% +% 
SteegriA 020 352311 I7>?d16* lfi 1 ? -1 
SlJUdsMd 040 133403 32* 31* 32 

Si Pad 030 10 632 21% 21% -% 

SteyfiT 1 289 2ft 2ft 

Staptes <2 K8 28 27* 27% -% 

Sate sir QfO 16 3571 39% 38* 39% 

90 Micro 9 662 14% 14* 14* -% 

SURefta 068 14 179 21% 21 21 

SteeJTde 008 19 125 17* 17 17* 

SteUyliSA 020 <3 1429011% 10% 11% *1* 


»* 

-% 

.7. 


SUM IX 41 19* 19* 19* 

Stated 1.10 12 124 20* 20 20% 

SnudDy 14 4376 7% d6% 7 

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36 


WORLD STOCK MARKETS 


FINANCIAL TIMES 


Tuesday July 19 1994 


AMERICA 


EUROPE 


US stocks in 
muted rise by 
midsession 


Wall Street 


US share prices showed little 
change yesterday morning in a 
quiet session highlighted by a 
fresh batch of corporate 
results, writes Frank McGurty 
in New York. 

By 1 pm, the Daw Jones 
industrial Average was 2.2? 
lower at 3.751-54. while the 
more broadly based Stan- 
dard & Poor's 500 was 0.39 bet- 
ter at 45435. In the secondary 
markets, the American SE 
composite was 0.59 ahead at 
432.10, but the Nasdaq compos- 
ite dipped 0.07 to 721.29. 

The opening was weak, com- 
pleting a pattern which is typi- 
cal of Monday mornings which 
follow “double witching" ral- 
lies. Yesterday stocks tumbled 
about 15 points in the first 
minutes of activity, wiping out 
most of the expiration-related 
gains struck in the final min- 
utes of trading last week. 

Apart from the technical 
considerations, the restrained 
tone reflected anticipation of 
tomorrow's semiannual Hum- 
phery-Hawkins testimony by 
Mr Alan Greenspan. The Fed 
chief will brief a Senate com- 
mittee on the state of the econ- 
omy, and investors were hop- 
ing for hints on the timing of 
the next move to higher inter- 
est rates. 

As the morning progressed, 
market indices managed to 
climb off their session lows. An 
absence of fresh economic 
news and benign trends on the 
bond and currency markets 
provided an uncluttered van- 
tage point from which to scru- 
tinise the second-quarter per- 
formances of several market 
bellwethers. 

For better or worse, the reac- 
tion to the results was gener- 
ally muted. Chase Manhattan 
posted net income of $307m in 
the second three months of 
1994, well ahead of Its 1993 
result of $233m. But the stock 
receded SH to $38%. 


MARKETS IH PERSPECTIVE 


% ctaag* ta beal currency + 

%Ctaq. 

M°8t 1 

* dang* 
hUSSt 


1 Woe* 

4 Wwrici 

lY«r 

tart of 
DM 

Started 1 
1994 1 

tart of 
19M 

Austria 

*0.07 

-2-23 

+13.50 

-8.75 

-3-52 

+1.64 

Belgium 

+45-66 

-2.35 

+2.42 

-7.05 

-0.60 1 

+4.72 

Denmark 

+2.71 

+1.35 

+17.02 

-1.76 

+3.63 1 

+9.17 

Finland . — 

+1.61 

+4.97 

+41.77 

+1221 

+19.601 

+2X99 

France 

+2.36 

+1.37 

+3.53 

-12.10 

-7.79 1 

-2.80 

Germany 

+1.85 

+1.79 

+13.16 

-8.48 

-3.04 

+2.15 

Ireland 

+4.38 

+3.55 

+12.89 

-2.00 

+1.53 

+0.95 

Italy 

+4.52 

+3.64 

+24.29 

+1X40 

+22.32 

+28.85 

Netherlands 

+0.91 

-1.45 

+12.01 

-7.51 

-2^8 

+2.94 

Norway 

+5.42 

+7.09 

+17.95 

+2.43 

+7.46 

+1X20 

Spain 

+3.85 

-1.50 

+12.57 

-8.34 

-X27 

+1.91 

Sweden 

+4.86 

-0.04 

+2028 

+0.17 

+2.65 

+X14 

Switzerland 

-1.88 

-4.72 

+6.30 

-1X43 

-X99 

-XOO 

UK 

+3.84 

+1.64 

+8.66 

-9.62 

-9.63 

-4.79 

EUROPE 

+2.46 

+066 

+iais 

-X06 

-4JS7 

+022 

Australia — 

+5.43 

+0.69 

+14.84 

-4.18 

-1.55 

+3.71 

Hong Kong 

+6.00 

+0.06 

+31.59 

-24.13 

-27.95 

-24.10 

Japan 

+0.48 

-2,40 

+2.15 

+14.56 

+23^7 

+3059 

Malaysia 

+3.01 

-2.95 

+48.86 

-22.63 

-2X74 

-1966 

New Zealand — 

+2.82 

-4.05 

+1X42 

-7.35 

-X85 

-081 

Singapore 

+4.61 

-0.69 

+31.03 

-12.42 

-11^6 

-6.83 

Canada 

+2.01 

+0.23 

+X65 

-2.04 

-10^6 

-X80 

USA 

+1.13 

-0.81 

+0.77 

-2.37 

-7-33 

-2^7 

Mexico 

-1.75 

-1.84 

+35.52 

-11.37 

-23.15 

-19.04 

South Africa 

+2.88 

■3.70 

+3X11 

+13.86 

+3.90 

+9-48 

WORLD INDEX 

+1-51 

4X97 

+5.11 

4X29 

+061 

+099 


t tawd on Jufy ism 1M*. Captrioft*. TIh» tUmial Vtva UWHd, Gottnan, Socfta * Co, and 
MrtWoul SocwWoii Umltnd. 

Equity markets enjoyed a markedly more positive time 
last week, bat in the current unsettled climate it must 
remain uncertain as to whether or not this marks a 
turning point. Taken on a year to date perspective the 
figures do not read so well - in dollar terms, Hong Kong, 
for instance, one of last week's star performers, remains 
off nearly 25 per cent, although, on the other hand, some 
good rises are still to be seen in Finland and Italy, 
up by similar amounts, while Japan leads the way, up 
31 per cent so far. The European financial community 
will be waiting expectantly for the Bundesbank meeting 
on Thursday, the last time it meets before the four- 
week summer recess, although some analysts do not 
forecast a farther rate easing, just yet. 


Milan tumbles 3% as political crisis deepens 


Nationsbaok also beat the 
forecasts of analysts, publish- 
ing a 42 per cent improvement 
is earnings, but its share price 
nudged only $% ahead to $55. 
KeyCorp slipped S% to $31% 
though its results matched 
expectations. 

In pharmaceuticals. Upjohn 
issued a strong earnings 
reports but the reaction by 
investors was tepid. The stock 
added $% to $30%. 

US West led the NYSE’s 
most active list, dropping $1% 
to $40% in volume of 1.2m 
shares. The regional telephone 
group’s earnings showed no 
change on the previous year, 
but the downturn in its share 
price was more a reflection of a 
decision to purchase two 
Atlanta cable-television 
operations and a downgrading 
by Goldman Sachs. 

At least two gambling-re- 
lated issues were big winners. 
International Game Technol- 
ogy jumped $1% to S22 1 /. and 
Circus Circus added $% to $28. 

On the Nasdaq, Microsoft 
was marked up $l& to S50W 
after settling a four-year fed- 
eral antitrust lawsuit Analysts 
played down the impact of the 
agreement on the company’s 
domination of the computer 
software industry. 

Canada 

Toronto edged lower in quiet 
trade and by noon the TSE 300 
composite index was 1.71 off at 
4.191.70 in volume of 15.3m 
shares. Gains in industrial 
products failed to offset losses 
in gold and oil and gas. 

American Barrick was even 
at C$31% after reporting sec- 
ond quarter earnings of 
US$0.2l. The company also 
said gold output soared by 2i 
per cent In the first half of fills 
year. 

Lac Minerals rose C?% to 
C$13 after its board recom- 
mended that shareholders 
reject a hostile takeover bid 
from Royal Oak Mines. 


It was a day of strong contrasts 
among the equity markets on 
the Continent, with Italy and 
Paris heading in opposite dir- 
ections. 

MILAN was unnerved by the 
deepening political morass, 
and the Comit index, under 
additional pressure from a 
number of companies trading 
ex-dividend, fell 2L43. or 3 per 
cent, to 689.®. The market was 
marked sharply lower early In 
the session. In line with the 
bond and currency markets, 
before steadying later in the 
day. 

Mr John Stewart at InterEu- 
ropa Sim in Milan commented 
t h a t growing tensions between 
the coalition partners over 
plans to curtail magistrates' 
powers had raised doubts 
about the future of the govern- 
ment. “Developments over the 
weekend have made it hard to 
see how they are going to bolt 
the coalition back together 
again." he said. More 
ately, it begged questions 
about whether budget details, 
due on Thursday, would be 
ready on time. 

The political uncertainty 
also took a toll on foreign 
investor confidence. Daiwa 
Europe, which bad maintained 
an overweight position, noted 
in its latest strategy review 

ASIA PACIFIC 

Nikkei e 


Tokyo 

Technical trading limited 
share price fluctuations to a 
narrow range, and the Nikkei 
Index closed marginally lower 
on light index-linked trading, 
unites Emiko Terazono in 
Tokyo. 

Index-linked selling by insti- 
tutional investors and profit- 
taking by corporations count- 
ered buying by investment 
trusts, and the Nikkei 225 
ended 53.51 off at 20.717.64. 
Without major moves on the 
currency and money markets, 
many investors remained inac- 
tive due to tire lack of news. 

The Nikkei peaked at 
20316.46 in fire morning ses- 
sion but fell to a day’s low of 
20,68834 in the last half-hour 
before the dose. Foreign inves- 
tors were also seen placing 
small-lot sell orders. 

Volume was 213m shares, 
against 2S8m. Many investors 
have been bracing themselves 
for a further fall in the dollar 
this week, and are likely to 
stay on the sidelines as Mr 
Alan Greenspan, the chairman 
of the Federal Reserve, gives 
congressional testimony this 
week and the German Bundes- 
bank policy-making council 
holds its scheduled meeting on 
Thursday. 

The Topix index of all first 
section stocks dipped 3.46 to 
1365.01, while the Nikkei 300 
lost 0.74 at 302.29. Falls led 
rises by 584 to 359, with 229 
issues unchanged. In London 
the ISE/Nlkkei 50 index edged 
up 1.65 to 1,34X46. 

Fanuc, the leading manufac- 
turer of numerical control 
equipment, dropped Y300 to 
Y4.190. The Issue failed to 
trade during tha morning due 
to a lack of buyers following 


that the Comit Index had risen 
by 131 per cent in the 20 
months to May, before the sub- 
sequent retrenchment 
“restored a very attractive 
level of potential appreciation 
for the end of this year, though • 
we recognise that political and 
economic setbacks could cause 
corrections along the way". 

The weekend's developments 
left Mr Roger Monson, chief 
equity strategist, reviewing the 
banking and securities house's . 
stance on Milan yesterday, and 
whbe he said that the market 
was one to be avoided is the 
short term, be maintained his 
positive view in the mid to 
long term. 

Selling was broadly based, 
with Montedison down L27 to 
LI ,435. Stet, trading ex-divi- 
dend, lost L130 to IA35Q and 
Generali fell L290 to L4 1,200, 
ex-dividend, 

PARIS enjoyed a strong per- 
formance on the first day of 
trading following the long 
weekend break. Supported by 
bonds, the CAC-40 Index added 
50-54, or 2.6 per cent, to break 
through the 2,000 level for the 
first time since mid-June, at 
2,025.13. 

The equity market has long 
been in the doldrums and has 
fallen steeply since the start of 
the year. Analysts had been 


IM. 


-SE Actuaries Share Indices 


Jul 18 
Wourt f cer j ea 


Cpe*. *>CU£ 11 CO 12C0 


THE EUROPEAN SERIES 
13.00 1400 15.00 Qbb 


n wzzrtt \X !S? 75 IS3SJ 1333S3 13*1.06 1341.78 13CSI 134357 13*611 
PT-Sc6«SK*Z33 13BJ2 1383SC 1354.17 1336.61 133740 139001 138285 133157 


iS 15 


Jd 14 


Jul 13 


Jid 12 


JB) II 


ITS EssWJt ICC 13 Ofi :C733 1325.94 I3T7SS 132678 

CJ35301 250 T3S2C5 1374.13 136213 ISO. 44 1365S0 

tea :*d asr. Hevar. nc ■ was ac iscoauwsv too • wn an - muo 


expecting a return to higher 
levels for some time, given the 
strength of the underlying 
economy. 

Klein wort Benson, in return- 
ing its recommendation to neu- 
tral from underweight, said at 
the end of last week that the 
strongest case for the market 
at present was one of momen- 
tum. “Earnings growth is 
strong, with disappointments 
unlikely. Investors are much 
less overweight in French equi- 
ties then they were and in 
many cases underweight... 
most importantly, sentiment is 
currently weak and it is diffi- 
cult to see what would make it 
deteriorate any further. France 
has underperformed for too 
long.” 

FRANKFORT pushed for- 
ward in official hours and then 
accelerated some more in the 
post-bourse, the Dax index 
closing the latter with an 


advance of 13.42 to 2.11&9& 

Merck Finck said yesterday 
that with the US currency 
remaining the key to move- 
ments in the equity market, it 
did not expect a rally until 
later in the summer, and from 
lower levels than at present 
Consequently it said that it 
was maintaining a defensive 
strategy, was remaining cau- 
tious on cyclicals, with the 
exception of chemicals, and 
had reduced the utilities sector 
from overweight to neutral By 
contrast it was raising its 
weighting of construction 
stocks from neutral to over- 
weight. based on an improve- 
ment in the sector. 

AMSTERDAM was encour- 
aged by the gains of last week 
and strength seen elsewhere 
on the Continent and the AEX 
index finned L52 to 393.61. 

The publishing sector was 
one of the main beneficiaries of 


the day. with the FI 3.oo gain in 
Elsevier, one of the index's 
heavyweights, to FI 164.30 help- 
ing to push overall sentiment 
higher. However, the publish- 
ing group's stock remains 
down more than 10 per cent 
from its level seen at the start 
of the year. 

ZURICH remained under 
pressure from Roche, and the 
SMI index fell 20.2 through 
support at the 2£Q0 level to 
finish at 2,494.7. 

Roche certificates gave up 
another SFrI70 to SFr5 .260 in 
further response to last week’s 
disappointing first-half sales 
figures. Other chemicals were 
also easier. Sandos registered 
shares lost SFrlO to SFt647» 
although its own first-half fig- 
ures were in line with most 
expectations. 

Insurers bucked the weaker 
trend on a positive view for the 
sector’s outlook. Swiss Re cer- 
tificates rose SFrl3 to SFrS55 
and Winterthur put on SFrH 
to SFI710 after the company 
confirmed a report that it 
expected double-figure profits 
growth this year. Banks were 
little changed as investors 
positioned themselves for half- 
year reports next month. 

MADRID turned firmer as 
bonds recovered, although late 
profit-taking took prices off 


best levels. The general index 
rose 2.16 to 304.95. 

Repsol put on PtaTO at 
PtaJ.020, and Sevtllana added 
FTald at Pta683 as 17.9m 
shares were placed at PtafiflO 
each in what was described as 
an internal adjustment 

STOCKHOLM moved higher 
although turnover was 
reported as being below aver- 
age. The Aflarsvarlden general 
index rose 13.7 to 1.43DA 

A number of factors contrib- 
uted to the recovery of sham 
prices, dealers said; a farther 
decline In domestic Interest 
rates, gains on neighbouring 
markets and optimism ahead 
of first-balf earnings figures 
from Swedish companies. 
Turnover came to SKrlJSba. 

WARSAW rebounded &3 per 
cent, overcoming Thursdays 
5.9 per cent tumble and return- 
ing to the winning ways of the 
previous seven sessions. The 
Wig index rose 65&2 to 11.06&3, 
although the rise prompted 
warnings that the high pace of 
recent gains, if sustained for 
long, could provoke another 
round of profit-taking. Turn- 
over rose 35 per cent to l»40Km 
zlotys. Universal rose 95 per 
cent to 218,000 zlotys. 

Written end edited by John Pttt" 
and Michael Morgan 


reports that the Japanese sub- 
sidiary of International Busi- 
ness Machines, of the US, was 
moving into the market 

Profit-taking depressed high- 
technology shares. NEC dipped 
Y20 to Y 1,220 and Toshiba Y5 
to Y777. 

Textile makers, which had 
gained ground recently as ben- 
eficiaries of the strong yen, 
met profit-taking by domestic 
institutions. Teijin receded Y17 
to Y557 and Unitika Y15 to 
Y375, but Toray Industries 
managed to recoup its decline, 
closing a net Y5 up at Y772. 

Tokyo Steel, the electric fur- 
nace steel maker, fell Y40 to 
Y2.470 after its announcement 
that it was closing down a 
plant in central Japan doe to 
the water shortage caused by 
the recent drought in central 
and eastern Japan. 

Other steel companies were 
higher in spite of reports of 
similar moves. Nippon Steel 
finned Y2 to Y344 and Kawa- 
saki Steel Y5 to Y409. 

In Osaka, the OSE average 
slipped 32.13 to 23,195.42 in vol- 
ume of I7.4m shares. 

■ Roundup 

The Pacific Rim saw mixed 
trading, with the reappearance 
of foreign demand in some 
markets. 

TAIPEI finished at its high- 
est level since June 1990 as 
intensified buying in the 
heavily weighted, and recently 
neglected, financial sector 
boosted overall sentiment The 
weighted index advanced 
125.96. or 2 per cent, to 6533.46 
in turnover that rose to a high 
for the year of T|13L04bn amid 
the reappearance of strong for- 
eign rignmntj 

The banking sector gained 3 
per cent as China Trust moved 


Gold shares off day’s best 


Gold shares in Johannesburg 
closed ofT the day’s best in 
generally subdued trading. 
The overall index improved 11 
to 5,587, industrials notched 
op 16 to 6,403 and the golds 
index eased 6 to 2,154. 

De Beers dipped 10 emits to 
R108.90 - the group 

announced yesterday a dia- 
mond exploration joint ven- 


ture in Canada. Anglos moved 
up HI to R233. 

• The governor of South 
Africa’s central bank cau- 
tioned at the weekend against 
a premature abolition of the 
country’s foreign exchange 
controls, saying the cost could 
be too high, at least in the 
short term, Reuter reports 
from Harare. 


