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FINANCIAL TIMES 


Telecommunications 
KK in business 

Soivay, Section 81 

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F.-'o-e s Business' Newspaper 


WEDNESDAY JUNE 15 1994 



Enterprise Oil 
raises stakes in 


bid for Lasmo 


Enterprise Oil raised the stakes in its hostile 
bid for rival explorer, Lasmo, with a revised all- 
share offer valuing the group at £L5Sbn ($2-38bn)_ 
It was dear from the revised terms and lack of 
a cash element that Enterprise has been under 
pressure from its own shareholders not to push 
its terms too far. The decision also paves the 
way for an alternative bidder to emerge. Page 
15; Lex, Page 14 

Row over British aimy tanks: It was 

"scandalous" that three-quarters of the British 
army’s main battle tanks in Germany were under 
repair when the Golf war broke out. a UK parlia- 
mentary committee said. Page 14 

Call for more deregul a tion In Japan: 

The Keidanr en, Japan's most powerful business 
federation, stepped up its cam paign for more 
economic deregulation amid the latest gf e n <| of 
a corporate recovery. Page 14 

USAir, the troubled US carrier, said it would 
seek pay and benefit cost-reductions of $500m 
from employees as part of a plan to reduce annual 
operating expenses by $lbn. Page 15 

Berlusconi to sen Rflondadorl stake: Italy's 
prime minister, Silvio Berlusconi, should raise 
L990bn ($61 lm) through the sale of a 53 per can t 
stake in Mondadori, the company which groups 
bis book and magazine publishing interests. 

Page 15 

Metropolitan Life and Travelers, the US 

insurers, have reached agreement on combining 
their health insurance businesses in a joint venture 
company. Page 15 

Cott Corporation, a Canadian soft-drink 
company, is giving Coca-Cola and Pepsi their 
stiff est competition in many years. Page 15; Upstart 
Cott shakes cola kings. Page 18 


Fugitive Botnar paid £3.81m last year. 

Octav Botnar, chairman 
of Nissan UK for whom 
an arrest warrant has 
been outstanding for 
the past 2% years, 
was paid £SJ31m last 
year in his role as 
chairman of Automotive 
Financial Group Hold- 
ings, which owns AFG, 
.one of the biggest UK 
motor dealer groups. 
Botnar, 80, is alleged 
to have been the principal conspirator in the 
largest corporation tax fraud in UK history. Page 
16; AFG tumbles to £2l.2m loss. Page 24 

US consumer spendtns stows: The pace 
of US consumer spending slowed last month and 
inflationary pressures remained modest, official 
figures indicated. Page 7 

Bonn bids for worid trade HCk Germany 
submitted its formal offer to site the Worid Trade 
Organisation in Bonn. Page 6 

G3 sign free trade deah The presidents of 
Colombia, Venezuela and Mexico - the Group 
of Three nations - signed a deal to phase in a 
free trade pact over 10 years and create a common 
market of 140m people. Page 6 

London to bear brant of rail strike: A 

24-hour stoppage on Britain’s rail network b eg a n 
last night Page 8; Editorial Comment, Page 13 

Chernobyl fears doud EU-Ukrafne pact 

European Union fears about the safety of the 
Chernobyl nuclear plant overshadowed the s ign i n g 
of an EU-Ukraine partnership and co-operation 
agreement Page 3 

Fears of renewed Kurdish violence: The 

killing of at least 12 people during a funeral proces- 
sion in northern Iraq has raised fears of new 
violence between rival Kurdish groups, threatening 
a IQ-day-old ceasefire. Page 4 

Siemens wins UK power contract: National 
Power, the UK’s privatised electricity generator, 
has awarded Siemens of Germany a contract 
to build a 1.350MW gas-fired power station at 
Didcot, southern England. Page 8 

Selling condoms in the Philippines: Selling 
condoms to some of the world's most devout Roman 
Catholics sounds like an impossible task, but 
Dr Juan Flavier, health secretary of the Philippines, 
is successfully spreading the gospel of femily 
planning. Page 5 

Henry Maneinu Composer Henry Mancini 
died, aged 70, in California of complications from 
liver and pancreatic cancer. 



■ STOCK MARKET INDICES 

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Clinton announces reforms of welfare system 


By George Graham In Washington 

President Bill Clinton yesterday 
unveiled a reform package intended to 
turn the US social safety net into "a pay 
cheque not a welfare cheque". 

The reform proposals, expected to cost 
around $9.3bn over five years, would 
expand education, training and child- 
care for the poor. But it would also 
require people who have received wel- 
fare benefits for more than two years to 
enrol in a work programme in return for 
their payments. 

A relatively modest portion of the 
overall US social safety net would be 
affected by the proposals, which are an 


attempt by Mr Clinton to keep his 1992 
campaign promise to "end welfare as we 
know It". 

The main target is Aid to Families 
with Dependent Children, a programme 
for parents with young children, virtu- 
ally the only federal government pro- 
gramme paying ^a«h benefits to healthy 
people who have exhausted their unem- 
ployment benefits or never held a Job. 

AFDC pays an average of $37658 a 
month to around 5m families, the 
amount depending on how much each 
state pays to supplement the federal por- 
tion. Under the plan, anyone who turned 
down a job or did not make adequate 
diforts to look for work could have pay- 


When working would cost too 
much Page 7 

merits halted. The reforms wiH affect 
recipients bom after 1971. and the White 
House estimates that by the year 2000 
fewer than one welfare recipient in 12 
would be enrolled in the mandatory 
work programmes. 

However, the scope of the programme, 
likely to be substantially changed in 
Congress, has already been halved from 
an earlier draft This is because US bud- 
get rules require any additional spend- 
ing on areas such as welfare to be offset 
either by higher taxes or by cats in 


other such entitlement programmes. 

In paying for the programme, higher 
taxes were ruled out by Mr Clinton, so 
the training, work programme and child- 
care elements of the reform plan are to 
be paid for largely by cuts in other wel- 
fare programmes - chiefly by withdraw- 
ing benefits from legal aliens and by 
limiting assistance to the homeless. 

Mr Clinton's pledges on welfare dur- 
ing his election campaign helped to label 
him as a "new kind of Democrat" and 
win back some middle class voters. 

The Republican party has also pres- 
ented welfare reform proposals in an 
effort to win back the political high 
ground on this issue. Welfare reform has 


been repeatedly postponed to leave room 
on the congressional agenda for the 
more ambitious reform of the healthcare 
system which Mr Clinton has made his 
top priority. Most members or Congress 
believe it is now too late for a serious 
attempt to pass legislation this year. 

Two reasons for publishing the reform 
plan now are widely suggested in Wash- 
ington. One is to appease Senator Daniel 
Moynihan, the chairman of the Senate 
finance committee, who is crucial to Mr 
Clinton's healthcare plan but who is 
more firmly fixed on the welfare system. 
Second, it will provide Democratic can- 
didates with something to stand on in 
November's congressional elections. 


$4bn stake in Sprint planned 


US telecoms 
alliance for 
France and 
Germany 


By Andrew Adonis 

Plans for an ambitious global 
telecommunications alliance 
between the French and German 
state-owned operators and Sprint, 
a US company, were unveiled 
yesterday, heralding a bitter reg- 
ulatory battle in the US. 

France Telecom and Deutsche 
Telekom intend to pay $L2bn for 
a 20 per cent stake in Sprint, the 
third-largest long-distance carrier 
in the US. The three will estab- 
lish joint ventures targeted at the 
communications needs of multi- 
national companies. 

AT&T, the largest US operator, 
yesterday urged the US govern- 
ment to block the alliance unless 
France and Germany agree to 
open their markets to competi- 
tion before the 1998 deadline 
agreed by the European Union 
last year. The European state 
operators would strongly resist 
such a move. 

The link-up is the second 
multi-billion dollar international 
telecoms venture to lave been 
launched in the last year. It 
resembles the deal forged by Brit- 
ish Telecommunications and 
MCI. the second largest US car- 
rier. BT has pledged $45bn for a 
20 per cent stake in MCI, and a 
further $750m to establish a joint 
venture company. 

The BT-MCl alliance will this 
week gain final approval of the 
US Department of Justice, after a 
year-long investigation. 

However, the Franco-German 
alliance with Sprint is set for a 
more fraught regulatory battle 
because of the relative size of the 
operators and the feet that. 


unlike BT. France Telecom and 
Deutsche Telekom enjoy a 
monopoly over most telecommu- 
nications services in their respec- 
tive countries. 

Mr Victor Pelson, chairman of 
AT&T’s global operations, said: 
“The French and German mar- 
kets are two of the most closed 
markets in the world for tele- 
coms service and equipment. 
They should provide foil access 
before this dead is allowed." 

The French and German com- 


Lex. 


Page 14 

Franco-German pact defies 
sceptics Page 20 

panics insist that the alliance 
will offer services only in sectors 
already open to competition in 
their home markets, such as call- 
ing cards, data networks and pri- 
vate corporate networks. Mr Hel- 
mut Ricke, chairman of Deutsche 
Telekom, said: “We are sure that 
we will receive regulatory 
approval otherwise we would not 
have signed." 

However, last month the Fed- 
eral Cartel Administration in 
Berlin reported that Deutsche 
Telekom had channel ad subsidies 
totalling DULSbn (Sl-l3bn) into 
its data networks division since 
data services were opened to 
competition in Germany in 1989. 
The company claims that the 
cross subsidies have ended 

The Sprint deal builds on an 
Eculbn alliance between Deut- 
sche Telekom and France Tele- 
com signed last December, which 

Continued on Page 14 



South Korean firemen wearing protective clothing unload an emergency chute in Seoul yesterday during an air defence exercise as tension 
heightened m the row over nuclear inspections In North Korea. A country wide drill is planned for today. Report, Page 14 nom arm 


Former BCCI executives jailed 


By Antfeew Jack 

Twelve senior executives of the 
collapsed Bank of Credit and 
Commerce International were 
yesterday sentenced in Abu 
Dhabi to serve a combined total 
of 61 years in prison and ordered 
to pay $9bn for their involvement 
in one of the biggest frauds in 
history. 

The verdicts marked the end of 
the first trial to examine the role 
of the most important figures 
involved in allegedly defrauding 
hundreds of tho usands of credi- 
tors, depositors and employees of 
more than 512bn in the decade 
before BCCI was dosed by regu- 
lators in July 1991. 

Mr Swaleh Naqvi, BCCl’s for- 
mer chief executive who is on 
trial in the US, received in his 
absence the heaviest sentence of 
14 years. 

Mr Agha Hasan Abedi, the 
founder and president of BCCI, 
who is ill in Pakistan and is 
unlikely to be extradited, was 


sentenced in his absence to 8 
years' imprisonment 
Others in detention in Abu 
Dhabi received sentences ranging 
from three to six years, while one 
defendant who has been on bail 
was acquitted. Mr Ziauddin Ali 
Akbar, former head or BCCl’s 
treasury division, was given 
three years, though he is serving 
six years in Rngi^nd on 16 counts 
of false accounting involving 
more than $745m_ 


The court ordered those found 
guilty to pay back $&56bn stolen 
from the private department of 
Sheikh Zayed bin Sultan al-Na- 
hyan, the ruler of Abu Dhabi, 
$1.35bn from the Abu Dhabi 
Investment Authority, $1.22bn 
from the Finance Department, 
and to pay costs. 

Mr Vivien Ambrose, chief rep- 
resentative of the BCCI Staff 
Association, said: "These sen- 
tences are very light The plight 


of the staff and the depositors 
remains unsolved and is going to 
drag on for years." 

Mr John Moscow, an assistant 
district attorney for New York 
County, which has charged Mr 
Naqvi and Mr Abedi, said that 
the sentences appeared to be 
“relatively light", given the 
magnitude of the charges. 

Continued on Page 14 
BCCI str uggle continues. Page 4 


Foreign investment surge in 
China slows in first quarter 


By Tony Walker in Beging 

China’s foreign investment surge 
appears to be slowing, after a 
year of hectic growth, when the 
contracted value of new agree- 
ments exceeded the total invested 
during the 14 years of Beijing's 

market reforms. 

The state administration for 
industry and commerce (SAIQ 
said yesterday that the number 
of newly established foreign- 
funded enterprises was down by 
43.6 per cent to 10,739 in the first 
quarter, compared with the same 
period last year. 

There was also a 5Q per cent 
drop in both newly pledged for- 
eign investment and in funds 
used, the official China Daily 
reported. Detailed figures were 
not made available. 

Mr Hoq Lin, head of the state 
office’s register of new foreign- 


funded enterprises, attributed the 
marked slowdown in the num- 
bers of new ventures to changes 
In the tax law which reduced 
preferential treatment. 

&1 the past, thnusanris of joint 
ventures were established to 
enable the partners to import 
duty-free cars. This privilege was 
suspended last year. Other fac- 
tors included tighter credit poli- 
cies in China itself - aimed at 
calming an overheating economy 
- and competition from neigh- 
bouring Aston countries, such as 
Vietnam, which are actively seek- 
ing foreign investment 

China' s gross national product 
in 1993 grew by 13 per cent This 
compares with 1 2& per cent in 
1992. The authorities are seeking 
to slow the economy to 9 per cent 
growth this year. 

While the number of new joint 
ventures decreased in the first 


quarter by about 50 per cent, 
numbers of wholly foreignowned 
companies grew by 6 per cent 
This is part of a trend under 
more liberal foreign investment 
policies now in place. 

Foreign-contracted investment 
in China surged last year to 
83,000 projects valued at flllbn. 
Actual utilised investment 
reached SffiJbn, an increase of 
134 per cent Over the year before. 

The state administration 
reported that there were 167,000 
foreign-funded businesses in 
China by the end of last year. 
Hong Kong accounts for about 
two-thirds of the investment but 
a new trend involves the US, 
Japan and South Korea in 
increasing numbers of larger- 
scale projects. Much of the 
investment from Hong Kong and 
Taiwan is lodged in smaller 
enterprises. 


Eucpaan ifews . 


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CONTENTS 



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© THE FINANCIAL TIMES LIMITED 1994 No 32,393 Week No 24 


LONDON - PARIS - FRANKFURT • NEW YORK - TOKYO 






FINANCIAL TIMES WEDNESDAY JUNE 15 


NEWS: EUROPE 


FT correspondents report on fallout from last weekend’s European election 

Presidential ambitions fanned on French right 


By David Buchan In Paris 


Squabbling broke out 
yesterday within France's gov- 
erning RPK-UDF coalition over 
the likely candidate for next 
year's presidential election. 

A group of 27 deputies 
threatened to break away from 
the parliamentary group of 
their centre-right UDF federa- 
tion, in an evident move to 
back Ur Edouard Bahadur, the 
RPR Gaullist premier, for the 


presidency nest year. 

Last night, the 27 were per- 
suaded by the leadership of 
their Republican Party to sus- 
pend their planned breakaway 
pending a party conference an 
June 26. 

The rekindling of presiden- 
tial rivalries within the conser- 
vative UDF-EPR coalition fol- 
lows the poor showing by Mr 
Michel Record, leader of the 
Socialist party, in the Euro- 
pean elections. Ur Rocard 


gained only 145 per cent of the 
vote for his EuroSocialist list 
and now looks easy to beat 
next year. This has encouraged 
several candidates on the right 
to enter the fipirf against him 
Earlier yesterday, the 27 dep- 
uties pledged themselves to 
support a single candidate rep- 
resenting the RPR and UDF, 
while Mr Valery Giscard d*Es- 
taing, overall leader of the 
UDF federation, has said he 
wants the UDF to field its own 


maw, perhaps himself. 

The other fact or behind yes- 
terday's move was the Euro- 
election success of Mr Philippe 
de Villi ers, whose anti-Maas- 
tricht campaign split his 
Republican party. Most of the 
rebels are similarly Euroscep- 
tic. unable to stomach the 
notion of backing an old pro- 
European like Mr Giscard d’Es- 
failng year. The fare that 
Mr BaHadur is drawing UDF 
support of this nature may 


incline to a more national- 
istic stance towards Europe. 

For his part, Mr BaDadur is 
maintaining a public show of 
having wnthing to do with this 
internal politicking and of 
merely getting on with run- 
ning the country. Next week 
he lays out plans for reforming 
social security and the budget 
ami for following up bis initia- 
tives in Gatt and and in promo- 
ting European stability over 
the rHy *t six 


Meanwhile, two newly 
elected MEPs traded Insults 
yesterday. Mr Bernard Tapie 
dismissed as “ridiculous inven- 
tions" claims by Mr Thierry 
Jean-Pierre. an ex-magistrate 
who won a seat on the de VU- 
liers list, that the Marseilles 
politidan/businessman may be 
using money in foreign bank 
a^ypiinfs to buy back, under 
others’ names, the Olympique- 
Marseflle football dub be has 
been entered to sell 


Bundesbank 
stands by 
M3 as guide 


By Christopher Partes 
to Frankfurt 


Irish political ‘mould breakers’ 
face the prospect of break-up 


By Tim Coons bi Dublin 


The party which set out nine 
years ago "to break the 
mould" of Irish politics, the 
Progressive Democrats (PDs), 
looks to be on the verge of 
breaking apart itself as a 
result of internal feuding fol- 
lowing its humiliation in the 
European elections, and the 
first poll defeat ever for the 
party's founder and former 
leader, Mr Des O’Malley. 

Mr Mary Harney, the pres- 
ent leader, called the defeat as 
a "catastrophe”. She has been 
criticised by some colleagues 
for her hamntng of foe cam- 
paign, although senior party 
figures were yesterday ruling 
oat a leadership challenge. 

Mr O'Malley had been cho- 
sen by the party to defend its 
only seat in Strasbourg- That 
had been won in 1989 by Mr 
Pat Cox, the party's deputy 
leader, who had achieved the 
distinction of gaining more 
votes than any other candidate 
in Ireland in that election. 


The 55-year-old Mr O’Malley 
resigned the leadership of the 
party eight mouths ago “to 
malm way for new blood” and 
said at the time he had mad* 
“an absolute decision” not to 
run in the European elections. 

Ms Harney was subse- 
quently elected party leader, 
defeating a challenge from Mr 
Cox. Then, earlier this year, 
she asked Mr O’Malley to 
reconsider his deriswin and to 
take ova- Mr Cox’s seat This 
he duly did. precipitating Mr 
Cox’s resignation from the 
party last month and his deti- 
shm to run as an independent 
The two were neck-and-neck 
as the successive vote trans- 


fers were counted, and the 
final result which gave the 
seat to Mr Cox, was only 
announced late on Monday. 
Nationally, the party only 
polled &5 per cent 

Ms Harney yesterday indi- 
cated that those party mem- 
bers who had supported Mr 
Cox's campaign should 'now 
resign. This could widen the 
spilt in the party. 

The PDs were formed in 
1985 by Mr O’Malley and Ms 
Harney, after tbey were 
expelled from Fianna Fail by 
its then leader, Mr Charles 
Haughey, for opposing his 
hardline policy on Northern 
Ireland, the contraceptive 


Correction 


German Free Democratic party 


Owing to & transmission fault yesterday's edition erroneously 
carried a list of German Free Democratic Party MEPs elected to 
the European Parliament In fact because the FDP scored less 
than 5 per cent of the vote in the elections in Germany, no MEPs 
from this party will sit in the new parliament 


issue and internal party 
democracy. 

It was Mr O'Malley’s threat 
to poll out of the 1989-92 
Fianna Fail-PD coalition over 
a series of scandals that 
brought about Mr Hanghey’s 
downfall in January 1992. His 
subsequent public fight with 
Mr Albert Reynolds, who 
replaced Mr Haughey as prime 
minister, over evidence they 
both gave to a public inquiry 
into the country’s huge beef 
industry, then brought about 
the collapse of the coalition 
and precipitated the November 
1992 general election. Hie 
report of that inquiry is expec- 
ted to be published shortly. 

Ms Harney has been a formi- 
dable performer in parliament, 
frequently overshadowing Mr 
John Bruton, leader of the 
main opposition Fine Gael 
party. But the PDs’ ambition 
to overtake Fine Gael as the 
main conservative voice in 
Ireland has now been seri- 
ously damaged by their Euro- 
election debacle. 



When the going was good: Desmond O'Malley, who failed to win 
a Strasbourg seat, campaigning in 1987 whoa party was rising. 


Search starts for Italian left-wing party chief 


By Robert Graham in Rome 


Mr Achille Occhetto’s 
successor as the head of the 
former co mmunis t Party of the 
Democratic Left (PDS) will be 
chosen by the party's 480- 
strong National Council, it was 
announced yesterday. 

Mr Occhetto resigned on 
Monday in the wake of the 
European elections in which 
the PDS fared badly. 

Mr Occhetto had been under 
pressure to step down since the 
March general election, but the 
timing of his move - and the 


bitterness of his resignation 
note - caught many of his col- 
leagues by surprise. 

The PDS, formed in 1991 and 
the largest opposition party, 
has procedures, as yet 
untested, for electing the lead- 
ership in circumstances such 
as these. The resignation of the 
communist party leader for 
personal or political reasons is 
unprecedented. The former 
communist party’s trad it i o n is 
embedded in the PDS psycholo- 
gy where the secretary-gener- 
al’s departure is only envis- 
aged for ‘objective reasons’. 


The contest to replace Mr 
Occhetto is expected to be both 
unpredictable and hard-fought. 
The most unpredictable ele- 
ment will be the role of the 
National Council, which, for 
the first time, will have to 
facilitate a democratic leader- 
ship contest 

Mr Stefano Rodota, one of 
the father figures in the PDS, 
was quoted yesterday as say- 
ing it was not simply a ques- 
tion of replacing Mr Occhrtto, 
but the entire top tier of the 
party. The implication was 
that they were all identified 


with the past of excessive con- 
trol at the centre of the com- 
munist party. 

Under Mr Occhetto the PDS 
was steered towards a social 
democrat philosophy, similar 
to the Social Democratic Party 
in Germany. But he failed to 
broaden its appeal beyond the 
old communist voters and lost 
a sizeable rump to hardline 
marxists who formed Recon- 
structed Communism. 

According to Mr Massimo 
Cacdari, PDS mayor of Venice 
and a possible contender far 
the leadership, Mr Occh et to's 


successor must be able to unite 
the left as a coherent attractive 
electoral force. Six groupings, 
from Greens to Socialists, 
formed the PDS-led Progressive 
Alliance in the election: in the 
new first-past-the-post voting 
system they stand little chance 
individually. 

The weakness of the small 
left-wing parties was under- 
lined yesterday by the resigna- 
tion of Mr Ottaviano Del Turco 
from the leadership of the once 
powerful but now insignificant 
Socialist party; and by the res- 
ignation of Mr Wilier Bordon 


from his role as coordinator of 
the Democratic Alliance. 

Only a year ago the Demo- 
cratic Alliance seemed ready to 
act as an umbrella under 
which the parties could 
regroup on the left. Involving 
former Communists, Republi- 
cans and Christian Democrats, 
it faded to get off the ground 
because the PDS was not pre- 
pared to co-operate. Continu- 
ing differences suggest the Left 
will take a long time to reor- 
ganise itself to challenge the 
right-wing coalition of Mr Sil- 
vio Berlusconi. 


The Gorman central bank will 
continue to rely on money sup- 
ply as a key guide to its mone- 
tary policy, but extra time may 
be needed to iron out recent 
distortions, Mr Hans Tiet- 
meyer, Bundesbank president, 
hinted Inst night 

The bank stood by the princi- 
ple of its policy based on the 
M3 measure of monetary 
growth, he said. This did not 
exclude consideration of the 
special factors affecting M3, or 
fine-tuning including the “time 
horizon". 

The issues would be dis- 
cussed at the bank's mid-year 
M3 review next month, he said 
at an international banking 
gathering in Frankfurt 

Mr Tietmeyer's comments 
suggest the bank is seeking to 
damp widespread criticism 
that M3 has been discredited, 
that the bank's own credibility 
has suffered as a result, and 
that the measure should be 
abandoned. 

A recent study from Gold- 
man Sachs, for example, attri- 
buted recent weakness in bond 
markets partly to the Bundes- 
bank's “ambivalent” attitude 
towards M3 growth rates 
which this year have far 
exceeded its target range of 48 
per cent In April, the measure 
was still growing at 15.4 per 
cent. 

The bank had sharply 
reduced interest rates despite 
months of excessive monetary 
growth, while at the same time 
c ontinuing to stress the infla- 
tionary dangers of growing 
liquidity. 

The study said keeping the 
current target range 
unchanged until the end of 
1995 was “the only theoreti- 
cally clean and credible solu- 
tion" to the bank's dilemma. 
The government's council of 
economic experts, the so-called 
"five wise men” has often 
suggested that the current 
practice of setting targets for 
one year at a time should be 
dropped. 

Extension of the 1994 target’s 
time-scale would allow more 
time for the absorption Into 
long-term investments of 
excess liquidity currently dis- 
torting the M3 data, and avoid 
the danger of a new 1995 target 
being disrupted from the out- 
set 

Although the 1995 M3 target 


is nut due to be set until nut 
December, the central bank 
may now feel that markets 
need more reassurance than 
has been available so far. 

Until now. central bank offi- 
cials have tended simply to 
insist that M3 must stay. Mr 
Tletineyer again stressed that 
money supply targeting 
remained a key indicator in 
Bundesbank policy. Altera* 
tlve strategies practised else- 
where in countries which had 
given up targeting had yet to 
stand the test of time, he 
added. 

While admitting the bank 
could not calculate the precise 
effects or the special factors 
distorting M3 at present, ft was 
by no means in a state which 
others had experienced in the 
past where it could no longer 
make any sense of money sup- 
ply growth, he added. 

He was concerned that 
recent disruptions - starting 
back in 1990 with German uni- 
fication - seemed to have 
affected M3‘s capacity as an 
effective indicator. But inter 
nal and external research had 
yet to suggest that the 
long-term relationship between 
money supply and inflation 
had been altered. 

Monetary targeting consti- 
tuted a part of Germany's sta- 
bility culture which would not 
be easy to give up. he said. 


THE FINANCIAL TIMES 


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FINANCIAL TIMES WEDNESDAY JUNE 15 1994 


NEWS: EUROPE 


3 


EUROP EAN NEWS DIGEST 

Berlusconi acts 
on pension fear 

Mr Silvio Berlusconi, Italy’s prime minister, yesterday held a 
special meeting of economic ministers to diBrngs (he impact of 
the constitutional court decision ordering pay men t of arrears 
on minimum pensions. The cost of mating (he payments in 
line with the court’s decision was estimated to be L30,000hn 
(£12-36bn) by Mr Clemente Mastella, the labour minister. Mr 
Lamberio Dini, the treasury minister, said before the meeting 
he had no details of how the estimated L30,000bn cost had 
been reached, but admitted the pansfans issue was a ’major 
problem’. 

Mr Gino Giugni, a former labour minister, sa id yesterday 
the Berlusconi government bad no alternative but to wafcp the 
payments. However, he voiced surprise at h»p Pdimah^ cost. 
The previous Ciampi government, he said , bad hiwi aware of 
the impending court decision and had rongirtowvt L16,000bn 
the upper limit. Both the stock market and the government 
bond market reflected continued nervousness because of the 
uncertain effect of funding the court decision on the public 
sector deficit. Robert Graham, Rome 

Greece confident over blockade 

Greece yesterday left a closed hearing at the European Court 
of Justice believing it had successfully defended its trade 
blockade of the former Yugoslav republic of Macedonia. For- 
eign ministry official Jannos Kranidiotis, who fwadpd a team 
of five Greek lawyers trying to stop an emergency court ruling 
forcing Athens to lift the embargo, said the European Commis- 
sion "did not bring any new elements" to the three-hour 
hearing. The EU executive had “Sailed to prove irreparable 
damage” was being done to the European Union as a result of 
the sanctions on Skopje, Mr Kranidiotis said. The nrarmriwritm 
has to show irreparable damage if it is to get a ruling against 
the embargo. Greece banned trade with Macedonia and the use 
of its Thessaloniki port to pressure it into chang in g Us flag 
and constitution, which Athens says hnpKp^ territorial ambi- 
tions on Greece’s own region of the same name. Mr Hans van 
den Broek, EU External Political Relations CranmtotoaBr , «a<d 
it was now up to the court to decide. It is not expected to rule 
for two weeks. Reuter, Luxembourg 

German retail sales down 6% 

German retail sales Ml a real 6 per cent during April, and 
were down 10 per cent on the comparable month last year, the 
federal statistics office said yesterday. Although the figures 
were distorted because the Easter shopping rush fell in March 
this year, economists said the decline confirmed expectations 
that shrinking real incomes were stifling private sector 
demand. The fall, widely forecast, followed an unexpectedly 
strong first quarter. The cumulative total shows real sales in 
the first four months were a real 2 pa- cent lower than in 1993. 
James Capel’s London office calculated that combining Mar ch 
and April data, and thus discounting the effect of the early 
Easter holiday, sales for the two months were 4 per cent lower 
year-on-year. According to the statistics office only drugs, 
cosmetics and paper and printed goods have managed year-on- 
year increases in the first four months. Clothing sales were 
down 4 per cent and turnover from road vehicles Ml 3 p ear 
cent Mail order deliveries were unchanged in the period, but 
other leading outlets showed sales declines of between 3 and 5 
per cent Christopher Porkes, Frankfurt 

New union federation chief 

Germany’s Federation of Trade Unions (DGS), under which 
the country's 16 unions are grouped, at its congress yesterday 
elected Mr Dieter Schulte as its new chairman in amove likely 
to usher in gradual reforms throughout the labour movement 
Although Mr Schulte, 54, cranes from the ranks of IG MetaD. 
Germany’s powerful engineering union, and the largest in the 
DGB, he is not expected to push the unions towards open 
confrontation with the government over its policies on unem- 
ployment 

Mr Schulte, considered a pragmatist, will have to decide how 
the DGB’s 11m members reconcile themselves with the slow 
shift away from centralised wage bargaining to more power 
being devolved to the works councils in separate enterprises. 
Of growing concern fra- the congress, which ends on Friday, is 
how it might respond to the consistent decline in union 
membership. Judy Dempsey, Berlin 

Hungary may grow only 1% 

Hungary’s central bank yesterday admitted that its latest 
interest rate increase could hold back economic recovery. Mr 
Almos Kovacs, deputy president of the National Bank of 
Hungary, forecast that GDP would grow by just l per cent in 
1994. The central bank’s internal projection, had been for 
output to bounce back by 2-3 per cent this year after falling by 
21 per cent between 1989 and 1993. Hungary, burdened by a 
gross foreign debt of $25-5bn, has been slower than Poland and 
the Czech Republic to emerge from the east Europe-wide 
recession. The NBH revised its economic outlook in the light 
of its decision last week to increase the base rate by three 
points to 25 per cent and raise “repo” rates by two points. The 
monetary authorities acted to reduce a current account deficit 
which last year exceeded 10 per cent of GDP. The central bank 
railed yesterday on the incoming Socialist-led government to 
play its part by cutting government spending. Mr Laszlo 
Bckrsi, the likely finance minister in the new admmstration, 
has committed himself to introducing a restrictive mini-budget 
later this summer. Nicholas Denton, Budapest 

ECONOMIC WATCH 


Inflation on the rise in Greece 


recce 

muai infeHon rate (%) 



Greece’s annnai inflation rate 
rose to 11 per cent in May 
from 10.4 per cent the previ- 
ous month, according to offi- 
cial figures released yester- 
day. Monthly consumer prices 
went up by 0.8 per cart in 
May. As in April, the increase 
resulted from a new tax on 
beating fuel and higher food 
prices. Increases in household 
rents and clothing prices also 
contributed. The govern- 
ment’s target of bringing the 
inflation rate down to 9J> per 
cent by the end of the year 
now looks difficult to achieve. 

1983 ■ Although a devaluation was 

waFTGtapftte averted following last 

inth’s lifting of capital controls, the drachma is expected to 
arecinte against other EU currencies. Analysts said higher 
oSfor imported goods over the next few months as a 
isequeno? S the drachma’s rece^depreoabo^ together 
^increased transport and utility prices, could add another 
, ofS^rcenta^points to the yearend rate. Enin Hope, 

Qrmin'g consumer price index rose 0.2 per cent in May, 
JSgthe annual inflation rate unchanged foam April 49 
rX according to the economy ministry. The nnmbra of 
SdSU dropped for the thud xtmihTmaiDS, 
/wv) * 0 <? cgm or 17.4 per cent. Daoid White, Madrid 
Portugal's consumer price index, excluding rents, rose &2 
S in May, compared with an mcreaseafOj percent m 
Ja the rational statistics institute said yesterday. Average 
Sual foliation was 6 per cent, unchanged from April, but 
STrrom River cent in May 1993. Yeawm-year inflation Ml 
MSMdl to 5.7 per cent in May. Peter W&& 

ffitotertandsche Bonk, the Dutch c entral b ank, towered 
ww money market intervention rate yesterday to 49 per 
■.•"LS^ner cent, as it offered Dutch banks five-day 
S&S special advance fadhty. 


Chernobyl fears cloud EU-Ukraine pact 

Partnership agreement signed yesterday aims at eventual creation of free trade zone 


By David Gardner in 
Luxembourg and 
JO Barahay In Ktev 

Mounting European Union 
fears about the safety of the 
Chernobyl nuclear plant in the 
former Soviet republic of 
Ukraine overshadowed yester- 
day’s vigTrmg 1 of a. partnership 
and co-operation agreement 
aimed at reaching a common 
free trade zone by around the 
end of the century. 

A similar accord with Russia 
is due to be initialled next 
week in Carfo at the summit of 
EU leaders. According to Mr 
Theodores Pangalos, European 
affaire minis ter of Greece, cur- 
rent EU president. President 
Boris Yeltsin has confirmed he 


will attend the meeting. 

Ukraine's President Leonid 
Kravchuk, in Luxembourg yes- 
terday for the signing, said be 
regarded the partnership 
agreement as a first step 
towards eventual Ukrainian 
membership of the EU. He did 
not raise the question of 
nuclear security. EU diplomats 
said. This is despite a letter to 
the Greek presidency from 
Chancellor Helmut Kohl of 
Germany and President Fran- 
cois Mitterrand of France, call- 
ing for action on Chernobyl to 

be “at the heart of our forth- 
coming summit”. 

Germany and France, with 
Wide harfring among their part- 
ners, want the summit to agree 
an a support framework for the 


overhaul of Ukraine's energy 
sector, to make possible an 
early shutdown of the Cherno- 
byl nuclear reactors. 

Mr Jacques Defers, European 
Commission president, told Mr 
Kravchuk that fears about 
Chernobyl bad pushed it near 
the top of the EU agenda. ”1 
think I can speak for all of us,” 
he said, “that the only solution 
is the complete and rapid do- 
sure of this nuclear facility. - ' 

Ukraine is stalling over clo- 
sure while it seeks alternative 
energy sources and a large 
payment from the west 

The nuclear power station is 
plagued with problems. 
Experts are currently search- 
ing for the source of a seven- 
day leak of radioactive water 


from a cooling pond where 
spent fuel rods are stored at 
reactor number 2. An official 
from Ukraine's nuclear super- 
visory body, Mr Boris Yukhi- 
rnenko, claime d that "no thing 
atarmmg has occurred” point- 
ing out that radiation levels 
are normal and that the reac- 
tor has been closed since a 1991 
fire. Meanwhile, two tons of 
contaminated water are leak- 
ing daily. 

The Franco-German initia- 
tive aims at providing new EU 
funds for the nearly exha usted 
Nuclear Safety Account, which 
is manag ed by the European 
Bank for Reconstruction and 
Development. 

It also wants the World Bank 
to play a central role in co-or- 


dinating efforts to develop 
safer and alternative energy 
sources in Ukraine. 

Senior German, British and 
French officials make clear 
that no figures for EU aid will 
be decided at Corfu, because 
the Union wants the US and 
Japan to pledge significant 
finance for the scheme at next 
month’s Group of Seven sum- 
mit in Naples. “We are after 
the maximum multiplying 
effect,” said one ambassador. 

Ukraine in recent months 
has talked of energy restruct- 
uring needs miming to around 
EculObn (£7.7bn). But officials 
say this is a long-term projec- 
tion, whereas the Franco-Ger- 
man letter indicates that what 
is needed now are funds suffi- 


cient to close Chernobyl and 
bring the reactors at Zapo- 
rodje. Khmelnftaki and Rovno 
up to western European safety 
standards. 

Mr Delons underlined to Mr 
Kravchuk that it was also an 
urgent priority for the EU that 
Ukr aine should sign the non- 
proliferation treaty. Until this 
was done, warned Mr Willy 
Claes, Belgian foreign minister, 
several member states would 
be unable to ratify yesterday’s 
agreement 

Despite the new closeness in 
the ElTs relationship with the 
east the partnership deal is 
meant to cement Belgium was 
the only member state to field 
a foreign minister at yester- 
day's signing. 


Brussels sets price for Greek airline debt write-off 


By Kerin Hope fai Athens 

Greece’s transport minister, Mr 
Yannis Haralambatis, feces a grilling 
today from the European Commission 
over the government’s request to 
write off Dr49Xba (£1.3bn) of debt 
incurred by Olympic Airways, the 
loss-making state carrier. 

Brussels is d emand i ng considerable 
changes in return for its accept an ce 
of the debt write-off and a Dr53bn 
capital injection over the next three 


years. Olympic would have to end its 
monopoly of ground handling facili- 
ties. It would also have to open up to 
other carriers profitable domestic 
routes to the Greek islands from next 
year rather than in 1998, the present 
date for deregulation of Island routes. 

The government would no longer 
be allowed to set ticket prices or 
interfere in management. No further 
stale aid would be p ermitte d and the 
airline's loans could not be guaran- 
teed by the state. 


The country’s civil aviation author- 
ities would have to speed up the ton- 
ing of operating licences to private 
Greek airlines, and let to compete 
head-on with Olympic on scheduled 
services. The three new airlines 
licensed to operate since deregulation 
was launched in 1993 are all regis- 
tered as charter carriers, although 
they operate regular flights to Grade 
and Euro pe an destinations. 

The Commission’s proposals, out- 
lined in a letter to the Greek govern- 


ment, go well beyond the measures 
foreseen in Olympic's restructuring 
plan, which as submitted in Brussels 
last month. 

Mr HaraJambous is expected to 
argue that maintaining control of the 
ground handling operation, which 
brings in DrSObn a year or 15 per 
cent of Olympic’s operating income, 
is crucial to returning the airline to 
profit by 1997, as envisaged by the 
plan. However, other airlines com- 
plain that restric ti v e working prac- 


tices and bureaucratic delays mean 
ground handling at Greek airports is 
more expensive and less efficient 
than elsewhere in the EU. 

Under the restructuring plan, 
Olympic has already agreed to freeze 
salaries for the next two years, cut 
loss-making long-haul routes, and 
^iim mate 1,500 jobs through an early 
retirement programme. The airline 
projects operating losses of Dr24bn in 
1994, with accumulated debt rising to 
Dz550bn. 








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¥^m, *Mr.AI. TIMES WEDNESDAY JUNE 15 1VM 


NEWS: INTERNATIONAL 


Israel security 
‘still torturing 
Palestinians’ 


By Julian Ozanro hi Jerusalem 


Israel's security forces are 
continuing systematically to 
torture and abuse Palestinian 
detainees, using beatings, 
physical force, abusive body 
positioning, sensory depriva- 
tion and psychological pres- 
sure, according to an interna- 
tional human rights 
organisation. 

A 316-page report released 
today by the New York-based 
Human Rights Watch claims 
the abuses have continued 
despite last September's Israe- 
li-Palestinian peace accord. Of 
the 36 cases documented, 10 
are said to have occurred since 
the peace agreement. The 
abases are not Isolated 
excesses but constitute a pat- 
tern that could persist only 
with the acquiescence of the 
government of Israel,” the 
report says. 

Human Rights Watch niaiwis 
Israeli interrogators use a “sys- 
tem ised, co-ordinated and 
increasingly painful regime of 
physical constraints and psy- 
chological pressures” over 
days and weeks, “in a manner 
calculated to inflict extreme 

pain and m^nfal an gnreh with- 
out leaving lasting physical 
traces”. 

The Israeli Defence Force 
command last night said it 
“unequivocally denies” allega- 
tions it uses torture to obtain 
confessions. “Any means of 
torture or violence against 
detainees is forbidden under 
Israeli law and any confession 
extracted against the free will 
of the detainee is inadmissible 


as evidence,” the IDF said. 

Hitman Rights Watch blames 
Israeli doctors and medics for 
complicity in torture and 
ill-treatment of Palestinians 
during interrogation by secu- 
rity officers and soldiers. 

The report carries an inter- 
view with an Israeli sergeant 
who says he beat a blindfolded 
Palestinian suspect with a 
club. The sergeant claims he 
broke many bones and that 
other interrogators would 
sometimes pour a liquid like 
arid on suspects' wounds. 

Of the ex-detainees inter- 
viewed, 42 per cent alleged 
they were beaten on the testi- 
cles; 94 per cent said they had 
bam deprived of sleep for up to 
several days; 29 per cent said 
they had been deliberately 
placed in over-cooled rooms, 
and 59 per cent said they had 
been shackled to pipes or rings 
embedded in the wall. 

Israel admits certain prac- 
tices, including hooding sus- 
pects with canvas bags, confin- 
ing them to small chairs anrl 

using moderate physical pres- 
sure. But Israel says all these 
physical methods are highly 
regulated and do not add up to 
torture and ih-treatment 

Mr Uri Dromi. government 
spokesman, said: “Basically, 
we welcome this report 
because we think no country 
or organisation is above criti- 
cism. We always use these 
reports to check ourselves and 
see where if at all we were 
wrong, and how to improve 
ourselves and refrain from 
exceeding what the law 
allows”. 


Correction 

OAU meeting 


Because of an agency error, a 
man pictured in the Financial 


Times yesterday with South 
African President Nelson 
Mandela at the Organisation of 
Afri can Unity s ummit was mis - 
id entitled as his Zambian coun- 
terpart. Zambian President 
Frederick CMIuba is not in fact 
leading his country's OAU del- 
egation. 


Libya ‘absolved’ 
over Lockerbie 


Libya said yesterday a rfamt 
by a follower of guerrilla 
leader Abu NMal that he blew 
up a US airliner over Locker- 
bie hi 1988 absolved it of 
responsibility, Reuter reports 
from Tunis. In Beirut, how- 
ever, where Youssef Shabaan 
is on trial on other charges, 
prosecutors deified he had 
made such a confession. 


Significant chapter ends, but more follow 


In September 1991 
more than 30 senior 
employees of the Bank 
of Credit and Com- 
merce International in 
Aim Dhabi were sum- 
moned to what they 
were told was a “man- 
agement meeting". 

To their surprise, on the a ggryfy 
was their detention an the grounds of 
alleged involvement in the frauds at 
BCC1 that had led two mnn«ig previ- 
ously to the closure of the bank by 
regulators around the world. 

The announcement yesterday of the 
conviction of 12 of them marks the 
conclusion of a Ki gnfflrant chapter in 
efforts by prosecutors around the 
world to bring to justice a large num- 
ber of the perpetrators of probably the 
largest banking fraud ever. 

It leaves the question of punish- 
ment for the most senior executives of 
BCCL and does little for hundreds of 
thousands of depositors, employees 
and creditors seeking compensation. 

Of those rounded up in Abu Dhabi 
nearly three years ago, several were 
released quickly and others followed 


Andrew Jack on convictions in probably the largest bank fraud ever I 1^ 


after an initial report by the public 
prosecutor. That left 14 who were for- 
mally charged in July last year. 

Arguably the most etgnifjeant of the 
accused, Mr Agha Hasan Abedi, the 
founder and president of BCCL who 
was sentenced to eight years, was 
tried in his absence. He has lived in 
ailing health in Pakistan for several 
years. 

All efforts to extradite him have 
proved fruitless - by Abu Dhabi and 
by the OS authority whore he was 
indicted last July for fraud, bribery, 
conspiracy, larceny and racketeering. 

Mr Abedi's assistant, Mr Swaleh 
Naqvi, who was BCCTs chief execu- 
tive and wrote a series of confessions 
to Abu Dhabi im plicating himself and 
Mir Abedi to 1990, was sentenced to 14 
years. 

Mr Naqvi was sent under an agree- 
ment with the Abu Dhabi authorities 
to the US in May, where he is due to 
stand trial an three sets of federal 
charges and one set brought to New 
York state. 


Under the agreement, the US 
authorities may agree to return him 
to Abu Dhabi once he has served out 
any criminal sentences in the US. But 
they also reserve foe right to hand 
him over to other govern m ents first 

A third BCCI e xecutive convicted 
for three years yesterday was Mr 
Zlaurfrfln Ah Akbar. former head of 
the bank's treasury, who was last Sep- 
tember sentenced to six years impris- 
onment in the UK after pleading 
guilty to 16 charges of false account- 
ing involving more than 8745m. 

Of the remaining Ll, Mr Aijmand 
Naqvi has since died. Mr Iqbal Rizvi, 
who had been released an bail, was 
acquitted yesterday on charges of 
assisting cither executives in the forg- 
ery and concealment of loans. 

The remaining nine have been held 
to detention at the Police Officers’ 
Club to Abu Dhabi since their arrest, 
and taken periodically to court 
appearances since last October, when 
their trial began. 

Three were sentenced yesterday to 


six years »»™h- Mr Zafrr Iqbal, head Of 
BCCTs Emtratw; branch. Mr Hassan 
Kami, primarily responsible for man- 
aging money stolen from the Abu 
Dhabi royal family, and Mr Abdul 
Hafeez, company secretary. 

The rest received three years each: 
Mr Fakhir Hussain, an account officer 
in Abu Dhabi. Mr Mohammed Azma- 
faiiiah, who was one of Mr Naqvi 's top 
ass ista nts in London, Mr Ameer Sid- 
diqi and Mr imtina Ahmad, who both 
sat on BCCTs loan authorisation com- 
mittee, Mr Naseem Sheikh, who 
worked to the treasury department, 
and Mr Bashir Tahir. 

All of those found guilty are also 
required in the judgment to meet civil 
Haim*; brought against them by the 
Abu Dhabi for $9bn to compensation 
for money allegedly stolen from the 
royal family and government bodies. 

A number of details remain to be 
answered over the sentencing, includ- 
ing how much more time they will 
spend to prison if unable to pay off 
the $9bn claim and whether they or 


the prosecution will appeal their sen- 
tences in the next two weeks. 

la August last year a US Jury 
acquitted Mr Robert Allman, a Wjofe. 
ington lawyer accused of prdftttnt 
from loans given by BCCI to enafab 
him to buy shares in First Amwfcta 
the bank of which he was pnsttat 
After the collapse of this and otter 
cases, the authorities are Kara tores 
Mr Naqvi prosecuted. 

In the UK. two others connected 
with BCCI have been prosecuted. Last 
month Mr Nazmudm V Irani, the ft*, 
mer head of Control Securities, was 
jailed far 2*'* years for fraud rotating 
to his business dealings with BCCL • 
Mr Mohammed Baqi. tha former 
managing director of Attack OB, wm- 
convicted in February of cooqririgg 
fraudulently to inflate BCCTs profit* 
and fined £120.000 plus costs, 

The trial is continuing of Mr Imren 
Imam, a former BCCL official who 
denies six charges including cumpto 
tog to conceal documents, falsify 
records and furnish false information. 


Killing s raise fears of Kurdish violence 


By John Murray Brown 
in Ankara 


The Wiling of at least 12 people 
during a funeral procession in 
northern Iraq has raised fears 
of new violence between rival 
Kurdish groups, threatening a 
10-day-old ceasefire, disrupting 
vital aid efforts, and raising 
doubts about the durability of 
the self-administered Kurdish 


region. 

Monday's incident to Sulei- 
maniya near the Iranian bor- 
der occurred as rival leaders - 
Mr Massoud Barzani of the 
Kurdistan Democratic Party 
(KDP) and Mr Jalal Talabani of 
the Patriotic Union of Kurdi- 
stan (PUK) - were meeting 
under Turkish auspices to 
review the tentative ceasefire 
to end a month of clashes lead- 
ing to 300 deaths. 

The killings, at a funeral of a 
KDP mflitiarnan could hardly 
be worse-timed for the nascent 
Kurdish leadership, striving to 
preserve its power-sharing 
experiment. The violence 
comes as Turkey’s parliament 
is due to debate the mandate 
for Operation Provide Comfort, 
the Turkish-based allied air 
operation set up to protect the 
Kurds. The clash coincides 


Kurdish refugees from fighting to Iraq erter the 15th day of a hunger strike outride the UN offices to Moscow yesterday. They ore 

dgrmnirfiiq r vleac tn a wpgtora Rmupero cnnnfay and haw thre aten ed to fast to death. 


with renewed UN efforts to win 
donor-support for relief efforts 

to fraq. 

The Kurdish zone is a legacy 
of the safe havens set up by 
the allies to 1991 to repatriate 
sane 500,000 civilians who had 
fled to Turkey and Iran in the 


wake of Saddam Hussein's 
onslaught. Since May, foe UN 
estimates 25.000 people have 
been displaced by the fighting 
between rival militia. The 
haven is now to effect parti- 
tioned. with the KDP dominat- 
ing the northern area along the 


Turkish border; the PUK con- 
trols the southern area centred 
on Sulemaniya. Aid workers 
have warned the Kurdish lead- 
ership they may have to curtail 
the operation unless security 
improves. The Germans have 
suspended aid operations. 


Earlier, Mr Mohammed 
Zejjari UN coordinator for 
Iraq, said he planned to call a 
meeting to win new aid pledges 
under the $2S0m (£lS6m) 
requested in this year’s pro- 
gramme. Only a few million 
dollars have been provided. 


Iran to let 


private 
banks open 


Iran has decided to lot 
privately-owned banka open 
from next wwsk fur the first 
time since the Islamic revolu- 
tion to 1979, Reuter report* 
from Nicosia. 

Mr Mohammed Hussein 
Adeli. central bonk governor, 
was quoted by Tehran radio as 
saying the bunk wuuM sapor 
vise the private banks ‘‘and 
therefore guarantee their activ- 
ities’*. Mr Adeli said regula- 
tions for private banks had 
been approved by the govern- 
ment and a Money and Credit 
Council and declared to be 
within constitutional and reb- 
gtous laws. 

"The banks would be able to 
take deposits and participate In 
production and economic activ- 
ities nationwide, u he said. 

Iran nationalised private 
b anks at the start uT the revo- 
lution. There are five existing 
state-owned banks. Foreign 
banks have representative 
offices in Tehran. Initial capi- 
tal of a private bank should be 
at least 5bn rials (£l.Sm). No 
bank would be allowed to lend 
more than 15 Uznes its depos- 
ited capital. Mr Adeli said. 


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5 



FINANCIAL TIMES WEDNESDAY JUNE 15 1994 


NEWS; INTERNATIONAL 


* ■*'«» to 
private 

tuuiks 


open 






.« ,* ‘ 


Manila sees 
deficit double 


By Jose Gatang in Manila 


The Philippines' current 
account deficit reached $ 676 m 
(£450m) in the first quarter, 
raore than double the figure of 
8297m a year-ago . 

According to data released 
yesterday by the co untry 's cen- 
tral hank, however, a sharply 
higher net inflow in the non- 
monetary capital account of 
$l.l6bn, up from {849m last 
year, more thqn mmpgng^^ 

A bigger trade deficit, up 30 
per cent to £L66bn, resulted 
mainly from increased imports 
of capital goods and raw mate- 
rials, which the central hank 
said “reflected the bullish 


investment climate" during the 
period. 

Helping ease the pressure 
were the accelerated growth in 
exports (up 17 JB per cent to 
{9-Qhn) and s ubstantial gsnnq 
In short-term capital and for- 
eign investments (np 36 per 
cent to fU6bn), boosted by 
proceeds from the partial pri- 
vatisation of Petron, the state- 
controlled oil refining and mar- 
keting company. 

Net foreign investments, bol- 
stered by the {502m payment 
for 40 per cent holdings in 
Petron that Saudi Arabia's 
Aramco group won fa a bid- 
ding, grew 114 per cent to 
{548m. 


Trade unions in 
campaign to 
halt child labour 


The International 
Confedera tion o f Free Trade 
Unions (ICFTU) launched a 
global campaign yesterday to 
eradicate child labour, includ- 
ing a boycott of exports made 
by exploited, under-age work- 
ers. Reuter reports from 
Geneva. 

Mr Rnzo Friso, general secre- 
tary of the world’s Largest 
international labour grouping, 
took the case for a link 
between trade and labour con- 
ditions to Mr Peter Sutherland, 
chief of the General Agreement 
on Tariffs and Trade. “This 
shameful phenomenon has 
grown over the last years," Mr 
Friso told a news briefing in 
Geneva. “It is a serious prob- 
lem which requires state inter- 
vention. 

“We are going to campaign 
for a boycott to stop goods 
made by children from gaining 
access to foreign markets,” he 
added. 

In a new report, the Brus- 
sels-based ICFTU says from 
100m to 200m children under 15 
are waking in streets, facto- 
ries and mines, mainly In 
South Asia and Latin America. 

They include children work- 
ing in coal mines in Colombia, 
gold mines in Peru, as con- 
struction workers in Bangla- 
desh, as “slaves" in Pakistan 
weaving carpets, sweet ven- 
dors in Mexico, and In garment 
factories in the Philippines. 

The 13-page report, “Child 
Labour: the world's best kept 
secret", co ntains documenta- 
tion from ICFTU affiliates on 
abuses in India, Bangladesh, 
Nepal, Mexico and the Philip- 
pines. 

“A n umb er of m ultina ti onals 


are currently rmriar investiga- 
tion by ICFTU experts," it 
says. “All companies discov- 
ered to be using child labour 
will be exposed and the compa- 
nies will be the target of spe- 
cial wnfan campaigns." 

Mr Bjome Grimsrud, ICFTU 
campaig n organiser, declined 
to name suspected multina- 
tionals but said: “It is impor- 
tant to get to the subcontrac- 
tors level because that is 
where you find the child 
labour.” 

In a statement, ICFTU said 
the campaign would include an 
international boycott of hand- 
woven carpets from Nepal, 
India and Pakistan, unless they 
wov labelled with a guarantee 
that child workers were not 
involved in production. 

The ICFTU has 174 labour 
union affiliates in 124 coun- 
tries, representing 120m work- 
ers. During the cold war it 
campaigned for workers' rights 
in Communist countries. 

The appeal was made on the 
fringes of the annual meeting 
of the International Labour 
Organisation, whose director 
general, Mr MTchal Hansenne, 
is also pressing for workers’ 
rights to be closely tied to 
global economic and trade dedr 
mens. 

Mr Friso called for a “social 
clause” to be used as an inter- 
national weapon against child 
exploitation and other abuses 
of workers’ rights at the future 
World Trade Organisation. 
“We want a sodal clause ... to 
prevent the import of goods 
from a country when its gov- 
ernment does not take mea- 
sures against exploitation of 
children," he said. 


Call to free Kashmiri fighters 


Pakistan regret on 
kidnapped Britons 


By Farttan Bokhari In 
Islamabad, Pakistan 


The P akistani government 
yesterday expressed regret that 
the two Britons, Kim Housego 
and David Madde. kidnapped 
by gunmen in Indian-adminis- 
tered Kashmir last week, had 
still not been released. 

A foreign office official in 
Islamabad also called era. the 
Indian government to release 
Kashmiri fighters, detained “in 
violation of all legal, moral and 
humanitarian norms”. 

The relatives of the two cap- 
tives had earlier approached 
Pakistani authorities to use 
their influence. The group 
holding the hostages, the Har- 
kat-ul -Ansar, has offices in 
both Indian and Pakistam-ad- 
ministered Kashmir territories. 


A number of groups of Kash- 
miri activists, as well as the 
semi-autonomous government 
of the Pakistani-administered 
side, have called an the captors 
to release the two hostages. 

Mr Mohammed Farooq Kash- 
miri. leader of the group, says 
he has ordered his mujahideen 
(freedom fighters) to release 
them. But the group says it is 
not able to ensure the release 
due to an Indian military pres- 
ence In the area where the cap- 
tives are being kept 

Trvfian o fficials have assured 
Mr David Housego, a former 
Financial Times Journalist and 
Kim's father, that the gunmen 
will he given safe passage if 
they agree to return the two 
Britons. But it is not clear if 
such assurances will satisfy 
the gunmen. 


Indonesian police 
arrest activists 


Indonesian police have 
detained two leading labour 
activists and summoned a 
third in an apparent crack- 
down linked to riots which 
swept Medan city in April, 
Reuter reports from Jakarta. 

Diplomats said the moves, 
which included interrogating 
Mr Much tar Pakpahan, a 
labour leader, may be partaj a 
wider effort to discredit Indon- 
esia’s nascent labour move- 
ment by linking it ifh 
lug unrest directed at the 
ethnic Chinese minority. 

Labour rallies in Medan m 
April were the dimax of grow- 
ing worker unrest in economi- 
cally vibrant Indonesia as 
activists tapped a grooms 

resentment at low wages and 
working conditions 


poor wunku*6 ’rr'iTAM 
among the nation’s Sum-strong 


workforce. The rallies exploded 
into ethnic violence directed at 
the town's Chinese minority, 
which as elsewhere in Indon- 
esia controls much of the econ- 
omy. The militar y has Warned 
the independent In do nesia Wel- 
fare Labour Union for the 
week-long rioting, in which 
one person was killed and cars, 
factories and shops smas hed. 

The unrest, the country's 
worst ethnic rioting in years, 
has been followed by sporadic 
and sometimes violent strikes 
across the province of north 
Sumatra. Last week, strikers 
held three factory employees 
hostage in a tense stand-off 
with local police and mffitaiy 
forces. Residents said yester- 
day ffie factory, in Pemateng 
Siantar south of Medan, had 
resumed partial operations. 



China voices 
doubts on HK 


land measures 


By Simon Hofoerton 
in Hong Kong 


Heavily armed forestry police check the documents of a lorry d ri ver carrying timber at Li River in China’s Tinman province. 
Valuable indigenous timber, for state use only, has been smuggled out of the country or sold on the Mack market 


China has expressed doubt 
over the measures announced 
last week to cool Hong Kong's 
overheated property market 

Mr Lu Ping, Beijing's top 
official on Hong Kong affairs, 
told a delegation of Hong Kong 
businessmen visiting Beijing 
that is concerned that 

the greater effect of the mea- 
sures will take place after 1997, 
when Hong Kong reverts to 
China , rather than before. 

Last week, the Hong Kong 
government announced mea- 
sures, including a proposed 
increase in the supply of land 
and a reduction in the pre-sale 
of flats. Analysts a nd leading 
house-builders such as Mr Li 
Ka-shing said they thought 
the measures would help 
restrain the growth in house 
prices. 

The increase in land supply 
(70 hectares more than 
planned) was seen as having 
the biggest effect in the 
medium term, and analysts 
expect it to have a downwards 
effect on prices. It is, however. 


the one major measure which 
also needs China's assent 
as Beijing has a role in the 
allocation of land in Hong 
.Kong. 

Mr Lu was quoted as saying 
Beijing did not want to see big 
fluctuations in land and prop- 
erty prices after 1997. "We 
hope to see stability. The over- 
heated property market defi- 
nitely has to be cooled, but it 
has to be cooled gradually," he 
said. 

His comments may reflect 
concern in Beijing about the 
possibility of presiding over a 
slump in house prices just as 
China resumes sovereignty. In 
voicing them. Mr Lu kept Chi- 
na’s options open. He said the 
issue ought to be discussed in 
the Sino-British land commis- 
sion, the body which will have 
to approve an increased alloca- 
tion in land. 

House prices have fallen sig- 
nificantly since the govern- 
ment said in March it would 
intervene in the market. Inves- 
tors believed last week's mea- 
sures would depress prices fur- 
ther and accordingly marked 
down property shares. 




I 










6 


FINANCIAL TIMES WEPNESOAY JUNI- 15 1994 


NEWS: WORLD TRADE 


Bonn offered as base for WTO 


By Frances WilBams in Geneva 

The German government 
yesterday submitted its formal 
offer to site the future World 
Trade Organisation in Bonn, in 
a hopeful but probably forlorn 
bid to tempt the WTO away 
from the Swiss city of Geneva, 
home of the General Agree- 
ment on Tariffs and Trade. 

Hie German offer came just 
a day before the bid deadline, 
in a letter from Ur GQnther 
Kesrodt, economics minister, 
to Mr Peter Sutherland, the 
Gatt director-general, and Mr 
Andris Szepesi. chairman of 


the Gatt contracting parties 
(members). A decision on the 
location of headquarters for 
the WTO, which is due to 
supersede Gatt neat January, 
is planned before the August 
break. 

No other contenders are 
expected. Singapore has denied 
it is a candidate (though it 
hopes to host the first ministe- 
rial meeting of the WTO). 

Details of the German and 
Swiss offers will be given to 
members of the WTO prepara- 
tory committee today. German 
officials said yesterday that the 
WTO had been offered even- 


tual possession of the new fed- 
eral parliament building over- 
looking the Rhine once its 
present occupants moved to 
Berlin in 1998. 

In the meantime, the WTO's 
500-plus staff would be housed 
in a new building close to the 
old parliamentary chamber 
which would serve as a meet- 
ing and conference room. 

Switzerland is offering Galt’s 
present lakeside headquarters 
and construction of an adjoin- 
ing conference room. The 
Swiss package also Includes 
more generous terms on immu- 
nities and privileges for WTO 


staff and diplomatic micnnng 
than Gatt now enjoys, anH a 
more relaxed approach to 
gra ntin g work permits for fam- 
ily members - two important 
gripes among Geneva's inter- 
national community. 

A lt hou gh Bonn says it will 
pay towards removal costs, 
trade diplomats say the 
expense ami upheaval involved 
in moving from Geneva almost 
certainly rule it oat 

For many poor countries, the 
expense of establishing a new 
specialist diplomatic mission 
in Bonn would be prohibitive, 
whereas in Geneva a single 


mission can cover the range of 
international organisations. 
Gatt's present staff has also 
shown a marked lack erf errthn- 
siasm for the idea. 

Moreover. Germany's EU 
partners are unenthusiastic. 
especially France which has 
already declared itself for fran- 
cophone Geneva. “The WTO’s 
presence in Geneva means 
French is one of the three 
working languages, which is 
good for the influence of our 
country and our culture," Mr 
Gerard Longue t, French trade 
minister, told the French par- 
liament last month. 


Australia investment rules probed 

Nikki Tait on quest to take the whim factor out of foreign venture approval 


W hen an Australian 
parliamentary 
inquiry revealed last 
week that prime minister Paul 
Keating had suggested three 
years ago that Mr Conrad 
Black, the Canadian media 
tycoon, was more likely to be 
allowed to take control of Aus- 
tralia’s Fairfax newspaper 
group if it laid off “barracking 
for” his opponents, the prickly 
issue of foreign investment 
was placed firmly on the politi- 
cal agenda. 

For one thing, the idea that 
editorial parameters were trad- 
able for an Investment position 
did not go down well. Even 
more serious was the question 
of whether it was desirable 
that foreign investment deci- 
sion-making should be allowed 
to be subject to such political 
whim. 

Foreign Investment is a 
tricky enough issue for any rel- 
atively small economy. And 
while there has been some 
unhappiness over the country’s 
relatively permissive invest- 
ment rules, the main concerns 
centre - Mr Beating’s “offer” 
aside - on the discretionary 
and often unaccountable way 
in which the policies seem to 
be applied. 

Under the spotlight is the 
Foreign Investment Review 
Board, a non-statutory body, 
which has no published consti- 
tution or rules of procedure. In 
theory, the Firb’s job is to 
advise the Australian Trea- 
surer (finance minister) on the 
3,0004,000 foreign investment 



Willis, left: asking for reasons is 'not unreasonable’. Blade received investment ‘offer’ 


deals that arise each year, 
allowing the latter to make the 
decision, at least in significant 
cases. (Flrb itself consists of 
four individuals, backed up by 
a number of nfffiBiafc operating 
as a branch within the trea- 
sury). 

But in reality, say invest- 
ment bankers, big decisions 
are simply announced, with a 
paucity of reasoning provided, 
and no indication of whether 
the Treasurer has taken the 
advice of Fob officials, or acted 
for some separate, perhaps 
politically-inspired, reason. 

“It's excessively secretive,” 
says Mr Paul Binstead, former 
joint head of Schraders' invest- 
ment banking arm in Australia 
and currently moving to 


County Natwest “Personally, 
I’d like to see decisions 
removed from the political 
arena.” 

Part of the problem is that 
the Flrb operates in the con- 
text of a permissive, but impre- 
cise, regime. The country first 
introduced rules on foreign 
investment in the mid-1970s, 
but then relaxed them signifi- 
cantly at the end of the 1980s. 
In essence, the stance today is 
that foreign investment is wel- 
comed unless it is shown to be 
contrary to the national inter- 
est-some would say a sensi- 
ble, but discretionary standard. 

In certain sensitive areas, 
such as the media, more pre- 
cise rules apply. But even 
these can shift. As the Senate 


committee's report on Fairfax 
noted with regard to newspa- 
per ownership: “From a posi- 
tion of absolute restriction in 
the early -19B0S, the policy 
flirted with total liberalisation 
in the late- 1980s, before moving 
on to the compromise positions 
of foreign shareholdings of 20 
per cent in 1991 and 30 per cent 
in 1993." 

The Firb's formal scope, 
meanwhile, allows it to exam- 
ine the acquisition of any 
shareholding above 15 per cent 
in any company with assets of 
more than AS5m (£2.4m). 

While agreeing that the cur- 
rent arrangements are not 
ideal, the multi-party senate 
committee is split over what 
should be done. The opposition 


senators are railing for a new, 
single foreign investment stat- 
ute that brings together the 

different exemptions or limita- 
tions applying to rliffarant sec- 
tors (such as banking, pierfia 
and so on). They fall short of 
demanding a precise definition 
of “national interest", but sug- 
gest that a set of criteria to be 
used in determining applica- 
tions by foreign investors be 
delineated. 

They would also like the flrb 
to become a statutory body, 
allow ed to wiakp binding deci- 
sions for certain classes of 
applications which, in turn, 
would be subject to administra- 
tive law review. The remain- 
ing; “more significant" applica- 
tions would be handled by the 
the Treasurer, who would be 
obliged to provide an accompa- 
nying statement of reasons in 
each case. 

The Labor part)' senators, 
who triadp up a min ority an the 
committee, are content to rec- 
ommend a “more open and 
consultative process’* and “a 
comprehensive system of noti- 
fication. involving publication 
of significant decisions, rea- 
sons for them and any special 
conditions". 

Either way. it seems likely 
that some changes will emerge. 
Mr Ralph Willis, the Treasurer, 
has already conceded that “for 
important issues . . . it's not 
unreasonable that we should 
give some reasons". 

And that, say the system's 
critics, would at least be a step 
in the right direction. 


Presidents 
of G3 
nations 
agree pact 

By Sarita Kendall in Bogota 


The presidents of Colombia, 
VenetPefai Mexico - the 
Group of Three <G3) - yester- 
day signed an agreement to 
phase is a free trade pact over 
10 years and create a common 
market of 140m people. 

The pact, which comes Into 
effect on January 1 1995, was 
thrashed out between negotia- 
tors over the past three years 
and was signed on the eve of 
the meeting of Ibero-American 
heads of state in Cartagena. 
Colombia's trade minister. Mr 
Joan Manuel Santos, called 
the trade pact “the most 
important trade accord in Col- 
onflaan history*. 

Most agricultural products 
ynH the vehicle industry will 
have special treatment 

The car sector, in which 
ctbwTT flfttomMfln an d Venezue- 
lan producers fear competition 
from much larger Mexican 
competitors, is to be included 
over a 13-year period and 
Venezuela will also be given a 
two-year grace period before it 
is compelled to dismantle tex- 
tiles ta riffs. 

Colombia’s industrialists 
have raised serious objections 
to the agreement and recently 
asked the government not to 
sign it, saying that it favours 
Mexico too strongly. 

Although Congress still has 
to ratify the treaty, both presi- 
dential candidates in Sunday’s 
election have given it their 
support. The G3 partners 
agreed to seek further free 
trade pacts with Central Amer- 
ican and Caribbean states and 
to build on the pact as a cor* 
nerstone of Latin American 
integration. Ecuador has 
already shown interest in join- 
ing the G3. 

Colombia and Veneznela 
also hope that the new agree- 
ment will be a step towards 
joining the North American 
Free Trade Agreement which 
Mexico entered on January 1 . 

Meanwhile, trade between 
Colombia and Venezuela, 
which soared during the 
last two years, has again 
fallen is recent weeks as a 
result of a sharp devaluation 
in the Venezuelan currency. 


NEWS IN BRIEF 


S Korean train 
contract sealed 

GEC-Alsthom. the Angltv French group, yestordav signed a $2.1 to 
(£i. 4 bn) contract with South Korea to provide grande yUone 
trains (TGV) Tor the country's new high speed rail system, writ™ 
John Barton in Seonl. 

The deal will be financed by a £L31m loan from a consortium of 
French banks led by Banque Indosurc. ^ 

The contract signing in Seoul concludes trow years ox nogotia- 
tions that involved GEC-Alsthom. Siemens of Germany and Mit- 
subishi of Japan competing for fhe prestigious rail contract. 

GEC-Alsthom offered a low bid and extensive technology trans- 
fers to win the contract to provide 46 locomotives whkh will run 
on a 410km track between Seoul and the port city of Pusan. AH 
but two of the trains will be assembled or built in South Karra by 
three main subcontractors, including Hyundai Precision & Indus- 
try, Daewoo Heavy Industries and Har\)m Heavy Industries, with 
localised production amounting to 50 per cent 

Japan backs KL airport 

Japan is to provide Malaysia with a M$l«’bn iDfcfim) soft loon 
for the construction of a new international airpurt south of Kuala 
Lumpur, writes Kieran Cooke in Kuala Lumpur 

Mr Hideaki Tanaka, a director of Japan’s Overseas Economic 
Cooperation Fund (OECF). said that the loan would be charged 
at 3 per cent annual interest repayable over 2 f* years. Final de t ai ls 
of the loan package are being worked out by Japanese and 
Malaysian officials. 

K uala Lumpur's new airport, expected to cost of MSl&sba. Is 
one of south-east Asia’s biggest infrastructure projects. Originally 
an Angio-Japanese consortium made up of Trafalgar House. GEC. 
Balfour Beatty. Gammon and Marubeni of Japan were given the 
contract for the airport’s project management and development 
However, the consortium has been disbanded following Malay- 
sian ban on giving government contracts to British companies. 

Invisible trade exceeds 40% 

Global invisible transactions exceeded 40 per cent of total world 
trade for the first time last year, reflecting several years in which 
trade in services and income from assets held abroad have 
increased faster than merchandise trade, according to estimates 
published by British Invisibles yesterday, writes Peter Norman in 
London. 

British Invisibles, which promotes the export uf UK-based 
financial Institutions and professional and business services, said 
it estimated that commercial invisibles, consisting of trade In 
services and income from assets abroad, accounted for 34.4 per 
cent of world trade last year while non-commercial transfers 
made up a further &2 per cent of the total. 

Reviewing recent trends. British Invisibles said that world 
invisible trade had increased by 153 per cent in dollar terms since 
1964. compared with a 97 jier cent inereiise in visible trade iu the 
same period. Commercial invisible transactions accounted for 30.4 
per cent of world trade in 1984 while non-commercial transfers 
were 4.1 per cent rtf total trade. Britain generated a $l5.1bn 
(£10bn) surplus from commercial invisible transactions m 1991 
This, according to British Invisibles, was the world's third largest 
after the US and Switzerland, -imt more than double the UK's 
STbn commercial invisible surplus m 1991. 

Bahrain promise renewed 

Bahrain and C-altex Petroleum of the I’S lure renewed a commit- 
ment to modernise Bahrain’s ageing refinery. Reuter reports 
from Manama. Bahrain Petroleum, which runs the 250,000-bar- 
rots-per-day refinery, is 60 per cent owned by Urn Bahrain govern- 
ment and 40 per cent by Caltex, which is jointly owned by Texaco 
Inc and Chevron COrp. 


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NEWS: THE AMERICAS 


45 !|] 


V«f ,'V^- 

IS 


US likely to 

contribute 
to IMF facility 


By Georgs Graham 
In Washington 

The US now seems likely to 
reverse an earlier move and 
make a contribution this year 
to the International Monetary 
Fund's enhanced structural 
adjustment facility (ESAF), 
which provides subsidised 
loans to some of the world's 
poorest countries. 

The willingness of the US 
Congress to provide the money 
is expected to be increased by 
new signs from the IMF that it 
may move to release more of 
its documents. Some econo- 
mists and political analysts 
believe such a gesture would 
greatly enhance government 
accountability for economic 
policy in some of the countries 
that borrow from the IMF. 

The Clinton administration 
has wanted to provide all the 
SI 00m (£66m) it has pledged for 
the ESAF in its fiscal 1995 bud- 
get, which is now under discus- 
sion in Congress, but a House 
of Representatives appropria- 
tions committee ftlimfoatori the 
money from the foreign aid 
bilL 

The Senate appropriations 
committee is expected, how- 
ever. to restore $25m when it 
considers the hOl tomorrow. 

11115 follows efforts by a sep- 
arate House committee, 
chaired by Congressman Bar- 
ney Frank of Massachusetts, to 
link approval of the ESAF 
money to promises of greater 
transparency from the IMF. 


Mr Frank's committee was 
expected to agree yesterday on 
legislation that would author- 
ise the appropriations commit- 
tee to provide up to $asm this 
year. 

Mr Michel Camdessus, IME 
managing director, this month 
wrote to his board urging that 
the fund should not only 
release more of the documents 
over which it hag control, such 
as notes on recent economic 
developments in borrowing 
countries, but ai«> urge mem- 
ber countries to publish docu- 
ments such as their letters of 
intent for IMF loans. 

The US contribution to the 
ESAF Is not of any immediate 

flnwnHal Si gnifica nce, grnra> 

IMF will not have to call cm 
the US contribution for 
another two years. 

Even so, other contributors 
to the ESAF had made their 
pledges conditional on the US, 
which is perpetually in arrears 
on its international obliga- 
tions, doing its share. Some 
Latin American countries were 
incensed at the House commit- 
tee's decision to strike the 
money from this year’s budget 

The US was (me of the last 
big industrialised countries to 
promise money to the ESAF, 
which comprises an SDR4£bn 
(£4Sbn) capital fund and a sep- 
arate SDRZbn fund to subsidise 
its interest rates, and its SI 00m 
contribution was described 
even by the US Treasury as “a 
meagre share for the largest 
economy in the world." 


Consumer prices 
rise by 0.2% as 
retail sales fall 


By Michael Prowse 
m Washington 

The pace of US consumer 
spending slowed last month 
and inflationary pressures 
remained modest, official fig- 
ures indicated yesterday. 

The Commerce Department 
said retail sales toll 0.2 per cent 
in cash terms last month, but 
remained 6.4 per cent higher 
than in May last year. The 
decline foDowed a revised 1.1 
per cent drop in sales in April. 

Consumer prices rose 0.2 per 
cent last month and by 23 per 
cent in the year to May. 

Both figures were weaker 
th an analysts expected, but 
were in line with other data 
pointing to a loss of economic 
vitality in recent months. The 
dip in retail spending probably 
overstated the weakness of 
consumer spending, which was 
artificially boosted last year by 
cash released from refinancing 
mortgages at lower interest 
rates. 

Recent softness mainly 


reflects a sharp toll in car sales 
after a very strong first quar- 
ter. Spending may also have 
been depressed by highs' tax 
payments in April following 
implementation of last year’s 
deficit-reduction measures. 

Mr David Rolley, senior 
economist at DRIjMcGraw Hill, 
th e forecasting group, said he 
expected real consumer spend- 
ing to grow at an annual rate 
of about 2 per cent in the sec- 
ond quarter, less than half the 
pace in the first three months. 
Spending, however, would 
probably rebound in the third 
quarter given strong recent 
increases in payroll employ- 
ment, he said. 

The “core” consumer price 
index - which excludes the 
volatile elements food and 
energy - rose 0.3 per cent last 
month and by 2.8 per cent in 
the year to May. Core con- 
sumer price inflation rose at 
an annual rate of 3.4 per cent 
in the past three months, indic- 
ating a slight deterioration in 
the underlying trend. 


Caracas 
closes 8 
finance 
houses 

By Joseph Mann in Caracas 

The Venezuelan government 
yesterday surprised bank 
depositors by closing eight 
troubled financial institutions 
which it had been keeping 
afloat since early this year. 

Long lines of sometimes 
angry depositors formed out- 
side the closed institutions, 
which have a combined total 
of 2m depositors. Some 
accused the government of 
defrauding them of their 
funds. 

The move was the latest by 
the administration of Presi- 
dent Rafael Caldera to ease a 
flmmriai system crisis which 
began in January when Banco 
Latino, Venezuela’s second 
largest bank, toiled and was 
taken over by the gove rnm ent 
Following the collapse of 
Banco Latino, other insitu- 
tions were struck by runs on 
their deposits and had to rely 
heavily on ff*iawri»i aid from 
the central bawfr ann th»> gov- 
ernment’s imiifc deposit guar- 
antee fund (Fogade). 

The institutions taken over 
by the government and dosed 
include seven banks 

lAwamnac , R awn nr, Ba rinan , 

Construed 6n, La Guaira, 
Maracaibo and Metropolitan©) 
and a company which financed 
commercial and tndmdriaT pro- 
jects, SF Fiveca. 

Even though the govern- 
ment had been the de facto 
owner of these institutions for 

mmp time - ft had Hamamfad 

shares and other assets in 
ret urn for fiwanrfal 
and had appointed its own 
adiatw ig tr at o r s - the authori- 
ties felt that the financial aid 
had reached an unacceptably 
high level and that the hawfcg 
could not be property restruc- 
tured without intervention. 

The eight banks had lost a 
large share of their deposits 
and had finandal losses 
amounting to several times 
their capital. They received 
the equivalent of almost $3bm 
in government assistance. 
Questions have been raised 
publicly as to whether some of 
this money was used improp- 
erly by the banks while stfll 
controlled by their former 
owners. 

The government had been 
expected formally to take over 
the institutions but the deci- 
sion to shot the banks was not 
expected. It emphasises the 
depth of a banking crisis 
which has done mnch to 
undermine confidence in the 
Venezuelan economy this year. 

Id announcing the decision, 
Mr Julio S06a, finance minis- 
ter, said that each depositor 
would be eligible to receive up 
to 4m bolivars ($24,000 or 
£15.900). 

In tite case of Banco latino, 
the government recapitalised 
and reopened the institution, 
paying depositors up to 10m 
bolivars. However, the author- 
ities saw no end to the finan- 
dal aid required by the other 
eight institutions and ikdijwi 
to close them down. 


Saudi diplomat seeks asylum 


By Jeremy Kahn 
in Washington 

A high-ranking Saudi diplomat 
at his country's United Nations 
mission sought asylum in the 
US yesterday, after accusing 
his own government of human 
rights abuses, terrorism and 
corruption. 

Mr Mohammed al-Khilewi, a 
first secretary at the Saudi UN 
mission in New York, signed 
an affidavit that he had 14,000 
documents, some of them clas- 
sified, which reveal a history of 
terrorism and rights abuses by 


the Saudi government 

Among the organisations 
which Mr Khilewi alleged his 
government was supporting is 
Hamas, a radical Moslem 
group opposed to the peace 
accords between Israel and the 
Palestine Liberation Organisa- 
tion. Mr Khilewi also claimed 
the Saudi government had 
asked its UN mission to spy on 
two US Jewish groups. 

He further alleged that offi- 
cials at both the UN mission 
and the Saudi embassy in 
Washington bad misused mil- 
lions of dollars in official 


funds, depositing them in New 
York banks and diverting the 
interest for personal use. 

The incident is unlikely to 
jeopardise US relations with 
Saudi Arabia, considered 
Washington’s closest Arab ally 
in the Middle East but it could 
embarrass both governments. 

There has been no official 
comment from US or Saudi 
officials. 

Mr Khilewi has received mul- 
tiple threats, warning him to 
return to Saudi Arabia or be 
killed, said Mr M i c ha e l Wildes, 
his attorney. 


Senate leaders at odds over healthcare 


Senate leaders told President 
Clinton that they could not 
reach consensus in a commit- 
tee on his healthcare reform 
plans, but they agreed to con- 
tinue their work, AP reports 
from Washington. 

Recognising the lack of con- 
sensus in the Senate finance 
committee, “the president 
asked that we take no votes in 


the committee at the moment," 
said Senator Robert Packwood 
of Oregon, the committee’s 
ranking Republican. “He obvi- 
ously doesn’t want any vote 
that causes his plan to be 
defeated," Mr Packwood said. 

Committee Chairman Sena- 
tor Daniel Patrick Moynihan 
summed up the meeting: “We 
agreed that ... there is not 


now a majority for any health- 
care reform plan in the Senate 
Finance Committee, that we 
will continue to work on a 
bipartisan basis to provide leg- 
islation that covers every- 
body." 

Such disagreements aside. 
Mr Moynihan insisted Clin- 
ton's healthcare reform plan 
was not dead. 


“Not at all. This a large piece 
of legislation and some of the 
principles are absolutely essen- 
tial. others are negotiable and 
he knows that,” he said. 

■Hie crux of the problem lies 
in Mr Clinton's desire to guar- 
antee coverage to all 
Americans, with employers 
forced to provide insurance to 
their workers. 


Mr Moynihan said the legis- 
lators would return to Capitol 
Hill to try “to put together 
combinations" of various pro- 
posals. Asked if Mr Clinton 
could achieve universal cover- 
age for all Americans without 
forcing employers to buy insur- 
ance for their workers. Mr 
Moynihan said, “We don't 
know yet" 


When working would cost too much 

Nancy Dunne on a family which Clinton’s welfare reforms are designed to assist 


L ittle John, unlike most 
American children, has 
both his parents at 

home. 

His father, Mr Tony Wilson, 
a roofer, was badly injured in 
March 1991 when a scaffolding 
collapsed and he fell three 
storeys to the ground, breaking 
his back. Little John’s mother. 
Mrs Maria Craig, is on welfare. 

Mr Wilson and Mrs Craig are 
now trapped in the “safety 
net” which the US and state 
government provides to keep 
citizens from absolute poverty. 
It is people like them President 
Bill CHntnn hopes to help with 
his welfare reform initiative, 
unveiled yesterday. 

Mr Wilson receives payments 
from Maryland’s workers com- 
pensation fund, a scheme 
funded by the state's busi- 
nesses but riddled with bureau- 
cratic sandtraps. Although his 
medical bills were paid, Mr 
Wilson received no income for 
the first 18 months after his 
accident. 

After four trips to court, he 
now collects $10,816 a year, 
although in theory he is sup- 
posed to be getting two-thirds 
of his pre-accident pay. Mr Wil- 
son gairi he was a aming $500 a 
week before his armrient but 
he had been working in that 
job for only two weeks. 

The stereotypical welfare 
mother of politiciaiis’ demonol- 
ogy is a Mack ghetto dweller 



An unemployed American man in the western city of Eugene, 
Oregon, begs outside a department store 


who has babies every year. Mrs 
Craig, however, is much more 
representative, according to 
welfare experts. Like the 
majority of welfare recipients, 
she is white. Along with an 
eight-year-old daughter, Ash- 


ley, she was deserted by her 
husband five years ago. She 
has never been able to afford a 
divorce. No member of her 
family has been on the welfare 
rolls before. 

From the age of 18. for more 


than 12 years, she worked for 
one employer, an optician, fit- 
ting eyeglasses. When she left 
the job to have the baby, 
whose birth was unplanned, 
she was earning $22,000 a year. 

The state's welfare system 
provides her with $3,432 in 
cash and $1,428 in food stamps 
taking the couple's earnings to 
a total of $15,676. It is barely 
above the poverty line - calcu- 
lated at $14,764 for a family of 
four - but there are powerful 
disincentives to her returning 
to work. 

At present she and her 
daughter are eligible for Medic- 
aid. the medical care pro- 
gramme for the “working 
poor”. Yet she would lose all 
these benefits and her welfare 
payments if she found a job. 

Mrs Craig could earn some 
additional money caring for 
other children, but would also 
lose her welfare cheque. She 
could go back to fitting specta- 
cles, but she says the $150 a 
week she would have to pay 
for childcare (since Mr Wilson 
is often unable to carry the 
baby) and the $240 a month she 
would have to pay for health 
insurance would actually 
reduce her earnings. 

Even now, neither Mr Wilson 
nor Little John get Medicaid 
benefits. The workmen’s com- 
pensation fund covers only 
healthcare related to Mr Wil- 
son’s injury. The baby is not 


covered because his father is in 
the home. 

This leads to Mrs Craig's 
skipping the baby's scheduled 
visits to the doctor unless he 
needs immunisation shots or is 
ill. “1 try not to think about the 
possibility of him getting sick, 
but when he shows symptoms 
-like an ear infection -I get 
petrified." she says. 

Mrs Craig would be an ideal 
candidate for the welfare 
reform retraining programme 
proposed by Mr Clinton yester- 
day. A high school graduate, 
she said she would, if given the 
chance, study for a two-year 
college degree which would 
enable her to earn a higher sal- 
ary. The retraining programme 
would also pay childcare 
expenses and allow recipients 
to retain their healthcare bene- 
fits. 

Meanwhile, the workmen’s 
compensation fund has dith- 
ered. Mr Wilson has been 
waiting for months for back 
surgery, which his doctors see 
as his only hope erf recovery. 
The workmen’s compensation's 
doctor disagrees; the fund likes 
to avoid expensive surgeries. 

“I had the physical body of a 
packhorse," he said. I thought I 
would always have it Instead 1 
have to sit here getting stupi- 
der every day. Sometimes 1 go 
fishing. Sometimes I’m sui- 
cidal 1 see it as an easy way 
out” 


MAIN POINTS OF THE WELFARE PLAN 


Welfare recipients bora after 1971 will 
be limited to two years of cash benefits 
in their lifetime, writes George 
Graham. 

Alter two years, they would be 
required to enrol in a one-year work 
programme sponsored by the govern- 
ment. They could re-enrol in work pro- 
grammes so long as they continued to 
look for work. Anyone who turned 
down a job or did not make adequate 
efforts to look for work could have his 
or her benefits stopped. 


Over the next five years, the plan is 
expected to cost a total of $10.8bn 
(£7.2bn). including: 

• $2J3bn for education, training and 
job placement 

• $1.2bn for work programmes for 
those who read! the two-year limit 

• $4.2bn for childcare for those in 
training and work programmes, as well 
as for other workers with low incomes. 

• 5900m for measures to improve the 
system of collecting child support pay- 
ments from pamts and for teenage 


pregnancy prevention. 

A reduction in the number of people 
in the welfare system is expected to 
save $1.5bn over the same five-year 
period. The remaining $9.3bn of costs 
would be made np by measures such 
as: 

• Tightening restrictions on foreign- 
ers receiving benefits such as aid to 
families with dependent children 
(AFDC), social security pensions or 
food stamps, to save $3.7bn. 

• Putting a ceiling on each state’s 


spending in the AFDC emergency 
homelessness programme, to save 
SL6bn- 

• Limiting social security disability 
payments to drag and alcohol addicts 
so as to save $800m. 

• Ending agricultural subsidies to 
fanners with mine than $100,000 a year 
in non-farm income so as to save 
$50Qm. 

• Shifting $l-6bn of savings from the 
snperft md for cleaning up toxic waste 
dumps. 



Argentine anger over 
volunteer army scheme 


President Carlos Menem is regaining popularity 


By John Barham 
In Buenos /tires 

Argentina's military 
commanders have reacted 
angrily to the surprise 
announcement last week by 
President Carlos Menem that 
he will abolish compulsory mil- 
itary service next year. 

No general has openly 
attacked Mr Menem’s plans but 
officers are irritated by his 
political motivations in ending 
conscription and the air of 
improvisation in the decision. 

A Defence Ministry official 
said yesterday: “The army has 
always wished to become a 
professional force, but it will 
require a four- or five-year 
transition." 

But Mr Rosendo Fraga. a 
defence analyst, commented: 
“Menem is demanding a cul- 
tural change but the generals 
and Defence Ministry are drag- 
ging their feet” 

Resentment in the armed 


forces has increased as the 
government raises wages of its 
civilian employees while hold- 
ing down military wages. Gen- 
eral Martin Ba lza, the army 
commander earns the equiva- 
lent of $2344 a month; a senior 
civil servant earns twice as 
much. 

But Mr Fraga said moving 
swiftly to a professional force 
should be neither difficult nor 
costly. The armed forces have 
18,700 conscripts and to put 
volunteers in their place would 
require only a 5 per cent 
increase in the $43bn defence 
budget 

Opposition to the deeply 
unpopular 12-month military 
service for 18-year-old men 
picked at random deepened 
after the unsolved murder in 
March of Mr Omar Carrasco, a 
conscript at an artillery unit 
An opinion poll published yes- 
terday showed that 61 per cent 
of Argentines oppose military 
service. 


Mr Menem’s decision is very 
popular. He is reforming 
Argentina's 1S53 constitution 
so that he may run next year 
for a second successive term as 
president but ins administra- 
tion has been adrift In recent 
months. He has now skilfully 
re ga i ne d the initiative. 

The armed forces have led 
six coups since 1930. were dis- 
credited by gross human rights 
violations during the last mili- 
tary government of 197883 and 
were plunged into crisis by 
defeat in the 1982 Falklands 
conflict 

There have been four muti- 
nies since the country's return 
to democracy in 1983 and the 
civilian rulers have still not 
found a new role for the mili- 
tary. Mr Menem’s authority 
over the generals is beyond 
question but his defence policy 
does not go beyond cutting mil- 
itary spending and sending 
troops overseas on UN mis- 
sions. 


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Uneven 

By Andrew Taytor and GBDan Tett 


The uneven pace of the UR 
economic recovery was h i g hlight ed 
yesterday by a matted decline in 
British construction orders in the 
three months to April and signs of 
unexpectedly subdued growth of 
retail sales in May. 

A big fell in British construction 
orders far road, rail and other infra- 
structure this spring prompted con- 
cern that the pace of the building 
and civil engineering recovery may 
be startin g to slow as public spend- 
ing cuts begin to take effect 


pace of recovery confirmed by 


At the same time the Confedera- 
tion of British Industry's latest sur- 
vey of distributive trades showed a 
drop in the numbers of retailers 
reporting year on year growth of 
sates in May compared with April. 

The fell disappointed City of Lon- 
don analysts, who expected the sur- 
vey to show a continuation, of April's 
strong sales growth. 

But tire CBI pointed out that there 
was little sign that the tax increases 
in April had yet significantly dented 
consumer de man d. Economist are 
anxiously awaiting news today of 
iflgfc month's unemployment trends 


and tomorrow's official retail sales 
data to establish whether Britain's 
recovery Is maintain tng its vigorous. 
Mr Kenneth Clarke, chancellor of 
the exchequer, will outline in his 
Mansion House speech ♦nwigh* how 
he hopes to maintain steady growth 
With low Infla tion. 

Figures published yesterday by 
the environment department showed 
that the value of infrastructure 
orders at constant 1990 prices fell by 
39 per cent during the three months 
to the end of April compared with 
die previous three months. 

I nfrastru cture orders also were a 


sixth lower than during the corre- 
sponding period last year. 

Construction orders, overall, fell 
by 14 pm- cent compared with the 
previous three months although 
they remained 6 per cent higher 
than during the corresponding 
period in 1993. 

More encouraging were rises in 
private industrial and commercial 
orders which increased by 16 per 
cent and 26 per cent, respectively, 
compared with a year ago. 

Private housing orders were also 
17 per cent higher than a year ago 
although 3 per cent lower than dur- 


ing the previous three months - pro- 
viding fhrther evidence of a recent 
wobble in the housing market recov- 
ery previou s ly re p or ted by building 
societies and estate agents. 

A sharp decline in infrastructure 
orders bad been expected following 
the bunching of very large contracts 
placed tor the Jubilee Line extension 
towards the end of test year. 

The fell, however, was greater 
than expected according to the Fed- 
eration of Civil Engineering Contrac- 
tors which said it *11811 not expected 
the year-on-year decline to reach 
double figures." 


figures 

The federation added; "It would be 

wrong to read too much into .one 

month’s statistics but we will be 
watching future order figures to sec 
if this trend is repeated, particularly 
on road spending." 

Road orders in current prices feu 
by 18 per cent to £470m compared 
with November, December and Janu- 
ary. One reason for the low figure 
may be the handing over, in April. Of 
responsibility for awarding road con- 
tracts from the transport department 
to the newly created Highway 
A oanru irhich m.-»v he suffering 


London to bear brunt of rail strike 


By Stewart Dolby, Robert 
Taylor and Charles Batchelor 

A 24-hour stoppage on British 
Rail got under way last night 
amid bitter exchanges between 
the KMT rail union and Rail- 
track, the r-rrmpany which r uns 
the network. 

London commuters were' 
expected to bear the brunt of 
the dislocation although most 
of the capital's Underground 
stations were due to stay open. 

London Transport is not 
planning extra services, hut as 
it carries 2.6m passengers a 
day It feels that a rail strike 
will not place undue strain on 
its services. 

Mr John Major, prime minis- 
ter, answering questions in the 
House of Commons, indicated 
extra parking will be made 
available. 

Mr Jimmy Knapp, leader of 
the RMT, accused BaRtrack of 
“reneging" on a 5.7 per cent 
pay offer for 4,600 signalmen 
saying the network authority 
had provoked the stoppage. 
But Mr Chris Leah. Rail track’s 
chief negotiator denied the 
company had made the offer. 

The hardening of attitudes 

between the RMT and Rail- 


Gatwick lights misled pilots who landed on taxiway 


The failure of the Civil Aviation Authority to 
implement recommended changes in lighting 
systems at London's Gatwick airport was yes- 
terday held partly responsible tor an incident in 
1993 when an airliner mistakenly landed on a 
taxiway. 

The crew of an Air Malta Boeing 737, with 
101 people on board, at the time, mi si nterpreted 
ground li ghts o peratin g fhrrin g ni g ht-Hme land- 
ings and touched down on a parallel taxiway 
instead of the stand-by ru n w ay they bad been 
instructed to use. 

The incident came five years after another 
aircraft mistakenly landed on the same runway 
and narrowly missed & *a*H«g aircraft. 

Disaster was avoided last year because the 
taxi w ay was empty at the time the aircraft 
actually landed. 


A report published by the Air Accidents 
Investigation Branch of the Department of 
Transport, said the mistake, which was princi- 
pally attributed to pilot error, provided 
grounds for “serious concern". 

It calls for a second review of Gatwick's light- 
ing systems in order to ensure miwhnnm 
grounds for confusion among pilots. 

The report said that, while some recom- 
mended modifications to lighting were made 
after the 1988 incident, others bad not been 
implemented because they were considered by 
the CAA to be unnecessary at Gatwick. The 
CAA was also anxious not to adopt a lighting 
system which was non-standard internation- 
ally. 

Aircraft Accident Report an incident to Boeing 
737-2Y5A. 9R-ABA at London Gatwick, H MSG 


track may lead to further 
industrial action. 

Rail track accepts that the 
signalmen have a genuine 
grievance over their relative 
pay position. However Mr Leah 
last night any 
rise for them beyond the pro- 
posed 2J> per cent for all Rail- 
track employees would have to 
come through negotiation on a 
new package of productivity. 

Mr Knapp, however, said: 


“Rafitrack have dealt a body 
blow to industrial relations 
and the integrity of the com- 
pany is in tatters. Who can 
believe anything they are told 
after this?” 

It also constitutes a consider- 
able personal test for Mr Rob- 
ert Horton, chairman of Rail- 
track. Mr Horton, who left 
British Petroleum with a formi- 
dable reputation for toughness, 
has to show that he can 


create a more modem railway. 

Under BR the internal pres- 
sures on the negotiators to 
keep the trains running while 
giving away as little as possi- 
ble would have been strong. 

But under the newly decen- 
tralised railway system which 
is being created, these pres- 
sures have been made more 
acute. If Rail track, set up on 
April 1 to take over BR’s track, 

signalling and sta tions. Fails to 


provide a working railroad it 
must compensate the train 
operating companies. 

A failure to keep the trains 
running puts direct fipagrtal 
pressures on a company which 
is hoping to achieve a stock 
market notation before the 
nprt election. 

Londons two ^nain airports 
have different problems. Gat- 
wick's main service to London ' 
is a British Rail tine to Victoria [ 
station in London. It Is expect- 
ing 54J300 arrivals today. Extra 
coaches have been laid on and 
it is trying to alert travellers. 

Heathrow, which expects 
120,000 arrivals today. Is con- 
nected to London by the ; 
Underground. Whenever there j 
is a rail strike it experiences j 
pressure on car parking. j 

A sunny day is forecast and 
this could be a factor in per- } 
suading people into not going ; 
to work. During the last one- i 
day strike it is thought that ; 
possibly a third of the 400,000 
British rafl commuters failed 
to make the effort However, 
the last one-day strike was on | 
a Friday, not a Wednesday, j 
and employers might not view- 
midweek absenteeism quite so ! 
favourably. 


Comment sought 
on Cadbury 
deal over lottery 


By Raymond Snoddy 
and Emma Tucker 

The European Commission is 
railing for comments on com- 
mercial agreements that link 
Cadbury Schweppes products 
to the operation of the 
National Lottery, 

The confectionery company 
is a member of the Camelot 
consortium due to launch the 
UK National Lottery in Novem- 
ber. Under the terms of the 
agreement with Camelot, Cad- 
bury Schweppes has the right 
to try to advertise Us products 
in connection with the prize- 
draws - a connection which 
could be extended to television 
for an agreed Tee. 

The plan is that confection- 
ery displays carrying the Cad- 
bury name, and possibly its 
products, will be offered as 
part of the lottery terminal 
which will dispense and 
authenticate tickets. 

The Commission said it was 


examining the consortium ven- 
ture to see whether or not it 
contravened EU rules on free 
»nd fair competition - normal 
practice for any joint ventures 
that threaten, however 
remotely, to create a dominant 
position in the market "This is 
purely normal," said the Com- 
mission. It said a decision 
would be taken within the next 
two months, well before the 
lottery’s November start date. 

Camelot emphasised that 
retailers would be tree to reject 
the Cadbury’s display and have 
a terminal on its own. Retail- 
ers could also accept the dis- 
play and HU it with the prod- 
ucts of other companies. 

The Commission notes that 
Camelot is obliged “to use rea- 
sonable endeavours to promote 
the use by retailers of a display 
unit supplied by Cadbury 
Schweppes to hold the lottery 
terminal and to display Cad- 
bury Schweppes branded con- 
fectionery." 


Making sure 
the Channel 
tunnel is safe 


I t is 1994, and a nightmare 
event has taken place - the 
Channel tunnel has been 
blown up by a terrorist bomb 
planted by the Irish Republi- 
can Army. 

The scene has so far 
occurred only in fiction - in a 
Graham Greene essay five 
years ago - but it is one that is 
still taken very seriously by 
Eurotunnel, the operator. Rich- 
ard Morris, Eurotunnel safety 
director says: “Safety is upper- 
most in our minds. If we have 
a major accident we are dead 
as a company." 

In spite of the financial and 
competitive pressures to run a 
fall service as speedily as pos- 
sible. the company is faced 
with the commercial impera- 
tive of being seen to ensure 
against accident or terrorist 
attack. The sensitivity sur- 
rounding the Channel t unnel 's 
record was brought into focus 
by the recent temporary sus- 
pension of Eurotunnel's freight 
service because of technical 
problems - the second incident 
in u days. 

At the weekend, hundreds of 
volunteer passengers took part 
In a successful evacuation 
rehearsal, only to be delayed 
below ground by a power fail- 
ure affecting the test of a 
Eurostar train. 

The earlier two Incidents 
occurred because of drivers 
bringing trains to an emer- 
gency stop in response to 
warning lights signalling non- 
existent faults. 

Eurotunnel argue that over- 
zealous, as opposed to lax, 


Jimmy Burns on 
Anglo-French 
efforts to 
safeguard 
passengers 

safety requirements were to 
blame, but the incident wor- 
ried some potential customers. 

What if, asked Sydney Bal- 
garaie of Britain's Road Haul- 
age Association. Eurotunnel 
had been naming a ton freight 
and passenger service and hun- 
dreds of civilians had suddenly 
found themselves trapped? 
Panic at worst, or at best- a 
decision by some travellers to 
switch back to the ferries. “We 
feel anxious that Eurotunnel 
should ensure the highest reli- 
ability possible.'’ he says. 

Eurotunnel knows it cannot 
afford a “crisis of confidence” 
such as that predicted fay Mr 
Balgamie, nor, apparently are 
government officials willing to 
let it happen. 

Over the past year, the com- 
pany has set itself a strict 
regime of safety and security, 
running tests covering equip- 
ment and operations. The tests 
have to win the approval of an 
Anglo-French safety commis- 
sion before Eurotunnel can be 
allowed to run a full service. 

John Henes, British depart- 
ment of transport official on 
the commission, is insistent 
that there Is no question of the 
safety certificates being steam- 
rollered so as to save 



Eurotunnel in the short-term. 

“It doesn't matter to us how 
soon or late the tunnel opens. 
Our obligation is to ensure 
that it is safe," says Mr TTpm»g 

Tests are continuing on sig- 
nalling equipment and fire 
alarms. The commission is also 
supervising a series of mock 
evacuations of tourist passen- 
gers. No one is guessing when 
the final green light will be 
given. 

Security nffiriaia meanwhile 
have concentrated their efforts 
on ensuring that adequate 
equipment, staff; and opera- 
tional back-up is in place 
already to prevent the threat of 
explosives being smuggled into 
tiie tunnel. 

Detective Superintendent 
Cliff Grieve, the UK head of 
ports and tunneling policy 
says: “We are clearly aware 


that the tunnel could be an 
IRA target and we are using 
the latest technology and the 
best advice to reduce that 
threat... but there is no 100 
par cent secure transport sys- 
tem.” The “latest technology” 
includes a state-of-the art X-ray 
system designed to maximise 
the accuracy of checks on sus- 
picious vehicles by Euro- 
tunnel's in-house security staff 
which have been recruited 
mainly from among ex-me in- 
here of the armed forces. The 
advice has evolved from count- 
less meetings involving police 
and Intelligence officials on 
both sides of the Channel. 

Security is also having teeth- 
ing problems. Yesterday, 
senior Home Office and French 
Ministry of the Interior offi- 
cials failed to agree on powers 
of armed French police sta- 


tioned at Cherrtngton where 
the tunnel emerges in Britain. 
The issue may delay the start 
up of a full passenger service. 
One senior French police offi- 
cer said this week: “The gun is 
part of our uniform. It is a 
symbol of the authority of the 
state.” 

A nother issue of sover- 
eignty has Involved 
been the delicate nego- 
tiation with Britain’s Ministry 
of Agriculture. After some dis- 
cussion it invoked the word 
rabies to get the agreement of 
French customs o fficiate not to 
bring sniffer dogs on trains 
bound to London. 

Within the UK, British cus- 
toms officiate responsible for 
building up intelligence on 
potential smugglers have pri- 
vately complained that they 


have yet to get as much infor- 
mation about passengers from 
Eurotunnel as that which is 
offered by ferry companies. 

Nonetheless, the overall 
sense one gets from talking to 
security chiefs on both sides of 
the Channel is one of consider- 
able co-ordination, cultural dif- 
ferences notwithstanding. 

No one is underestimating 
the c h alle n ges that lie ahead. 
As one senior security adviser 
put it “British Airways lost 
£10m because of some IRA 
mortars that caused no physi- 
cal damage.” If a q«in«r inci- 
dent threatened the tunnel, the 
dislocation to operations could 
be massive. 

• In an FT survey on the 
Channel tunnel published on 
May 6, the name of Euro- 
tunnel's safety director was 
incorrectly given 


First three months 1994 

ING Group achieved good results for the first three months of 1994. Net profit . 
increased by 26.8% to NLG 501 million (first three months 1993: NLG 395 million) • = 
Net profit per share went up by 21.3% to . NLG T. 94. ' >* ■ 

Total assets increased by 3.2% to NLG • 350.5 billion in tire first- three months, of ! 994. 
After the sharp increase by NLG 59 billion^ $93, shareholders 7 equity decreased from 
NLG 21.5 billion at the end of December 1993 to NLG 20.? ;biUi 9 n at the end of . 
March 1994. 


Amounts in Dutch guilders 

First three 
months 1994 

First three 
months 1993 

% 

Change 

(millions) 




Result before taxation 

656 

530 

+ 23.8 

Net profit 

501 

395 

+ 26.8 

(guilders) 




Net profit per share 

1.94 

1.60 

. + 21 J 


31 March 

31 December 


■■■ . 

1994 

1993 


(billions) 




Total assets 

3505 

339.4 

+ 3.2 

Investments 

131.6 

132.1 

- 0.4 

Bank lending 

147.1 

144.9 

+ 1.5 

Group capital base 

21.8 

22.6 

■ 3.5 

(guilders) 




Shareholders' 




equity per share 

79.75 

82.70 

- 3.6 



GROUP 


The Executive Board expects that for the whole of 1994 net profit will at least equal Tta re P° rt f° r the ^ tJirec months 19945“ b® obtained at the following 

address: Internationale Ncdcrlanden Group, P.O. Box 810, 1000 AV Amsterdam. 

1993 level. the Netherlands. Tel. (+3 1) 20 541 54 60. Fax: {+31 ) 20 541 54 51 . 


Britain in brief 



Professional 
advisers give 
‘poor service’ 

Accountants, lawyers and 
bankers overcharge and 
provide a generally poor 
service to their clients, says 
a survey of companies' views. 

Only half of companies felt 
accountants provided a useful 
letter to management to 

accompany the » nrmnt audit, 
according to a survey of nearly 
200 small companies, 
sponsored by Levy Gee, the 
accountancy firm. Just 19 per 
cent of businesses felt their 
bankers offered value for 
money, while half expressed 
dissatisfaction over value from 
their solicitors and 43 per cent 
from their accountants. 

Few advisers explained 
adequately bow fees were 
calculated, and accountants 
were tingled out for most 
crt iipuiiii over amounts 
charged. One respondent said 
there were often “too many 
round figures for comfort”. 
Bankers and solicitors were 
also criticised for failing to 
keep their clients up to date 
with developments. 

Three-quarters of companies 
surveyed believed that their 
bankers did not understand 
their business sector, 
compared with, two-thirds erf 
solicitors and 43 per cent of 
accountants. 


Proton man 
leaves £27m 

Mr David Brown, the former 
m ec h anic who founded Proton 
Cars (UK), the Malaysian car 
importer, left an estate of more 
than£27m. 

Mr Brown, a friend of the 
Malaysian royal family, died 
of a cerebral haemorrhage 
while riding an exercise cycle 
at his home in Cheshire in 
April He was 45. His egfa te 
was valued at £27.im gross, 
£25m met A burly, extrovert 
figure with a robust sense of 
humour seemingly at odds 
with his reputation for secrecy, 
he was on the point of taking 

Proton into Continental 
European markets. 


Texaco enters 
gas market 

Texaco is to enter the UK gas 
market and take advantage 
of deregulation. The OS oil 
company has set up a 
subsidiary, Texaco Natural 
Gas. to market gas to 
industrial and commercial 
users. 

Texaco is a big North Sea 
gas producer, and believes 
that this will enable It to offer 
competitive rates. 


Siemens 
wins £400m 
power plant 
contract 

By Arafrew Baxter 

National Power, the privatised 
electricity generator, hit * 
awarded Siemens of Germany 
a fiercely-contested contract to 
build a I.350MW gas-fired 
power station at Didcot in 

Oxfordshire. 

The contract for the cterign. ; 
construction and conunbatas- 
ing uf the plant is valued at 
less than E400m. Mr John 
Baker. National Power chief 
executive, said he believed ft - 
was the UK’s must competitive 
power plant project. 

The announcement came a 
few d;tvs ;ifter PowerGea, the 
other big UK electricity genera- 
tor. said it was paying SMXm 
in advance for its gu-firad 
power station at Coanah'e 
Quay. North Wales, to be buffi 
by the Anglu-French GEC All* 
thorn group. 

The Didcot B contract to tin 
first for Siemens from National 
Power, whose other combined 
cycle gas turbine stations bin 
been, or are being, built by 
Zurich-based Asea Brown 
Boveri and GEC Abthosn. 

But the German company 
has built two gas-fired stations 
for PowerGen, and Mr Juergm 
Gehrels. Siemens UK chief 
executive, said; “We believe 
that our successful track 
record in delivering total pro- 
jects, on time and to budget, 
was a key factor in l Notional 
Power's] decision." 

National Power is clearly 
delighted at the deal it has 
struck with Siemens. Two 
years ago it was thought the 
station would cost about 
E45Gm. The project wilt 
upgrade generating capacity 
and meet tightening environ- 
mental standards. 


Housing boost 
‘unlikely’ 

Abolition of restrictions on 
how cash raised through the 
sale of municipal houses can 
be used to build new homes 
for rent “will provide no 
Iong-tenu solution to the 
boosing shortage*. 

The release of local authority 
capital receipts has been at 
the centre of Labour opposition 
party policies to increase the 
supply of •‘council" homes and 
create Jobs to construction. 

But a report from the Joseph 
Rownfree Foundation, the 
social research organisation, 
says that the receipts are 
concentrated In areas where 
there are high council house 
sales, not the greatest housing 
need. The only realistic way 
to increase investment in 
low-cost housing for rent is 
for council housing to be 
transferred to local housing 
companies, the report says. 


Revenue union 
in US deal 

Hie main Inland Revenue 
union has won agreement for 
a path-breaking agreement 
with the US computer 
company EDS as part of the 
contracting out iff the 
Revenue’s computer 
operations. 

Members of the Inland 
Revenue Staff Federation have 
voted to accept the deal with 
EDS which guarantees 
existing conditions of 
employment. The onion is 
particularly pleased that it 
has a union recognition deal 
as EDS is known as a 
non-union company in the US. 

Unions are winning more 
such deals in cases of 
contracting-out, especially 
where the Transfer of 
Undertakings (Protection of 

Employment) European 
regulations - known as Tope 
- apply. These are being 
revised in Brussels, and 
require most of a worker's 
conditions be maintained 
when a job is transferred. 
Unions and private contractors 
ore seen to be becoming 

increasingly friendly. 


Cigar-shaped 

development 

The Corporation of London 
has given planning permission 
for a 222,000 sq ft building at 
One London Wall in the CSty, 
The cigar-shaped building was 
designed by Sir Norman Foster 
for a joint venture between 
Stanhope, the UK property 
company, and Kajima, the 
Japanese building contractor. 


Wind code 

The UK wind energy industry 
is to establish best practice 
guidelines in order to promote 
development Of wind farms. 
The industry is responding 
to mounting controversy over 
development of farms, often 
in the face of local opposition. 






[\l 




JPHNANClAL. TIMES WEDNESDAY JUNE 15 1594 


MANAGEMENT 


An educational 
experience 


John Gapper on a chance for 
executives to study a topic relevant 
to their company in the US for free 


A re yon a British executive 
interested in learning 
about bow DS companies 
run schools, reshape employment 
policies, or sell products to ethnic 
minorities? Is your company 
interested in public-private joint 
ventures in the UK, but ignorant 
about how such ventures work 
hi the US? 

If so, yon have a chance to 
study the topic that interests yon 
at first band, free. 

The Financial Times is joining 
the Commonwealth Fund, a US 
foundation, to offer a fellowship 
for up to 12 months to a UK 
company executive who wants 
to observe innovation in the US 
private sector. He or she will 
travel the US, seeing bow 
American companies are 
responding to competitive 
pressures, as well as social and 
demographic changes. 

If the offer sounds unusual to 
UK readers, that is because it 
emerges from a US tradition of 
private philanthropy largely 
absent in Britain. The new 
fellowship is an adaptation of 
the Commonwealth Fund's 
existing Harkness Fellowships. 
Since 1990, these have offered 
mid-career British professionals, 
mostly in the public sector, the 
opportunity to examine US 
innovation in their field. 

In the past three years, this 
has allowed British doctors to 
examine the US healthcare 
system, and education 
professionals to observe changes 
in US schools. Last week, the 
prime minister’s office announced 
that the UK government is to 
part-fund a new fellowship 
scheme based on the Harkness 
idea, offering Americans a chance 
to examine UK practice. 

The Harkness Fellowships, 
although theoretically open to 
the private sector, have not 
attracted many applicants from 
UK companies. The new 
fellowship has been devised to 
broaden the scope of fiu awards. 

It will allow a UK company to 
observe changes in the US 
through the eyes of a younger 
executive whom it regards as 
a future leader in its industry. 


Among those on the selection 
panel for tbe award is Howard 
Davies, direetorganenl of the 
Confederation of British Industry. 
Davies says the new FF-Harkness 
fellowship is timely because the 
barriers between public and 
private enterprise are now 
breaking down in tbe UK in a 
rimilar manner to h»i> US. He 
argues that although the 
fellowship may not be of direct 
short-term benefit to a company, 
ft win gain in tbe longer term 
through, the participation of a 
valued employee. ‘There are 
many thing s that com pani es need 
to be prodded to da A company 
may not see tbe short-term 
financial advantage of the 
experience, but it will probably 
learn something to hs 

advantage," he says. 

Keith Kiihy, director of tbe 
Harkness Fellowships, says US 
companies are used to studying 
social anil political ffihaiifl ft jjj 
order to adapt their businesses, 
and the fellowship offers an 
insight into how they do 

fjiat- 

Kirby says that the selection 
panel, including Ian Hargreaves, 
deputy editor of the Financial 
Times, and Sir David Scholey, 
chairman of the investment hank 
S.G. Warburg, will encourage 
broad-based proposals. “Narrow 
technical projects are less useful 
titan something which will 
broaden the mind of someone 
who is likely to be at the top of 
their industry or field Indue 
course,” he says. 

The theme of the fellowship 
is: “Renewing tbe company: 
sustaining competitiveness; 
improving business performance 

against a background of rapid 
social change.” Information and 
application forms are available 
until October 6 from: 

Harkness-Financial Times Award, 

Harkness Fellowships, 28 Bedford 
Square, London WC1B 3EG. 


John Gapper is banking editor 
of the Financial Times. He was 
a Harkness Fellow in 1991 - 92 , 
studying educat i on and training 
in US schools, colleges and 
companies. 



Tbeo Lieven and Louise Price who performed Mozart's Double Piano Concerto at St James's Church, PucadOy, recently 


Crocodile scales 


Motoko Rich meets busking boss Theo Lieven - pianist 
and president of Germany’s largest PC manufacturer 


T he 250 music-lovers who 
gathered at St James's 
Church in London’s Picca- 
dilly for a performance of 
Mozart's Double Piano Concerto in 
April were, said one of the perform- 
ers, a bit unusual “When they 
clapped they really appreciated the 
music,” says Theo Lieven. “Nor- 
mally when I play in concerts yon 
may have people there who dap 
because they have to.” 

Lieven, tho ugh, is a hit unusual 
hhnBp-if. A pianist who has per- 
formed with orchestras in Vienna, 
Berne, Louisiana and California, he 
is also president of Vobis Microcom- 
puter, Germany’s largest PC manu- 
facturer and Europe's largest PC 
retailer. Some past audiences may 
therefore have felt compelled to 
applaud because they work fin- him. 

Lieven is one of an elite band of 
busting bosses that includes Trevor 
Holdsworth, retired chairman of 
GKN (a pianist who has played with 
orchestras in London), Sony presi- 
dent Norio Ohga (trained opera 
singer and international conductor 
in his spare time) and Kenichi 
Ohmae, head of Tnanagtyment con- 
sultant McKenzie's Tokyo office 
(flautist who performs in Tokyo). 

While he makes no simpln con- 
nections between the disciplines of 
music and business, Lieven sug- 
gests that the motivations to play 
an instrument or head a company 
may be similar. “In the concert you 
have the dapping of the audience. 


in business you have the dapping 
of the bank," he says. “If you play 
the piano you are your own conduc- 
tor. So if you are not someone who 
knows what he wants yon cannot 
play the piano. Or lead a company.” 

For the Vobis president, piano 
playing intensifies rather than 
eases his lifestyle. 

He has been leading the jet-set- 
ting life of a performer (he flies his 
own aeroplane) since 1991, when he 
met Hannes Keller, a software sup- 
plier and fellow pianist, at a press 
conference in SwitsaiandL In 1992, 
when recording a CD, they were 
noticed by William Kushner, con- 
ductor of the Lake Charles Sym- 
phony in Louisiana, In the US. 
Kushner invited the pair to play 
with the orchestra in the US. 

The idea of getting paid to play 
gave Lieven such a thrill that he 
never banked the cheque (for 
$1,500). Indeed, the international 
piano foundation that he estab- 
lished at a villa near Lake Como in 
Italy In 1991 - which every year 
sponsors five pianists to take mas- 
ter classes with outstanding mud- 
dans - suggests he is keen to put 
more into music than he takes out 

Trained as a classical pianist in 
his home town of Aachen, Ger- 
many, where Voids is based today, 
he won second prize in a dty piano 
competition at the age of 18 . 

“If I had been the first-prize win- 
ner I would have continued but 
since I was not I decided to 


do something else.” he says. 

That something else was a mathe- 
matics course at Aachen University. 
There, at the age of 23, he and a 
friend. Vobis partner Rainer Fral- 
ing, started a business selling Hew- 
lett-Packard scientific calculators to 
classmates. Soon they had secured a 
contract to sell 2J50D HP calculators 
for DM1,000 (£400) each. From there 
fiie company expanded by about 50 
per cent a year, opening shops 
throughout Germany and expand- 
ing into 10 European countries. 

The business really took off, 
though, after Vobis launched its 
manufacturing divison when an 
order for Commodore computers 
failed to show up. Lieven was des- 
perate for units and flew to Taiwan 
to see a computer parts supplier. By 
January of 1988, Vobis was mating 
its own machines 

“At the time it was a short-term 
thing ," said Lieven. But Vobis’s 
operation grew, and now the com- 
pany is second only to Olivetti in 
PC production in Europe, with a 
turnover in 1993 of DM2bn. 

A friend once likened Vobis’s 
management style to the tempera- 
ment of a crocodile. “They at for 
hours and hours in warm water 
looting and looting, doing nothing 
and relaxing,” lieven says. “But the 
moment a zebra comes and they 
spot a chance for food, they snap 
it” Lieven prepares for concerts ou 
the same principle. “One hour of 
effort a day is enough." 


Michael Dempsey on corporate 
attitudes to air safety 


Travel sense 
for high-fliers 


T he recent Chinook 

helicopter crash not only 
wiped out decades of 
experience in the fight against 
terrorism in Northern Ireland; 
it raised questions about the sense 
of putting 25 senior personnel 
on one aircraft. 

Id the commercial sector, the 
risk of losing an entire higher 
echelon has long been recognised 
as an issue that has to be 
addressed. 

“If this happened to a 
commercial organisation I would 
expect to see the Share price 
collapse," says Michael Regester. 
a crisis management consultant 
with a long track record in the 
oil industry - a business that 
requires very senior staff to travel 
widely, often visiting remote sites 
by helicopter. 

Companies, says Regester, have 
to prepare for the worst. 

“The basic rule is that you never 
put more than two directors on 
the same flight And the company 
has to get across the message that 
it is not totally reliant on one 
individual,” he says. 

Regester warns that the loss 
of a high-profile director, by 
accident or otherwise, can be 
devastating to a company. 

Oil company Chevron rules that 
no more than two out of three 
of its principal officers can fly 
on the same aircraft. A total of 
five directors can fly together but 
they must comprise no more than 
two executive and three 
non-executive directors. 

“The thinking is obviously that 
in the event of an accident we’ve 
still got at least one principal 
officer to assume command right 
away,” a Chevron spokesman 
says. “It’s just commonsense. You 
cannot afford to have your board 
wiped out" 

“Our board members do a lot 
of travel offshore," says Chevron. 
“If they have to visit a rig they 
might use up to three helicopters, 
even though the party would fit 
into one." 

IBM, tbe world’s largest 
computer company, also has a 
policy on air travel. 

In August 1983, Don Estridge, 
head of the company's Entry 
Systems division, was tilled when 
a Delta Airlines flight crashed 


at Dallas Airport. The loss of 
Estridge, a visionary who had 
championed the personal 
computer within IBM, arguing 
against colleagues who refused 
to believe that one day a PC would 
sit on every desk in tbe business 
world, was keenly felt. 

By coincidence several other 
IBM personnel were also on that 
flight but in spite of tbe personal 
loss incurred, the crash did not 
wipe out a significant part of the 
company's leadership. 

IBM, which says its precautions 
predate the Dallas accident, issues 
an instruction letter on flight 
safety. It says no more than three 
country general managers or 
heads of divisions should travel 
on the same flight. 

Checks are carried out on 
airline safety. For corporate jet 
and helicopter hire only approved 
companies are used and IBM is 
rumoured to inspect individual 
pilot’s records. The aim is to 
ensure that a business jet 
containing senior staff is only 
piloted by a very experienced 
crew. 

While companies like Chevron 
and IBM have formal procedures 
on air travel, elsewhere dividing 
travelling parties is regarded as 
too obvious to need spelling 
out. 

“It’s an unwritten policy ," a 
London-based spokeswoman for 
Japan's Nomura Bank explains. 

In January, Nomura's London 
arm sent 20 top staff in its bonds 
division to a fixed income 
conference in Prague. Mindful 
of eastern Europe's air safety 
record, the specialists travelled 
in three groups on separate 
flights. 

Taking a different approach, 
oil company BP has found that 
a new emphasis on the use of 
videoconferencing is one way 
to reduce corporate air 
miles. 

Britain’s Ministry of Defence 
is already under pressure to 
contract out more facilities to 
the private sector. The armed 
force view this trend with 
suspicion, but in the aftermath 
of the Chinook crash there would 
at least seem to be some lessons 
to be learned in the area of air 
safety. 


CONTRACTS & TENDERS 


HOTELS 


DEPARTMENT OF 
ECONOMIC DEVELOPMENT 


PROPOSED NEW DOMESTIC ENERGY 
EFFICIENCY GRANTS SCHEME: 
APPOINTMENT OF MANAGING AGENT 


The Department proposes shortly to invite tenders for 
appointment of a managing agent to develop and 
administer a new energy efficiency grants scheme for 
low income householders in Northern Ireland. 

The new scheme will replace the existing Homes 
Insulation and Energy Grant Schemes and will offer 
eligible householders grants towards insulating and 
draughtproofing their homes, and advice on how to use 
energy more efficiently. 

Organisations interested in applying for appointment as 
managing agent for the scheme are invited to register 
this interest, in writing, with the Department’s Energy 
Efficiency Service, Room 88. Netherleigh, Massey 
Avenue. Belfast BT4 2JP (telephone 0232 529307) no 
later than 24th June 1994. 

Further information on the scheme and the role of the 
managing agent will be available to 
registered organisations on request. 


cm/tTMENr cf ecamc devb. owevr 



COMPANY NOTICES 



Following me DIVIDEND DECLARATION by Ford Motor 
Company (U.S.) on 14 April 1994 NOTICE is now g/ven 
mat the following DISTRIBUTION wflJ become payable on 
or after 15 June 1994. 

2-2500 Cents 
0-3400 Cents 


Gross Distribution per unit 
Less 15% USA Withholding Tax 


1-9100 Cents 

£0-01256579 


Convened at SI .52 

Claims should be lodged with the DEPOSrrARYj Nato^J 
Westminster Bank PLC. Basement. Juno Co j^ 2 VJ*^ 
street. London El 8BB on special forms obtainable from 

rhal office. 


that omce. 

IS'SSSfSSXSSSSt 

square on the reverse of the certificate. 

ah nther claimants must complete the special form and 

STme address l0 = Slh6r wi,h * he 

K ft* niariong by the teaonal westanster Bank 
PLC. Postal 


Dated 15 June 19 94 


Summer Paradise in DJ£s/OS 





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7 nights with half-board, 
one massage and a trip on the world famous 
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Pfer person in stogie or double room from Sfc 101 5-“ 
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7 Rne May, 1207 Gams 
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Fuc 7860644 


LEGAL 

NOTICES 




NOTICE IS GIVEN | 

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taking effect on 10 June IW a* ■ Special 


payneai uu or capital far the pwpoic of 
toqniringZZinBEDaariBioBotkaiciom act 
by postal tar 
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far the sba* it quota « 

Tie etatory dedanata ctf 0«e dtaOBB ot tta 
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Fjf JTflHV manapE-rnatt positions. For advertising infonnatiCHl CllL 
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Jons 1994 apply to tbe cowl under tbe 
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10 


FINANCIAL TIMES WEDNESDAY JUNE 15 1994 

BUSINESS AND THE ENVIRONMENT 


Energy- efficient 
and allergy-free 

Computers meet medieval building design in the 
green 21st century home. Andrew Taylor reports 



McKay and Baker-Brown with a ntodd of the RIBA awar d -wi nn ing MuraHouw 


A centrally heated, 

four-bedroom house with 
a fuel bill of less than £50 
a year, household systems 
controlled by the breath of 
disabled people and a low-allergen 
house designed for asthma 
sufferers can be semi at an 
exhibition, just opened in the 
English town of Milton Keynes*. 

FutnreWorld, sponsored by 
Britain's National Housebuilding 
Council, invited architects, 
builders and producers of building 
products and materials to provide 
a glimpse of the way homes may 
operate in the 21st century. 

AH of the 36 dwellings have 
had to comply with UK building 
and health and safety regulations 
and are to be sold when the 
exhibition ends on July 10. A 
buyer has already been found for 
one £40,000 property. 

Common themes are energy 
efficiency and conservation of 
the environment. Builders have 

opted for materials from 
renewable or recycled re s ources 
as much as possible. Specially 
treated softwoods have been used 
rather than slow-growing 

hardwoods Aram diminishing 
tropical forests. Some properties 
incorporate Warmcell insulation, 
produced from recycled newsprint 
treated with gypsum. Paints and 
glues use plant extracts and 
natural pigments In many 
developments. 

Several homes incorporate 
sophisticated electronic controls. 
Ihis includes an apartmen t for 
a disabled person - developed 
by the Electricity Association. 
Admiral Homes and the Charter 
Partnership - which uses an 
automated system allowing touch 
or breath control of doors, 
entertainment systems, telephone, 
electrical appliances, computer, 
lights and curtains. 

Hie low-allergen house, 
sponsored by the National Asthma 
Campaign, filters and warms air 
entering the house. By changing 
the air every hour, humidity is 
reduced to the point at which the 
house dust mite is destroyed. 
Water-based and solvent-free paint 
is used to prevent an allergic 
reaction. 


One of the most exciting 
developments is by two former 

Brighton University architectural 
students, Duncan Baker-Brown 
and Ian McKay, whose 
energy-efficient FutnreHouse 
design won the Royal Institute 
of British Architects House of 
the Future competition. 

It combines traditional 
construction techniques and a 
custom-built computer system 
with of basic physics and medieval 

b uilding desig n. 

At its heart is a simple 
convection system incorporating 

a two-storey glass conservatory 

covering the south wall of the 
house. Air is I mH inside the 
conserv a tory and rises to be either 
drawn into the house using a 
low-power fen or allowed to 
escape through windows in the 
conservatory. 

Cooler air is drawn in through 
air brides in the northern wall 
and passed under the bouse by 
convection. It is either cooled 
farther or heated depending on 
the soil temperature under the 

hn riding 

Deciduous vines planted inside 
and outside the conservatory 
provide shade in summer and 
inhibit over-heating. Solar panels 
in the roof heat water for washing 
and the underfloor hearing 


system. Supplementary heat is 
provided by an oil-fired boiler. 

The house has been built using 
concrete block, brick and a timber 
rl adding. The 150mm blocks assist 

TTign 1 aH<yn 

“Medieval builders knew that 
thick walls helped keep heat in 
during winter and warm air out 
of the building during summer,” 
says Baker-Brown. 

Sensors embedded in the walls 
allow a £4j000 computer system 
developed from an industrial 
computer system by SatchweQ 
Control Systems to control the 
Mi»nd of natural and man-made 
K«»«rHng - Annual heating Mila are 
estimated by the architects at 
£40 to £50 a year. 

The thick walls, combined with 
the natural convection flow of 
the building, help to prevent 
condensation and damp. The 
building has a large electronic 
office far working from home - 
“potentially the greatest 
energy-saving feature of them 
all,” says McKay. 

FutnreHouse cost about £130,000 
to build or £650 a square metre, 
excluding land. Offers are 
expected to start at £185,000. 

*FutureWorld exhibition at Kents 
BUI, Milton Keynes, runs until 
July 10. 


The Uruguay Round may be 
concluded, but it leaves a handful 
of potential trade conflicts, 
explains Bronwen Maddox 

Troubled 

waters 



The US is trying to ban imports of Mexican tuna btcuM th# nets Mi dolphins 

However, in Eglin's view, while 
these potential conflicts attract 


T his week, the gleaming 
Geneva headquarters of 
the secretariat of the Gen- 
eral Agreement on Tariffs 
and Trade may look a little scuffed. 
Officials, stm worn a fter the mara- 
thon of the Uruguay Round, opened 
their doors at the weekend to 300- 
odd envi ronmentalis ts and politi- 
cians from more than 100 countries. 

The subject was one of the most 
troublesome legacies of the recent- 
ly-concluded Uruguay Round of 
trade liberalisation measures: the 
potential between free trade 

and the environment The m es sag e 
raming lo udly jf chaotically, from 
the weekend’s symposium was that 
messy and Attempered conflicts are 
diwmpring on many fronts. 

Peter Sutherland, director-general 
of the Gait secretariat, left dele- 
gates in so doubt that, in his view, 
the environment would have suf- 
fered if the Uruguay Round had 
failed, because economic prospects 
in developing countries would have 

Hoon Hatrmpd 

Nevertheless, developed countries 
are still anxious that Gatt win erode 
hard-won environmental standards, 
w tiflp itoniln p m g w umhidfi fear that 
these standards are protectionism 
in disguise. Gatt has set up a com- 
mittee, due to meet for the second 
thug next Tnrnith, to address these 
worries and to tackle clashes 
between trade and environmental 
prrtiripias a s they arise. 

According to Richard ft g iin , direc- 
tor of Gaft's trade and environment 
division, po tential conflicts fail into 
three categories. Much of the week- 
end’s debate focused on the first of 
these: clashes between Gatt and 
high-profile international environ- 
mental treaties. These Include the 
Montreal Protocol on curbing sub- 
stances which damage the ozone 
layer; the Cites convention on trade 
in endangered species; and the 
Rggip convention on trade in haz- 
ardous waste. 

Each of these treaties appears to 
give signatories the right to ban 
imports which have been manufac- 
t u re d in an pn im -nnmpntaHy damag- 
ing way, even if the products them- 
selves are not damaging. 

For example, in a hypothetical 
case cited by lawyers in Geneva, 
signatories to the Montreal Protocol 
might try to block imports of Tai- 
wanese electronics, as Taiwan is 
not a signatory to the protocol, even 
if Taiwan argued that the circuit 
boards were cleaned with ozone-safe 
substances. 

PhiHipe Sands, an environmental 
lawyer who is the founder of Lon- 
don University's Foundation for 
International Law and Develop- 
ment, says: "If you ask a trade law- 
yer which agreement suprem- 
acy, the answer is that Gatt 
prevails. But for a general interna- 
tional lawyer, it’s not so black and 
white.’' 


enormous attention because of the 
public interest in ambitious green 
treaties, they are largely academic 
at the moment. Tougher problems, 
he believes, are Likely to arise from 

rinchtfg hp+ w » n Gatt and natitmal 

or regional environmental regula- 
tions. 