\nmcBs 


Jonty compiled by The financial Times lid.. Goldman, Sacte & Co. and NatWsst Sacutfttas Ltd. in conjunction with the Institute of Actuaries and the Faculty of Actuates 
NATIONAL AND 

REGIONAL MARKETS FRIDAY JULY IS 1994 THURSDAY JULY 14 1994 DOLLAR MOEX 

Rquras in pwanmeses US Day's Pound Local Local Gross US Pound LocN Year 

Show number of Crus Oadar Change Seeding Y«n OM Cunmcy % chg Oh. Oofer Staffing Yen DM Currency 52 week 52 week ago 
oi j»ck index % Into* Index Index Index on day Y**) bide* indw tndew index index High low (appro*; 

Australia 1*3) 173 03 2.8 164.83 107.11 138.99 156.67 ZB X52 16834 15058 10458 13128 152.47 189.15 13628 139.66 

Austria (17} 188.0? -0.6 170.SS 11030 ISM 8 151.98 0.4 1.05 18323 179 . 38 11755 158.08 151.30 195.41 t4923 149.69 

Belgium (37) 170.33 -0.1 162.01 105,41 137.70 134.78 0.7 4.10 17048 101.82 105.91 137.00 13181 17&07 143.62 148.90 

Canada (106) 127.92 0.2 121.68 79.16 103.46 127.53 -02 2j» 127.61 12097 7958 10254 137.73 145.31 12054 126.49 

Denmark (33) 269.87 0.0 256.71 167.01 21828 224.44 0.7 1.32 26SA8 25524 167.66 210. BT 222^8 275.79 20758 20954 

1555Z -0.4 147.65 98.06 125.55 180.01 02 064 165^7 14776 9083 12525 167.08 158.95 96.42 97.40 

France (97) — -..170.93 -08 >02.59 105.78 138-25 14018 OLD 013 17227 16330 107.02 13643 14116 185.37 14180 149.90 

Germany (581 14320 1.0 13627 6UQ8 115.87 115.87 1.7 1.78 14121 134.43 88.10 113.0B 11326 147,07 11268 11420 

Hong Kong (56f_ 37129 3.4 35326 229.8* 300.40 36822 32 322 35929 340-80 28321 288.73 356-41 506.56 271.42 281.10 

Ireland 114) 196.09 VO 188.44 122.60 16023 181.49 1A 326 196.08 186.86 121.82 1S737 178.90 209.33 157.90 158.39 

Italy (81} 8828 0,7 84.07 54.70 71.48 10ZJJ7 1.7 1.48 87.78 8321 &W3 705 4 10035 97.78 5738 6620 

Japan (469) 160.94 O.B 101.66 105.17 137.46 105.17 02 0.73 166.97 180.17 104.97 135.7B 104.97 170.10 124.54 15064 

MjiQytila (SB) .475.24 0.4 452.06 294.11 384.40 47487 0.6 1.72 47351 448-88 294.17 380.52 47223 621.83 322.60 32220 

Mexico (IS) 1933.00 0.9 1638-72 119027 1663.49 7198.76 CL9 1.60 1916JB7 1816.17 110021 153057 7123.07 204728 1516.57 1563J32 

Nathedand 127) 204.97 02 194.98 12U8C 165.80 16324 0-8 3.48 20M8 193.04 127.03 16423 181.78 207.43 16420 164.69 

New Ztafand (14) 6726 32 64 Of 41.60 54 48 59.72 2.1 4X0 65J0B 82.48 40.91 5222 58.43 7733 Si £2 5221 

Norway 20X30 00 183.44 12566 164.49 18724 0.8 1.76 20X4 0 192.82 12636 18X46 188.78 206.42 150.74 139.63 

Singapore (44) -24Z.41 0.9 325.72 211.91 270.98 23X66 0.9 1.77 33SL22 32157 210.74 272.00 236.58 378.92 2-U-27 24*27 

South Africa (59) .282.41 2-2 278.15 18X97 236.62 28521 Ifl 2-22 daxo* 271.16 177.70 22988 252^8 232.41 ITS. 83 205S9 

Spam (42) 142.01 -05 135.08 87.89 114.86. 13X30 0,0 VI 8 143.16 136.71 8X33 115.04 13X28 156.79 11X33 11435 

Sw«fen(301 -21X35 0.1 201.99 T31.4Z 171.76 242.71 0.7 1.65 212.18 201.14 131.01 170-51 240.95 231.35 168.75 170.11 

Switsedond (47) 156.93 -1.0 149.27 97.12 12X63 127.6* -0.4 1.90 15X54 150.28 9X48 127.40 10X17 17X56 124.40 127.72 

United Wngdpm ptM) 19523 0.4 16S.70 12062 157.91 185.70 03 4M 194.38 1 84.26 120.75 15X19 18456 214.98 170.49 171.52 

U9AB19) 1B6.4Q 02 176.38 114,74 14X96 18X40 02 2-89 185.09 17X48 114,89 148.74 16X09 19X04 170.9S 183,99 

EUROPE (720) 189.95 0.1 181.66 10X18 137.47 151,75 0.7 306 160.72 16089 105.4* 13X38 15065 17X58 142.02 142JK 

NOrtfiC (116) —.21X90 00 20X61 130-52 17X58 205.12 Q.6 1.46 210.85 199.97 131 JOS 169.32 203.83 22X80 160.69 161.73 

PodftJ BaSn f7W) — 170A6 0.8 1S8.Z3 108.45 1*3-05 114.70 X6 1.04 173.41 18X29 10X97 1*096 11*20 17096 134.79 15X82 

Euro-fineHte (1470) 17X82 09 mat 107.57 14058 12X78 09 197 172-89 16189 107.40 13X93 129.01 17382 14X88 1*921 

North America J82B).„ 181.84 0.2 172.07 11X53 147.M 181.43 07 2J1B 181^2 17X08 11X77 140.07 101.15 19X73 17S3? 100.42 

Europe 6 l UK SI®- 152.00 XO 145.16 9444 12X43 131,55 X7 X*7 16X68 144.73 9VB4 12 X 08 130^4 1S7.47 124 77 124,77 

Patafc Ejl Japan B81) .247.19 7-3 235.14 15X98 199.94 22151 23 228 Z4l.m 229.06 150.11 194.17 216S2 29X21 184.93 18X45 

JMsrid &. US (18S3) 174.69 0^ 160.17 108.11 141.29 13X03 06 1J90 17X70 18V86 107m 139-58 13X26 174.® 145® 149® 

,ra -' W 0A 16631 10!L5B U1M 14S - 78 a< 2® 185-62 10X54 140 AO 14X19 17X58 155.90 1S8® 

,76S0 0,4 ,67 - 89 ,Q9 - Z3 ,42 - 76 14a4 ° 0-4 Z24 17X78 16X84 109® Ml® 147.78 17X50 150.54 100.11 

\Voridfa.Ja wp703) 183® X4 17455 113® 1*8-42 174® X6 X83 16X83 17X32 HXS8 140® 178® 19X20 16X51 167.44 

Tho_WqM1ndte(Zi72) 1772 5 0 ,* Tex58 iQg® 14X3* 1 * 0*2 0,4 224 17X40 ~18728 103.88 14120 1*8.77 17 X 87 156.85 160^1 

CwVWJiwRrariMnw* umtoo. amw an, 8w*s mOmM HflM Snrtn Untod 1*97 

Kr "* ,B " "*■ *** 1VTn4i ^ *** * V™**- Coradlwrt 'tien* W7A* Km Raa. w R-W nanwrdtaed JSW9L L*«p^ 



ahead TS5 to T$&5 on sound 
profits expectations. 

HONG KONG finished higher 
on foreign fund buying of 
selected blue chips but profit- 
taking left the Hang Seng 
index below the 9200 bench- 
mark. It was finally up 7RS1 at 
9,183£3 after a day's high of 
9,228.50. HSBC showed 
strength, adding HKS2.25 at 
HKS89.75. 

SYDNEY saw a continuation 
of last week's gains and the All 
Ordinaries index closed 1-4.3 
higher at a month's peak of 
2JJ72J. Volume in News Corp 
was a heavy 5.1m shares. The 
stock rose 10 cents, or 1.2 
per cent, to a month's high 
of AS8.S0. Elsewhere among 
blue chips, BHP gained 4 cents 
at AS IS. 64 and CRA traded in a 
20-cent range before closing 
steady at AS19.08. 


MANTLA was supported by 
lower domestic interest rates 
and expectations of strong sec- 
ond-quarter corporate earn- 
ings. The composite index put 
on 45.91 at 2,650.61. 

PLOT led blue chips as the 
telephone stock jumped 3.4 per 
cent to 1,510 pesos. San Miguel 
“B” climbed 4.1 per cent to 126 
pesos. Benpres Carp led sec- 
ond-line issues as it leapt 8.1 
per cent to 9.30 pesos. 

WELLINGTON advanced 1.1 
per cent in improved turnover 
of NZ$41.4m, with forest sector 
stocks again singled out as 
buys. The NZSE-40 capital 
index gained 21.95 at 2,034.46. 

Brierley Investments, which 
on Friday said it expected to 
report a record profit for the 
1993/94 year, firmed 1 cent 
to NZ$1.20 in higftpr than usual 
volume of 6.27m shares. 


SHANGHAI'S A share index 
lost 3.8 per cent on news that 
the exchange would enforce 
regulations banning short sell- 
ing in state bonds and repur- 
chase agreements starting on 
Monday next week. 

The index retreated 16.12 to 
40038 in thin volume of 202.2m 
as investors fled the long-de- 
pressed A market, which has 
lost 75.60 per cent from its 
peak of 1,640.71 in February 
last year. 

The bond news also hit Shen- 
zhen’s A index, which fell 4.72, 
or 4.4 per cent to 101.82. 

SEOUL extended early losses 
in very thin trade, sending the 
market to a lower close for the 
third consecutive session. 
Many institutional investors 
remained wary after the securi- 
ties watchdog said it would 
monitor stock price manipula- 


tion, leaving trading volume 
sharply reduced. The compos- 
ite index finished 4.93 down at 
944 AO. 

SINGAPORE closed flat, 
with the broader market soft- 
ening on profit-taking in 
Malaysian shares traded over 
the counter. 

The Straits Times Industrial 
index put on 0.83 at 2A99J5, 
with part of the dampening 
influence attributed to a Mer- 
rill Lynch report which said It 
did not expect a sustained rally 
in Malaysia on an announce- 
ment of a general election. 

KUALA LUMPUR was 
broadly lower in sluggish trad- 
ing as investors took advan- 
tage of last week's gains to sell 
shares. The composite index 
receded 7.06 to 1,005-05 in vol- 
ume that slid to 90m shares 
from Friday's 22 tin. 


Polar Lights Company 
KoMnaHMH rionnpHoe CiiHHMe 

a joint venture betiveen Conoco Timan- Pechora Ltd. 
and CP Ark/umgefskgeologia 


as. $200,000,000 

Project financing for the Ardalin Field 

in Timan -Pechora, Russian Federation 


Funds provided or guaranteed by 

European Bank for Reconstruction and Development 

International Finance Corporation 

Overseas Private Investment Corporation 


J. P Morgan Securities fnc. arranged die financing commitments 
and acted as financial advisor to Polar Lights Company 


JPMorgan 


September 1993 




FINANCIAL TIMES SURVEY 


JAPAN 


Tuesday July 19 1994 



Tokyo Disneyland visitors: the present phase resembles Japan's crash industriatisation a century ago Picture: Giyn Genin 


In the throes of 
transformation 

Social upheaval is rare in Japan. When it takes 
place, it does so with dramatic suddenness, as in 
today’s radical changes. William Dawkins reports 


J apan, does not evolve 
gradually like other lead- 
ing industrialised coun- 
tries. Instead, it goes through 
decades of stability, punctu- 
ated by upheavals such as the 
one happening now. 

Evidence has piled up over 
the past year that Japan is 
starting to redefine every 
aspect of its society. Old max- 
ims, such as stability, consen- 
sus, the subordination, of the 
collective will to export-led 
economic growth, have all 
been thrown into question. 

A new blueprint is be ginning 
to emerge. It is only partly 
drawn and will take years to 
complete. But the first blurred 
sketch shows an unpredictable 
Japan, in which open debate 
rivals consensus, individual 
initiative has begun to chal- 
lenge collective will, and the 
race for growth is giving way 
to the challenge of adjusting to 
a slowly expanding mature 
economy. 

Optimists liken the present 
phase to the start of the Meqi 
Restoration. Japan's high 
speed transformation at the 
end of the 19th century from a 
medieval to an industrialised 
society; or to the creation of 
Japan’s economic miracle in 
the decades after the second 
world war. 

Realists point out, however, 
that for the moment there is 
no restoration. Japan wavers 
tantalisingly between the par- 
tial destruction of the old order 
and the construction of a new 
one. For every few steps for- 
ward, it takes a step back. 

“Change has been slower 
and more disorganised than 
many foreign observers think, 
but it is reaL It is also much 
stronger than many foreign 
observers think." says Mr 
Kiyoaki Kikuchi, a former 


ambassador to the United 
Nations. 

Nowhere has the transforma- 
tion been more visible than in 
politics. Formerly stable Japan 
has produced four prime minis- 
ters over the past year. The 
monolithic dominance of the 
Liberal Democratic Party has 
given way to a shifting web of 
alliances between 12 parties, in 
which policies are announced 
one day to be revoked the next. 

The breakdown of the old 
political order began a year 
ago today, when the electorate 
voted out the LDP after 38 
unbroken years in power. 

An LDP government 
returned to office three weeks 
ago. but this time under a 
prime minister from the Social- 
ist party. Mr Tomiichi Muray- 
ama, the LDP’s traditional 
enemy since 1955. It is a partial 
step back to the old system, 
but also an illustration of how 
severely the old structure has 
been fractured. 

While a h umilia ted LDP 
spent U months in opposition, 
two unstable coalition govern- 
ments led by a younger genera- 
tion of reform-minded politi- 
cians managed to achieve a 
long-delayed redesign of the 
political system and set curbs 
on political funding. 

The new rules, to be com- 
pleted with the redrawing of 
electoral boundaries this 
autumn, will make Japanese 
politicians compete for seats 
more on the quality of their 
policy ideas, and less on their 
newly curtailed ability to hand 
out favours. 

The defeat and subsequent 
weakening of the LDP. which 
has seen its numbers dwindle 
through a trickle of defections 
over the past year, was a ter- 
minal blow to the so-called 
iron triangle of business, poli- 


tics and the bureaucracy. 
"Business no longer knows 
where to go for favours arid the 
bureaucrats feel there is no 
power centre,” says Mr 
KflmchL 

Elements of the old system, 
in which important decisions 
were made in secret by LDP 
factions, are of course still 
intact. The pact between the 
LDP and SDP that brought the 
odd couple to office shows that 
governments can still be made 
by the backroom collusion of 
the LDP’s heyday. The LDP 
and the SDP remain the first 
and second largest parties 
respectively. 

Yet the framework in which 
they operate has shifted irre- 
versibly. Japan has already 
moved from one-party rule to a 
system of three competing 
political groups; the rump of 
the LDP; centre-right reformist 
parties like the Japan Renewal 
party and the Komeito clean 
government party; plus a left 
wing loosely grouped around 
the Socialists. 

Political upheaval may be 
linked to Japan’s longest eco- 
nomic downturn since the sec- 
ond world war. another chal- 
lenge to the old power 
structure. There are signs of 
recovery, but the recession has 
overturned several traditional 
assumptions about Japan's eco- 
nomic strength. 

Unlike previous recessions, 
this one was at least partly 
caused by internal structural 
weakness, rather than just by 
external blows, like a rise in ofl 
prices. ‘Rut is why the reces- 
sion has been a long one, likely 
to be followed by weak growth, 
rather than the shallow dips 
followed by vigorous recov- 
eries shown in previous cycles. 

The recession has uncovered 
heavy overcapacity in the for- 


mer engines of economic 
advance, the car and electron- 
ics industries. These will take 
years to correct and provide a 
drag on growth in the future. 
No industry is an obvious can- 
didate to power the economy in 
the next decade, as c are and 
electronics did in the 1980s. 
The government is backing 
multi-media as one possibility, 
but the international competi- 
tion is intense. 

There has also been a heavy 
external shock. In the past few 
weeks, the yen has risen for 
the first time through the psy- 
chological barrier of Y100 to 
the dollar, threatening to 
choke the fragile recovery by 
further squeezing the yen 
value of export earnings. Busi- 
ness leaders are running even 
more scared than they did in 
previous rounds of yen appreci- 


ation. The yen’s ability to defy 
gravity means that even as 
Japan comes out of recession, 
there will be no let-up in the 
pressure on industry to 
rest ru c tur e. The outward shift 
of production capacity to 
cheaper locations in south-east 
Asia is accelerating, as a 
result, raising fears that Japan 
may deplete its industrial base. 

J apan's formerly all pow- 
erful financial system 
has also been forced to 
face up to structural weak- 
nesses. This downturn has left 
hanks straining under a moun- 
tain of bad debts, inherited 
from the unsustainable rise in 
asset prices of the late 1980s. 

In previous recessions, banks 
could be counted on to tide 
their customers through hard 
times and provide the funds 


needed to finance recovery. 
But this time, banks are letting 
shaky corporate customers go 
under in record numbers, 
rather than allow bad loans to 
pfie up foster. It will take sev- 
eral years for them to reduce 
bad debts to manageable lev- 
els. during which time the 
banking system's ability to 
fund a recovery may well be 
weakened. 

Economic upsets have gone 
hand in. hand with social 
change. Japan's social con- 
tract, in which companies 
guarantee a job for life in 
return for life-time loyalty, is 
up for renegotiation. Promi- 
nent standard bearers of life- 
time employment, such as 
NTT, Nippon Steel and Tosh- 
iba. have had to cut their 
workforces. Others, including 
Sony and Honda, have replaced 


traditional seniority-based pay 
with merit awards and encour- 
aged staff to compete for jobs. 

One reason why Japanese 
industry still carries so mucb 
overcapacity is that it has 
restructured to nothing like 
the extent of its US and Euro- 
pean competitors. 

Yet the process has been rad- 
ical enough to unnerve mil- 
lions of salarymen who used to 
think of the company as the 
staple of their personal lives 
and have learned to value cor- 
porate loyalty above personal 
initiative. The tradition of life- 
time employment is still intact, 
but no longer guaranteed. 

Social change has stretched 
to the behaviour of Japan's for- 
merly passive consumers, who 
are flocking in record numbers 
to increasingly popular dis- 
count retail stores. 


ill THIS SURVEY 

□ Economy: activity is pick- 
ing up again, but don't 
expect mirades 

S Agriculture: Japan's rice 
farmers mount an emotional 
campaign against imports of 
cheap rice PAGE 2 

□ Industry: big manufactur- 
ers are “in a hollow" as they 
sharpen their management 
and create more jobs abroad 

U De-regulation: why Body 

Shop took 18 months to 

launch a banana- flavoured 
Shampoo PAGE 3 

□ Nuclear power shades 
at Hiroshima as nuclear 
power yields more than 30 
per cent of electricity 

□ Finance houses: banks 

learn that sire and strength 
are not identical PAGE 4 


□ Sleeping giant: post-Cold 
War diplomacy is caught 
between past and present 

O Aslans quouo up: most 
Far East countries are more 
interested in new Japanese 
investment than in old griev- 
ances PAGE 5 

□ Political turmoil: the fall 

of the Liberal Democrats 
after 39 years sets the scene 
for a period ot political insta- 
bility PAGE 6 


This is partly a symptom of 
the pressure on wages. But 
many analysts believe it also 
marks an underlying change in 
attitude. Consumers are 
starting to realise that they 
can no longer tolerate the fact 
that Japan’s consumer prices 
are still on average 80 per cent 
above the OECD average. 

Consumers 1 new taste for a 
bargain has wide repercus- 
sions. It challenges the exis- 
tence of the multi-layered dis- 
tribution system, the main 
feature in Japan's high prices 
and a factor in the orderliness 
of its social structure. 

Deregulation, given fresh 
emphasis by governments over 
the past year, has also played a 
part. The practical impact has 
been slight so far. but deregu- 
lation is popular and widely 
□ Continued on page 3 


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II 


FINANCIAL TIMKS TUKSDAY JULY tO 1994 


JAPAN 2 


J apan’s consumers, indus- 
trial companies and 
banks are starting to 
adjust to the fact that they can 
expect nothing like the high 
growth of the 1380s during the 
second half of this decade. 

The change down in eco- 
nomic gear is one of the many 
factors forcing Japan to chal- 
lenge tile values that used to 
He at the heart of its economic 
power, like the dominance of 
producers' interests over con- 
sumers, the lifetime employ- 
ment system and the tight-knit 
organisation of business into 
keiretsu, or corporate families. 

Japan may have to team to 
switch to a mature consumer- 
led economy rather than the 
fast growing industry-led 
exporter it used to be until the 
downturn hit, just after the 
turn of the decade. 

A faltering increase in pri- 
vate demand has just started 
to arouse the economy from its 
longest and deepest recession 
in the post-war era. It may 
only w alk rather than run into 
its next recovery phase, but 
few doubt that the worst is 
over. 

Most economists in Tokyo 
believe that gross domestic 
product will recover from stag- 
nation last year to growth 
between less than 1 per cent 
and 2 per cent this year, set- 
tling to something like one or 
two points below the 1980 aver- 
age annual growth rate of <tS 


The economy stirs, but expect no miracles, writes William Dawkins 

Solidity and maturity 


per cent. The main evidence 
for an upturn includes a 3J> per 
cent annualised increase in 
gdp in the first quarter of this 
year, the best performance for 
three years. It could fall back 
again in the current quarter 
for seasonal reasons, but the 
underlying forces at work are 
clear, even if fragile. 

Government spending pack- 
ages have fed through to 
strong rises in boosing starts, 
private consumption and 
imports in the first three 
months of this year. Imports, 
spurred by the yen’s sharp 
rise, increased by just over 16 


per cent in the year to last 
month, the clearest evidence 
that Japan's huge and politi- 
cally troublesome trade sur- 
plus might now be on the turn. 

Private consumption rose by 
5.8 per cent in the first quarter. 
There has been a consumer 
spending spree in discount 
stores, often loaded with cheap 
imported goods, and helped by 


the gradual breakdown of 
Japan’s retail and distribution 
cartels, incidentally one of the 
ways in which economic 
change is producing an adjust- 
ment in the structure of soci- 
ety. 

Industry has started to 
reduce its vast Inventories of 
unsold goods, but industrial 
production has yet to show a 
clear pickup. Output showed 
an apparently encouraging rise 
in the first three months of 
this year by comparison with 
the last quarter of 1983. Yet the 
monthly figures have switched 
direction every month since 


last August 

Recovery is being slowed in 
its early stages by the yen’s 
recent historic break through 
YlQO to the dollar, an unwel- 
come new blow to the interna- 
tional competitiveness of 
Japan’s manufacturing indus- 
try. 

Some business leaders, such 
as Mr Takeshi Nagano, chair- 


man of the Nikkelren employ- 
ers’ federation, believe the 
yen's sharp rise could nip the 
recovery in the bud, just as a 
jump in the yen did when a 
phantom upturn appeared this 
time last year. Most econo- 
mists. however, believe indus- 
try has cut its costs so sharply 
during the recession that the 
latest rise in the Japanese cur- 
rency will merely slow, rather 
than choke, recovery. 

Japan's chaotic political 
scene, with four governments 
in the past year, has also 
slowed the recovery by ham- 
pering ministers’ ability to 
make difficult economic policy 
decisions. 