The now notorious conflict 
between the US and Mexico on tuna 


fishing falls firmly under this head- 
ing. Under the terms of the US 
Marine Mammal Act, the 
Americans want to ban imports of 
Mexican tuna because the fishing 
nets also kill dolphins. This week 
Geneva is due to send out to Gatt 
signatories the conclusions of its 
second panel on the dispute. Tim 
panel, it has widely been leaked, 
has again ruled that the US is 
wrong. 


Delegates in Geneva dted a host 
of other areas in which they expec- 
ted similar squabbles to occur, 
including Brazilian shrimp fishing, 
which some environmentalist* 
believe hams turtles, and Danish 
standards far drink containers. 

Ira Goldman, trade rvpresentittVB 
of the Governor of California, sakt 

that the state is bracing itself to 
defend its rules on ear exoisskms 
and on package recycling ag ri a mt 
European complaint* under Gatt, 
Importers “are going to sty *bow 
can you insist that California’s Ugh . 
standards are necessary, as New 
York state has different oat*”* be 
said. California's response will be 
th at levelling environmental stan- 
dards would undermine regional 
diversity and opportunities far 
•‘testing” new environmental solu- 
tions. 

One of the fiercest battiogroundi: 
is likely to be European Uakm rules 
far a packaging directive, which 
would set mandatory levels for use 
of recycled packaging. Developing 
countries ore also concerned about 
EU eco-labelling proposals, which 
would label goods with a descrip- 
tion of the environmental Impact of 
their manufacture. 

Martin Khor. director of the ThW 
World Network, a Malaysian envi- 
ronmental group, said tint Malay- 
sian timber companies were acutely 
concerned that the eco-label would 
shut out imports of furniture made 
from Malaysian wood. 

Bat Gatt secretariat officials 
stressed that while they are expect- 
ing appeals from countries which 
believe their products are excluded' 
from markets by European environ- 
mental rules, it may prove hard to 
enforce Gatt principles. 

Nell Robson. Gatt adviser cm 
pnc lre gtog exports, pointed oat that 
as the European packaging direc- 
tive does not specify where pa ck a g 
ing must come from, it is far from 
straightforward to show that it con- 
tradicts Gaft principles of trade, 

Beyond these predictable squab- 
bles lies an “unexplored black 
hole”, according to Egtin. contain- 
ing questions of trade in services, 
transport and genetically modified 
organisms which, some might 
argue, wore environmentally dam- 
aging. For example, some delegates 
suggested, a non-nuclear country 
might wont to ban imports of elec- 
tricity produced by nuclear power. 

These issues will clearly embroil 
veterans of the Uruguay Round in 
farther years or committee meet- 
ings. But judging by the huddles of 
packaging industry executives on 
the shores of Lake Geneva last 
weekend - and by the comments of 
Gatt officials - that ungtomarous 
sector will provide some of the first 
battles, in Eglin's words, "it comes 
down to brows paper bags - that’s 
where the real issue ia because 
that’s where the money is”. 


Concentration on dearly defined whole- 
sale banking sectors again produced good 
results for Luxembourg-based Deutsche 
Girozentrale International 5 A in 1993. 

Active prindpally on the Euromoney and 
Eurocredit market, we boosted total assets 


ment funds of Deka International SA. 
Luxembourg, which recorded major growth 
during the year. 

Despite narrow margins in a highly 
competitive market environment, the Bank's 
earnings progressed satisfactorily. Interest 


Business Year 1993 


THE RESULTS OF COMMITMENT 
AND WELL-DEFINED TARGETS 


by 7% to DM 8.4 billion. A large part of this 
growth was attributable to an increase of 
DM 0.7 billion in the securities portfolio. 
Interbank business showed significantgains, 
and lending to European public-sector 
borrowers was stepped up considerably. The 
year saw increased activity in the innovative 
market segments as well. 

Deutsche Girozentrale International SA 
is also the custodian bank for the invest- 


and commission income were up 
substantially, and trading operations were 
again positive. Net profit for the year 
amounted to DM 7.5 million, a rise of 50%. 

Backed by quality financial and human 
resources, plus dear goals, Deutsche Giro- 
zentrale International S.A. is poised for 
another successful year in 1994. 

A copy of our annual report is available 
upon request 


Financial Highlights (DM million) 

1993 

1992 

Total Assets 

8/m 

7.891 

Balances with Banks 

4,028 

3,823 

Advances to Customers 

3.054 

3357 

Securities 

1.164 

439 

Liabilities to Banks 

4346 

3.922 

Other Liabilities 

3.736 

3,571 

Capital and Reserves 

199 

194 



Deutsche Girozentrale 
International S.A. 


16, Boulevard Royal, L-2449 Luxembourg; Postal address: P.O. Box 19, L-201Q Luxembourg Telephone (3 52) 462471-1, Fax (352) 462477 


PEOPLE 

In-house or boutique? Pundits swap 


Roge- Nightingale, 49, an early 
pioneer of global stock market 
strategy in London, has 
decided that working far a bro- 
ker is more rewarding than 
running cuk’s own investment 
research boutique. 

Four years after setting up 
Roger Nightingale & Associ- 
ates, Nightingale and his fi rm 
are joining WX Carr (Far 
East), part of France’s Basque 
Indosuez. Nightingale’s deci- 
sion to throw in his lot with 
Indosuez comes only a month 
alter David Roche, 47, Morgan 
Stanley's stock market strate- 
gist, decided to set up his own 
London research boutique. 

The two moves highlight the 
contrasting views of the viabil- 


ity of independent research 
firms in London. Roche, whose 
old employer is one of his big- 
gest clients, says that it is 
absurd to think all research 
should be conducted in-house. 
However, Nightingale's experi- 
ence raises the question of 
w hether institutional investors 
are prepared to pay for 
research which they can get 
free from the big brokerage 
firms . 

Nightingale, who spent 20 
years with Hoare Govett and is 
a non-executive director of M & 
G Investment Management, 
says that it’s virtually impossi- 
ble to make a business out of 
UK research on its own. By 
contrast, overseas clients in 



L* 

- ? . 

p'i ** 

i 

k 

■ j 



the Far East and the US were 
more prepared to pay for inde- 
pendent research. 


He says that everybody is 
“digging in the same pot of 
gold” but many clients prefer 
to get subsidised research from 
a tanker rather than pay for it 
directly. He believes that the 
weakness of the big US bro- 
kers, which make most of their 
money from primary business, 
is that their research can 
“become a little less frank”. 

Although his new employer 
is heavily biased towards Far 
Eastern business. Nightingale 
will continue to offer a world- 
wide investment view. He 
hasn’t forgotten the advice of 
an old boss who told him 
always to make sure he com- 
petes in an area where the 
competition is weak. 


■ John Rink, 47, joint head of 
the litigation department at 
Allen & Overy, the City-based 
international law firm, has 
been seconded to British Aero- 
space as its legal director for a 
period of “up to two years*. 
Initially, his ap po in tment will 
be on a fall-time basis while 
he carries ont a review of the 
structure of BAe’s legal ser- 
vices. though it will not 
remain full-time far the whole 
two year period. He will be 
assisted by Jeremy Thomas, 
another ADen & Overy part- 
ner, also seconded to the com- 
pany during this period. 

His appointment follows a 
“beauty parade” Involving six 
City law firms, which was wan 
by Allen & Overy. BAe said 
yesterday that as the compa- 
ny’s interests became more 
diverse and it became involved 
in more joint ventures, partic- 
ularly with international part- 
nos, there was a need to re- 
appraise its legal services 
requirements. It would con- 
tinue to use a number of dif- 
ferent law firms to provide 
external legal services. 

■ The Trades Union Congress 
will today announce the 
appointment of a new media 
and communications director 
intended to provide it with a 
friendly modem image. John 
Healy has already done ster- 
ling work over the past year 
and a half providing a new 
style for MSP. the technical 
and professional union. 

Healy used to work In the 
voluntary sector - with BOND, 
the mental health organisa- 
tion, RNID, the body for the 
deaf and RADAR, which is con- 
cerned with disability and 
rehabilitation. 


Bodies politic 

■ Colin Bay, general manager 
of the defence and industrial 
division of Brown & Root 
Technology; John Sellars, 
form er chief executive of 
BTEC; and Sir Alan Thomas, 
he ad of defence export services 
organisation at the MoD, have 
been appointed members of 
the ENGINEERING COUNCIL. 

■ Alan Bowkett, chief 
executive of Berisfbrd 
International, and John Neill, 
group chief executive of 
Unipart, have joi ned the 
council of the INSTITUTE OF 
DIRECTORS. 

■ Tony Sheppeck, board 
member for finance of London 
Transport, has been appointed 

fthaittrum of Hip 

NATIONALISED INDUSTRIES 
FINANCE DIRECTORS 
GROUP. 

■ Rodney Galpin. retired 
nhairman of S tandar d 


Peter Owen. 47, who has just 
spent a year trying to trans- 
form the fortunes of Aer Lin- 
gus, where he was group chief 
executive, is joining PPP. one 
of the UK’s Leading providers 
of healthcare finanwp as man- 
aging director. He starts his 
new job with PPP an August L 

A year ago Aer Lrngus was 
losing I£L2m a week. Those 
annual losses Of £6&4zn have 
been reduced, though the cur- 
rent year’s figures (which will 
be annramepri in October) are 
still likely to show losses in the 
region of I£5Gm. 

Owen joined Aer Lingus in 
May 1993, having beeu director 


Chartered, has been appointed 
chairman nf the Code Of 
BANKING PRACTICE Review 
Committee, in succession to 
Sir George Blunden. 

■ Ami Kelly, a former director 
of British Railways Board and 
former chairman of Women 

in Management, has been 
appointed a member of the 
POLICE COMPLAINTS 
AUTHORITY. 

■ John Hackney, retired chief 
executive of the Tees and 
Hartlepool Port Authority, has 
been appointed chai rman of 
the POST OFFICE USERS' 
NATIONAL COUNCIL. 

■ Anthony Close, a former 
group director of personnel 

at Trust House Forte, has been 
appointed interim chairman 
of the HEALTH EDUCATION 
AUTHORITY. Tony King has 
been appointed head of 
netw orking in the NHS 
EXECUTIVE; he moves from 
RacaL 


of operations with British Air- 
ways from 1985 to 1990. He left 
BA to become chief executive 
of Innocan. a Canadian holding 
company with businesses in 
textiles, distribution, commu- 
nications and specialist 
cl eaning and consultancy. 

Owen spent a total of 2l 
years with British Airways, his 
time there culminating with 
his assisting in the manage- 
ment of the acquisition and 
merger with British Caledo- 
nian in 1987. 

At PPP he succeeds Roy For- 
man, who announced his 
retirement on July 1 1993. after 
14 years with the company. 


Insurance moves 

■ John Halls has been 
appointed client services 
director of IRISC. 

■ Paul Swain, formerly a 
non-executive director of 
UMTT and a member of Us 
insurance panel, has been 
appointed a director of 
CATUN Underwriting 
Agencies. 

■ George Stuart-darke, a 
former joint head of corporate 
fin ance at Lloyds Merchant 
Bank, has been appointed 
finance director of LLOYD 
THOMPSON GROUP on the 
retirement of John Birirmlre: 
Stuart-darke has been on the 
board as a non-executive 
director since 1991- 

■ Neil Candeland has been 
promoted to director of finance 
at RAC Insurance Services. 

■ Martyn Hooper has been 
appointed a director of 
LOWNDES LAMBERT. 



care insurance for almost 2m 
people. In 1993 group income 
was £500m. with pre-tax profits 
of £4Qm. 


Owen flies off to PPP 





FINANCIAL TIMES WEDNESDAY JUNE 15 1994 


1! 


ARTS 


Television/Christopher Dnnkley 

’ When comedians 
were craftsmen 



Bring back the sunshine: Morecombe and Wise hoofing it np in their heyday 


D eclare that there 
was a golden age 
of television in 
the late 1960s 
and early '70s 
and those who run television 
today - especially the accoun- 
tants - accuse you of wearing 
rose tinted spectacles. The real- 
ity was nothing like your fond 
memories, they say, nothing is 
ever as good as nostalgia sug- 
gests and if only you could 
judge those old programmes 
against today’s you would real- 
ise they were actually pretty 
primitive and limited. Well, the 
BBC has recently enabled us to 
make such a comparison, in 
comedy at any rate, and the 
evidence suggests that the 
accountants are wrong. More- 
cambe And Wise and Steptoe 
And Son really were superior. 

Having decided to mount a 
series to mark the 10th anni- 
versary of Eric Morecambe's 
death, BBCl called it More- 
cambe And Wise: Bring Me 
Sunshine which was absolutely 
right. To watch was to remem- 
ber how your face would go 
into a broad grin the moment 
you heard the signature tune 
and stay that way right 
through to “Bring Me Sun- 
shine” at the end. Moreover, 
that title emphasised the fact 
that these men were - in the 
case of Ernie Wise, still are - 
not just comedians, but enter- 
tainers who certainly wanted 
to make you laugh, yet, beyond 
that, to bring s unshine into 
your life. 

The difference between them 
and today's comedy entertain- 
ers was, surely, their back- 
ground. Today’s comedians 
grew up watching Monty 
Python on television, but More- 
cambe and Wise grew up - not 
that many years earlier - in 
the music halls and variety 
theatres. True, they did 
stand-up routines; their televi- 
sion show always began that 
way, but music played a bigger 
part. Can you imagine Hale 
and Pace doing a wicked yet 
fond send-up of “Singing In 


The Rain"? Or Enfield and 
Whitehouse with their legs 
stuck in buckets doing "New 
York, New York"? It is not that 
today’s performers would nec- 
essarily be incapable of master- 
ing the routines; what would 
be missing is that affection 
which was central to every- 
thing that Morecambe and 
Wise did. 

Watch them with their guest 
Eric Porter when he says "Ah, 
so you’d like a bit of Shake- 
speare?" and turns upstage to 
prepare a suitable extract Eric 
and Ernie vamp till ready, then 
Porter turns back and , in 
heaviest Shakespearian 
accents, intones "If the; could 
see me now/That little gan g of 
mine/I’m eating fancy chow 

and drinking fancy wine " 

and with dawning dp.Tight. you 
realise that the three of t hem 
are going into a song and 
dance number. Before long 
they have a straw hat and sil- 
ver tapped cane apiece and are 
into the sort of soft-shoe rou- 
tine that every entertainer of 
that generation seems to have 
learned as a juvenile. More- 
cambe and Wise were not 
Astaire and Kelly, but they 
could do you a cramp roll or a 
ball change without thinking 
about it Perhaps Rik Mayall 
and Adrian Edmondson could 
too, but I doubt it 

The number of “jokes” in a 
Morecambe and Wise show 
was often small (and in the 
repeats now bong transmitted 
by BBCl on Saturdays even 
smaller, because the original 45 
and 50 minute shows have 
been cut to SO). Much of the 
humour came from "business”. 
In this week’s programme Eric 
went into a shop to buy a pair 
of binoculars and Ernie prom- 
ised him his most powerful 
pair. Go to the other side of the 
shop and look at this pin. 
Ernie instructed, holding up 
nothing. The minute Eric's 
back was turned Ernie 
whipped out a three-foot pin 
from under the counter . . . 
That, essentially, was the gag 


but, in the tradition of panto- 
mime, they it expertly 

until the audience was falling - 
about. 

In all those sketches where 
the two stars perpetually pre- 
tended to upstage their emi- 
nent guests, they actually did 
precisely the opposite and 
made them look good. Today’s 
stand-up comedians exemplify 
the phrase: they stand up, and 
they tell jokes, but they do not 
spread a sense c f ten. content- 
ment and affection to 20 mil- 
lion viewers. As for the people 
who now m fl k e situation come- 
dies, the example set by Gallon 
and Simpson in Steptoe And 
Son seems to have been forgot- 
ten. With series such as BBCl's 
Once Upon A Time In The 
North, and ITV’s two new Sun- 
day series. Mother’s Ruin and 
The House of Windsor, we have 
slipped back into the rut worn 
in the 1950s. 

T he picture quality 
of The Lost Steptoes 
has been poor, 
unsurprisingly, per- 
haps, since they 
were non-professional copies, 
abandoned for years in some- 
body's cellar (the BBC haring 
destroyed the originals, of 
course). However, the high 
quality of the writing is still 
unmistakable. In the episode 
shown last week Harold, the 
arm , has difficulty breaking it 
to his lather, Albert, that Her- 
cules, the horse that has 
always pulled their rag and 
bone cart, has died in the 
shafts and been unceremoni- 
ously removed - "For cat's 
meat!" the old man snarls In 
fury. Albert has always been 
the horse lover while Harold 
knows himself to be suspected 
of mistreating the antmal. The 
point is that here, as in so 
many Steptoe scripts, the divi- 
sion between comedy and trag- 
edy is about as substantial as 
morning mist 

Mother's Buin is also about 
an adult son firing with a par- 
ent, this time Leslie FHtcroft 


with his mother. He (Boy Bar- 
ra dough, late of Coronation 
Street. ) is bald, unmarried, and 
panting for sex behind the 
counter of the shop where he 
sells herbal nostrums. She 
(Dora Bryan) is an ageing thea- 
trical luwie who lurks 
upstairs pouring gin from a 
teapot, losing money on the 
horses, and making her son’s 
life a misery. The set up may 


be no Ipss anthantir. than that 

in Steptoe And Son but the dif- 
ference is stark. 

The laughs in Steptoe are 
induced as often by pathos or 
the wry recognition of some 
eternal truth about the human 
condition as by “funny” fines. 
In Mother's Rum we are expec- 
ted to laugh when Leslie says 
“He had a verruca” and Ms 
mother says “I tho ug ht ft was 


a Volkswagen”. We are sup- 
posed to laugh when a man 
with a hangover says to Leslie 
"Get out of here - both of 
you”. We are Invited to laugh 
at a schoolboy suicide attempt 
in which the pQls turn out to 
have been laxatives. We are 
even meant to laugh at the fine 
"I turned down spotted dick to 
come here”. All change is not 
progress. 



Opera/John Allison 

La finta giardiniera 


M ozart’s teenage operas, 
given a strong cast and 
producer, can easily bold 
modem audiences. Mitri- 
date has enjoyed recent success at 
Covent Garden and 22 re pastors drew 
enthusiasm at Opera North, but it is 
hard to imagine more alive and per- 
suasive early Mozart than Tim Alber- 
ts staging at La finta giardiniera, 
which opened at Cardiff's New Thea- 
tre on Monday, Welsh National Opera 
having taken over Opera North's orig- 
inal 1989 production. 

But then Finta, written shortly 
before Mozart’s 19th birthday, is per- 
haps the most interesting of the com- 
poser’s early operas. In its blend of 
comic and serious styles it foreshad- 
ows Cost fan tutte and, especially. Le 
noose di Figaro, and the extraordinary 
music accompanying Sandrina's 
nightmarish visions at the mid of Act 
2 anticipates not only Mozart’s later 
style but that of his musical succes- 
sors. Finta deserves respect, and gets 
it from Albery. 

Albery convinces one of its dra- 
matic riabifityi which in fact is not 
consistently strong. He is helped by 
Tom Cairns's bold designs - bright 
green for the garden setting with con- 


trasting reds and blues, a heap of sail 
with plastic flowers for Sandrina’s 
garden - which play up to the opera's 
absurdities. It is fascinating to see a 
producer who in opera has been 
drawn mainly to dark dramas played 
out by a “people" - his Peter Grimes, 
for instance, currently in revival at 
English National Opera - direct a cast 

Mozart’s early opera 
deserves respect - and 
gets it from director Tim 
Albery for the WNO 


of just seven with such a strong sense 
of comedy. 

He draws intense performances 
from each, singer. In her WNO debut, 
Joan Rodgers as Sandrina - the 
disguised gardener of the title, 
really a Countess - gives a heart- 
melting performance. Her creamy 
soprano plumbs depths of emotion, 
she sings with poise befitting 
the nobility Sandrina conceals. 
Janice Watson is a commanding, 
brightly sung Arminda, Sandrina’s 
arrogant and sometimes hysterical 


rival, and plays the role for all it is 
worth. 

The American Paul Cloves portrays 
Count Belfiore with wit and reveals a 
firm, lyric tenor - a notable UK 
debut. Another American, the 
soprano Cyudia Sieden, makes her 
WNO debut as a truculent Serpetta. 
Ryland Davies celebrates the 30th 
anniversary of his first WNO appear- 
ance as a properly comic Mayor, and 
sings with a fine sense of musical 
style. The mezzo Ann Taylor-Morley, 
a rapidly emerging talent, is fresh and 
impetuous in the trouser role of 
Ramiro, and the baritone Neal Davies 
an appealing Nardo. 

Finta is a long opera, but it files 
past in this stylish performance and 
because words - Amanda Holden's 
lively translation is used - are 
projected with such clarity. Ivor Bol- 
ton’s inflexible conducting is less 
than ideal, but does little to detract 
from a production that should not be 
missed. 


Further performances in Cardiff on 
June 15 and 18, before the production 
tours to Swansea (June 23), Birming- 
ham (June 30), Southampton (July 7) 
and Bristol (July 14). 


Recital/Richard Fairman 


Olaf Bar 


E conomic prosperity 
has always been 
an important 
pre-condition if the 
arts are to nourish. By the 
turn of the 18th century the 
middle plasms in Dresden 
were sufficiently well-off to 
enjoy widespread domestic 
music-making and a large 
amount of their chamber 
music and songs has come 
down to us. 

The baritone Olaf B&r was 
bom and lives in Dresden, so 
he is well placed to delve 
into the city's musical 
history. Neumann and Weber, 
Relssiger and Marschner were 
among the composers most 
active there, usually involved 
with the court opera. Bfir 
included songs by each of 
them in his Wigmore Hall 
recital on Monday and gave 
a good idea of the sturdy 
Teutonic musical diet a 
Dresden family might have 
favoured after dinner around 
1825. 

By and large there are 
good reasons why we do not 
hear many of these songs 
today. One poet after another 
sets out for the hills, 
roams across green meadows, 
listens to the hunting-horns 
and generally finds his words 
set to an unremarkable 
melody supported by 
four-square harmony. In 
short, these are generic pieces 
ami Bar treated them in a 
generic way. 

hi« singing is admirable 
for its effortless balance of 
words and fine, but a sharper 
imagination might have 
helped one or two come 


Individually to life. The 
opening stanza of Reissiger’s 
“Das Schlachtfeld" talks of 
the moon shining with 
serenity, but no moon-lit 
shadows were cast by the 
performance, and helpful 
phrases later, like the fields 
“in bloody dress” looking on 
in horror, were not used to 
add much colour. 

Much more interesting was 
the combination of songs 
by Robert and Clara 
Schumann, husband and wife, 
also Dresden-based, after the 
interval. Clara's music is 
getting more attention these 
days (some record labels 
specialise in women 
composers) and on the 
evidence of songs like “Liebst 
da am Sctriraheit”, as tender 
as Mahler's setting, she could 
rise to equal the best Her 
music is not tied down by the 
bar-lines, like the lesser 
examples heard earlier. 

Bdr found more to engage 
him in these and the Robert 
Schumann songs. Though the 
voice is short on expressive 
colours when be is singing 
quietly, he puts across 
outgoing songs, like “Die 
beidcn Grenadiere” (not just 
Robert Schumann, but also 
a Relssiger setting) with 
more communicative energy 
than he used to. Perhaps 
the ever-supportive Geoffrey 
Parsons as accompanist might 
challenge Bfir to give 
more. 


Second recital, with half the 
same programme, today 


Jazz/Garry Booth 

Hugh Masekela 


M iles Davis 

described the 
young South 
African who had 
come to Us attention in the 
1960s as follows: “Hugh had 
Us own approach to playing 
the trumpet . . . had his own 
sound. Every time I saw him 
I told him just to keep on 
doing his thing rather than 
trying to play what we were 
playing over here. After a 
while I think he started 
listening to me because Us 
playing got better.” 

Davis followed Masekela’s 
progress with interest, in the 
1960s when studying at the 
Manhattan School of Music. 
Prior to that he had studied 
at the Guildhall In London 
after John Dankworth secured 
him a place there. He, like a 
number or his fellow blade 
jazz musicians, including 
Dollar Brand and Dudu 
Pukwana, had been forced to 
leave Johannesburg in i960 
by the strictures of apartheid. 
And like them, just as Davis 
advised, Masekela has 
retained the distinctive 
musical colours of the 
townships to combine 
variously with his bebop, big 
band and funk influences. 

Now 65, and back in South 
Africa again, the trumpeter’s 
recent recorded output has 
been characterised by a 
toughening up in both African 
and "western” funk attitude. 
Starting a two week stint at 
Ronnie Scott’s on Monday, 
Masekela sounds in great 
form. The young band, which 
consists of keyboards, electric 
and bass guitars and drums, 
acts as a metronomic rhythm 
section to Ngenekhaya 


Mahlangu’s rasping tenor sax 
and the leader’s explosive 
fingelhom. Masekela sings 
too: a hoarse, shouted 
declamation which subsides 
abruptly into lilting 
harmonies filled out by the 
band. 

Indeed, it is a pity that 
dancing isn’t possible in the 
main room at Ronnie’s - it 
is too full anyway - because 
Masekela's jubilant highlife 
tinged numbers do more than 
tap feet The sweet tones with 
their clattering cowbells and 
chipping rhythms are 
irresistible. Masekela 
squeezing sparks out of the 
horn to the encouragement 
of an ullulating audience is 
electrifying. The close, with 
Masekela tragically intoning 
the story of the Gold Train, 
is a lesson in how to bnild up 
a song for maximum effect 

London is lucky to have 
been a spiritual home to 
musicians like Masekela 
during the bad years. While 
it seems likely that the death 
of apartheid will mean that 
we in London will see less of 
Masekela, more of South 
Africa's unfettered 
danring-in-your-head jazz will 
surely come our way from 
those he is now free to 
encourage. 


Hugh Masekela is at Ronnie 
Scott’s until June 25. Tel: 071 
439 0747. Viva South Africa, 
an open air festival at 
Highbury Fields on July 9 
features Hugh Masekela & 
Miriam Makeba plus 
Ladysmith Black Mambazo 
among others. Tel: 0891 300140 


1 1 Interna tionalw 

A 


A 

K 

is 

Gi 

:jt 

DE 


ji 


BAD K1SSINGEN 

) annual musk: festival opens 
June 24 and runs till July 17. 
ong Oils year’s events are a 
Hubert recital by Andras Schrff, 
ig recitals by Edita Gruberova 
i Wolfgang Hobmair. a Mahler 
icert with Christa Ludwig and 
nphony concerts conducted by 
laid Runnides, Vaclav Neumann 
i Vladimir Ashkenazy. The 
action of Bad Kissingon Is Its 
th Bavarian setting and the 
ix ed atmosphere of a former 
al spa. The Regentenbau 
orporates four elegant concert 
la, and there is also a 
de-si ecle theatre (Kissinger 
rimer. Postfech 2260. D-97672 
i Kissingen. Tel 0971-807110 
: 0971-807191) 


BONN 

er The season ends with 
formances of Antonio &*rtos 
mes’ 1870 opera-ballet II 
rt Mon and Fri, Tosca on Tues 
i Thurs, and Les Contes 


d' Hoffmann on Wed (0228-773667) 


■ COLOGNE 

Phflharmonie Tonight’s concert 
is given by three saxophone 
ensembles. WDR Big Band play 
a Duke Ellington tribute on Sat 
James Con Ion conducts GOrzenlch 
Orchestra on Sun morning and next 
Mon and Tues evenings in Mahler's 
Sixth Symphony. Pierre Boulez 
conducts Ensemble 
InterContemporain on Sun in works 
by Boulez, Varese and Antoine 
Bonnet (0221-2801) 

Opemhaus Gwyneth Jones sings 
BrunnhUde In Die WalkOre tonight, 
Sat and next Wed. The season runs 
till June 28 with repertory including 
Gounod's Faust and Jochen Ulrich's 
choreographic version of Peer Gynt 
(0221-221 8400) 

Schauspielhaus The season 
continues till June 25 with repertory 
including GOriter Kramer’s radical 
version of Fiddler on the Roof, 
Jtfnes Joyce's Mo&y Bloom, Camus' 
Caligula and Ibsen's Rosmersholm 
(0221-221 8400) 


m COPENHAGEN 

Tivofi Tomorrow: Michael 
Schoenwandt conducts Danish 
Radio Symphony Orchestra in works 
by Homemarm and Richard Strauss, 
with horn soloist Michael Thompson. 
Frt Michel Tabachnik conducts 
Orchestra of the Royal Danish 
Conservatory In Rutters, Schumann 
and Dvorak. Sat: Brahms' German 
Requiem (3315 1012) 


■ DRESDEN 

Semperoper Tomorrow: Zemlinsky’s 


Der Zwerg and Dallapiccola’s li 
Prigionero. Fri: Wolfgang Rennert 
conducts Hans Holknann’s new 
production of The Cunning Little 
Vixen, with cast hea de d by Patricia 
Wise. Sat La clemenza d) Tito with 
cast headed by Hans- Peter 
Bfochwltz. Sun: The Bartered Bride. 
Sun morning, Mon and Tues 
evenings: Giuseppe Sinopoti 
conducts Dresden Staatskapede 
in works by Ruzicka, Berg and 
Brahms, with soprano Barbara 
Hendricks. June 26: new production 
of Romarei’s Melustne (0351-484 
2323) 


■ FRANKFURT 

Alba Oper Tonight, tomorrow, Fri, 
Sat Sun: American stage show 
SpeBboundL Mom Diana Ross. Next 
Tues: first of eight performances 
of The Phantom of the Opera 
(069-134 0400) 

Oper Tonight, Fri, Sun: Sytvaln 
Cambreilng conducts Christoph 
Marthaler’s new production of 
PeUeas at M&Isande, with cast 
headed by Catherine Dubose, Urban 
Maim berg and Victor Braun 
(069-236061) 


■ HAMBURG 

Stsatsopar Hamburg Ballet Festival 
runs tifi Sun with guest 
performances by National Ballet 
of Canada tonight and tomorrow, 
John Neumeier choreographies of 
Henze's Undine on Fri and Mozart's 
Requiem on Sat, and a Nijinsky 
gala on Sun. Operatic repertory 
resumes next Tues with Aida 
(040-351721) 

ThaSa Theater Maly Theatre of 
St Petersburg is in residence till 


Sun with Gaudeamus (040-322666) 


■ LEIPZIG 

Gewandhaus Fri: Kurt Moll song 
recital. Sat, Sun: Daniel Nazareth 
conducts Mid-German Radio 
Symphony Orchestra in works by 
Rossini, Respighi, Sibelius and 
Stravinsky (0341-713 2280) 


■ LYON 

Opera Tonight Fri, Sat, next Tues 
and Fri: Louis Erie’s adaptation of 
Die Zauberfldte. Tomorrow, Sun, 
next Wed: John Nelson conducts 
Klaus Michael Gruber's production 
of La traviata, with cast headed 
by Giusy Devinu and Franco Farina 
(tel 7200 4545 fax 7200 4546) 


■ MUNICH 

Staatsoper Tonight, Sun: Bavarian 
State Ballet in an American 
programme, with choneogngahles 
by Lucinda Childs, Twyla Tharp 
and Robert LaFosse. Tomorrow, 
Mon: Nabucco with Julia Varady 
and Alain Fondary. Fit Der fl legends 
Hollander with Ektehand Wlaschlha 
and Liana DeVol. Sat, Tues: Le 
nazze di Figaro with Carol Van ess, 
Barbara Bonney, Boje Skovhus and 
Alan Titus. The Munich Opera 
Festival opens on July 6 with a new 
production of TannhSuser, staged 
by David Akten and conducted by 
Zubin Mehta (089-221316) 

Gasteig Tonight Herbert Bkxnstedt 
conducts Munich Philharmonic 
Orchestra in works by Rakhmaninov 
and Sibelius. Tomorrow: Mikhail 
Ptetnev is conductor and piano 
soloist with Scottish Chamber 
Orchestra, Fri: Martin Andre 


conducts SCO in works by Maxwell 
Davies, Edward Harper and James 
MacMHan. Sat Munich Philharmonic 
Festival Sun: Enoch zu Gotten berg 
conducts Munich Bach Collegium 
in choral works by Mozart (089-4809 
8614) 

• A festival of renaissance music, 
buBt around Orlando di Lasso, runs 
tiD July 17, with most events taking 
place at the Resktenz. Guest 
ensembles indude The TalBs 
Scholars (information 089-982 8676 
tickets 089-299901) 
SCHLESWIG-HOLSTEIN 

The Schleswig-Holstein festival 

opens on June 26 and runs till 
August 21. Stretching from 
Westeriand In the north to Hamburg 
in the south, the festival embraces 
everything from family music days 
in country bams to high culture. 

This year's programme places a 
special emphasis on Jewish music. 
There are visits from the Israel 
Philharmonic and Jerusalem 
Symphony Orchestras, and 
performances of music by Jewish 
composers banned during the Nazi 
era, plus Mendelssohn and Mahler. 
There is also a retrospective of 
Beethoven, whose Missa Solemnis 
Is conducted by John Eliot Gardiner 
at the opening concert in LObeck. 
Other visiting artists Indude Thomas 
Hampson, Midori, Yevgeny Kissin 
and the Kirov Opera Orchestra 

(Kartenzerrtrale des 
Schleswig-Holstein Musik Festivals, 
Postfech 3840. D-24037 Kiel. Tel 
0431-567080 Fax 0431-569152) 


■ STOCKHOLM 
Royal Opera Tonight Natalie 
Conus’s production of Swan Lake. 
Tomorrow: choreographies by Ulf 


Gadd, Ulysses Dove and 
Balanchine. Fri: Beryl Grey's 
production of Sleeping Beauty. Sat 
Natalia Makarova's production of 
La Bayadere. End of season 
(08-248240) 


■ STRASBOURG 

Palais de la Muskpie Tomorrow, 
Sat Bulgarian National Opera 
presents con cal performances of 
Verdi's Oteflo. Fri: symphonic and 
choral programme featuring works 
by Himsky-Korsakov and Prokofiev 

(8852 1845) 


■ STUTTGART 

STAATSTHEATER 
The main event this week is a new 
production of Wagner's Die 
M sisters! nger von Numberg opening 
on Sun, staged by Hans Neuenfels 
and conducted by Gabriele Ferro. 
The cast is headed by Wolfgang 
Probst as Sachs and jam Wilsing 
as Beckmesser (repeated June 22 
and 26). Repertory also fedudes 
Cosi fan tutte and a ballet evening 
(0711-221795) 

LUDWIGSBURG FESTIVAL 

Vladimir Ashkenazy gives a piano 
recital tonight, followed by Krystian 
Z merman on Fri. Nederiands Dans 
Theater presents Its new Mondrian 
programme at Theater im Forum 
tonight and tomorrow, with 
choreographies by Jiri Kytian and 
Hans van Menen. Next week's 
highlights include two performances 
by Paul Taylor Dance Company 
and a concert by the Berlin Radio 
Symphony Orchestra conducted 
by Ashkenazy. The festival continues 
till September (07141-939610) 


ARTS GUIDE 

Monday. Berlin. New York and 
Paris. 

Tuesday: Austria, Belgium, 
Netherlands, Switzerland, Chi- 
cago. Washington. 
Wednesday: France, Ger- 
many, Scandinavia 
Thursday: Italy, Spain, Athens, 
London, Prague. 

Friday: Exhibitions Guide. 

Eoropean Cable and 
Satellite Business TV' 
(Central European Time) 
MONDAY TO FRIDAY 
NBC/Super Channel: FT Busi- 
ness Today 1330; FT Business 
Tonight 1730, 2230 

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

Euronews: FT Reports 0745, 
1315, 1545, 1815, 2345 

WEDNESDAY 

NBC/Super Channel: FT 
Reports 1230 

FRIDAY 

NBC/Super Channel: FT 
Reports 1230 

Sky News: FT Reports 0230, 
2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 

Sky News: FT Reports 0430, 
1730: 






FINANCIAL TIMES WPOMESDAY JUNE 15 I9?4 


Tasty dish to set 
before the City 

Michael Skapinker examines the recent 
recovery in London's restaurant scene 


G ood Judgment 
undoubtedly played 
a part But share- 
holders in regional 
electricity companies in 

En gland and Wales WOOld find 

it bard to deny that they have 
been lucky since they bought 
into the sector four years ago. 

London Electricity, which 
serves the capital, should kick 
off the results season today 
with another set of impressive 
figures. Its profits performance 
has contributed to the shares 
more than doubling In value 
since flotation in 1990. In spite 
□f recent falls, they have out- 
performed the FT-SE-A All- 
Share index by 68 per cent dur- 
ing the period. 

Back in 1990, the power 
industry was viewed by the 
City as a safe but dull invest- 
ment. London is not excep- 
tional among power compa- 
nies, most of which have 
performed similarly. East Mid- 
lands has outperformed the 
market by mote than its Lon- 
don counterpart, even though 
its profits for 1993-94 will be 
depressed by £130m because of 
poor acquisitions. However, 
the good times may be coming 
to an end. 

Professor Stephen Little- 
child, the industry regulator, 
will shortly announce the 
results of a review of the pric- 
ing regime which helps! the 
regional companies to make 
their unexpectedly high prof- 
its, and which is now consid- 
ered to have been too lenient 
He is threatening to be tough; 
“draconian", according to 
industry insiders. 

Prof Littlechild is reviewing 
the distribution prices of the 12 
regional companies and the 
two Scottish power companies, 
privatised In 199L Distribution 
accounts for more than 80 per 
cent of the companies' profits 
in England and Wales, and 40 
and 20 per cent respectively at 
Scottish Power and Scottish 
Hydro-Electric. 

While the review is impor- 
tant both for the companies 
and the customers, for whom 
distribution costs constitute a 
quarter of their electricity 
bills, it also has wider implica- 
tions. Increasingly, countries 
from the Pacific Rim to South 
America are privatising their 
utilities. Since the UR has been 
in the forefront of transferring 
electricity, telecommunications 
and water to the private sector, 
its regulation model is studied 
both for its qualities and its 
shortcomings. 

The perceived shortcomings 
have come to notice recently as 
critics, including Mr John 
Baker, chief executive of 
National Power, the main elec- 
tricity generating company. 


W andering through 
London in the 
early hours 
recently, Mr Roy 
Ackerman, a well-known res- 
taurateur and food publisher, 
was accosted by a waiter from 
a Greek taverna- 
The waiter had saved 
£100,000. A friend had accumu- 
lated a s imil ar amount. They 
wanted to open their own res- 
taurant. Did Mr Ackerman 
think the time was right? 

Mr Ackerman, president of 
the Restaurateurs Association 
of Great Britain, says a grow- 
ing number of people have 
decided it is the right time to 
open a London restaurant. In 
the past two months. 30 new 
establishments have opened. 
During the same period last 
year, fewer than 10 opened. 

Two London-based restau- 
rant groups have been Floated 
on the stock exchange in 
recent months: Chez G6rard, 
which includes Bertorelli’s in 
Covent Garden and Ca IS Fish 
off the Haymatrket; and My 
Kin da Town, which runs the 
Chicago Pizza Pie Factory and 
Henry J. Bean’s. 

Several chains plan to 
expand. Chez G6rard wants to 
increase its restaurants from 
seven to 14 over the next three 
years. Comey & Barrow began 
this year with seven City 
establishments. By the end of 
the year, it expects to have 
double that number. 

Mr Joel Kiss in. managing 
director of Conran Restau- 
rants, which includes Le Pont 
de la Tour near Tower Bridge 
and Quaglino's In the West 
End, says he first noticed a 
substantial improvement in 
business last November. 

The company was not sure 
whether this heralded the end 
of the recession or was the 
result of an American Express 
advertisement featuring Sir 
Terence Conran, Mr Kissin’s 
partner. However, staff turn- 
over at the restaurants began 
to rise and Mr Kissin noticed it 
was becoming more diffi cult to 
hire waiters, suggesting busi- 
ness had improved elsewhere. 

Other restaurants have 
noticed greater employee 
movement too. Mr Neville 
Abraham, chairman of Chez 


MEW CITY 
RESTAURANT 


‘■three 'cautious 

OPTIMISM' SPECTfiLS 

COMING (jp 


Gerard, says this is one sign of 
a return to normality. 

“At that age, 34 or 25, people 
are very mobile and will go off 
to Australia with a girlfriend 
at the drop of a hat." he says. 
“But in a recession, people are 
afraid. They don’t want to 
leave a secure job." 

Mr Christopher Brown, man- 
aging director of Comey & Bar- 
row, says business began to 
pick up last October. When 
staff at SG Warburg received 
their bonuses in April, Comey 
& Barrow in Broadgate had its 
second best day ever (the best 
was the Conservatives’ election 
victory in 1992). 


T he recovery in City 
restaurant business is 
more noticeable than 
in the West End. Mr 
Mark de Wesselow, publisher 
of Square Meal, a guide to City 
restaurants, says City employ- 
ees are eating out more than 
staff at West End businesses, 
such as advertising agencies. 

There are, nevertheless, 
signs of increasing business 
throughout London. Mr Acker- 
man's list of new restaurants 
includes suburban establish- 
ments north and south of the 
river. One of the factors 
encouraging new entrants is 
the property downturn, which 
has resulted in lower rents. 

Even in the City, however, 
restaurateurs have had to 


make adaptions to benefit from 
the upturn. Comey & Barrow 
is converting its establish- 
ments into wine bare, largely 
because this enables it to 
attract evening trade. 

Mr Brown says it is difficult 
to get a decent return from a 
City restaurant which is open 
only for lunch, and not on 
weekends. When you take 
bank holidays Into account. 
City lunchtime restaurants are 
open on average 4.7 times a 
week. People will not stay in 
the City for an evening meaL 
Mr Brown says. But they will 
stay for a drink and a little 
food. At lunch times, his cus- 
tomers have a light meal and 
non-alcoholic drinks. In the 
evenings, they drink alcohoL 

Several of the new London 
restaurants offer an attraction 
in addition to food, such as live 
music. Mr Ackerman says. 
Outside the city centre, restau- 
rants are attracting a younger 
clientele, looking for entertain- 
ment as well as a meal. 

He says the most successful 
establishments are in the 
cheap or mid-price range, 
appealing both to diners who 
were too young to go to restau- 
rants when the recession 
began and to older customers 
looking for less expensive 
places to eat 

Mr Abraham wonders, how- 
ever. whether the recovery is 
strong enough to sustain the 
new restaurants. He says: “I'm 
still quite nervous about the 
economy. My instinct is to be 
very cautious. I don’t think 
we'll go back to the way it was 
at the end of the 1980s." 

He also questions whether 
the new restaurants have the 
business skills to succeed. In 
the 15 years he has been in die 
restaurant trade, he says, the 
quality of London chefs and of 
the capital's food have < 
improved out of all recogni- 
tion. He says he has noticed 
little improvement in the qual- 
ity of restaurant management. 

“It never ceases to amaze 
me. the optimism with which 
people open restaurants,” he 
says, "ft’s often because 
they've always wanted to cook 
rather tban because they've 
looked at their potential as 
businesses." 



parmalat Acquisition (>C Atlanta Dairies. Inc. by Parmalat SpA 



Gi 


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v J V. MEAT PRODUCTS B.V. 


wagemans Hanskamp 


Acquisition of a majority stake in Stidmilch AG 
In- Campina Mrlkunie b.a. 


lake uvi-r nf Zonnenbi-rg Vk-ovvarcnfabrick 
l*v O.-lnvo Meat Pnniucts B.V. 


Sale ut Wjeornan*' \ lees (part ol BP Nutrition) 
t<i H.in>kamp bv 


1bdav, effective advice in Mergers & husino- s-vtor. covering 50 countries from 50 

Acquisitions calls for more than financial special i- offices outside the Netherlands, 

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partner for the international loud and agri- concerned. 




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Innilun Kimih'Ii. MBS (.'.in>m Mr.-' I. I ■ ■■■■I- ,n !C4\‘ <iK/.. i> i. 44.71 fi, 44.” J ,’S < 444*. 


The review of the UK's electricity pricing regime 
must tread a fine line, says Michael Smith 

Don’t shoot, I’m 
only r^^^^or 






and opposition Labour MPs 
have pointed to the idiosyn- 
cratic styles of different UK 
regulators and called for a 
more co-ordinated and consist- 
ent regime. Prof Littlechild, 
together with Mr Ian Byatt, the 
water regulator, who is con- 
ducting a parallel exercise, will 
thus be subjected to searching 
scrutiny in their application of 
the regulatory regimes. 

Prof Littlechild must tread a 
fine line: if he is too tough in 
setting price targets, he risks 
the regional electricity compa- 
nies successfully challenging 
his decision through the 
Monopolies mid Mergers Com- 
mission. At the other extreme, 
less stringent prices could lay 
him open to charges that he is 
flavouring already rich compa- 
nies at the expense of consum- 
ers. 

In retrospect the controls 
which have allowed English 
and Welsh companies since 
1990 to increase distribution 
prices by an average of 1.1 cent 
above inflation every year 
seem woefully inadequate for 
an industry which has made 
si gnifi cant cost reductions; 
even the companies admit pri- 
vately that they have had a 
relatively easy ride. 

They deny, however, that 
they misled the government 


about what could be achieved f 
after privatisation. “No one i 
expected to be able to imple- 
ment the kinds of jobs reduc- i 
tions or efficiency improve- i 
meats which have been 1 
effected," says one executive, j 
The companies have typically < 
lost more than 20 per cent of i 
staff; Eastern, the largest < 
regional power company in ( 
England and Wales, has cut i 
jobs from 8.770 in March 1990 c 
to 6£00. £ 


“S— ' 90 

|8wpk Oaa a i tc a u 


O ther efficiency mea- 
sures have included 
cutting layers of 
management, more 
flexible working, improving 
purchasing, and setting up 
business centres where profits, 
rather than cost, are the focus. 
In addition, ca pital expenditure 
has been lighter Hum expected 
because of the recession. 

The result of these changes 
and the relaxed price control 
regime Is that the companies 
and their shareholders enjoy 
an embarrassment of riches. 
For instance, London Electrici- 
ty's forecast pretax profits for 
199344, at between 2180m and 
ElDOm, compare with just 
£126m in the year before priva- 
tisation- This has enabled the 
company to double dividends 
to shareholders from I0.45p per 


share in 1991-92 to an expected 
22_4p for 1983-94. 

Similar progress has been 
Twaiin by of t he other U 
regional companies and, to a 
lesser extent, the Scottish 
groups with their tighter price 
controls. Bui the underlying 
performances of the regional 
companies may be even better 
than the companies are stating 
pubhdy. Most of the regional 
mwpimiwi have set sub- 
stantial sums to meet future 
potential costs such as redun- 
dancy pay and pension provi- 
rions. 

To charges from consumer 
groups of profiteering, the com- 
panies point out that custom- 
ers have also benefited from 
privatisation. Services have 
Improved and prices have 
fallen in real terns for all but 
the largest customers. This 
year domestic tariffs have 
fallen, by 6 per cent in some 
areas at a time when most 
European countries are exper- 
iencing price rises. 

Consumer groups say the 
effect of privatisation Is less 
clear-cut since prices rose prior 
to 1990 as the government 
sought to wwhangft profit levels 
and thus make the industry 
more attractive fin: investors. 

Prof Littleehild’s task is to 
amwm? how far the division of 


post-privatisation spoils needs 
to be reallocated. The regional 
companies do not like the way 
he is tackling it Their overrid- 
ing objection centres on his 
definition of capital invested in 
the businesses. This is crucial 
because the price controls 

which will be set for the next 
five years will take into 
account what he considers to 
be an adequate rate of return 
chi capital. 

In a letter to the co mp a ni e s 
he ha s indicated that he 
favours a rate of 6 per cent. He 
has suggested that the defini- 
tion of capital employed in the 

business should be the market 
ffip i hiiiaitinn of the companies 
about a year after privatisa- 
tion. T he companies argue that 
the true figure for capital 
employed should be what it 
would cost them to replace 
their assets. The distinction 
between, market value and 
replacement cost is important 
to the companies: the post-pri- 
vatisation market capitalisa- 
tion of the sector was £8bn, 
whereas replacing assets could 
currently cost £l2bn In total 

It is in the interests of the 
companies to win as ge nero us 
a definition as possible on capi- 
tal employed. The regulator is 
suggesting they might earn 6 
per cent on a figure less than 
half that which they estimate 
is adequate. 

Observers suggest that if 
Prof Littlechild is unwilling to 
compromise on this tricky 
issue, Ihe regional power com- 
panies in England and Wales - e 
would be forced to reduce dis- 
tribution prices next April by 
up to 20 per cent He has indi- 
cated that in future years they \ \: 
would be able to raise prices by 
Inflation minus 4 per cent. In 
times of low inflation that j; : : 
would mean price cuts- T» 

While this would disappoint 
some consumer groups, the 
regional companies say they 
could not tolerate it. “Right 
now we think the MMC would 
give us a better deal," one 
chief executive said yesterday. 

"If Prof Littlechild sticks to his 
line, the returns for us would 
be woefully inadequate." Some 
of the companies are already 
devising strategy for appealing 
to the monopolies commission. 

Prof Littlechild's review is 
sure to arouse controversy. 

But it Is likely that a compro- 
mise on price controls will be 
reached to placate most, and 
probably all, the 14 companies. 
Whether this will satisfy con- 
sumer groups, which fed the 
utilities have profited at the 
expense of customers, is doubt- 
fUL Power companies may con- 
tinue to reap rewards which 
many consumer advocates find 
unacceptable. 


LETTERS TO THE EDITOR 

Number One Southwark Bridge, London SE1 9HL 

Fax 071 873 5938. Letters transmitted should be dearly typed ana got hand written. Please set fax for finest resolution 


No evidence 
shown of 
instability 

From David Harley. 

Sir, You maintain on your 
front page of June 14 (interna- 
tional edition) that govern- 
ments across Europe have 
expressed concern “about the 
stability of the European Par- 
liament" after the recent elec- 
tion, but you fail to provide 
any serious evidence to sub- 
stantiate this sweeping and 
alarmist judgment. 

The political forces repre- 
sented in the new parliament 
directly reflect political trends 
in the member states. The case 
has yet to be proved that the 
emergence of new political 
groupings, or fragmentation 
into a multiplicity of lists such 
as in France, necessarily leads 
to “instability". Indeed, insta- 
bility is mare likely to be the 
cause than the result of this , 
situation. Democratic societies 
evolve, as the FT would usu- 
ally be the first to point out: 
parliaments exist to reflect and 
integrate that evolution. 

We were particularly 
intrigued by your reference to 
anonymous senior German 
officials muttering darkly 
about “unpredictable factions” 
threatening to disrupt Bonn's 
relations with the newly 
elected parliament. No men- 
tion, on the other hand, of the 
absence from the new parlia- 
ment of the German Republi- 
kaner. surely an unpredictable 
faction par excellence, who 
polled 7.1 per cent in the 1989 
European elections but failed 
to win a single seat this time 
round. 

Again, your reference to 
between 80 and 100 MEPs unat- 
tached to formal left or right- 
wing party groups in the par- 
liament is bordering on the 
gratuitous. In all probability 
new groups and new alliances 
will be formed in the new par- 
liament: surely you are not 
suggesting that there will be 
100 unattached French and 
Italian MEPs continuously 
fomenting instability between 
now and 1999? 

We would urge you to 
eschew dire predictions and 
instead to judge the European 
parliament on its actions over 
the critical months and years 
that lie ahead. 

David Harley. 

adviser to the secretary-general, 
European Parliament, 
Luxembourg 


Banking on two-way checklist 


From Mr Martin Watts. 

I refer to Ian Hamilton 
Fazey’s article on the subject 
of NatWest Bank’s checklist 
(“Campari for accountants”, 
June 14). 

Naturally enough, we also 
use Campari as our checklist 
for assessing which bank we 
wish to US8 — such assessment 
should also be two-way. Our 
version reads as follows: 

C = Compatibility (It Is easier 
to do business with people who 


are cm your own wavelength); 

I A = Adaptability (We live in a 
changing world - flexibility Is 
the keynote); 

M = Managers (We have qual- 
ity people - likewise, so should 
the bank); 

P = Performance (We have to 
perform, but so do the banks 
cm our behalf); 

A = Accessibility (We need 
computer access to our 
account date); 

Bp = Rationality (We run our 


business on our principles, and 
hot the bank’s); 

I > Interest (No, not what it 
charges, but its interest in us). 

Oh, and by the way, when I 
sit down with our tank man- 
ager to eqjoy a refreshing Cam- 
pari, he is from NatWest! • 
Martin Watts, 
managing director, 

C a mpar i GB, 

45 New Street, 

Henley on Thames, 

Oxfordshire RGB 2BP 


Assurances given for Brixton project 


From Councillor Anna TapseU. 

Sir, Considerable concern 
has been generated since the 
local ejections about the future 
of Brixton (Xtallenge, particu- 
larly in relation to problems 
that could arise in sustaining 
the council's commitment 
when no one political grouping 
has control 

Your readers will he aware 
that Sir George Young wrote 
on May 26 to all three political 
group leaders in Lambeth seek- 
ing assurances on a number of 
matters. Since then all three of 
us have examined in detail the 
targets Brixton Challenge has 
been set and the level of sup- 
port that needs to come from 
the council to ensure that 
those targets will be met To 
make commitments without 


that detailed scrutiny would 
have been irresponsible. . 

AH three leaders have now 
written to Sir George Young to 
give him, as the minister 
responsible, our wholehearted 
support to the programme for 
Brixton and the specific under- 
takings that be sought, which 
should enable him to release 
year two’s funding. 

There is no doubt that any 
farther delays to this approval 
will greatly undermine the 
implementation of many 
worthwhile projects and put at 
risk the financial ■ stability of 
t he lar ger developments on the 
central site. 

A great deal of progress has 
already been made in the past 
ntno months: to consolidate the 
working arrangements 


between the board of Brixton 
Challenge and the council. 
Despite its “hung” situation 
the council experienced no dif- 
ficulty in gaining cross-party 
support for farther fast-track 
measures that will assist the 
speedy implementation of chal- 
lenge projects, 

I have no doubt that Sir 
George Young genuinely 
wishes to see Brixton Chal- 
lenge succeed. It would be 
tragic if the argument cur- 
rently being pursued by his 
Tory colleagues about the 
fixture of urban f unding was to 
find its first victim in Brixton. 
Anna TapseU, 

Leader of Labour Group, 
Lambeth. Council, 

Tam Hall, 

London SW2 1RW 


Danger of marginalising UK aerospace industry 


From Mr Alain Deckers. 

Sir, The Hercules replace- 
ment decision (“Herculean task 
for UK defenders”, June 13) 
raises two important questions 
about British government pol- 
icy. First, acquiring the C-130J 
would mean short-term budget- 
ary pressures prevailing upon 
the long-term interests of the 
British aerospace industry. 
Given the close relation 
between the FLA (Future 
Large Aircraft) and Airbus pro- 
grammes, British Aerospace's 
position in the latter would 
inevitably be compromised if 


the RAF (fid not procure the 
FLA. There would be knock-on 
consequences for Britain^ 
aerospace equipment and 
aero-engine industry, which 
would lose FLA and Airbus 
work, gaining comparatively 
little in return for the C-130J 
procurement 

Second, the decision to pro- 
cure the American C-130J far 
the RAF would stand in stark 
contrast with the call for 
“enhanced, cooperation in the 
fields of armaments” among, 
western European nations, 
contained in the Maastricht 


treaty. The FLA is the only 
significant European defiance 
eq u i pment programme for a 
long time an which all Euro- 
pean governments' views coin- 
cide. It would be a shame if the 
government’s budgetary preoc- 
cupations marginalised the 
Briti sh aerospace and defence 
indust r ies from developments 

at ihe heart of Europe 

Alain Deckers, 

postgraduate student, 
programme of policy research. 
Engineering, Selena ami Tech- 
nology, 

The VrUoerstiy, Manc hester 


Housewives run the economy as husbands chat 


From J E Faxnoeather. 

Sir, Your correspondent, 
Alexander Nicoll, seems sur- 
prised that a "housewife” 
could achieve what Mrs Radla 
Rader has achieved 1 (“House- 
wife who* ' built empire 


from nothing”, June 9). 

I would draw his attention to 
the book ct Proverbs, chapter 
31, verses 10 to the end. There 
he wffl find that housewives 
have in the past been responsi- 
ble for the economy. The hus- 


bands sat by the gate 
— tte sum total of their contri- 
bution. 

J E Fairweather, -, 1 -' 

28 Fumivat Mansions, 

Wells Sheet. 

London W1P3FF - 





a 











FINANCIAL TIMES 

^CtaS*** Brid ®^ London SE1 9HL 
Tet 071-873 3000 Telex; 922186 Fax; 071-407 5700 

Wednesday June 15 1994 


Bad start for 
Railtrack 


Today's one-day rail dispute in the 
UK is an inconvenience for mil- 
lions of people who rely on rail 
transport, and an unwelcome 
reminder of the bad old (toys. It is 
more t h a n an incon ve nience for 
Railtrack, the state-owned com- 
pany set up in April to run British 
Rail's track and si gnalling 
operations as it is privatised. 

hi its first few months of exis- 
tence, it needs to win the confi- 
dence of its customers and con- 
clude dozens of deals with the 
train-operating companies and the 
track maintenance comp an ion a 
one-day strike of Rafltrack’s sig- 
nalling staff, with the promise of 
more to come, is an inauspicious 
start 

Further, with its own privatisa- 
tion hoped for before the nex t elec- 
tion. Railtrack is caught in a bind. 
It wants to keep down its wage 
costs to Tna-rfyniw. its sale price, 
bat if it continues with its hard 
hue against the RUT rail union it 
will face a growing bill for com- 
pensation from track users m»«We 
to run trains. 

Railtrack is not blameless for 


the current mess, which involves 
a pay claim going back seven 
years. It appears to have indicated 
that it was ready to offer an 
interim pay dea l to dgnaiq gfaff . 
before withdrawing the offer and 
saying that an offer would only be 
made at the conclusion of produc- 
tivity talks. 

The union, however, must take 
most of the blame for today's 
events. Railtrack accepts the logic 
of a catch-up payment for si gnals 
staff. But union members are 
demanding sntm» of that money 
now - and without a link to pro- 
ductivity changes. To strike for 
such a deal Is more than prema- 
ture; it is irresponsibly exploiting 
Rafltrack*s vulnerability at a deli- 
cate stage in Its development. 

Mare than 100 years of adversar- 
ial industrial relations on toe rail- 
ways will not disappear ov ernig ht 


But now that the railway system 
is being exposed to market forces, 
the new. rail managers are nwiw 
even greater pressure to manage 
change without industrial cnnfHH- 
They cannot do that with a trig- 
ger-happy RMT. 


Jumping beans 


Even in world markets every dog 
has its day. While bands and equi- 
ties have plunged, real assets have 
staged a striking come back. Yes- 
terday base metals such as copper 
and aluminium hit new highs for 
the year. Others that have soared 
in recent weeks and months 
include coffee, rubber and wool. 
Oil has managed a modest uplift 
Does this presage a renewed bout 
of inflation? 

It seems unlikely, even though 
surging commodity prices have 
often foreshadowed inflationary 
problems in the past There is 
nothing in the macro-economic 
environment to wnirii the explo- 
sive growth of foreign exchange 
reserves or the ail shocks of the 
1970s. Nor is synchronised eco- 
nomic growth creating excessive 
pressure on commodity supplies 
as it did two decades ago. 

Since the 1970s the stru ct u re of 
global industry has become less 
sensitive to commodity price rises. 
The use of oil per unit of GDP is 
reckoned to have fallen by some 
40 per cent and the newer infor- 
mation industries rely on cheap, 
light inputs such as silicon mare 
than expensive, heavy metals like 
copper. Raw materials account for 
a low proportion of total costs. 
There are, admittedly, new cartel 


agreements in soft commodities 
such as coffee. Yet demand for 
such products is price-sensitive - 
hardly a good omen for a cartel. 

In reality, commodity prices are 
rising from an exceptionally 
depressed base. So much the bet- 
ter, since it wfll prevent producers 
from closing down capacity, 
thereby restricting supply and 
creating potential bottlenecks. 
The surge is a predictable 
response to the strength of the US 
recovery. It also reflects demwnH 
from the fast growing Asian econ- 
omies, ftichidiwg ‘ China And the 
hedgB foods, gored by the bear 
market in bonds, have swindled 
their febrile attention to commod- 
ities. 

Yet gold, which Fed chairman 
Mr Alan Greenspan admits to 
watching; has obdurately foiled to 
levitate, partly because a non-in- 
come yielding investment is 
expensive to hold when real inter- 
est rates are high. This points to 
volatility in the coarse af a cycli- 
cal upturn rather than a sus- 
tained, financially-driven bubble. 
And with competition in retailing 
in the developed world still fierce, 
the recent rise wifi. be felt more in 
profit margins than mtmmnw 
prices. No reason yet to panic over 
beans, bellies and barley. 


Student vouchers 


In the past five years, the 
proportion of 18-year-olds going 
into higher education in the UK 
has doubled, an ex pan si o n, in stu- 
dent numbers widely seen as 
essential for improving toe coun- 
try's competitiveness. Yet this 
enormous expansion has taken 
place within a framework of 
higher education largely designed 
in the last century to educate a 
much smaller elite. It is not sur- 
prising, therefore, that the system 

coming under strain. 

Ch i ef among those pressures is 
fending , made more acute by toe 
UK tradition that the state pays 
most of the cost. The govern- 
ment’s solution has been to avoid 
funds to match the rise 
in student numbers. Universities 
have been able to improve produc- 
tivity, but much of the saving has 
been at toe expense of st raining 
university staff and facilities, if 
not at the expense of quality. A 
further squeeze is planned. 

Such measures are inevitably 
short-term in scope and arbitrary 
in consequence. University vice- 
chancellors and principals have 
become increasingly vocal in their 
protests over shortage of 
resources. Their difficulties have 
been compounded by wild swings 
in policy. When the government 

launched the recent expansion 
drive, it offered enticing incen- 
tives to those institutions that 
were most successful in attracting 
students. When this worked better 
than ant icipated, the incentives 
were hastily reduced. 

Universities cannot so easily 
chang e direction. A dear course is 
needed that allows them to plan 
development. Their top m ana g e rs 
have increasingly recognised that 
greater stability would oome from 
breaking toe dependence on funds 
allocated by the higher education 
funding councils. Hence the grow - 
ing interest in a shif t from grants 
paid by Whitehall to fees paid by 
or for students. 

The latest manif estation of this 
- Monday's report of the Higher 
Education Quality Council, which 
monitors the quality of degree 
courses. Its starting point is the 
need for changes to encourage 
greater flexibility in higher educa- 
tion. Much-needed measures are 
proposed to make it easier for stu- 
dents to move between universi- 
ties, to work while studying and 
to re-enter education after breaks. 

The report ex amine s ways to 
ensure that such measures do not 


undermine the quality of higher 
education. But it goes on to look 
at how the binding of students 
can be reformed to encourage flex- 
ibility. Hie answer is to move to a 
“credit-based formula", or vouch- 
ers. Students would be allowed to 
buy the education they desire, 
while universities would be 
rewarded for their success in 
responding to student choice. 

The report finds that there is 
r-fmciriorahip agreement in princi- 
ple to such a move. Academic staff 
are wary of students who make 
several changes during their 
degrees, arguing that institutions 
can suffer destabilisation. But 
many previously opposed to 
vouchers have been persuaded of 
the advantages of a funding sys- 
tem that would be less prey to the 
ju dgments of a quango and the 
whims of ministers. 

That is welcome. Vouchers 
would also bring many other 
advantages, including the opportu- 
nity for universities to charge 
top-up fees. Those that believe 
they offer something special 
should be able to charge more. 
Individual students are best 
placed to judge whether the addi- 
ticHial cost is merited. 

But the acceptance of the princi- 
ple of vouchers is only a starting 
point. Implementing toe policy 
would involve many awkward 
questions, including toe value of 
toe voucher and whether it should 
be the same for an subjects. Some 
courses cost more than others - 
training doctors for example- Then 
there is the question of whether 
toe voucher should be worth more 
for courses that are considered 
national priorities, such as science 
or engineering. And if students 
are to pay. a graduate tax would 
be better than the current loan 
scheme. 

Perhaps toe most difficult ques- 
tions to be faced, however, are 
those confronting the politicians. 
Free higher education is a highly- 
valued component of the middl e- 
class welfare state. Reforms to 
plac «> more of the burden on those 
who benefit from higher education 
risks their votes. Both ministers 
and the opposition have shied 
away from that prospect Will they 
be able to find the courage now to 
provide those who run higher edu- 
cation with a funding system 
equal to toe task of expanding pro- 
vision without eroding the quality 
of one of the UK’s most prized 



For politicians and 
political analysts, 
election results are 
irresistible. Even 
when the direct con- 
sequences are insig- 
nificant and the 
turnout low, you 
still get a much big- 
ger sample of public opinion to pn in 
any mere opinion poll 
So we eagerly weigh toe results of 
last weekend's elections to see 
whether German Chancellor Hel- 
mut Kohl is now sure of reelection 
in October, or whether UK Prime 
Minister John Major can survive. 
Fair enough, so long as one remem- 
bers that many more people will 
vote in national elections, and that 
those who did vote would not neces- 
sarily vote the same way if they 
were choosing a government 
Since they were actually choosing 
a European Parliament, and since 
the results ware released in all 12 
European. Union member states on 
the same day, it is even more tempt- 
ing to dr a w flnnrlpffjnp g about toft 
political future of Europe as a 
whole. More tempting, but also 
metre hazardous. The low turnout 
suggests that many voters either 
had no strong feelings on pan-Euro- 
pean issues, or were not convinced 
that tofa election offered an effec- 
tive way to express those feelings. 
Among those who did tnm out, sig- 
nificant minorities in France and 
Denmark voted for lists whose main 
plan fc was opposition to toe Maas- 
tricht treaty. Elsewhere, the vast 
majority voted for candidates whose 
position on European issues was 
only one feature, and usually not 
the most prominent, in their gen- 
eral political profile. 

The parliament Tfa»if may be less 
single-minded, and therefore less 
effective in seeking a farther 
increase in its own powers, than 
was its predecessor. But its views 
on that subject tend in any case to 
be discounted by governments, 
which still wield most of the real 
power. More gigntfirawf will be toe 
French prime minister’s need to 
look over his ahimiHar at Mr Phil- 
ippe de VUliers. the Euro-sceptic 
leader whose supporters will have 
to be wooed by anyone hoping to be 
the standard-bearer of the right in 
next year's presidential election. 
And all 12 governments, in prepar- 
ing their positions for the 1996 
Maastricht revision confe renc e, will 
have to bear in mind the ex trem e 
difficulty of winning the Danish 
electorate's assent to new measures 
of European integration - though 
after the gruelling saga erf Maas- 
tricht ratification, they should 
hardly nesd reminding of that. 

Public opinion w ithin the EU is 
clearly going to be an important 
facto r in determining its ftitme, and 
the Maastricht saga well illustrates 
the perils erf neglecting it But the 
femir of European leaders in thp next 


Edward Mortimer 


More strategy, less 
small print 

European Union leaders should concentrate on leading, 
not on following every shift in public opinion 



few years is not to respond slav- 
ishly to every perceived shift in 
public opinion, but rather to use the 
institu tions of the EU, imd to adapt 
them where necessary, to deal with 
problems that call for a common 
European response: If they do this, 
and if they can show clearly that 
tote is what they are doing, they 
sYiradd not to>d it too difficult to 
c ar ry public opinion with them. 

What are those problems? It is 
almos t a knee-jerk response to say 
that the first and direst is unem- 
ployment High unemployment Is 
indeed something of a European dis- 
ease, but it is not certain that the 
remedies for it are best adopted at 
the EU level. Most of the sugges- 
tions in the recent Organisation for 
Economic Cooperation and Devel- 
opment report on toe subject are 
still within the competaice of mem- 
ber states. Consensus on the precise 
policy mix wfll be hard to achieve, 
and there is a lot to be mid for 
letting individual states exp erim ent 
with different approaches, and leant 


from each other’s successes and 
failures, so long as these different 
approaches do not constitute non- 
tariff barriers to trade or to the free 
movement of capital and labour. 

The contribution the EU can 
make to reducing unemployment 
lies precisely in demolishing such 
banters, and preventing new ones 
from being erected. Internally, it 
must p re serve and improve the sin- 
gle market. E x ternally it must build 
on the success of the Uruguay 
Round, and above aD encourage toe 
growth of central and east Euro- 
pean economies, where geography 
should give an edge to west Euro- 
pean exporters and investors over 
their global compet ito rs. Expanding 
its market to feefede central and 
eastern Europe is clearly in the 
ETTs economic interest, even if 
there are short-term costs such as 
accelerated job losses in so-called 
“sensitive" sectors, meaning those 
where the west European workforce 
is anyway shrinking rapidly. 

As with employment, so with the 


environment Some aspects of the 
problem can best be dealt with at 
national or even sub-national level, 
others on toe scale of the planet 
But there is an obvious task for the 
EU in preserving natural resources 
which are used by residents of more 
than one member state, «nH m com- 
bating pollution which spills across 
state frontiers. That also implies 

planning Hip tr ansform tinanfa 1 infra- 
structure, especially the transport 
networks, in ways which preserve 
rural tranquillity as far as possible. 
At present the EU is perceived by 
public opinion in many member 
states as eco-hostile. not least 
because of the incentives it gives to 
maximise agricultural productivity 
with intensive use of chemical fer- 
tilisers and pesticides, and with lit- 
tle concern either for toe quality of 
the product or for the effect on the 
countryside. That can, and should, 
he changed. 

But probably the EU’s most 
urgent task lies in the area of secu- 
rity. Conventional British wisdom 


has it that security should be left to 
Nato, and that for the EU to meddle 
in it would risk weakening the 
all-important link with the US. That 
wisdom is out of date. President Bill 
Clinton, during his D-day tour of 
Europe, positively egged on the cre- 
ation of separate European defence 
structures. He promised that the US 
would "remain engaged” in Europe 
and honour its Nato commitments, 
but added: "We also want Europe to 
be strong. That is why America sup- 
ports Europe’s own steps so far 
toward greater unity - the Euro- 
pean Union, toe Western European 
Union and the development of a 
European defence identity." 

There is an important subtext 
here. Mr Clinton was elected to give 
priority to US domestic problems 
and economic interests, and if any- 
thing his determination to do that 
has been strengthened by toe vicis- 
situdes of the last year. His "presi- 
dential decision" on multilateral 
peace operations, issued last month 
after a full year’s gestation, sets 
tight limits on the operations the 
US will support and even tighter 
ones on those it will participate in. 

I n Europe, Mr Clinton c laims 
to be committed to deploy 
ground troops in Bosnia, but 
only after a foil peace agree- 
ment is reached, and if Con- 
gress agrees. Likewise he claims to 
be committed to expansion of Nato 
eastwards, but at some unspecified 
date in the future. For today there 
is only "security co-operation every- 
where in Europe". Unless Russia 
begins again to look seriously 
aggressive, that will not mean 
much more than joint military exer- 
cises. 

His message to Europe is very 
dear, and can be paraphrased thus: 
"If you are attacked, we are still 
with you. But for the moment, 
thanks to our past efforts, you are 
not in danger and we have other 
fish to fry. For God's sake organise 
yourselves, bring central Europe 
within your fold while the going is 
good, and deal with the problems on 
your frontiers so that Europe does 
not again become a major worry for 
us. We will give you logistical and 
air support, but we will not expose 
our troops to casualties on the 
ground." 

That is toe agenda Europe has to 
deal with in the next few years. To 
do so effectively will require a pool- 
ing of sovereignty in the very sensi- 
tive areas of defence and foreign 
policy - for which, according to 
today's wisdom, public opinion is 
not ready. Yet it is a task which 
should be much easier to explain to 
public opinion than the need to 
standardise electric sockets, or to 
spray fields with weedkiller to pre- 
vent anything growing in them. If 
the EU had been able to save Bos- 
nia, its citizens would have a 
clearer idea of what it was for. 


Dividends are only part of the story 



Remarks by Mr 
Stephen Dorrell. 
financial secretary 
to the Treasury, to 

thp nnnfftdpraHnTi of 
Briti sh Industry last 
month criticising 


P *K2S fr ’ UK rampudn* 


— — dend policy have 
certainly set the cat among pigeons. 
Perhaps the conclusion, the chancel- 
lor wfll draw is that Treasury min- 
isters would do well to remain 
decently veiled throughout the 
year, not just at Budget time. 

If so, that would be a pity, 
because Mr Dorrell did ask some 
interesting questions, which 
deserve a serious response. Does the 
rise in dividend payouts matter? 
Has it affected companies* ability to 
invest profitably? Is the corporate 
tax and regulatory framework still 
appropriate? 

Business investment in the UK 
has indeed been too low. Fixed 
investment as a share of gross 
domestic product has been below 
the levels achieved by Britain’s 
mam, competitors over the last 10 
years. The UK average has been 17.5 
per cent, compared with a European 


Union average of 19.7 per cent and 
an OECD average of 20.4 per cent 

The main reason for companies’ 
unwillingness to invest - certainly 
the one they give in response to our 
surveys - is that they are uncertain 
about future demand. Of course 
uncertainty is a feet of business life, 
but in the UK it appears to have 
been ma gnify by government pol- 
icy errors. So the government’s 
main response to the problems Mr 
Dorrell identifies should be to main- 
tain a stable macroeconomic and 
ffnanHai environment 

The behaviour of long-term inter- 
est rates in recent months suggests 
the market still lacks confidence in 
the authorities’ ability to meet infla- 
tion targets in the upturn, perhaps 
because the govern m ent has only 
gone half way towards creating an 
independent and accountable Bank 
of England. Making an honest 
woman of Rank gov er nor Mr RArtte 
George should be high on the Trea- 
sury's age nda . 

But the amounts and types of 
finance available are also relevant, 
however stable the Inflationary 
environment Our research shows 
that, over toe medium term, there 


is a close hnk between the trends in 
business saving (retained profits) 
and investment So it is reasonable 
to explore how retained profits 
might be increased. The best 
answer is increased profitability. 
UK companies’ profitability has 
been lower than that of some com- 
petitors - the return cm capital in 
the business sector in 1980-91 was. 

Uncertainty is a fact 
of life, but it 
appears to have been 
magnified by 
government errors 

at 9.7 per cent a year, S points or 
more below rates in the US, Japan, 
Germany or France. 

Then there is the tax system. The 
Institute for Fiscal Studies has 
argued that the reform of the corpo- 
ration tax system in the mid-1980s - 
which reduced both capital allow- 
ances and corporation tax - 
although Intended to be fiscally 
neutral increased the user cost of 
capitaL That points to the need for 


other reduced rates erf corporation 
tax, or increased capital allowances. 

Dividend payouts - which also, of 
course, reduce retained earnings - 
are very delicate territory, as Mr 
Dorrell has discovered. One false 
move could send actuarial deficits 
in pension schemes soaring, requir- 
ing increased company contribu- 
tions, offsetting any cashflow bene- 
fit from lower payouts. 

The first point to note is that, 
while payout ratios have risen, so 
have amounts raised through rights 
issues and flotations. So - certainly 
for large companies - financial mar- 
kets are performing as they should, 
requiring managements to justify 
calls for funds, and recycling money 
to c ompa nies which have attractive 
opportunities. 

But smaller companies wonder 
whether the market knows enough 
about their investment opportuni- 
ties to add value to their decisions, 
and argue that the costs erf raising 
equity are too large. The govern- 
ment has already produced part of 
the answer to that problem with its 
Enterprise Investment Scheme and 
Venture Capital Trust proposal 

Another constructive change 


might be to allow the costs of 
equity r aisin g against tax. And the 
Treasury might also focus on the 
operation of the capital taxation 
regime. The capital gains tax rate is 
too high; it discriminates against 
direct equ ity in vestment and hin- 
ders the effective operation of the 
equity market Among the many 
possible reforms the chancellor 
might consider is to taper the rate 
on realised gains in line with the 
length of time the amount was held. 
Over time that would reward rela- 
tionship investors and encourage 
tax-paying institutions to take a 
long-term view. It is an idea the 
Labour party favours, which ought 
not to be allowed to rule it out. 

Rates of dividend payout are only 
part of the story- Mr Dorrell would 
therefore do well to downplay this 
and begin instead to develop a 
broader agenda of corporate tax 
reform. 


Howard Davies 


The author is director-general of the 
Confederation of British Industry 


OBSERVER 


Political 

affairs 


■ Denmark's most celebrated 
unmarried couple have at last tied 
the knot Prime Minister Poul 
Nyrup Rasmussen, Social 
Democratic party leader, and Lone 
Dybkjaer. a leading light in the 
Radical Liberal party, have teen 
firing in unmarried bliss for the 
past two years. That raises not an 
eyebrow in tolerant Denmark, 
where more than a third of 
cohabitin g couples are unmarried. 

Rasmussen and Dybkjaer married 
in secret in May, in the midst of 
toughfought European 
parliamentary aipctions . Dybkjaer 
triumphed in the vote; she achieved 
the second-highest personal score, 
with 159.552 votes, and won her 
party's first Strasbourg seat 
Rasmussen fared less well His 
party’s vote fell to a miserable 15L8 
per cent, from 213 per cent in 1989 
and 374 per cent in the last election 
to the Danish parliament itself. 

A former environment minister, 
Dybkjaar’s connection with 
Rasmussen kept her out of the 
current Radical party/Social 

Democrat coalition government 
On present form, she might be 
keeping Rasmussen out in future. 


Marathon hurdle 

■ Winning the right to host the 
2000 Olympics Games was obviously 


the easy bit for Sydney - getting 
someone to run the damn thing 
is the tricky part 

The Sydney Olympics Games 
Committee brought in two firms 
of headhunters to help choose toe 
games' chief executive. But SOGOC 
is covered in embarrassment Its 
(un-named) second-choice candidate 
has pulled out, just hours before 
the appointment was due to be 
announced. The first choice also 
withdrew, some time ago. 

The sticking-polnt is - wouldn’t 
you believe it? - money. This time 
round, the A$400,000-a-year salary 
was quickly topped by the 
candidate’s existing employer. Gary 
Pemberton, the Qantas boss who 
heads SOGOC, says everything 
now goes back to square one - 
moaning , in all likelihood, another 
eight-month delay. 

Should be a dose finish. 


Lucy the Underdog 

■ For the four new MPs who took 
their seats in the House of 
Commons, yesterday should have 
been their special day. But then- 
arrival in the chamb er was 
upstaged by the entry of another 
newcomer - Lucy, David Blunketfs 

new guide dog. 

As Labour’s health spokesman 
entered a packed chamber for prime 
minister's questions, the 21-month 
old Labrador slowly led her master 
towards the government benches. 
Pandemonium ensued as her master 
was hauled back across the floor 



*1 was searching through people’s 
homes while they were watching 
the Dlmbleby lecture’ 

of the House by anxious colleagues. 
Said a Bhmkett aide: "Lucy can 
only have assumed that our 
performance in the European 
elections was so good that we bad 
taken power," 


Party pooper 

■ T alkin g of dogs, what do we 
make of Labour MP Kw 
Livingstone's support for the 
"Scoop that poop” campaign which 
he helped launch in Battersea Park 
last weekend? 

The aim is to “persuade owners 
to dear up after Britain’s 7fim 


dogs" and the sponsors, dog-food 
manufacturers James WeUbeloved 
& Co, wanted a tame MP to pose 
for the cameras, because folding 
tqr dogs is an issue upon which 
MPs receive more mail than any 
other. 

Another sign, perhaps, that the 
Labour leftwinger is not taking 
seriously his other campaign to 
collect colleagues' signatures for 
his candidacy in Labour’s 
leadership race? 


False alarm 

■ When John Harris retired 
unexpectedly early from the 
chairmanship of East Mwnnmia 
Electricity earlier this year, it had 
been thought that he could at least 
look forward to the chairmanship 
of the Coal Authority - which the 
government had indicated was his 
for the taking. 

However, Harris’s reputation, 
once among the highest in the 
industry, has taken a bit of 
hammeri ng following revelations 
about the problems East Midlands 
has had with some of its 
post-privatisation acquisitions. 
Indeed, it seems that the 
government is now looking for 
someone else to head the 
organisation which will supervise 
the licensing of pits and their 
liabilities following coal 
privatisation in the winter. 

As for Harris, he seems to be 
enjoying life away from the 
business fray. Apart from a bit of 


consultancy work overseas, he is 

busy painting his No ttinghamshir e 

house. 

Who knows - the government 
may still decide he’s the right man 
for the job. 


Gloom speaks 

■ John Major’s renewed interest 
in seeing British MPs working 
"sensible hours” is not to the taste 
of some members of the House of 
Lords. 

The peers have recently teen 
burning the midnight oil on the 
bill to privatise British Coal Nearly 
nme hours after making the initial 
speech from too Labour front bench 
on Monday, Lord Morris said he 
was glad the House did not meet 
at 9 o’clock in the morning. "1 get 
better as the light gets darker," 
he confessed. 

Rather like mushrooms, really. 


US bonding 

■ The word from Wall Street is 
that the Clinton administration 
has announced plans for a new, 
three-tranche US government bond 
issue. 

The first tranche is the “Gore” 

- No interest The second is the 
"Stephanopoulos” - No maturity. 
The third is the “Biliary” - No 
principal A rumoured fourth 
tranche, to be used only in 
emergencies, is the “Paula” - No 
date. 



14 



wimm&Mimm 


WOMPWWE EXPERTISE AMD RESOURCES 


FINANCIAL TIMES 

Wednesday June 15 1994 



typewriters * woRDPsooBsgs® : 

PRINTERS - COMPUTERS - PAX ' 


US prepares resolution for Security Council 

Japan backs sanctions 
against North Korea 


By WHfiant Dawkins in Tokyo and 
John Burton in Seoul 


Japan yesterday reassured the 
US that it would support posable 
United Nations sanctions against 
North Korea. 

Prime minister Tsutomu Hata 
told US president Bill Clinton 
that Japan would take “responsi- 
ble action within the bounds of 
our constitution'’ if the UN 
adopted a sanctions resolution. 

In a 20-minute phone conversa- 
tion with Mr Clinton, Mr Bata 
denied the minority Japanese 
government was reluctant to sup- 
port sanctions. Tbe Social Demo- 
cratic party, the second largest 
opposition group, has so far 
opposed sanctions, a reflection of 
its ideological support for Pyong- 
yang and the cash it gets from 
North Korean groups in Japan. 

Japan’s gesture of solidarity 
came after Ms Madeleine 
Albright US ambassador to the 
UN, said the US would submit a 
draft sanctions resolution to the 
UN Security Council in the next 
few days, in response to North 
Korea’s announcement on Mon- 


day t ha t it would withdraw from 
tiie ftrtemaHfiTiB? Atomic Energy 
Agency, the United Nations' 
nuclear watchdog. 

Official notice of the with- 
drawal was made yesterday by 
the North Korean ambassador to 
tbe UN. 

The heightened tensions unset- 
tled share prices in Tokyo and 
Seoul. The Nikkei average of 225 
leading Japanese stocks fell 
198-84 paints, or 09 per cent, to 
■zi 353 -07 The South Korean com- 
posite i ndex shed 19.52, or 2.1 per 
cent, to 903-72. 

It was the sharpest one-day fall 
on the Seoul bourse since the 
nuclear dispute entered a new 
and critical phase at the end of 
May with Pyongyang’s unsuper- 
vised removal of spent fuel rods 
horn its nuclear reactor. 

Mr Han Sung-joo, South 
Korea's foreign minister, yester- 
day expressed confidence that 
conflict was not about to erupt 
on the Korean peninsula. 
"Despite war talk, there is no rea- 
son to worry about the outbreak 
of hostiliti es" he said. The door 
to negotiations remained open. 


although “the possibility seems 
much less than several weeks i 
ago”. 

South Korea's president Kim 
Toung-sam, said North Korea’s 
announced withdrawal horn the 
IAEA was taken “to avoid the 
disgrace of [Pyongyang] being 
kicked out of” the IAEA for its 
refusal to accept full interna- 
tional nuclear inspections. 

Some government officials in 
Seoul believe Pyongyang may be 
using the threatened puO-oot as a 
fresh negotiating tactic to force 
the US to hold direct talks on 
possible diplomatic normalisation 
and eco nomic aid. 

Former US president Jimmy 
Garter will travel to Pyongyang 
today in an unofficial attempt to 
maintain diplomatic dialogue. 

Mr Han Indicated it would take 
several weeks to pass a UN sanc- 
tions resolution as the western 
powers try to persuade China to 
support punitive actions. 

“Obviously, we do not know 
what the Chinese attitude will 
be,” he said, suggesting China 
would support sanctions if 
Pyongyang remains intransigent 


I Japanese 
’ business 
federation 
urges cuts 
in red tape 


By WnHam Dawkins in Tokyo 


Report attacks condition of 
UK battle tanks in Gulf war 


By Bruce Clark, Bernard Gray 
and James Blitz fo London 


It was “scandalous” that 
three-quarters of the British 
army's main battle tanks in 
Germany were under repair 
when the Golf war brake out. a 
parliamentary committee said 
yesterday. 

Britain should also think twice 
before buying foreign weapons 
because it cannot trust other 
countries to provide support in 
times of crisis, the House of Com- 
mons defence committee said in a 
report on the lessons of tbe Golf 
war. 

The Ministry of Defence, which 
is preparing several big procure- 
ment decisions and a plan to 
make deep cuts in spending on 
support services promised to 
Study the report carefully. 

The committee commended UK 
industry for its emergency opera- 
tion to upgrade the battle- 


readiness of forces rushed to 
Saudi Arabia following the 
August 1990 invasion of Kuwait. 

The crisis found the UK ill-pre- 
pared to face chemical and germ 
warfare attacks, while more than 
75 per cent of the army’s Chal- 
lenger tanks in Germany were 
out of service. 

“We are disturbed that the UK 
was not as ready to protect its 
forces against chemical and bio- 
logical attack as it might have 
been,” the report said. Some defi- 
ciencies had been rectified when 
hostilities began in January 1991. 
but in fhture the forces might not 
have so long to prepare. 

The committee deplored the 
condition of the Challenger-1 
tanks which were rushed to 
Kuwait from Germany. It 
described the tank’s turret as 
“barely adequate 1 ' and said: “We 
consider it scandalous that the 
Challenger-l tank fleet was in 
such a poor state." 


A spokesman for Vickers, the 
tank's manufacturer, said the 
Challeuger-1 did perform well 
when properly maintained, and it 
would soon be superseded. 

The report warned against run- 
ning down the UK defence sector 
and said strategic factors should 
be taken into account in procure- 
ment. The government will make 
announcements soon on plans to 
buy frigates, minesweepers and 
transport aircraft. 

The committee said: “We 
believe it would be unwise to rely 
entirely on even our closest allies 
to provide surge capacity as they 
have their own priorities." It said 
some support roles, including tbe 
overhaul of vehicles, could be 
contracted out to private compa- 
nies but some in-house capacity 
must be retained. 

A British Aerospace spokes- 
man said UK companies’ work at 
the war front would be harder if 
foreign systems were procured. 


Sprint deal I BCCI managers sentenced 


Continued from Page l 


Continued from Page l 


has still to be approved by the 
European Commission. Tbe Euro- 
pean operators will have seats on 
the Spruit board. 

A complicated structure gives 
all partners equal votes on a 
global board. Joint ventures will 
be established to offer services in 
Europe, tbe US and the rest of 
the world, with a separate net- 
work to provide a global network 
for multinational customers. 


Lawyers for tbe defendants said 
yesterday that they were consid- 
ering appealing. The sentencing 
follows charges brought against 
14 BCCI executives by the Abu 
Dhabi authorities in July last 
year, and a trial by the state’s 
public prosecutor which began in 
October. 

The government of Abu Dhabi, 
BCCTs majority shareholder, 
said: “It is a landmark in the 


BCCI affair that these key indi- 
viduals have been brought to jus- 
tice." It said It would continue to 
help world authorities convict 
“wrongdoers’’. 

Among the other sentences 
handed out, three senior execu- 
tives of the bank currently in 
detention in Abu Dhabi were 
given six years each. 

A further six staff in detention 
in Abu Dhabi received three 
years each. Mr Iqbal Bizvi was 
acquitted cm all charges. 


The Keidanreu, Japan’s most 
powerful business federation, 
yesterday stepped np its cam- 
paign for more economic deregu- 
lation, amid the latest signs of a 
corporate recovery. 

Mr Sboichiro Toyoda, who 
became Keldanren’s chairman at 
the start of this month, called on 
prime minister Tsutomu Bata to 
halve the number of business 
regulations in the next five 
years. Be urged the government 
to “break the wall of vested 
interests”. 

There wore 11,402 regulatory 
per m its and approvals in force in 
March 1993, 460 more than the 
previous year, and tbe seventh 
year running of growth in the 
red tape mountain, according to 
the government’s management 
and co-ordination agency. The 
Tokyo office of Baring Securities 
estimates the regulations cover 
industries representing 40 per 
cent or gross national product 

Highly publicised deregulation 
drives by successive administra- 
tions have failed because of min- 
istries* reluctance to lose power 
and fear of competition, mainly 
among small companies in 
highly regulated sectors such as 
distribution. 

By contrast big manufactur- 
ing business, represented by tbe 
Keidanreu, supports deregu- 
lation to cut costs in the hope 
that a more open market may 
bring a fall in the value of the 
yen, the strength of which is 
hampering exports. 

Mr Morihiro Hosokawa, the 
previous prime minister, staged 
a fresh deregulation drive on 
taking office last August but 
only held power for eight 
months, not amagh to make sig- 
nificant progress on his hit list 
of 94 regulations. 

Mr Hata. whose government 
may be even shorter lived, yes- 
terday called on cabinet minis- 
ters to display “leadership” in 
pulling together by the end of 
this month a package of propos- 
als to cut red tape. 

Fresh evidence that the worst 
of tbe recession is over for large 
companies came yesterday when 
Tefltoku Databank reported a 33 
per cent year-on-year decline by 
value in bankruptcies last 
mouth- However, the number of 
corporate collapses rose by 7.3 
par cent over toe same period, 
suggesting that small companies 
continue to suffer. 

Many businesses are still faced 
with surplus capacity, with the 
government's economic planning 
agency yesterday reporting a 2.5 
per cent decline in private sector 
machinery orders in April from 
the same month last year. 

Machinery orders, a forward 
indicator of general industrial 
investment, fell more sharply 
month on month, by 14-2 per 
cent from March to April, more 
than wiping out a 10.3 per cent 
rise in the previous month. 


r 


FT WEATHER GUIDE 


Europe today 


A westerly stream of air wBI cover northern 
Europe, while southern and south-western 
Europe will be affected by high pressure. 
Finland wiO have rain. Sweden wS be sheltered 
from the rain by the Norwegian mountains, 
bringing sunshine and occasional showers. 
France and Spain wffl be warmer, with tropical 
conditions over the interior of Spain. South- 
eastern Europe will have unsettled conditions. 
Greece, western parts of Turkey, mid the 
Balkan states will have thunder storms. Poland, 
Germany, and the Alps win have dear spells 
with occasional showers. 




t -S 


fWi 








••••;• .... 1,?»V 


Five-day forecast 

A surge of warm air from Spain wfll flow 
northwards and conditions win be warmer over 
France, Germany, and the Benelux. Coaler air 
wiH flow from the Atlantic, bringing 
thunderstorms over Spain, France, the Benelux, 
and Germany. Northern Europe will have 
unsettled conditions, while the south-east will 
be warmer. 




mm 

mm 


S afe K*rT 

'fA :- v rsi "'':':. '£{■* ” ' *v v ■■■'• .v-' - -1 » •• 

Warm tram JLA. CoU front A- Wind spaed In KPH 


TODAY'S TEMPERATURES 


Situation at 12 OUT. T ampor at une maximum tor day. Forecasts by Metao Consult of tfw Nattertands 


Abu Dhabi 

Accra 

Alglont 

A m sWn 

Alhsns 

Atlanta 

B.Akaa 

B.ham 

Bangkok 

Barcelona 


Maximum 

Ba*ng 

fair 

34 

Caracas 

Cabiua 

Belfast 

douefy 

17 

Cardiff 

sun 

41 

Belgrade 

sun 

26 

Casablanca 

shower 

29 

Berfin 

fair 

18 

Chicago 

BUI 

30 

Bermuda 

fair 

30 

Cologne 

fair 

17 

Bogota 

fair 

19 

Dakar 

sun 

28 

Bombay 

tain 

28 

Dates 

fair 

33 

Brussels 

far 

20 

D«IN 

d«g 

17 

20 

Budapest 

GtHujen 

fair 

fair 

24 

16 

Dubai 

Oiitti 

cloudy 

34 

Cairo 

»m 

38 

Dubrovnik 

aun 

26 

Cape Town 

SU1 

21 

Edinburgh 



Lufthansa 

German Airlines 


Faro 

aun 

23 

Madrid 

sun 

34 

Rangoon 

rain 

30 

Rmkftjrt 

tde 

22 

Majorca 

sun 

28 

Rcykfavfc 

fair 

11 

Genova 

aun 

26 

Malta 

sun 

16 

Rio 

cloudy 

20 

Gtoraflar 

sun 

26 

Manchester 

fair 

17 

Rome 

aun 

24 

Gtesgow 

shower 

17 

Mania 

shower 

33 

S. ftsco 

stfl 

20 

Hamburg 

cloudy 

16 

MeBnume 

dMKty 

IS 

Seoul 

sun 

31 

Helsinki 

shower 

16 

Mexico CHy 

shower 

21 

Singapore 

thund 

32 

Hong Kong 

rain 

30 

Mami 

fair 

32 

Stockholm 

fair 

19 

Honolulu 

Mr 

31 

Mian 

Ml 

26 

Strasbourg 

fair 

25 

Istanbul 

shower 

20 

Montreal 

fair- 

30 

Sydney 

etoudy 

16 

Jakarta 

cloudy 

31 

Moscow 

fab 

23 

Tangier 

•un 

25 

Jersey 

Mr 

IB 

Munich 

Mr 

23 

Tel Aviv 

Ml 

33 

Karachi 

sun 

41 

Nairobi 

lair 

22 

Tokyo 

fair 

25 

Kuwait 

sun 

44 

Naples 

sun 

23 

Toronto 

Mr 

32 

L Angelas 

aun 

24 

Nassau 

far 

32 

Vancouver 

rain 

17 

Ub Palmas 

aun 

26 

New York 

to - 

32 

Vantea 

sun 

29 

Una 

doudy 

22 

Nice 

sun 

25 

Wanna 

sun 

23 

Lisbon 

aun 

30 

Nfcosie 

sun 

30 

Warsaw 

fair 

15 

London 

fair 

22 

Oslo 

Mr 

18 

Vteahhgton 

fair 

33 

UnJboug 

Mr 

22 

rmz 

fsir 

26 

Wellington 

dourly 

10 

Lyon 

sun 

26 

rOnJl 

fair 

21 

Vtoripoo 

cloudy 

23 

Madeira 

(ok- 

23 

Prague 

fair 

20 

Zurich 

am 

23 


THE LEX COLUMN 


Sprint for the line 


It is becoming something of a tradition 
for European telecom operators to pay 
fancy prices for minority stakes in 
their us counterparts- BT started the 
trend with its &L3bn investment in 
MCI last year. Deutsche Telekom and 
France Telecom axe following suit 
with their $L2bn investment in Sprint 
It is a mark of the relative dynamism 
of US operators that European groups 
have to bribe them to become partners 
in global al fi pTipps- 

As well as negotiating a good price. 
Sprint has been able to clinch a cen- 
tral role in the new it will 

own half the alliance’s global network, 
despite being smaller than either part- 
ner. Sprint will also have total respon- 
sibility for marketing the partner- 
ship’s services within the US, a third 
share in European markets outside 
France and Germany, and a half share 
in the rest of the world. 

Whether this will be sufficient to 
win over US regulatory authorities is 
unclear. The argument that foreign 
state-owned monopolies should not be 
allowed to compete in the US could 
strike chords with the Clinton admin- 
istration. Approval may be contingent 
on the French and Germans opening 
their own markets to competition. 

Rival groups are unlikely to wait for 
regulatory decisions before planning 
their responses. AT&T may well for- 
malise its association with Umscurce. 
an alliance of Swiss. Dutch and Swed- 
ish operators. BT will redouble efforts 
to w oo Japan’s NTT as well as seeking 
to build up Us position in continental 
Europe. That leaves Cable & Wireless 
looking like tbe odd man out It has 
opted to provide global services 
through its existing “federation” of 
operators. But what it possesses in 
geographic reach, it tacks in financial 
muscle. 


FT-SE Index: 3039.6 (+23.3) 


Share price rotative Jo d*» 
FT-5E-A Water IftCfcX 
IlQ 


1982 

Source FT Gncftfa 


combined group. That compares with 
the 40 per cent offered in the original 
bid. Though independent analysts 
have different views about the relative 
asset values of the two companies. 44.3 
per cent is at tbe top of the range. 

Enterprise will have its work cut 
out to persuade Investors of the bid's 
merits. Lasmo shareholders will need 
good reasons why they should surren- 
der paper in a company which is 
recovering from years of poor manage' 
ment and is highly geared to move- 
ments in crude prices. Moreover, over- 
hanging the whole bid is Enterprise’s 
inability to demonstrate any added 
value from putting the two companies 
together. That means either Usmo’s 
shareholders or Enterprise’s look like 
suffering if the bid succeeds, and per- 
haps both. 


land’s success partly reflect! life 
knack of truing peripheral bustmaia 
cm high multiples, buying dairies « 
low multiples and rattou riMn g then 
at some cost to Increase throughput at 
existing plant. As long as margin pres- 
sure on dairy products continue* - 
and there is no guarantee that loon- 
Uig changes to the milk mutating 
regime will bring relief - this Is a 
sensible strategy. But it requires scope 
for shuffling group assets. - 
Happily. UnigRte still has a trump i 
card in Us stake in Natricl* of BoQand 
which Is worth around CMta but ton- 1 
tributes toss than £4m in dividends to , 
group cash flow. Were the state sold 
and the proceeds reinvested, both cash 
flow and earnings would ba enhanced. 
That would secure a further dfvfaSmd 
progression, but it would ba a poor 
substitute fur a real im prov e me nt to 
dairy market contiitinas. 


Enterprise/Lasmo 

On the face of it. yesterday's fall in 
Lasmo's share price suggests that 
Enterprise's improved bid is expected 
to faff. If it were thought likely to 
succeed, Lasmo's share price would 
not stand at a 10 per cent discount to 
the value of tbe all-paper offer. Arbi- 
trage would dose the gap. either by 
pushing up Lasmo's share price or by 
driving down Enterprise’s. 

But it is stiff early days and it would 
be a mistake to write off Enterprise's 
chances entirely. Lasmo shareholders 
will have to think hard before dismiss- 
ing the offer. On tbe positive side, tbe 
new terms amount to offering lasmo 
investors a 4L5 per cent share of the 


Unigate 

The ti per cent jump in U rugate's 
shares after yesterday's full-year 
results suggests the 7.3 per rent 
increase in the dividend came as a 
pleasant surprise. Dividend growth us 
accelerating alter three years of flat 
payouts at the start of the decade. 
That might signal success for the 
restructuring undertaken by Mr Ross 
Buck land, the chief executive, at what 
had become an unfocused conglomer- 
ate. Look deeper, though, and doubts 
about long term growth remain. More- 
over Unigate is hardly a cash cow. 
Free cash flow before acquisitions was 
not quite enough to cover the divi- 
dend. 

Admittedly, this reflects an abnor- 
mally high interest payment and a 
healthy Increase in capital expendi- 
ture. It also underlines that Mr Buck- 


Severn Trent 

For all its adventures in waste man- 
agement. Severn Trent baa outper- 
formed the sector due to to attrac- 
tions as a utility. The water business 
was endowed with cash at privatisa- 
tion and has been well managed state 
then. Capital expenditure was skewed 
towards the early years, which 
allowed the company to benefit from 
low construction costa during mere 
sion. Investment spending last year 
was £25m less chan budgeted u e 
result Despite losing badness fro® 
British Coat the impact of receesta 
on turnover has been generally ten 
severe than in regions such u 
AngUan 

Such considerations have out- 
weighed the drag from Bifia. the waste 
business bought for £2l2m three jmn 
ngo. The quality of BUfa has rarely 
been questioned, even if the price Sev- 
ern Trent paid for U has. As Btite’s 
operating performance improves, the 
drag on earnings should lessen. Stiff 
it will be some years before the waste 
ride is covering the financing costs of 
the acquisition. A £A7m loss on inter- 
national business hardly instills confi- 
dence to other non-utility activities. 

But the merits of Severn Trent’s 
water business show no sign of dimin- 
ishing. Capital spending through the 
second half of the decade should be 
low relative to cash flow, so the com- 
pany should end up less heavily! 
geared than many of to peers. High 
dividend cover also points to flexibil- 
ity on the pay-out If Severn Trent can 
avoid embarrassments elsewhere, the j 
utility looks well positioned to shine. ( 














S' • V : 

•j.;:;.".-- 




^ i 




stT.j* 







rV. 





T ? • 1 K ‘ lV • • vtfi’.jrfv 



T I GROUP 


WORLD LEADERSHIP IN SPECIALISED ENGINEERING 


For further Information about the T1 Group, con tact the Department of Public Affairs. II Group pic. Lamboum Court. Abingdon, Ox on OXW iUH, EngJjnd 









The world's first ‘green’ refrigerator, manufactured in Germany by Foron, is a major breakthrough in environmental protection. 

But without Bandy, a great new idea would still be on ice. 

The re&igpram used by Foron is an iso-butane/pencme mix and - unlike other CFC replacements - is neither an ozone- 
depleter nor a greenhouse gas. Working alongside Foron, Bandy produced a single wall tube condenser which met the 
critical demands of the new refrigerant and incorporated further environmental benefits - optimal thermal efficiency leading 
to reduced energy consumption. Now Bandy is helping other leading manufacturers keep Earth's deep freeze from de-frtsiii# 
Bnndy is one of Tt Group’s three specialised engineering businesses, the others bcingjohn Crane and Dowty. 

Each one is a technological and market leader in to field. Together, their specialist skills enable 
T1 Group to get the critical answers right for to customers. Worldwide. 


J&, 


l wr:V 







► > HENRY 
J*^BUTCHER 



POWERFUL 

CONNECTIONS 


Controllers, Electric Motors, 
Gearboxes 


FINANCIAL TIMES 

COMPANIES & MARKETS 

©THE FINANCIAL TIMES LIMITED 199* Wednesday June 15 1994 


International Property 
& Plant Consultants 


071-405 8411 


IN BRIEF 


Pechiney shares 

fall on warning 

Shares in Pechiney inte rnational, the packag in g 
arm of Pechiney, the French state-owned alumin- 
ium group, fell sharply following a warning t hftt 
first-half profits would falL However, Mr Jean 
Gandois, chairman, expected an improvement 
in the second half Page 16 

De BenedetU relaunches Cofir 

Mr Carlo De Benedetti, the Italian financier, has 
relaunched Cofir, the Madrid-based flirting- com- 
pany controlled by Ids Cerus group in France. 

Page 16 

Japmese banks yet to seals bad debts 

Last month, Japan's hanks unveiled their annual 
results boasting that the worst of the country’s 
bad debt crisis bad passed But, on closer Inspec- 
tion, the bad debt mountain is a long way from 
being scaled. Page 19 

Franco-German pact to serve the world 

France Telecom and Deutsche Telekom are spend- 
ing $4J2bn an a stake in Sprint and mapping out 
a structure promising that the new allian ce would 
serve the world Page 20 

Showdown in Chicago 

Chicago's two big futures exchanges and then- 
primary regulator, the Commodity Futures Trading 
Commission, are beaded for a showdown over 
how strictly customer protection rules should 
be enforced Page 21 

ACT restructure takes tod 

Shares in ACT Group, the UK computing services 
company, fell almost 20 per cent after the group 
warned that trading this year would be adversely 
affected by restructuring of its financial products 
division mid increased product development expen- 
diture. Page 22 

Charter may invest hi fourth leg 

Charter, the diversified UK industrial group, 
could spend between £200m and £4Q0m on budding 
up a fourth leg for the company, according to 
Mr Jeffrey Herbert, chief executive. A number 
of proposals are under consideration. 

Page 22 

Volex rises on acquis i tions 

Overseas acquisitions and organic growth helped 
full-year pre-tax profits at Volex Group, the restruc- 
tured UK electrical interconnection products 
and cable assemblies company, rise 40 per cent 
Page 23 

Delays hit Severn Trent 

Severn Trent, the UK water company, announced 
a 4 per cent rise in annual pre-tax profits to Z28L4m 
($42&n). The results were at the lower end of 
e x pec ta tions, after delays on international con- 
tracts . Page 24; Lex, Page 14 

Benfletd to launch reinsurance am 

Benfleld Group, one of the UK’s most successful 
reinsurance brokers, wQl today announce the 
launch of Benfleld Re, a £50m ($76m) London 
market reinsurance company. Page 24 

Vegetable growth 

The past 10 years have shown a huge growth, 
in the export of vegetables from Latin America 
to the US. Page 26 


Companies In this Issue 


ACT 

AFG 

AT&T 

Ambartey 

Applied Hoto^aphiCS 
Attwoods 

BAe 

BSS 

BT 

Bank of Scotland 
Benfleld 
Berisfarcl Inti 
Bradford Property 
CCPC 

Cairn Energy 

Central Railway 

Cerus 

Charter 

ChezG&rard 

Coca-Cola 

Cofir 

Cott 

CourtauWs 

David Uoyd Leisure 

Deutsche Telekom 

Deutsche Waggonbau 

East Surrey 

Emap 

Enterprise Oil 
Esab 
eurocopy 
Exco 

F&C Smaller Cos 
Finmeccanica 
France Taleoom 


22 

GEGnAJethom 

6 

24 

Hawtfn 

24 

20. 1 

Karstadt 

16 

24 

Lasmo 

16 

24 

London Bactriotty 

12 

22 

MCI 

20 

10 

Magnet! Mare# 

16 

23 

Mentals 

24 

20 

Metro 

18 

22 

Metropo«tan life 

15 

24 

Mondadori 

15 

24 

My Kkida Town 

12 

22 

Nissan UK 

16 

10 

Oceana Consolidated 

24 

22 

PPP 

10 

23 

Pechiney 

16 

16 

PepsiCo 

15 

22 

Pharmacia 

16 

12 

RSvsr Plate and Gen 

24 

IS 

Royal Bagemann 

18 

16 

Severn Trent 

24 

15, 18 

Sheriff 

24 

23 

Shoprite 

24 

23 

Sflmma 

24 

2ft 1 

Sprint 

2011 

16 

Symonds EngJnoortng 

24 

23 

Trans World Comma 

22 

22 

Travelers 

15 

15 

USAir 

15 

18 

Valmet 

18 

23 

Vicfcers 

14 

24 

Vote* 

23 

2A 

Wellman 

24 

16 

Whteeroft 

23 

2ft 1 

wahemtean WDhrtm. 

16 


Market Stati s ti c s 

XtAnranl reports service 2B-29 

Benchmark Govt bomb 2f 

Bond futures aid options St 

Bond prices and yields 21 

QnmnSdes prices 2B 

DMdends Mnanced. UK 22 

BS curancy rates 3* 

Eurobond prices 21 

Rffld terast Indices 21 

FT-A World Wk» Beck Pap" 
Ft Gold Mfcws bidn BankPage 
FT/EMA US bond arc 21 

FT-SEfctarfas hikes V 


Fot&ga exchange 34 

GUIs prices 21 

UKeeqOy atoms B«*Pa«p 

London share sondee 28-20 

London tad options Back Pape 

Managed tows sendee 3634 

Money martets 34 

New U1 bond taues 21 

Record issue* (X 27 

Short-term tot rates 34 

US introt rates 21 

WaW Stock Maritats 35 


Chief price changes yesterday 


muKNmrpMq 


FMte 

MaPtT 

M5 

_ 

2b 

QAatapr 

MO 

- 

35 

Dmuasa 

480 

- 

12 

Donato mo 

555 

- 

13 

Uide 

893 

— 

25 

Semen 

ene 

- 

173 

MON YORK ft) 

esmftr tom 

+ 

3K 

cantor 

sow 

+ 

th 

Fad 

fliu 

+ 

2H 

GaiUatas 

S3U 

+ 

IH 

IMtedtedt 

83H 

* 

tti 

hrits 

Sorts 

37h 


Ztt 

MHtgm) 

Haas 

CradUKd 

405.1 

4. 

7.1 

New Yorit price* at 1220pm. 


LONDON (Pmc*) 

Mm 

V 

Breda Saves 
Emapf 
Ere Ony 

Stem 

tarn cane 
ShBBHdOJ 
Tftno 

Tiasnanac 


GoidnEnt 

2340 

+ 

105 

StlC 

817 


77 

vasera 

280 

♦ 

17 

Mb 

Fere Lyon 

850 


31 

BsnoMnqus 

782 

- 

18 

TOKYO (VM 

■ttnaa 

taflertas 

752. 

+ 

a 

Date Steel 

5*5 

+ 

16 

JEOL 

930 

+ 

43 

Mb 

Soar Meter 

529 

_ 

15 

Mi Brea 

11» 

- 

SO 

NfesnDteri 

881 

- 

a 


tMgeb 

384 

+ 

a 

MMenSl 

120 

+ 

ii 

FaB> 

ACT 

138 

. 

a 

BeaiwaiBown 

4«7 

- 

10 


139 

- 

5 

snogrto 

51 

- 

Z7 

Stekriey 

755 

- 

13 


40e» + 
70 + 

» + 


180 

778 

370 

380 


15» 

6 

3 

18 

13» 

18 

14 

ID 

14 


USAir seeks 
$500m in cuts 

from workers 


By Patrick Harvereon 
In Now York 

USAir. the loss-making US 
carrier in which British Airways 
holds a 24.6 per cent stake, is 
seeking pay and benefit cost cuts 
of $50am from employees to help 
reduce annual operating 
expenses by glbn. 

Outlining details of USAir’s 
cost-cutting programme at a Mer- 
rill Lynch transportation confer- 
ence in New York, Mr Seth Scho- 
field, USAir’S rthairinan and 
executive, said the carrier had 
already introduced measures to 
reduce costs by 5175m this year. 
These included job cuts, subcon- 
tracting freight and niaii han- 
dling, and improved inventory 
management. He said USAir 
would not attain its goal of cut- 
ting annual costs by $lbn imTtvae 
pay and benefits were lowered to 
‘levels more consistent with mar- 
ket standards". 

Talks with the unions were 
under way. Mr Schofield said 
that when agreement an a cost- 
reduction plan was obtained from 
at least one of the three primary 
unions , the carrier would imme- 
diately implement the measures 
with both its members and all 


non-radon employees. 

He was confident the savings 
would win the support of the 
whole workforce. 

The airline is desperate to 
reduce costs - among the highest 
in the industry - because the 
fares war among US carriers has 
prevented it from turning round 
its finances - In the first quarter 
of this year, USAir lost 5196.7m. 

The airline also wants to cut 
costs through fleet rationalisa- 
tion, more productive flight crew 
and ai rcr aft scheduling, the cen- 
tralisation of cargo management 
and purchasing, distribution sys- 
tem refinements and by contract- 
ing out catering. 

This month, labour unions 
armnqnrgri plane to seek a fed- 
eral injunction to stop USAir’S 
plans to contrac t out its freight 
end mail handling operations. 

USAir shares rose $'/* to $6 % in 
early trading in New York. 

• Delta Air lines, which is also 
gpelring to Slash annual costs, 
announced y esterday the suspen- 
sion Of four tr ansatlan tic routes 
- New York-Oslo, New York- 
Stockholm, Miami- London and 
Cincinnati -Munich - and the 

removal of all 13 Airbus A-130 
aircraft from its fleet 



Coca-Cola 

Share price© 

45 — 



PepsiCo 

Share price (S) 



Cott challenges the big boys 


The soft drinks market is among the bloodiest 
fr aftfefipidK in the global war between national and 
retailer-controlled brands. Cott Corporation, an 
upstart Canadian company, is giving Coca-Cola and 
Pepsi - long considered two of the most impregna- 
ble brands - their stiffest competition in many 
years. 

Cott has signed supply agreements with 90 retail 
chains around the world, jnefuding Wal-Mart, the 
biggest US retailer, and the UK’s J. Sainsbury. It 


recently began shipments to Japan's second biggest 
retailer. But nowhere has Cott made bigger inroads 
or provoked a more aggressive response from Coke 
and Pepsi than in its home market of Ontario. Coke 
closed half its C anadian bottling plants in a drive to 
match Cottis costs. 

Coifs nhafratan Mr Gerald Pencer. is an entre- 
preneur whose last venture - a Canadian trust and 
loan company - ended in failure. 

Background, Page 18 


MetLife and Travelers 
to combine health sides 


By Richard Waters 
ki New York 

Metropolitan life and Travelers 
are combining their health insur- 
ance businesses In a joint ven- 
ture company. 

It is a forther sign of the con- 
solidation under way among US 
managed healthcare organisa- 
tions. 

Travelers, which has the 
smaller health insurance busi- 
ness of the two, agreed to pass to 
MetLife disability, dental care 
and other insurance businesses 
with annnal premiums of more 
than 5950m in return for a half 
share in the new company. 

It is also selling MetLife its 
group life insurance business for 
$350m- 

By growing in size, h ealthcare 
groups hope to reduce unit costs 
and fence bigger discounts from 
healthcare providers, such as 
hospitals and drugs companies. 


The deal marks the first steps 
taken by Mr Sanford Weill, 
whose Primerica financial ser- 
vices group took over Travelers 
at the end of last year, to sort 
out some parts of Travelers' 
underperforming insurance 
operations. 

Earlier this year, Mr Wrin pre- 
dicted mergers in the insurance 
industry as companies sought 
greater effi c ie nc y. 

The two insurers said their 
new company, which had yet to 
be named, would provide health 
insurance to 13m people. 

However, only 391,000 of these 
are in the two companies’ health 
maintenance organisations 
(HMOs), under which individuals 
are serviced by a prescribed net- 
work of doctors and hospitals. 

AH US insurers are attempting 
to move people from their tradi- 
tional fee-for-service plans into 
HMOs, which have become a 
more profitable way of providing 


healthcare cover. HMOs have 
ai<n become popular among the 
US companies which pay for 
their employees’ health Insur- 
ance. Buying coverage for the 
average person in an HMO cost 
$&£20 fosf year, compared with 
54,370 for traditional health 
insurance. 

In addition to the HMOs, Met- 
Life and Travelers cover a fur- 
ther 4.4m people under other, 
looser managed care arrange- 
ments, tnnluding PPOs (preferred 
provider organisations). 

The joint venture comes at a 
tine when other managed care 
organisations are growing fast 

United Healthcare, which has 
increased from 2.1m HMO 
patients at the start of the year 
to 3m now, said it planned to use 
the 52-3bn cash from its sale of a 
drugs distribution company to 
Snritfrinin g Beecham last month 
to expand further through acqui- 
sition. 


Mondadori sale 
may raise L990bn 


By Ancfrew H1B In Milan 

Mr Silvio Berlusconi, the Italian 
prime minister and me dia mag- 
nate, should raise L990bn (5611m) 
through the sale of a 53 per cent 
stake in Mondadori, the company 
which groups all his book and 
magazine publishing interests. 

The price of the international 
offering of 66m new Mondadori 
shares was yesterday set at 
L15JJ00 a share, at the top of the 
range established by Mr Berlus- 
coni's banking advisers - Medio- 
banca and Banca Commerciale 
Italians - in April. 

Mr Franco Tat6. managing 
director of Mr Berlusconi's Fin- 
invest bumness empire and of 
Mondadori, returned from an 
international roadshow last week 
bullish about the prospects for 
the sale, which begins tomorrow. 

Mr Berlusconi is under pres- 
sure to sell parts of his empire to 
cot debts at Fininvest and reduce 
the risk of a conflict of interest 


between his political and entre- 
preneurial ambitions. 

Observers are also eager to see 
if tiie decision of Mediobanca to 
work with Fininvest for the first 
time on this deal marks the 
beginning of a powerful alliance 
between Mr Berlusconi and Mr 
Enrico Cuccia. the merchant 
bank's 86-year-old honorary 
chairman. 

Less than 2 per cent of Monda- 
dori - the full name of which is 
Arnoldo Mondadori Editore - is 
quoted on the Milan stock 
exchange. But ahead of the offer- 
ing, Mondadori merged with Sil- 
vio Berlusconi Editore, the pri- 
vate company which held many 
of the prime minister's publish- 
ing interests, to create one of the 
largest publishing companies in 
Europe. 

The combined group, in which 
Mr Berlusconi will have a 47 per 
cent stake, would have shown a 
net operating profit of LlOObn 
last year, on sales of L1^30hn. , 


Enterprise 
raises 
stakes in 
Lasmo bid 

By Peggy Hoflinger in London 

Enterprise Oil yesterday raised 
the stakes in its hostile bid for 
rival explorer Lasmo with a final 
all-share offer valuing the target 
at £l-59bn ($2.3Sbu). 

H was dear from the revised 
terms and lack of a cash element 
that Enterprise had been under 
pressure from its shareholders 
not to push its terms too for. 

Enterprise Is seeking to win 
over Lasmo’s hesitant sharehold- 
ers by doubling the promised 
dividend, allowing them a 
greater share or the enlarged 
company and offering earlier 
conversion dates for the A shares 
and warrants which make up the 
unusually structured equity 
offer. 

Based on an Enterprise share 
price of 399p, Lasmo shares were 
valued at 16Sp, against last 
night’s close of 143%p - the 
day's 4p fall indicated scepticism 
about prospects of the bid’s suc- 
cess. After a 9p drop in Enter- 
prise’s shares, the offer was 
worth about 161p. 

Mr Graham Hearne, Enter- 
prise’s chief executive, said the 
revised offer represented fair 
value for shareholders in both 
companies. “We haven’t used 
buckets of cash, we haven't 
underwritten the shares, we are 
confident this will win it" 

Lasmo’s shareholders were less 
enthusiastic, given the absence 
of cash and Enterprise’s decision 
to retain the unusual structure. 
Enterprise’s institutional inves- 
tors are also believed to be unen- 
thnsiastac. They fear significant 
earning s dilution and short-term 
effects on the share price. 

Mr Rudolf Agnew, Lasmo’s 
chairman, said tile revised bid 
remained unwelcome. "The 
share of the combined company 
is totally inadequate and it con- 
tinues to be in junk paper," he 
said. 

Enterprise is offering 36 A 
shares and 13 warrants for every 
88 of Lasmo's, valuing the tar- 
get’s shares at 165p mi an Enter- 
prise price of 399p. This com- 
pares with 27 A shares and 12 
warrants for every 80 lasmo in 
the original offer. Lasmo inves- 
tors would bold 44.5 per cent of 
the enlarged company, against 
40 per cent 

The A shares would carry divi- 
dends of 6p in 1994 and 1995, 
against 3p in the three years to 
1996. This equals 2p per Lasmo 
share, against the target’s prom- 
ised minimum of lp. The war- 
rants’ strike price has been 
improved to 430p against 470p. 
Lex. Page 14 


Barry Riley 


German monetary drag 
on bond markets’ anchor 


Europe has been 
to the polls, bat as 
far as the Euro- 
pean capital mar- 
kets are concerned 
the problem seems 
to be that interna- 
tional investors 
are voting with 
their feet. German bonds, the 
bedrock of the European securi- 
ties structure, have had a terrible 
year, with the 10-year govern- 
ment bond yield now up to 7 per 
cent, from 5V4 per cent at the 
beginning of January. Other 
bond markets may have per- 
formed more badly, but in less 
than six months bunds have lost 
all the gains of the previous 12. 

Unlike their US and Japanese 
counterparts, tbe European 
equity markets have not been 
able to brush aside the weakness 
in bonds, so that in local cur- 
rency tbe Europe index is down 6 
per cent against only about 1 per 
cent for Wall Street and the 
rogue 17 per oat gain in Japan. 
The indices in France. Germany 
and the UK are all down by 
between 7 and 10 per cent. 

European currencies have held 
their own against a weak dollar 
which still offers a lower 
short-term interest rate, but they 
have slipped by around 3 p er cent 
this year against tbe yen. 

A basic factor behind all this is 
the loss of monetary control by 
the German Bundesbank. Only 
last week the world’s top central 
bankers were in London oddrat- 
ing the rare peak of their power 
and influence, but nupketg o ft™ 
cynically sea into signs of hubris. 
Sturdily independent the Buba 
may be, but it is flo undering in a 
sea of M3 bank deposits, up an 
annualised 15 per cent so for this 
year compared with a target 


growth range of 4 to 6 per cent 
Since the beginning of 1992, Ger- 
man M3 has risen by 24 per cent 
twice as fast ks if the central 
targets had been ML 
At feast the surprisingly strong 
performance by tbe Christian 
Democratic Union in the Euro- 
pean parliamentary elections, 
with positive implications for Mr 
Helmut Kohl’s chances in the 
domestic poll next October, may 
soothe fears that the Bundesbank 
win continue to bend over back- 
wards to help the government 
All the same, the Bundesbank’s 
apparent willingness to take 


The Baba is 
floundering in 
a sea of M3 
bank deposits 


inflationary risks through sur- 
prisingly aggressive rate-cutting, 
and measures to support the dol- 
lar, has upset the brad markets. 

It may all, of course, turn out 
to be an unimportant technical 
tangle, a shift in velocity best left 
to academic monetarists. The 
expansion of the D-Mark area 
into east Germany and (unoffi- 
cially) beyond may have invali- 
dated past trend lines, and fur- 
thermore the speculative bubble 
in global bonds last year priced 
bunds out of the reach of domes- 
tic investors. Foreign investors 
and iwriicg bought the German 
bond issue in 1993, with domestic 
non-bank investors notable for 
their absence. 

At the end of last year the 
wholesale money market rate on 


three-month D-Marks was 30 
basis points higher than on 10- 
year bonds. Hence the pile-up of 
savings in deposits which are 
included In M3. This year’s dras- 
tic measures to turn the yield 
curve around should cause those 
savings to shift longer, once 
investors have lost their fear of 
further price falls in bonds; even 
now, however, bond yields are 
short of their long-run average of 
some 7.5 per cent Meanwhile the 
gamble is that lower short-term 
rates will not set off a renewed 
growth in credit - at a time when 
the German economy is starting 
to pull quite decisively out of 

recessio n . 

The Bundesbank Central Coun- 
cil will meet for a mid-year mone- 
tary target review on July 21. 
Hardliners are bound to fear that 
the protracted period of double- 
digit monetary expansion is inev- 
itably going to lead to currency 
weakness and, within two or 
three years, to rising inflation. In 
the Immediate future, however, 
German inflatio n may be shout 
to dip below 3 per cent 

For glohal investors it must be 
worrying that tbe European 
Union should be in danger of los- 
ing its financial anchor at a time 
when the weekend poll showed 
signs of political fragmentation 
in France, not to mention contin- 
ued waywardness in the UK 

The recession and falling inter- 
est rates last year covered up the 
financial pressures in Europe but 
economic recovery will prove 
testing. Already the bond mar- 
kets have seen significant diver- 
gence, with spreads against 
bunds widening for UK and Span- 
ish government bonds, for 
instance. But the uncertainty has 
spread right to the heart of the 
European capital markets. 



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FINANCIAL TIMES Wt-DX ESPAV JUNE ISW 


INTERNATIONAL COMPANIES AND FINANCE, 


Pechiney division 
hit by chairman’s 
profits warning 


By John Ridding fcn Paris 

Shares in Pechiney Inter- 
national. the packaging arm of 
Pechiney. the French state- 
owned aluminium group, fell 
sharply yesterday following a 
warning by Mr Jean Candors, 
cha irman, of a fall in first-half 
profits. 

The shares lost 5 5 per cent 
to close at FIM52J2 following 
Mr Gandois's statement to the 
company's shareholders' meet- 
ing. However, he added that he 
expected an improvement in 
the second half of the year, 
compared with the first six 
months. 

According to Mr Gandois, 
first-half profits wiQ be hit by 
increased financial charges, 
partly reflecting higher US 
interest rates, and the cost of 
recent investments and acqui- 
sitions. The result, he said. 


would be a reduction is net 
profits compared with the 
FFr439m ($T7m), after amorti- 
sation, recorded in the first six 
months of 1393. 

Mr Gandois said the com- 
pany was considering a con- 
vertible bond issue, although 
the sfo g and the riming hart not 
been decided. The company 
said recovery in the Paris stock 
market would be necessary 
before a launch. 

Mr G andois said sales in the 
packaging division bad. shown 
a relatively strong improve- 
ment since the beginning of 
the year, but prices bad 
remained uncertain. 

The company is considering 
measures to respond to the 
problems in the US beverage 
cans market, which is domi- 
nated by Pechiney's American 
National Can subsidiary and 
four other groups. 


Spear battle re-opened 


By John Mason, 

Law Courts Correspondent 

The battle for control of 
J.W. Spear, the board game 
manufacturer which makes 
Scrabble, was thrown open 
again yesterday when a High 
Court judge released the com- 
pany's trustees from any obli- 
gation to sell their shares to 
Hasbro, the US toy group. 

The judge ruled that Mattel 
a rival US toy company, had 
acted property in announcing 
an improved offer five minutes 
before the deadline for the 


operation of an escape clause 
allowing the trustees to be 
released from an irrevocable 
undertaking to sell a control- 
ling interest to Hasbro. 

The court's decision now 
leaves the Spear trustees - 
who own 24J9 per cent of the 
company - -free to accept the 
Mattel bid or any higher one. 

Hasbro was last night consid- 
ering its options: whether to 
mount an appeal against the 
judge’s ruling, out-bid Mattel 
or walk away. The company is 
certain to reach its decision 
before Thursday. 


Pharmacia in demand 


By Christopher Brown-Huraes 
in Stockholm 

The Swedish government said 
yesterday its public offer of a 
33 per cent voting stake in 
Pharmacia, one of the world's 
top 20 pharmaceuticals groups, 
had been heavily oversub- 
scribed. 

It suggests the government 
will increase the size of the 
public offer to 47.5m shares 
from 40m shares, equal to 275 


per cent of the votes. However, 
it will wait until Friday, after 
the offer to Swedish and inter- 
national Institutions has 
closed, before setting share 
allocation and price. The gov- 
ernment's is to sell as 
many as Rgfon shares in the 
group, raising some SKrlQbn in 
Sweden’s largest ever privati- 
sation. 

This would cut the state's 
voting stake to 10.1 per cent 
from 575 per cent. 


Fugitive 
Nissan UK 
chief was 
paid £3.81m 

By Kevin Done, 

Motor Industry Correspondent 

Mr Octav Botnar, the 
chairman of Nissan HE for 
whom an arrest warrant has 
been outstanding for the past 
2 Vi years, was paid £3.81m 
(S5-7lm) last year. 

The emoluments - repre- 
senting a 2531 per cent rise 
from his previous year’s pay of 
£130,000 - were for his role as 
chairman of Automotive 
Financial Group Holdings, 
which owns AFG, one of the 
UK’s biggest motor dealers. 

Of the total remuneration, 
£3-7m is described as a bonus 
paid by AFG. The figures 
appear in the latest annual 
report filed by AFGH, the 
b idding company, for the year 
to July 1993. During the year 
AFGffs pre-tax profits fell by 
73 per cent to £llm, from 
£40 5m. Turnover was down 23 
per cent at £419.9m. 

An arrest warrant was 
issued in January 1992 for Mr 
Botnar, 80, who is alleged to 
have been the principal con- 
spirator in the largest corpora- 
tion tax fraud in UK history. 
The Inland Revenue was 
cheated of £55m ($835m) by 
Nissan UK, the Botnar subsid- 
iary which bad imported and 
distributed Nissan cars until 
Nissan took over the role. 

In the most recent informa- 
tion filed at Companies House, 
Mr Botnar’s "usual residential 
address” is listed as Columbia 
Drive, Worthing, West Sussex 
tire headquarters of AFGH. He 
has failed to return to the UK 
for 2K years, preferring to live 
in Switzerland in a villa near 
Geneva. 

During his absence, two of 
his former colleagues bare 
been jailed for their part in 
the fraud. Mr Michael Hunt, 
former Nissan UK managing 
director, was sentenced last 
summer to eight years and last 
month lost an appeal against 
conviction and sentence. Since 
be went to prison, Mr Hunt 
has become eligible to receive 
£1.06m as his latest dividend 
payment on his 10.6 per cent 
stake in AFGH. 

The inland Revenue is seek- 
ing repayment of up to £238m 
from Nissan UK. 

AFG’s results. Page 24 


De Benedetti back on takeover trail 


By Tom Burns bi Madrid 

Mr Carlo De Benedetti. the 
Italian financier, has 
relaunched Cofir. the Madrid- 
based holding company con- 
trolled fay his Cents group in 
France, on the Iberian take- 
over trail. 

Cofir has acquisitions, 
secured and in the pipeline, 
amounting to about PtaS5bn 
(57to). 

Mr De Benedetti told Cofi/S 
annual meeting yesterday that 
fr had last Friday acquired the 
majority holding in Spain's 
leading city hotel group for 
Pta65bn. 

Mr De Benedetti said it was 
close to spending Pta3bn to 
bay a supermarket chain and 


it planned to expand its wine 
division to become to the big- 
gest producer of Rioja table 
wine. 

Twenty UK and US institu- 
tions control 35 per cent id the 
holding company’s share capi- 
tal. Cerus owns 45 per cent of 
Cost’s equity and the rest is 
traded on the Madrid stock 
market 

Mr De Benedetti said institu- 
tional balking far Cofir gave 
him “great satisfaction". He 
d gfoprifrf the cautious invest- 
ment policy of the past years 
that had allowed Cofir to build 
up a liquidity of more than 
PtaZDtm- 

The decision to restart buy- 
ing comes as fixed income 
investment becomes less 


attractive due to falling 
interest rates and as cheaper 
properties come on to the mar- 
ket. 

The first move has been to 
increase a 49 per emit stake 
held by Cofir in NH Hoteles. a 
group that owns and manages 
60 hotels in Spain, io TO per 
emit as a prior move to listing 
the hotel within the next 
two years. 

“ITs good news to see Cofir 
at last buying growth potential 
assets again to take them to 
the market," said Mr Carlos 
Pertejo of AB Asesores. a Mad- 
rid securities firm. 

Mr De Benedetti's group is 
close to completing the pur- 
chase of a 100-unit family- 
owned supermarket chain 


called Dflgna which is based 
in Catalonia and in Aragon, 
two of Spam's fastest-growing 
regions. 

The retailing business repre- 
sents a new division tor Co fir 
and this acquisition is likely to 
be followed up by further onus 
In the sector. 

Cofir is assessing properties 
in the wine business where it 
controls Berbereno, the second- 
ranked Rioja producer, with 
the stated aim of becoming 
Spain’s leading table wine 
group. 

The group’s real estate divi- 
sion has in the meantime been 
lifted by the announcement 
that the 1997 Ryder cup wifi he 
played on the Valiterrama golf 
course. 





Carlo De Benedetti: satisfied 
with institutional backlog 

This fc» one of three lomted 
in its extensive holiday home 
and leisure complex of $atw 
grande, near Gibraltar. 