Successive governments 
have, to their credit, delivered 
three public spending packages 
worth Y45,000bn over the past 
18 months. But badly needed 
income tax cuts and further 
public spending have been 
delayed or blocked. 

Japan's shaky governments 
have also done well to produce 
three deregulation packages 
over the past year, marking 
modest steps in the attempt to 
reduce Japanese costs and 
prices in line with interna- 


tional competitors. 

But the political upheavals 
have delayed and possibly- 
weakened the implementation 
of the most recent deregulation 
package, published last month. 
This is not all bad, since many 
economists believe deregu- 
lation should in any case be 
slow, to avoid creating too 
much deflation at a time when 
wholesale prices are already 
foiling. 

Looking beyond the immedi- 
ate problems, the later stages 
of the recovery will be con- 
strained by at least two struc- 
tural problems - surplus 
industrial capacity and the 
weakness of the financial sys- 
tem. 

Surplus capacity will force 
the industries that used to be 
the engines of Japan’s econ- 
omy to hold down wage 
increases, new employment 
and investment in the mature 
domestic market 

The car industry alone, for 
example, still has surplus pro- 
duction capacity of 2m 
vehicles, equivalent to the 
entire car market of Britain or 
France. It is not alone. The 
electronics, shipbuilding, engi- 


Industry has started to reduce its 
inventories of unsold goods 


Coouumptlan 

Real annual % change 

Government 



Exporta {goods and services) 

Real annual % change 
10% — 



SouncOlMMitOCCO . 


QDP 

no.il annwtf % change 
7 % 

6% 

S* 

ill- " — 


firowiMInwatiMiit 

Boss annual % change 

}4% 



3% 




neering and financial services 
industries are all going into 
recovery with bloated payrolls. 
Their high costs are more of a 
handicap now than in the 1980s 
because of the sharp rise in the 
yen, by 35 per cent in trade 
weighted terms since early last 
year. 

This means that Japanese 


companies will continue, as 
they did in the recession, to 
curb recruitment and to 
encourage early retirement, as 
a way to reduce capacity in 
line with demand without 
breaking the taboo against 
heavy redundancies. Lifetime 
employment will come under 
strain, but it will weaken 


rather than collapse, soy Japa- 
nese managers. 

According to a recent survey 
by the Ministry of Interna- 
tional Trade and Industry, 
companies will increase capital 
investment by 1.1 per cent in 
the year tu next March, yet 
most of this new cash will go 
to cheap production sites in 
China and south-east Asia, 
which represent Japan’s fastest 
growing export markets and 
investment destinations. 

The financial system, mean- 
white, is making slow headway 
in running down the burden of 
bad debts, inherited from the 
boom in lending on the back of 
over-valued property during 
the sharp rise in asset values 
of the late 198Bs. Since then, 
commercial property prices 
have fallen by up to 50 per cent 
and have shown no clear sign 
yet of recovery. 

It is feared that the experi- 
ence has made banks so cau- 
tious over extending new loans 
that the economic recovery 
may prove hard to finance. 
This is born out by the weak 
performance of the benchmark 
indicator of money supply, M 2 
plus certificates of deposit. It 
turned the corner early last 
year, from a three year decline, 
but grew at a mere 1.7 per cent 
in the year to May, well below 
the 5 per cent annual growth 
which many economists 
believe is needed tu fund a 
revival. 



A tanner pro tests against imports of rice 


M r Koji Takada, a 44 year old rice 
farmer tn Kitakami, northern 
Japan, describes the future of 
Japan’s fanning as “grim". Although 
more than four generations of his family 
have been farmers he doubts whether his 
children will keep up the tradition. 

He is one of the many Japanese rice 
fanners who have lost faith in the govern- 
ment's policy, due to last y ear’s decision 
to open the rice market to imports, and to 
the conftasion following the shortage of 
domestic rice earlier in the year. 

Japan will open its rice market to for- 
eign imports next year under the Uruguay 
Round of trade liberalisation talks. For 
the first six years, imports will have lim- 
ited access. In the seventh year the mar- 
ket is expected to be fully open. Mean- 
while, the rice shortage caused by the 
exceptionally cold weather last summer 
triggered a rice shortage row, and the 
government was forced to import emer- 
gency supplies from the US, China, Aus- 
tralia and Thailand. 

The row over the opening of the market 
heightened the sense of sanctity of home- 
grown nee, toe cultivation and toe har- 
vesting of which remain at the roots of 
Japanese traditions and rituals. 

fu ancient Japan, rice was not only food 
to fill toe stomach but a symbol of deities, 
or a means of connecting .humans to the 


A storm is brewing over imports of rice, writes Emiko Terazono 

Some things are sacred 


gods. The emperor, still considered by 
many as a living god, today plants rice 
seedlings in his private rice paddy behind 
toe imperial walls. 

Later, rice was used as taxes and traded 
like a currency, and would become a sign 
of wealth. In medieval Japan, rice and 
rice cultivation was turned into a cultural 
symbol by which Japanese would differen- 
tiate themselves from the Chinese, 
Koreans, and westerners, an ideology 
broadened and popularised by toe mili- 
tary government during World War II. 

Behind the symbolism, however, the 
opening of the rice market has high- 
lighted the rigidly controlled fanning sys- 
tem, which has become inefficient and 
outdated. Mr Takada's woes are shared 
with other farmers, who are concerned 
with tiie country’s agricultural future. 

The protection of the farmers, whose 
are votes are highly valued by politicians, 
has come in the form of farm subsidies. In 
order to keep afloat the farming sector, 
which has an annual output of about 


Y10,000bn, the government pumps iu 
about Y6,000bn. The figure rises to 
around Y9.000bn if subsidies from local 
government are included. 

Others who have benefited from the sys- 
tem have been the 12.000 bureaucrats in 
the Food Agency, which have nothing to 
do all year except during the harvest, 

in ancient Japan, rice was a divine 
symbol and was later used as taxes 
and traded like currency 

when they inspect rice. Around 350,000 
people are employed by the numerous 
farm cooperatives, which work as an 
intermediary between the farmers and the 
government, selling agro chemicals and 
farming machinery to the farmers azzd 
collecting and distributing toe govern- 
ment’s payments for rice. 

But aside from Japanese consumers, 
who have had to pay around seven times 
the International price for rice, the farm- 


ing community has paid the penalty for 
such distortions. Dependent onsubsidles 
and toe state ran distribution system, 
they have lost control over their liveli- 
hood. Farmers cannot buy or sell their 
land freely due to regulations on farm- 
land transactions, while the state controls 
every aspect of rice fanning from the 
planting to the retail sales. “The position 
of rice growers is little more than that of 
serfs working on state-owned farms,’’ says 
Mr Taro Yayama, a political analyst advo- 
cating the form reforms. 

And in spite of the government’s subsi- 
dies, rice production is not profitable. Mr 
Takada says while his income does not 
differ from office workers of the same 
age, alter paying for farming machinery, 
fertilisers and pesticides, sold at higher 
than market prices by toe forming cooper- 
atives, “there isn’t much left to spend". 

The result has been a sharp fall in toe 
country’s forming population, which has 
declined from 3.7m in 1985 to 3.1m in 
1990. The figure is likely to fall further to 


around 2.lm by 2000. At the same time 
the forming population is ageing rapidly 
and, according to the ministry of agricul- 
ture, the number of formers under 60 in 
1990 will be halved in 2000. 

Not that the government Is unaware of 
the problems. In 1992, the agriculture 
ministry released a report on food policy, 
agriculture and rural life. It called for 
consolidation of smaller farms for a more 
efficient system. 

Reform advocates are calling for a mote 
radical reform, including bringing in foe 
market mechanism by deregulating state 
control, and freely allowing those who 
want to enter the sector. 

However, the government has been slow 
to respond to the need for agricultural 
deregulation and reform. The new Mnray- 
ama administration merely followed Its 
predecessors by agreeing earlier this 
month to the ritual annual increase of 
subsidies to the farmers. 

Although Japan still has six years 
before the official opening of the rice mar- 
ket, with no apparent gainers except con- 
sumers from lull fledged farm reform, pol- 
iticians, farmers and agriculture 
bureaucrats may continue to drag their 
feet In the end, like so many other Issues, 
Japan may once again need the help of 
outside pressure to rationalise the dwind- 
ling farming sector. 


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! V * 


FtNANCIAI. TIMES TUP^n.v ju^y 19 1994 


JAPAN 3 




T o me rest of the world, 
Japan still seems an 
unstoppable economic 
leviathan which dominates 
many industrial markets, hasa 

huge trade suiplus- especially 

£ the Protesting US - and 
cultivates a wort ethic sune- 
nor to that of most competing 
countries, 

But while its products 
remain successful and its peo- 
P J f hard-working and disci- 
piued. the picture is very dif- 
fcrent when seen from inside 
Japans high costs and strong 
currency, which last month 
forced the dollar below YlOO 
have put hurdles in the way of 
its continued industrial prog- 
ress. 

Industrialists and economists 
talk constantly about the 
potential “hollowing out” of 
Japanese industry as it opens 
more operations in lower-cost 
countries in North America. 
Europe and South-east Asia. 
Big companies are striving to 
their employees more 
flexible and productive by 
restructuring operations to cut 
costs and increase efficiency 
without sacrificing lifetime 
employment and destroying 
loyalty and motivation. 

. It is proving tough. After 
investing heavily to meet 
demand during the expanding 
“bubble" economy of the late 


Industry is worried about its future, writes Andrew Fishe r 

It’s tough at the top 


1980s, many companies have 
too much capacity. 

“After the bubble. Corpora- 
tions faced a huge cost burden 
as they had expanded too 
much,” says Haruo . { tblmaHM i 
economics professor at Keio 
University. They have cut 
down on recruiting, leaving a 
trail of disaffected graduates, 
and eased back sharply on pay. 
Many are also trying to move 
away from the tradition of pay 
by seniority rather than merit 
and ensure that able managers 
move fester up the ladder. 

Making workers redundant 
to cut costs is virtually 
unheard of in consensus- 
minde d Japan. Not only is it 
culturally unacceptable, and 
legally awkward, but some 
companies fear they may be 
short of labour again the 
economy picks up. Even so, 
workforces are being reduced 
as companies do not replace 
those who leave. 

“ Japanese management is 
fa c ing a huge challenge,” says 
Mr Masaya Mi y os hi, director 
general of the Eeidanren, the 


Japanese business federation. 
“The system needs overhaul- 
ing.” Some companies are tak- 
ing tough action within the 
constraints of the Japanese 
system. In cars and computers, 
Honda and Fujitsu are 
up their management struc- 



Honda's NotaMko Kawamoto: 
trying to move with tfw times 

tares, looking at every aspect 
of their operations and trying 
to inject a more entrepreneur- 
ial spirit into them. 

“It’s not enough just to cut 
the workforce,” says Torn Kat- 


surada, a director of Fujitsu, 
which made a loss in 1992 but 
is now back in profit. “We need 
to review every business we 
are in.” The Nissan car com- 
pany has even ta ke n the bold 
step of closing its plant at 
Zama to concentrate output in 
newer facilities. But the clo- 
sure is being spread over two 
years and the 2,000 production 
workers shifted to other sites; 
no-one is being laid ofT- 

Nissan’s plan is to cut costs 
by Y200bn (S2bn) up to 1996, 
much of it by sharing more 
components between different 
models. Honda, Toyota and 
Mazda are also rationalising 
the way they build cars. About 
50 per cent of the parts used in 
Honda's newest Accord family 
car are shared with the previ- 
ous model or with others in the 
range; previously, it was only 
10 per cent 

This amounts to a big sav- 
ing. But Honda is also trying to 
revitalise its management by 
moving aside people who do 
not progress fast enough »nri 
introducing performance-based 


pay. This is vital, says Mr 
Nobuhiko Kawamoto. Honda's 
president, if it is to move with 
the times. "We are trying to 
cope with the problem of the 
decline in Japan's competitive- 
ness in world markets due to 
the high yen and political 
issues." The latter mainly con- 
cern US attempts to persuade 
the Japanese industry to buv 
more parts there. 

As Mr Kawamoto points out, 
many or the steps being taiwn 
by companies like Honda go 
against the traditions built up 
in growth-conscious Japan 
after World War Two. Until the 
post-bubble recession, compa- 
nies prized their keen and pro- 
ductive employees who in turn 
valued their lifetime connec- 
tions with an employer who 
gave them a sense of belonging 
and security. 

But in these harsher times, 
companies need to become 
more flexible and tbeir 
operations more transparent. 
"The traditional Japanese sys- 
tem is now in direct conflict 
with the com peti t i veness-o ri- 



Mssan’a Kyushu plant gradual 


ented system of the western 
world." adds Mr Kawamoto. 
Younger Japanese are more in 
tune with western wax's of liv- 
ing and working. So the 
actions of companies like 
Honda have to take their aspi- 
rations and abilities into 
account 

T herefore." says Mr 
Kawamoto, “we have to 
survive through this 
period of harsh competition 
and yet maintain the good fea- 
tures of the Japanese tradition. 
We want to give the next gen- 
eration something to hope Tor." 
In the opinion of Mr Shin taro 
Hori, managing director of the 
Bain consultancy in Japan, 
this virtually means two com- 


Social upheaval 


panics in one. “Honda needs a 
young, motivated, fast track, 
performance-oriented company 
and another more middle-aged, 
balanced, judgment-oriented 
company. If it can keep this 
balance, then it has a great 
advantage.” 

In the case of such globally- 
minded industries as cars and 
computers, this may work. Mr 
Matthew Ruddick, car analyst 
at stockbroker James Capel 
Pacific in Tokyo, believes the 
cost-cutting activities of the 
car companies will benefit 
profits considerably. “There is 
good reason to be optimistic 
about the automotive indus- 
try.” 

Even if the market improves, 
though, there will still be a 


surplus of jobs and capacity. 
But reinvigorating Japanese 
industry as a whole, without 
destroying the social and cul- 
tural values which helped it 
become successful, is far more 
challenging. For one thing, 
much of the Japanese economy 
is highly regulated which 
keeps up costs and hinders 
competition; moves to change 
this are proceeding slowly. 
Also, notes Mr Shlmada. "we 
have a lot of inefficient sec- 
tors". He reckons only a third 
of manufacturing industry is 
competitive in world terms, 
while large areas like construc- 
tion, transport and distribution 
have high costs and low pro- 
ductivity. 

He adds, ominously: “If com- 
panies and the government 
don't take drastic reforming 
action, we'll be pulled into a 
declining scenario year after 
year." More operations will be 
carried out abroad and Japan’s 
steadily rising standard of liv- 
ing and ability to create jobs 
will be threatened Further. Not 
all see the future in such stark 
terms. But even the Keldan- 
ren’s Mr MKoshi believes the 
pessimists among Japanese 
industry are currently in the 
majority - "by hunch. I would 
say 60 per cent pessimists and 
40 per cent optimists. I'm right 
in the middle." 


□ Continued from page 1 

accepted. Consumers’ interests 
are starting to assert them- 
selves in a society traditionally 
dominated by producers’ inter- 
ests. 

It is no surprise that, with all 
these changes churning away 
at home, Japan is redefining 
its place in the international 
community. The first step has 
been to start renegotiating its 
traditional dependence on US 
leadership. 

This is a belated response to 
the end of the cold war, which 
has reduced Japan’s role as a 
passive USeponsored bulwark 
against communism in Asia. 

Evidence of this is Japan's 
newly assertive stance on eco- 
nomic relations with the US, as 
shown by its continued opposi- 
tion to US demands for numer- 
ical targets for increases in 
imports. 

When Mr Morihiro Hoso- 
kawa met US President Bill 
Clinton in February, it was the 
first time that a Japanese 
prime minister chose to come 


away from a US summit with- 
out an agreement rather than 
make concessions. Yet Japan’s 
dependence on US military pro- 
tection is as strong as ever and 
may increase with North 
Korea's nuclear ambitions. 

While Japan rethinks its US 
relationship, it has - again 
be lated ly - started to make 
overtures to its increasingly 
important Asian neighbours. 
Mr Hosokawa’s 

unprecedentedly explicit 
apology for Japan's wartime 
record helped, for a while, to 
reduce Japan’s isolation in 
Asia. Unfortunately, the 
gesture was ruined later when 
a justice minister hi the next 
government denied that a 
notorious wartime atroc i t y had 
ever occurred. 

Japan's search for a credible 
voice of its own will be as 
sensitive and difficult as the 
rest of the changes sweeping 
through the country. Japan is 
changing from a passive 
economic machine to 
something different, but as yet 
incompletely rfpfinpri 


W hen The Body Shop wanted 
to sell In Japan shampoo 
made from bananas, it took 
one-and-a-half years to get the neces- 
sary approvals. “They never thought 
of bananas as an ingredient,” says 
Mrs Mitsn Kimata, head of the UK 
company’s operation in Japan, about 
the attitude of Ministry of Health and 
Welfare officials. 

Wat er melons are also not on toe 
approved list of cosmetic in pwiiMrfg 
So bringing in a sun-care product 
made from this fruit is »i«n fairing 
tone. “I hope we can get it next sum- 
mer, but it was developed last year.” 
Not surprisingly, she adds: “Japan is 
(me of the most re st ric tive countries 
that Body Shop operates in.” 

The complaint is echoed by a host 
of foreign, and many local, compa- 
nies in Japan. Despite government 
initiatives to promote deregulation - 
the latest was announced last month 
- there is scepticism about the pace 
of change, especially now the govern- 
ment has changed yet again. “It’ll 
take light years,” says Mr Peter 
Woods, president of Rover Japan, 
about the prospects for progress. 

A recent survey of foreign compa- 
nies m Japan, of which there are 
more than 3,000, showed that 58 per 
cent thought it was more difficult to 
operate tome than in other advanced 
countries. The extreme cost of land 


Andrew Fisher studies the potential for more de-regulation 

Yes, we have no bananas 


and rents was the main reason, fol- 
lowed by high prices of goods - gen- 
erally twice as high as in other indus- 
trialised countries - and the number 
of government regulations. However, 
the survey by LBS, a firm which pro- 
vides services to non-Japanese com- 
panies, did find that 39 pm cent of 
respondents felt It bad become easier 
to do business in Japan. 

But toe progress of deregulation 
was well down the list of reasons for 
this. Companies felt instead that 
more goodwill was now being shown 
to outsiders, while they had devel- 
oped a better understanding of Japa- 
nese business customs. Either way, 
said Mr Homare Takenaka, a senior 
managing director at IBM Japan 
(which helped set up LBS), in the 
survey’s foreword, “the Japanese 
market as seen from foreign eyes is 
still fraught with many obstacles in 
the form of regulations and puzzling 
business practices.” 

The latest government package 
promised action on 279 regulations. 
These cover housing and land, tele- 


communications a raj financial mar- 
kets, as well as the acceptance of 
foreign inspection data and standards 
for more imports. There are more 
than 10,000 regulations inhibiting an 
estimated 40 per cent of the economy. 
Former prime minister Mr Morihiro 
Hosokawa last year launched a five- 
year campaign to sweep away this 
forest of rules alter previous govern- 
ments had faffed to reduce than. 

J apan’s bureaucratic system 
served the country well as the 
economy recovered and grew 
after World War Two. “The Japanese 
system has been built on toe philoso- 
phy that this is a country poor in 
resources but rich in people." says 
Mr Takenaka. Bnt growth has 
changed all that. “Now, we are at an 
economic stage where Japan is not 
poor. It should be more open to for- 
eign companies and people, more 
free. But toe historical heritage 
remains as a barrier.” 

One area where Japan has been 
most heavily criticised is car Imports, 


still only accounting for 5 per cent or 
toe total market For years, foreign 
makes were hindered by high tariffs 
and a raft of regulations. The tariffs 
have gone and it is much easier to 
sell foreign cars; the streets or Tokyo 
are full of them. Helped by toe strong 
yen. car imports have soared this 
year. 

But there are still big hindrances, 
says Mr Woods. “The Japanese are 
rather consistent, stubborn and 
rather networked." The Ministry of 
Transport is slow to chang e its rules 
- especially on inspection - and has 
to be persuaded, even if the pressure 
is coming from high political level; 
some politicians, pursuing special 
interests, obstruct attempts to free up 
the system. 

Also, there are informal rules 
which are hard for outsiders to com- 
prehend. “Guidelines are operated 
which are almost not written. There 
is a tremendous level of power in the 
hands of the bureaucrats.” This they 
will not give up lightly. Mr Nobuhiko 
Kawamoto, president of the Honda 



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car company, notes: “Everybody talks 
of deregulation - but if it is imple- 
mented full-scale, there will be a lot 
of lay-offs among bureaucrats and 
civil servants.” 

The high level of regulation keeps 
prices high. Japanese workers at 
Honda making the same curs as its 
workers in the US earn more at the 
current yen rate. “Yet the standards 
of li ving enjoyed by the Japanese 
workers are far below those enjoyed 
by toe Americans." 

The experience or The Body Shop 
shows how regulations keep up costs. 
Currently, it can sell less than 70 per 
cent of the frill range of products in 
Japan. Mrs Kimata hopes to raise 
this to 85 per cent next year. If ingre- 
dients - such as exotic fruits or oils - 
are not on toe ministry’s approved 
list for cosmetics, there ore delays 
due to testing (for which the com- 
pany pays). 

She hopes deregulation will ease 
the way for Body Shop products and 
make them cheaper. Bnt many Japa- 
nese companies would benefit, too. 
“Deregulation will create new busi- 
nesses,” believes Mr Masaya Miyoshi, 
director general of the Eeidanren, the 
business federation. “Companies, citi- 
zens and customers will be encour- 
aged to think about their own respon- 
sibilities. Finally, we will get away 
from the umbrella government” 



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IV 


JAPAN 4 


FINANCIAL TIMES TUKSOAY JULY 19 1W4 



Tokyo protest one imports of French-reprocessed plutonium Reuter 

■ NUCLEAR POWER 

Thirty percent 
and rising 


Finance houses start to pick up the pieces, writes Gerard Baker 

The bubble that burst 


A s the heat and humidity 
soar in the sweltering 
Japanese summer, elec* 
tricity companies have to shift 
gear to keep up with demand. 
Air-conditioners, refrigerators 
and juice extractors make life 
more comfortable for those 
who can afford them, but put a 
huge extra burden on generat- 
ing capacity. 

With energy use climbing 
steadily and no natural fuel 
resources of its own. Japan has 
long put its faith in nuclear 
power, a policy reinforced by 
the oil crises of the 1970s. More 
recently, the government and 
the nuclear industry have gone 
to great lengths to win the pop- 
ulation over to the idea of yet 
more energy from uranium 
and plutonium. 

Already accounting for 30 
per cent of electricity genera- 
tion - the country has 46 
nuclear power plants with 
seven more on the way - the 
scale of the nuclear commit- 
ment is set to rise further. 

Yet several factors have com- 
bined to slow down the nuclear 
energy drive. Concern over 
nuclear proliferation, espe- 
cially after North Korea's 
reluctance to allow interna- 
tional inspection, has focused 
foreign attention on Japan's 
technological prowess in the 
nuclear field, despite protesta- 
tions from Tokyo that it has no 
intention of using plutonium 
to make weapons. 

Japan's growing environ- 
mental consciousness is also 
playing a role. So is the fact 
that uranium, used in the pres- 
ent light water reactors, looks 
likely to be in plentiful supply 
for many years. Thus the gov- 
eminent has just decided to 
hold back on further develop- 
ment of the fast breeder reac- 
tor (FBR) programme, based on 
plutonium, and on building a 
second nuclear fuel reprocess- 
ing plant. 

This plant, on which a deci- 
sion will not now be taken 
until 2010, would follow one 
being built some 700km 
north-east of Tokyo in an area 
of lush fields and low hills near 
the town of Masawa at a cost 
of YlJSObn (Sl£5bn). Chatter- 
ing school children and atten- 
tive adults tour the visitors’ 
centre at the Rokkasho repro- 
cessing and waste disposal 
plant near the Pacific coast. 

fn the smartly designed cen- 
tre, the workings of the facility 
are demonstrated - from the 
treatment of spent fuel and the 
enrichment of uranium to the 
storage of radioactive waste. A 
smiling hostess points to a dis- 
play of yellow drums in which 


low-level waste from power sta- 
tions will be buried in con- 
crete; some 3m drums will 
eventually be stored. 

Although the Japanese peo- 
ple broadly accept the case for 
nuclear energy, they have res- 
ervations. The government 
says 70 per cent believe in its 
necessity but only 40 per cent 
think it is safe. Also, said a 
recent report by a nuclear 
advisory subcommittee of the 
Ministry of International Trade 
and Industry iMiti), "the public 
has a low degree of confidence 
in information on nuclear 
power generation provided by 
the government and electric 
utilities*'. 

The 7.5m sq m Rokkasho 
site, partly completed and 
partly a hive of round-the-clock 
construction activity with tall 
cranes piercing the skyline, is 
central to the government’s 
aim of providing security of 


energy supply for resource - 
poor Japan. The enrichment 
facility, in which the concen- 
tration of heat-generating 
U- 235 is increased, is building 
up its operations, while the 
first huge pit for storing the 
dr ums is now in use. 

R eprocessing will not 
start until around 2002, 
also a slight delay. But 
Rokkasho is already a symbol 
of both the nuclear industry's 
ambitions and the concern in 
and outside Japan over how far 
it intends to go down the 
nuclear road. Despite constant 
reassurances from Tokyo, sus- 
picions about the possibility 
that the country may one day 
build nuclear weapons persist. 

It certainly has the skills to 
do so. Even the previous prime 
minister, Mr Tsutomu Hata, 
whose minority government 
collapsed last month, admitted 


as much. Yet anyone who has 
visited the Peace Museum at 
Hiroshima with its horrific 
exhibits from August 1945 
when Japan became the only 
country to suffer atomic bomb- 
ing. will understand its reluc- 
tance to enter the nuclear 
arms race. “We have to show 
foreign countries how we are 
keeping to peaceful uses of 
nuclear power." says Mr Ter- 
uaki Masumoto. head of com- 
munications at Tokyo Electric. 

The overseas concern, espe- 
cially in the ITS, has arisen 
mainly over Japan's nuclear 
fuel cycle policy - with ura- 
nium reused after spent fuel is 
reprocessed - which would 
result In the production of plu- 
tonium, which could be used to 
make nuclear weapons. “The 
idea that surplus plutonium 
could be used to make a bomb 
is very controversial,'’ admits 
Mr Harushige Takeuchi, a gen- 
eral manager at Rokkasho. 
“Japan has no intention of 
doing that; the point is to use 
the nuclear fuel resources in 
the most practical and eco- 
nomic way." Officials at Miti 
echo this. But while stressing 
the absence of military ambi- 
tions, they argue that Japan's 
nuclear policy is vital to secure 
long-term electricity supply in 
a country which is a voracious 
consumer of energy. 

Japan used to be heavily 
dependent on imported oil, 
which accounted for around 70 
per cent of its needs. Today, 
this is down to some 30 per 
cent. At Tokyo Electric, the 
share of electricity produced 
from nuclear power units, of 
which It has 15. is set to rise to 
43 per cent in 2003 from 37 per 
cent last year. 

The company appears 
unworried about the FBR 
delay. The Y600bn Monju pro- 
totype facility has now begun 
operations after technical prob- 
lems. But commercial use of 
fast breeders has been post- 
poned by 10 years to 2030. with 
the planned demonstration 
plant (to be built by industry) 
put off from the late 1990s to 
early in the next century. 

The slowdown in policy will 
lessen the supply of plutonium 
and should thus abate concern 
over non-peace ful uses. But 
Tokyo Electric's Mr Masumoto 
thinks the FBR will eventually 
go ahead. “No-one knows if a 
third oil shock will coma We 
have to prepare something as 
insurance.” So while the FBR 
programme is on hold, R&D 
work will carry on at full 
stretch. 

Andrew Fisher 


The last few years have 
revealed a simple but unpalat- 
able tenth about Japan's finan- 
cial institutions. Though they 
rank as the largest companies 
of their sector in the world by 
almost any measure, their 
s tre ng t h was never commensu- 
rate with their size. 

Banks and brokers have 
been brought low by the burst- 
ing of the bubble that inflated 
them in the late 1380s- Both 
look set for a long period of 
reconstruction. 

The banks boast that the 
last year was a watershed in 
the struggle to discharge the 
bad loans of the bubble period. 
In their annual reports far the 
year ended March 31 in May, 
most of the major city banks, 
trust banks, and long-term 
credit banks declared that the 
worst of the problems were 
over. All 21 banks announced 
sharp falls in profits as a 
result of heavy provisioning 
for bad debts. 

As Mr Kensuke Uchida, 
director for corporate plan- 
ning at Sumitomo Bank puts 
ft “Our policy of provisioning 
for bad debts means that this 
year will mark the end of the 
adjustment process.” 

The main piece of evidence 
to support the claim is that 
total disclosed nonperforming 
loans actually declined from 
September 1993, implying that 
last autumn banks scaled the 
peak of the bad debt moun- 
tain. But more important is 
the fact that the banks' loan 
loss reserves surged as the 
companies finally grasped the 
bad loans nettle. 

Declared non-performing 
loans now stand at a total of 
YI2.5 trillion, with specific 
loan loss reserves at Y3 tril- 
lion. Banks have thus now 
made bad loan provisions for 
24 per cent of the total of dis- 
closed nonperforming loans, 
up from 16 per cent last year. 
This is a significant step In the 
clearing up process and If it 
told the whole story would be 
an encouraging development 

But It is. of course, only part 
of the overall picture. Banks' 
disclosed nonperforming loans 
include only those to bankrupt 
borrowers and those on which 
no Interest has been paid for 
six months or more. They do 
not include “restructured” 
loans, where interest rates 


have been pared to the bone to 
keep troubled borrowers alive, 
last month Mitsubishi Bank 
gave the first tantalising 
glimpse of the real scale of the 
problem when it became the 
only Japanese bank to release 
its accounts under US account- 
ing rules. They showed non- 
performing loans to be twice 
the level declared in Japan. 

Furthermore, even some of 
the improvement recorded In 
the figures for last year is illu- 
sory. Last year banks sold 
Y3-3 trillion of their worst 
loans to a newly established 
institution, tbe Cooperative 
Credit Purchasing Council 
(CCPQ. The CCPC helps banks 
“dispose” of their bad loans by 
buying them at a discount. 
The banks write off the 
remaining charge. 

But the banks have to lend 


quentiy, several more years of 
sluggish profits. 

According to 1BCA, the bank 
credit-rating agency, "it will 
take another two or three 
years for the average bank to 
dean up its balance sheet by 
using operating profits and 
hidden reserves". 

But perhaps even more dis- 
turbing for the longer term is 
a growing weakness in the 
banks’ underlying perfor- 
mance. Pre-provision operat- 
ing profit declined for the first 
time in three years last year as 
interest rates fell close to the 
bottom of the current cycle, 
a n d non-interest-related reve- 
nue registered sharp falls in 
profits from forex and bond 
dealing. 

In foot, stripping away the 
various layers that disguise 
the weakness of the core per- 


they face is heavy dependence 
on equity commissions. Even 
the Big Four earn a third of 
tiiclr operating revenue In this 
way. For many of the smaller 
firms the figure I s over 50 per 
cent 

They are thus heavily vul- 
nerable to the ebbs and Rows 
of Investor interest in the mar- 
ket. The last year has seen 
daily turnover on the TSE 
recovering slightly from post- 
bubble blues, but at 368m 
shares per day. It Is still 
nearly 100m shares per day 
lower than the break even 
point for most brokers. 

Getting that breakeven 
point down has been the key- 
task Tor most, and cost-cutting 
has been carried further in the 
sector than in most other parts 
of the economy. Staff levels for 
the industry are down by 22 
per cent to 129,000 from the 
peak of 167,000 in 1991. 

The need to cat costs is 
made more argent by the 
threat posed by deregulation. 
In the last year, three banks 
have established broking sub- 
sidiaries and later this year a 
further half dozen are expec- 
ted to do so. Though the banks 
arc prohibited from trading 
equities, their underwriting 
buiness is eating into the bro- 
kers’ revenue base. 

The large banks and brokers 
have sufficient capital to see 
themselves through several 
more years of difficulties. But 
some smaller hanks amt bro- 
kers have very little room for 
manoeuvre. The Ministry of 
Finance is anxious to avoid 
collapses and is likely to try to 
organise a rescue through 
merger should n failure come. 

But this approach is Itself 
symptomatic of Japan's prob- 
lems. The financial institu- 
tions have operated for too 
long on the assumption that 
they would not be allowed to 
fait - hardly a major incentive 
to greater efficiency. They 
claim that current problems 
are merely the backwash of 
the collapse of the babbie 
economy. 

But as the excesses of the 
1980s recede further into tbe 
past the truth is that many 
companies never were worid- 
clasfi competitors- The last few 
difficult years have merely 
exacerbated their problems; 
they did not create them. 


Tokyo stock exchange's Nikkei 225 index 

index [1 6/6/1949= 100) 



198S 86 

Smqs DdLntneP) 


87088990 91 929394 


the money to the CCPC to 
enable it to buy the loans in 
the first place, so the risk, if 
the CCPC foils to dispose of 
the collateral, remains with 
tbe banks. The really bad 
news is that so far the CCPC 
has collected just one per cent 
of the value of the loans it has 
bought. And the average dis- 
count at which the CCPC buys 
the loans has been increasing 
sharply - last month it 
reached over 70 per cent If it 
fails to dispose of the loans it 
has bought, the banks will 
have further provisioning to 
do. 

These two factors lead most 
analysts to estimate that Japa- 
nese banks’ actual total prob- 
lem loans are roughly twice 
the disclosed amount - more 
than Y25 trillion, or at least 6 
per cent of total loans. That 
will require significantly 
higher write-offs, and, conse- 


formance. the only source of 
profits from which to offset 
the large loan loss provisions 
remains sales of equities. Once 
again the major banks are 
forced to rely on a rising stock 
market to support their profit- 
ability. 

At least the country’s four 
major stockbrokers - Nomura, 
Daiwa, Yamaichi and Nlkko - 
managed to record increases 
in pretax profits last year. But 
the earnings recovery was 
weak, and from an unprece- 
dentedly low base Nomura, the 
largest stockbroker in tbe 
world, saw pretax profits rise 
to nearly Y50bn, down from 
almost Y500bn in 1989-90. 

But for the middle-sized and 
smaller brokers it was another 
difficult year. Nearly half of 
all brokers listed on tbe first 
section of the Tokyo Stock 
Exchange recorded pretax 


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W hen Aslans fret about 
Japan these days, 
they are rarely con- 
cerned by Japanese atrocities 
in Asia during World War Two 
or the tactless denials of 
Japan's war record by right- 
wing politicians in Tokyo; 
they are usually anxious about 
winning a share of (be next 
round of Japanese Investment 
Except in China, Korea and 
occasionally in the Philippines 
and Singapore - whose peo- 
ples suffered most from Japa- 
nese imperialism - there Is lit- 
tle interest in Japan's 
tentative efforts to adopt a 
more assertive foreign policy 
to match its economic power. 

Asian governments and 
businesses from India to the 
Philippines are more preoccu- 
pied by Japan's money and 
manufacturing skills its 
history. This is especially tree 
of south-east Asia, Japanese 
investment in everything from, 
vehicle assembly to the manu- 
facture of computer disk- 
drives and air conditioners Ha* 
been the driving force behind 


*30# £ 



JAPAN 5 

Asians concentrate on bid for Japanese capita], says Victor Mallet 

So polite about the past 


the rapid economic growth of 
countries such as Thailand 
and Malaysia since (he 1870s. 

More than 90 per cent of 
cars in Thailand are Japanese 
marques, most of them assem- 
bled ha Thailand, in Malaysia, 
the factories of the Japanese 
company Matsushita alone 
account for about four per 
cent of the country's gdp. 

The recent liberalisation of 
the economies of China, Viet- 
nam and India was therefore 
regarded with some trepida- 
tion in south-east Asia, 
because it was assumed that 
these three capital-hungry 
countries would receive so 
much Japanese investment 
that the rest of Asia would be 
starved of new money. 

At first the figures appeared 
to confirmed the hypothesis. 


Japanese investment at the 
start of the decade rose 
sharply in China - Hitachi 
says six of its nine Joint ven- 
tures in China were estab- 
lished is the past three years - 
and fell in some traditional 
south-east 'Asian recipient 
countries. Governments hur- 
ried to improve their invest- 
ment incentives. 

They need not have worried. 
The remorseless rise of the yen 
against the dollar has obliged 
Japanese companies to move 
increasingly sophisticated pro- 
duction lines offshore where 
wages are lower, and the big 
corporations are being fol- 
lowed by component suppliers 
which alsu need to reduce 
costs to remain competitive. 

Broadly, investments in 
China are designed to supply 


Foreign policy is in the melting pot, writes William Dawkins 

Towards a new Far East role 


“If Japan evades the costs 
associated with five trade and 
stability , world peace and free- 
dom. toe run the serious risk of 
denying ourselves our own 
peace and prosperity. 

" Despite the gravity of the sit- 
uation. Japan’s political world 
- which is supposed to recog- 
nise harsh realities and steer 
the country m the right direc- 
tion - is at present unable to 
make any effective decisions at 
all - 

This passage from Blueprint 
for a New Japan, the political 
best-seller by Ichiro Ozawa, the 
former government's backroom 
strategist, became painfully 
relevant last month when the 
fourth government in the 
space of a year took office, 
thus disrupting Japan's sensi- 
tive process of waking up to its 
responsibilities in a newly 
unstable post-cold war era. 

It is perhaps unfair to accuse 
Japan of not shouldering its 
burden, since it has been the 
world's biggest provider of 
development sod for the past 
three years. Moreover, Japan 
will lift its assistance budget 
by 1.6 per cent this year, rather 
more than the overall state 
budget, at a time when other 
leading donors are suffering 
from “aid fatigue". 

Even so, the fact that until 
the collapse of the Soviet 
Union in 1991 Japan was 
spared the military or eco- 
nomic cost of stability is gener- 
ally accepted as an element 
both in its economic success 
and its diplomatic weakness. 

While the US assured peace 
in Asia, partly through the 
presence of its troops on Japa- 
nese sod, Japan concentrated 
on economic growth, a strategy 
known as the Yoshida doc- 
trine, after the prime minister 
who was the architect of the 
post-war Japanese state. In 
return, Washington knew it 
could count on Japan as a bul- 
wark against communism in 
Asia. 

The US-Japan balance, the 
pivot of Tokyo’s foreign policy, 
has now become less predict- 
able, partly because of the end 
of the cold war, but also 
because aS Japan's own vaga- 
ries. 

In theory, the Social Demo- 
cratic Party of Mr Tomiichi 
Murayama, the new prime 
minister, wants to end the US- 
Japan security treatment the 
staple of Tokyo’s special rela- 
tionship with Washington. In 
practice, Mr Murayama, has 
pledged to honour the treaty, 
reflecting the fact that he owes 
bis position to the support of 
the conservative liberal Demo- 
cratic Party. 

The conservative nature of 
the new government may keep 
the special relationship with 
Washington intact But it also 
marks a break with the policy. 


created by the previous two 
coalition administrations, of 
abandoning Japan's passive- 
ness in international affairs 
and seeking to make a greater 
contribution on the world 
stage. 

One of Mr Murayama ’s first 
acts as new leader was to tone 
down the campaign to be 
admitted as a permanent mem- 
ber of the UN security council, 
the top table of the world's top 



llllilllii' 


Yasushi Akashi, the UN special 
anvoy for former Yugoslavia 

powers. Bafflingly for Japan's 
foreign partners, this came 
only weeks after his predeces- 
sor, Mr Tsutomu Hata, made 
an unprecedentedly explicit bid 
for the council seat. The 
Murayama administration is 
also more cautious than the 
previous one possible sanctions 
against North Korea, cause for 
some anxiety in Washington. 

While the political storms 
rage overhead, Japan's profes- 
sional diplomats have been 
striving to keep foreign policy 



Mrs Sadako Ogata, UN high 
con u rH sat onorfof refugees 

on course. Indeed, the frequent 
changes of governments have 
increased their responsibilities 
more than is the case for most 
bureaucrats. 

In recent weeks, Japanese 
diplomats won praise from 
western officials by lobbying 
China to obtain good behav- 
iour from North Korea and 
helping to smooth relations 
between the UK and China 
over Hong Kong. Two promi- 
nent Japanese, Mrs Sadako 


Simritamo'Irust 

&> Banking CkKyJLtML 

Financial Results as of 31st March 1994 


Income before Income Taxes 

94&MSofyea 

year ended 

Y36.237 

fjdi&ms nfyen 
ytaraufal 

JLStMmfi 1993 

V49.192 

Net Income 

14,287 

18,698 

Total Assets in Banking Accounts 15,341,083 

16,416,499 

Total Assets in Trust Accounts 

34.414,646 

33,176,018 

Dividend 

¥8.50 per share V8.50 per share 


<Tht Annual 'Import for year ended 31st March 1994 
unS 6 c azHnlahtc upon request from September. 

•p feast direct enquiries to the address Below. 

The General Affairs Dept 
The Sumitomo Trust & Banking Co., Ltd. 

London Branch 

155 Bishopsgate, London EC2M 3XU 
Telephone: 071-945*7000 Fax; 071-945-7177 


Ogata, UN high commissioner 
for refugees, and Mr Yasushi 
Akasahi have played leading 
parts in Bosnia, a conflict in 
which Japan’s short lived gov- 
ernments have had no time to 
take an Interest 
But perhaps the most sensi- 
tive task facing Japan's foreign 
policy makers today is the sub- 
tle renegotiation of the rela- 
tionship with the US. 

The foreign ministry wants 
to keep the US security link as 
tight as ever, yet at the same 
tfmR other departments, such 
as the finance «nd interna- 
tional trade and industry min- 
istries, want to test the Hmifa 
of Japan's post-cold war free- 
dom to be more assertive 
towards the US on trade and 
economic issues. “We are get- 
ting both more and less asser- 
tive towards Washington," 
says Mr Kfyoaki ffikuchi, a for- 
mer ambassador to the UN. 