Sales at Fiat unit improve 13% Bid for east German 

By Andrew HOT in Milan European car prod action. allowed [the company] to real- ]"Q) |ll lff—StOClS. 21*0111) 

In 1993. net revenues rose ise a positive operating result O ^ * 


By Andrew HOT in Mtan 

Net sales at Magneti Marefli, 
the Italian automotive compo- 
nents group which is con- 
trolled by Fiat rose 13 per cent 
in tire first five months of this 
year, compared with the same 
period oT 1993. 

Mr Luigi Franckme, Magneti 
Marelli's chairman, told share- 
holders at their annual meet- 
ing yesterday that turnover 
had increased to Ll,473bn 
(S910m) between January and 
the end of May, in spite 
of the gloomy outlook for 


European car production. 

In 1993, net revenues rose 
only L9 per cent to l£935bo, 
and the group returned a net 
consolidated loss of L157.4bn 
after financial and restructur- 
ing charges. 

However, Magneti Marelli 
said that it bad experienced 
“notable increases" in sales of 
fuel systems, engine control 
and temperature control units 
this year. 

“The growth in sales volume 
and the implementation of 
rationalisation, foreseen and 
undertaken in 1993, has 


Finmeccanica rights 
issue gets green light 


By Andrew HU 

Shareholders of Finmeccanica, 
the Italian state-controlled 
engineering and defence group, 
yesterday approved a Ll.700bn 
(Sl-QSbn) rights issue, which 
will reduce tbe stake owned by 
In. the state holding company, 
to less than 60 per cent from 85 
per cent 

In is to pay nearly LSOObn 
for its new shares and a fur- 
ther Ll,000bn should be sub* 
; scribed by the creditor banks 
[ of Efim, the now defunct state 
| holding company which is 
j transferring its defence inter- 
■ ests to Finmeccanica. 

J Tbe banks said their under- 
J writing of the issue was Condi- 
1 tional on the completion of the 


transfer of the seven Efim com- 
panies, which include Agusta. 
the helicopter manufacturer. 
Finmeccanica said yesterday 
that the exercise of its option 
to buy the companies was "a 
formality" and should take 
place on June 20. 

The deal was agreed by the 
government three months ago. 
and means that Finmeccanica 
will not have to assume the 
Efim companies' L7,QO0bn of 
debts. Although the issue is a 
form of privatisation, the plan 

prevents the government los- 
ing control cf strategic defence 
manufacturers' 

Finmeccanica's shares fell 
L3t to close at Ll^C in Milan 
yesterday, compared with the 
issue price of 12.100. . 


allowed [the company] to real- j 
ise a positive operating result | 
and to break even before { 
taxes." the group said. 

Yesterday's meeting granted 
the Magneti Marelli board a 
five-year authority to increase 
capital by a maximum nominal 
value of Li ,000b u and to issue 
bonds for the same amount 

About 42 per cent of Magneti 
Marelli is owned directly by 
Fiat, and a further 21-5 per 
cent by other group companies. 
In terms of sales it is the 
fourth largest company in the 
Fiat stable. 

Strong advance 
at Norwegian 
shipowner 

By Karen FOssfi fn Oslo 

; 

Wilhelmsen Wilhelmsen. one 
of Norway's largest shipping 
groups, lifted pre-tax profits 
I three-fold in the first four 
| months of the year to NKr321m 
l < 5415m) from NKrtlOm in the 
I same period last year, 
j U was helped by a NKrlQOm 
I gain from the disposal of a dril- 
ling rig. The shipowner said 
t there was uncertainty over the 
remainder of the year. 

Group freight revenue was 
unchanged at NKrl.2bn but 
operating profit, before depre- 
ciation. fell NKr28m to 
NKr22fim. 

Pre-tax profit, after minority 
interests, rose sharply to 
NKr2Slm from NKr83m. 


By Christopher P*riw» 
to Frankfurt 

The Royal Bcgenunn group of 
the Netherlands emerged yes- 
terday as the leading con- 
tender to take control of Deut- 
sche Waggonbau, the east 
German rolling-stock maker 
owned by the Treuhand priva- 
tisation agency. 

The company said it hod 
reached agreement on the out- 
lines of a deal under which it 
would take over 74.9 per cent 
of DW stock, white the balance 
would remain with the Treu- 
hand for the time being- ?. 

The Treuhand. taken 
unawares by the Begvmann 
announcement, stressed that a 


heads-of-ngreement paper, con- 
taining details or points subject 
tv further negotiation, would 
not hinder continuing discus- 
sions with other potential 
investors. 

However, the Dutch group's 
statement appeared designed 
to deter aay other would-be 
investors. Begemaon and the 
Treuhand Intended to develop 
the (toads of agreement Into a 
legally-binding deal, it said 

A deal, which the bidder 
expects to tie completed this 
year, wutiM mark the end of a 
long period of uncertainty fix 
the barely profitable DW. 
, which suppitef mast of the for- 
mer Comecon area's railway 
goods wagons and carriages. 


Karstadt edges ahead 


By Michael Underoann In Bonn 

Karstadt. Germany's biggest 
retailer following the recent 
purchase of Hertie. yesterday 
reported slightly improved 
annual earnings of DM2285m 
(J 197.4m). up from DM224.1 ra 
in 1993. 

Group turnover In the first 
five months of this year soared 
by 31.7 per cent compared with 
ti» previous year, to DMllbn. 
helped by strong demand for 
tourist services. 

Turnover In 19H3 rose to 
DM13. 3bn. up from DM125hn 
the year before. The dividend 


is increased by DM1 to DM13. 

However. Mr Walter Deuss, 
chief executive, underlined 
warnings given by competitors 
that the retail market was still 
In a ‘Recession'* despite fore- 
cast economic growth. “Given 
the only slight change in tbs 
number of unemployed there is 
no sign of a fundamental 
improvement in the consumer 
climate.** Mr Deuss said. 

The company spent about 
DMt.Bbn earlier this year to 
buy Hertie. Germany’s third 
biggest retailer, but said it 
would take about five years to 
integrate the two groups fu/ly. 





C E M E NT 




1. The Republic of Turkey, Prime Ministry Privatization Administration tPA) oHeis for sale the shares of HAVA$-HavaalanUn Tfer Hizmederl A.$. 
(Airpons Ground Handling Co.) of which 51% is owned by PA and 49% is owned by Turkish Airlines. Total capital of the Company is 20 billion TL 
Pountiai investors can bid for a certain amount of the shares which will enable then to obtain the management right- 

2. PA is planning to make a public offering of the remaining shares and list these shares on the Istanbul Stock Exchange- The amount of the 
shores which Is going to he offered to the public will be decided during tbe negotiations with the investors. 

3. The lender will he realized by obtaining the bids and performing negotiations with the bidders. 

4. Investors are required to submit an irrevocable unconditional bid bond payable on first demand with a maturity period of at least 6 months, 
amounting to TL 5.000,000,000 to Republic of Turkey Prime Ministry Privatization Administration's Office (Huseytn.Rahmi Gurpinar So leak. 

No: Z, Cankaya. 06680, ANKARA- TURKEY) no later than June 27, 1994 Monday by 6.00 PM Turkish mean time. 

5. The tender offer, together with the receipt obtained upon submission or the bid bond to PA. shall be made in a sealed envelope on which the 
name of the company and the sign of “CONFIDENTIAL* should be indicated. 

6. The following documents must be attached to the tende r offer in the event, 

a) the bidder' is a real person, the certificate of specimen signature. 

b) the bidding is made by a proxy, the power or attorney particular? authorizing to bid in this lender on behalf of the bidder together with this 
certificate of specimen signature of tbe attorney 

c) the bidder is a legal person, a certificate of power proving that the persons acting on behalf of the legal person have the authority to represent 
and obligate the legal person together with specimen signature. 

7. Information memorandum relating to tbe sale of the above company can be obtained from the PA Toro fee of TL 10.000.000. 

8. The PA is not subject to the State Tender law No: 2886 and reserves the right to decide whether or not to privatize and to extend the deadline 
of the tender; if deems necessary. 

9. Other significant matters relating to tbe sale of the above Company will be notified to the investors during negotiations meetings 

Note: The sale of the shares to real persons and the legal entities domiciled abroad is subject to the existing law and regulations of foreign capital, 
copies of which are obtainable from the Under-secretariat of Treasury and Foreign Trade, General Directorate of Foreign Investment. 


REPUBLIC OF TURKEY PRIME MINISTRY 

Privatization Administrate 


Huseyin Rahim GOrpmor Sokak, No: 2, Cankaya, 06680 ANKARA / TURKEY 
Ttl: (00-312] 441 IS 00; Fax: (00-312) 440 32 71 


cc 


The Nippon Credit Bank, Ltd. 

(tit* ‘Bank”) 

Notice to Holders off 

VJS. $ 150 , 000,000 

1% per cent Convertible Bonds 2002 

Ithe *6onda"l 

Tbs nutating of ifto Board of Otatctora of tfw Bank held on 9th March. 1994 resolwti 

to spHtoach share of cornmnn stock of the Bank hha 'Shares') with a per vahw 
of «50a into ton (101 Shares with a par value of *S0 each as at 1Wi August, 1994 
(the 'Stock Split'). 

As a result 0( the Stock Split, tite current Co nvsrstonPrica of dt« Bonds waibaadkntod 
inwcordanc* with Q«rea 5 lil ofpw Treat Quad dared McTiOaotar, WP eorwftudng 
mo Bonds. The change of par value ol the Shares requires an amendment to 
mArtfeteaf/neorpantfonoffire Ban*, therefore, tft* SUxk Split is aobjeef eu trie 
approval ol the oansnl moating « anarahoMere of the Bonkto ba heW on aStit Jur», 
WM. A further notice will to mm as to tfw Co nvorefon to Pa adjusted. 

Uiwtar on (xnandinam tothe Commercial Code of Japan which took eJfact on lat April. 
■*>. *h* wmi 'SreckSpB*- nwjmMy hind ofatockaplitln ratakmro the Shares and 
InriudWBuch sutydMslQn of tna ShafM n are preaedbad hn the above Trust Dead. 

lBth June, taa* . Tha M p p n ti Cwdh Brew. Ltd. 


NACIONAL FINANCIERA, SJrl.C, 
Trust Division 

as trustee of the Matin Finance Trust 

la /ran aaOrr Ar torn nf Umnt) 

US$200,000,000 Guaranteed Floating Rate Note* due 1997 
Vn rimMt m ii/t rmirt toeio rattrGra iwir nUy 



This announcement appears as a matter of record onJy. 


US$75,000,000 

Government of Bermuda 


7.59% Senior Notes Due June 14, 2004 


As agents for the Government of Bermuda, the undersigned 
placed these securities privately with qualified institutional buyers. 




Rothschild Inc. N M Rothschild & Sons 

Limited 

Affiliated companies in 

Paris Frankfurt Milan Hong Kong Singapore Sydney 

Tokyo Shanghai Toronto Santiago Bermuda 

June 15, 1994 



Lehman Brothers 
Holdings FLG 

llonfMreAla EtyiW Ftom*i woot 

Oumra Lcton BrclAen HotfmgJ FLO 

UJS. S175, 000,000 

Guana seed Flmriag Race 
Notes due 199S 



BANQUE PARIBAS 

US$200,000,000 
Undated floating rate 
securities 

In accordance with dot 
provisions of the securities, 
notice U hereby given that for 
the three month interest period 
Horn IS June 1994 to 
75 September 1994 the 
securitie s anil carry an interest 
rate of 4.875% per annum. 
Interest due on 15 September 
1994 will amount to USS 12,46 
per USS1.0QQ security. 

Agent,* Morgan Guaranty 
Trust Company 

JPMorgan 


BANQUE PARIBAS 
US$400,000,000 
Undated subordinated 
floating rate securities 
In accordance with die 
provisions of the securities, 
notice is hereby given that 
for the interest period from 
IS June 1994 to IS September 
1994 die securities mill carry 
an interest rate of 4.6575% per 
annum. Interest payable value 
IS September 1994 per 
USS 1,900 security mill amount 
to USSI 1.98 and per USS10.0VO 
security aid amount to 
USS 119. 79 

Agent, 1 Morgan Guaranty 
Trust Company 

JPMorgan 


The Kingdom of Belgium 

USS400.000.00U 
Floating rate notes do* 
December 1999 

In accordance anth die 
provisions of the nates, notice 
a hereby given dud the mtc 
of interest has been fixed 
at 4. 75% for the interest 
determination period IS June 
l994to IS December 1994. 
Interest payable an 
15 December 1994 mil 
amount to USS2.4I4.5S per 

uss mow note. 

Morgan Guaranty 
Trust Company 

JPMorgan 








\ ■ 



i's- 






V - £ 


erF nar 

s^OUp 


1 ^ucs ahead 


FINANCIAL TIMES WEDNESDAY JUNE 15 1994 


17 


R 1 £ 

THE GERMAN Ip PFANDBRIEF 

SOLID VALUE FROM THE GROUND UP 


If German quality — like Meissen fine porcelain — is your cup of tea, we suggest you spend 
your next break looking into German Pfandbriefe. Accounting for about 40% of the vast fixed- 
interest securities market in Germany, Pfandbriefe generally provide higher yields than 

German Treasury bonds (Bunds). And thanks to the 
strict legislation of Germany's Mortgage Bank Act, 
they are just as safe. 

This legislation is designed to ensure that 
investors receive a full return of principal in all 
circumstances. Pfandbriefe are bonds used to refinance 
mortgages or public loans. The bonds are covered by 
mortgages with an upper lending limit of 60% of the 
property's conservatively estimated value, or by public- 
sector loans. They must always carry backing of sepa- 
rate funds with at least matching yields and 
maturities. Moreover, all Pfandbrief issues are 
monitored by a state-appointed trustee. Issuing 
banks are fully liable for each issue. 

These and other safety features of the system 
help explain why at year-end 1993, DM 1 trillion 
were invested in outstanding Pfandbriefe, of which Germany's 
26 private mortgage banks accounted for DM 603 billion. As for quality, 
no investor has ever failed to receive 100 % repayment of a Pfandbrief held I 

i _ _ "ll _ _ _ ^ _ ■ Issuers actively maintain a well- 

to maturity. Not bad for an idea that goes back 225 years. ■ functioning secondary market. 




WHEN THERE’S NO SUBSTITUTE FOR QUALITY. 



GERMANY'S MORTGAGE BANKS 

DEPFA-BANK, WIESBADEN 
BAYERISCHE VEREINSBANK AG, mONCHEN 
HYPO- BANK, MUNCHEN 

DEUTSCHE HYPOTHEKENBANK FRANKFURT AG, FRANKFURT 
RHE1NHYP, FRANKFURT 

DEUTSCHE GENOSSENSCHAFTS-HYPOTHEKENBANK AG, HAMBURG 
FRANKFURTER HYPOTHEKENBANK AG, FRANKFURT 
DEUTSCHE CENTRALBODENKREDIT-AG, KOLN 
BAYERISCHE HANDEL5BANK AG, MUNCHEN 


WESTHYP, DORTMUND 
BERUN HYP, BERUN 

SUDDEUTSCHE BODENCREDITBANK AG, MUNCHEN 

MUNCHENER HYPOTHEKENBANK EG, MONCHEN 

HAMBURGHYP, HAMBURG 

WURTTEMBERGER HYPO, STUTTGART 

NURNBERGHYP, NORNBERG 

HYPOTHEKENBANK IN ESSEN AG, ESSEN 

DEUTSCHE HYPOTHEKENBANK (ACT.- GES.J, HANNOVER 


BRAUNSCHWEIG- HANNOVERSCHE 

HYPOTHEKENBANK AG, HANNOVER 
ALLGEME1NE HYPOTHEKEN BANK AG, FRANKFURT 
RHEINBODEN HYPOTHEKENBANK AG, KOLN 
LUBECKER HYPOTHEKENBANK AG, LUBECK 
NORDHYPO BANK, HAMBURG 
BFG- HYPOTHEKENBANK AG, FRANKFURT 
WL-BANK, MONSTER 
HYPOTHEKENBANK IN BERUN AG, BERUN 









18 


FINANCIAL TIMES WEDNESDAY JUNE 15 1994 


To the Holders of 

Middletown Trust 

10%% Notes Series B due 1998 

NOTICE IS HEREBY GIVEN thaL pursuant to ArHde Seven of the General Covenant lor the Sinking Fund due July 15. 1994 U.S. $16,560,000 
of the Notes will be redeemed at 100 % of their principal amount plus accrued interest to July IS, 1994, when interest on the Notes redeemed shall 
osase to accrue. Following the above redemption, U.S. $36325.000 TOIYK. Notes Sales B due 1998 and U.S. $37305,000 11«% Notes Series C 
due 2010 will remain outstanding. 


The redemption price and accrued interest are payable against surrender of the Bearer Notes together with afl coupons maturing subsequent to 
July 15. 1994 at the offices of the Paying Agents outside of the United Slates fisted betovsr- 


The Chase Manhattan Bank, N A. 


Chase Manhattan Bank 

Banque Bruxelles Lambert 


Chase Manhattan Bank 

vwootgate Housb 




Luxembourg, S J\. 


Avenue Marnlx 2 4 



(Switzerland) 


Coleman Street 





5 Rue Plaetis 



1050 Brussels 



63 Rue du RhOne 

London EC2P 2HD 




L-2338 




Beldum 




CH-l 204 Geneva 

England 






Luxembourg-Gained 








Switzerland 


The 

serial numbers of U.S. 516,560,000 Bearer Notes to be redeemed are as follows: 









3 

845 

1 729 

2672 

56<4 

4598 

5503 

8497 

7391 

8294 

9268 

10268 

11239 

12226 

13130 

14125 

15151 

16011 

16954 

17072 

18801 

19774 

5 

853 

1730 

2693 

36l7 

4598 

5512 

8505 

7394 

8297 

9273 

10283 

11241 

12228 

13132 

14139 

15154 

16014 

16959 

17082 

1B803 

19778 

12 

854 

1739 

2697 

3628 

4602 

5513 

6507 

7398 

8299 

8276 

10287 

11242 

12230 

13140 

14143 

15161 

1 8024 

16981 

17083 

18805 

19783 

18 

855 

1744 

2699 

3632 

4804 

5515 

6511 

7400 

8302 

9278 

10293 

11246 

12235 

13154 

14150 

15168 

16027 

16984 

17084 

1B8Q9 

19784 

26 

859 

1745 

2703 

3850 

4613 

5517 

8531 

7401 

8305 

9303 

10295 

11275 

12241 

13155 

14151 

15169 

16032 

16988 

17087 

18810 

19801 

34 

881 

1763 

2706 

3861 

4618 

5519 

6533 

7402 

8324 

9306 

10298 

11291 

12242 

13162 

14152 

15173 

15034 

16987 

1 7096 

18812 

19803 

35 

866 

1769 

2711 

3684 

4617 

5522 

8540 

7404 

8337 

9315 

10302 

11297 

12244 

13187 

14157 

15174 

16043 

16990 

17916 

18814 

19807 

38 

884 

1773 

2720 

3676 

4627 

5527 

6542 

7408 

8348 

9316 

10316 

11315 

12247 

13180 

14161 

15(76 

16048 

16992 

17919 

18815 

19812 

*3 

900 

1778 

2724 

3696 

4643 

5534 

6545 

7407 

8349 

9321 

10318 

11319 

12250 

13186 

14162 

15178 

16049 

17003 

17924 

16824 

19815 

48 

904 

1780 

2742 

3700 

4655 

5541 

6550 

741 B 

8381 

9328 

10322 

11320 

122S5 

13188 

14170 

15181 

18059 

17006 

17927 

18832 

19821 

53 

914 

1733 

2743 

3702 

4858 

5542 

6552 

7420 

8384 

3329 

10323 

11323 

12257 

13191 

14174 

15)83 

10074 

17012 

17934 

10835 

19827 

58 

329 

1794 

27Sl 

3718 

4675 

5S56 

8562 

74 ZS 

8385 

9355 

10351 

11329 

12261 

13215 

14180 

15190 

16088 

17013 

1 7939 

18839 

19831 

60 

930 

1803 

2755 

3736 

4676 

5565 

6565 

7428 

8371 

3380 

10387 

11334 

12270 

13216 

I41B3 

15197 

16089 

17022 

17947 

1B840 

19840 

72 

939 

1803 

2760 

3738 

4679 

5581 

6570 

7428 

8382 

9385 

10390 

11336 

12272 

13237 

14185 

15200 

16091 

17025 

17951 

18851 

19845 

78 

942 

1812 

2762 

3743 

4696 

5584 

8581 

7438 

8398 

9367 

10407 

11355 

12274 

13238 

14194 

15202 

16098 

17027 

179S7 

18858 

19862 

82 

945 

1826 

2765 

3744 

4703 

5605 

6563 

7443 

8399 

9388 

1D4I2 

11358 

12288 

13244 

14207 

15221 

16111 

17029 

17958 

13875 

19868 

83 

947 

1829 

2773 

3751 

4707 

5608 

8588 

7447 

8413 

9372 

10415 

11360 

12296 

13247 

14220 

15223 

16115 

17035 

17960 

18878 

19870 

84 

974 

1831 

2777 

3755 

4712 

5632 

8590 

7454 

8419 

9384 

10417 

11401 

12297 

132G6 

14229 

15247 

16136 

17037 

17964 

18879 

19878 

93 

979 

1857 

2779 

3766 

4718 

5649 

6593 

7460 

8425 

9401 

10423 

11403 

12300 

13276 

14230 

1S2S9 

18137 

17038 

17965 

18898 

19682 

98 

980 

1858 

2760 

3773 

4721 

5850 

6594 

7464 

8428 

9407 

10424 

11409 

12319 

13278 

14231 

15260 

16141 

17042 

17900 

18907 

19884 

111 

995 

1877 

2783 

3783 

4733 

5653 

6599 

7471 

8434 

9412 

10429 

11415 

12324 

TJ282 

14232 

15282 

16142 

17052 

17970 

18909 

19920 

122 

997 

1883 

2793 

3786 

4735 

5854 

6606 

7473 

8438 

9413 

10447 

M4ig 

12335 

13297 

14236 

15283 

16148 

17055 

17977 

18818 

19923 

123 

999 

1886 

2796 

3790 

4737 

5658 

6813 

7479 

8443 

9417 

10448 

11421 

12330 

13305 

14237 

15290 

16150 

17074 

18003 

18940 

19924 

124 

1001 

1894 

2798 

3807 

4739 

5688 

6623 

7481 

8450 

9418 

10464 

11435 

12336 

13307 

14240 

15292 

16151 

17084 

18013 

18948 

19937 

128 

1004 

1899 

2803 

3809 

4750 

5680 

8827 

7491 

B453 

9422 

10478 

11436 

12342 

13309 

14247 

15294 

161 S4 

17090 

18020 

18948 

19940 

139 

1011 

1902 

2804 

3811 

4754 

5690 

6629 

7500 

6465 

9432 

10490 

11445 

12353 

13312 

14259 

15299 

16170 

17106 

18040 

18949 

19941 

141 

1013 

1926 

2828 

3818 

4759 

5695 

8659 

7502 

8475 

9456 

10491 

11460 

12354 

13313 

14268 

15302 

10173 

17109 

10052 

18950 

19952 

144 

1030 

1932 

2835 

3819 

4700 

5704 

6664 

7514 

8476 

9478 

10490 

11481 

12355 

13321 

74260 

15309 

16185 

17111 

18053 

18952 

19960 

153 

1031 

1941 

2640 

3835 

4782 

5717 

6676 

7516 

8480 

9484 

10502 

11484 

12362 

13328 

14274 

15315 

16198 

17115 

18055 

18959 

19963 

155 

1032 

1942 

2841 

3837 

4785 

5727 

6678 

7522 

8489 

9495 

10506 

11480 

12363 

13330 

14276 

15320 

16204 

17117 

10058 

18960 

19968 

164 

1037 

1945 

2845 

3848 

4769 

5735 

8680 

7529 

8482 

9500 

10510 

11469 

12386 

13334 

14277 

15350 

16205 

17121 

18003 

18966 

19972 

174 

1041 

1946 

2846 

3869 

47B5 

5737 

8886 

7533 

8494 

9507 

10516 

11474 

12367 

13330 

14279 

15351 

16215 

>7122 

18067 

18975 

19978 

178 

1043 

1948 

£847 

3878 

4797 

5740 

6887 

7540 

8503 

9522 

10523 

11480 

12368 

13352 

14261 

15352 

16218 

17139 

18074 

18978 

19979 

181 

1056 

1950 

2861 

3884 

4810 

5747 

WWW 

7552 

8505 

9527 

10538 

11481 

12397 

13362 

14282 

15357 

16233 

17147 

18081 

18977 

19980 

182 

1058 

1957 

2863 

3886 

4814 

5750 

6698 

7553 

8509 

9533 

10544 

>1482 

12398 

13383 

14295 

15306 

16240 

17175 

18083 

18379 

13983 

185 

1067 

1958 

2865 

3887 

4815 

5751 

6707 

7555 

8511 

9535 

10548 

11496 

12400 

13386 

14296 

15367 

16254 

17178 

18091 

18989 

19985 

190 

1 070 

1961 

2956 

J892 

4817 

S7SS 

6709 

756S 

8513 

9550 

10552 

11506 

12401 

13400 

14299 

15374 

16276 

1 7180 

18092 

T8S91 

19900 

209 

1076 

1965 

2873 

3900 

4622 

5761 

5717 

7571 

8514 

9558 

10560 

11512 

12406 

13403 

14306 

15375 

16277 

17187 

18095 

18996 

19991 

210 

1079 

1970 

2874 

3904 

4824 

5762 

6725 

7587 

8525 

9563 

10569 

11514 

12422 

13404 

14310 

15380 

16289 

17189 

18105 

19000 

19993 

215 

1081 

1971 

2878 

3914 

4828 

5766 

6727 

7589 

8S26 

9564 

10580 

11516 

12424 

13423 

14314 

15391 

16292 

17193 

18112 

19017 

19996 

219 

1094 

1977 

2879 

3922 

4827 

5767 

6733 

7503 

8527 

0573 

10592 

11518 

12425 

13424 

14323 

15393 

18294 

17201 

18114 

1901B 

20000 

220 

1112 

1979 

2888 

3926 

4833 

5778 

6739 

7005 

8547 

9581 

10600 

11519 

12434 

13429 

14334 

15401 

16297 

17308 

18125 

19021 

20001 

223 

1118 

1962 

2889 

3928 

4835 

5801 

6740 

7610 

8553 

9582 

10601 

11522 

12435 

13434 

14335 

15414 

16301 

17210 

16126 

19033 

20002 

224 

1120 

1984 

2892 

3929 

4841 

5602 

6752 

7627 

8554 

9591 

10604 

11541 

12436 

13440 

14356 

15418 

18302 

17217 

18136 

19037 

20010 

234 

1129 

1930 

2395 

3931 

4842 

5818 

6753 

7628 

8569 

9595 

10613 

H549 

12471 

13441 

14360 

15428 

16310 

17224 

18137 

19046 

20019 

238 

1130 

1995 

3896 

3933 

4853 

5645 

8755 

7630 

8574 

9597 

10814 

11566 

12472 

13448 

14385 

15433 

16314 

17234 

18142 

19059 

20020 

258 

1131 

2003 

2904 

3935 

4854 

5850 

0757 

7838 

8590 

9600 

10019 

11590 

12473 

13440 

14382 

15452 

16315 

17235 

18143 

19066 

£0026 

261 

1144 

2011 

£909 

3938 

4856 

5657 

6774 

7B43 

8592 

9601 

10623 

11591 

12488 

13452 

14389 

15454 

16328 

17239 

18149 

19093 

£0032 

266 

1171 

2016 

2946 

3943 

4859 

5656 

6777 

7648 

8598 

9602 

10630 

11599 

12S00 

13467 

14391 

15457 

16333 

17249 

18156 

19097 

20033 

271 

1177 

2017 

2949 

3956 

4862 

5866 

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18756 

19708 


787 

1687 

2620 

3557 

4524 

5479 

6472 

7318 

8262 

9201 

10215 

11176 

12176 

13056 

14059 

15077 

15965 

16917 

17835 

18773 

19726 


790 

1891 

2625 

3562 

4531 

5480 

6480 

7322 

8273 

9208 

10221 

11181 

12200 

13060 

14063 

15099 

15968 

16924 

17B37 

18776 

19737 


791 

1693 

2636 

3567 

4539 

5484 

6483 

7323 

8277 

8209 

10222 

11195 

12205 

13066 

14065 

15095 

15972 

15925 

17838 

1B783 

19748 


794 

1700 

2644 

3571 

4550 

5489 

6486 

7331 

8278 

9215 

10224 

11209 

12211 

13068 

14074 

15098 

15977 

16934 

17644 

I87B4 

19750 


814 

1702 

2651 

3562 

45S7 

5490 

6490 

734S 

8281 

9221 

10232 

11213 

12212 

13096 

14075 

15103 

1S979 

16939 

1784S 

13706 

197SS 


823 

1714 

2665 

3594 

4571 

5495 

6491 

7347 

8282 

9222 

10241 

11215 

12214 

13097 

14078 

1S119 

15986 

15941 

17848 

1B769 

19756 


825 

1719 

nccA 

3595 

4573 

5498 

6492 

7353 

0290 

9234 

10246 

11227 

12215 

13125 

14121 

15122 

15990 

16647 

17849 

18794 

19762 


844 

1724 

2671 

3602 

4583 

5501 

6435 

7361 

8293 

9253 

10252 

11233 

12219 

13129 

14123 

15135 

15995 

15949 

17868 

18800 

19771 



The redemption price and accrued interest on the Registered Notes are payable at the office of the Registrar, Transfer Agent and Paying Agent. 
The Chase Manhattan Bank, N.A., Corporate Trust Administration, 4 Chase Meirotech Center, Brooklyn. New York, NY 1 1 245. 

The Connecticut Bank and Trust Company 
National Association as Trustee 

Dated: May 16. 1394 


U.S. $100,000,000 

EW 

Great Western Financial 
Corporation 

Floating Rate Notes Due 1995 


interest Rate 

536% per annum 

Interest Period 

15th June 1994 

15th September 1994 

Interest Amount per 
U.S. 550,000 Note due 
15th September 1994 

U.S. S670.83 


CS First Boston 

Agent 


uINb 




ECUTvmbmtPLC 
29 Chaahaa. Ptaca 




London SW1X ML 

1WS *71 2460088 

Fwc +71 2360599 

Mw i itiar SPA 


FUTURES OPTIONS BROKERS 

QJ *2 ROUND 
TRIP 

ETSOUTIOr: ONLY 


U.S. $50,000,000 



Credit Chimique 

Floating Rate Notes due 1996 

In accordance with the provisions of the Notes, notice is hereby 
given that for the Inlerest Period from June 15. 1994 to December 15. 
1994 the Notes wit carry an Interest Rate of 4.875°® per annum. 
The interest payable on the relevant interest payment date, 
December 15. 1994 will be U.S. S247.81 per U.S. S10.000 principal 
amount and U.S. $6,195.31 per U.S. 5250,000 principal amount. 


By: The Chase Manhattan Bank, N.A. 
London, Agent Bank 

June 15,1994 


CHASE 


1 MICHAEL. 

LAURIE 

We arc urgently seeking commcndal 

aasssni 

investment properties upwards Ot 

URGENTLY 

£0-Sm far in-house funds and overseas 

UK 


clients. Please forward details Ur 

Commercial 

| Fr 071 4** 4274 

Richard von Gotzen 

Property 


INTERNATIONAL COMPANIES AND FINANCE 


Upstart Cott shakes cola kings 

The Toronto group is at war with Coke and Pepsi, says Bernard Simon 


W alk into the Loblaws 
supermarket in 
Humbertown Plaza 
on the western outskirts of 
Toronto and you are on the 
frontline of the global cola war. 

Soft drink displays dominate 
two walls of the store, and It is 
quickly apparent which br and 
Loblaws wants shoppers to 
buy. Most of the shelf space is 
taken up by President's Choice 
(PC), Loblaws’ own in-house 
brand. 

A 750ml bottle of PC Cola 
sells for 49 cents, compared 
with 79 cents for Coca-Cola or 
Pepsi. While a 24-can case of 
the two traditional brands 
costs C$639, President's Choice 
sells for just C$439. 

PC Cola is one of a growing 
array of private-label soft 
drinks made by Cott Corpora- 
tion, the upstart Toronto-based 
company which is giving Coke 
and Pepsi - long viewed as two 
of the world's most invincible 
brands - their stlffest competi- 
tion for a long time. 

The success of Cott and 
other private-label soft-drink 
makers led PepsiCo to warn 
last week that its second-quar- 
ter earnings would be virtually 
□at. Pepsi's share price has 
tumbled by 16 per cent on the 
New York Stock Exchange in 
the past 10 days. 

By contrast, Cott last week 
reported a 67 per cent jump in 
first-quarter earnings, to 
C$9.6m (US$6.9m). Sales, at 
C$2l73m, were more than 66 
per cent higher, and they 
included a 77 per cent surge in 
revenues from the US. Ana- 
lysts predict sales will surpass 
C$13bn in the year to January 
1995, almost double last year’s 
C$665 m. 

Cott has signed supply agree- 
ments with 90 retail chains 
around the world. They 
include Wal-Mart, the biggest 
US retailer, which markets 
Cott products under the name 
Sam's American Choice. 

Since the beginning of the 
year, the Canadian company 
has helped supermarkets in the 
UK, France and Spain to 
launch private-label soft 
d rinks , it recently began ship- 
ments to Ito Yokado, Japan’s 



Classic battle: J. Satasbury’s own cola lines up against the rest 
second-biggest retailer. 


Cotfs success is dramatic- 
ally illustrated by the experi- 
ence of J. Salnsbury of the UK, 
which launched a Cott product 
under the name Sains bury’ s 
Classic Cola in April. Within 
four weeks, the cola had. won a 
60 per cent share of Samsbury 
sales, equal to a quarter of 
England's entire take-home 
cola market. 

Cott has several advantages 
over Coke and Pepsi: 

• its marketing and advertis- 
ing expenses pale in compari- 
son. By providing retailers 
with their own private-label 
brands, Cott has no need to 
spend tens of millions of dol- 
lars promoting a national 
brand by sponsoring the US 
National Football League (as 
Coke does), or hiring Michael 
Jackson and basketball star 
Shaqille O'Neal far advertising 
campaigns (as Pepsi has). 

• Cott piggy-backs on retail- 
ers' centralised warehouse and 
distribution facilities. The 
same supermarket trucks 
which carry produce from 
warehouses to stores bring 
Cott soft drinks from the bot- 
tler back to the warehouse. 

• Until recently, the cost to 
bottlers of Cott concentrate 
was as little as one-sixth of 
that for Coke or Pepsi. 

Mr Mark Husson, analyst at 
J. P. Morgan in New York, con- 


cluded in a recent report that 
“private-brand retailers stand 
to make 15 per cent more profit 
from a premium private-brand 
cola than they do from 


turn,” says the soft drinks cate- 
gory nunmgPt- at one of Cana- 
da’s biggest supermarket 
chains. 

T he products of Cott, dis- 
guised in retail chains' 
private-label packaging, 
are on the shelves of almost 
every supermarket in the prov- 
ince. Even comer stares cany 


(short for Royal Crown Cola), 
for which Cott has the Cana- 
dian bottling Hnwina, 
Private4abel colas have cap- 
tured more than haV the busi- 
ness in the two biggest super- 
market groups, Loblaws and 
(heat Atlantic & Pacific (A&P). 
According to Cott, its products 


drive to improve competitive- 
ness. It hag closed eight of Its 
16 production plants, and all 
but six of the 68 administration 
offices. 

Coca-Cola and PepsiCo have 
responded to Cotfs challenge 
in Canada by lowering prices 
mil, more importantly, widen- 
ing retailers’ margins. The two 
wwHmnHi brands used to be loss 
leaders for many supermar- 
kets. Now, according to an 
A&P nffireaT, the ri 1flr C iTls on 
Coke, Pepsi and Cott colas are 
roughly equal 

Co m pe titiv e margins are not 
flntmg h, however, to persuade 
retailers to posh Coke and 
Pepsi as hard as their private 
labels. According to Mr Hus- 
son: “Successful retailers in 
the 1990s will be those under- 
standing that they are promo- 
ting a strong, differentiated 
supermarket brand, not merely 
serving as passive landlords of 
space.” 

The A&P official notes that 
soft drinks have played an 


place, 1 * he says. 

Not everyone, however, is 
convinced that Cott’s 
long-term future is assured. 
Same analysts have questioned 
its aggressive accounting prac- 
tices. Its chairman, Mr Gerald 
Pencer, is an entrepreneur 
whose last venture - a Cana- 


growth of the past two to three 
years can be sustained. Its 
margins have lately been 
squeezed hi several key mar- 
. kets, Ttirfmting Ontario. 

Cotfs first-quarter earnings 
may have been impressive, but 
they woe less impressive (ban 


now ttimnifliid a 31 per cent 
shar e of the entire Ontario cola 
market 

On the other hand. Coca- 
Cola’s Canadian bottling sub- 
sidiary ran up losses of almost 
C$200m in 1992 and 1993. In a 


many investors anticipated. 
PepsiCo and Coca-Cola can 
console themselves that their 
new rival's share price has also 
fallen more than 10 percent In 
the past week. 


naHnnnl brands . 

Nowhere has Cott scored big- 
ger gains, or provoked a more 
powerful response from Coke ' 
and Pepsi, than in Its home 
market of Ontario. “It’s 
tweaked Coke and Pepsi to re- 
examine their whole organisa- 


indispensable role in promo- 
ting the chain's attire range of 
Master Choice private-label 
products. “It’s the one item 
that has brought the name 
Master Choi ce to the market- 


rtian trust ami loan company - 
muled in failure. 

Coke and Pepsi's increas- 
tbern under the name RC Cola lng(y aggressive response has 

also raised doubts about 
whether Cotfs spectacular 


Metra down heavily to FM65m 


Esab sees 
profit of 
SKr300m 

By Hugh Camegy 

Esab. the world's leading 
producer of welding equip- 
ment, said yesterday profits 
were rising faster than antici- 
pated. It forecast income after 
financial items for 1994 of 
around SKiSOOm ($38m). com- 
pared with SKr82m last year. 

The Swedish group said the 
improvement stemmed chiefly 
from cost-cutting and restruct- 
uring within the European 
operations, where the number 
of employees has fallen by 35 
per cent since 1990. 

Although the European mar- 
ket was said to be “somewhat 
weaker” this year, Esab said 
there was strong growth in 
North America and Aria. 

Group sales in the first five 
months of the year rose mod- 
estly, to SKrs.lbn from 
SKr23bn in the same period 
last year. However, profits 
after financial items surged to 
SKrl3Sm from SKrl3m. 

If market trends in Europe 
and North America continued, 
and there was no adverse 
effect from currency reform in 
Brazil, an important market, 
fufi.year profits should be 
three times the 1993 result. 


By Hugh Camegy 
ki Stockholm 

Metra, the Finnish industrial 
group, yesterday reported 
profits after finannifll items of 
FM65m ($ll.8m) in the four 
months to the end of April, a 
dramatic foil from the FM145m 
posted for the same period last 
year. 

However. Metra, whose main 
operations cover diesel 
engines, sanitaryware and 
security systems, said the 
figure was distorted by 
unusually large deliveries 
by the WSrtsilfi Diesel unit, its 
biggest division, in the first 


By C h ri s topher Brown-Humes 
in Stockholm 

Weaker sales of large paper 
machines led to deeper losses 
at Valmet, the Finnish engi- 
neering group, in the first four 
months of this year. 

The group, which recently 
raised FM671.3m ($1223m) 
through an international share 
offering, said its deficit after 
financial items amounted to 
FM243m for the period. 

This is more than three 
times the previous year's 


four months of last year. 

It predicted profits for the 
whole year would he ahead of 
1993*5 FM472m, in spite of the 
effects of the merger 
announced last week between. 
Metre's Abloy Security divi- 
sion the locks division of 
Sweden’s Securitas. 

Ibft merger, the latest In i 
series of moves to narrow 
Metre's focus, will take effect 
later this year, creating 
Europe's biggest maker of 
cylinder locks. 

The surge in WSrtsiia deliv- 
eries early.last year, combined 
with divestments, also led to a 
decline in Metre’s group sales 


FM72m loss, and follows a 20 
per cent drop In net sales, to 
FM2.65hn. 

The group said several large 
paper machines were delivered 
in early 1393, whereas most Of 
this year's contracts would not 
be booked until the end of the 
year. 

Although It fell to an operat- 
ing loss of FMl40m from a 
FMSOm profit, the bottom line 
benefited from reduced net fin- 
ancing costs of F Ml 03m,. 
against FMl52m. - 

New orders amounted to 


in the first four months, to 
FM3.4bn from FM4.2bn. 

Sales for WflrtsilS, one the 

world’s leading •tnamifantiTrprfi 

of diesel power generators, 
tumbled 35 per cent during the 
period, to FMLBbn, and operat- 
ing profits fell heavily to 
IMlfon. 

However, Metre said the 
order book had grown steadily 
since 'January, foreshadowing 
increased deliveries in the last 
four months of the year. 

WSrtsfla sales in the full 
year were expected to remain 
around last year’s* level of 
FMTbn, with profits down 
slightly on 1993*s FM449m. 


FM2.45bn r taking the order 
backlog at April 30 to 
FM6J5bn, or 8 par cent up on 
last year. The paper and board 
division accounts for FM4JSbn 
of the backlog. 

Valmet warned that its full- 
year result would be affected 
by the recently-completed 
FMtffifon. sale of Its; transport 
equipment and tractor 
operations to Sian-Auto. The 
transfer win cut 1994 net sales 
by 20 per cent, to around 
FM&5bn, and reduce operating 
imygne from 1993*8 FM479HL 


Weak sales deepen loss at Valmet 


‘ . COMMERZBANK 

Invitation to Receive 
New Coupon Sheets 

- Securities code number 803 200 - 

In connection with the shares of our company, new coupon sheets 
with dividend coupons Nos. 61 -80 and the renewal coupon attached 
will be distributed free of charge from 15th June, 1994 onwards. 

The distributing agents are: 

Commerzbank AG, London Branch 

S. G. Warburg & Co. Ltd. 

Please submit the renewal coigions from the old coupon sheets, 
classified by nominal amounts and arranged in numerical order, to 
one of the above-mentioned credtt Institutions with two copies of the 
list of serial numbers. Shareholders whose securities are being held 
in safe custody at a credtt institution need not take any action. 

From 15th June, 1994, up to and including 15th July, 1994, the 
shares ot our company wilt be available with both the renewal 
coupon, from the old coupon sheets, and the new coupon sheets; 
from 18th July, 1994 onwards they wfH be obtainable only with the 
new coupon sheet 

Frankfurt am Main, June 1 994 The Board of Managing Directors 


Heart II limited 

HSS 174S00JMM 

Second Floating Kale Notes dme 20M 

In accunJawr wuh the pmvmn ot the Nctemotkx b hereby pt .cn tin for tbe faaem Fated baa 
Uifalme I-W4 m J-fth September l-Ml.ifar Non win tm ■ rue of Una af-UUZMtpruoam. 
The UKU nma moon, panfate on Hit September 19« win be USS 2.1 W3SJJ 
DnUcUKM««BMfc 

iLuunbau^l &A. 



071 320 828> 


•f nr lei tonl lYx the ictlous Investor 


Market-Eye 




THE VENEZUELA HIGH INCOME 
FUND N.V, 

DIVIDEND NOTICE 

Consistent with the authorization granted by the Board of 
Supervisory Directors on May 18, 1994, notice is hereby given 
that the Fond will pay a distribution of UJS. $0_25 pei share on 
July IS, 1994 to common shareholders of record at the dose of 
business on Jane 30, 1994, in the case of shares held in 
registered form, or upon presentation of conpon number 12 
attached to the common share certificate, to the Fund's Paying 
Agent (on or after July 15, 1994), in the case of common- 
shares held in bearer loan. 

By order of the Managing Director 

M a n ag in g Director and Location of 
Principal Office 

Curacao Corporation Company N.V. - ' 

De Ruytertade 62, P.O. Box 812 ' 

Netherlands Antilles 

Administrator, Registrar, Transfer bad 
Paying Agent 
Cititnist (Bahamas) TimimH . 

Thompson Boulevard • ' ■■ ■ 

P.O. BoxN1576 .. 

Oakes Field 
Nassau, Bah ama*! 

Investment Manager. 

Scodder, Stevens & Clark, Inc. 












19 


^Na 


ola ki 




■ 1 Si 


n 8. 


il\ to !-A165r 


,^j^i ^[£j|Al4_Tl{VffiSWEDNESDAY JUNE IS 1994 

INTERNATIONAL COMPANIES ANP FINANCE 

daH^E^t' 0 Hard slog up the bad-debt mountain 

fund’s Japan’s banks claim the worst is over but details suggest otherwise, reports Gerard Balter 

Commifmpntc T ast mon tlii Japan's Bat this alchemy is, in prac- week, show that it continues to Banks' primary capital ratios Its principal advantage 1 
t'AAA V-U I banks unveiled their tice. Httle better than its meril- nile nn the hnw Tnptal wtthreifc m awmm aF ahmit s taw WiM-maiiTf K^ntc ham * 


By Judy Dmnpsay 
bi Berfin 

The Treuhand privatisation 
agency yesterday held negotia- 
tions with the East German 
Investment Trust (Egit) in an 
attempt to clarify the extent of 
the London-based fund's 
investment commitments in 
companies it bought from the 
agency in 1992. 

Egit, which pledged to invest 
more than DMl.5bn ($909,000) 
over the nest three years' in 
com panies whose workforces 
total 74)00, is ap parently hav- 
ing second thoughts about 
acquiring a stake in Forun. the 
eastern German refrigerator 
company. Forun was one of the 
first to manufacture a product 
free of CFC gases, which have 
been criticised on environmen- 
tal grounds. 

Mr Eberhard Gunther, man- 
ager of Forun, said Egit had 
signed a contract in November 
1992 to acquire 47 per cent of 
the company. “But Egit has 
not Invested one DM in the 
company,” said Mr GUnther, 
adding that Forun was in 
desperate need of capital in 
order to face growing 
competition. 

According to Forun, under 
the terms of the contract with 
the Treuhand, Egit had agreed 
to invest DMILSm in the com- 
pany over a four-year period, 
as well as guarantee 800 jobs. 
Forun had a turnover of 
DMl20m last year, and is carry- 
ing losses of DMI2m. 

Mr Olav zu Ermgassen, a 
board member of Egit, this 
week denied that the fond had 
signed a contract for Forun, 
and instead shar ply criticised 

the Treuhand. 

Tt is the Treuhand's fault," 
said Air Ermgassen. “We had 
the option to acquire a 47 per 
cent stake in Fonm. We have 
been negotiating the terms of 
this contract with the agency 
since' November 1992. But we 
have been passed from one 
negotiating team to the next 
The Treuhand did not stick to 
the original terms. 1 * 

When it was set up in 1992. 
Egit’s board of directors 
included Mr Colin Black, chair- 
man of Scottish Widows' Fund, 
and Sir Christopher Tugend- 
hat, chairman of Abbey 
NationaL I 


L ast month, Japan's 
banks unveiled their 
annual results with con- 
fident boasts that the worst of 
the country's bad-debt crisis 
had past They congratulated 
themselves on having disposed 
of more non-performing loam 
than they had ever written off 
before. 

The figures seemed to sup- 
port claims that the total of 
bad debts had peaked. At the 
11 leading city banks, out- 
standing disclosed problem 
loans fell by more than 3 per 

cent from September 1993 to 
the end of March, down to less 
than 4 per cent of total loans. 
Most banks spoke boldly of 
eliminating problem loans 
within two years. 

But, on closer inspection, the 
details suggest the bad debt 
mountain is a long way from 
being scaled. Most of the 
apparent improvement in the 
I banks’ performance stems 
from their disposal of loans to 
the Co-operative Credit Pur- 
chasing Corporation (CCPQ. a 
body set up last year 
specifically to take over the 
worst of the bad debts - and 
the writing-off of loans to that 
body is not quite what it 
seems. 

As an exorcise in financial 
alchemy , CCPC <*wiw not 
have been bettered. Banks 
would turn the base metal of 
their non-performing loans 
into gold of a sort by 
selling them to the CCPC at a 
discount to their full asset 
value, and book the difference 
as a loss against their 
earnings. 

The value of the loans 
parked with the CCPC would 
then he a real, though slightly 
diminished asset. The CCPC 
would dispose of the loans, 
most of them property-related, 
and collect the collateral. 


But this alchemy is, in prac- 
tice, little better than its medi- 
eval forerunner. The catch is 
that the hanks have to lend the 
money to the CCPC in the first 
place to enable it to buy the 
loans. The risk of default 
remains with the hank if the 
CCPC is unable to recover 
what it paid for the loans, the 
difference is met by the 

banks. 

As Mr David Snoddy, bank- 
ing analyst at Jardtne Flemimg 
in Tokyo, says: “The CCPC is 
principally a repricing mecha- 
nism, designed to reduce the 
market’s perception of 
bankruptcy risk in Japan's 
banks.” 

If the CCPC were getting rid 
of the vast numbers of loans it 
has purchased from the hanks 
at book value, of course, there 
would be little to worry 
about 

But the latest figures from 
the corporation, published this 


week, show that it continues to 
pile up the base metal, without 
any real sign of the 
gold. 

The backs have been dump- 
ing vast quantities of loans on 
the CCPC. So far It has man- 
aged to dispose of just over 1 
per cent of them. 

T he Mure of the CCPC 
to liquidate the loans 
may soon create a prob- 
lem for the operation of the 
system itself 

Under ministry of finance 
rules, banks are forbidden 
from lending more then 20 per 
cent of their primary capital 
base to any one lento 1 . Some 
banks have been, so busy pass- 
ing on loans to the CCPC that 
they are in danger of breaching 
that con s traint 
The finance ministry yester- 
day denied that there was any 
immediate threat but the fig- 
ures speak for themselves. 


Banks ' primary capital ratios 
stand at an average of about 5 
to 6 percent 

They are attempting to dis- 
pose of around 5 per cent of 
their total loan book as bad 
loans. 

That mpaiw that only one- 
fifth of thp loans would have to 
be passed to the CCPC before 
they started to hit the capital 
adequacy c onstrafot- 

It is nnWtely that s uch a Sit- 
uation would provoke a crisis. 
Before the ratios are breached, 
the ministry is likely to step in 
with a solution. 

One possibility is a “Son of 
CCPC”, enabling the banks to 
go on lending in the same way 
to another, identical institu- 
tion. In such a way, a whole 
family of CCPCs could be 
spawned, as the number of 
loans piles up. 

The CCPC does have benefits 
for the banks. But even these 
have been overst a ted. 


CCPC: loans from all banks 



Bought 




Sold 




Number 

puxhased 

Face 

value 

(Ybn) 

Value at 
ptaxtaree 
(Ybn) 

Average 

dbcoiait 

(%) 

No of 
loans 
sold 

Value of 
recoveries 
(Ybn) 

Accumulative 
proportion 
sold (%) 

Apr 93 

1 

0.1 

0.1 

0 

2 

0.4 

0.1 

May 93 

9 

10.0 

6.7 

33 

0 

- 

0.1 

Jun 93 

12 

24.3 

17.6 ' 

28 

2 

0.4 

0.1 

Jul 93 

14 

64.2 

26.1 

59 

1 

0.1 

0.1 

Aug 93 

60 

130.8 

66.7 

49 

4 

1.3 

0.2 

Sep 93 

414 

954.7 

485.7 

49 

5 

1.3 

<X2 

Oct 93 

16 

54.1 

29.3 

46 

5 

0.1 

02 

Nov 93 

19 

51.4 

20^ 

61 

6 

2.1 

0.3 

Dec 93 

116 

231.2 

105.0 

55 

17 

5.4 

(L5 

Jan 94 

103 

187.6 

98.8 

47 

6 

3.2 

0.6 

Feb 94 

228 

467.0 

213.9 

54 

8 

2.0 

0.6 

Mar 94 

901 

1,062.0 

708^ 

57 

31 

13£ 

0.7 

Apr 94. 

24 

65.1 

22.9 

65 

31 

7.4 

0.8 

May 94 

12 

15.6 

4.5 

71 

24 

10.9 

1.1 


Its principal advantage is 
tax. Normally, banks have to 

nu gntiflte with the Ptegni-w mtn- 

istry on every loan for 
which they wish to receive 
approval to post tax-free 
reserves. The CCPC allows 
them to receive the tax relief 

a iitemaHr-ally 

But, as Mr David Threagold, 
of BZW in Tokyo, points out, 
tins is not such a huge benefit 
“The hanks would stiH eventu- 
ally receive the relief on the 
bad loans once they were 
finally confirmed as non- 
performing,” he says. “All 
the CCPC allows them to do 
is to receive the relief immedi- 
ately.” 

All this leaves the bank's 
bad debt problems where they 
have been for some time. 
And behind thn nfnrf»i figures 
there are darker problems. 

The CCPC deals only with 
loans meant for liquidation. 
Later this year, the banking 
authorities will announce new 
plans for dealing with the vast 
numbers of loans that do not 
even currently appear as non- 
performing - loans that have 
been ‘restructured’, where 
interest rates have been pared 
to the bone to keep borrowers 
afloat 

Ms Alicia Ogawa, banking 
analyst at Salomon Brothers in 
Tokyo, estimates that count- 
ing the bulk of the CCPC 
as non-performing, aRBrng 
in the undisclosed restructured 
loans, total problem loans at 
all Japan's largest banks grew 
tor at least IS per cent last 
year. 

As the pace of economic | 
recovery threatens to be slow, 
the truth for most banks is 
that they are still some way 
from summit of their 
iW mountain. The n ext few 

yean promise them a hard slog 
to the top. 


GM unit turns in record year NZ forestry group optimistic 


General Motors New Zealand, a unit of 
the US carmaker, recorded its best 
financial result for six years in the 1993 
calendar year, reporting an after-tax 
profit of NZ$L5m (US$1 -5m) compared 
with a loss of NZ$8004100 in the previ- 
ous 12 months. Beuter reports from 
Wellington. 

Mr Don Bowden, managing director, 
said the result reflected for the first 
time the foil impact of cost-reduction 
initiatives implemented during 19 92 


Profit before tax was NZ$5Bm, a $7m 
rise over the previous year. 

Mr Bowden said: “It was achieved in 
a market that offered little in the way 
of growth and that was marked by 
fierce competitive activity at the r&ail 
end of the business." 

He said the result vindicated the com- 
pany's strategic direction in recent 
years, with a switch in focus from new 
vehicle assembly and distribution to 
sales and marketing . 


Forestry Corporation of New Zealand is 
optimistic that the recent lifting of a 
ban on logging the Pacific north-west 
forests will not have an adverse effect 
on profits, Reuter reports from WeHing- 
ton. 

Mr Tim CnlKnane, chief executive, 
said yesterday: “It is by no means cer- 
tain that the changes that have tairan 
place win in fact hold. 

“I think we can expect the environ- 
mentalists will run another solid 


charge through the courts system, and 
our intelligence is that there will not 
be much of an increase in volumes 
wwntng ons t ream. ” 

He said he thought wood prices 
would hold steady for the rest of the 
year. 

Forestry Corp earlier announced a 
net profit of NZ$157.1m (US$9 2.5m) 
before p a yme n t to the government of a 
NZ$1 12m dividend. Gross sales were 
NZ$454Jhn. 


The Korea Equity Trust 

Internationa! Depositary Receipts 

Evidencing Certificates in respect of 
W0 Units in the Ihist 

NOTICE IS HEREBY GIVEN W UrttboMars Bat Korea Equity Trust has 
declared a dvldend in Tha Republic oi Korea amounting to Won 39,000 
per Certificate por 1.000 Units, payable on or after July 1, 1994. 

Payments ol Coupon No 5 of me international Depositary Receipts, wiB be 
made on or alter July i, 1994 against presentation of the Coupons to Uio 
Depositary or to one ol the Depositary Agents listed below: 

DEPOSITARY 

Chase Manhattan Bonk Luxembourg SJL 
& Rue Piaetis, Luxembourg Grand, L2012 Luxembourg 

DEPOSITARY AGENTS 
The Chase Manhattan Bank, N. A. 

Wbdgata House, Coleman Street Chase Plaza, 3405 Chung -dong 
London EC2P 2HD Choong-ku. Seoul, Republic of Korea 

Chaus Manhattan Bank {Switzerland} 

63 Ruedu RhOne. CH-1204 Genova. Switzerland 

The amount ol dotiara payable in respect of Coupons presented to an Agent 
oi the Depositary by the Close of Business on June 29. 1894 shafl be the 
net proceeds of the Bale ol the amount of Won for US dollars at the 
pravailng talegrephlc transfer ssMng rate o( US dollars tor Won as quoted 
by a foreign exchange bar* in Korea on the day on which the relevant 
transfer Is made. 

The dvtdond proceeds wilt be distributed to I0R holders m proportion to 
their respective entitlement and after the deduction ol all taxes and lees, 
charges, duties and expenses of the Depositary. 

All Certificate holders are required to submit the name and address of a 
bank In New York and a US dollar account number for payment, or an 
address tor which payment should be sent by US dollar cheque. 

All holders resitting In a country having a double taxation treaty with the 
Republic of Korea may obtain payment at a tower rate of the Korean 
non-reskJen! withholding tax. on condition they furnish to otther the 
Depositary or through one ol the designated Depository Agents, a 
certificate showing thek residence, logother with a copy of Utd Certificate ol 
Incorporation, or. for tncflviduals. a copy ol their passport. Those documents 
are requested by the Korean National Tax Administration Office as 
evidence of residence. 

Without such proof of residence, l he full lax rate of 26.875 per cent Korean 
non-resident withholding tax wHI be retained. 

Alt documents should be submitted to the Depositary or a Depositary Agent 

by June 29. 1934- 

Chase Manhattan Bank Luxembourg S.A_ 
as Depositary 


TheRoyal Bank 
ofScotfandGroup pie 




® AW RATE 


In accordance with the Terms and Condttons of 
the Notes, notice is hereby given that lor the Interest 
Period from 15th June 1994 to 15th .December 1994, 
the Notes will bear a Rate of Interest of 5.125% per 
annum. The amount of interest payable on 15th 
December 1994 wd be US 5260.52 per US $10,000 
Note and US $6513.02 per US $250,000 Note. 

AGENT BANK: CHARTERHOUSE BANK LIMITED 
A Member of The Securities end Futures Autarky 


CHARTERHOUSE 


v.«. .it 


air 





CTROPERU 


THE TIME IS NOW 


We invite you to participate 
in the Privatization Process 


Visits to Installations 


The Cepri-ELP invites interested parties 
to visit Electroperu's SICN installations 
from June to September, 1994. 

Interested parties are requested to 
communicate their intention to 
participate in the installation visits as 
soon as possible. 


Contact for Further Information 


Hydroelectric Santiago Antunez de Mayolo 


| Hydroelectric 

PlantsJ 

S. Antunez de Mayoio 

798 Mw 

Restitucfdn 

217 Mw 

Cahua 

40 Mw 

Candn del Pato 

150 Mw 

Carhuaquero 

75 Mw 



L. '■■■* ■ • ‘ . * ‘ 


***% ft, ; 


« s t. > v :# 


^ . ..... .. ♦ ; 


: V ,V 


* * , 

- r i +, 


Thermo-Electric Plants 


Ventanllla 


Chimbote 


Trujillo 


200 Mw 


60 Mw 


20 Mw 


Slif ’ Vt.^ 

... • 

.• I 

’ ' ' lv ' ;• . . " :«!? 



Transmission Lines 


Oscar Gomez: Presidente Cepri-ELP 

1.448 Km of 220 kV 16 Substations 5114-66-1849 Fax: 5114-66-1899 Lima, Peril 


r* »t W ij ii 




“ &■$■■■ " : w--* ■ .’A'. ■?:> C . ' • - ’ 






J.R Morgan & Co, announces a special 
presentation for institutional investors: 

"The Future of the fjatin American Eurobond Market” 

Topics will include: 

Eurobond trading in difficult markets 
'Hie future of the 1-atin new issue sector 
Corporate credit analysis and market value 
Credit enhancement and structured Kurobond notes 

'llic presentation will be given in Ccncva on Wednesday, 

22 June and in Zurich on r rhursday, 23 June. 

For further information, please coll 

Ronald M. Ncumunz 

Vice President 

Emerging Markets 

J.P. Morgan Securities I Ad., Ixjndon 

071 779 2444 

Admission is bv invitation. 



THE SPRINT 


JPMorgan 


©/W iJP. ilmjtmirCa. into rpantrJ. 


. ipftrvrrdjbr ianr tnrJJ\ Morppn Sn u ri im /Jrf- 
anwatlm-aflhr Smrifirt and t'unm . hAwAr. 


UP to15% 

off electricity 


021 423 3018 

Powerline 




MORTGAGE FUNDING C0BP0RA3I0NN0. 1 PLC 

Class A- 1 Mortgage Backed Floating Rate Notes Due March 2020 

NOTICE IS HEREBY GIVEN to Baalcen Trustee Company limited (tbe “Tnntee") and to the hoUen of 
the Class A-l Mortgage Bached Floating Rate Notea Doe Match 2020 (the “CLus AT Notes’ 1 ) of Mortgage Funding 
Corporation No. I PLC (the “Iime*^)&at, pmaoaraio the Trust Deed dated 31slBiIarch, 1988 (the “Trust Doctf^, 
between the Issuer and the Trustee, and the Agmcy Agreement dated 3 Ul March, 1988 (the “Agency Agreement"), 
between the Issuer and MorpmGiratsnly Trust Corapuiy ofNew York (the“Prindpa5 Paying Agcnt*^ and other*, tbe 
mud that iHaena wianee with the rm t -i n|ei i m|»WM i i « i aHsae«BMt in iheTenai and CondhiiiMiif llienaas 

AT. Nolc^ Available Capital Funds aadeGucdmtbeTeriBaandCandiliDiis in iheamounLof £1,000,000 mil be udbed 
on 30th June, 1994 (lhe“Rr*kraptkm Date”) toredoema Eke amount of Claaa A-l Note*. Tbe CbiaA-lNo lea rejected 
by drawing in lots of£100|Q00 for re d e mptio n on the Eodeinption Dale at* redemption price (the u Redetupbon Priced 
equal to their principal amount, together with accrued interest thereon are as foflowi : 

OUTSTANDING CLASS A-l NOTES OF £100,000 EACH BEARING 
THE DISTINCTIVE SERIAL NUMBERS SET OUT BELOW 


The Class AT Notes may be surrendered for redemption at (be specified office of any of the Paying Agenti, 
which areas follows: 


Morgan Guaranty Trust Company of Near York 
PQBox 161, 60 Victoria E m b a n kment 
London EC4YQJP 

Union de Basques Souses (Luxembourg) S A. 
36-38 Crand-rue 
L-2011 Luxembourg 

Ib respect of Bearer Class AT. Notes, the Bed 


Morgan Guaranty Treat Company of New York 
Avenue des Arts 35, B -1040 Bxussdt 

Morgan Guaranty Trust Company of New York 
55 Exchange Place, Basement A 
New York, New York 102604)023 
Attic Corporate Trust Operations 

Vice will be paid upon pnucnt ati on an d surrender, on 


or after tbe Redemption Date, of such Notes together with afl unmalurad coupons and talons appertaining 
thereto. Such payment w31 be made (i) in sterling at the specified office of the Playing Agent in London or (n) at 
the specified office of any Paying Agent fisted above by sterling cheque drawn on, or at the option of die holder 
by transfer to a sterling account m ainta in e d by the payee with, a Town Cl eari ng branch of a bank ta London. On 
or after the Redemption Dale inierat shall cease to accrue cm the CJass A-l Notes which are the subject of this 
Notice of Redemption. 

MORTGAGE FUNDING CORPORATION NO. 1 PLC 

By: Morgan Guaranty Trust Company 
at Principal Paying Agent 
Dated; 15 ih June, 1994 

NOTICE 


the Internal Revenue Code of 1986 and amended by the Energy Policy Act of 1992 tmUy 


it made within the United Slates is required by 
Inergy Policy Act of 1992 unless tbe paying 


U.S. $150,000,000 


Formosa Plastics Corporation, U.S.A. 

(Incarparmlmd with Brititod tiabBUy M tftm Stefa of Dtlawmra) 

Floating Rato Notes due 1999 

In accordance with the provisions at the Notes, notice to hereby 
given that for the six month Interest Period from June 15, 1994 to 
December 15, 1994 the Notes wffi carry an Interest Rate of 6.375% 
per annum. The interest payable on the relevant interest payment 
date. December 15, 1994 wH be U.S. £16,203.13 per U.S. $500,000 
principal amount 

By: The Chase Manhattan Bank, KA. 

London, Agent Bank CHASE 

June IS, 1994 VF 








t Trust Co. of New Yu* 



Appear in the 
Financial Times 
on Tuesdays, Fridays 
and Saturdays. 

FOr further WwmaBon or to 
advertise In this section 
please contact 
Karl Loynton 
on 071 873 4780 
or Melanie MU es 


MftHaiHl Bank pic 

(la eo rpanui l tm 

U.S. $300,000,000 
Undated Heating Rats Primary 
Capital Notes 
(Series 3) 

far the six mentis bum June 15, 
19M to December 15, 1994 the Notes 
wfl cany an imarast me of 4J75% 
par annum. Or December 15, 1994 
Interest of OS. 4&SZ9Q and 
03. SZ£3AM wtt bepayaUa per 
OS. $10,000 and U A. $100,000 
rsapecOvaty tor Coupon No. 18. 