Former prime minister Mori- 
biro Hosokawa’s agreement to 
disagree with President Bill j 
Clinton, at their summit in 
February, over US demands for 
numerical targets for increases 
in imports to Japan, made it 
look as If Japan was ready to 
tilt away from Washington. 

ft was a remarkable break 
with the comfortable tradition 
of TJS-Japanese summits, in 
which the Tokyo side would 
hand over trade or economic 
concessions in return for prom- 
ises of everlasting protection. 

Senior foreign ministry offi- 
cials were, unsurprisingly, 
worried that the trade row 
would spill over into security 
relations. To their relief, the 
Clinton administration has 
softened its tone towards 
Japan. 

The trade dispute might be 
under precarious control for 
the moment, yet it is only the 
latest example of Japan's diffi- 
cult search for a voice indepen- 
dent of Washington. 

It ignored Washington in 
1990 by resuming aid to China 
after the T iananm en killings 
and was a persistent exponent 
of avoiding a link between 
trade and human rights. 

Japan Ignored the US 
embargo on Vietnam two years 
ago and is now resisting US 
pressure to step up aid to Rus- 
sia because it first wants prog- 
ress an the disputed Russian- 
held Kurile islands north of 
Japan. 

The common theme in these 
gestures of independence from 
the US Is (he growing impor- 
tance to Japan of its Asian 
neighbours. They represent 
Japan's largest export destina- 
tion, its fastest growing market 
and its fastest growing destina- 
tion for industrial investment 
Japan is cautiously feeling 
its way towards a new role in 
Asia. It is a highly sensitive 
process, constrained by local 
wartime memories, which pre- 
vent Tokyo from seeking 
regional leadership, and 
Japan’s own wish not to 
weaken that sacred link with 
Washington. “How can we tilt 
towards Asia without tilting 
away from the US?” muses one 
Japanese diplomat. 

Japan's ministry of interna- 
tional trade and industry took 
an influential, but discreet part 
five years ago in forming the 
Asia-Pacific Economic Cooper- 
ation Forum, a grouping 
designed to foster economic 
cooperation in the region. 

But Japan has taken a low 
profile in Apec discussions. Its 
search for a voice has not been 
helped by Malaysian prime 
minister Mahathir Mohamad'S 
calls for an East Asian Eco- 
nomic Caucus, to exclude non- 
Asians. Mr Mohamad’s scheme 
places uncomfortable pressure 
on Japan to do Just what it 
wants to avoid, choosing 
between the US and Asia. 

So for. Tokyo has managed 
to suppress the di lemma 
thawtea to an accord between 
Asean countries to subsume 
Mr Mohamad's caucus into 
Apec, But Mr Mohamad contin- 
ues to criticise Japan’s non- 
committal stance. 

Japan will have an opportu- 


nity to move closer to Asia's 
centre stage next year when 
Apec leaders are due to hold a 
summit for the first time in 
Tokyo. 

Japan is, meanwhile, push- 
ing regional cooperation on 
security through an lSr-country 
Asean Regional Forum, 
inspired by a former Japanese 
foreign minister, which will 
bold its first meeting in Thai- 
land at the end of this month. 

Diplomats hope that this will 
at least start a regular 
exchange of security informa- 
tion between often distrustful 
Asian neighbours, flimig h the 
first meeting is likely to be of 
merely symbolic value. The 
mere feet of getting the mili- 


tarily powerful China engaged 
in multilateral debat will be 
valuable, say analysts. 

The forum's Bangkok meet- 
ing will also be an indicator or 
the state of Japan's regional 
image. Mr Hosokawa’s unprec- 
edentedly explicit apologies 
last autumn for Japan's war- 
time record and the participa- 
tion of Japanese peacekeepers 
with the UN in Cambodia two 
years ago may have helped 
soothe wartime memories. 

Yet Japan's credibility was 
damaged by a former justice 
minister's claim in May that 
an infamous wartime atrocity 
never happened: another 
reminder of the constraints on 
Tokyo's tilt towards Asia. 


goods to China’s huge domes- 
tic market or to produce 
labour-intensive products for 
export The various national 
markets of south-east Asia are 
also important (especially 
Indonesia and Thailand), but 
the purpose of many new Japa- 
nese investments there is to 
produce medium or high-tech- 
nology products for export to 
Japan, America and Europe. 

Mitsubishi Electric, for 
example, stuffed production of 
its standard line of elevators 
from Japan to Thailand in 
1991. The same company says 
that since last year it has been 
producing 90 per cent of its 
floppy disk drives in Thailand. 

Last year for the first time 
Japan imported more colour 
televisions than it exported; 
the same is true of other prod- 
ucts such as refrigerators. 
Hitachi is in the process of 
shifting production of one type 
of refrigerator compressor 
from Japan to a new factory in 
Ayudhya north of Bangkok, 
and Vs building a facility in the 
Philippines to make mini hard 
disk-drives. 

But the six members of the 
Association of South East 
Asian Nations (Asean) - 
namely Brunei, Indonesia, 
Malaysia, tbe Philippines, 
Singapore and Thailand - will 
have to deal with two poten- 
tial problems in their partner- 
ship with Japanese companies 
if they are to prosper in the 
midst of corporate Japan's 
growing fascination with 
China and India: the first 
problem is the slow evolution 
of the Asean Free Trade Area 
(Afta). and the second is a dis- 
pute over technology' transfer. 

Although the influential 
Japanese motor industry man- 
aged through lengthy negotia- 
tions to secure special tariff 
reductions for car components 


traded between Asean coun- 
tries - the so-called "brand-to- 
braud complementarity 
scheme” - Japanese and other 
manufacturers are often frus- 
trated by the difficulty of 
establishing integrated 
operations within Asean. 

Car component maker Nip- 
pondenso, for instance, is in 
the throes of negotiations with 
Asean governments; the com- 
pany wants to specialise in 
particular products at each of 
its factories in Asean instead 
of duplicating its efforts in 
several different countries. 

A fta is an attempt to deal 
witb this sort of diffi- 
culty, but under the 
present agreements individual 
countries can and do under- 
mine free trade principles by 
excluding numerous products 
they regard as sensitive from 
the tariff cuts. Even for prod- 
ucts embraced by Afta, tariffs 
are scheduled to fall to 
between zero and five per cent 
only in the year ZOOS. 

Economies of scale are there- 
fore not always available in 
Aseau, at least not for the 
regional market. “If they want 
to grow faster they have to 
give op these nationalistic pol- 
icies,” says Mr Minoru Tsu- 
kada. manager of Asian busi- 
ness development at Hitachi. 

If Afta succeeds, therefore. 
Asean members may have to 
watch Japanese companies 
close down operations in one 
country and consolidate their 
operations in another - a pro- 
cess which has from time to 
time caused nationalistic out- 
rage In parts of Europe. 

And if Asean baulks at such 
rationalisation, Japanese com- 
panies can always mention 
China. Mr Nobnhiro Ognra of 
Mitsubishi Electric says of tbe 
company’s television plants in 


Thailand, Indonesia and Sing- 
apore (tbe Singapore operation 
is expected to move to neigh- 
bouring Johor State in Malay- 
sia): “Either we still continue 
to produce In those three loca- 
tions: or by integrating and 
increasing the volume we 
reduce the cost; or we estab- 
lish a new facility in China 
and we discontinue those 
which produce in smaller 
countries." 

As for technology transfer, 
non-Japanese Asians often 
accuse Japanese Investors of 
arrogantly refusing to pass 
modern technology to develop- 
ing countries or promote 
enough locals to management 
posts. This was particularly 
true of Proton, the Malaysian 
carmaker in which Mitsubishi 
Motors has a 15 per cent stake. 

Japanese businessmen can 
barely bide their impatience at 
such accusations, pointing out 
that technical knowhow takes 
time to acquire and cannot 
simply be handed over like a 
car component. They complain 
of everything from a lack of 
trained scientists to unstable 
electricity supplies. 

But they acknowledge that 
they have been slow to move 
research and development 
activities Into Asia, and ore 
gradually starting to da so 
now. 

In spite of Japan’s war 
record in Asia, and in spite of 
occasional disputes, commer- 
cial relations between Japan 
and the rest of Asia seem to be 
wanner than ever. A decade 
ago. Japan exported a third 
more to the VS than to Asia; 
now it exports a third more to 
Asia than to the US. 

US trade officials look to 
Asia for allies when they 
argue with Tokyo over Japan’s 
trade surpluses, because, like 
the US, many Aslan countries 
suffer from severe deficits In 
tbelr trade witb Japan. One 
reason why tbe US finds little 
sympathy In Asia is that Aslan 
exports to Japan are increas- 
ing, and many of those exports 
are Japanese branded products 
made outside Japan. 


Wiy the First Two Sovereign Issuers 
in the New Samurai Commercial Paper Market 
Came to the Bank of Tokyo 


DEALER, 

ISSUING AND PAYING AGENT 


for the 

First Yen-Denominated 
Commercial Paper 

issued in the 

Tokyo Market 

by 

Sovereign Borrowers 

Mass Transit Railway Corporation 

Hong Kong 

and 

China International Trust and 
Investment Corporation 

The People’s Republic of China 

March 1994 


Experience. 

The Bank of Tokyo has been selected as commissioned 
company on approximately 90% of all Samurai bond 
issues since the market’s inception in 1970. We have also 
been a leader in Japan’s commercial paper market since 
its beginning in 1987. From 1991 to 1993. we supported 
15% of all such issues as either a dealer or issuing and 
paying agent 

Placement Capabilities Second to None. 

Our strong and extensive relations with Japanese investors 
ensure smooth placement and optimal pricing. 


Reputation for Excellence. 

Customers know the Bank of Tokyo maintains the highest 
standards of excellence in all its financial products and 
services, from handling nonresident yen accounts and 
forex transactions to corporate banking and capital 
market services to global custodial services. 

Global Presence. 

The Bank of Tokyo has the largest international network of 
any Japanese bank. Chances are there's a Bank of Tokyo 
office or subsidiary near you, waiting to introduce you 
to new financing opportunities in the Samurai 
Commercial Paper Market. 


VV BANK OF TOKYO 

Ovanes* DinmM, Tokyo 1 03 > SraWMOJ Asu Business Deputuunt, Toliju (Uj) 3245-9557 






VI 


FINANCIAL TIMES TUESDAY JULY 19 1994 


JAPAN e 


William Dawkins charts the end of a political era 

The triangle breaks 



Strange marriage: socialist premier Tontichi Murayama (c) cQncbes a three-way ooa&Bon deal with liberal 
D emo c ra t s party president Yohei Kono (t) and Hew Party Sakigage l eader Masay os h i Takawura (Reuter) 


1 KEY FACTS 1 

1 Atm „ 377 7511 «n km 1 



... 124.5 mBHon 1 





‘ Yen fV\ 1 


I 

1 ~ 19ft4 Si =Y 08 57 ttU7KU\ 1 



' " * 

ECONOMY 




1803 

1094 • 

Total OOP, constant (Y ’OOObn)... 

421.2 

423.7 

Real GW* growth (%i 

0.1 

0.6 

Components of GDP {%) 



Private consumption. 

57.7 

n/a 

Government consumption.... 

9.6 

n/a 

Private housing 

5.1 

n/a 

Private plant and equipment..... 

16.4 

n/a 

PubBc investment 

06 

n/a 

Change in stocks. 

02 

n/a 

Exports^. — 

9.4 

n/a 

Imports 

-7.1 

n/a 

Annua} average % growth In. 



Consumer prices (%}. ....... 

1.3 

06 

Industrial production (%) 

-4.5 

-1.5 

Employment {%) 

02 

0.3 

Unemployment rate 

2.5 

2.9 

Unit labour costs (%) 

22 

0.6 

Government bond yield (%) *_ 

3,18 

4.24 * 

Total reserves minus gold ($bn)_ 

98.5 

n/a 

Money growth (M2+CO) * 

22 

2.7* 

FT-A index (% change) * 

2.91 

172 • 

General govt financial bsAJ~ 

03 

-1.9 

Current account ($bn) 

131.4 

105.8 

Merchandise Exports (Sbn) 

351.3 

338.0 

Merchandise Imports ($bn) — ..... 

209-9 

225.5 

Trade balance (Sbn) - 

141.4 

112.5 

Main trading partners (%) *. 

Exports 

Imports 

US. 

292 

22.9 

Hong Kong 

6.3 

n/a 

Taiwan 

6.1 

4.0 

South Korea — — 

5.3 

4.9 

Germany — 

5.0 

4.1 

China 

4.8 

8£ 

(1) 1994 forecast unless otherwise Indicated. (2) End period. 

(3) July 1994. (4) M2+Cwtfficates of deposit (5) April 1994. 

(6) Dec 1993-Juiy 1994. (7) % of CSS 3 . (8) Share of world trade 

1993 



Sources: IF S, BU. OECD, Datastresm I 


Seismic upheavals in Japanese 
politics over the past year have 
caused the old power structure 
to shift and crumble, but a new 
one has yet to take its place. 

The dominance of the lib* 
eral Democratic Party, which 
has just returned to power 
after spending nearly a year In 
opposition for the first time in 
its 39-year life, has been termi- 
nally damag ed Unstable coali- 
tion governments may be the 
norm for the next few years. 

Japan’s conservative post- 
war rulers were only able to 
seize power three weeks ago 
thanks to the support of their 
lifetime enemies in the left 
wing Social Democratic Party, 
a telling sign of how com- 
pletely the old balance of 
power has been upset 

ft could take several general 
elections before stability 
returns. As so often in Japan, 
underlying change is not as 
East as it looks on the surface. 

The LDP's defeat in a gen- 
eral election last year, precipi- 
tated by the defection of 
refonn-minded politicians from 
its own ranks, led by Ur Tsu- 
tomu Hata and his mentor Ur 
Ichiro Ozawa, ushered in what 
looked like a radical seven- 
party coalition. Led by an ide- 
alistic former prefectural gov- 
ernor, Ur Morihino Hosokawa, 
it embraced a wide range of 
Interests from the religious 
right to the extreme left and 
promised to Introduce a new 


poltical style and structure. 

Ur Hosokawa won instant 
popularity by staking his job 
on achieving parliamentary 
agreement on a new political 
and electoral system designed 
to curb corruption. 

The Keidanren, Japan's pow- 
erful business federation, 
recognised that the old system 
was really on the way out 
when it decided, days after Ur 
Hosokawa's arrival, to stop 
^ h ap pening funds to political 
parties. Keidanren cash, is 
return for a guarantee that 
government would be sensitive 
to big manufacturing indus- 
try’s voice, was crucial to bind- 
ing the so-called iron triangle 
of business, politicians and the 
bureaucracy together. The 
LDP's r e t ur n in no way tempts 
the Keidanren to change its 
ban on political donations, 
says its new chairman, Mr Sho- 
ichiro Toyoda. 

Failure to deliver on political 
reform, under debate for the 
previous five years, had con- 
tributed to the decline of two 
former LDP prime ministers. 
So it was no surprise that Mr 
Hosokawa had to water down 
his proposals to obtain agree- 
ment from the reluctant LDP 
and SDP old-guards, many of 
whom fear they will lose their 
seats under the new system. 

The final plan, agreed in Jan- 
uary, will tightly regulate 
political fund raising and 
replace Japan’s unique multi- 


seat constituency system with 
a mixture of single seat dis- 
tricts and proportional repre- 
sentation. All that remains is 
for new electoral boundaries to 
be drawn, to reflect the new 
system and to Increase the 
power of under-represented 
urban voters. The new govern- 
ment of Mr Tomuchi Muray- 
ama aims to complete this by 
the autumn. 

Soon after Mr Hosokawa’s 
' political reforms cleared parlia- 
ment, his coalition was 
plunged into a divisive argu- 
ment over tax. At tills point, 
old style Japanese politics 
began to take its revenge. The 
LDP. resorting to a tactic used 
against itself while in govern- 
ment, blocked parli amen tary 
debate on this year's budget to 
put pressure on Mr Hosokawa 
to disprove two not so serious 
allegations of personal finan- 
cial impropriety. 

An increasingly tired and 
frustrated Mr Hosokawa joked 
over dinner with friends that 
he ought as well resign. Two 
days later, in early April, he 
did just that, to the surprise of 
both his allies and enemies. 

The old order. In which deci- 
sions are madp by consensus in 
backrooms rather than debated 
in open partiampn^ began to 
reassert Itself Evidence of this 
was a secretive deal between 
centre-right members of the 
coalition to form a parliamen- 
tary group, called Kaishin, or 


inno vation, with the blessing 
of Mr Ozawa, the government's 
brilliant but accident prone 
backroom strategist 
The SDP, the largest member 
of the coalition, promptly 
walked out in anger at being 
excluded. This deprived the 
government of a majority only 
hours after it had selected - 
ironically with SDP support - 
Mr Hata, the former foreign 
minister, as the new prime 


minister. From that moment 
the Hata administration was 
doomed. The opposition con- 
sented to keep it in power only 
until the current year's budget 
already three months overdue, 
had cleared parliament Rather 
than lose a no-confidence 
motion supported by both the 
LDP and an angry SDP, Mr 
Hata stepped down after the 
budget and after just two 
mouths in nffig g , in the hope of 


forming a majority coalition 
behind the scenes. It had been 
the shortest-lived Japanese 
government since 1945. 

In the event, Mr Hata and Mr 
Ozawa foiled to attract the SDP 
back to tbeir camp. In a des- 
perate final bid for power, they 
fiwfrfryi as their faa/iwship can- 
didate Mr Toshiki Kaifu, a 
reform-minded former LDP 
prime minister. 

The stratagem foiled. Mr 
Kaifu lost a parliamentary vote 
to Mr Murayama, chairman of 
the SDP who agreed, in a 
flurry of last minute bargain- 
ing, to form a government with 
his old foe, the LDP. The wily 
Mr Ozawa's miscalculations 
consigned him - no doubt tem- 
porarily - to obscurity, just 
two years after he was poised 
to Inherit the LDP's most pow- 
erful faction. 

The LDP-SDP marriage is 
strange by any standards. It 
remains to be seen whether the 
LDP’s leader, Mr Yohei Kono. 
is better at working with a 
divided and erratic Socialist 
party than was Mr Hata, or 
whether the alliance will break 
up like its predecessor. The 
desire to stay in power may be 
strong enough to suppress pol- 
icy differences. 

The past year’s political 
power struggle has been 
greeted with polite bafflement 


by Japan’s foreign partners. 
There is, however, a pattern to 
the chaotic political events of 
the past 12 months. Most politi- 
cal experts think that Japan is 
evolving from the one-party 
rule of the LDP era to a more 
or less evenly balanced system 
of two or three parties, capable 
of taking it in turns to govern. 

The LDP has been weakened, 
with the first round of defec- 
tions that provided the founda- 
tions for the Hosokawa coali- 
tion and with the latest 
defection by Mr Kaifu, who 
wants to form a new party. All 
this has created a fragmented 
opposition of small moderate 
parties, which have begun to 
coalesce, with the formation of 
Mr Ozawa's Kaishin. The SDP 
and the tiny Japan Communist 
Party form a third group. 


The LDP’s return to govern- 
ment might look like a step 
back in Japan's search for a 
new political system. Against 
that, there have been several 
steps forward in the past year. 

Firstly, time is the passage 
of the new laws on political 
reform. This makes change 
irreversible so long as this 
unpredictable new government 
does not have second thoughts 
about completing the new elec- 
toral boundaries. 

Secondly, there Is the cre- 
ation, for the first time since 
the war, of a moderate opposi- 
tion capable of running a gov- 
ernment. Finally, Japan has 
seen the beginnings of an open 
television and newspaper 
debate on policies, previously 
the domain of smoke-filled 
backrooms. 


J UNE 18, 1993. Liberal Democratic 
Party government loses uoconfi- 
dence motion initiated by Social 
Democratic Party and backed by LDP 
rebels. 

• JULY 18. LDP loses majority 18 gen- 
eral election. 

• JULY 29. Mr Morihiro Hosokawa, 
head of the Japan New Party, and a 
crusader against anti-corruption, cho- 
sen as prime minister by seven opposi- 
tion parties, including SDP. Mr Hoso- 
kawa promises to take political 
responsibility - meaning resigns or 
call snap elections - if promised politi- 
cal reforms are not enacted by year 
end. 

• NOVEMBER 18. Four reform bills 
passed by Lower House and sent to 
Upper House, where they hit delays, 
due to fierce controversies aver budget 
bills and foreign calls for end to ban on 
rice imports. 

• DECEMBER. Against fierce opposi- 


Year of change 


tion from LDP and SDP, Mr Hosokawa 
flnnnunraa partial opening of rice mar- 
ket, part of deal to complete Uruguay 
Round of global trade negotiations. He 
Wins 45-day extension Of parliament to 
push through reforms. 

• JANUARY 5, 1994. Upper House 
begins debate on political reform. 

• JANUARY 20. Reform bills are 
passed by special Upper House reform 
panel, thanks to an LDP detector, and 
sent to foil session. 

• JANUARY 21. Full Upper House 
votes down, reforms. Mr Hosokawa 
later has to compromise with LDP to 
get wateredrdown. version passed. 