Bp He Ohm Beaten fata.MJL 
Unfa, Aoati Bat 0 

June 15, 1994 cham 


VfiiWrJiT 


U.S. $250,000,000 

Floating Hate Notes Due December 1995 

Notice is hereby given that the Rate el Interest has been fixed at 
4.6875% and met the Interest payable en the relevant Interest 
Payment Dele September 15, 1994, against Coupon Ne. 3 will be 
US$59.90 m rape* of US$5,000 nemindef Km Nates and US$1, 198 .00 
fa rasped of US$1 00,000 nominal of fa Notes. 


nommai of fa Ndek 


Unlikely allies make a connection , 

Yesterday’s three-way.telecoms deal unites groups with distinct ideas 

F ra- of the wrif j tea* Ufc.H WMM|MB te. compare awww— po-wwWHw 
telecommunications ^ • uimna oi txndbwman Subaodtafit 

operators an more db- ™*rerer*btf . . Op*r*«n«toconre^bn) *>Mn* 


M operators are more dis- 
similar t>»wn sprint and the 
French and German state com- 



France Telecom and Dent* 
sebe Telekom are state-owned 
natiowfli monopolies. Sprint, 
with revenues barely a third as 
large as its new German part- 
ner, has fought former monop- 
olists every day of its life, in 
the process building an impres- 
sive intern a t i o na l portfolio. 

Yet for all three companies, 
yesterday’s alliance was the 
answer to a similar problem: 
how to become a serious cfaab 
lenger in the emerging market 
for one-stop international tele- 
coms services. 

For France Telecom, and 
Deutsche Telekom, the deal 
satisfies a long-held desire to 
find a US partner to strengthen 
their »Tit»Vriatinnai expansion 
and strengthen their position 
in the large corporate sector 
ahead of the liberalisation of 
the European tttooommnnica - 
Homs market in 1996. Sprint's 
wri sting client base among 
multinationals, its modem 
data network and its brand 
nam e, are seen as valuable 
assets. 

The French and German 
operators signed an Eculbn 
alliance last December to 
strengthen their existing 
“EunetconT joint venture to 
provide corporate services. A 
US deal was the next vital step. 

But for both European com- 
panies it is far from the last 
step. Yesterday Mr Marcel Rou- 
let, chairman of France Tele- 
com, spoke of extending the 
agreement to indude new part- 
ners in the Asia-Pacific region. 
He declined to mention the 
potential partners, bat NTT, 
the largest Japanese operator, 
is a possibility. 

Mr Roulet was at pains to 
stress that the Sprint deal is 
consistent with his company's 
AThcting investment {dans and 
can be Wnawraui thnxtgh cash- 
flow or borrowings. Neither, be 
i said, would it undermine 
France Telecom's policy of 
reducing its ftnanrial charges. 
The aim is to reduce financial 
charges to three per cent of 
sales by 199ft, compared wish a 
current level of just under 7 
percent 



— -■ am 


150 


:C«»pw^raporfa(Fraw** 0 Deutw^ 




France Telecom's status as 
an "autonomous operator 
under public law” has ruled 
out the exchange of shares to 
seal alliances. Last year the 
French government announced 
plans to convert the operator 
inhn a state-owned joint stock 
company. But strong opposi- 
tion from its 155,000 employees 
forced a retreat 

Mr Roulet is trying to per- 
suade his staff of the need for 
reform. But privatisation 
remains a distant prospect So 
too, therefore, is the prospect 
of a cross-shareholding with 
Sprint 

Thus yesterday’s deal seems 
unlikely to accelerate France 
Telecom's entry into the pri- 
vate sector. Mr Roulet and Mr 
Helmut Ricke, his German 
counterpart, also played down 
the prospect of a more rapid 
liberalisation of the Franco- 
German voice telecommunica- 
tions market as a condition for 
regulatory approval 

Deutsche Telekom has 
already been expanding rapidly 
eastwards. Last year it took a 
30 par cent stake in Matav, the 
Hungarian state-owned tele- 
communications group, which 
it bought with Ameritech of 
the US for S87Sm. It also has a 
stake in Astra, the interna- 
tional satellite television com- 
pany, and a share in mobile 
and fixed networks in Russia 
and Ukraine. The operator also 
has EU ambitions: it has Just 
joined the Spanish Cometa con- 
sortium bidding for a mobile 
plane licence in Spate. 

However, Deutsche Tele- 
kom's internal problems are 


just as pressing as those of its 
French partner. It is in tough 
miles with the postal union 
which may threaten the next 
stage of privatisation, the cre- 
ation of a joint stock company 
by January 1, 1395. 

Mr Helmut Ricke. Deutsche 
Telekom chairman, said the 
Company would “have consid- 
erable difficulties” finding the 
DM1.75bn it needs to finance 
the purchase of an 11-1 per 
cent stake in Sprint, the first 
tranche of a two-stage opera- 
tion to give the French and 
German companies 20 per cent 
of Sprint The money had. how- 
ever, been set aside in tbe com- 
pany's medium-term financial 
plan “Even if it [privatisation! 
does fall this project will be 
safeguarded," said Mr Ricke. 

Unless Mr Helmut Kohl's 
centre-right coalition can per- 
suade the opposition Social 
Democrats to vote in favour of 
privatisation before June 29, It 
will be impossible to meet the 
gristing privatisation deadline, 
since privatisation requires a 
two-thirds parliamentary 
majority to pass. That may not 

overturn the Sprint deal but It 
will make its extension prob- 
lematic. 

For Sprint, the European 
alliance offers added credibility 
and financial muscle as it tries 
to attract business from multi- 
national companies in the fast- 
growing global market Sprint 
is the smallest of America's 
three long-distance 
telecommunications groups, 
with a market share of around 
9.5 per cent to the 19 per 
cent held by MCI and some 


Franco-German pact defies sceptics 



L ast autumn the French 
anH German state tele* 
communications compa- 
nies were in talks about a 
union extending to a full 
merger of their international 
activities, and the possibility of 
an equity swap. In the event 
they produced a far more mod- 
est joint venture. 

She months later, the scep- 
tics warned that the talks 
between the Franco-German 
alliflnflfi and Sprint, the thir d- 
largest US long-distance car- 
rier, would end the same way. 
The state-owned European 
monopolies had pnrmgh prob- 
lems forging their own alli- 
ance: subsequent talks with 
AT&T, the large US group, 
oflim* to nothing ; and the chal- 
lenge in Unking with any oper- 
ator in the highly competitive 
US market seemed Herculean. 

Yesterday was no time for 
sceptics. Fiance Telecom and 
Deutsche Telekom went the 
whole way, spending $A 2 bn on 
a stake in Sprint and mapp in g 
out a structure promising that 
the new alliance would serve 
the world. Mr Helmut Ricke, 
Deutsche Telekom 's chai rman, 
called Sprint “the ideal part- 
ner” for implementing his 
global strategic goals. 

The Franco-Germ&nSprin t 
deal mirrors last year’s alli- 
ance between British Telecom- 
munications and MCI of the 
US. The amount of cash 


Kidder Peabody 
Mortgage Finance Ltd. 

US S20SJXM jxm 
G u ar a nt e ed Seemed Boating 
Rate Notes due 1997 
For tbe period from June IS. 1994 to 
September 15, 1994 Ibe Notes will 
cany an interest rate of 54625% 
per annum wifli an interest omoum 
of US SU1931 par US SIQOjOOO 
principal amount of Notes payable 
an September IS, B94. 

Bonk of Amorim NT ASA. EH 


n 



Helmut Ricke: Sprint is Ideal 
partner 1 for Deutsche Telekom 

involved is roughly similar; in 
both cases it is flowing from 
Europe to the US; and the goal 
proclaimed for the Interna- 
tional alliances - to exploit the 
large corporate market for one- 
stop international tdeoams ser- 
vices — iS identical 
A third alliance may be In 
the offing - between AT&T 
and Unisource, a joint venture 
between the Swedish, Swiss 
and Dutch national operators. 
If the talks between the two 
yield another US-European 
tie-up, the financial arrange- 
ments are likely to be different 
to the other two: bat tbe ratio- 


nale and objectives wUl be the 
same. 

However, the parallel 
between the BT/MCI and 
Sprint/ Franco-Germ an deals 
should not be pressed too far. 
The alliance announced yester- 
day la between three, not two 
companies, and beers all the 
hallmarks of complex tripartite 
ha g glin g . While 8T and MCI 
are to establish one joint ven- 
ture company to spearhead 
their joint efforts, Sprint and 
its partners are promising at 
least three separate entitles, 
with a variable balance 
between the three. 

The regulatory barriers are 
also likely to be far higher for 
Sprint, France Telecom and 
Deutsche Telekom than they 
were for BT-MCL It has taken 
the latter a year to get 
approval from US authorities, 
in spite of the fact that the UK 
is arguably a more competitive 
telecommunications market 
than the US. 

France and Germany, by 
contrast, remain monopolies 
for voice and leased-line busi- 
ness - tbe most lucrative parts 
of the telecoms business. Nei- 
ther the French nor the Ger- 
man operators will face “voice" 
competition in their home mar- 
kets until 1998, and given Mer- 
cury’s experience in tbe UK It 
may take years for competition, 
to become a reality. 

Within minutes of the 




>«*- 

City of Stockholm 

US$325,000,000 
Floating rate notes 1999 

Notice is htrebygitHn that the 
notes will bear interest ai4£% 
per aimnm from 15 June 1994 to 
15 September 1994. interest 
payable on 15 September 1994 
will amount to USSIL 50 per 
USHOOOnote, USStlS.OOper 
US$10.000 note and USSU50. 00 
perUSSmOOOnote. 

Agent: Morgan Guaranty 
TVust Company 

JPMorgan 


USS 509,90(1000 

Bo atte g fa te Sa bwrin a tart Loea 
FartfdpaUaaCcftncaiasAMMM 
tamed by JJ. Morgan GmbH 
for Ibe pazpoN eCfiuadtag and 
mataufotag a sabonDnatcd loae ta 
The tW-fctd Kongo Bank, United 

Notice fa hereby given dm the tata of iniERM applicable a payment! node* tin ticttiGOM 
po ur yowl big to ptymeau of fatteren under tbe lose Is. for tho fntuoi Period fine 14th 
June, 1994 to 14th September, 1994, 4S125* per teams, with ■ Coupon Amount of 
USS3J174JS par US5 250,000. CenlGate payable on 14tb September, 199*. 

Dsi4c*d Kifigya Bsnk. (Luxembourg) SA 
Agent Buk 


AIX^^ALSTHOM 
COMPAGNEE GENERATE D'ELECTRITfi 

Corporation oigamaed trader French Law (Sod£«i Anotmoo) 

CapiaU Pleach Paaca 5,73 6^87.4 00 
Head Office: 54, roe la Boftfa . 75008 PARIS 
Registered Head Office: PARIS 85420L9 096 


Due to the feihtra to reach ibe ro quco te d quorum tor tbe General Meeting of 
(be boUtere of 6 Yift 1990-2000 Bonds of FRF 680 nontoal value tamed by 
ALCATEL ALSTKOM COMPAON1E G£n£RALB D*£lECTR 1CXT& con- 
vened on June 10, 1994 the balden of these bonds on convened to a new 
General Meeting to be held 30 raeTlritbQat-75009 PARIS (France) on June 22, 
1994 u 2,30pm hi order to deliberate on (be some agenda similar n tbo one of 
the Conner General Meeting namely; 

- Board of Directors' Report 

- Approval of the decUon proposed to the Mixed Meeting (Ordinary and 
Extramdimny) of shareholders, authorising the board: 

* (0 issue, with waiver of their preferential r^hb 
■ share warrants, 

• convertible bonds, 

sc f orl , li y which allow, through conversion, exchange, repayment. 
pwentatioi^iM a warrant or through any other way, to receive shares of 

’ w .y t0, Ute »»nhera of the company or mambera of the wore afQUiuea. 

subscribe or purchase shares, without uy preferential Subacrip- 

’ 01 “^8 » puiehMo or exchange share*, the 

authorisations given to It in order to rabc tho capital. 

- Derision on the method of recording fa doeumcma of tho General Meed*. 

i bo ndhold er* to attend, or to be represented at this 
“* h? « has five day* 





r 'J' 
F** 


GO per cent by AT&T. 

A tie up with France Tofc 
com and Deutsche Tetekom 
links it with tho dominant car- 
riers in two countries which 
contain soma 14 per cant of tbs 
world's multinationals. With a 
Anther 29 per oent located In 
the US. that gives the antanoe 
a potential market of nearly to 
per cent of the world's MBng 
companies before it starts tbe 
harder task of winning busi- 
ness in other countries. 

Sprint already haaasubaten- 
tial presence in the Interna- 
tional market for corporate 
data traffic through SorintNtt 
one of the world's leading lead- 
ing data networks, SprintNeft 
operations outside tiia US .wfll 
be injected into the global part 
nerehip with the French and 
Germans. 

Mr BIB Esrey, Sprint's date 
man. yesterday highlighted 
two probable uses for th* Whn 
of new equity Sprint is raising. 
Some will be earmarked to pay 
down debt Sprint also (dans to 
use the money on new Invest- 
ments, notably Its plan to aBy 
with other US wireless service 
providers and create a seam- 
less national mobile telephone 
network. 

As part of this scheme. 
Sprint plans to bid for US 
licences for a new system d 
mobile telephony - personal 
services IPCSi 
> being auctioned at the and of 
this year. 

Martin Dickson, 
Michael Lindemum 
and John Ridding 


Glot’- 1 1 " ,U ” 

forl s,Ui ’' 




announcement of yesterday's 
deal, AT&T was vowing to 
fight it strenuously through 
the US Federal Communica- 
tions Commission and other 
forums. US analysts believe it 
stands some chance of success. 

The French and Germans 
claim that the alliance wfl] pro- 
vide services only in sectors - 
notably data telecoms and pri- 
vate corporate networks - 
already open to competition In 
their home markets. Nonethe- 
less, claims and counter-claims 
as to the cross-subsidies bring 
provided from monopoly reve- 
nues look set to preoccupy reg- 
ulators, possibly for years. 

T he spotlight is now. 
firmly on AT&T, whore 
European strategy has 
been difficult to discern since 
BT announced its purchase of 
20 per emit of MCI last June. 
AT&T has to decide whether to 
work with established Euro- 
pean operators, or to compete 
aggressively against them as 
and when it can. 

An alliance with Unisource 
may offer It the best of both 
worlds - taking it Into Europe 
in respectable domestic com- 
pany, but leaving it free to 
compete head-on with the HlTs 
larger operators, which control 
most of the telecoms business 
of Europe's multinationals. 

Andrew Adonis 


inm* u'n 


4.i y 





















FINANCIAL TIMES WEDNESDAY JUNE 15 1994 


21 

INTERNATIONAL CAPITAL MARKETS 


Treasuries improve after better inflation news 


By Frank McGurty in New York 

and Conner MMdebnann 
to London 

US Treasury bonds improved 
yesterday morning after the 
day's economic news relieved 
the market's lingering con* 
cents over inflation 
By midday, the benchmark 
30-year government bond was 
S higher at 87%, with the yield 
slipping to 7.306 per cent The 
two-year note was 4 better at 
1004. to yield SUJ05 per cent 
Bonds made a moderate 
move higher in early trading 
after the Labor Department 
reported that consumer prices 
in May had risen by a benign 
0.2 per cent, for an annualised 
rate of 2j5 per cent When the 
more volatile food and energy 
sectors were excluded, the core 
CPI came in a <LS per 
Both figures matnhed the con- 
sensus forecast of economists. 


The readings eased concern 
in the bond markets that infla- 
tion may have began to climb 
last month. Such misgivings 
were introduced Last Friday, 
when the core producer mice 
index for May slightly 
exceeded expectations. 

Yesterday the positive senti- 
ment was reinforced by news 
of a 0.2 per cent decline in May 
retail sales. Analysts had proj- 
ected no change in the reading, 
which suggested a cooling 
economy and tamer inflation. 

ary pressures. 

■ European government bonds 
had another roller-coaster day, 
failing sharply in the morning 
and rallying in the afternoon 
to close little changed on the 
day. 

The early sell-off was largely 
due to «*TTing in the 

futures market and nervous- 
ness ahead of US inflation and 


retail ««i«s data. When these 
tamed oat better than expec- 
ted, US Treasuries rose, puffing 
European bonds higher. 

■ Despite sterling's weakness, 
UK gilts put In a strong perfor- 
mance, buoyed in the after- 
noon by the better DS trend. 
However, most of the action 
was reported to have taken 

GOVERNMENT 

BONDS 


place in the futures market. 
“Most investors think the mar- 
ket’s cheap but aren't wflhng 
to commit any- money to it," 
rmfl dealer. 

Most traders today will be 
watching a barrage of data, 
including May retail prices, 
May unemployment April 
average earnings data. 

“The average earnings will 


be the most closely watched 
after strong numbers in the 
last few months,” said Mr Ian 
Shepherdson, UK economist at 
HSBC Green well. If average 
earnings come in at per 
cent “gilts will have another 
horrible day,” he said. The con- 
sensus forecast is for a 4 per 
cent rise in average earnings. 

Traders will aim be looking 
to chancellor Kenneth Clarke's 
Mansion House speech tonight 

■ German bonds foil sharply 
in the morning in ftitnres* 
driven trading and bounced 
back after the US data. Weak 
April retail sales numbers had 
little impact on bunds. “The 
market bas still not refocused 
on f undamentals , which are 

being overridden by technical 
and external factors,” said Mr 
Torsten BOhler, senior bond 
analyst at UBS. 

In Austria, the government 


cancelled a planned auction of 
a five-year band winch was to 
have totalled SchlObn, trigger- 
ing a spurt erf short-covering ta 
the five-year area. 

Dutch bonds tracked German 
bunds despite the Dutch cen- 
tral bank’s 10 basis-point cot hi 
its special advances rate to <190 
per cent “The cut was largely 
a tochrrinni adjustment an the 
back of guilder strength,” said 
Mr BOhler. 

■ Despite the Swedish central 
bank’s three basis point cat in 
its repo rate to &92 per cent 
Swedish bonds plunged in the 
morning on heavy foreign sell- 
ing, which also pressured the 
currency, before recouping 
most of the losses in the after- 
noon. 

While many analysts now 
see value in the market “with 
the political uncertainty nht>ni{ 
of the September election and 


the November EU referendum, 

and the economic risks associ- 
ated with the strengthening 
recovery, we see the risk of 
further yield curve steepening 
in the months ahead," warned 
Mr Graham McDevitt, bond 
strategist at market analysts 
IDEA. 

In Finland, market partici- 
pants are eyeing today’s vote 
of confidence for Prime Minis- 
ter Esko Aho's government, 
which, he warned yesterday, 
would resign unless it received 
sufficient assurance of political 
support for its haniTKwg of the 
EU membership process. 

■ Italian bonds were dragged 
off their lows by the recovery 
in other markets, but further 
advances are expected to be 
capped by today’s issuance of 
new 10-year bonds and contin- 
ued uncertainty about the size 
of the budget deficit 


Global offerings In the works 
for US mortgage agencies 


of benchmark issues in 
D-Marks, yen and dollars, 


NEW INTERNATIONAL BOND ISSUES 


Amount 

Cotpon 

Price 

Maturity 

Fees 

Spread 

Book runner 

Pumnaar 

DOLLARS 

m. 

% 



% 

ta> 


HHHB.T 94-1 (aj+t 

731*58 

<b) 

(lOOOQ 

May .2011 

0*0 

- 

MenB Lynch fcitannflonai 

Far Eastern Dev. S4oraM§ 

100 

(40) 

loom 

JuL2001 

2*0 

- 

Bering Brattwra & Co. 

D-MARKS 

RepubRc 0 1 Atganttna 

500 

8j0 

90*75 

JUL1B07 

1*0 

a 

Deutsche Bonk 

YEN 

Traaewy Corp. ol Vtetorta$ 

60bn 

M 

10O.12SR 

JuLIBBB 

0*5R 


Mkko Europe 

DSLBortae) 

lOtan 

40 

100-1B75R 

Oct. 1996 

0-18750 

- 

Fui WL Rnancs 

ITALIAN URE 

Abbey NatLTraa&Servicssffi 

150bn 

1420 

101.045 

juuaoa 

1.875 

_ 

Credtto RaBeno 

SWISS FRANCS 

Baysrtachn tandesbwribHt 

100 

5.25 

101*75 

JuL1986 

atandatt 

. 

CmdB SuSsae 


Rnad tarns and nan-catabfe unless stand. The yMd spread lover relevant government bond] at launcti la ngyiiaH by me lead 
manager. * » P rivat e placeman L WtMatad. SConwtfc ^floating rate note. Ft Ibead m-erffcr price; fees am shown at the re-offer 
favto. 4 Houehoid Ftmotvfng Home Eqtoty Loan Trust AmortMng Issue with dean*] cafl at 109S. Average Me: 3.47 yre to cafl and 
348 yre without caB. TVw tranche daat: pricing and spfit detamkied Her. b) Class A1: 1-mth Libor +23-25bp- Qasa A2: CP +2S-27fap. 
4 Hwig by 22WM: conv pramhan Mated at S-10M. nrifatoie. subject to 14094 tUe, from 8/7/B7 at 103% (stag INpa to par. <9 
2% bed Id 2D/&B8 man 6-mtfi Uhor +46bp to DecJT7 and 7-nrth I fccr i IBbp flnri payment a] Shot! Int mupm 1) rnlhmin nn mifinn 
data from DffiM at pm. 


Already, BNG is one of the 


By Tracy Corrigan 

Bank Nederlandse Gemeenten 
(BNG), the Dutch municipal 
finance bank, plans to take 
advantage of its newly-as- 
signed debt ratings to launch a 
series of b enchmar k interna- 
tional bonds. Yesterday, 
Moody's and Standard & Poor's 
both officially rated the bank's 
debt triple-A. 

Global offerings for two lead- 
ing US mortgage agencies are 
also in the works. The Federal 
National Mortgage Association 
(Fannie Mae) bas followed the 
lead of the Federal Home Loan 
Mortgage Corpora turn (Freddie 
Mac), which last week 
announced plana to launch its 
first global offering via Salo- 
mon Brothers and Goldman 
Sachs. 

Fannie Mae has mandated 


Merrill Lynch and JJ?. Morgan 
tO WTT w ngw its pf fo rin fr which 
could emerge as early as next 
week. Both offerin gs are expec- 
ted to total around $lbn. 

Fannie Mae's 10-year US 
domestic bonds c ur ren t ly trade 
at a spread of about 28 basis 
points over the comparable 
Treasury yield, but a global 


INTERNATIONAL 

BONDS 


bond would be priced more 
tightly. The maturity of the 
global band has not yet been 
decided. 

In addition, Belgium is con- 
sidering a 5500m band offering, 
which could emerge today, 
though a maturity is yet to be 
decided. 

BNG plans to launch a series 


according to Mr Jakob Hekkol- 
man, a member of the bank’s 
executive board. 

Goldman Sachs, which acted 
as financial adviser to BNG on 
its rating, ha« been mandated 
to arranga the first benchmark 
issue. 

The decision to seek a rating 
was sparked by the expansion 
of the bank’s international bor- 
rowing- “We are becoming 
increasingly active in the inter- 
national c a pital markets.” sa id 
Mr Hekkahnan. “It's better to 
have explicit ratings,” rather 
fean constantly to explain to 
potential investors the bank's 
dose relationship to the Dutch 
government BNG is 50 per 
cent-owned by the gove rn ment 
and 50 pea- cent by Dntch 
municipalities and provinces. 


largest Dutch b o rrowers in the 
international markets. Last 
year, it raised Fl&3bn equiva- 
lent in the international mar- 
ket, and Fllffim in the domes- 
tic market Mr Hekkahnan said 
increasing demand from local 
government cheats will mean 
a farther expansion of its fin- 


ancing activities. The bank 
will host a series of roadshows 
in Europe and Asia. 

Among yesterday's new 
issues, Household Revolving 
Home Equity Loan Trust 
issued $731m of floating-rate 
securities backed fay first and 
second mortgages. Lead man- 
ager Merrill Lynch said that 


around a third of the offeri ng 
will be placed in Europe. 

In the D-Mark sector, Argen- 
tina launched a DM500m three- 
year issue priced to yield 220 
basis points over the compara- 
ble bund. The deal was largely 
targeted at retail investors, 
according to lead manager 
Deutsche Bank. 


Chicago heads for 
regulatory clash 


C hicago's two big futures 
exchanges and their 
primary regulator, tbe 
Commodity Futures Trading 
Commission, are beading for a 
showdown over how strictly 
customer protection rules 
should be enforced just as the 
exchanges, and the derivatives 
industry in general, are 
attracting a broad range of 
new customers and large 
blocks of business. 

The outcome of the dispute 
may determine whether the 
CFTC, which bas a reputation 
as a "soft-glove" regulator, will 
be able to function effectively 
as the main derivatives watch- 
dog in the US, or whether it 
will be hamstrung by the 
derivative industry's consider- 
able voice in Congress. 

The test for the agency 
comes as its newly-nominated 
chairman, Ms Mar; Schapiro, 
awaits confirmation on Capitol 
Hill , and within weeks of the 
start o f Con gressional debates 
on the CFTC's reauthorisation. 
The CFTC’s current mandate 
expires in October. 

At issue is the Commission's 
enforcement of fraud 
prevention measures mandated 
in 1989, when the Chicago 
Mer canti le fornhang n arid the 
Chicago Board of Trade were 
under federal investigation for 
corrupt trading floor practices. 

Investigators found weak 
controls, non-competitive order 
execution and manipulation 
of the price and tinting of 
trades. 

The CFTC responded by 
ordering the exchanges to 
audit trades more closely, and 
Congress, in reauthorizing the 
CFTC in 1992, directed the 
Commission to enforce tighter 
audit by October 1993. Con- 
gress, through the CFTC, also 
ordered the exchanges to have 
in force a modem - and trans- 
parent - trade-tracking system 
by 1995. 

In spite of the mandates, the 
exchanges have done little 


since 1989 to upgrade their 
existing trade-tracking 
systems. 

Instead, they have invested 
some SI 2m in developing a 
high-tech electronic “note- 
book” to be used by traders 
and brokers to record transac- 
tions. 

The system, dubbed Audit, 
aims not only to meet the more 
stringent 1995 trade tracking 
requirements, but also provide 
a variety of pit accounting ser- 
vices to brokers. 

Exchange officials admit that 
if their goal for the Audit proj- 
ect was simply to create a fool- 
proof audit trail, it could have 
been completed quickly and 
cheaply by 1991. However, by 
going for a full-service device, 
they have used technology to 
successfully delay interim 
CFTC sanctions. 

In a review of the CBoTs 
trade-tracking system last 
year, for example, the CFTC 
found it had generated few 
investigations that resulted in 
referrals to exchange disciplin- 
ary committees, and that the 
exchange bad Ignored previous 
Commission suggestions for 
upgrading the system. 

H owever, the Commis- 
sion excused the short- 
comings, noting the 
CBoT's commitment to the 
Audit project, which at that 
time was due to be imple- 
mented in 1995. 

In a surprise twist last week, 
however, the exch ange s told 
Congress and the CFTC that 
they needed another four years 
to develop Audit 
Rather than risk CFTC sanc- 
tions for missing the 1995 dead- 
line, the exchanges persuaded 
an Illinois Congressman to 
introduce a House Appropria- 
tions proceeding that would 
force the CFTC to extend the 
trade-tracking deadline to 1989 
or risk losing its funding. 

Laurie Morse 


WORLD BOND PRICES 


BENCHMARK GOVERNMENT BONDS 

Rad Day's Wwk 

Coupon Date Price change Ytad ago 


Month 

■go 


Italy 

■ NOTIONAL ITALIAN QOVT. BOND (DTP) FUTURES 
gJFFg* Lira 200m IQOlta of 100% 


FT-ACTUARES FIXED INTEREST INDICES 


Mob Indlcaa 


Tun 


Mon 


Accrued xd ad). 


— Low coremn yMd — — Medium coupon yield — — High coupon yield — 


Austmfia 


a 000 

004)4 

1009700 

- 0*00 

494 

464 

468 

Beigtom 


7*50 

OW* 

ggjQQO 

-0050 

7*0 

7*8 

7.48 

Canada - 


6*00 

06/04 

84*500 

-0550 

437 

469 

442 

Danmark 


7.000 

12/04 

92*500 

-OIOO 

6*7 

8*5 

7*2 

Renee 

BTAN 

8*00 

05/86 

104*000 

-0130 

479 

4*8 

411 


OAT 

5*00 

04AM 

66*300 

*0060 

7-48 

7.40 

6*2 

Germany 


6.750 

05AM 

97*500 

-0720 

7.10 

7*2 

4*9 

Rely 


8.500 

01AM 

904000 

-osoo iat»t 

9*6 

6*5 

Japan 

N0 119 

4*00 

06/69 

105*700 

-0090 

454 

3*9 

321 


No 164 

4.100 

12/Q3 

88*170 

-0200 

4*6 

4*9 

AM 

NeBtalonda 


5.750 

01/04 

907000 

*0020 

7.12 

7.10 

459 

Spain 


10*00 

10 AB 

101.7500 

-0600 

10.18 

10*2 

9*3 

UKGBs 


6.000 

asm 

90-27 

*3/32 

422 

413 

7*8 



0.750 

11/04 

87-25 

+8/32 

454 

8*0 

7*9 



9.000 

10/08 

103-13 

+13/32 

6*8 

454 

412. 

US Treasury 

• 

7J2SO 

06/04 

101-23 

+15/32 

7*1 

6*4 

724 



4250 

06/23 

87-12 

+17/32 

7*0 

7*5 

7*4 

ECU (French QmQ 

6*00 

0*04 

87.1100 

-OIOO 

7*3 

7*1 

7.18 

London dosha. Ttar TMt nrid-dfar 




TfaUr Lata raertat atandi 

t Qnas tactudna watMdna t« ■> i £6 p« ob« pRMta 

by nonreriaenat 




Open Senprtoe Change High low EsL vol Open brt. 
Sep 10020 10085 -020 10035 10528 50552 60865 

DM 10420 -020 0 100 

■ ITALIAN QOVT. BOND (BTP) FUTURES OPTIONS (UFFE} UraZOOm IQOttg of 100% 


UKQfrte 

Jun 14 

change % 

Jim 13 

Honest 

y« 


Jun 14 

Jin 13 

Yr. ago 

Jun 14 

Jun 13 

Yr. ago 

Jun 14 

Jun 13 

Yr. ago 

1 

Up to 5 years 04) 

121*8 


121*5 

1*3 

417 

5 yre 

B29 

428 

7.10 

448 

448 

7*2 

456 

8*6 

7*2 

2 

5-18 years (22) 

13470 

+0*7 

139*3 

1.97 

413 

15 yre 

449 

8*4 

7*4 

464 

468 

4*3 

8*3 

8*6 

458 

3 

Over 15 yearn (9) 

15415 

+0*5 

155.61 

253 

525 

20 yre 

446 

446 

416 

8*4 

8*8 

444 

476 

481 

482 

4 

Irredeemables (B) 

174*1 

+051 

175*2 

1*4 

6*8 

[nad-t 

456 

461 

451 







5 

Al stocks (81) 

137*1 

+0*0 

137*4 

2*3 

470 



















— — tdMlpn 51fc~— 

frdtaflon 10 % — 

— • 



SUM 





- tadeoHtakad 






Plica 

Sep 

Dm 

Sop 

Dec 

6 Up to 5 yaeraCQ 

185*9 

+003 

185*4 

1.01 

2.53 

105B0 

2*5 

2.74 

1*1 

3*4 

7 Over 5 yeare(ll) 

173*2 

-022 

17340 

1*2 

2.12 

10000 

2.10 

2*2 

2.15 

3*2 

B Al stocked?} 

17348 

-018 

173*0 

1*1 

2.15 

10650 

1*4 

2*1 

2*9 

3*1 








Jun 14 Jun 13 Yr. ago 


Jun 14 Am 13 Vr. ago 


3.75 

M3 


3.76 

M2 


2.99 

357 


181 
3 . 66 


Ml 

3.64 


3.40 


&L wri. tad. CM* IMS PUN 7B. tanfaui cky-e Op«n I*. Ota 18808 Pure 13414 


Debenture* end Lome 


5 year yMd 75 year yMd *5 year yMd 

Jun 14 Jun IS Yr. ago An 14 Julia Yr. ago Jun 14 Jun 13 Yr. ago 


9 Debe & Loans (76) 127.87 

Avaapt gmai redanpdan ytoida n riioan 


4052 127.00 228 527 8 M I7S LBB 9.60 9.68 

■hove. Coupon Bend*; Lour. OK-rHK: kMune M- 1 MN: High: n% end over, f Rat yWLytd Year to date. 


9*1 


9*8 9*2 


M7 


US INTEREST RATES 


Spain 

■ MOTIONAL SRAIUSH BOND FUTURES (MEFF3 

Low EsL wL Open ML 
01*7 71*04 83*23 


LwkMrh 


MJndi 

FKUUndi MemoHUL. 


Orb nontt _ 
T\ Thd anon _ 
Itaeamflu 
Sknsfe — 
Ow»wr — 


Tfensury Mb Bad Band VMfe 
334 TOo jeer . 


Open Sett price Change 
Sep 92*0 9212 -0.41 

Dm 91*0 82*5 -075 91*0 91*0 


Hgh 

9250 

91*0 


FT FIXED INTEREST INDICES 

June 14 June ISJune 10 June 9 June 8 Yr ago High* Low* 


CULT EDGED ACTIVITY INDICES 

■tone 13 June 10 June 9 


June 8 June 7 


Oovt 


a 


418 Hmynr- 

420 Hnynr _ 
485 llnr 
5.13 sower 


930 

8.15 


730 

729 


(UK) 91*5 91*8 92*2 92 78 92*2 85*7 107*4 9T*4 
103.62 10239 11027 11058 110123 11130 133*7 10052 


OHt Edged tagtai* 
5-tajr average 


10SJ} 

96* 


92.7 

945 


T15* 

905 


59* 

973 


51* 

100* 


BOND FUTURES AND OPTIONS 
Franca 

■ NOTIONAL FRENCH BOND RfTWES (MATY) 


IIK 

■ MOTIONAL UKQO.T FUTURES (UFTEJ* £90*00 32nda oT 100% 

Open Sett price Change High Low EaL vol Open bit 
Jun 100-28 101-23 40-08 101-28 100-20 1511 13013 

Sap 8024 100-16 -*049 100-25 99-08 75963 117828 

Deo 99-15 40*0 0 67 

■ LONQ QB-T FUTURES OPTIONS (UFFE) CSOOOO 64tf« of 10044 


•tar 1984. BwraiwmtBeeMttaW^ataceepMiBBi 12740 HB/Tflq. toe 48.1B yi/TE RaxMnwmtNnh Nice cum ptaton; 13357 gl/MM) . tar 50*3 p/1/7B>. Bade lOOt Oovemnwra Securttta 157112 
2 S aid Rued knaraa 1028. 8 E actMty [ - 


FT/I5MA INTERNATIONAL BOND SERVICE 


UaM « frw UM HomMonil bonk kr «Mch Owe l> an adaquM eeconday nntkaL UMt pAeea at TflO pn on *n 14 
(■and Bhf Otar dig. Yfatt bud BtdT Otar Cfrg. 


tauad Bfcf Oder Chg. Weld 



Open 

Settprice 

Change 

H 0 h 

Low 

Eat vaL 

Open InL 

Sep 

11528 

115*8 

+002 

11465 

114*2 

272J42 

13231 

Dec 

11440 

114*8 

+002 

114*0 

114*2 

370 

118423 

Mar 

113*8 

113*4 

+402 

113*5 

113*8 

2 

9*13 


Strike 


CALLS 


pure 


■ LONQ TERM FRBriCM BOND OPTIOW3 (MATTF) 


Price 

Sap 

DM 

Sep 

Dec 

100 

2-41 

3-04 

2-11 

3*9 

101 

2-09 

2-40 

2-43 

4-10 

102 

1-48 

2-15 

3r18 

4-49 


BA voL total Cm W77 Pud 1 


Pterion* (tale open Int. Criri 48783 pub gnosr 


Jti 

1*3 

075 

0.40 

017 

CALLS 

Sop 

223 

1.65 

121 

0.83 

DM 

JM 

0*2 

128 

1.89 

— PUTS 

Sap Dec 

1.72 

2*9 

2.70 

821 

Ecu 

■ ECU BOW FUTURES (MATIF) 




008 

052 

- 

- 

4*0 

Open Sett price Change 

High 

Low 

Eat voL 

31.163 

Pun 75*11 

(Various cta/a open tot. Crib 287,717 Pim 260.786. 

Sap hum nawt 

63*8 

(PM 

2.765 


Strike 
Price 
115 
11B 

117 

118 
11B 

EsL ML tout Cat 

Germany 

■ MOTIONAL OSMAN BUMP FUTURES QM2SO*00 IQOths ot 100% 


ILS DOLLAR 8TRNQHTS 

Afitxy NN Deeauy 6^2 03 1000 

Atali Rtanoe 7^ SB 1000 

AufetaS^OO 400 

BR*crTttqiuB%g6 WO 

BdofamPaiB tooo 

BRE7i|B7. 


EMMiQm021 - 
cmdisoB _ 


.1500 


Chang Seng Ho 5% 88 . 

China 6 ^ W 

OoundEUqpeBH 

CMtfondar 8^ SB 

Demerit 5l| 88 


- £00 
.1000 


Sep 

Dec 


Open Sett price Change High Low EsL vol Open M. 

92*7 92*7 40*2 9240 91*4 171390 137434 

9120 91.75 -0*3 91*1 91*0 210 784 


Dec 


US 


6/35 


■ US TBEA3URY BOM> FUTTJBES (CS1) 9100*00 32nde ct 100% 


■ HUW) HITUBES OPTIONS (LiFFg DMMftOOO polnla of 100% 


Aug 

CALLS — 
Sep 

DM 

Jul 

Aug 

PUTS 

Sop 

DM 

129 

1*4 

1.74 

046 

1*2 

127 

1*9 

1*2 

127 

146 

070 

125 

1*0 

224 

079 

1.02 

126 

1*0 

1*2 

1.75 

2*1 


Strike 

Price «M 

9200 0-73 

8250 0.47 

9300 0-27 

EsL ta. tort. Ct*> ieom Pun 1B8Z4 Piwtoue open tt. Om WMO Puts 180«2 



Open 

Latest 

Change 

W 

taw 

B tL WO L 

Open W- 

Jut 

104-28 

106-10 

+ 0-12 

106-13 

104-27 

16*31 

67*62 

Sep 

103-29 

104-13 

+0-13 

104-15 

103-28 

268*13 

307,725 

Dm 

103-11 

10823 

+ 0-11 

1Q3-2S 

103-09 

420 

38*91 


EatJqnMw 6 !)IH. 

EC 8 C 8^90. 

SC At 88 

087*86, 

BBAS7. 

Bk da Fare 8 88 

ajtrinsSVse . 

fa-ln Barit J^Mn 8 02 

Bpat Dar Cop frij SB — 

FMadM|B7 

FkrdV) Expat f) 3 * 95 

Fad Iridar Crect 6*4 88 _ 
Gan Bk Cata 9% 96 _ 
GMAC«>a 86 . 


.800 


.1500 


. 300 


NOTIONAL MSXUM TERM OERMAN OOVT. BOfO 
(Bnnt)(i tffQ* DM2S0*0Q lOOthe ol 100% 


Sep 


Open Settprice Change 
97.92 +A12 


Hgh 


Eet vol Open InL 
0 78 


■ NOTIONAL LONG TERM JAPANESE OOVT. BOND FUTURES 

@JFFQ YlOOm lOOttw el 100% 

Open CfoM Change High Lew Erl vol Open M. 
Sep 109*0 109*7 109*6 2302 0 

* UFFE c c n e aid a Indri on APT. AM Open HM flga. n tar preriaue dv- 


MBkJripen Rn 7% 97 . 
hfer Atb- D ev 7^| 98 _ 
tariy5%23. 


.3500 


*paiDevCk6^cn 

Kiad&cPwr1O90_ 

Kane Boo Pcanr 6>a 03 . 
LfCSFti697 


UK GILTS PRICES 


MtaiehlaBoc7 I 4 02_ 

NttanQadEkU 0 | 9 S. 

97 

Ontala7^08 


IfrU— —1984 — 

IUn K jta HP fA* 


YMd _1BM„u 

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FINANCIAL TIMES WEDNESDAY JUNE IS I9»j 


COMPANY NEWS: UK 


ACT shares fall 33p on warning 


By Paul Taylor 

Shares In ACT Group, the Birmingham- 
based computing services company, Ml 
by 20 per cent yesterday after 

the group warned that trading this war 
would be adversely affected by the 
restructuring of its ffranraal products 
division and increased product develop- 
ment expenditure. 

The shares dosed 33p lower at I36p 
even iftnmgti ACT, which has reorgan- 
ised Its .operations substantially over 
the past five years, also announced a 39 
per cent increase In pre-tax profits. 
They rose. In line with forecasts, from 
£20.5!n to £2&5m during the year to 
Mflrch 3L 

Mr Roger Foster, chairman, said 
trading 1 would be affected, mainly in the 
UK, by the decision to integrate its 


three ftnamflai software operations 
from April 1 in order to consolidate the 
worldwide sales operations, maximise 
the long-term synergy benefits and 
ensure a clear focus for the group's 
development effort. 

In addition, he said the group was 
planning to spend 13 per cent of its 
revenue an product development this 
year, a £3m planned increase on previ- 
ous years. A large part of fills expendi- 
ture would be used to invest in banking 
software and a new version of the 
group’s Quasar investment manage- 
ment product 

The pre-tax line was struck on turn- 
over up 64 per cent to £250.6m 
(£152 ,9m). Acquisitions, including the 
BIS Group which was bought for £932m 
in July last year, contributed £73v4m 
while discontinued non-care operations 


accounted for £6L4m (£4&5m) of the 
total. 

Operating profits, faninfling B SPOftw 
contribution from acquisitions. 
Increased by 51 per cent to £28.7m 
(£19. lm). Three discontinued busi- 
nesses, which were sold generating 
cash proceeds erf £28m, contributed prof- 
its of £4.eim (£523m). 

The disposals marked the end of 
ACT’S hardware related activities and 
completed its transition to a highly 
focused financial software products 
business - the group’s financial soft- 
ware products division now accounts 
for 72 per cent of group turnover and 96 
per cent at trading profits f rom continu- 
ing activities. 

The pre-tax result was after net inter- 
est costs Of £700,000 (EL.to receipts). 

Bantings per share increased by 14 


per cent to 12.15p (1063p) and a final 
dividend of 3£p is proposed making a 
total for the year of 525p (Sp). 

• COMMENT 

Despite the market’s reaction y e st e rda y 
to the surprise profits wanting ACT’S 
management deserves credit for trans- 
forming the gr o up in reca n t years. ACT 
is now firmly established as one of the 
20 largest software vendors in the world 
its particular Tl fahp — flnsmrria l finffr- 
ware - is one of the fastest growing 
market segments. Forecasts for pre-tax 
profits this year were downgr a ded by 
about £7m to £27m because of yester- 
day’s warning. But this would still give 
««rwingg of io.5p which puts the shares 
on a prospective p/e of just under 13.. 
Given the longer-term p ro sp ec ts , the 
shares are cheap. 


Bradford Property ahead 52% to £31m 


By Vanessa Moulder, 

Property Correspondent 

Bradford Property Trust, the 
UK’s largest tenanted property 
company, announced a 52 per 
cent rise in pre-tax profits from 
ggfl-Sm to £30.Tmfor the year to 
April 5. 

Net assets per share 
increased from 170p to 184p, 
based on directors’ estimates 
that the value of Bradford's 
prop ert y had risen to £26L2m 
at April 5. ■ 

“There are signs of recov- 
ery,” said Mr Nigel Denby, 
company s e c r e tar y . 

“We are anticipating some 


rise in prices in the next 12 
months, althong h it is unlikely 
to be dramatic.'’ 

Mur* 1 of the increase in prof- 
itability stemmed from a rise 
in property dealing sales from 
£17 Jm to 82&&n- 

This included a £7.87m 
exceptional property dealing 
fiflip. from the -i»le of 9 acres 
of land at MaTtlasham, near 
Ipswich, for the construction of 
a sup erstore. 

If the figures were adjusted 
to eliminate the exceptional 
profit and exceptional pension 
contribution costs of £l~18m, 
the underlying fa^re ase in pre- 
tax profit would be a 19 


per cent rise to £2 4.1 m. 

Mr John Burgess is to retire 
as managing director at the 
end of April 1995, when he will 
be 6L 

Mr Burgess has been manag- 
ing director for the last 18 
years. He win be succeeded by 
Mr David Baker and Mr Tim 
Watts, who wQl be joint man- 
aging directors. 

Mr Baker, aged 54, joined the 
company in 1963. He will be 
responsible for pro pe r ty deal- 
ings. Mr Watts, aged 34 and a 
chartered surveyor, will be 
responsible for the operational 
management of the property 
portfolio. 


Net bank borrowings were 
reduced from rafiim to wsm 
Warnings per share rose by 
52 per cent, from 9.4p to 
1425p. 

A proposed final dividend of 
3.6p makes a total for the year 
af&5p<54$. 


Bradford’s seemingly relentless 
ability to turn out large divi- 
dend increases has helped 
defend its share price from tbe 
turhulwiM afflioHng th> rest Of 

file pr o perty sector. So for this 
year, its shares have fallen by 
8.7 per cent, just ovs* half the 
flgrifaa s u ffered by the rest of 


the sector. But ye ste rday the 
shar es wore mar ked down by 
awnthw 9p to gip as the mar- 
ket reacted to a disappoint- 
ingly modest rise in net asset 
value. Assuming that this 
reaches 200p per share this 
year, the shares are on a 10 per 
cent premium to net asset 
value, which seems precipi- 
tously high compared to the 
rest of the sector. But 
Bradford’s strength fies in its 
ability to grow its dividend. 
Assuming another 20 par cent 
rise this year, the shares are 
yielding 42 per cent, which 
should proride a degree of sup- 
port to the share price. 


DIVIDENDS ANNOUNCED 




Cment 

payment 

□ate of 
payment 

Cones - 
poncSng 
dividend 

Total 

for 

year 

Total 

last 

year 

Amberfey § 

fin 

It 

Oct 1 

1 

1 

1 

ACT 

fin 

15t 

Aug 15 

325 

52S 

5 

Bradford Prop Jin 

3.6 

Aug fi 

3 

62 

5.4 

BSS 

-fin 

12 

July 28 

112 

17.75 

1725 

Charter 

fin 

15.5 

Aug 8 

15 

222 

22 

David Lloyd 

- lot 

1.45 

Aug 12 

- 

- 

125 

East Surrey 

. ■■■■■fin 

7.95 

July 29 

728 

1228 

MAS 

Eurocopy 

Int 

06 

Sept 1 

05 

- 

12 

F&C SmaBor 

.... — fin 

1.27 

July 21 

1.16 

127 

124 

Grand Central An 

rd 

- 

125 

n3 

125 

Hawfin 

—int 

0275 

Oct 4 

025 

- 

095 

Marshalls 

fin 

3 

Oct 3 

2.75 

425 

4 

Neotronlcs 

Int 

0.85 

Aug 26 

085 

- 

26 

Oceana..— — , 

fin 

2 

July 29 

12 

23 

12 

Rhar Plate Gen . 

Int 

3 

July 29 

3 

- 

09 

Severn Trent 

fin 

152 

Oct 3 

14.1 

2275 

21.1 

Sheriff § 

on* 

1.7Sf 

Aug IS 

125 

- 

325 

SBmma . — 

W 

12 

Aug 31 

- 

- 

- 

Symonds Eng _ 

fin 

025 

Sept 5 

015 

025 

0.15 

Unigate 

fin 

112 

Aug 5 

104 

172 

16.1 

Votax 

fin 

116f 

Oct 1 

1125 

18.1 

1725 

WaOman 

■ fin 

06 

Aug 31 

06 

09 

02 

Whftecrott 

fin 

2 

Aug 15 

nl 

2 

na 

Wrexham Water 

fin 

141.45 

Ju! 21 

92A5 

1892 

1342 


DMdencfe shown pence per share net except where otherwise stated, -fan 
Increased capflaL §USM stock. 


Inflation culture 
limiting projects 
says BoS chief 

Mr Bruce PattuRo, governor of 
the Bank of Scotland, said yes- 
terday that the “slow change 
in Britain’s inflation prone cul- 
ture" was limiting the number 
of new investment projects 
being launched by huge UK 
companies. They were still 
seeking high investment 
despite low inflation. 

At the annual meeting in 
Edinburgh Mr Fattullo said 
“the reluctance by manage- 
ment to adjust dow n w ar ds the 
returns which they seek on 
new projects means that the 
new jobs which would be cre- 
ated by new investment 
announcements will be 
delayed”. 


Emap expected to move 
In with Trans World bid 


By Raymond Snoddy 

Emap, the media and 
exhibitions group, is expected 
to go ahead next wed: with a 
bid for tbe Trans World Com- 
munications commercial radio 
group if agreement cannot be 
reached b7 then. 

Conversations continued yes- 
terday between the two sides 
to clarify the situation follow- 
ing t he annnnwcpmpnt that 

Emap had an agreement with 
Mr Owen Oystcn, the Lanca- 
shire millionaire, to buy his 22 
per cent stake at ISlp. 

As Emap already holds 30 
per <wnt of the company this 
would give the group control 
although it is seeking a recom- 


mended bid. The deal would 
value Trans World at about 
rrom. 

The proposition is controver- 
sial because an Emap takeover 
of Trans World would breach 
the number of radio licences 
that a single company 
hold. 

Trans World opera t es a total 
of eight local radio sendees in 
the UK in Manche st er . Cardiff; 
Leeds and Preston and has a 

maritpt vahie Of BSw- 

In the event that an offer is 
made, the Bnflin A uth o r i ty has 
agreed that an “ownership 
structure” could be put in 
place to cover part of Emap's 
radio interests to comply with 
the rules. 


UK growth 
behind 28% 
rise at 
Attwoods 

By Peggy HeObiger 

Strong UK growth helped 
Attwoods* tire waste manage- 
ment company, to increase 
third quarter pre-tax profits 
by 27 pm cent to £3-8xn, an 
sales £2An lower at £89 .2m- 

The group was still strug- 
gling to overcome dUUcdlUes 
far Germany, however, where 
recession hit margins. 

For tiie nine months to April 
3& pre-fax profits were 43 per 
cent lower at £I2L8m on sales 5 
per ceo* ahead to £267.7m. The 
profits included a £2.7m excep- 
tional charge for settling 



Ken Foreman: 1994 had proved 
to be difficult 

litigation in the US. 

Mr Ken Foreman, chief exec- 
utive, said 1994 had proved to 
be difficult. However, he 
expected a return to profits 
growth in 1995. 

UK profits improved 39 per 
cent to £2£m, on the back of 
both volume and price 
increases. Further price 
Increases had been imple- 
mented in May, which would 
help profits hi last quarter. 

The US soUd waste business 
had performed well in spite of 
a 24 per cent foil in operating 
profits to £223m for the nine 
months period. The previous 
year benefited from Hurricane 
Andrew. 

Mr Foreman said cash flow 
had covere d the costs of all 
fe Mni payments in the first 
nine months. Attwoods was 
exp e ct e d to maintain tbe pay- 
out titis year. 

Normalised earnings for the 
three months were 0.93p 
0-42p). 


Charter plans to 
build fourth leg 


By Simon Davies 

Charter, the diversified 
industrial group, could spend 
between £20Qm and £4Q0m on 
building a fourth leg. accord- 
ing to Mr Jeffrey Herbert, chief 
executive. 

The company was restruc- 
tured last year, selling its 
stake in Johnson Mattbey and 
rreteg part of the proceeds to 
buy Hark Mlntirco’s 36 par cent 
stake. The deal left Charter 
with £156m of cash, and its 
independence. 

The rom parry has refocused 

on three core businesses of 
building materials, coal and 
rail track equipment Mr Her- 
bert said a number of propos- 
als were under consideration 
for toe fourth. 

The company also 
announced pre-tax profits of 
ran iw for the year to March 
31, a gains t £289.frn, which was 
distorted by the sale of the 
Johnson Matthey stake. 

Operating profits from con- 
tinuing operations foil 4 per 
cent to £33. 8m < 8 3K2 m) . 

Building materials contrib- 
uted £14.7 eq, up from £l2.6m. 
Cape. Charter’s listed subsid- 
iary, showed a strong increase 
in overseas sales, and Har- 
greaves. tbe quarrying busi- 
ness, benefited from new road 
contracts and a recovery in the 
price for aggregates. 

The US miners' strike last 
year cost Charter's coal 
operations about £3m, and 





reduced divisional profit from 
£8.2m to £403. 

Rail track equipment ooti- 
tributed £138. up from mfrp. 
despite shrinking margins on. 
its US maintenance toM; 

Interest Income amounte&ft 
£i3.9m. up from £U.6a, 
boosted by a lag 
receiving the proceed* ft 
the JM sale, and buying 
shares from Mlnorco. 7 . 

The company is propoetogi 
final dividend of lWp. mi 
a total for the year of _ 
(22p>. Earnings per share, ^ 
torted by the restructuring; 
amounted to 36.4p. against 
242.9P. J 

• COMMENT 

White Charter's shape may he 
becoming clearer, the key to ttr 
near-term performance ms 
depends on how the manage- 
ment chooses to spend its 
pile. There were few surpl 
in the 1994 figures, and the i 
rent year will show nan 
growth at the operating 
but a decline in pre-tax 
to about £4$m. Thla 
result frum falling interest 
income. Earnings will benefit 
from the share buy-back, but 
Charter is still trading on a tie 
oT about 16.3- This Is high- fet 
the shares carry almost 230p of 
cash, and whatever happens, 
the management should aka a 
better return from an acquisi- 
tion Uum a bonk vault. In fee 
meantime, investors should 
continue to hold. 


Cairn Energy US arm to 
make $34m acquisition 


By Carofine Southey 

Cairn Energy. the 
Edinburgh-based ml and gas 
explorer, yesterday announced 
the proposed acquisition by its 
American subsidiary of oft and 
gas assets controlled by Har- 
vard University for $33*0 
(£22£m). 

Cairn also said it would cut 
its stake in Calm Energy USA 
from 6(15 per cent to 2&8 per 
cent through tbe sale of 3m 
shares. At a price of $7.50 per 
share, the sale would raise 
$2?. 5m net 

CEUSA’s acquisition of 
Smith Offshore Exploration 
Company 11 from Aeneas 


Group, controlled by Harvard 
University, will give it inter- 
ests in another 25 blocks in tbe 
Gulf of Mexico and offshore 
along the Texas Gulf coast 

The purchase price, to be sat- 
isfied by the issue of new 
CEUSA shares, will be subject * 
to adjustments based on a val- 
uation the assets before the 
rod of June 1996. 

Aeneas will also buy 2m of 
the additional CEUSA shares 
Calm is setting; to give it a 
stake of 384 per cent Cairn 
will place the o t he r lm shares 
which are traded on Nasdaq. 

Cairn Intends to redirect 
funds raised from the sate to 
Its non-US businesses. 


A network that can open more doors 
to opportunities in China. 


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Standard Chartered has been developing its opera- 
tions in China for rather longer than most banks - in 
fact, for more than 135 years. 

Today, we have more offices in China than any 
other foreign bank. And through the links between our 
Chinese offices and our international network of offices 
in more than 50 countries, you can draw cm our expe- 
rience to make the most of opportunities in China. 


We re best known as a leading player in trade 
finance and export credit, where the experimee and 
expertise of our people give us the ability to create tai- 
lor-made financings for you. Our Treasury team plays 
an active role delivering derivative products into China. 
Aid our investment banking group arranges debt 
financing far Chinese boirowers, and equity capital 
through mtanational securities markets; in 1993, far 


example, the group led 26 new issues in China and 



Standard Chartered can also provide services in 
China unavailable through many other banks - faom 
indirect and compensation trade, through to market 
studies, introductions and joint-venture assistance. 

The objective of our international banking network 
is to give you access, wherever you are in the world, not 


only to the services you need but also to people who 

haws real understanding of tbe matte in which you 
want to do business. 

In China, as in countries across Am and the 

Me, you will find Standard Chartered is a strong 
and supportive banking partner. 

Standard & Charterer! 


INTERNATIONAL NET WO R KING 



4 


FINANCIAL, TIMES WEDNESDAY JUNE 15 1994 


COMPANY NEWS: UK 


23 


Overseas buys 
help Volex rise 
40% to £10.3m 


BSSup 
51% and 
sees more 
growth 

By Carettie Southey 


By Paul Taylor 

Overseas acquisitions and 
organic growth helped Volex 
Group, the restructured electri- 
cal interconnection products 
and cable assemblies company, 
record a 40 per cent increase in 
full year pre-tax profits. 

The increase from £754m to 
£10-3m in the year to March 31 
came on turnover ahead 26 per 
cent to £l49.2m (2118.3m), 
partly reflecting the impact of 
three acquisitions made during 
the previous year In the US 
and south-east Asia. 

Organic growth accounted 
for about 12 percentage points 
of the increase Sales of prod- 
ucts manufactured in the UK 
increased by 9 per cent to 
£86.Gm w hile those of products 
manufactured overseas 
increased by 62 per rent and 
represented 42 per cent of total 
group turnover. 

Earnings pre share increased 
by a more modest 9 per cent to 
23.6p (2L7p) after a 23 per cent 
increase in the average num- 
ber of shares following the 
£175m rights issue in February 
last year, partly offset by a 
reduced tax rate. 


By Daniel Green 

Mr Sipko Hnismans. chief 
executive of Courtaulds, 
received a 25 per cent pay 
increase from. £284,150 to 
£355,353 in 1994. according to 
the chemical company’s 
annual report 

Pre-tax profits last year fell 
by 35 pa- cent from £186m to 
£122m. 

The figure was affected by 
exceptional items and a higher 
interest bill although even 
at the operating level profits 
slipped by 16 per cent to 
£176.4m. 

Mr Huismans' pay included a 
basic £320.000 (£270,000.) and a 
performance-related bonus of 
£12500 this time. Benefits in 


East Surrey Holdings, the 
property, water and building 
supplies group, turned in a 45 
per cent increase in pre-tax 
profit for the year to March 31, 
from £5.7m to £&28m. 

Hie outcome included a 
£l.88m exceptional profit aris- 
ing from land sales. 

Turnover was ahead at 
£25.5m (£24. 4m), with £22.7m 
(£21.9m) coming from water 
supplies. 

Following a 5 per cent drop 
in the first half, metered con- 
sumption at East Surrey Water 
returned to the previous year’s 
level in the second halt and 
the company “performed well”. 


An increased flmi divi dend 
of 11.6p lifts ftie total to 18.1p 
(17-85p). 

Mr Oliver Chappie, chief 
executive since October, said 
the results hi g hli ghted the suc- 
cessful consolidation »n4 inte- 
gration of the acquisitions 
made in the previous three 
years. As a result Volex was 
now an international m^nfaft . 
turer and supplier of intercon- 
nect products to original equip- 
ment manufacturers in the 
computer, medical telecommu- 
nications and appliance indus- 
tries. 

. Operating profit increased by 
41 per emit to £10.4m (£7.41m) 
and operating profit margin 
improved from 65 per cent to 7 
per cent reflecting the greater 
impact an the group’s perfor- 
mance of its power coni and 
data assembly operations 
which were enlarged consider- 
ably, partly as a result of 
acquisitions. 

Interest costs rose to £L03m 
(£366,000). The group moved 
from net cash of £5 -86m to mar- 
ginal net debt at the end of the 
year after capital expenditure 
of £7m. Investment income 
rose to £855500 (£297,000). 


fcfnd tn c re*w«l 59 per cent to 
£22553 (£14,150). 

Under the company’s execu- 
tive share option scheme, Mr 
Huismans was granted options 
on 30,000 more shares talcing 
his total to 195,000. 

He already owns 20,500 
shares. 

Sir Christopher Hogg, chair- 
man, saw his pay rise by 3.7 
per cent, from £110,058 to 
£H4J3L He has no executive 
share options but already owns 
121,000 shares. 

Two other Courtaulds direc- 
tors received packages worth 
between £215501 and £220,000. 
Th 1993 the gprcrnd and third 
highest paid directors each 
received between £185,001 and 
£190,000. 


said Mr John Fooks, chairman. 

“Costs are under control and 
have benefited from lower than 
average demand during the 
summer of 2993 and a reduc- 
tion in water lost through 
leakage" he said. 

Capital and infrastructure 
spending was increased to 
£6.49m (£5.89m), with expendi- 
ture rescheduled to develop 
treatment works and build pes- 
ticide removal plant by Decem- 
ber 1995- 

Ramfrngq per share came out 
at 56.4p (38.8p). A recom- 
mended final of 7-95p brings 
the total dividend to I258p 
(lL46p). 


BSS Group, the heating, 
plumbing and process control 
supplier, ended four years of 
unchanged dividends after 
reporting a 51 per cent rise in 
pre-tax profits from £&54m to 
£9-86m for the year to March 
3L 

A final dividend of 12p 
(11.5p) is recommended, 
bringing the total to 17.75p 
(I7.25p) on earnings pa- share 
up 44 pa cent from 16-7p to 
24p. 

Operating profits rose from 
27.84m to 210.8m cm increased 
sales of £258. lm (£243.7m). 

The strongest contribution 
came from the industrial ami 
commercial construction divi- 
sion where profits roGe by 27 
pa cent to£L2.7m on turnover 
of 2154.4m (21495m). 

Hie domestic division, one 
of the top three distributors to 
the heating market in the UK, 
showed a tnraronnd from 
losses of £712,000 to pro fit s of 
£44,000 following the integra- 
tion of three bu sin es se s, Hea- 
I tek, TjWa ana fi arial, into a 
j new company, Zenith F hrrnh - 
puint, 

Mr Alan Milne, finance 
j director, said the tnraronnd 
had been achieved now that 
the “worst of the recession is 
behind ns". However, the 
upturn in the construction 
industry remained tentative. 

In the commercial sector 
new building work remained 
40 pa emit below the peak vol- 
umes of 1990. But, as a market 
laaiter he predicted the* BSS 
would continue to take market 
share. 

He said the company was 
“very positive about the next 
few years when we will see 
good growth in our perfor- 
mance”. 

To raise its competitive posi- 
tion and to improve stock 
availability, the company said 
it would establish a single 
national trunking central 
warehousing system. 

Net borrowings were 
reduced from £15.4n to £13Jm 
far gearing at the period end 
of 2U per cent (25.5 per cent). 
Interest charges fell from 
£L3m to £958,000. 

Eurocopy 

continues 

recovery 

Eurocopy, the office 
equipment distributor, contin- 
ued its recovery with pre-tax 
profits up 34 per cent to 
£1.64m in the half year to 
March 31. 

This followed a jump of 54 
per cent to 22.6m for 1992-93. 
The shares closed 3 p higher at 
68p yesterday. 

Mr Cyril Gay, chairman, 
said that machine sales 
remained level but there was a 
small growth in copy volume. 
Triangle Systems, acquired in 
January, made a small contri- 
bution. 

Turnover dipped to £13^m 
reflecting the disposal of the 
furnitnre division. Earnings 
per share rose from L68p to 
2_27p and tire interim dividend 
is 05p (<L5p). 


Courtaulds chief 
gets 25% increase 


East Surrey aided 
by exceptional 


THIS ANNOUNCEMENT APPEARS AS A MATTER OF RECORD ONtY 

GRAHAM GROUP pic 

Placing and Offer for Sale of shares in Graham Group, 
one of the largest builders merchants in the UK and formerly 
a subsidiary of BTR pic 

Market capitalisation of £210 million 
at the Offer Price 


J O HAMBRO MAGAN & Co 

acted as financial adviser 
and co-sponsored the flotation 

J O HAMBRO MAGAN & COMPANY LIMITED 
32 Queen Anne's Gate London SW1H 9AB 
"xel: 071 233 1400 Fax; 071 222 4978 

Member of The Securities and. Futures Authority 


Central Railway seeks £6m for start-up 


By Chafes Batchelor, 

Transport Correspondent 

The first railway company to seek 
private to build a modern rail 

mnta in Tn^rplnnd ftr jfotn fnr winra than 

50 years yesterday announced plans to 
raise between 4pm and £fim from pri- 
vate investors. 

Central Railway Gfroup plans to cre- 
ate a 180-mile railway Hoe from Leices- 
ter to the Channel tunnel entrance to 
catty trucks on flatbed wagons. 

The total cost of the project is esti- 
mated at £3bn, but £5m to £6m is 
needed to fund the obtaining of parlia- 
mentary approval. 

The route will consist of disused 


track, parte of the existing network in 
the Chiliems and new track in tunnels 
under London. Tunnels and bridges 
would have to be widened to take the 
trucks. 

Trucks-on trains are rarnmnn in con- 
tinental Europe but the smaller loading 
gauge of the British rail network has 
meant it has not been possible to trans- 
port complete trucks in the past 

Central Railway believes the offer 
will prove more attractive to private 
investors thgn to ms rifriflpna thoug h 
there will be no dividends for at least 
seven years. 

Some investors may also be put off 
however, by the repeated refinancings 
needed to raise the £llbn required 


to build the Channel tunnel 

Central Railway is making an offer to 
the public of up to 6m £1 shares in 
minimum sub sc r ip tion amounts of £500. 
'Hie offer has not been underwritten 
and. given the small size of the issue, a 
Stock Exchange listing will not be 
sought. 

Subscriptions are open between June 

10 and July 19. 

The company believes it can capture 
15 per cent of international truck traf- 
fic, about 1.75m trucks, travelling 
between the UK and the Continent by 
2005. 

It plans to build terminals in Leices- 
ter, west London and in northern 
France. 


Crucial to the project is for Central 
Railway to acquire ownership of all the 
track. This would require the agree- 
ment of Railtrack, which owns the for- 
mer British Rail track and signalling 
and which, in general plans to retain 
ownership of the track. Initial talks 
have been held. 

The project has been under prepara- 
tion for four years and has provoked 
scepticism among some people in the 
transport industry. 

Central Railway is the brainchild of 
Mr Andrew Gritten, a former political 
analyst who developed an interest in 
rail projects while working as a 
researcher at the Centre for Policy 
Studies. 