• FEBRUARY 2. Mr Hosokawa shocks 
coalition partners by announcing plans 
to more than double sales tax to seven 


per cent, to finance proposed income 
tax cats. Forced to withdraw tax plan 
five days later. 

• FEBRUARY 1L Trade summit with 
U.S, President Bill Clinton ends in fail- 
ure after Mr Hosokawa rejects U.S. 
demands to set numerical targets for 
opening up Japan markets. 

M ARCH. LDP blocks state bud- 
get due to take effect on April 
1 to bid to force Hosokawa to 
clear doubts over a 1982 loan he alleg- 
edly used flMctly for a political cam- 
paign. 

• APRIL 1. Deadline for passage of 
1994/95 budget missed, parliament 
grudgingly votes stopgap finance biiL 
• APRIL 8. Hosokawa resigns to take 


responsibility for parliamentary dead- 
lock over personal finances. 

• APRIL 25. Mr Tsutomu Hata, head 
of centre-right Japan Renewal Party, 
elected prime minister with SDP help. 
Hours later, SDP leaves the coalition in 
protest at efforts to marginalise it 

• APRIL 28. Mr Hata. leader of 
Japan’s first minority government 
since 1948, forms cabinet. 

• JUNE 23. With tacit backing of LDP 
and SDP, minority coalition finally 
sees long-delayed state budget voted 
into law. LDP Immediately submits no- 
confidence motion. 

• JUNE 25. Mr Hata resigns, after 
breakdown of talks with SDP, unable 
to agree on tax reform. 

• JUNE 29. LDP agrees to back Mr 
Tomiichi Murayama, SDP chair man, as 
prime minister. Mr Murayama wins 
parliamentary vote a gainst Mr Toshiki 
Kaifu, an U)P defector adopted as 
coalition candidate. 



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The property market has 
fared better than those 
of its neighbours: Page 3 


O ne photograph hanging 
in the Monaco govern- 
ment offices shows the 
principality in 1865 as a clutter 
of houses perched on the rock 
around toe palace. The picture 
beside it was taken in 1949 
after the casino had ushered in 
a new era of affluence, and a 
final photograph depicts the 
modern Monaco where every 
scrap of land is crammed with 
high-rise apartments, hotels 
and offices. 

The three photographs ten 
the story of Monaco's meta- 
morphosis from toe dusty old 
Mediterranean town of the 
mid-I9to century to toe leisure 
resort and fledgling finannfr? 
centre of today. They also illus. 
trate how Prince Rainier, who 
took the throne in 1946 as 
Europe's sole surviving abso- 
lute monarch, ha* dung on to 
his country against the odds 
and turned what was once a 
playboy's playground into a 
more broadly -based, if idiosyn- 
cratic economy. 

His achievements have 
recently been put to toe test by 
the economic recession and so 
far he has passed with flying 
colours. Monaco, like every 
other European country, has 
been affected by the do w nt u rn, 
but it has Dared far better than 
most places, notably the 
nearby towns of Nice and 
Cannes. The level of employ- 
ment in the principality Cell by 
less than 3 per cent in 1993 
and, at toe end of March, only 
700 people from a population of 

30,000 were out of work. 

“We have felt toe effects of 
the recession, but it has been 
much milder in Monaco than 
in France or Italy,” says Jean 
Pastorelli, government coun- 
sellor on finance. ‘The reces- 
sion has also been shorter 
here. The level of a c t ivity has 
already picked up since the 
start of this year and many 
local companies, having laid 
people off last year, are now 
hiring again.” 

The key themes of Prince 
Rainier's reign have been to 
develop the local economy 
thereby providing long-term 
employment for the 5,000 or so 
surviving Monegasques and to 
nurture good relations with 
France, his powerful neigh- 
bour. When he took the throne 
Monaco’s only assets were its 


FINANCIAL TIMES SURVEY 

MONACO 

Tuesday July 19 1994 


*kss.T 













** ! • 






Two feces of opulence: an aarfet view of Port Hercufe where some of the world's most luxurious yachts are moored (Ml); and a view of the famous Monte Carlo casino at (tight, where gamblers stake fortunes at the tables 

An anachronism - but it works well 


climate, its picturesque posi- 
tion and its liberal fiscal sys- 
tem. 

His principality had become, 
in the words of Somerset 
Maugham, a “sunny place for 
shady people” that risked fall- 
ing victim to the sleazy side of 
the Cdte d’Azur underworld. 

Rainier, helped by Grace 
Kelly, the Hollywood movie 
star whom he married in 1956, 
spruced up Monaco's image 
and restored its lost lustre. He 
created a country which was 
scrupulously r.laan am) virtu- 
ally crime-free thanks to a 
large, well- trained police force. 
He also kitted out Monaco with 
every conceivable convenience 
including street signs, escala- 
tors. pedestrian subways and 
even doggy shelters where 
pampered pooches can shade 
themselves from the sun. The 
principality soon regained its 
old status as an upmarket holi- 


Prince Rainier’s achievements have recently been put to the test by 
the economic recession, and so far he has passed with flying colours, 
writes Alice Rawsthorn, who is the author of this survey 


day resort and became a popu- 
lar haven for wealthy tax 
exiles. 

Monaco still ftilfils those 
roles today. There might not be 
quite as many rich tourists 
who are able, and willing, to 
check into its luxury hotels as 
there were in the 1950s. But 
Monaco has recognised reality 
by building up a business con- 
ference business creating 
new faHKtiAg for the thousands 
of day-trippers flooding in from 
France and Italy. The local 
tourist industry was affected 
by the recession last year but 
not as badly as other parts of 
the Cote d’Azur. The number 
of visitors fell by 15 per cent to 
208JX6 from 245,592 in 1992 and 


ha* been increasing so for flu* 


The principality has also 
taken on a new lease of life as 
a tax haven. Only a few years 
ago it was in danger of being 
seen as a retirement home for 
elderly ex-pats of Prince Rain- 
ier's own vintage. It has since 
attracted a new generation of 
ex-pats in toe globe-trotting 
supermodels Claudia Schiffer 
and Helena Christensen, who 
have joined long-time resi- 
dents, such as Karl Lagerfeld, 
the fashion designer, and Hel- 
mut Newton, the photogra- 
pher. The supermodels have 
also provided a new source of 
publicity after the apparently 
endless paparazzi pictures of 


Rainier’s children: Caroline, 
Albert and the wayward Steph- 
anie. 

The influx of new residents, 
coupled with the expansion of 
the tourist trade, has stimu- 
lated the property market. 

T he property business is 
no longer as frenzied as 
It was in tbe late 1980s, 
but It is still relatively robust 
thanks to the scarcity of land 
and toe supportive presence of 
long-term investors such as 
Socfete des Bains de Mer, toe 
state-controlled leisure com- 
pany, and Pastor property 
group. 

The price of residential prop- 
erty is only 10 per cent or 20 


per cent beneath its peak. 
Prices in Monte Carlo's presti- 
gious Place du Casino are still 
comparable with the most 
expensive parts of Paris. 

Meanwhile, the local bank- 
ing industry has flourished 
since the 1987 abolition of 
French exchange controls 
which enabled foreign inves- 
tors to move money in and out 
of Monaco more easily - and 
discreetly. The number of 
banks in the principality has 
since doubled to just under 40 
and toe value of private client 
deposits has almost quadru- 
pled to FFr80biL The banks 
have recently experienced a 
slowdown in growth, but still 
expect an increase in deposits 


and assets for 1994. At the 
same tone the introduction last 
year of tough new banking 
laws has been welcomed by 
bankers as evidence of Prince 
Rainier’s determination to pre- 
vent Monaco from becoming a 
money laundering centre for 
French drug dealers and refu- 
gees from Italy's corruption 
crackdown. 

The banking laws are also 
illustrative of Prince Rainier's 
diplomatic skills. He realises 
that his absolute monarchy 
and the continued existence of 
a country with a population of 

30,000 (only 5,000 of whom were 
actually bom there) is an 
anachronism. He also knows 
that France could take away 
Monaco at any time as General 
de Gaulle demonstrated in 1962 
when he sealed off toe border 
with troops in protest at toe 
number of Frenchmen using it 
as a tax haven. 


Prince Rainier, nothing if not 
a realist, immediately agreed 
to exclude tbe French from 
Monaco's tax privileges. He has 
since stuck to the same concil- 
iatory approach on tbe 
assumption that France will 
tolerate Monaco’s indepen- 
dence only for as long as it 
does not pose any problems. 
Hence his government’s zeal at 
cracking down on money laun- 
derers. 

Yet the success of Prince 
Rainier's economic policy has 
given him another defence in 
toe political game against the 
French. The expansion of the 
local economy has not only 
enabled him to protect the 
indigenous Mouegasques by 
giving them cheap housing (in 
the FontvieiUe area that has 
been reclaimed from tbe sea) 
and preferential employment 
rights, but also to generate 
jobs for French workers. 

The principality now 
employs just over 30,000 people 
only 7,000 of whom are MonA- 
gasques, either living in 
Monaco itself or in cheaper _ 
places across the French bor- 
der. Some 3,000 Italians and 

17,000 French also work there. 
The French government would 
be loath to sec those jobs dis- 
appear at a time of high unem- 
ployment if Monaco lost its 
independence and its special 
tax status. 

Prince Rainier continues to 
finance new economic develop- 
ment projects such as the 
FFrl^bn new conference and 
cultural centre due to open in 
1998 and his FFrl.4bn scheme 
to liberate more land by sub- 
merging the railway station. 
The government is also work- 
ing on turo-of-toeHxntury land 
creation projects such as the 
construction of a new jetty 
beside the present harbour and 
toe creation of FontvieiUe □ on 
another sea reclamation site. 

“The impression one gets is 
that Rainier is a very clever 
b usinessman in the tradition of 
grands patrons, the great 
French bosses.” says one for- 
eign banker. “He may be an 
absolute monarch, but he is far 
too astute to use his power 
bluntly. There are never any 
surprises but you always know 
that a firm hand is in control. 
Monaco might be an anachro- 
nism - but it works.” 



EFFECTIVE 

WE ACHIEVE PERFORMANCE LEVELS EQUAL TO THOSE Of PRIVATE BANKS M SWITZERLAND. 
LUXEMBOURG Oft ANY OTHER INTERNATIONAL BANKING CENTRE. OF COURSE, WE ARE NOT AS 
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SECURE 

WE ARE ONE OF THE FEW BANKS IN THE PRINCIPALITY TO POSSESS A FULLY-EQUIPPED TRADING ROOM. 
ALL TRANSACTIONS TAKE PLACE WITHIN MONACO TO ENSURE CONFIDENTIALITY AND SECURITY. 

AT THE SAME TIME, OUR PORTFOLIO MANAGERS HAVE DIRECT 
CONNECTIONS TO THE WORLD'S FINANCIAL MARKETS. 


Effective 

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PERSONALISED 

WORLD-WIDE 

Local 

Reliable 

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Banking in 
Monaco 


PERSONALISED 

WE ARE A NOT LARGE BANK BY INTERNATIONAL STANDARDS. 

WE GIVE PERSONALISED ATTENTION TO EACH CLIENTS NEEDS 
BECAUSE THEIR SUCCESS IS OUR SUCCESS. ITS NO SURPRISE THAT 
SO MUCH OF OUR NEW BUSINESS IS REFERRED TO US BY EXISTING, 
SATISFIED CUSTOMERS. 

WORLD-WIDE 

MODERN TECHNOLOGY MAKES IT POSSIBLE TO MANAGE INVESTMENTS 
WORLD-WIDE, BUT NOTHING REPLACES REGULAR FACE-TO-FACE 
CONTACT WITH CLIENTS. OUR PORTFOLIO MANAGERS DIVIDE THEIR 
TIME BETWEEN MONACO AND VISITING OUR CUSTOMERS WHEREVER 
THEY MAY BE. 

LOCAL 

When you come to Monaco mi the Riviera for business or for 

PLEASURE. WE PROVIDE YOU WITH A FULL RANGE OF TRADITIONAL 
BANKING SERVICES AND PROPERTY INVESTMENT ADVICE. 



BARCLAYS PRIVATE BANKING 


RELIABLE 

Established in 19Z2, we are the largest and oldest bank in 
MONACO. We BECAME PART OF THE (NDOSUEZ GROUP IN 1972. THIS 
MEANS WE PROVIDE THE HIGH OUAUTY OF SERVICE ASSOCIATED WITH A SMALL PRIVATE BANK AND 
THE RESOURCES OF A MAJOR INTERNATIONAL FINANCIAL INSTITUTION. 

Banking in Monaco 

MONACO IS SOMETIMES OVERLOOKED IN THE CHOICE OF INTERNATIONAL BANKING CENTRES. 

NEW CLIENTS GENERALLY ASK US TO MANAGE PART OF THEIR ASSETS, BUT RAPIDLY INCREASE THE 
SHARE AS THEY SEE THE RESULTS. 

If YOU ARE INTERESTED IN DIVERSIFYING YOUR INVESTMENT OPPORTUNITIES, PLEASE CALL 

Michel oe Robillard. director of international private banking operations. 

Direct line (33) 93.1 5.46.30. 


Dedicated to the protection 
and management of 
substantial personal assets 


♦♦♦ 



CREDIT FONCIER DE MONACO 
International Private Banking 


In the UK Barclays Bank PLC is a member of IMRO 


PRIVATE BANKING FINANCIAL MARKETS PROPERTY INVESTMENT CORPORATE BANKING 
MEMBER OF THE INDOSUEZ GROUP 

II. Boulevard Albert ier, mc 98000 Monaco Tel (33) 93.i5.45.oo fax (33) 93.15.46.00 






*• 


u 


FINANCIAL TIMES TUESDAY JULY 19 1994 


MONACO 2 


T here is a story in Monfr 
gasque banking circles 
that an Italian recently 
appeared in one of the local 
banks bearing a cardboard box 
containing L7bn in used notes 
which, he told the manager, 
was the profit from the sale of 
his business back in Italy. 

Such stories crop up from 
time to time in Monaco, 
although not as often as they 
did in the past. The principal- 
ity still has the reputation of 
being a secure and discreet 
bolt hole for large quantities of 
cash. But the introduction last 
year of tough new laws to 
crack down on money launder- 
ing and to compel local banks 
to exercise tighter scrutiny 
over the source of their clients’ 
funds, gave a very clear indica- 
tion of the way the govern- 
ment plans to encourage the 
banking industry to develop. 

“Monaco has established 
itself as a financial centre in a 
very short time." says Michel 
de Robillard, chairman of 
Credit Fonder de Monaco, the 
subsidiary of Suez, the French 
financial group, which is one 
of the biggest banks in the 
principality. “The government 
realises that if Monaco is to 
fulfil its full potential in the 
financial sphere, the banking 
industry must be strong and 
clean." 

There has always been a 
small banking business in 
Monaco but it was only after 
1987, when the French govern- 
ment abolished exchange con- 
trols thereby enabling foreign 
clients to move money quickly 
and discreetly in and out of the 
country, that the local finan- 
cial industry really took o£ 
The number of t anks operat- 
ing in the principality has 
since doubled to around 40. 
The old independent MonSgas- 
que b anks have all disap- 
peared. The banking market is 
dominated by the big French 
financial groups such as Credit 
Lyonnais, Banque Nationals de 



The number of banks operating bi Monaco has doubled to 40 sfnce 1087 

Reputation as a bolt hole persists 

Crackdown on 
banks welcomed 


Paris, SociGte G6n6rale, Pari- 
bas and Suez. Yet the other 
leading names in European 
banking are also represented. 

Most Monaco banks concen- 
trate on providing private 
banking services for the 
wealthy private clients - or 
“high net worth individuals”, 
as they prefer to call them - 
who want to take advantage of 
the country's tax advantages. 
Any foreigner, apart from the 
French, does not have to pay 
tax on money deposited or 
invested In the principality. 

The private banking sector 
has expanded dramatically 
since 1987 with the total value 
of client deposits almost quad- 
rupling from around FFr22bn 
($&95bn) eight years ago to an 
estimated FFrSQbn today. The 
deposit market grew by 
between 20 and 25 per cent a 
year during the late 1960s and 
has continued to expand (albeit 





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at a slower rate) since the start 
of the economic recession. 

"It’s true to say that life !s 
more difficult in private bank- 
ing than it was at the height of 
the boom three or four years 
ago," says Martin Peake, head 
of the Mon£gasque branch of 
Lloyds, the UK banking group. 
“But we've had a far easier 
time than private bankers in 
other places. The market here 
in Monaco is still growing. It's 
just growing more slowly." 

T he consensus among 
local financiers is that 
the value of private cli- 
ent deposits rose by between 5 
per cent and 10 per cent last 
year and has increased by 
about 5 per cent in the opening 
months of this year. However, 
these figures conceal a trend 
for clients to counter lower 
interest rates by switching 
their money from deposits into 
more efficient vehicles such as 
mutual or managed funds. As a 
result the local banks benefited 
last year from an estimated 20 
per cent increase in the value 
of the assets placed in Monaco. 

This expansion helped to 
counter the effects of the eco- 
nomic recession, which has 
posed problems for the dozen 
or so local banks that are still 
involved with commercial 
banking activities such as 
loans to local companies and 
property finance. Monaco has 
not been as badly affected by 


the economic downturn as 
nearby Nice or Cannes. How- 
ever. some sectors of the econ- 
omy, notably the tourist indus- 
try and property development, 
have been depressed with a 
knock-on effect on their banks. 

The continued growth in pri- 
vate banking has also per- 
suaded some new international 
banks to sustain the financial 
sector's expansion by setting 
up subsidiaries in Monaco. The 
latest arrivals include the ABN 
of the Netherlands. 

Local financiers suspect that 
one of the main reasons for the 
buoyancy of the banking mar- 
ket is psychological “Monaco 
is an attractive place, bat it's 
also clean and peaceful." says 
Mr de Robillard of Credit Fon- 
der de Monaco. “There’s virtu- 
ally no crime, which means 
that our clients can feel calm 
and comfortable when they 
come here. Ail that is very 
appealing at a time of uncer- 
tainty." 

He is also convinced that the 
hanking industry has benefited 
from becoming more profes- 
sional in recent years due to 
the restructuring efforts of the 
banks themselves and the 
expansion in related areas 
such as the arrival of interna- 
tional legal firms. 

The new banking legislation 
has been welcomed as part of 
this process particularly by 
those who remember the col- 
lapse of Banque Industrielle de 
Monaco in 1989. The bank was 
closed by the French banking 
authorities after an official 
investigation discovered that it 
had built a substantial busi- 
ness by accepting “cat’s paw” 
bearer deposit notes in Mon6- 
gasque names for tax-evading 
French residents. 

“None of us wants to see a 
repetition oE the BIM debacle." 
says one local banker. “It 
would be bad for Monaco's 
image and bad for business. 
Nor would it be in anyone's 
interest for Monaco to become 
a haven for money launder- 
ers.” 

Monaco has always been sub- 
ject to French banking regula- 
tions but most local financiers 
believe that the new laws give 
them a necessary layer of extra 
protection. “This legislation 
won't actually alter the way 
that we operate." says Mr 
Peake of Lloyds Bank. “But it 
should help us by sending out 
the right signals. It might 
make our international clients 
Eeel more confident about 
investing their money here." 


Societe des Bains de Mer is a Monegasque institution 

Catering for leisure seekers 


* ^ 
1 ^' 


You could stay at the 
sumptuous Hotel de Paris and 
treat yourself to a three-star 
meal at the Louis XV restau- 
rant. You might risk some 
chips at the Monte Carlo 
casino and stop for a cocktail 
on the terrace of the Cafe de 
Paris before dancing the rest of 
the night away at Le Jimmy’z 
night club. 

If you did all this you could 
spend a couple of days in 
Monaco - and a very pleasant 
few days at that - without ever 
leaving the properties owned 
by the Socfete des Bains de 
Mer (SBM), the quaintly named 
leisure company which is by 
for the biggest single business 
in the principality. 

SBM is more than a busi- 
ness, it is a Monegasque insti- 
tution. It is not only the largest 
commercial concern in Monaco 
(with sales of FFrLTSbn in its 
last audited financial year to 
March 30 1993) but is also the 
largest employer with a work- 
force of 2JB00 in a country with 
a population of 30,000. 

Although SBM is a publicly- 
quoted company with shar es 
listed on the Paris stock 
exchange, its ownership is 
dominated by the state. The 
Monaco government has 
owned 70 per cent of the group 
since 1966 when it bought all 
the shares amassed by Aris- 
totle Q nassis , the Greek ship- 
ping magnate who was one of 
the most profligate players at 
the Monte Carlo casino. Onas- 
sis had for years been buying 
up small stakes in SBM until 
eventually he had control and 
Prince Rainier decided the gov- 
ernment should buy him out 

Yet the relationship between 
SBM and the Mondgasque state 
goes back for further than the 
mid-1960s. The company traces 
its roots to 1863 when Prince 
Charles III gave a 50-year 
licence to operate a casino in 
Monte Carlo to Francois Blanc, 
who had turned the Bavarian 
town of Bad Homburg into a 
glamorous gambling centre. 

Francois Blanc was charged 
with creating a casino and an 
hotel in Monte Carlo, which 
was then a delapidated olive 
grove on the hill opposite the 
royal palace. His company was 
christened. Society Anonyme 





i for the Louis XV restaurant 


des Bains de Mer et du Cercle 
des Strangers, or the sea bath- 
ing society and circle of strang- 
ers, as a euphemism to throw 
the French authorities off the 
scent in case they objected to 
Monaco's newfound zest for 
gambling. 

SBM has continued the prac- 
tice of combining hotel owner- 
ship with casino operation. Its 
interests, which occupy a 
twelfth of the land in Monaco, 
Include the Hermitage, Mira- 
beau and Monte Carlo Beach 
hotels, as well as the Hfltel de 
Paris, together with Hie Op6ra, 
Sun Casino and the sporting, 
golf and country dubs. 

Raoul Biancheri. thp present 
chairman insists tha t, the SBM 

will not deviate from its tradi- 
tional role. “Diversification 
isn't anything that we know 
about or are Interested in," he 
says. “Our expertise lies in 
owning and operating casinos 
and hotels here in Monaco. 
That’s what we're good at" 

The company's cautious atti- 
tude towards expansion is pos- 
sibly reinforced by the memory 
of its unsuccessful investment 
in Baudouin, a Paris stockbro- 
ker that collapsed In the late 
1980s. Yet Mr Biancheri also 
rules out the less dramatic 
option of investing in hotels 
and casinos outside the princi- 
pality. 

“We’re prohibited by our 
company statutes from becom- 


O nly a few days ago a 
crowd of Flintstone 
Tans crowded Into the 
open-air cinema at Monte 
Carlo to watch Fred, Wilma, 
Barney and their fellow char- 
acters caper around in the 
movie version of The Flints- 
tones; the smash hit at the US 
box office this summer. 

The FHntstones - La Famille 
Pierreafeu, as they are called 
in France - has not yet opened 
for general release in Europe. 
It was screened as an al fresco 
preview in Monaco this week- 
end as part of a summer sea- 
son of English language films 
at the open-air cinema. The 
special showing of The Flints- 
tones is only one of the attrac- 
tions with which the Mondgas- 
ques hope to persuade more 
people to visit the principality 
at a time when the European 
tourist industry Is emerging 
from the recession. 

Monaco remained relatively 
resilient to the downturn in 
tourism until autumn 1992, 
when the combination of the 
chilly economic climate and 
the French franc's rise after 
the European currency crisis, 
triggered a steep decline in the 
number of visitors. 

Last year the full effect of 
the downturn became appar- 
ent. The nnmber of foreign 
tourists, which had been fairly 
stable at about 240,000 a year 
during the late 1980s and early 
1990s, fell sharply, Monaco 
Government Tourism and Con- 
vention Office figures show a 
drop of just over 15 per cent to 
206,206 in 1993, from 245,592 
in 1992. 

One difficulty was an accel- 
eration of the fall in the num- 
ber of French visitors, which 
had been in decline since the 
late 1980s. The French reces- 
sion deepened last year, with a 
devastating effect on foreign 



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Chilly economic climate and 
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travel and leisure expenditure. 
As a result the number or 
French visitors to Monaco fell 
to 35,359 in 1993 from 41,352 
in 1992. Tourism from the US. 
UK and Germany was also 
down during the year. 

Yet the chief problem for the 
Monggasques was a dramatic 
downturn in the influx of visi- 
tors from neighbouring Italy, 
which had emerged as its sin- 
gle biggest source of tourism 
in the 1980s when it ousted 
France from pole position. The 
number of Italian visitors rose 
each year in succession from 
43,169 In 1984 to peak at 
86,097 in 1992. It plummeted 
to 67,727 in 1993. 

“It's easy to see why Italian 
tourism was down so signifi- 
cantly,” says Raoul Biancheri, 
chairman of Sociite des Bains 
de Mer (SBM), the largest lei- 
sure group in tbe principality, 
which owns the Monte Carlo 
Casino together with the Hotel 
Hermitage and Hotel de Paris. 
“There has been a great deal 
of political instability in Italy 
for the past two years. Then 
there was the anti -corruption 
drive and also the economic 
downturn culminating in the 
devaluation of the lire." 

Yet the overall impact of the 
decline in the number of visi- 
tors has not been quite so 
damaging to tbe Monegasque 
economy (which depends on 
tourism for about a quarter of 
its gross domestic product) as 
the bald statistics suggest 

The most depressed area of 
the tourist industry has been 
the least lucrative - the day 


trippers who pour across the 
borders from France and Italy. 
These casual visitors provide a 
useful source of revenue for 
the principality’s cafes, souve- 
nir shops, slot machines and 
tourist attractions. But their 
absence has little impact on 
the more profitable part of the 
tourist business - the luxury 
hotels. Michelin-starred res- 
taurants, designer fashion 
shops and exclusive gaming 
rooms. 

T be official figures do not 
identify the total nnmber 
of day trippers but they 
show that while the total num- 
ber of visitors declined by 15 
per ' cent to 208,206 from 
245,592, the number of over- 
night stays fell at the lower 
rate of less than 13 per cent to 
601,111 from 698,047. 

Similarly, although the over- 
all rate of hotel occupancy was 
7.2 per cent lower at 48-1 per 
cent for 1993 against 55.5 per 
cent during the previous year, 
the upmarket SBM hotels 
maintained higher occupancy 
rates of just over 54 per cent, 
thanks to the patronage of 
their wealthy private clients 
and corporate customers. 

One of the main reasons for 
the comparative strength of 
the upper end of the tourism 
industry Is Monaco's success 
at establishing itself as a busi- 
ness conference centre. The 
principality only started to 
develop its conference activi- 
ties in the 1970s. It opened the 
Centre des Congrts, its first 
important venue, in the late 


1970s, followed later by the 
Centre de Rencontres Interna- 
tionales. 

Monaco now hosts large 
business conferences for the 
insurance and television 
industries, as well as for Indi- 
vidual companies which use It 
as a location for internal meet- 
ings and promotional events 
(such as Elizabeth Arden’s 
elaborate launch this spring of 
the new Karl Lagerfeld per- 
fume, Sun Moon and Stars). 
The conference industry now 
accounts for almost a third of 
all Monaco’s foreign visitors, 
against under one tenth in the 
early 1970s. 

The focus of future invest- 
ment is In conferences. The 
main project in the principal- 
ity is the construction of the 
huge new Centre Culture! et 
d’Exposttions, which will pro- 
vide more conference and exhi- 
bition space, thereby enabling 
Monaco to host more than one 
big event at a time. 

The opening of the new cen- 
tre, originally scheduled for 
the end of this year hot 
delayed due to construction 
problems until 1998, might 
also catalyse a new spurt of 
hotel construction. 

The hotel sector has been 
relatively quiet since the open- 
ings four years ago of the 
Abela and the Metropole, 
There have been no important 
new hotels since then, 
although SBM does have one 
possible project: it is consider- 
ing building a new 300-room 
luxury hotel on the larvotto 
peninsula. 

In the meantime the MonA 
gasques are anxiously waiting 
to see whether tbe local tour- 
ist Industry will fare better in 
1994 than in 1993. So far the 
signs are encouraging. The 
number of visitors during the 
first few mouths of the year 
was healthily higher than in 
the same period of 1993. So for 
this summer, thanks to The 
Flintstones and other attrac- 
tions. it seems likely to rise 
flgfljn. 


ing involved with gambling 
outside Monaco," he says. “It 
may be that a similar restric- 
tion applies to hotels. I don’t 
know. But we’re not a hotel 
and leisure company in the 
conventional sense. We really 
do have a very particular speci- 
alisation." 

SBM has instead been invest- 
ing heavily in its existing 
interests. It started to do so 
after a painful period in the 
mid-1980s when its profits fell, 
reflecting heavy losses at the 
casinos and low occupancy 
rates at the hotels which were 
then regarded as loss leaders 
for its gambling interests. 

The group embarked on an 
upgrading programme, begin- 
ning by luring Alain Ducasse, 
one of France's young super- 
star chefs, to the H6tel de Paris 
where he has since won three 
Michelin stars for the Louis 
XV restaurant 

It has just completed a three- 
year investment scheme that 
included refurbishing the Hdtel 
de Paris and the Hermitage, 
rebuilding most of the Monte- 
Carlo Beach Hotel and opening 
a new gaming room on the 
ground floor of the Cafe de 
Paris. 

SBM is now building a 
FFrlOOm new thalassotherapy 
centre, due to open next June. 
It is also considering plans for 
a brand new luxury hotel on 
the Larvotto peninsula, which 
would have 300 rooms and, pos- 
sibly, a yroflh casino in a proj- 


ect costir® between FFr600m 
and FFrtOQm. 

Despite these Investments 
SBM has not emerged 
unscathed from the economic 
recession of the past few years, 
although Mr Biancheri is con- 
vinced that the group would 
have fared even worse without 
them. SBM reported a foil in 
net profits to FFrl71m for the 
year to March 30 from FFr229m 
in the previous year. Its 
audited accounts for the 1933/ 
94 financial year are not yet 
available. However, Mr Bianch- 
eri confirmed that hotel occu- 
pancy fell slightly during the 
year as did gambling receipts. 

One consolation is that the 
occupancy rate at the SBM 
hotels is still higher than those 
of other Monaco establish- 
ments at around 54 per cent 
against 48 per cent Similarly, 
its occupancy levels have not 
fallen as for during the reces- 
sion, which would appear to 
endorse its strategy of upgrad- 
ing its interests to stay at the 
top of the market. 

Moreover, Mr Biancheri says 
that business has picked up 
since the start of 1994 as the 
economic strains have eased. 

“There's definitely been an 
improvement in trading since 
the start of this year," he says. 
“Hopefully we'll soon return to 
our normal level of activity. 
We also ought to reap the 
rewords of our recent invest- 
ments. We've sewn the seeds. 
Let’s see how they grow.” 



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FINANCIAL TIMES Ti iggnu v JULY 19 


MONACO 3 


Tlie pro perty market has fared better than those of its neighbours 

Golden triangle’s glitter dims 


There is a villa for sale in 
Monaco, the Villa Fauvette, 
which boasts no fewer than six 
bedrooms, five bathrooms, bal- 
conies outside, marble floors 
inside, gardens and terraces 
all aro und with a sweet little 
summer house perched on its 
roof. The price is FFriSm, or 
just under S2.7m. 

V UIa Faxrvette is a very spe- 
cial property. It is one of (he 
handfnl of belle epoque town- 
houses, or Mtels particuliers 
built in the late loth century 
to house Monaco’s wealth; 
residents and visitors, to have 
survived the principality’s 
post-war building boom. 

If a suitable buyer appears 
Villa Fauvette will be handed 
over intact. But the owners 
have another option. They 
could always sell the property 
to a developer who, thaniry to 
the scarcity of land in Monaco, 
would probably be prepared to 
pay almost as much as the 
FFrtSm purchase price. VUJa 
Fauvette would then become 
the latest in the long im*» of 
belle epoque relics to be demol- 
ished to make way for yet 
another new apartment block. 

Anyone glancing at the doz- 
ens of “For Sale” and “To Let” 
signs festooned across the 
facades of Monaco’s apart- 
ments, shops and offices could 

The seeds of the property 

market were sewn in the 
early 1970s 

be forgiven for thmiring that 
there was no shortage of prop- 
erty already on the market 
The local property industry 
has been affected by the down- 
turn that has depressed the 
European market in recent 
years. Yet the Idiosyncratic 
nature of the Mondgasque 
market - dominated by a 
small nnmber of powerful 
property owners and a high 
proportion of rich, relatively 
recession-proof private clients 
- has enabled it to withstand 
the recession rather better 
than its counterparts in other 
countries, notably in neigh- 
bouring France and Italy. 

The dearth of land, where 
sites for new development are 
so scarce that one of the big- 
gest projects fs the construc- 
tion of a new underground 
railway station so that apart- 
ments can be built on tap, has 
always ensured that there is 
strong demand for unusual 
properties on prime sites such 
as Villa Fauvette. 

The seeds of the Mon£gasque 
property market were sewn in 
the early 1970s by Prince Rain- 
ier and Gildo Pastor, the mul- 
timillionaire developer. They 
presided over a building boom 
that filled most of the princi- 
pality’s available sites 


Wnwn 

MOW* 


BEAUSOLE 3 L 





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ROOUBBRUNE 

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Concrete evidence: development sites in the prtndpefity am scarce 


together with reclaimed land 
in the 1970s and 1980s. 

The price of MonCgasque 
property escalated sharply 
with the cost of new apart- 
ments rising from around 
FFr3,000 a square metre in 
1971, according to industry 
estimates, to FFr10,000 in 1980 
and to FFr70,000 at the mar- 
kets peak in 1990. Prices in 
the golden triangle of Monte 
Carlo (in the area around the 
Casino and the HGtel de Paris) 
rose even higher to anything 
between FTrlOO.OQO and 
FFr125,000 a square metre, 
which made them roughly 
comparable to the most expen- 
sive parts of Paris. 

Prices have since weakened. 
“The Monaco property market 



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APARTMENTS 

OFFICES 

BOUTIQUES 



has certainly been affected by 
the economic recession,” says 
Yves Max, chief executive of 
Crtdit Fonder de Monaco, one 
of the biggest banks in the 
principality with interests in 
the property sector. “But the 
downturn has not lasted as 
long, nor has it been as strong 
as in other parte of -the Cfite 
d’Azur such as Nice or 
Cannes.” 

Mr Max estimates that the 
average price of residential 
property has fallen by 
“between 10 and 20 per cent” 
since its 1990 peak. Commer- 
cial prices have probably 
fallen further, but that repre- 
sents a relatively small part of 
the Mondgasque market The 
speculation of the 1980s, 
whereby apartments would be 
sold from the plans and resold 
several times before they had 
actually been built, has fizzled 
out Yet the upper end of the 
residential sector has 
remained robust, particularly 
in the most expensive areas 
such as the golden triangle 
where prices have barely 
changed despite the recession. 

One of the main reasons for 
the market’s comparative sta- 
bility is the presence of a 


6.000 sq.m 
adjustable 
office space 


FT SURVEYS INFORMATION 


rFprdertajfeof forttxxgnlnal^surve^, call: 


PATIO 

PALACE 


LE PATIO: ^ ^ 

41, 43, 45, Av. Hector Otto 

MC 98000 MONACO 

Tel. 92. 16.90.00 - Fax 93.25.29.39 


SEMI MONACO 


. paH& changed at 39p/min cheap rate 
.and" 49p/mln at -all otfte*? -times. . *" ■ 
. Overseas callers, ring UK: 71 2G2 2001 


Driving in and around Monaco is a treat in itself 


Mediterranean rendezvous 


handful of solid, local inves- 
tors notably the Pastor group 
(now run by Gildo Pastor’s 
sons, Michel and Victor) and 
Socifite des Bains de Mer 
(SBM), the state-controlled 
hotel and casino operator. 
These companies have a 
long-term commitment to 
Monaco. It is scarcely in their 
interest to depress the market 
by dumping properties 
through panic selling. Further, 
they are exactly the type of 
large, well-established busi- 
nesses that can afford a 
long-term approach to invest- 
ment 

Similarly Monaco’s wealthy 
residents have been spared the 
worst of the recession. Many 

The upper end of the 
residential sector has 
remained robust 


are affluent enough to have 
been able to hold on to their 
old properties, rather than 
risk selling them at low prices. 
Finally, the level of construc- 
tion activity has slowed down, 
partly in response to the reces- 
sion and partly because of the 
land shortage. 

As a result the market has 
already responded to the eas- 
ing of recessionary pressures 
in Europe. Local estate agents 
say that the price of new resi- 
dential property has returned 
to around. FFr60,000 a square 
metre, just below its peak in 
the late 1980s. 

“We’ve definitely seen an 
increase in demand for resi- 
dential prope rt y in Monaco,” 
says Betty Bloom, director of 
the SPA Property Agency, 
which specialises in the South 
of France and is the agent for 
Villa Fauvette. “There’s tre- 
mendous interest from Ital- 
ians, but also from Germans, 
tiie British and even from a 
few very rich Russians who 
have come on to the market” 

The recent rise in Monggas- 
que property prices reflects a 
general improvement across 
the Riviera, but the idiosyn- 
crasies of the local market 
coupled: with the particular 
attractions of the principality 
have ensured that the recovery 
was faster there. 

"Nanoe ever mentions tax, 
but it’s obviously a major fac- 
tor in drawing people to 
Monaco,” says Ms Bloom. “IPs 
also a safe, clean and politi- 
cally stable place to live. 
Monaco is more popular than 
other Riviera towns, even 
though you could buy a lovely , 
property in a pretty part of 
Antibes for half the price 
you’d pay In Monaco.” 


One of the nicest things about 
Monaco is its location: clinging 
to a cliff on the picturesque 
Mediterranean with the Italian 
coast to the east and the 
French riviera to the west 

The idea of being able to 
drive over the border for din- 
ner in a foreign country Is 
always appealing. Nice, Cannes 
and Genoa are all within easy 
reach. But IT you tire of the 
glitz and gloss of Monte Carlo, 
there is also the option of visit- 
ing some of the smaller towns 
and villages along the Cote 
d'Azur and inland in rural 
Provence. 

Driving in and around 
Monaco is a treat in itself 
thanks to the spectacular 
views offered from the the cor- 
niches, or coastal roads, which 
run through the principality 
from Nice to Menton. There 
are three comiches - high, 
medium and low depending on 
the height at which they perch 
on the clifisides- All three are 
familiar settings from car com- 
mercials and C6te d’Azur 
movie car chases. 

Roquebrune is the first place 
you come to when leaving 
Monaco on the western cor- 
niche. It is a 15th century vil- 
lage built around an nth cen- 
tury castle complete with a 
mock medieval tower added by 
an eccentric English owner In 
the 1920s. The village has been 
colonised by souvenir shops 
and is now something of a 
tourist trap, although the 
charm of its narrow alleys and 
stairways is still apparent 
when the shops close down at 
night. 

The coastline to the west of 
Roquebrune Is accessible only 
by foot and offers a stunning 
shoreline walk past the white 
rocks and pine trees of Cap 
Martin. The path is called Le 
Corbusier after the famous 
modernist architect who drow- 
ned there in the mid-1960s 
while staying at a house owned 
by the Anglo-Irish designer, 
Eileen Gray. 

The next stop after Cap Mar- 
tin is Menton, the sunny sea- 
side town nestling in moun- 
tains and lemon groves which 
is, in many ways, a more sub- 
dued version ol Monaco. Men- 
ton and Roquebrune both 
belonged to Monaco until the 
mid-19th century when they 

Mice, Cannes and Genoa 
are all within easy reach 
of Monte Carlo 

declared their independence. 
The then Prince of Monaco was 
stoned on the streets when he 
came to reclaim them and later 
sold them off to France for 
FFrfm. 

Menton, like Monaco, has an 
Italianate uieille oiUe. or old 
town, with candy-coloured 
houses and pretty little cha- 
pels. It also sports one of the 
most sought-after Salle des 
Mariages, or register offices, in 
France (teh9357 8787) decorated 
by Jean Cocteau, the surrealist 
artist Cocteau not only filled 
the walls with friezes of love 
stories - from a Saracen wed- 
ding party, to Orpheus and 
Eurydice - bat even carpeted 
the floor with a mock-panther 
akin. 

Cocteau also created his own 
museum for Menton, the 
Musle Jean Cocteau (teL9357 
7230), which lies between the 
vualle. ville and the old port It 
houses a fine collection of his 
drawings, paintings, writing, 
stage ami nim sets. 

The comiches to the east of 
Monaco are also well worth 
exploring. The hilltop village of 
Esse looks wonderful from a dis- 
tance, with its medieval houses 
and churches winding around 
the natural fortress of its hill. 
But on closer inspection it is 
even kitscher than Roquebrune 


c98mmer in G^^Snte-Sarlo 


2,870 FF 


For everybody who wishes to 
discover the magic of Monre-Carlo 
during a short stay there, the Societe 
des Bains de Mer provides the 
package “Summer in Monte-Carlo", 
three days and three words to 
discover the best of the Summer in the Principality. Starting at FF 
2870 you have the following advantages : the 
journey from Nice Airport to your hotel and 
back, a cocktail to bid you welcome, three 
unforgettable days at the Hotel Mirabcau **** 
with continental breakfast or buffet Add to 
this SBM's Carte d'Or which will be given to 
you on your arrival thus opening to you, free 


^ ;; ,..r :• 


I 


of charge, the doors of all our establishments and giving you 50% 
reduction on the entry fees at the Monte-Carlo Golf Club. Your stay 
can be made even more pleasurable with the Dream of a Day at 
the Monte-Carlo Beach and its private bathing establishment with 
changing-room, deck-chair, towel and a signed bath robe as a 
present. In addition a cocktail will be served to you on the private 
beach. In the evening you will enjoy dinner and a show in the 
Salle des Etoiles of the Monte-Cario Sporting 
Club where the most briliant stars will 
appear during the Monegusque Summer - 
Shirley Bassey, Natalie Cole, Earth Wind 
Fire, Stevie Wonder, Julien Clerc. 
(an additional charge of FF 350 to 800 is 
made for the gala evenings of the week-end). 