Whitecroft in the black with 
better-than-expected £4.3m 

By Ian Hamilton Fazay, 


New projects help 
David Lloyd to £3m 


Northern Correspondent 

Whitecroft, the lighting, 
medical cotton fibre, industrial 
textiles an(i building products 
group, returned to profits and 
the dividend list in the 12 
months to Marc h SL 

A pre-tax outcome of £45m 
compared with losses last time 
of £41 5m - a result well ahead 
of analyst's expectations; the 
shares rose Up to 12pp. 

The recovery was achieved 
despite flat turnover of 2124.9m 
- a decline of £23500. 

The previous loss included 
substantial provision for previ- 
ously overvalued property - a 
sector which almost brought 
Whitecroft down in the reces- 
sion and from which it has 
dna> exited The improvement 
is better judged b; operating 
profits which quadrupled to 
nearly £5 55m (£L36m). 


The dividend is restored at 
2p, payable from earnings per 
share of 8.8p compared with 
losses of 945p. 

Year-end borrowings were 
halved to £l8m (£S6.4m) and 
gearing fell from 153 per cent 
to 67 per cent. 

Mr Mike Derbyshire, chief 
executive, said the perfor- 
mance vindicated the board's 
decision a year ago not to 
lmmrh a rights issue to reduce 
debt, even though some insti- 
tutional investors would have 
backed. one. 

This leaves a r»Tt avail- 
able for expansion, although 
Mr Derbyshire stressed the 
mrnpnny had no takeover tar- 
get in sight - or any other 
plans that could not be 
financed from existing 
resources. 

Lighting increased sales by 
£fcn to £49.7m and improved 
profits to £456m (£8.95m). 


Medical cotton fibre - tam- 
pons - lifted sales by 22 per 
cent to £155m, with profits of 
£252m (£1.79m). 

B uilding products — mainly 
fire-resistant doors - and tex- 
tiles - a principal product is 
book cloth and fabrics for pass- 
ports and bankbooks - 
incurred small losses. Mr Der- 
byshire expects both sectors to 
recover. 

An easing of property mar- 
kets was behind the improve- 
ment in the balance sheet. The 
214.4m of written-down prop- 
erty awaiting disposal last year 
was down to £65 Im by the 
year-end. 

Since thpn the fnm pa ny hag 
sold an option to buy back a 
retail property in Stockport 
that it disposed of in 1991. 
Profit of nearly £6m has 
reduced current borrowings to 
about ci am am? gearing to 34 
per cent 


By Simon Davies 

David Lloyd Leisure, the tennis 
and health dub company, yes- 
terday announced a 53 per cent 
increase in pre-tax profits from 
2L94m to 2256m for the six 
months to March 31, fuelled by 
increased membership and 
contributions from two new 
projects. 

On a like-Fcr-like basis, the 
dubs reported a 13 per cent 
rise, with membership fees 
by 3 per cent more than the 
inflation rate. Turnover from 
continuing operations rose 26 
per cent to £21m (28.75m), 
helped by a 9 per cent increase 
In memberships from pxict-ing 
dubs to 23,000. 

The company's newest dub, 
in Glasgow, cost more than 
£Sm to develop and opened in 
October. It has already sold 
3,000 memberships, and was 
profitable at the interim stage, 


despite a £150500 write-off of 
pre-opening casts. 

In addition, the company 
saw a six month contribution 
from its new bowling centre in 
Raynes Park, London. 

It is on target with its stated 
policy of introducing two new 
clubs per year. Work has 
started on developments in Bir- 
mingham, Bristol .md Reading, 
which are due to open In the 
first half of 1995. 

Interest payments dropped 
£524.000 to £143,000, due to the 
impact of cash raised from the 
March 1993 flotation. 

Gearing, however, has risen 
from 13 to 14 per cent in the 
past 12 months, and the com- 
pany is signing up a £30m 
banking facility to help fund 
expansion. 

Earnings per share rase 15 
per cent to 4.73p (4.1p). A first 
interim dividend of 1.45p is 
declared. 



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does Scottish Nuclear generate? 



Success. 


From our two nuclear power stations at 
Hunterston and Tomess, we generate around 
half of Scotland’s total electricity requirement. 

This in turn generates jobs and profits, vital to 
Scotland and die UK as a whole. 

We are a top employer with highly qualified 
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Our tradition of safety, engineering excellence 
and efficiency stretches back over 30 years, to 
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• 14 ©3) 

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Scottish 

Nuclear 


If you would like a copy of our Annual Report contact Vikki Fuller, Corporate Communications Department, Scottish Nuclear Limited, 

3 Redwood Crescent Peel Park, East Kilbride G74 5PR. Telephone: 03552 62145. 






24 


COMPANY NEWS: UK 


Severn Trent held to 4% rise 


By Peggy HoIDnger 


Delays on international 
contracts held bads the profits 
advance at Severn Trent as the 
group announced a 4 per cent 
Increase to £28L4m at the pre- 
tax level for the year to March 
31. Sales were 10 per cent 
higher at £998m. 

The results were at the Lower 
end of expectations, and the 
shares moved up just lp to 
dose at 527p. 

The proposed final dividend 
is raised by 7-8 per cent to 
75 for a -gimflar increase in 
the total to 22.75p. This com- 
pared with forecasts of an 8.5 
per cent rise. Kamingg were 4 
per cent up at 72.7p. 

Mr Roderick Paul, chief exec- 
utive. said Severn had taken 
action to cut costs following 
the £4.7m operating loss 
incurred by the international 
division last year. 

The loss had been largely 
because of delays an two con- 
tracts, in Mexico and Mew 
York, the subsequent restruct- 
uring charges, and the costs of 
marketing the international 
b usiness . Marketing had been 
cut back, costs reduced and the 



Trevor HwifMai 

Roderick Paul (left) and Vic Cocker, deputy chief executive: 
action taken to cut costs after £4.7m international loss 


division was now operating 
profitably, he said. 

Mr Paul was more upbeat 
about Biffia. the waste manage- 
ment arm. It had lifted operat- 
ing profits by IS per cent to 
ei d-gm on sales 16 per cent 
Wghw at glTfl-fim in a difficult 
market The return reflected 


the “stringent control of oper- 
ating costs and strength of our 
sales and marfrating initia- 
tives." Mr Paul said. 

Bifia's ability to improve 
margins in its landfill business 
had been because of a chang- 
ing mix of waste, rather than 
any underlying improvement 


in prices, he said. However, 
prices were beginning to show 
tentative signs of recovery. 

The division is behaved to 
have incurred losses of glim 
after interest, because of oner- 
ous financing arrangements at 
the time of the acquisition. 

Profits gr o wt h in the core 
utility bn ■dupes was back 

by a 7.8 per cent in 

usage by the top 1,500 indus- 
trial users. 'Hie rate of dwrihw 
had begun to slow, Mr Paul 
said. Operating prefits in the 
water and sewerage business 
rose by 11 per cent to £324.6m, 
an 6 per c»nt ahead to 
£737-fim- 

Severa said costs in the 
water business had risen by 3J5 
per cent. The workforce had 
been reduced by about 6 per 
cent, bringing the number of 
jobs cot in two years to 889. 
Severn was continuing to 
examine opportunities for cost- 
catting gW’hnmg ft it refused to 
give details. 

Capital expenditure was 
some yss™ less than budgeted 
at £445m (£550m). Net debt rose 
by £153.4m to g-VTSftn, repre- 
senting 27 per ewit of share- 
holders' funds. 


Applied 
Holographies 
cuts losses 


By Chris Tlflhe 


Applied Holographies, the 
USM-quoted producer of holo- 
graphic products for security 
and packaging uses, yesterday 
reported a pre-tax loss of 
£27*895 for the year to the 
end of March. 

The result, which compared 
with losses of £2 .26m last 
time, came on tur n over ahead 
to £&8m (£4. 96m) despite a fall 
to £700,066 (£l.37m) in hot 
aiainpi ng foil sales following a 
deal agreed a year ago to sell 
the business to Wbfley Foils. 
Gross margins were affected 
by the slower than expected 
transfer of production to Whi- 
ley. 

Losses per share were L3p 
(losses of ll-2p). The compa- 
ny’s deficit now stands at 
217.5111. 

Floated 10 years ago, the 
company has never made a 
full year profit. However, 
directors were confident about 
currait year prospects against 
a background of 48 per cent 
and 47 per cent growth respec- 
tively in sales in the security 
and packaging product ranges 
and the completion of restruct- 
uring to focus on the core 
business. 

Mr David Mahony. chair- 
man, said shareholders, 
mainly large institutions, had 
been “very patient". “They 
have understood what the 
company was trying to do and 
have seen it through. They see 
the potential there," he added. 

Three investment trusts, 
new investors in the company, 
had taken up a placing of 
997,620 new ordinary shares, 
raising £800,000 for invest- 
ment in production equip- 

UUSlte 

Operating losses were 
£219,014 (£l-39m). 


Exco floats with £220m tag 


By Simon Dawes 


Exco. tfiA money braking aim 
of tile collapsed British & Com- 
monwealth group, is proceed- 
ing with its flotation, despite 
the softsiing riffmanrl for U6W 
issues tha slowing of activ- 
ity in the frml inmmr* securi- 
ties TnflT-Tcptq 

The company will offer up to 
£110m of shares, primarily 
comprising B&C7s 40 per cent 
stake, and the flotation is 
expected to value the company 
at about £22Qm. 

The company, which derives 
half of its profits from money 
broking and half from fivad 
income securities trading, is 
forecasting pre-tax profits 
growt h of at least 21 per cent 
at the interim stage. 

This follows what Mr Ron 


Sandler, chief executive, 
described as an “exceptional 
first quarter", due to increased 
interest rates in the US and 
political uncertainty hr Japan. 

He said this would not be 
carried through for the year, 
but 1993 Mining* should be 
“satisfactor y ". 

Exco will be only the second 
pure money broking and secu- 
rities company on the stock 
market, along with Trio. 

Money broking Is a competi- 
tive and volatile business, and 
Exco^ issue price win reflect 
this, with a likely p/e ratio of 
between 9.5 and 105. However, 
the shares ghnuld offer a yield 
of more than 5 per cent 

Rrm has achieved substan- 
tial enming B growth over the 
past three years, in the face of 
an increasingly competitive 


market place. 

The trend for money broking 

rvtmmisRTfiTHt has hoon s teadil y 

downwards. In addition, for- 
eign exchange trading - one 
third of 1993 money broking 
p r o fi ts - has seen a loss of 
market share to di rect trading 
between the banks. 

However, Mr Sandler said 
the broker market for foreign 
exchange continued to grow in 
absolute terms, while the 
group ha« benefited from the 
explosive growth in derivative 
products. 


The flotation price will he 
announced on June 29, and 
dealings are due to remmanre 
an July 19. Up to half the com- 
pany's shares will be offered 
through a placing and public 

offer. 


Marshalls advances by 64% 


By Andrew Taylor, 
Construction Correspondent 


Pre-tax profits of Marshalls, 
the Halifax-based building 
materials group, jumped by 64 
per cent from £I24m to £20.4m 
during the 12 months to the 
end of March as it took fall 
advantage of thA hpracing mar- 
ket recovery. 

Profits also were assisted by 
lengthening the depredation 
period for large items of equip- 
ment from 10-15 years to 15-20 
years. This added £2m to pre- 
tax profits and L8p to earn- 
ings, ijdd Marshalls . 

Even without this adjust- 
ment, operating profits 
increased 58 per cent, from 
Cl?, ,4m to £21 . 7m. Ramin g s per 

share after the adjustment rose 
from 3J93p to 8E2p. 

Mr Andrew Marshall, chair- 
man, said the trading Improve- 
ment had been greater than 


expected enabling the group to 
increase its final dividend to 3p 
making a total for the year of 
4.25p (4p). The group hoped to 
increase dividends further tills 
year provided trading contin- 
ued to improve. 

The recovery in the housing 
market prompted a 12 per cent 
rise in UK turnover of stone 
and concrete products, mainly 
for paving and flooring, to 
£143m (£127.7m). Operating 
profits, boosted by higher vol- 
ume sales and increased 
emphasis on higher margin 
products rose by 44 per cent to 
£17.9m (£12.4m) including 
£L6m from reduced depreda- 
tion. 

US losses for stone and con- 
crete declined from £800,000 to 
£600,000. The US had generated 
a profit in the first two mnwtha 
of the current financial year, 
said Mr Marshall 

Operating profits from clay 


products in the UK rose 
sharply from £25,000 to £3.lm 
against a turnover increas e of 
just 14 per cent to £22.5m 
(£19.7m). 

The engineering division, 
which supplies equipment for 
drilling rode, also increased 
operating profit, from £889,000 
to £i_29m. 

Net debt at the end of March 
stood at £25.4m (£21 An) equiv- 
alent to gearing of 20.7 per cent 
(182 per cent). This, however, 
included £64m of cumulative 
convertible preference shares, 
redeemable in 2004 as equity. 


Wellman 
falls £1.07m 
into red 


EXCO 


Exco is one of the leading international wholesale money and 
fixed income securities brokers, operating in 13 financial centres 
worldwide. Exco provides customers with an around- the- clock 
service in all three major financial time zones and in each 
of the world’s major currencies. 



Exco pic 


Placing and Public Offer 

Share Registration & Information Line 


To reserve a prospectus and application form 
or for further information, 
please call the following freephone number 


0800 400 501 


This adverctaemenc, which has been prepared and raued by Exco pic. has been approved by N M Rothschild & 
Sons limited, a Maher of The Securities and Futures Authority, for the purposes of lection 57 of die Rnnncia! 
Services Act IflW. No oifcr or invitation » aagdic securities rfExtopfc is being made now- Any such offer or 
invitation will be made m a prospectus to be published in due cause and any such aoqubtdan should be made 
solely m the basis of information contained In such puptens. 


Severely reduced marg ins in a 
depressed market coupled with 
reorganisation costs resulted 
in Wellman, the specialist engi- 
neer, reporting pre-tax losses 
of £L07m for toe year to March 
31, against pro fit s of £681,000. 

Mr Geoffrey Hey, chairman, 
said that a slow improvement 
in trading had come too late to 
affect the result, but a marked 
upturn in order intefcg should 
have a significant impact an 
trading in the present year. 

Reflecting this, the final divi- 
dend is held at 0.6p for an 
unchanged total of 0.9p. Losses 
per share were 3J5p (earnings 
ip). 

Turnover was £22. 3m 
(523.7m). There was a trading 
loss of £483,000, against pro fi t s 
of £L15m, and reorganisation 
costs of £445,000 (S35L00Q). 


Amberley 

Amberley Group, the USM- 
quoted building services con- 
cern, has acquired Metacol, a 
supplier of liquid colourants 
for plastic processors, for up to 
£5Jim. 

In (ado: to fond the acquisi- 
tion an underw ri t te n rights 
issue is proposed to raise 
£4£8m cash for the vendors 
and £L94m to provide £Llm for 
repaying Metacol’s debts with 
the remainder for ex penses and 
working capiiaL 

The Issue, of 13 ,5m new ordi- 
nary shares, is on a l-for-2 
basis at 47p. 

Following a tunuOund at the 
interim stage, the group 
announced pre-tax profits of 
£403/KW for the year to March 
31 against losses of £91,000. 

Turnover rose by 40 per cent 
to £5JJ6m (£3 -82m). Earnings 
per share worked through at 
L94p G.71P losses) and the pro- 
posed dividsid is held at lp. 


Shoprite 

Shares in Shoprite fefl 27p to 
51p yesterday after the' dis- 
count food retailer said the 


Berisford 
£5. 8m in 
red after 


provision 


By Maggie Urry 


Berisford International* (be 
former commodities and 
property group which paid 
£56m for the Magnet k it chen 
and joinery business in March, 
yesterday reported pre-tax 
losses of £5£m for the half 
year to March 31 compared 
with profits of £400,000. 

The result was after a £9. 7m 
provision cove rin g the 
write-off of Blister Tnufing, 
BerisfonTs cocoa trading 
associate. If any cash is 
recouped from thfc business 
it wffl come back thr o ugh the 
profit and loss account. 

At the operating level 
Berisford achieved, profits of 
£3.7m <£L5m lasses). Magnet 
contributed £L4m of the 
profit, but Mr Alan Bowkett, 
chief executive, stressed that 
March vras traditionally 

Magnet’s best wmrfh as 
January sales turned into 
profits. Even so, Mr John 
Sdater, Awtrmawj remained 
confident of predicting tiie 
pa yment of a final dividend. 

T urnover rose to £5L3m 
(£47_3m) with Magnet 
contributing viu-Qm. Losses 
per share were 4.4p (02p 
earnings). 

Since the half-year end, Mr 
Bowkett said. Magnet had 
remained profitable in spite 
of a repo sition ing programme 

in April and May when 
advertising was stopped. 
Branches now served both 
trade and retail customers and 
ranges had bees rationalised. 

Magnet’s work f orce had 
been cut from 2£00 to 2,000, 
with 400 jabs going in the 
shops and 130 In the factories. 
More than £4m had bees 
in vested in new kitchen 
iM M i fw * B r ing equipment. 

One new outlet has been 
opened white Berisford las 
Identified 50 places where It 
could open brandies. 

The group is also continuing 
to realise some “old Berbfard* 
assets, including properties 
with a book value of £2 6m. 

It aims to retain its CS 
agribusinesses, although these 
are expected to incur teases 
In the second half. In order 
to protect fts US tax l os s e s 
which total £434m. A senior 
executive is bring posted to 
New York to search out an 
acquisition to the US. 

Following the rights brae, 
which funded the Magnet 
purchase, net cash was £53Bm 
at March 31. which has since 
risen to £54.7to, and net assets 
were £2X4.7 iil 

Mr Robert Pritzker, has 
resigned as a non-executive 
director, although his brother 
Jay is remaining an the board. 
The two are large shareholders 
to the group. 


NEWS DIGEST 


Sheriff 


Sheriff Holdings, the 
USM-quoted plant hire group, 
reported pre-tax profits for the 
six mouths to March 31 more 
than doubled at gi-2m , against 
£465400. 

Mr Richard Dunn, chairman, 
said: “The strung pe rf ormance 
was a satisfying mix of organic 
growth and initial contribu- 
tions from two acquisitions. 1 * 
The Shares advanced 14p to 
278p, 

Turnover was £8. 68m 

(£5- 72m), hv-lniting tl Bflm f rnm 

acquisitions, for operating prof- 
its of £L25m (£534,000), includ- 
ing £122,000 from acquisitions. 
Earnings par share were 7.4p 
GL5p) and the interim dividend 
is L75p (L25p). 


SKmma 


In its Gist figures sines enming 
to the market to February, 
Sllmma, the women's wear 
company, reported a 11 per 
emit Increase In protax profits 
from £482,000 to £535,000 for 
the six months to April 1. 

Turnover rose 20 per cent to 
£&73m. against £73&n. 

Earnings per share were 4-lp 
(3JJp) and an interim dividend 
of L3p is declared. 


Hawtin 


Hawtin, the leisure, textiles, 
building products and property 
group, reported profits of 
£824,000 before tax for the six 
months to March 3L 
The outcome, aided by a 
reduced net interest charge of 
£260,000 (£370,000), represented 
a rise of some 5 per cent on the 
comparable £783.000. But if the 


Benfield expands its 
reinsurance activities 


By itichard Lapper 


Benfield Group, one of the 
UK's most successful reinsur- 
ance brokers, will today 
winwnKy the launch of Ben- 
field Re, a £50m London mar- 
ket reinsurance company. 

The venture is the latest of a 
number of new international 
re in s ura nce companies to have 

boon Twimrbpd in the lSSt 18 
months, following rises in 
rates after heavy losses 
between 1968 and 1992. 

Institutional investors back- 
ing the vsiture include Mont- 
agu Private Equity and Royal 
ftpnk Development Capital, the 
vent ur e capital arm of the 
Royal Rank of Scotland, which 
also owns Direct Lise, the 
highly profitable direct-re- 
sponse insurer. 

Institutions will invest 
£lZ5m, with Benfield Group 
supp lying £l7.5m from existing 
cash resource s . A further £2Gm 
of «»«rinr driit has been raised 
from Citibank and Lloyds 
Bank. 


Benfield Re will specialise in 

catastrophe reinsurance, 
underwriting sections of con- 
tracts negotiated by about a 
dozen so-called “lead" under- 
writers from both Lloyd's and 
the company market. 

It can accept up to £125m to 
premiums. with rate 

competition beginning to 
return to the market, income 
in Its first year, probably 
starting in January 1995. is 
likely to be much less. 

“The new venture will per- 
form a long-term role to the 
Benfield strategy. It Is not 
under pressure to write pre- 
mium to give us a return." 
stressed Mr Matthew Harding. 
rbalrman. 

He said the new company 
would underwrite contracts 
brokered by a range of brokers 
but would have “pretty obvi- 
ous access to Benfleld's 
account”. 

like the Benfield brokerage 
group, tire new company will 
co-operate with Frankona. a 
German reinsurance company. 


and Fortress Re, a US 

which underwrites on btbaff of 
a group of Japanese coopt, 
toes. 

Benfield Group has grata 
rapidly in the last few m 
and made pre-tax profits xt 
S3l2m to W*93 on turnover of 
£38 Am. Net asset vain* wig 
E».Su i at June 30 1983. : _ 

Four or Its directors figoteft 
prominently In a tecettt BMfeg 
of 500 of the UK’s meet warily 
individuals. Mr Harding, who* 
personal wealth waa aaMaag H 
at more than £10Qmto tin jpjp 
vey. owns a minority stata Ma 
Chelsea Football Club up* 
injecting £Sm last ywfr. Hb Sal- 
ary rose from CT - 2tn to SMtt 
last year. 

One of Benfleld's four otter 
directors earned more tten 
£l.3m last year while aaMfcir 

exceeded £385,000. 

With a total staff of 80 amU 
wage bill of mote than Xtfm, 
including directors, Benflrijft 
per capita pay rates - and pnl 
its - are among the highest Jh 
the UK. 


AFG tumbles to £21. 2m 


loss after restructuring 


By Kevin Dona, 

Motor Industry Correspondent 


Automotive and Financial 
Group, one of the leading UK 
motor dealer groups and which 
is controlled by Mr Octav Bot- 
nar, tumbled to a pre-tax loss 
of £21 .2m last year compared 
with profits of £3.7&n. 

Turnover in the 12 months to 
end-July 1993 fell by 25 per 
rmt (0 E330.7&1 (£438£m), 8S 
the company was forced to 
undertake a substantial 
restructuring to response to 
the loss of the Nissan import- 
er/fistributor franchise by its 
sister company Nissan UK to 
1991. 

AFC's 180 dealerships, which 
all previously sold Nissan 
vehicles, have been cut bade to 
a network of 78 outlets, while 
the compan y's wo rkfor ce has 
been reduced from 3,153 to 
2.120. according to the latest 
annual report. 

The company has been 
turned into a multi-franchise 
dealer group operating for sev- 
eral Leading carmakers indud- 
tog Citrota. Peugeot. Fiat, 
Honda, Renault. Vauxhall, 
Rover and Volkswageo/AudL 

It is currently ranked 11th tor 
turnover among UK motor 
dealer groups, according to the 
latest listing of the top 100 car 
retailers by Automotive Man- 
agement magazine. 

AFG said to its annual report 
that it had succeeded in re- 
franchising 70 of remaining 



reduced to a net loss of £Mta 
thanks to a tax credit of 
£11.7m. described as “group 
relief receivable". 

Current assets In the balflaoe 
sheet include some £llm of 


corporation tax said to^bt 


Octav Botnar: dealerships cut 
bad: from 180 to 78 outlets 


78 dealerships, but tire costs of 
the restructuring had been 
high- 

“We have only been able to 
take new franchises in markets 
where a manufacturer has pre- 
viously had a very weak dealer 
or no dealer at all, and sub- 
stantial investment in time 
and money will be required 
before the dealerships can 
trade profitably." 

Five of the farmer seven-man 
board of AFG resigned in 
the 14 months to October last 
year. 

Three new directors have 
been appointed including Mr 
Botnar and bis secretary, Ms 
Dawn Lawson. 

The £21-2m pre-tax loss was 


recoverable as a “group 
receivable from fellow subsid- 
iary undertakings". 

The heavy loss to the AFG 
motor dealer operations was 
offset by a pre-tax profit of 
£27Bm achieved by the finance ' 
division. Automotive Financial 
Services, and a pre-tax profit ot 
£4. 6m from the group’s prop- 
erty division. 

As part of the retrenchment 
being undertaken by AFGH, tts 
parent company, the volume of 
new business bring taken -on 
by the finance subsidiary k 
bring reduced, with a concen- 
tration on business introduced 
by AFG dealers ratter than the 
provision of instalment outfit 
to consumers and businesses 
la other sectors. 

As part of the group restruct- 
uring. AFGH has also sold 
Automotive Leasing, its con- 
tract hire subsidiary, and baa 
ceased trading in Automotive 
and Industrial Machinery, its 
fork lift truck distribution sub- 
sidiary. 

Partslink. the group’s auto- 
motive parts Import and distri- 
bution subsidiary, suffered a 
trading loss last year and 
operations have now been con- 
centrated an wholesale distri- 
bution. 


sale and leaseback of 11 Scot- 
tish supermarkets, annnnn/wt 
on May 3, bad not been com- 
pleted. 

The anticipated Elifim sur- 
plus on disposal, therefore, 
which was conditionally 
reported in the company’s 
interim results announced on 
May 26, is now SBS8J00Q. 

Accordingly, pre-tax profits 
for six months to May l fell 
from £L69m to £L44m instead 
of rising to £2.7«n. Earnings 
per share amounted to 1.45p 
(L9ip) instead of 3J)5p. 


benefit of a one-off surplus of 
£315,000 last time on sale of 
goodwill is stripped out the 
underlying gain was 76 per 
emit 

Turnover improved to £l4.4m 
(£13.1 m). Earnings per share 
edged ahead from <L75p to 0.78p 
and the interim dividend is 
lifted from (L25p to 0J275p. 


Symonds Eng 

Symonds Engineering cut its 
pre-tax loss from £456,000 to 
£285,000 in the year to end- 
March after providing for 
exceptional items of £200,000, 
against £115,000. 

After missing the last 
interim and final dividends, 
the precision engineer declared 
a final of 0J25p - last year’s 
interim was 0JL5p. 

Mr Rod Ackrill, chairman, 
said the result was partly due 
to a return to profitable trad- 
ing to the second half and to 
restructuring. The exceptional 
item relates to a recently com- 
pleted redundancy programme. 

Turnover showed a smell 
increase from £4J8m to £4. 43m 
and despite the loss there was 
a net cash inflow from operat- 
ing activities. Losses per share 
were ZSp (4.6p). 


Stockbroking lifts Oceana 


Oceana Consolidated, the 
stockbroking, corporate 
f!nfln«» myi investment man- 
agement group, reported 
record turnover and profits in 
the 12 months to end-March, 
reflecting another strong per- 
formance by Charles Stanley, 
the retail stockbroker. 

On turnover ahead 30 per 
cent to £14.7m, pre-tax profits 


jumped tram £837,009 to ESm. 
Directors said that fixed costs 
remained under tight control 
and fee income improved to 
£2^m(£iBm). 

Net asset value at year end 
was 645p (4L24p) per share. ... 

A proposed final dividend of 
2p brings the total for the year 
to 25p (L5p), well covered by 
earnings of 25£8p (lO.lp). 


River Plate General 


River Plate and General Invest- 
ment Trust reported net asset 
value of 156.2p per capital 
share at April 30. The figure 
compared with values of 166.7p 
at foe October year end and 
124.7p 12 months earlier. 

Gross revenue for the six 
months was ahead at £3.41m 
(£3.15m); net revenue was 
£2J39m (£2J6m) leaving earn- 
ings per income share up from 
4.01p to 4.44p. The interim divi- 
dend is held at 3p. 


F&C Smaller 


Foreign & Colonial Smaller 
Companies achieved an 

increase in net assets per share 
of 29 per cent to 175.8p during 
the year to April SO. 

Available revenue was 
£2JJ8m (£l.76m)fbr earnings per 
share of 256p (l-96p>- 

The dividend is increased 
from L84p to L97p, with a pro- 
posed final of L27p. 


INCREASED AND FINAL OFFER BY 
ENTERPRISE OIL pic (“ENTERPRISE") TO ACQUIRE 
ALL THE ORDINARY SHARES 
AND AMERICAN DEPOSITARY SHARES OF 
LASMO pic (“LASMO") 


^—J^erdDcsincorbmn, i-najonc. 

Prospects* Supplement'), 


ufax.t>ymeai»ofa 
it dared 14th Jane, 


lend 


and by atm of dua advcnbcmen£ 
i offer {“the Fiiul 


— : nukes an , «= ruua 
I to acouirr all the ordinary iharm 
do Shares') and American 


Share, r LASMO ADS.-) of 
already owned b* 


no* Jisr ib mt K 
die 

SoppWem oc any related < 

m. into oc (ram Amnia and doing so 
MW tender nmU any ieZmd 
g“P«»n«d a cc e p tan c e of the Final 


— — *9 «>W already .. 
Euaipiim . Terms defined m die 
•’rospeem* Supplement have the same 
meanings m tidi advccrisement. 

The final Offer b final and will not be 

5 BmC r , j! ,Cre S£i or beyond 

In July, |99d except m the 
otamwnota denxfeed m the 
Prospcam Supplement 

TTie Final Offer comprises (a) 36 new A 
otdmatjr shores of 2S P each in 
Emerpoac {* Enterprise A shares') and 
13 new warrants to subscribe far 
shares in Enterpnre 


TJeEmal Offer n, by meant of this 
Mwnsaneni. exrendad 10 aB pmaona 
*° h t m e w Svwlmtsn 

2* B0 * •* despatched who MOw 

wiaiaie entitled teba*cnicoii(F~ — “~ 

■Jwtted Of murd to them. 

Shares mr LASMO AD5s. 


^^t nalOO ct is being asadc by inmna 
of th* Pros pecm. Supplement w»J this 

WWlKlDCflL 


A«epmces u f Ac FumIOHh should b« 


GssssaJSaft ,** 3 


^orea« *e p tmpe e t ua Sopotaneat 


T— w— yui urwretJ ADStt. As OB 
alternative, xharcboUcn fc& LASMO 

who acamrebe final Offer m» elect to 

r m ■ A * h «» «d three 

SiTTr “ 1 rrf **ion to die Fuad 
^omproe A shares, die 


-.■iu 7 ""qwiw ran „ 

vofccnoo fropt^Barck^n 


£«*»«*■. Ocound floor. 

Street London 
(telephone 03 1-*50 4 RM). 


EO 


2* advernmnent ts jmbbdwd go 

Authors. wl^SrX 
««b«« i? of the Ftammal 
Act loyg. 


The O mxion of Emw™ 

tor the udotmaw 
■- -h-l s lrrmii i^uTTi 



mminecsand ttuwe^nS 


* **®*dan« with 
Ac ami Joes not omit 


ftrff to af leci the utpon 
mfbt tuauuu . 


ljthjune, 1944 



WaOQnwfcooppfl^j^ 


o^oata^^STvS 


cal London 9 (0) 71 231 mm 

tef¥<Kagtido8ntiaonolpric-m« 


V 


TA 


* 


i 









» €21. 2m 

icturing 







f;. 


( 


FINANCIAL TIMES WEDNESDAY JUNE 15 1994 



FINANCIAL IZVESTIA 

TALKS BUSINESS TO 300,000 INFLUENTIAL 

RUSSIANS EVERY THURSDAY. 

Financial Lzvestia is an 8-page weekly business newspaper 
produced by the Financial Times in partnership with lzvestia, Russia’s 
leading independent daily. 

Printed on the FT’s distinctive pink paper, it accompanies 
lzvestia every Thursday. 

Drawing on the huge editorial network of both newspapers, 
it brings up to the minute, accurate, national and international news to 
300,000 decision makers in Russia. News from around the world that 
impacts upon the Russian market, making Financial lzvestia an 
essential and unique business tool for those shaping the new Russia. 

To find out more about advertising to these influential people 
call Ruth Swanston at the Financial Times in London on 44 71 873 4263 
(fax 44 71 873 3428), Stephen Dunbar- Johnson in New York 
on 1 212 752 4500, Dominic Good in Paris on 33 1 42 97 06 21, 

Sarah Pakenham- Walsh in Hong Kong on 852 868 2863. 

FINANCIAL TIMES 

LONDON PAWS • FRANftFUKT • NEW YORK • TOKYO 





■ J 




COMMODITIES AND AGRICULTURE 


Aluminium 
takes up LME 
pace-making 


Opec ministers see no need to discuss output 


By Robert Canine In Vienna 


By Richard Mooney 


Thu aluminium market picked 
up the baton at the London 
Metal Exchange yesterday as 
copper's surge faltered in the 
face of strong resistance. 

The white metal chalked up 
its ninth rise in a row, with the 
three months position shrug- 
ging off news of a further rise 
in LME stocks, to reach, a peak 
of $1,447 a tonne, the highest 
level for three years. 

It was trimmed back by 
profit-taking to $1,44225 at the 
dose, up $15 on the day, and 
drifted further in after hours 
trading to $1,428. But dealers 
were still looking for more 
gains and same suggested that 
a breach of resistance at $1,450 
could herald an assault on the 
$1,500 level. 

“The fundamentals are 
recovering with stockpiles 
gradually decreasing, while 
demand for cars and construc- 
tion is also showing signs of 
pairing up," Mr Yasuo Tanaka, 
senior amount executive of the 
LME dealing team at Rudolf 
Wolff in Tokyo, told the Ren- 
ters news agency. 

Mr David Contis, executive 
director of Australia’s Alumin- 
ium Development Council, was 
more cautious. He said in Syd- 
ney that the recent voluntary 
production cuts maife in the 
world’s six major producing 
states to counteract over-sup- 
ply had been factored into the 
current price. “The price 


improvement has been Justi- 
fied until now but unless some- 
thing else h qppgn* the TfiflrVpt 
could react again with a nega- 
tive price impact,” he warned. 

In early trading the copper 

marlcBt bad looked set tO h nfld 
substantially on Monday’s 
break above $2,400 a tonne as 
the three months price quickly 


Oil ministers from the 
Organisation of Petroleum 
Exporting Countries meet in 
Vienna today for talks that 
promise to be at lerat relaxed. 
If not amicable. 

Delegates, including Mr HIs- 
ham Mazer, the Saudi oil min- 
ister, said last night that there 
was no need to discuss out put 
quotas or prices. 

A sharp rise in oil prices 


over the past three mantis has 
taken much pressure off the 
ministers, who are not expec- 
ted to tamper with last March's 
decision to set the Opec pro- 
duction at 2L52m bar- 
rels day fin* the remainder of 
the year. 

Iran has recently si gnalled 
its desire to see Opec add to 
the momentum cf recent price 
increases, which have fallen 
the Benchmark Brent Blend 
from a low of about SIS a bar- 


rel in February to its pr e sent 
level of $16.50. But analysts 
suggest that Opec could send a 
strong signal to the markets fey 
simply cancelling Its next 
informal meeting in Septem- 
ber. 

Saudi Arabia, the cartel’s 
biggest producer, says it sees 

no Dfpd for annthw l m wHwg 

before November, when the 
organisation must hold a for- 
mal 

Traders say a cancellation 


would be interpreted as confir- 
mation that Opec was deter- 
mined to stick to the present 
celling, even If international 
r>fi rtPTmmd rose further as a 
result of more robust economic 
activity in the Industrialised 
countries. 

Opec has recently revised 
upwards its estimate of 1934 
tfarwarwi for Us oil, to an aver- 
age of 2/L8m. bands a day, up 
40.000 b/d from last month’s 
forecast 


The that oversees 

Opec output yesterday 
expressed satisfaction that 
member states were generally 
adhering to their quotas. The 
report said estimates from 
selective secondary sources 
indicated production for May 
at 2L87m barrels a day. That is 
about 250,000 barrels higher 
the revised April average 
of 24.65m. 

The main issue on Opec s 
agenda is the election of a new 


secretary general to ratface 
the outgoing Dr Sobrato eg 
Indonesia. 

Dr Subroto yesterday ndft 
that he would be prepared to 
extend his tens if. U mm 
likely, delegatee tolled to reach 
unanimous agreement oa « 
replacement. But he tatt he 
would not be Interested, hi 
serving for just a tow us* 
months, preferring instead to 
extend bis term tor at West* 
year. ■ . 


(At at Monday* dcaaj 


Latin America’s vegetable export drive runs into 

Excessive use of pesticides is generating new problems and threatening markets, writes 


trouble 

John Madeley 


AtanWun +0030 to 2061026 

AtamWum slay -140 to 31080 

Copper -3.750 to 307,450 

Load +450 so 368.126 

Mefcta >18 to 131.910 

Zine -075 to 1.191075 

Tki +-186 to 23.746 


W hen a shipload of 
vegetables from the 
Dominican Republic 
was turned away by US port 
officials last October, shock 
waves were felt throughout 
Latin America. The vegetables 
- inchiding tomatoes, peppers, 
broccoli, onions, celery and 
peas - were considered to have 
too high a level of pesticide 
residues. 

The last ten years have 
shown a huge grow t h in the 
export of vegetables from Latin 
America to the US. With, press- 
ing debt problems, Latin Amer- 
ican countries have looked to 
their fields as a so ur ce of tor 
eign Anrwiwg w that could get 
them off the debt hook. 

Encouraged to grow vegeta- 
bles and fruit for export, farm- 
ers rp g m - K tvi pesticides as tV 
way to guarantee that their 
produce arrived In top-notch 
condition. But agriculturists in 
Latin America are now warn- 
ing that the HinwtntBiHnn on 

export crops has led to the 


climbed to $2,440. But that 
appeared to be the signal tor a 
long-awaited bout of profit-tak- 
ing, and by the dose the price 
was back at $2,409.50, down $2. 
The reversal continued after 
hours, taking the market down 

annth+n- $20. 

But traders were not dis- 
heartened. “Copper was due 
for a bit of a shake-out," one 
told Reuters. “The market will 
be healthier tor this.” 

At the London Commodity 
Exchange coffee futures con- 
tinued their surge towards last 
month’s five year highs as 
deepening supply fears encour- 
aged buyers and kept sellers 
away. The September position 
closed at $2,396 a tonne, adding 
$208 to Monday’s $240 rise, 
after touching $2,412 at one 
time. 


neglect of basic foods, such as 
beans, tor local people and that 
heavy pesticide applications 
are feartfng to the appearance 
of new pests a nd viruses, caus- 
ing serious damage to crops. 

Chile was the first Latin 
Amaican co u n t ry to «ininwcp 
export crops. In 1980 it 
exported about the same 
amount of beans as it grew for 
local consumption. By the 
early 1990s the production of 
beans tor export, such as Mack, 
white and pinto varieties, was 
running at 55,000 tonnes a 
year, compared with 20,000 
tonnes grown for local con- 
sumption. 

The country's qj 

fruit and other export crops 
brought about an inmng mH* in 
pests that acted as carriers of 
viruses, says Mr Francisco 
Morales, head of the virology 
unit at the Colombia-based 
Tw+pm atinnal Centre for Tropi- 
cal Agriculture. “As a result, 
bean production in Chile is 
Increasingly affected by epi- 


demics of new viruses or 
strains of viruses, such as bean 
yellow mosaic virus, and 

alfalfa VfrUS.” 

In 1970 Brazil grew soya- 
beans on l.4m hectares of 
by 1988 the crop covered 105m 
ha. “The boom in soyabean cul- 
tivation coincided with one of 
the worst virus epidemics that 
Latin American agriculture 
has ever suffered - golden 
mosaic disease, caused by a 
virus transmitted by the wM- 
tefly,” says Mr Morales. 

The big increase in the whf- 
tefly pest “is directly related to 
the abundance of soyabean”, 
he points out The pest has 
seriously affected traditional 
bean-growing areas. Consume 
tion of fe»gns by B razilians is 
today little more than half its 
1981 average at 28kg per per- 
son. 

Mexico and ocher Central 
American countries have 
sharply increased their exports 
at vegetables, especially toma- 
toes. “The expansion of varia- 


ble crops in these countries 
has resulted in the appearance 
of new virus problems,” says 
Mr Morales, hi some tomato- 
growing areas, pests have 
increased beyond control, caus- 
ing major epidemics. 

•The formers grow export 
crops bed are often not sure 
how to do it,” he points out 
“When the market price is 
high for the export crops some 
are earning more money than 
from beans alone. But the 

1 wtrarmtirwi al market demands 

fruit aid vegetables with no 
blemishes and formers use 
incredible amounts of pesti- 
cide, which eats into their prof- 
its.” 


M ost of these pesti- 
cides are not 
approved far use on 
the crops the formers are grow- 
ing, Mr Morales alleges, and 
they often do not have the 
knowledge to apply them cor- 
rectly. They apply them at the 
wrong times, including right 


up to the harvest and fre- 
quently overuse them. “Depen- 
dence on rharpiffai pesticides 
has become almost total." he 
points out 

Some ten years ago, about 90 
per cent of the money that 
Latin American countries 
spent on agriculture research 
went an food crops, especially 
beans, which contribute about 
SO per cent of the protein con- 
sumed by the continent’s 200m 
low income families. 

There has now been a total 
change: only about 20 per cent 
is devoted to food crops while 
goes on export crops. In some 
countries, research into food 
crops has been completely 
abandoned. 

“Governments are more 
interested in how they use 
fend for export crops, and sci- 
entists are being switched to 
work on these crops,” says Pas- 
tor Corrales, a plant patholo- 
gist 

Beans are the chief victim of 
this trend. Land that once 


grew beans now grows vegeta- 
bles for export. As a m ult, 
formers are often growing just 
enough beans for thesnssbns, 
but none far the market, to 
towns and cities beans m 
often scarce. 

Every Latin American coun- 
try apart from Argentina, Ctafb 
and Ecuador has become a a* 
importer of beans, with saps 
countries importing them fra® 
China. : 

With the US likely to tighten 
still farther its regulations on 
pesticide residues is food 
crops, Latin American ferswi 
will either have to apply teas 
pesticide to their export craps 
or return to growing food 
crops. 

And white US port officials 
can block the product, they 
cannot stop the winds. Mr 
Morales points out that tomato 
viruses, which have recently 
emerged in the Caribbean, we 
now being seen In Florida - 
“probably blows there by the 
winds". 


MG to develop Quebec gold deposit I Australian winter crop plantings expected to rise by 6% 


By Bernard Simon in Toronto 


Metall Mining, the 
international mining arm of 
Germany's Metallgeseflschaft, 
lias decided to develop the 
Troilus gold deposit in 
north-west Quebec. 

The mine , with a ca pi tal cost 
of about C$15Qm, will start pro- 


duction in the third quarter of 
1996, at the earliest The devel- 
opment is subject to various 
regulatory permits and financ- 
ing. MptaTI hag also aafreri for 
go v e r nment haip in providing 
infrastructure. 

Output is expected to aver- 
age 138^00 troy ounces of gold 
a year over 14 years at a cash 


cost of US$222 an ounce. Mine- 
able reserves are estimated at 
49.2m tonnes of gold-bearing 
ore with a grade of L34 grams 
a tonne, as well as L29 grams a 
tonne of silver and 0.11 per 
cent copper. 

MptaH said tha t an environ- 
mental review of the project 
was “well advanced”. 


By Nikki Taft in Sydney 


Despite the recent lack of rain, 
Australian formers are expec- 
ted to increase total winter 
crop planting by about 6 per 
cent, to 16.7m hectares. How- 
ever, rising wool prices and the 
reduction in sheep numbers in 
recent years are likely to slow 


the switch into cropping and 
thp wpanww of p am giin riwg 
areas after thfc season. 

The forecast was made by 
the government-owned Austra- 
lian Bureau cf Agriculture and 
Resource Economics yesterday. 
It also reported that there has 
been a late start to the current 
cropping season but said that 


recent rains had improved the 
dhwHnn h> Western Australia. 
South Australia *md Victoria. 
It noted that there was an con- 
tinuing problem in Queensland 
- parts of which are suffering 
from severe drought - and 
parts of Hew South Wales. 
Crops most at risk from the 
late start, it suggested, were 


chickpeas, canola »»d lupins. 

Abare said it expected the 
total wheat area to increase to 
about 102m ha, compared with 
9.5m last season. This assumes 
that the area sown to wheat in 
Queensland increases by over 
70 per cent to about lm hect- 
ares. The bureau admitted, 
however, that "good follow-up 


rains will be required before 
this forecast can be realised*. 

It added that, with the 
1993-94 cotton harvest almost 
completed, it expected lint pro- 
duction to fell by some 17 per 
cent to 31L090 tonnes because 
of "dry conditions and irriga- 
tion water shortages during 
the growing season. 


COMMODITIES PRICES 


CROSSWORD 


BASE METALS 


LONDON METAL EXCHANGE 

(Prices tan Amalgamated Metal Trading] 

■ ALDMENUM, 88.7 PUBJTY (S per tome) 


Precious Metals continued 

■ QOLQ COMBC {<00 Hoy oy Stay oaj 


GRAINS AND OIL SEEDS 

■ WHEAT LCE (E per writ} 


SOFTS 

■ COCOA ICS (Otenpet 


MEAT AND LIVESTOCK 

m live cattle cme (aqooabt omrnfitxt) 


No.8,480 Set by VIXEN 


Close 1413-4 

Previous 13805-491.5 1427-75 

rtgh/taw 1491 144771428 

AM Official 1401-2 

Kerb dose 

Open bit 26352 b 

Total dally turnover 108540 
■ AUUMHHIM ALLOY (S per tonne) 


3 rath* 
1442-25 


SaB Days Opaa 

price change Up he kt W 
Job 3842 403 384.4 3825 850 188 

Jta 2843 *05 

Ana 388.4 *05 3875 3855 73.141 1751* 

Oct 3894 405 3905 2899 5.178 70 

Dae 3915 +18 3835 3815 24204 610 

M 398 3 405 8982 3953 1734 210 

ToU 138,483 1*882 

■ PLATINUM NYMEX (50 Troy 6/troy oej 


Satt Oqra Opm 

price change Up Le H W 

11250 +0.75 11200 11130 237 17 

10130 4050 101.40 10150 461 82 

10150 4055 10130 10135 2204 208 

18335 +070 10170 10330 1325 203 

105.15 4030 10530 10435 415 37 

10855 4050 10850 10840 344 77 

5518 122 


■ WHEAT C8T (5500bu n*s cantt/SOBj buehaQ 


Jta 1002 +9 1019 998 18380 I0M 

Sap 1025 -9 1338 1019 18508 2773 

Dae 1044 +4 100 1330 2808 1066 

■ft 1065 +5 1073 1080 27798 577 

Hay 1071 *4 10ft -574 10.423 113 

Jta 1091 +0 1099 1094 33*1 128 

Ttata injK 119 

■ COCOA CSCE (10 tonnee; S/tonrwe) 


p*e daw ffiga lata tat «tf 

JIB 84825 -OJOO 88180 84300 85W 2530 

Ate 84200 -0300 01300 83450 28515 fi MS 

Od 674ft -0350 67300 18725 11713 2.785 

Dec 88425 -020 98380 67500 16596 1560 

fab 89300 -0360 08275 88700 73ft 588 

J«r 70.400 -0250 70350 70560 3396 312 

total 71541 17508 

h uve Hoaa CME WtOQOffia; caiaa/tee) 


Ctoae 
Previous 
Hgh/tow 
AM Official 
Kart) dose 
Open tat. 

Total daBy turnover 


1425-80 1425-30 

1415-80 1420-5 

143571420 

1420-3 1422-fi 

1425-30 

3,173 

750 


JUB 3983 42.1 -: 

Jta 4035 405 4050 4030 12584 1588 

Oct 4082 407 4075 405.0 8599 455 

Jaa 4084 405 4093 4095 1,185 4 

Apr 4105 407 4105 4105 1.194 35 

Total 22582 1582 

■ PALLADIUM NYMEX (100 Troy OL22S62; 
S1782/troy ax) 


Jta 337/4 -3ft 34263 3304117575 34,195 
ftp 343/4 -4/0 348/0 34310 83270 110O 

Bac 355/4 -Vt 3604) 354/2 99080 16065 

am 3SBM -SO 362/0 35770 11045 620 

■by 34074 -4/4 - - 320 35 

Jta 338/4 -2ft 333/4 332ft 1040 120 

total 28X340 *1510 

■ MAIZE COT (5000 Du Brin: Qereaftflb buahcfl 


J H 1359 -3 1388 13*6 13013 &S48 

Sap 1387 -4 1398 1377 30589 7567 

Dae 1429 0 M3 1*15 10535 435 

■ar 1458 +4 1465 MO 7023 71 

Kay 1477 44 1477 1470 2048 59 

Jta 1499 44 1489 1495 2045 

TOM 72581 14090 

■ COCOA QCCO) (SPRVtcnne) 


jm mars -0.450 <8050 47.700 2 jm 1039 

Jta 47575 -0425 48.100 47.430 MOB 1329 

Aft 4759) -0575 47500 47050 8068 4013 

Oat 44 375 -0300 44000 44000 <297 871 

DK 44550 -0350 44550 44050 3025 349 

Ml 44.725 -0375 44.400 44000 70S 75 

TOW 280*2 7,128 

■ POBKBELUaCME<4O0Oatacant»/M 


■ LEAD (S per tonrw) 

Ctaee 

6345« 

6696-700 

Pmrtoue 

529-30 

9700-10 

HlgMow 

5355 

554/546 

AM Offldta 

530-65 

553-35 

Kerb doae 


546-7 

Open Int 

37577 


TaM dally turnover 

8.438 


■ MCKH. (Spar tonne) 


Close 

8380-00 

6475-80 

Previous 

8378-86 

647580 

hrighriow 

6388/0386 

6650/8470 

AM OffleM 

8386-90 

84808 

Kerb doae 


84708 

Open Int 

59013 


Total drily turnover 

19032 


■ TM 0 par tonne) 



Ctoae 

5820-5 

6896-700 

Previous 

6826-36 

8700-10 

HgMow 


5730/5670 

AM Official 

5613-7 

56908 

Kerb dooa 


668080 

Open htt. 

17540 


Total daBy turnover 

4088 


■ 21MC, special high grade ($ per tonne) 

Ctoae 

9815^5 

1006-7 

Previous 

968-0 

992-26 

Mgh/tow 

972 

1008/984 

AM Offlctal 

972-3 

997-78 

Kert) does 


10058 

Open tat. 

103537 


Total dally lumcmr 

19,711 


■ COFFER, grade A (Spir tome) 


Ctaee 

2383-6 

2409-10 

Previous 

2397-8 

24115-2 

VfigMow 


2440/2396 

AM Offldta 

2415-7 

2430-2 

Kerb dose 


2399-400 

Open to. 

223586 


Total daBy turnover 

90.603 



Jaa 

138J3 

4000 13960 

91 

. 

Jta 

275/2 

40/4 

Z7B» 

272/4473000 80J40 

Sot 

13800 

+060 13860 13800 

3018 

116 

Sft 

27lft 

40/4 

Z71/4 

2880192085 18075 

Das 

warn 

4050 13950 

803 

12 

DOT 

3B5I0 

403 

2 son 

281/4 467070 143,150 

Mft 

13320 

4060 

1 

- 

■ft 

271/4 

+V4 

272ft 

266/2 53030 3060 

Ttata 



UU 

127 


275/4 

+1/4 

275/S 

273ft 8090 320 

■ SO.VBI COMEX (100 Tiny cot; Centa/buy oz) 

Jta 

278/4 

+1/2 

278/4 

273ft 14030 1005 
UriiMUS 


; LCEjSAom) 


Piw, fcf 

Jta 

41000 8.473 42000 43400 

Alia 

1.434 

100X38 

Aog 

41025 8325 41050 40000 

3079 

803 


m 

47.700 8050 47000 47.450 

472 

43 

HA 

Mr 

47000 +0050 47000 

37 

4 


■ft 

48050 - - 48000 

33 

3 


Jta 

50200 

12 

2 


538.1 +05 

5362 +0.7 5425 8390 78,171 19076 


■ MMBVUEfl per tome) 


abb 

842.1 

♦CJ 

5430 

542.1 

> 

*P 

9178 

4000 

9176 

8925 

185 

14 

*p 

5430 

+07 

5470 

5409 18017 

1068 

Not 

0980 

+000 

8975 

9995 

323 

18 

DOT 

5510 

+07 

5550 

5500 17072 

788 

JOT 

10075 

■ 

. 

. 

28 

. 

Jm 

awe 

+07 

- 

32 

- 

■» 

10205 

- 

- 

- 

15 

_ 

Tetri 




12BJ26 22022 

■ft 

10400 

- 

- 

- 

4 

- 







Ttata 





956 

30 


Jtf 

2414 

4® 

2470 

2384 11 01 Q 2071 


2395 

+108 

2412 

2354 

11305 4,195 

Not 

2384 

+106 

2376 

2330 

7024 

838 

Jaa 

2344 

+113 

2355 

2315 

9074 

481 

■tar 

2304 

+118 

2320 

2274 

2045 

364 

"T 

2294 

+104 

2295 

2280 

128 

3 


LONDON TRADED OPTIONS 

Strflee price 9 tonne — Cats Puts — 


ENERGY 

■ CRUDE 08. NYMEX (42000 US flats. j/bftWj) 


■ 8QYABEA— car ejecta mt 1 


■ LME AM OffleM £/* rata: 10207 

LME Ootang PS rate: 15178 

SP0C15164 3 DdftKl51G3 8 aOae15146 9 ntfK15138 

■ HIGH GRADE COPPBI (COMEX) 



Ctaee 

Pftl 

OpM 

trio* tow fed 

Vs! 

tan 

11000 

-1.40 

11100 10140 521 

83 

Jta 

10906 

-105 

111A0 10175 32,158 

60S 

Ate 

11005 

-105 11005 10900 578 

2 

Sot 

110.15 

-1.40 

111.40 10190 16088 

3039 

Ota 

10140 

-105 

- 272 

41 

Not 

10900 

-105 

- 202 

4 

total 



8Z039 11748 


PRECIOUS METALS 


■ LONDON BULLION MARKET 
(Prices auppOed by N M 



Latest 

Days 





F*e 

cWega 

HOT 

Left tat 

Vta 

Jta 

1809 

+110 

1900 

1178 71,485 38048 

Ate 

1121 

+118 

1900 

1808 79083 30088 

*ot 

1708 

+114 

1705 

1700 41780 13051 

Ota 

1708 

+008 

17.72 

1703 28062 


Not 

1704 

+005 

1701 

1704 19041 

1083 

Dm 

17A3 

- 

1700 

1703 31007 

1008 

total 




418098 94072 

■ crude OIL PE ($banta) 




Latest 

Dftfe 


•tow 



prise 

OTsega 

HOT 

Low 1st 

Vta 

Jta 

1862 

+111 

1800 

1045 500)3 20,705 

*te 

1944 

4112 

I960 

1935 53.184 

14037 

SOT 

1801 

4112 

1806 

1803 21071 

2.050 

oet 

192B 

+116 

1131 

1118 9029 

334 

Not 

1822 

♦90S 

1605 

1118 5009 

185 

Dae 

1119 

+105 

1924 

1115 7000 

583 

total 




183098 3B07B 

■ HEATING OB- N11EX (42000 US gaCS^QUSotfSj 


Latest 

Oaf* 


ops* 



Pries 

dnate 

MOT 

Lew tat 

Vta 

Jta 

4700 

+116 

4110 

4700 33094 

9137 

too 

4800 

+008 

4800 

4105 19437 

4037 

SOT 

48X0 

•104 

4135 

4985 13075 

1003 

Ota 

no % 

4106 

mat 

5000 9077 

728 

Hot 

6000 

+006 

6100 

5005 7.183 

882 

Dm 

5105 

4111 

roan 

5100 19157 

517 

Ttata 




121823 17080 

■ QAS OIL PE (t/bnes) 




SsB ' 

Bar* 


Open 



pda 

OTaogs 

HOT 

Low tat 

Vta 

Jta 

15925 

+100 

15000 14800 31.794 

4,995 

Ate 

18260 

+1.75 

15200 

16100 11067 

1.718 

sot 

75405 

+700 

75405 

15300 7073 

098 

Ota 

15700 

+105 15700 

15125 7043 

146 

Hot 

15905 

+100 15900 15800 5084 

175 

Dot 

18106 

+1J5 18I0S 10025 13,763 

315 

ToW 




88092 

8012 

■ NATURAL GAS KY1EX (10000 mmSfe; StanOu) 


Jta 890/4 -VI BB3/4 6890235030 79005 

Aaf 688ft -lft 890/4 881ft 80595 30045 

ftp 676/2 -VI 880ft 889ft 47040 3010 

■a* 868/2 +1A) 870ft 658ft 321 005 189075 

Jaa 871/4 +1/6 678ft 683/4 25520 1080 

Bar 678/2 +2/2 579ft B8B/D 12020 2030 

Total 758,129291075 

■ SOYABEAN OK. CST (BO.OOOfte: canta/E} 


Total 45095 1052 

■ COfTS*C* CSCE (37500tes; centattm) 

Jta 12808 +0.13 14300 136.10 12048 6,130 

ftp 13750 +000 14250 13550 21098 8.131 

Dae 13400 +800 13400 13300 12018 1017 

Mr 13155 +500 13105 13000 7060 422 

May 130.15 +80O 13115 13040 1015 25 

Jta 129.15 +840 129.15 - 123 

Ttata 5609814,725 

■ COfTEE QCO) (US certs/pound) 


2708 -021 Z7J7 27.44 210GB 4057 

27.40 -119 2707 2707 15028 3028 

2708 -113 2755 27.40 10083 382 

27.12 -111 2705 27.12 8048 315 

2809 -1 12 2700 2505 21088 2074 

2BJD -0,18 2850 28.70 2035 80 


■ SOYABEAN MEAL CST (1 00 tone; 5/ton) 


Jta» 13 Met Pm. riqr 

Cbap. drily 12557 11702 

15 rift ta a n ga 117.19 11852 

■ No7 PRBftUM HAW 8UOAR LCE (cantata) 

Jta 1255 +002 1255 1259 3071 55 

Oct 1270 4005 - - 1,111 

Jm 1152 

■ar 1220 4105 80 

Total 4042 GS 


■ ALUMMUM 
(99.7W] LME 

1375 

1425 

1475 

■ COPPBI 
(Grade A) LME 

2350 

2400. 

245D 

■ COFFEE LCE 

2150 


Nov Aug Nov 


Jta 


- 

2012 

1913 23080 

7088 



- 



Are 

2016 

413 

201.7 

1990 17058 

3090 

Ate 

35200 

4180 35200 35100 11037 

top 

2000 

+10 

2010 

1870 11081 

1008 

Ota 

33200 

+140 


9147 

Ota 

1919 

4Q0 

2010 

1012 5,752 

194 

Dec 

32500 

+100 

32400 32400 

872 

Dec 

1980 

400 

1980 

1940 11183 

1475 

Uft 

32200 

4000 

32120 32100 

2059 

JM 

1992 

+10 

1897 

1950 1011 

57 

“ft 

32200 

+100 

32200 32260 

201 

Total 
■ pan 

wtoesi 

JXISJ 

tome) 

91291 19071 

Ate 

Ttata 

32400 

+40D 

32200 32100 

256 

24,711 


■ COCOA LCE 

975 

1000 

1050 — 

■ BRENT CRUDE PE 

1600 

1080 

1700. 


73 

111 

18 

31 

43 

81 

38 

50 

22 

B7 

87 

75 

Aug 

Nov 

Aug 

Nov 

101 

118 

49 

102 

74 

DB 

72 

128 

52 

78 

100 

158 

Jti 

Sep 

Jta 

Sep 

284 

358 

- 

112 

214 

327 

- 

131 

16S 

299 

1 

153 

Jlri 

Sep 

Jta 

Sep 

27 

78 

- 

28 

8 

83 

6 

38 

- 

4a 

48 

BS 

Aug 

Sep 

Aug 

Sep 

75 

- 

29 

62 

44 

. 

60 

_ 

25 

- 

84 

- 



n # l- J 


LONDON SPOT MARKETS 

■ CRUDE OIL FOB fcer 5arreVJi0 +or 


Hot 900 

■ft 1050 .... 

Apr 1465 -15 1490 1460 705 

lift 1400 .... 

Jen 1075 .... 

Total 746 

■ FRBQHT (HFFEX) ICE (SICWndex poW) 


Jm 

1278 

+3 

1280 

1280 

634 

10 

Jta 

1200 

+17 

1205 

1185 

943 

17 

Ate 

1211 

+18 

1210 

1196 

435 

9 

Oct 

1283 

+14 

1290 

1286 

218 

7 

Jot 

1307 

+10 

1310 

1305 

83 

■ 

Apr 

1340 

*12 

- 

- 

80 

. 

total 





2081 

54 


Bsee 

Rev 





BR 

1329 

13% 






Jlri 1237 4001 1209 1205 33043 6015 

Oct 1246 4004 1246 1233 70000 6081 

nr 1255 4004 1205 1104 25080 1080 

■ft 1200 4003 1202 1104 4,111 227 

JM 1158 4003 1108 1100 1028 

Oct 1101 4403 - - 729 7 

Ttata 13701813090 

■ COTTON NYCE (CO0Oabe; oena/fcta 


Dutxd SI 650-855** +0.18 

Brent Blond (dsted) S1857-6 j40 +0.165 

Brent Blond (Juft $1149*62 +0,165 

VITA (1pm est) S185»-801« +051 

■ CBL PRODUCTS NWE prompt dafcaay OF (tortna) 


Pronrium OeaoBna 
Gas 08 
Heavy Rita 01 
NapMha 
Jft FuaJ 


$183-164 
$140-160 +1 

67V-81 -2 

$168-160 48 

$181-162 +1 


ACROSS 

1 Condemn in just a few words 

<B) 

S Husband in need of exercise 
after car’s repaired (6) 

9 Manual workers may well 
find minting is the answer (8) 

10 Attachment no longer occupy- 
ing a wom an (6) 

11 In favour of charge for report 

(8) 

15 An area north erf London, it 
appears, provides only basic 
housing (6) 

14 Keep fit and hang on (10) 

18 Eager to hand one over with a 
note (10) 

22 A moving experience (8) 

23 The imprisoning of Insurgent 
by bluff king could be a 
bloomer (8) 

24 Failing - in last place (6) 

25 Making an onset whan taking 
off (8) 

28 Companies have a point in 
supplying running water (6) 

27 A fen, but he daren’t maybe 
show this (8) 


4 Agreeing on scent. It's to be 
used (10) 

6 Gather to take a look at the 
roadside (8) 

7 A type causing hostility (8) 

8 Regular surge at the aid of 
the day (8) 

13 Made a deal and cut down (10) 

15 Discerning use of dope In pain 
( 8 ) 

16 Asinine pair, popular though 
criminal (8) 

27 It could be a tribe held by the 
French will be set free (8) 

19 Academic distinction for only 
sixty minutes? (6) 

20 A red church tower (6) 

21 Thin, but thatfs of little conse- 
quence (6) 

Solution 8,479 


Jta 79.79 -041 8030 7072 10732 2088 

Del 7704 -041 7753 77.12 6049 797 

Dot 7802 -053 7655 76.10 28,434 4098 

Mft 7806 -00! 7750 7803 3,461 BS 

Mft 7750 -0.75 7500 7750 1022 22 

Jta 7755 -000 7800 7705 572 20 

Ttata 31087 7008 

■ ORANQE JUKE NYCECIBJOOBm; CftjB/fcjj 


Gold (par troy o4* 
S*ver (per troy ozJJf 
PtaUmvn (per troy oz.) 


DOWN 

1 Acerbic view faican about a 
game (6) 

2 The country's not in a 
(6) 

3 Put money into comforts - 
they’re so supportive (6) 


□naaaca □□□dqqgg 

□ □ □ □ a q b 

□□□DQQ □BOQEaOB 

□ Q D a Q □ B D 

HHHHllQaQ aonBDB 

□ a b □ a q a u 

□□□□ OQQaQQQ 

□ ananiaan 
_ aaoaQG3B qboq 

□ □□asBae 

□□tanHB dbqqdddd 

□ sa a q q a cj u 
aaaaaaaa onoiaiau 
h a a a u d q 
oanaQOCia □oobisb 


PaBadkm (par tmy oz) $13X78 40.75 


Oak) (Troy 01) 

$ price 

£ aqtav. 

Ctose 

383.70-384.10 


Opening 

383.70-384.10 


Morning fix 

38300 

2S2.419 

Afternoon fix 

38300 

2S20B8 

Day's Hgh 

38400-38600 


Day's Low 

38300-38300 


Previous doae 

38200-383.00 


Loco Ldn Mean Odd LotiOTm FMh (Vs USffl 

1 month — . 

,.--400 6 inunttta 

4, 

2 months 


3 months — 

— 4.13 


Surer Rx 

p /trey oz. US eta equi 

Spat 

368.10 

541 .75 

3 months 

38000 

547.70 

8 months 

38405 

55305 

1 year 

376.75 

570.05 

Gold Coins 

S price 

£ aquhr. 