Hotel Mirabeau 


Monte-Carlo Beach Hotel 


Hotel de Paris • Hotel Hermitage • Hotel M.raneau - iwonie-^ar.o oeacn note, 

■ u . I, I KM MirabMU osoh and service charge Included. fcues f'» the H&d de Paris, Hutcl Hermitage and Monte-Cario 

• Cost of a stay per person m double non. at tlx 1 lord f ^ ^ 



Informations and reservations : 

Morae-Cario - Tel. : (33) 92 16 36 36 - Fax : (33) 92 16 69 13 - Great Britain = 080 089 78 42 - Italy : 16 78 78 261 


■ifC-.:':';- • ' . 





y? .» js, :£* • • * -v ■ r v- 

, v ; ■ fe'M 



Thera are spectacular views from the comiches M and around Monaco 


Otraar;'; 


Garros^ ;i 


r> ******* 
jaj y Menton 

cap i 

tf^Ezeo ”T MONACO 


Safnt-Paut- 

de-Vence 


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Caone* 



"^r^BhUex- . 


CapFernt 


V . ■ - .CW^Aarf 


MEDITERRANEAN 


with a clutter of souvenir 
shops and overpriced antique 
dealers. 

Beaulieu, the next town 
along the coast, has the same 
sleepy air as Menton. Its main 
attractions are the recently 
renovated Art Deco casino and 
the idiosyncratic Villa Kerylos, 
a replica of a classical Greek 
villa built in the early years of 
this century for Theodore Rein- 
ach, an archaeologist who 
lived there for 20 years in the 
same style and dress as an 


ancient Athenian. 

The other coastline folly is 
Fondation Ephrussi de Roths- 
child (tcl:9301 3399) which 
perches high above the nou- 
veau riche holiday homes of 
Cap Ferrat to house the collec- 
tions of art and furniture 
hoarded by the eponymous 
Baroness de Rothschild. The 
baroness, like Theodore Rein 
ach, had a penchant for 
ancient Greece. Her pastel pink 
villa is cluttered with classical 
columns, as well as vestiges of 


almost every period from Tie- 
polo frescoes, to Louis XIV fur- 
niture and a tiny lover’s room 
tucked away on the ground 
floor. 

Jean Cocteau crops up again 
in Vtliefranche-sur-Mer. yet 
another picturesque fishing vil- 
lage to have fallen victim to 
souvenir shops and tourist 
traps. But Villefranche does 
boast the Chapelle Saint- 
Pierre, a tiny l-Uh century seaf- 
ront chapel where Cocteau cov- 
ered the interior walls with 
abstract fantasies of Saint 
Peter frolicking with the 
Camargue gypsies. 

Nice Itself is filled with 
museums and restaurants. The 
nearby town of Gagnes is now 
a jumble or modern villas but 
was once the home of the 
painter, Pierre- Auguste Renoir. 
His house has been turned into 
a museum, the Musle Renoir 
(tol:9320 filOTt. which contains 
his old studio as well as some 
or the paintings he did there 
and pieces by friends, such as 
Bonnard and Dufy. 

Then there is Saint-Paul-dv- 
Vcnce, another pretty Proven- 
cal hill village transmogrified 
into a tourist trap, where the 
Fondation Mneght ttel:9332 
8163) offers one of the best col- 
lections of modern art in 
southern France with works by 
Giacometti. Arp and Mira. The 
foundation, which was created 
by a family of Paris art dealers, 
also stages temporary shows 
the latest of which U a Georges 
Braque exhibition that runs 
until the autumn. 

The last port of call before a 
longlsh drive back to Monaco 
could be La Colombe d’Or 
(Ce!:9332 8002), the Saint-Pau! 
restaurant run by the Roux 
family since the 1920s where 
local artists paid for their 
meals with their work. Luckily 
for the Roux the “locals" 
included Picasso, Braque, Cha- 
gall and Miro not to mention 
Fernand Leger. whose frieze 
decks the restaurant terrace, 
and Alexander Calder. who 
made a mobile to bob above 
the sw imming pool. 


MONTE-CARLO 

LE FLORESTAN - THE EIGHTH FLOOR 





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An exceptionally spacious and well- Tilled apartment or approximately 6900 square feet (640 nr) including 
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For Sale Freehold. Brochure and information on residence and (axes available from: 

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20. Bd des Moulins, MC 98000 MONACO 

Phone: +33 93 50 30 70 Fax: +33 93 25 86 72 


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2 Avenue de Mome-Carlo, MC 98006 MONACO, Tel: 93 50 OS 20, Fax: 93 25 24 12 



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Merrill Lynch sam. Le Prince de Galles, 4 Cune Etagc, 
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TO£phone (33> 92 IS 67 67, Telex 469 553. 
Teiecopleur (33) 93 25 53 82. 


Merrill Lynch 

A iralu mn of tfiwr 









IV 


MONACO 4 


FINANCIAL TIMES TUESDAY JULY 19 1994 



A very special event the Givenchy auction was a prime example of the best type of Mon 6gas q ae sale 

The principality has become an international landmark for art sales 

Newcomer finds its niche 


C hristie's, the celebrated London 
auction house, always knew that 
last winter's sale in Monte Carlo of 
the contents of a Parisian apartment 
owned by Hubert de Givenchy, the French 
fashion designer, would be a rather special 
event but it did not realise quite how 
special until after the auction was over. 

Givenchy bad shown the same fastidious 
taste in furnishing his apartment as in 
creating his haute couture. His rue de Cre- 
nelle apartment had contained some 
exquisite exam p l e s of French painting and 
furnishings, including the famous Han- 
over chandelier, a stunning piece in ster- 
ling silver. 

Christie’s had cal cu lated th pt the sale of 
his collection should raise between 
FFrlOOm and FFrllOm. Yet the auction 
itself achieved a total of FFrl55m - which 
included a successful bid ofFFrlSm for the 
Hanover chandelier alone. 

For Humphrey Butler, head of Christie's 
in France, the Givenchy auction was a 
prime example of the very best type of 
Monfigasque sale. There’s a glamour asso- 
ciated with Monte Carlo which is abso- 
lutely ideal for the auction of a very spe- 
cial private collection such as Hubert de 
Givenchy's." he says. “If s the sort of col- 
lection that probably sells better in 
Monaco than anywhere else." 

Monte Carlo is still something of a new- 
comer to the art market, at least compared 
to the old-established centres such as Lon- 
don. Geneva and New York. The first big 
sale in the principality was staged in 1975 
by Sotheby's, chief competitor of Chris- 
tie's, when it auctioned off the D§d& de 
Rothschild collection. That auction and 
subsequent sales were so successful that 
Monte Carlo has since become a landmark 

on the international art de aling scene. 

The merits of Monaco as an auction cen- 
tre are easy to see. The location, only a 15 
minute helicopter ride away from Nice's 
busy international airport, mak es it easy 
for international dealers to fly into the 
principality for special events. Sotheby’s 


and Christie's even ensure that they hold 
their six monthly sales fairly close 
together in June and December to maxim- 
ise attendance by foreign dealers. 

Monte Carlo also offers the added frisson 
of a sprinkling of self-indulgent local resi- 
dents. and people driving over the borders 
from France and Italy. 

Yet the main reason for Monaco's meta- 
morphosis into an auction centre is the 
idiosyncratic nature of the French art 
market, which is so tightly restricted by 
anachronistic legislation that it is almost 


impossible for leading international auc- 
tioneers such as Sotheby's and Christie's 
to hold important sales in France. 

France is the home of some of the 
world's finest art collections. French paint- 
ing and antique furniture is highly sought 
after by wealthy collectors in other coun- 
tries. notably in the US and Japan. Yet for 
decades the market has been hidebound 
by stiff export restrictions which make it 
very difficult for Sotheby’s. Christie's or 
their international rivals to transport 
works out of France to auction them in 


London. New York. Tokyo or Geneva. 

The French government is empowered 
to stop any piece from leaving the country 
for foreign auction by buying it at the 
minimum reserve price - usually much 
lower than the “hammer" price at which 
the auctioneer will actually sell iL (If the 
piece is sold in France, the government 
must buy it at the hammer price.) 

However, the controls over the French 
market are so tight - the only people 
allowed to practise as auctioneers are the 
small band of c ommasai r es priseurs. who 


are licensed by the justice ministry and 
can only apply for a licence when an exist- 
ing commissaire relinquishes one ~ that 
Sotheby's and Christie's cannot operate in 
France. At the same time, the archaic 
nature of the commissaire system means 
that the auction market is highly frag- 
mented and that individual auctioneers do 
not have the resources to stage and mar- 
ket international sales on the same scale 
as Sotheby‘s or Christie's. 

This state of affairs continued until 1975, 
when Peter Wilson, then chairman of 
Sotheby's in France, decided to exploit a 
loophole whereby works could be auc- 
tioned in Monaco free from the usual 
restrictions on foreign sales. In other 
words, the French government is obliged 
to pay the full hammer price, rather than 
the minimum reserve, if it seeks to stop 
French works leaving the principality. 

Monte Carlo has since become renowned 
for its sales of old master paintings, 
antique French furniture and for other 
Gallic decorative specialities such as Art 
Deco and Art Nouveau. It has also hosted 
a series of high profile sales, including 
Sotheby's auction of the the Florence 
Gould and Claud Cartier collections, the 
Christie's sales of Sir Chutes Clore's fur- 
niture and its auction last month of the 
contents of the Cap d 'Antibes house 
owned by Margaret Biddle, the wealthy 
American who was a leader of the Riviera 
social scene in the 1910s. 

The nature of the Monaco market means 
that it has been relatively robust during 
the recession of the late 1980s and early 
1990s. The only area of the market to have 
suffered is classic cars, which became a 
Monegasque speciality in the 1980s (thanks 
to the principality's motor racing tradi- 
tion) but fizzled out in the economically 
depressed early 1990s. 

Christie’s and Sotheby’s achieved well 
over their original estimates in last 
month's Monte Carlo art auctions. The 
prize of the Sotheby's sale - a pair of 18th 
century black lacquer corner cabinets by 


Bernard Van Risnmburgh - was sold for 
FFrS.-iSra, against an estimate of FFr5m. 

Hie biggest threat to the Monfigasquc 
auction scene is not the economic environ- 
ment. but the forthcoming reforms of the 
French art market. In theory, the French 
should have liberalised their arcane auc- 
tioneering system with the onset of the 
single European market at the end of 1992. 
But In practice, although proposals for 
change have been tabled, the system has 
remained Intact 

Yet even the most conservative commis- 
saires accept that change is inevitable. 
Jacques Teuton, the centre-right arts min- 
ister, has already put forward a concrete 
plan for reform. “The inflexibility of the 
art market will soon be no more than a 
bad memory," began a recent article in ta 
Tribune Desfosses, the French financial 
daily. 

Liberalisation of the French market is 
almost certain to prompt the international 
bouses to switch some of their Monaco 
auctions to Paris. Sotheby's and Christie’s 
arc already planning to do so. At the same 
time the French commissaires have devel- 
oped plans to band together in order to 
compete more effectively against the Lon- 


Monte Carlo offers the added 
frisson of a sprinkling of 
self-indulgent local residents 


don and New York houses. 

Yet Christie’s Humphrey Butler is still 
convinced that there will be a role for 
Monaco on the auctioneering scene. “I 
doubt very much that as soon as the Paris 
market opens, we'll move everything there 
and close down in Monaco," he says. 
“Monte Carlo serves a very particular pur- 
pose in the art market. We may well have 
decided to hold a special sale like the 
Givenchy there even if Paris was open to 
us. After all. we're all susceptible to glam- 
our." 



M 


■a*- 5-y> . -o . 








The Safle Europe bi the Casino merits a vfadt for its aesthetic ex cea ses 


onaco is really little 
more than a smallish 
seaside city. Prince 
Rainier rales over a co un t ry 
that stretches across three kil- 
ometres of rugged Mediterra- 
nean cliff bat is still one of the 
most popular destinations on 
the Cdte d’Azur. 

The principality is divided 
into four areas. Monaco Ville. 
the original heart of Monaco, 
is the political centre as the 
home of the vielle ville, the old 
town, and the G rimaldis ’ can- 
dy-coloured palace. Monte 
Carlo is much younger. It was 
a scrappy olive and lemon 
grove until the mid-19th cen- 
tury when Prince Charles m, 
one of Prince Bahtier's more 
imaginative ancestors, built 
the famous casino and luxury 
hotels there. 

Most of Monaco’s foreign 
residents live in the jungle of 
modern apartment blocks 


Visitor’s guide to the principality 

Like nowhere else on earth 


flung up in La Condamine, the 
flat area lying between the 
more picturesque hills of 
Monte Carlo and Monaco Ville. 
The Mon£gasques themselves 
occupy the cheaper housing 
that has been built in Font- 
vieille, the strip of land to the 
south of Monaco Ville which 
was reclaimed from the sea in 
the 1970s and now houses a 
small industrial zone. 

Yet to most people Monaco 
is synonymous with the belle 
epoque glitz of Monte Carlo. 
Nothing s iims it np better than 
the Casino (tel; 9216 2121), an 
extraordinary edifice designed 
by Charles Gamier, architect 


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of the Paris-Opera. The Casino 
merits a visit for its aesthetic 
excesses - from the Bohemian 
crystal chandeliers in the Salle 
Europe which weigh more 
than 150 kilos, to the scantily 
clad women in the Galelli 
fresco on the ceiling of the 
smoking room whose eyes are 
said to follow the visitor 
around the room - even if you 
do not plan to risk frittering 
away your francs on the rou- 
lette wheels or slot machines. 

No snperstitious gambler 
shonld go into the Casino 
without first wishing them- 
selves luck by stroking the 
knee of the bronze horse bear- 



ing Louis XIV in the statue 
outside the Hotel de Paris (tel: 
9216 3000). The hotel is almost 
as elaborate as tbe Casino 
with an extraordinary bar 
where Monaco's Chanel-clad 
residents knock back cocktails 
during afternoon piano ses- 
sions. It is also the home of 
tbe Louis XV (tel: 9216 3004), 
one of the few restaurants on 
the Cote d'Aznr to boast three 
Michelin stars thanks to the 
talent of Alain Ducasse. its 
young chef. Donald Tramp 
was so impressed with 
Ducasse’s culinary skills that 
he once flew him over to Man- 
hattan to cook a family meaL 



The logo for the new thal a ssother a py complex 

Thalassotherapy complex rises again 

Healing waters 
of Monte Carlo 


In tbe grand old Edwardian era 
when the cream of European 
high society whiled away their 
summers in Monte Carlo, they 
spent each morning washing 
away their worries about the 
previous night's amorous 
adventures or gambling losses 
in tbe healing waters of the 
Sea Water Thermal Baths. 

The thermal baths were a 
Monegasque institution which 
opened in 1908 after Prince 
Albert I had noted the success 
of the sea baths at Rose off in 
Brittany. 

They soon became a fashion- 
able place where wealthy bath- 
ers could indulge In the 
ancient practice of thalassoth- 
erapy. a form of healing that 
exploits the soothing proper- 
ties of exposure to warm water 
extracted from the sea. 

Tbe original baths were 
destroyed by a stray German 
bomb which fell on Monte 
Carlo by accident at the begin 
ning of the second world war. 
The debris was cleared and the 
old baths became tbe site of a 
swimming pool for the Hotel de 
Paris and Hotel Hermitage. 
That pool has now been closed 
while the Societe des Bains de 
Mer. the owner of the old ther- 
mal baths, builds a brand new 
FFrlOOm version. 

Monte Carlo’s new seawater 
baths will posit on the same 
thalassotherapeutic principles 
as the original, whereby the 
body is exposed to sea water 
that has been pumped from a 


depth of 30 metres and heated 
to around 35 degrees. 

The temperature ensures 
that the microorganisms in the 
water, tbe phytoplankton and 
zooplankton, stay alive to 
secrete antibiotic bacteria and 
hormones with healing proper- 
ties. 

But the new baths, due to 
open next June, will be much 

more sophisticated than the 

old ones. 

The new complex will 
include two sea water swim- 
ming pools together with sea- 
weed cabins, sea water jet 
showers and a number of "dry" 
treatment facilities such as 
massage rooms and a gymna- 
sium. 

The complex has been 
designed by Dr Yves Treguer, 
one of France's leading cardiol- 
ogy specialists and the man 
behind the successfol Thalas- 
sotherapy Centre at La Baule 
in western France. 

He hopes to appeal to both 
people with medical conditions 
and to “lay" bathers who sim- 
ply need a relaxing respite 
from their stressed-out lives. 

Societe des Bains de Mer, 
which has been struck by the 
recent revival of interest in 
thalassotherapy, hopes that its 
new Sea Water Thermal Baths 
will enable it to challenge the 
established centres at La 
Baule. Biarritz and Saint Malo: 
just as tbe old baths helped 
Monte Carlo to rival Roscoff in 
the early years of the century. 


Anyone whose budget does 
not quite run to a meal at the 
Louis XV - let alone to Con- 
corde tickets for the chef - can 
dabble in the Tramp lifestyle 
by window shopping at 
Chanel. Valentino. Cartier. 
Van Cleef & Arpels or any of 
tbe other expensive shops 
around Place dn Casino and 
along Boulevard des Monlins. 
They can also stroll around 
the Casino gardens to gawp at 
the stunning sea views or at 
the work of CCsar, the French 
sculptor who is tbe subject of 
the latest summer exhibition. 

There are more gardens to 
see in Monaco Ville, where the 
cliff tops have been covered 
with Aleppo pines, agaves, and 
aloes to offer spectacular 
views across the Mediterra- 
nean cliffs. Hie narrow streets 
of the uieille ville still offer an 
occasional glimpse of the 
sleepy charm of medieval 
Monaco, bat most of the old 
town is a commercialised clut- 
ter of souvenir shops selling 
Prince Rainier mugs and 
Casino tea-towels. 

The Grimaldis’ Palace (tel: 
9325 1831) looks like a souve- 
nir in Itself with its pastel 
pink walls and comic book 
battlements. Hie ceremonial 
changing of the guard, which 
takes place just before noon 
each day, completes the pic- 
ture with the soldiers sporting 
black uniforms in winter and 
white in summer. Day after 
day the Place da Palais is 
packed with tourists waiting 
to see tbe soldiers or hoping 
for a glimpse of Prince Rain- 
ier, Princess Caroline and the 
other Grimaldis. 

The vieiOe ville is also the 
home of Monaco’s two most 
interesting museums. The 
Mns€e des Souvenirs Napoleon 
(tel: 9325 1831) in the southern 
wing of the palace is a trea- 
sure trove of Napoleonic mem- 
orabilia with more than 1.000 


of his documents and objects 
ranging from his socks and 
handkerchlcves to medals and 
weapons. 

fiat the principality's main 
m useological asset is Music 
Odonographique (tel: 9315 
3600), which was built in 1910 
at the behest of Prince Albert I 
and has since established itself 
as an important centre far sci- 
entific research and one of 
Europe's best aquariums. It 
contains some 90 tanks of rare 
fish from all over the world 
with stunning colours and 
shapes. It also houses Prince 
Albert I’s own collection of 
marine fauna and stuffed sea 
creatures (including a 20-me- 
tre whale) together with mod- 
els of his laboratory ships. 

The other academic curioos- 
ity in Monaco is the Jardm 
Exotique (tel: 9303 3365) high 
on the rocks above the princi- 
pality. The gardens, which 
were founded in 1933. now 
encompass more than 7,000 
different types of succulent 
plants including surreal cacti 
from central and southern 
America and giant African 
Euphorbia. Tucked beneath 
the gardens is another surreal 
scene in the Prehistoric Obser- 
vatory Caves with their stalag- 
mites and stalactites. 

Finally, one of Monaco's 
main claims to fame and a 
fierce point of local pride is AS 
Monaco, the football dub 
which is widely regarded as 
one of the most successful in 
France. AS Monaco has, tike 
other European clnbs, bran- 
dished its cheque book to slgu 
a number of imported players 
over ttie years, including Mark 
Hateley and Glen Hoddle. 

Similarly, no expense has 
been spared on Its statoof-tbe- 
art stadium at FDntvteflle. Tbe 
head of one foreign bank 
remembers sending a visiting 
director from his London bead 
office to see AS Monaco. “AH 
he talked about alter the 
match was the escalators that 
carry the su pp orters up to the 
terraces,” recalls tbe banker. 
"It was the escalators that 
made him realise Monaco 
really isn't like anywhere 
else.*" 


International Currency 
Consultants (I.C.C.) 

Reliable forecasts of short- and medium- 
term Forex trends, including specialist advice 
in Italian Lira spot and derivatives market. 

Please contact: 

Roger Vine 
I.C.C 

Gildo Pastor Center 
7, Rue du Gabian 
MC 98000 Monaco (Principality) 

Tel: 33-92 05 39 26 
Fax: 33-920567 64 


HMM, M1ELVI1L1LE 
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Park Palace 

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MC 98000 
MONACO 


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33-93 

250100 


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