Krugerrand 

388-391 

256-257 

Maple Leal 

39400-39700 

> 

NON Sovereign 

8048 

58-81 



bftst 

Dayte 


opm 



ptae 

eftaga 

SOT 

lm W 

Vta 

Jta 

2.115 

-0008 

2185 

2105 lion 11,188 

Ate 

2.147 

-0019 

2185 

2160 16046 

4082 

sot 

2.155 

-1012 

2180 

2155 11.481 

1,487 

Od 

2.180 

-0009 

2185 

21B0 1834 

874 

Nov 

20ED 

-0009 

2288 

2280 10079 

118 

DM 

2345 

-0008 

2354 

2045 14,714 

388 

ToW 




121023 19017 

■ UttEADED GASOLINE 



NYWX (42000 US gtafccftJSpfc) 



unit 

0 aft 


SPOT 



price 

iftaga 

HOT 

few tat 

Vta 

Jta 

5100 

-002 

5205 

51.60 37013 10063 

Ate 

5200 

4108 

5240 

51.75 25081 

4003 

*ot 

51 JO 

+108 

6200 

6105 11019 

2009 

Ota 

5120 

4113 

5000 

5110 4094 

2B4 

Not 

48.05 

Jiac 

4800 

46 05 3094 

401 

Dec 

5200 

-150 

5800 

8280 2880 

» 


Jta 95.15 -aio 9820 9C*5 5.1 K 695 

Sot 8110 +&40 9850 9650 8057 731 

HOT 9905 +050 10000 8125 1032 14 

JOT 10200 *025 10200 10050 3033 129 

■ft 10(00 +02S 10450 10273 1,139 72 

■ft 10325 +125 48 1 

Ttata 2X910 1542 


87028 17071 


UwlMb 

European tree maricat from Motal Bdtann. S 

& to In waratnuoa. untaw o thutaa «a wd 
wota^s h tndcata, wtiara efangee^. AntS- 
mony: 9SL6M, S pv bn, 3.100^000 (3000- 
3050). Btamuriv min. 9950%, lama Iota 230- 
245 (225-240). Cadmium; min. B95K. 87-77 
(75-65) cents a part. Cobalt MS free mar- 
tot 985%. 2450-2550 (2450-2550; 995%. 
1950-20.40 (19.80-20.50- Maafts min. 
9959%. S per 78 b Haafr, 106-12a Molybde- 
num: drummed molybdfc otade, 350-300 
(300300. Setanhnz min 390%. 350455. 
Uneaten wot atanctaRJ nrin. 65%. S par toma 
unit (iota VWu dr. 33 -43. Vgnm&irn: min. 
98%. df. 1.40-1.50. Uranium: Nuexco 
eMcrianga vaJue, 750. 


VOLUME DATA 

Open Interval and Volume data shown tor 
C M ft a ete 1mded on COMEX NYMEX CHT, 
NYCE, ChE, C8CE and IPE Cnida 0» n one 
dft fa anaart. 


Copper prod) 
Lead (US prod) 

Tin (Kutaa Lumpu) 

Tin (New Yort} 

Znc (US Prim WJ 
CtaBa (hM wtagtitt 

Sheep Pw we^iOto 

Pigs weight} 

Lot. day auoft (raw) 
Lon. day sugar (wtta 
Tma & Lyfa nport 
Barley png. need/ 
Maize (US No3 Yellow) 
Wheat (US Dark North) 
RtaJbar (JuOf 
Rubber (Audf 


119.0c +20 

3550c 

1406m +0.10 

299.60c -150 

Uoo. 

12B52P -108* 


11 S. 10 P +o.er 

8152p -358* 

33035 -15 

$3825 +20 

£3125 >20 

£10451 
$1420 

£1905 -65 

77.76p +000 

77.75P +050 


INDICES 

■ BEUIBtegaea: 1879/31 =r100) 

Jane 14 Jine 13 month ago year apo 

20300 20022 18695 18S02 

■ CRB RriUTM Pa»K 4/B/StelOH 
Jm 13 June 10 monSi ac 

23650 23288 22651 


RubbmtKLBSSNol JuO 27050m +250 

Coconut OB (PhD§ SOllQz -75 

Pahn 01 (Mtaay.)S S4SG5q +25 

Copra (Ptfl)§ 34085 +25 

Scyeboarte (US) G2i75z 

Cotton Outlook A Max 86.40c +006 

Wooftopa (B4s Super) 420p 

E par tomw untaK othantan sttaad. p ponca/HB. e 
oemaftt. r ringgB/hg. m Mtaaytaen centa/fcg. q Aua 
t Oet/Oeo x JotUuL w Jta. f London Rwtacta. § 
OF Ratt a nto n . * Bitatan maritta dose. 4 Sheep 
(Lhn wel g h i prices}. * Change on weak. provMonta 
pric es . 


June 10 monSi ago year ags 
23288 22851 20359 







A-lj+srue* Xu 





l * '?*',1 fa 


# 










* i U 1 


' ll 'oubt 

4 


WEDNESDAY JUNE 15 1994 


MARKET REPORT 


LONDON STOCK EXCHANGE 


27 


Strong close follows latest US consumer data 


By Tenry Byiand, 

UK Stock Market Editor 

The London. market’s nervousness 
abeaa of the announcement of the 
OS consumer price statistics proved 
unrounded yesterday and share 
Prices ended an uncertain session in 
good form. Supported by a tum- 
round in bond prices, a premium on 
stock index futures, and a strong 
start on Wall Street, the FT-SE 100 
Index ended the day 23.3 points up 
at 3499.6. 

Equities opened slowly and were 
held back at first by weakness in 
UK gilts as European band markets 
backed away ahead of the US con- 
sumer price data. The FT-SE 100 fell 
nearly 12 points In early trade but 
once again the Footsie 3,000 area 
brought in support. More signifi- 
cantly, the UK stock market sepa- 


rated itself from gilt-edged stocks, 
which were at that stage nearly half 
a point lower at the longer end of 
the range. 

Shares rallied quite quickly, and 
the Footsie loss was translated into 
a gain of 17 points, before the mar- 
ket settled back to await the US 
data which came in early afternoon. 
The London stock market was slow 
to respond to the improvement in 
sentiment in the US but extended 
its gains when transatlantic buyers 
appeared for British Petroleum. 

The FT-SE Mid 250 Index moved 
in direct contrast to the blue chip 
Index, falling 171 to 3,578.7 a a a 
series of individually-structured 
option contracts in second Un« 
shares was believed to have expired 
yesterday afternoon. 

Non-Footsie business made up 
around 58 per cent of yesterday's 


Accowit n— Dug Date* 

RaOatw 

JLn S 

Jk»20 

Jl 4 


Jui 30 

M 14 

Laat Ditenpe. 

Jun 17 

Jdl 

M 16 

rtaewifOtr 

Jun 97 

MIT 

JU 25 

-Near Lkaa daaArga 
htrtiin tea* eater. 

drt late 

plaoa tea taw 


Saaq total of 709.6m shares. Equity 
volume increased sharply from the 
previous session when a mere 
488.7m shares traded through Hw 
Seaq electronic network and ware 
worth only £948 £02 at retail level. 
Daily retail volume has rarely 
clipped below £lbn ovber the pest 
twelve months. 

The focus on oil shares reflected 
market belief that Opec may switch 
to a more aggressive pricing policy 


and also that the US ban on exports 
erf oil hum Alaska could be lifted 
soon. However, neither factor influ- 
enced shares which refused 

to match the new offer from Enter- 
prise Oil US investment funds, 
which hpid large stakes in Tamn, 
showed no sign of selling stock yes- 
terday after the Laamo board 
rejected the latest terms from 
Enterprise. 

Traders «rid tha t the marlrwi had 

featured substantial technical 
switching in both bonds »«d equi- 
ties, with perhaps as many as six 
equity trading programmes march- 
ing across the trading screens. Sev- 
eral very large overnight deals, 
when shares sold at the previous 
market close are rebought the fol- 
lowing maming, were believed to be 
tax-related operations. 

The renewed volatility in UK 


FT-SE-A AR-Stan tndax 


Equity Share* Traded 

Turnover by votume Cmconl. BgkjCenp: ■ 
WnwMrint boafcieaa and own tunorcr 
1,000 


securities markets, and in particu- 
lar In the government bond sector, 
brought new reports of heavy losses 
among marketmaking firms, which 
have to stake their capital on the 
view taken of the market outlook. 

The market was bracing Itself for 
the annmmramwif today of impor- 
tant UK economic date. Investors 
are likely to focus on the average 
earnings statistics for April. The 
previous Tnonth showed an annual- 
ised gain of 4 per cent in average 
earnings, significantly larger than 
the Tnarirebc anticipated. 

The latest retail price index, the 
principal measure of infla- 

tion win be published at the market 
opening; and the trading session 
win close just before Mr Kenneth 
Clarke, XJK chancellor of 
exchequer, delivers an Important 
policy speech in the City of I /radon. 



.1,475 


■ Kay Indicator* 

Iik*om and ratios 

FT-SE 100 3039.8 +23.3 

FT-SE MM 250 3578.7 -17.1 

FT-SE-A 350 1S34.9 +74 

FT-S&A Afl-Shara 1 52843 +&58 

FT-SE-A AB-Shara yield 3-86 


Boat p i fum ilng a o ct o ra 

1 Oil, Integrated +24 

2 Ha a—i e d i +2.1 


3 Mnaral Extraction 

4 Insurance 


S Printing, Paper & Pckg. 


+14 

+14 

+ 1-2 


FT Ordinary Index 23974 +11,7 

FT-SE-A Non Fkw p/a 1840 09-41) 

FT-SE 1 00 Fut An 3038.0 +28.0 

10 yr OIK yield BAS (8.70) 

Long gat/equity ytd ratio: 247 (247) 

Worst performing ee ct or e 

1 OH Exploration & Prod -2.0 

2 Bufldtng Materials -1.0 

3 Bidding & Const -14 

4 Mer cha nt Banka -1.1 

5 Distributors — -0.8 


cl fu rise h\ (i 


CROSSWORD 



■ ■ $ 
* M 


BP share 

peak 

challenge 

British Petroleum came within 
a whisker of breaching its 
all-time peak of 411Vip, eventu- 
ally dosing the session a net 
15K higher at 406%p. Turnover 
in BP was a heavy 14m shares. 

Driving the stock price 
ahead was some determined 
and sizeable buying interest 
from both sides of the Atlantic , 
with US institutions said to 
have been big buyers towards 


the dose of business. 

Dealers said that a US 
Energy Department Paper cm 
the export of Alaskan oil is 
scheduled to go to the White 
House for approval by Presi- 
dent Clinton. An approval of 
the export of Alaskan ail by 
the US authorities is thought 
by oil anlaysts to be worth In 
excess of $100m a year to HP's 
bottom line earnings. The US 
buying interest also focused on 
Shell Transport, which moved 
up 9 to 713p. 

Oil bid falters 

The Enterprise /Lasmo bid 
battle came to boiling point as 
the former surprised the mar- 


EQUITY FUTURES AND OPTIONS TRADING 


Stock Index futures overcame 
early weakness to make strong 
gains on the day as the sector 
responded to US retail sales 

and consumer price date 


writes Joel Kibazn. 

Active selling dominated 
initial trading In the Uffe FT-SE 
100 contract after it opened 
at 3,003. As the selfrig 


* FT-SE tOO MDEX FUTURES (UFFE) £25 per M Index pofr* 


(APT) 



Open 

Sett price 

Ctienga 

Hgh 

Low 

Eat. veri 

Open M. 

Jun 

3002.0 

30300 

+200 

30440 

29900 

22345 

33749 

Sep 

30100 

3051.5 

+200 

30505 

3005lO 

7852 

29063 

Dec 


3061 J 

+200 



0 

752 


* FT-SE HP 250 S«>EX FUTURES (UFFQ CIO par Mhdw point ___ 

Jun 35865 35764 -54 36850 3581-0 113 2756 

Sap 3598.0 3568.0 -14 3898.0 35834 113 2887 

■ FT-3E MD 250 WDEX FUTURES (OMIX) CIO per ful Index point 

Jui - 35754 - - - - 771 

Al apon Man* flgtm m tor prauku my. t Exert <«**» Mnm. 

■ FT-SE 100MDEX OPTION (UFF3f30«C| ElOper fufllndacpoW 


3180 
C P 
114 


3200 
C P 
la 164 


2880 2000 £090 3000 3080 3100 

CPCPCPCPCPCP-. _. 
Jin U3 »1 14* >2 84^ 1«a 4712 9z 13% 25 Z 84 1 114 ^ 164 

M 2M 11 158 IBb 1M 26h M 42 6 Bh 60a 35 831a 2D 123h 18 17(la 

222 2Bfe182fc3£fe 148 50 IW 26 SI 2 8 fe Oh Bft 1181a 43 1471a 31 185 
Sgp 2V* 38 382 51 W 64^ 134% 84 10* 104^ 81 132 88 ^ 162 « 196b 

Ooct znb 83 - n*a 122 tab 168 nb 22^2 

am U12P1* 7 pn 

■ BIO STYLE FT-SE 100 INDEX OPTIOM (UFFE) CIO per 98 tadaer port 


3078 3128 

5 40 1b M 
48 77 


3175 3225 

.. . b 138 b 1« 

a 109 15b 146b 8 188b 

54 130 24b 200 

7Db 143 abZDOb 

111 173 74 23* 

efto* aa taut an adflenart pfece. 


2875 2025 2875 9025 

JB 16«b b 115b 1 Mb 4 24 11b 

Jui 179b 12 «8 20lj 101 33 » Sib 

lug 16*b«b 100b 78 

Sep 180b » UD 93 

tact 220 87b 158 124 

Cite 2,817 Ms 3.018 * (WertjtoB UK trtc. 
t leno dBed north*. 

■ EURO STYLE FT-SE MP 350 M)EX OPTION (OMLX) CIO pw Ml hdax point 

3800 3650 

JW 77b 3 27b 5 3 

Qrt 0 Ms 0 SMtaamt ericas and < 


Indices 


Day's 

Jun 14 chgaSt Jim 13 Jim 10 Jun 9 


■BQ 


if a t by unleashing an increased 
offer for Lasmo, which ft said 
was worth 165p a Share, or a 12 
per re n t premium an Lasmo's 
closing price on Monday. 
Enterprise until the wnd of 
the week to launch a new bid. 

The market’s Immediate 
response was to lift the Lasmo 
share price to 153p. However, 
Lasmo shares gradually 
riw-tinad, eventually rinsing a 
net 4 lower at l43Vip, after 
turnover of 14m, with many 
specialists adopting the view 
that the Enterprise hid is likely 
to fail- Enterprise shares fall to 
389p before closing a net 9 
lower at 391$, after heavy turn- 
over of 7.3m. 

“The market is clearly indio- 


conthued, the contract fed 
to a low of 2,992 In the first 
hour of business. 

The recovery in UK gilts and 
European bonds helped to 
steady the contract and the 
return of mid-momlng buyers 
saw ft regain some strength. 
This gained momentum with 
the covering of short positions 
by Independent traders. 

The US data appeared to 
dampen the market’s recent 
fears on inflation, encouraging 
further buying, but It was the 
strong response to the figures 
on Wall Sheet which generated 
a squeeze in June. At the 
day’s peak it touched 3,044 
and was at a premium to cash 
before c oming off the top to 
end at 3,039, at parity with 
cash. Traders rolled forward 
positions and volume in the 
near month contract reached 
22^345 lots, while that in 
September, which becomes 
the lead contract on Friday, 
was 7.852. 

In traded options, turnover 
returned to mors favouable 
levels, reaching 31,629 lots, 
of which 10,018 were dealt 
In the FT-SE 100 option and 
5,845 in the Euro FT-SE. 
National Power led the stock 
options at 1,735 contracts. 


Ov. Earn. 
ytojdKyMdtt 


WE 

ratio 


Xd ad). TotK 
ytd Return 


FT-SE IDO 3038* 

FT-SE MM 250 3578.7 

FT-SE Md 230 ok biw Trusts 3SW.4 

FT-SE-A 350 1®4w9 

FT-SE SmKKtep 185953 

FT-SE SmeftCap ax In* Tnatt 1836.94 

FT-SE-A AUrSHARE 152623 


+08 30163 3065.8 30268 23700 

-05 36053 36005 35903 3205.1 

-05 3603.8 30168 36009 3221.3 

+06 1527.8 16440 15320 14320 

-Ol 1881.73 1683.17 1684.17 183092 
-01 183081 1838.16 184088 164025 
+04 1519.65 153001 152407 1418.10 


■ FT-SE Actuaries Ail-Share 


tw* 

Jun 14 chgett Jun 13 Jun 10 An 9 




407 091 17-22 4083 1134*0 

3M 075 21.10 44.03 131021 

3*2 020 ia72 44*0 1314*8 

3*3 0*4 17*0 23*8 117228 

2*9 3*7 3329 2087 142051 

014 424 30*7 21.46 1414*2 

3*0 044 18*0 22.77 1185*8 

01*. Earn WE Xd M- Total 

yferid* ytefcffl. ratio ytd Return 


10 MINERAL EXTRACTION (IB) 268007 

IS Extract** industrial 3904.74 

15 04. inteoratedP) 7 

16 Ofl Exolnnalon 3 ProdUD 1880.87_ 


+1.9 263030 2886*3 2584.19 2219*0 
+OB 3872.75 3891*9 3662.11 304720 
+2* 2587.13 2571.07 2514*8 214020 
-2* 191092 182243188333 11 


3.49 

040 

3*0 

3*9 


4*8 28*7 

5.17 24*4 
4*0 27*1 
1*2 «Uttt 


37*8 

43*9 

4043 

15*2 


1095*1 

10669B 

106015 

107011 


20 GEN MANUFACTURERSpBaj 

21 BuBdng & Constnx*on(31) 

22 eufcang Matt* 4 MerchsPW 

23 Chorafcatopi) 

24 Ofvarslflad MduatriatsOffl 

25 BocWJrtc & Etoct EOUW34) 

29 Enginaarin|rf71) 

S7 Engtoxmring, Vshkdas(i2D 

28 Print! nQ. Paper ft PcKpP 7 ) 

29 TaxtBae 3 AoparatBOl. 


1974^7 

-02 107087 199559 19BOB3 1782.70 

382 

434 

2787 

MM 

99080 

11B3J7 

-1 2. 1197.47 120040 1201179 1057^0 

018 

4.11 

3189 

15.52 

01051 

188079 

-1.8 102022 194090 1828.08 1681 JO 

387 

4.14 

3049 

3023 

88058 

2417^8 

-05 2428^0245072 2443^8 222040 

384 

4JX 

3211 

4232 

108100 

166082 

+03 1001/94 107067 1874J& 104480 

482 

4.05 

2088 

3048 

994^8 

190720 

-08 201380 204022 2039L43 204180 

389 

051 

18.70 

1008 

96087 

183017 

+01 183882 1846JB8 184184 156380 

288 

4J» 

2088 

am 

103053 

23(77.75 

-Ol 231003 231020 231000 1779.10 

454 

224 

3186 

3288 

110096 

2784.89 

+12 275228 2781.18 270984 231020 

380 

5.19 

2264 

37.63 

108001 

178057 

+08 175008 1750-23 173283 179780 

097 

687 

2275 

»48 

99454 


30 CONSUMER QOOOS<95) 

31 Breweria3(17) 

32 Spirits. WUqs S CtderapOJ 

33 Food ManutachrtraP3) 

34 Household Goodafl3J 

36 HeaUi Care(20) 

37 Ptwrmacaudcaleflll 

38 Tobaoccfl) 


2042*2 +1* 2816*88853*0 283096 2089*0 

217017 +0* 2162322189*3 2180121982*0 

2845*8 +0*2819*62881*02847*52794*0 

2196*4 +0* 2192*3 220080 2217*6 2286*0 
245042 +0* 2451.07 2484*7 2454*5 228440 

1675*7 +0-4 168080 1681*1 188054 188040 
2807.98 +2.1 2740*6 2791.80 2743*7 298040 
3519*2 +0-1 3515*33884*93811*0389020 


4.42 

7JBS 

1030 

5068 

996-58 

403 

7.74 

1SL86 

3010 

96923 

039 

0J08 

17J3 

6078 

04827 

456 

010 

1403 4275 

91000 

058 

7 AS 

1006 

4074 

875.19 

004 

002 

7146 

19410 

98128 

4^6 

7X 

14J3 

4720 

87087 

5.99 

0.68 

11.70 10236 

78068 


40 seaflCESp20) 

41 ObtrfbuoraPI) 

42 Leisure & Hotetap3) 

43 MmAoOB) 

44 manors. Food (17? 

45 HotoUara, General^ 

48 &4»P«t SarvtceaW 

49 Transport(l6) _ 

5 i drier S«^eos a BuatnaspgL 


1960*4 

275090 

2141.06 

2975.71 

1031*2 

1889.79 

1669*8 

2324*7 

1184*7 


+0*1955*61970221987*21790*0 3.10 826 19*5 23*5 963.14 

-0.8 2780442796*7280809286620 322 033 1080 36.04 945*0 

+0*2134*1216012 2128371794*0 3*2 4*8 2005 19*2 1041*3 

+0* 2959*2 3000*73021*12334*0 018 4*9 2044 36*6 102048 

+0*1826*81049*61811*71957.10 3*0 11*9 1079 25.18 986*2 

+0* 16BU1 1701*4 1081.67 1482*0 3*2 8*0 19*8 24*9 897*0 

-05 157&06 1585*3 1684.15 1483*0 2*2 6*0 19*4 13.75 946.10 

+0*2310782354*7 2344*5 2080*0 3*1 . 5*8 21*4 15.14 896*2 

-0* 1190.19 1195.85 119Q3B 123090 4*2 2*1 BOOOt 091 _1Q02JS 


60 unUTESPfl 

82 Beetriwy(17) 

64 Quo DlsWDudond 

66 TeleooinmunlcnttonsW 
69 Waterflg. 


2246*5 +02 2240*1 2283*4 2224.02 2125.70 

2190*5 +07 2174*1 210057 2127*8 1771.40 

191087 -03 1921*6 196010 1854.77 1953*0 

1944.71 -0.1 1946*0 1991*0 1999*3 1906.70 

iTaOTB +0*178055 1720*3 1717.23 164g*0 


421 

050 

14^3 2002 

84051 

007 

llttl 

1057 2427 

68042 

a 3c 

t 

t 5043 

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425 

726 

1523 009 

80082 

OS2 

1424 

a.18 19.72 

845.13 


lt0W44NA NClAl*ff 

70 FWANC1ALS{102) 

71 Bonk9(lD) 

73 InsurancefiT) 

74 Life Aeautncapl 

75 Morctam 

77 other FinandoH24) 

79 " 


lfiST.77 +05 1844*4 188079 184045 1537*9 3*8 827 19*0 23.10 


213069 

2773.94 

1221JM 

2294.94 
2785*7 
1814*4 
1521*2 
2747.67 


+042131.102154*62157*8200000 4*2 038 13*3 44.73 

+06 275065 2787.72 279071 2485*0 090 030 13*0 »*7 

+1* 1206.09 1230*0 1230.78 1333*0 028 11*1 9*8 2044 

-O* 2800*0 2322*1 2315*4 2531.40 5*2 7.93 15*0 8038 

-1.1 281028 283070 2BZB.74 2643.70 059 12.10 9*8 44*5 

•4L5 1822*8 1825.07 1825*2 1488*0 3.74 7*1 16*9 25*7 
_OlS IffM 99 1539*8 1836*9 134070 4.01 4.13 3 002 23*0 

-0.1 2750*1 2783.132780*42330*0 


1152*8 

83011 

821*4 

825*1 

871*2 

831. n 

057*2 

88236 


HU IWFA 44I”— — 

89 FT-SE-A AlL-SHAREieM 

■ Hourly movements 
Open < 


1528*3 +0* 1619.66 1535*1 1524*7 1418.10 3*8 6*4 1090 2277 1M 


FT-S6 1K> 
FT-SE MW 250 
FT-^-A 350 


9JOO 

3011* 
^5903 
1 52**n 1526* 


1000 

1100 

1200 

<1300 

1400 

1800 

18.10 

HoMter Low/day 

30222 

35908 

15292 

303 T. 4 
35900 
15300 

.maa 

36872 

15310 

30 207 
36870 
15310 

30360 

3583.7 

16305 

30909 

35790 

18310 

30306 

3579.1 

15350 

30390 

3594.7 

1535.1 

30044 

3578.7 

1522/4 


. . . 

_ — Actuaries 3S0 toduetnr baskets 
■ FT-SE 1M0 IMP I 2 S 


13*0 14*0 16*0 18.10 doaa Prwteua Ctanga 


— — a . 34 7 1132* 1125* 1124.4 11101 1100* 11103 1116.4 1133* -17* 

BdflACrewn 113 M 12^8 a 740 -H 2744.1 2743.1 2742* 27409 27705 2781* 27ZZ* +504 

SSnraraWBds 2T21 -° 17264 1727* 17202 1723* 1729.7 1729* 1732* 1733* 1728* +5* 

1730.1 17»7 2795* 2796* 2790* 27934 2801* 290ft* 2807* 2790* +17.8 


Water 

Barto 


2791.9 


4^rlM».Utf>e» ea ia« u «nia — n » lwK i bomTha FUandNTtaaa 


SfSLSfcb !£ n» W-SE IDOL Bid FT- flE MU 200. FT-SE AcuakateO aid FT-SE AaMW W«t> 


H" Bw wUi tta ol Aea«a» ««l Iha of Aenari» ibUm a a*«iri mi rf ffwnd nin. 

1—1 or Mnd uetad ibm. ov» n«U itaw UmtM iflM. M rign «med. 

MHf araaudnad 


atieg the bid will not be suc- 
cessful, " said (me analyst. He 
said that with E n t e rprise at its 
present quotation, Lasmo 
should be trading at lSOp-phis, 
rather than the curr ent price 
ctf around l4Sp; the feeling Is 
the Americans, who speak for 
over 20 per cent and paid 
upwards of these prices, won’t 
sell, nor will Philips & Drew 
Fund Management, which 
speaks for IS per rent 

Mr John Toalster, oil analyst 
at Strauss Turnbull, was even 
more forthrig ht ; “Enterprise is 
overpaying for Taamn at the 
expense ol its own sharehold- 
ers," he said. 

Institutions now have until 
July 1 to nufl p* up their minds 


TRADING VOLUME 


Yesterday 

VbL daring D*T* 
8B0 d CM dana» 


ASa^Qrntpt 

AbteyNUtanUt 


A9«+tyorwt 


Fbodkf 

ME Parti 

BAAt 

BATindD-t 

BET 

bkx: 

HP 

ar* 

B«*fX 8 ootM>cft 


Bnast 

aUDdrcMf 


1*00 


4,100 

fl*00 


Soc«»T 836 

. 1.700 

edt Ae tu tptc a f 1400 

BMM 2 BOO 

BdBMiQMt 10.000 

MhfaUnd 378 

iaaia 

T.100 

300 
4JOO 
5*30 

CMbuy SdsMOPMt 2*00 
Qriot aoup 87 


BmzJ 

BlBDMl CDnsft 

am 

OOta4WSr«t 


OSDdout 
Carton Comm-T 


Qon*a 




CoattiJdat 

D*an» 
Er*am Beet 


EngdBaa 


sr 


am 


2.100 

488 

2*00 


7*00 


fcrtno4Cd.LT. 

fcrtaT 

Oan. Acddertt 
Canard Bed-T 

39 

GWJ 

Guhwsat 

mocrapahuf 


LandSnSitM 


Lags 4 Qarnrtlf 

LoodcnBaet 
Lonrto 
L ujan . 


NKWort Bankj 
itaMAmt 


NorBiam FOodat 
Nwwtb. 


P40t 


TOT 


H?^dmarTT 


Hart 


ftpBk 

K 


ScoQMl 4 N«D.t 
ScoL Hydro-SooL 
ScoDtataPDiMT 

Searat 


13» 


SyM*nTtanrt 

Srt«bl 




SUiA£Mriot 

TJN 

Tjoreupt 

T^nt 

7te4LyM 

T«|tarWaeSe« 

Taaonf 

TbmlMWt 

TtenSeT 

Tomioorf 

iMMavHnae 

33BSt _ 

LUMBUedst 

UUNMapn 

WMcnm Bt 

WMFlWSV 

WHWWW 

VABmaat 

mBnaMdgxt 

WBaCemm 


1*00 371 +13 

s-ioo «n 

3JJ00 IT* «8 

388 342 

1*00 577 +1 

3*00 713 +9 

7JC S71 -1 

*21 240 +1 

14W) MB . 

1S00 151** +lk 

3*00 400 +4 

MOBaadamUtet 3,700 370 +12 

318 472 

tt 291 580 •« 

SQaa HUM Bad. 271 033 -8 

sauowmwnv i78 

SOUtlWWLBOOL 381 

SotdwnWSsr 307 

StaSrtOMlt 10*00 

WOO 


5« 

BIB 

524 

272 

217 

322 

235 

370 

220 

14* 

408 

131 

229 


3*00 
1*00 
1*00 
1*00 
w® 

38a 
610 
5; 700 
1^00 480>z 
724 1072 

2.700 224 

700 a 

1,400 3*4 

1*00 1010 

1.100 322 

247 *14 

2.100 50* 

032 721 

1JT» 564 
293 313 

410 BOS 

1*00 539 

2.100 S5B 

1.100 157 
XjOOO Ififi 

405 755 

571 592 

285 482 

1*00 708 


-7 

i9 

+4 

+3 

40 

♦10 

-7 

-2 

■6 

-1 

-b 

-i* 

40 

49 

422 

+10 

42 


WUatayt 

Yoriort^Baa. 

Yortsaro Vtor 285 482 -2 

Zenecst 1*W 706 +14 

Baod an *adng «otna lor b odaoton at rador 

aaaaSM eedt rtouai Oh OEM nidani 

MSdv imS 4*0pm. Idrta d ona idDen or 
■am art Obml t MeaM an FT-8E 

100 Mm enmduan 


whether to accept Enterprise's 
new and final MH 

British Gas shares eased a 
fraction to 288V*p ahead of pub- 
lication this morning of the 
Ofgas document on rates of 
return, for British Gas’s trans- 
portation and storage busi- 
nesses, which is expected to 
approve the Monopolies and 
Merger Commission recom- 
mendations. 

London Electricity, 3 off at 
587p, will be the first erf the 
recs to announce full-year 
numbers and will set the stan- 
dard for dividend increases, 
analysts said. “A dividend 
increase of 15 per cent is expec- 
ted; anything l e s s win get the 
thumbs down; much more will 
be seen as likely to upset the 
regulator, ahead of the distri- 
bution review expected in 
early August,'’ said an analyst. 

Unigate jumped 22 to 384p. 
after brokers upgraded profit 
expectations following the 
release of better than expected 
figures. 

Smith New court raised its 
current year estimate by £&n 
to £118m, while BZW upgraded 
its figure from £116.5m to 
El 20m. However, Mr Carl Short 
at Strauss Turnbull who 
increased his forecast by a 
modest £1.5m to £118m 
sounded a note of caution 
when he said: "It is im p ort an t 
to point out that benefits of 
acquisition will have less erf an 
impact on the current year’s 
figures.” 

Profit-taking hit Id, which 
dropped 17 at one point before 
rinsin g down 10 to 789p. The 
fall was despite news that the 
group is considering spending 


NEW HIGHS AND 
LOWS FOR 1994 


BANK8 (1) Toyo TM. * 8*0. BUEOMa & 
CNSTIW (I) Bhmtl BUM MAH* * MCHTS 
01 9hw> (A). DMatsmeD MU (ft Waatvn. 
MmtKKlA. SJ9CTRNC ft B*CT BOUP ffl 
l^rtML BNMNSERMa 0) Koto 8M, 
EXTRACTIVE DM (* HOUSStOLD Q0008 
P) 04am * UC0*. MiranMMT nun* HI 
tWVEBTMPIT CUHVOM [Q 0*. 

expumKnoN a mew p) ewiv au 
■rmnATB> oi mou, support «owt m 

HM WM9«. 1WCIMB * APMHEL M 
DMrtnt Tom, UK Srtrty. Wram, 
AMB8CANS to 8CXTTH AFmCANB Oft. 

NEW LOWS 0*6. 

OEJSM BANKS « ABN AmRMrtLAuKOrt. 
BftSWBKS IS fcatara. Qnwrt K3*. Vma. 
BU8JXNO A CNSTTVi (13) BUM MAm* A 
MCHTS PI Moavin. Mrtv. Irtyw In*. 
NiM*»-1M« TtftaraU. SrtWd tartrin. 


0) 

□fsmBUTXteS n CNjym. Rte 

ka*nw. toetupa. 1km Rod*. 0NUO9B 
*8JL* (ft TNcOc Dirtop. Powrt Durtyn. 

UrtOrtk XLECTFNC A ELECT 6MJP M 
r>rtw Orta. Onriy, Vote. 
BNMSMNO n Brhtbpinb. Cook (V* 

MMnnOucftl* 7HfB Cv. M, VBB. 
Com. MHr, BO, VEMCUB8 01 tigtem. 
EXTRACTIVE Ml* IB FOOD MANUF N 
Asuoc. BrtL Foods. Bota Womnm. Cvluy 
BNiMpprt INDDRrt EM DBTMBUTION 0> 
Cm or, HEAT-TM CARE 0} Enrtomoit 
IIOWMIBU 900BI 68 RabW* ft OSaw Do 
BXpo Cv. Band INSURANCE (0 MVESTkENT 
IRUffr* |H) IB8URE A H01BJB 01 AC. LEV 
ASSURMICe (9 MEDU 0) DVMm 
■acHANT BANKS 0 OR. BVbORMION A 
PROD 0) Hsdy< OIL, BmORATED (1) Exxon. 
OTHBH HNANCtAL (9 Ostmoro, MVE9C0, 
umon &OA. unior. other amm a 

BUSHS 0) CR»» Rnpa. PRTNQ. MPER A 
PMCXO n Aa Jvvto Pore, Kyrranm. Ryw, 
Ajp*. 8CA a wiofwmr 09 hetmso. 
FOOD 0) BNrtBrtB. Shops* RETALBB, 
OBCRM. W Banotvnrt. OR, Ktartm. MR. 

aPEffia W9M8 B esms (I) BUnar m 
SUPPORT SSTVB n ACT. BPP. VhuMqr. 
TMJCIMME— CAH0MBt09Mll»te9av*. 
1EXTUB * APPARS. M HKrtwette Uirt 
PL ArttSdC Shrtr. TRANSPORT M AnaC. 

BrtL Part. Oean. Trtrapart Da*. AMEHCANS 
OJ CANADIANS 9| SOUTH ARECANS OV 

S 200 m on a chemicals plate in 
Pakistan, a move which ana- 
lysts considered pr omising . 

Pharmaceutical stocks recov- 
ered their losses from Monday, 
with Glaxo up 18% to 563p, 


Zeneca adding 24 to 708, and 
Wellcome rising 5 to 594p. The 
main increases early 

afternoon after the US markets 
opened st ron gly , and the rela- 
tive performance of Smlth- 
Klftie Beecham units, predomi- 
nantly USowned and up 12 to 
370p, compared to the ordinary 
‘A’ shares, up only 9 to 406p, 
suggested the main interest 
came from America. 

However, UK analysts were 
equally positive; Robin Gilbert 
at P anm ure Gordon, which 
recently turned positive on 
Glaxo, said the bearish stories 
surrounding the stock had 
faded away and the dividend 
prospects were Improved as 
the likelihood of buying US 
drugs distributor McKesson 
lessened. 

The NatWest Securities buy 
recommedation on NatWest 
helped the shares move 5 to 
464p, but worries that the stal- 
led ftu pnWpn Of HheHanham 
& Gloucester Building Society 
may yet encounter further 
problems, saw Lloyds dip ID to 
566p. 

Merchant hanirg were hit by 
renewed worries of bid losses 
in international bonds and 
gilts with SG Warimrg closing 
a further 8 off at 721p. 

Mirror Group, up 3 at 171p, 
clamb ered back up above the 
psychologically significant 
170p mark, the price at which, 
the joint administrator placed 
its 54£ per cent share of the 
stock lari September. The rise 
was on the back erf ABC figures 
for May, which showed that 
the Independent had boosted 
its circulation from April 

News that Michael Heseltine, 


President of the Board of 
Trade, has referred the Daily 
Mail's hid for T-Bafiey Forman. 
publisher of the Nottingham 
Evening Post, to the Monopo- 
lies and Mergers Commission 
had little effect on shares; 
Dally Mall & General Trust 
lost 5 to U75p. Ms Loxna Tfl- 
bian at Warburg said that, 
with an estimated value for the 
shares being around the £12 
mark, the stock would be 
regarded as 'dead money’ until 
the autumn. 

Discount supermarket group 
Sboprite suffered a further fall 
s tilting 27 to 51p, on news that 
the sale and leaseback of 11 
Scottish supermarkets had 
fallen ftiung h With tiie main 
supermarket chains Still main - 
t aining strong pressure on 
prices and improving their tar- 
geting of specific products for 
competition, analysts felt Sho- 
prite had to complete the doni 
within six months if the group 
was to maintain any credibil- 
ity. 

Inchcape relinquished 6 to 
467p, on reports that it was 
about to mount a Md for Ges- 
tetner, in which it has a 24£ 
per cent stake. The latter rose 
3 to 168p. 

Suggestions that the impact 
of the detergent war on Uni- 
lever's balance sheet will not 
be as great as nri gmaTTy feared, 
saw the shares improve 10 to 
lOlOp, after trade of lm. 

MARKET REPORTERS: 

Steve Thompson, 

Ctare Gascoigne, 

Joel Klram 

■ Other statistics, Page 21 


LONDON EQUITIES 


L1FFE EQUITY OPTIONS 


RISES AND FALLS YESTERDAY 


apaon 


Crfi 


M Oct JM M Od Jbi Opfen 


CA MS 

Aon Not Fab tag No* Feb 


MW-Uan 540 4B5BH - B V4 - 
[■575 ] 589KK30 - 26 35 - 

Aiwa 240 10 1M2CKTIK16M21K 

r2«7) 2» 3»11» » 28 29» 34 

ASOA 50 m I 11 1H 4 4M 

PSS ) BO 2 4 I W M 1014 

BrtAbWte 390 nfi28»32»17H 28 32 
[*383 ) 420 4MUH Zl 40 4SH50H 

teUttBH 390 2SH 3BM 44M 9 18 Z7» 

r«H ) 420 9% 22 302S»3BK48tt 

Som 500 40W S3 81 5H 13 19H 

rs» ) 550 W 25 3S14Z7H 38 44 

BP 390 26M37H 44 B 14H IS* 

r*0B) 420 10 H 22 M 29 21 30 38 

BrtUSBB 130 10M 15M 18» 4H B 10M 

n» ) 140 SR 10» 14 B» 13 1514 

B3SB 500 SIX «4 54 10H 19 32 

(-515 J 560 9 22 29M 41 43 6114 

Gate I Eta 426 2014 - - 14 - - 

(-435 ) 450 9 - - 29 - - 

CoatMAda 500 28 44 63 11 21 2B» 

(-513 ) SEO 614 201H 2914 42M SO 5614 

QbbIUb 500 30 38 47H 12 23M 29 

rS14 ) 560 7)4 tt 25 42 5S 57 

n 750 8214 66 7®4 8)4 25 34 

(-738 ) BOO 21 37 BIH 2914 GO 59 

Matter 500 32)444)4 6614 9N 2ZM 29)4 
(*519 ) MO 9 3BR 33 39)4 47)4 S7 

Land Sear GOO 3B» SO 57 514 13 17M 

(«») 650 814 2814 36 3014 37 42)4 

INkj & S 390 30 41 <714 4 9 13 

(-413 ) 420 71)4 22 30)41514 211*25)4 

NBUtat 460 21 21)4 41)4 14 2©4 31 

PW> 500 8 15)4 24)4 41 52 5R4 

SteHtonr 390 t8» 29)4 3814 13)4 24 30 

(-390 ) 420 6 16M Z3» 35 41)4 47H 

Mlln 700 <9 4214 62 TIM 25M 30K 

(*714 ) 750 714 18 28 40M 66 9 

SMm 200 2014 26 » 314 7H 11 

(*216 ) 220 7 1314 1* 13)4 17H 21 


87 3 - - 11 - - 

1000 MM a 7BM18M 31 38M 
1050 T2M36H 9 48M58M65M 
700 28M44M 9 15)4 33 39)4 
750 8 22 30 47M S3 9 

ABB Mr ft* AC Afar Ftb 

ten) Ikl <20 ISM 33H 38M 16 24 31 
r«2S ) 400 SM 17 23 4S4814S5M 

LatXTrt 160 12*21)4 24 7 1254 14 

n«) 180 8 t2M 15M 21 204 25 

Ufef assort 300 29M 38 42 <M 12 15 

r320 ) 330 1ZM 22 2B 17H 27)4304 

Opdon Jm 3 ri Pec -hn S«» Me 

Rnm 140 8 IBM 23 1 7 13M 

P147 ) ISO 1 l» 1214M 212SM 

Opted Abb * w F9 Anfl ter ft* 

BA MO 460 3314 54 WM 24 42 9 
(*466 ) 600 17V4 37 9 47)460472)4 

BKTMt 420 19 2914 IBM 22 29 32)4 
r«0 ) 480 BM IS W 53 57 SB 

BTR 39 U 9 X10K 19 23 

raw) 390 8 14 Z1M2BS4 a? 40 

HTtaa 39 19M » 2914 12 18 »H 

ran) 39 S 12b ISM a 37 43 
tertiyScb 420 34M44M5BM 5» 14 18 
p444 I 460 11)4 2315 3B 24M 34 3BM 

EtateaBac 800 SU4 56 26M 41 WM 

rfi» ) WO 954 204 35 8414 73 9 

Gteoa 480 2314 a 44 9H19M W 

r<70) 500 6 18 24 3SM 43 48 

GBC 230 M 25 28H 6 11 14 

r237 ) 300 714H 18 17 21M & 


r252 > 


n«) 

Lucs Me 
H87) 
P80 
r«33) 


H 78 ) 


240 IBM 23M 2SH SM BM 12 
260 7M 13 ISM 13 18M 22 
18* K IBM - 6 B - 
154 «M 10 - ISM 19 - 
180 15M 22M 2BM 6 13M 16 
200 614 13 IBM T7M 26 28 
06 9 93M19H11M 29 35 
650 » 36M 4S34H57M 63 
1B0 7JH3BK29M 4 BM 10M 
160 8M 15 1813M1BH20M 
29 28 32 37 5H 12M 14 
39 13 » 29M IS 22 23M 
650 45M 9 65 2141M48M 
09 a 44M SOM 49M 86 74 
460 404 57 B2M 7M 16 23 
59 2BM 34 42 23M 38 43M 
240 aM 29 38 6M15M16M 
29 1DM 19 25 17 26M 27 
220 T3W2DMMM 8 14M 17M 
240 5 TIM 15M 20 2BM 29M 

59 26M4SMB3M 20 32 41 




20 

15 

Other Ffarad krtaneei 

- n 



59 

184 

73 

380 

General IMrtn 

97 

Consumer Goode 

34 

44 

107 

23 

93 

114 

52 

113 

328 

11 

183 

307 

38 

IMMn* _ 






Other* . - 

43 

Totart 

502 

708 

1482 


Omm b«sad an Mow convert* Med en *■ London 8rtm Smlee. 


C»B) 

RTZ 

(* 888 ) 


r«2) 

RoyN trace 
1*251 ) 
Teico 
r223 | 


Last Dodarabons 
For seMamenl 


Sept. 15 


TRADmONAL OPTIONS 

Fta Oealho* June 13 

Laat n — fngi Jun* 24 

Cate DMaktn Grp. Regent Corp., TnXxde Tedv, TMay Robor, Tulow Oft. PutK 
Novan Ran, Portar Ctnd, TuBow Ol Putt ft Cate Lonrto, Porter Chad. WEEK 

LONDON RECENT ISSUES: EQUITIES 


P«) 

Urtnr 

noig 

ZMraa 

P 7 W) 


CSV) 

SSO 

714 24 32 

55 6ZM 70 

Mane 

An* 

MkL 



Ctoee 







364 1CM 26 - 

12M20M - 

price paid 

cap 

1904 

Price 


Net 

Otf. 

Grs 

WE 

P5B) 

384 

5M 13 - 

32M38H - 

P 


(Emj 

HOgti 

Low Stock 

P 

W- 

<*. 

coy. 

yM 

net 

OpBen 


M Oct Jm 

M Oct Jm 

Sim 

FJ>. 

607 

123 115)2 A«l Hart 

122 


W3.74 

20 

30 

101 

BAA 

BOO 47M 68M 8TM 13M 25M 31 

161 

FP. 

450 

184 

180 Amoy 

183 


LN108 

00 

5 A 

as 

CB30) 

Uph fgf 

fiSD Uti 41 M 54M S8M SOM 5BM 

255 

FP. 

1460 

287 

258 Argw* 

288 


- 

- 

— 

- 

SKI Mft XfH SEW, 

13 23 a 

100 

F.P. 

403 

108 

100 Aucomottw Piece 

108 

-a 

LN40 

00 

4.7 

350 

rvt > 

soo 

5 tt 18 

42 48M 54 

§1» 

FP. 

310 

154 

160 Bravrt Ddpttn 

152 


100 

20 

40 

110 

m. 

FP. 

224J* 

81 

73 CAMAS 

73*2 -2«2 

UN3.75 

07 

04 

340 

Option 


Jos Sap Doc Jun Sep Me 

- 

FP. 

1050 

112 

107 CLS 

107 


- 

- 

- 


Aboey Nai 

420 

122SM 39 

1M IBM 23 

§143 

FP. 

110 

158 

143 Ceaael 

168 

+i 

W30 

- 

01 

105 

(M30) 

flllrtlluH 

460 

30 

1 11M 21 

32 40K 46 

- 

FP. 

190 

36 

36 Ctrime Comma. 

35 

-4 

— 

- 

- 

- 

SM SM *M 

13 4 

h2S0 

FP. 

1702 

249 

228 DCC 

228 


L034M 

30 

30 

110 

4MIBinPI 

f32» 

Bardte 

r549) 

3S 

300 

650 

I IK 4* 
SZ 62* 73 
4M 30 44 

4 5* 7 

1 BM 18 

5 30 3BM 

130 

FP. 

FP. 

F.P. 

FP. 

<5.1 

770 

700 

1<48 

137 

03 

50 

374 

133 Dentiy 

00 Ranting (ntfien 

42 Do warranto 

334 Govett GW 81 Wl 

135 

92 

47 

334 

-1 

W3.T 

20 

20 

161 

Bbe Ckda 

280 

4 MM 28 

ZM 18 22 

10S 

FP. 

54.1 

106 

93 Hratticel 

88 

43 

WN40 

10 

61 

130 

rzsi 1 

300 

1 12M t9 

21 2BM33H 

225 

FP. 

1003 

232 

225 mtermecDaiB 

232 


LN69 

2.1 

63 

61 

ftrtft Sea 

280 

M 23M27M 

1 9 IBM 

- 

FP. 

> 

77 

66 J= H Japan Wrta 

74 

-3 

- 

- 

- 

- 

r299 ) 

300 

1 12M 15M T2M IBM 28 

5 

FP. 

400 

S4 

6 Key* Food 

54 


— 

- 

- 

— 

Dfenee 

180 

10 16 23 

1 12M 15 

180 

FP. 

57A 

183 

158 tombanJ kta. 

181 


WN7 7 

22 

00 

90 

(168) 

200 

1 BM H* 

14 24H26M 

200 

FP. 

162.7 

230 

200 {London Chris 

230 

+2 

W1102 

10 

05 

11.7 


105 

FP. 

404 

113 

103 MgMfcekritf 

103 

-2 

R308 

20 

4.1 

130 

MUW 

160 

7M 1B1SM 

1M 7M 9 

120 

F.P. 

34.7 

130 1254 Nona* 

120 


W406 

2S 

4.4 

110 

C16SJ 

ISO 

1 7 Tt 

17 2 OH 21M 


FP. 

26S0 

131 

116 Rortow 

120 


WKL7 

2£ 

2JS 

T62 

Untie 

130 

3 12)4 T7 

2 2 15 


FP. 

460 

02 

01 Scudder Lathi 

91 


— 

- 

- 

- 

(*131 ) 

140 

1 BM 13 10M 16 20M 

« 

FP. 

010 

44 

43 Do Wits 

44 


— 

- 

- 

- 

Naa Few 
C*441 ) 

<20 23M 41 49M 1 14 19 

460 1 1* S2IK 33 39M 

595 

FP. 

FP. 

FP. 

14.1 

207 

508 

113 

133 

100 

108 Spattio Cone 

128 SpedaBty Shops 

96 TR EVro Gwth C 

113 

130 

88 


US 

IS 

10 

20 

440 

Scat hewer 

360 

t3 27 32M 

1 16 zaM 

100 

FP. 

73.7 

100 

02 TR Rap liw C 

02 

-4 

— 

- 

- 

- 

two) 

390 

i is a 

& 37 41 

§108 

FP. 

45.1 

119 

108 UPF 

119 


W307 

2.7 

30 

100 

Seen 

120 

JM OH 12 

1M 7M 9 

150 

FP. 

410 

183 

154 Vymura 

183 


LAW 

22 

04 

160 

0121 ) 

130 

1 8 7H 10M 13 15H 











Rats 

228 IBM 2BM 31 

1 7 11 












(*238) 

210 

2 i? m 

5 IB 21 













Tarmac 136 15 - - 1 - - 

P4S | 165 1 - - 9 - - 

Thera ’EM I05027H 6BM M 2 63M » 
non) 119 2 3BM82M33MMM9BM 

T5B 220 3 14 9 S 16 IB 

(*220 ) 240 1 7 12 22 28M 31 

Hmtta 220 4M15M a 1M 13M IBM 
(*223 ) 240 1 712M 19 27 2014 

Weftgna S50 4BR 99 81 1 19M 29)4 

r®3 ) 600 3M 3BM53M 114ZM6SM 

Oponn JA Oat Jw JU oa Jm 

530 34 50 90 IBM 41M <914 
69 18 W 38M 47K 7ZM 7BH 
79 37B2V47BM32M 57 68 
79 tt 41M 88M 84 87 9 
46Z26M 38 - 13 M - 
475 19 32 - 10 2914 - 

teg fc» frt Re H* FW 

Rrtften 180 a » » SIM 4M 5* 12M 
P94 ) 29 9 17M MM 13 ISM H» 

• gnderiyfrig Keuty prtce. Amtn rtwn m* 
taeeaa on iturta ertr pIcaoL 
Jtn 1« . Todri uatiuam. 3293 Cite 16,710 
Puts 16J04 


RfOHTS OFFERS 


Gbn 

rS83) 

BSB7»98 

BU 

r«3 1 
fymn 


Issue 

price 

P 

Amount 

peM 

to 

Uset 

Reran. 

dtte 

1904 

figh Low 

Stock 

Cknkig 

price 

P 

+or- 

2 

M 

23(7 

4pm 

1>2pm 

jCorpi Service* 

2pm 


180 

M 

son 

23pm 

3pm 

DbconMokn 

3pm 


265 

M 

— 

05pm 

32pm 

Ewotumel 

37pm 

43 

185 

M 

ii n 

25pm 

8pm 

Heaton 

6pm 


105 

w 

W7 

iVpm 

1pm 

Higgs i HE 

14pm 


230 

Ml 

m 

34pm 

20pm 

Janri* Porter 

20pm 

-a 

205 

Ml 

ia n 

26pm 

14pm 

McAlpfc»(A) 

14pm 


100 

NS 

•sn 

11pm 

7pm 

NSM 

7pm 


5 

M 

21/7 

9pm 

7pm 

standard Pto 

9pm 


24 

M 

- 

12pm 

lOpm 

IM 

12pm 


2S0 

Ml 

27/7 

36tm 

27pm 

Wtari 

28pm 

-1 


FINANCIAL TIMES EQUITY INDICES 


29970 

23865 

24190 

24010 

24110 

22300 

27130 

23212 

402 

404 

4.18 

400 

4.19 

4.12 

402 

3.43 

667 

609 

501 

804 

6B2 

407 

678 

682 

1682 

1075 

1002 

1806 

1904 

2608 

3803 

1058 

1051 

1044 

1072 

1069 

1907 

24.46 

3000 

1018 


FT GOLD MINES INDEX 



Mi %cte 
13 mdat 

Jae Jh Tsar 

10 9 800 

Baas A 
riser K 

32 tea* 

Bte lam 

GsiriUte* index {36ft 

182704 +10 

190682 1908.12 183&B3 

219 

TSam 152286 

■ BtotiteMcae 

a»a(iq 

Nrtftfl 

Nerifa America (111 

275624 +10 
2B2Q06 +02 
158106 +00 

2710,18 2663.45 223ft 11 
261505 283240 T89609 
156621 1560.16 143104 

485 

108 

071 

344080 190223 
301389 1S03.T6 
203888 138600 


Copma. The FlmncW Ttoiae Unrtd 1694. 

ten h indrte rt» iui4mt «r oolite. M US Detea. Ban Veter 10HU» 3Vl2fl2. 
PnteMMT 0<4d MMM hrte in l« 22SJ: dejTa dangr +41 petaai Yer aoet IBM t Parti 
’.rtiediaw*. 


[prteHi 


atria tor ttrt rfrtn. . Iteffrtai enrte i 


Old. tee. yield 
Eam-ytt. «M 
P>E 1*50 oat 
FVEnflo rd 

■For 1904. Oiteny Sm rtte rtco complrtton! N* ZTWjB 2ABA4; lew 28MMO 
FT Onftny Stare hdn bow te 1/705. 

Oi iftna e y Shn tout? c h a nfl aa 

open bloo ioloo lino ixoo i&oo 14J0 i&oo iflho Wah Law 
23802 23803 2387.4 2362.1 23808 23802 23805 23802 23903 2397.4 23702 
Jaw 14 June 18 Jam 10 June 9 Jun* 8 Yr ago 

SEW (Mrgrina 23.141 22 .3 38 S2JBSS 23.353 ZZ.979 27.738 

BqJty hanovnr 9405 1284.7 1711.0 1281.5 11503 

EquOy b ai g al nsT - 24.654 28.036 27,746 24^42 33^54 

Shorea traded (nri)T - 3708 517.7 582.1 5002 477.4 

t GadudUg I f +nertt burineea md murueiw tmonr. 


I 






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financial times we DNESDAY june is 1994 


LONDON SHARE SERVICE 


MmhK IQ 


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GMEB 

91 

K 

158 

24 

MU 

1879 

49 

- 

09 

57 

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151 

14 

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37.1 

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209 

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09 

254 

148 

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111 

129 

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4350 

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MU 

119 

m 

229 

29 

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210 

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70 

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149 

230 

37 

159 

2711 

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153 

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11 

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171 

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219 

17.1 

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32 









































































































































































34 


CURRENCIES AND MONEY 


PiNAi vnAL TIMES WED NESDAY JUNE 15 1994 

money market funds 


MARKETS REPORT 


POUND SPOT FORWARD . 


Dollar remains weak 


Jur 14 


Ctoetog Chnga Odftrffer 
mtt-poW on d ay agreed 



Day’ll*! 

high tow 


On* north IhttAMh 
W» WA (ton XM 


Bank of 
HP* Ebb, mow 


Europe 

Austria 


Anslety about the progress of 
the US-Japanese trade talks 
drove the dollar lower yester- 
day an the foreign exchanges, 

while the D-Mark continued to 
gain strength in the aftermath 
of the European elections, 

writes Graham Bowley. 

The dollar fell against the 
yen, despite the intervention 
by the Bank of Japan to sup- 
port the US crarency. 

The D-Mark's strength, aris- 
ing from Chancellor Helmut 
Kohl’s strang performance in 
the European elections, 
exerted downward pressure on 
other European currencies. 

■ The dollar recovered same 
ground in later trade after 
remarks from Mr Lawrence 
lindsey, a member of the the 
Federal Reserve board, that the 
US trawi nm y jg “Jn the mids t of 
a solid expansion”. But ana- 
lysts said that the downside 
potential for the dollar 
remained. 

The US currency largely 
Ignored the Tnain data releases 
yesterday, the US consumer 
price index and. retail sales for 
May, which amw in. mtinh in 
line with expectations. US con- 
sumer prices rose 02 per cent 
in May, above April's DJ. per 
cent increase. Retail sales fell 
0.2 per cent in May, the second 
monthly tall in a row. 

"There are signs that con- 
sumer activity in the second 
quarter has moderated a little, 
but the US economy is still 
growing robustly. This is not 
evidence of a slowdown,” said 
Mr Steve Hannah, head of 
research at IBJ International 
In London. "What has been 
depressing the dollar is the 
increasingly aggressive rheto- 
ric on the US trade position 
with Japan,” he said. 

Ur Jeremy Hawkins, chief 
economist at Bank of America, 
said: “Recent comments from 
the US authorities that they 
are happy with ths dollar at its 
present levels may mean that 
they will not be inclined to 
intervene if it fens further.” 

The Canadian dollar weak- 
ened yesterday. The Bank of 
Canada was reported to have 
intervened to buy the Cana- 
dian currency for US dollars as 
it foil to a low of CJL3875 in 
early trade. 

The US dollar dosed in Lon- 
don at Y 102.665, against 


AgOTnattho DoBar (pM par $} 

tao — - — 


1J55 


I-™ * W 




Jm 1994 

Jim 

SoncK FT OMpHto 

- 

M Poood fra Haw Ynrfa 



Jon 14 

Croat 

1 Drib 

3 rath 

in 


1-5130 

1.5182 

15170 

15105 


-Prav. cfan- 
15215 
15207 
1-519* 
15137 


Y103.145 on Monday, and at 
DML6443, from DML65. 

■ Sterling maintained its lev- 
els a gaftigfc the US dnTlar ye $. 
terday but weakened slightly 
against the DMa r k as traders 
remained nervous about the 
UK political environment. Ana. 
lysts said the pound was also 
dragged down by the dollar’s 
fan against the D-Mark. 

Investors have been 
unnerved by talk erf tax cuts to 
boost the Conservative party's 
standing following its poor per- 
formance In the European elec- 
tions and UK by-elections. 
"Tax cuts would be seen as a 
parrir, reaction to events and 
would not smack of good eco- 
nomic management,” said Mr 

Hannah. 

Tim pound lost about a pfen- 
nig yesterday to finish at 
DM2.4951 in London, against 
DM2Jj061 an Monday. It was 
little changed against the dol- 
lar at SL5175, from 5L5189. 

Attention today will be 
turned towards the chancel- 
lor’s Mansion House speech 
and important economic data, 
including the latest labour 
marke t statistics and the May 
retail price 

The data will be scrutinised 
for any sign of a pick-up in 
A rise in the average 
earnings figure, currently at 4 
per cent; could have a signifi- 
cant impact on the market 

In the UK money markets, 
the Bank of England provided 
liquidity of £32Qm after fore- 


casting a shortage of £300m. 
Overnight money traded 
between 4% per cent and 3% 
per cent 

The December contract on 
the UK futures market dosed 
at 93.72 from 93.67, discounting 
a short-term interest rate of 
more than (E4 per cent 

■ Most other European curren- 
cies were weighed down by the 
general strength of the ELMark 
and by their own political 
uncertainties following the 
European elections. 

Both the French franc and 
the Spanish peseta continued 
to suffer from their govern- 
ments’ poor showing in the 
elections. 

But in Italy, the lira was 
pushed down by fears that the 
recent constitutional court rul- 
ing ordering the Emrp mmoTrt - to 
pay trillions of lira In back 
pensions would farther worsen 
the deficit 

The Greek drachma was 
pushed lower by data showing 
a rise in the Greek annual 
inflation, rate to 11 per c*mt in 
May and fears that, with the 
elections over, the government 
will be under less pressure to 
support the currency. 

The Bank of Portugal inter- 
vened successfully to defend 
its currency. But the Swedish 
krona fell sharply in early trad- 
ing led by weakness in the 
Swedish and other European 
bond markets. It recovered 
same losses later in the day. 

The Dutch central bank sur- 
prised the markets with a 10 
basis point cut in its special 
advance rate to 430 per cent Q 
said the cut was justified by 
the strength of the guilder. 
Analysts were surprised that 
the cut came before the Bund- 
esbank’s money market 
operations today. 

The Bundesbank announced 
that it was setting a tender for 
14-day repo funds at variable 
bid rates. Dealers said they 
expected an announcement 
today of a 5 basis point cut in 
the repo rate to 5.05 per cent 
from 5 JO per cent 


Dermwtc 

FMand 

franc* 

Germany 

GreeOti 


Luxembourg 


(Set* 170638 

(Bft) 51-3*37 
(DKj) 9.7810 

(FM) 03563 

(Fft) 00130 

(PM) 24851 
(DO 37B.707 
0E) 102*1 

(L) 242500 

(LFO 513437 

(fi> 2.79*4 
108190 
TO 250.181 
TO) 206.187 
(90) 118870 
CSR) £1031 
« 

- 18946 

- 0830819 


(Pmo) 18150 
(DJ 3332.29 
tGSt £1010 
Mans (New Paso) 5.1191 
USA (S) 18175 


2-0800 

11.7390 

478043 

155l78B 

38381 


Nanny 

Portugal 

Speki 

Swan 

Srtaailand 

UK 

Ecu 

SOR 


-OOB7B 682 
-08387 168 
-0044 582 
*00068 479 
-00342 113 
-ami 944 ‘ 
-0818 SBC 
-00032 233 
*035 485 
-02397 188 
-00148 833 ■ 

-00821 170 ■ 
-£148 079 
-0808 100 . 
*00043 70S 
-0015 025 

-00049 940 ■ 


(AS) 

Hang Kong (HKS) 
Me TO 

Japan (Y) 

UH*t*k 90 S) 

NawZeatoid (NZ3) 
PMppkma TO) 
Saudi Arabia (Sfl) 
Singapore (SS) 

S Africa (Com) (R) 

S Africa 0=10) n 
South Kcww. (Won) 
Taiwan (13) 

ThaBaod (BO 

ISDRntafor Jw 14. 
bar M knpfcd fry cure* I 
aw Mar Spat tOTtiae 
3 


DOLLAR SPOT FORVVA? 


093 

17.6724 17.4534 

1788 

08 

174544 

02 

» 

• 

700 

518370 518500 

51X337 

02 

518297 

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51.1087 

03 

658 

98183 9J200 

£7887 

-09 

07824 

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9.7966 

-04 

647 

02990 82000 

- 

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• 

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163 

A5E03 LffiSI 

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05229 

-04 

s.4941 

02 

057 

£5211 £4884 

£49S9 

-0.1 

2MU 

ai 

£4757 

04 

124 

378.790 373 835 

- 

- 

. 

• 

- 

» 

240 

18278 18150 

18243 

-08 

18252 

-04 

1.02S9 

-02 

664 

243140 240420 

2QL7 

-2.9 

244£36 

-2.7 

2*78,30 

-32 

708 

518370 518500 

518337 

08 

518297 

Ot 

51.1887 

03 

954 

281 J 2 £7KB 

27MI 

ai 

£3947 

08 

£7734 

04 

222 

10844B 10.7719 

10814 

06 

106268 

-08 

108177 

cur 

282 

261890 250879 

260.106 

-4J 

202.101 

-48 

- 

. - 

225 

205264 203836 


-38 

200552 

-£7 

209-217 

-28 

957 

128937 118044 

128106 

-£3 

128456 

-18 

12.1438 

-18 

037 

£1138 £0012 

£162 

as 

£0996 

07 

£0768 

12 

951 

1-3009 12864 

18996 

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1892 

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18930 

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152 

18221 18047 



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£1063 £8820 

£1024 

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5-1302 58875 

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176 

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18167 

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18084 

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£0851 £0500 

£0802 

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£0700 

04 

28770 

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400 

11-7986 118646 

11.7309 

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Tt.7271 

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11.7539 

-Ol 

147 

478350 478010 

- 

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157810 155880 

155804 

38 

15480* 

38 

150454 

04 

392 

38520 38007 

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£5934 £5006 

£3061 

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28927 

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41.1230 

58811 

28248 

5-4067 

78814 

122488 

418433 

38.1487 


-00303 154-305 
-08053 003-819 
-00018 237-293 
-00083 850-884 
*08083 755 - 022 
-182 431 - 501 
-00574 354 - 511 
-08617 207 - 875 

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41.4789 408154 
5.7181 5.6635 
£3348 23094 
5-5123 5,4545 
78232 78431 
123083121647 
418500 408000 
382380 378960 


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1878 



JOT 14 £ I 

UW 158019- 157228 103420 -10K70 
ksa 20(400 - 2651-00 174UB - 179000 
few* 04509 - 04522 02972 - 02900 

Mni 342111 - 342522 225500 > 225700 
(Mi 295781 - 298388 194000 - 195300 
55873 - 5L57B7 38715 - 38735 


ILA£ 


Jun 14 

Ctoatog 

ntiO-polm 

Change 
oo day 

BUfoffar 

spread 

Day* aid 
ttitfi low 

One month Tina rnmittai 
Ram %PA Ram HPA 

One year JJ> Morgan 
Mi SPA Max 

Europa 

Austria 

(Sch) 

115745 

-00336 

720 - 770 

118075 11-5435 

11882 

-08 

115885 

-04 

115103 

06 

1035 

Balgkan 

(8R) 

OTRVVi 

-01255 

210 - 500 

338200 33.7750 

f«W 

-09 

3OB025 

-OT 

330155 

-02 

1045 

Danmark 

(DKr) 

04325 

-00228 

300 - 350 

6.4451 04227 

6441 

-18 

6.4555 

-18 

6.4875 

-09 

1045 

Finland 

(FkQ 

58068 

*00098 

018 - 116 

58166 04803 

0511 

-09 

651B3 

-09 

55718 

-15 

75.1 

Franca 

[FFr) 

58106 

-00172 

095 - 117 

08200 S804Q 

56185 

-15 

58242 

-10 

55936 

03 

1040 

Germany 

n 

18443 

-00057 

440-445 

10613 1.6400 

1.8453 

-07 

1.6481 

-04 

1.6403 

02 

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(Dr) 

248850 

-03 

000-500 

240700 246800 

2498 

-05 

25045 

-35 

2S£75 

-1.8 

007 


(S3 

1^818 

*00032 

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1.4073 14804 

1X608 

10 

1*4781- 

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1-4718 

07 

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159880 

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820 - 900 

159980 1593-20 

18035 

-35 

1811.66 

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184105 

-2,7 

78-2 

tmeanhreBj 

(Lft) 

338355 

-0.1286 

210 - 500 

338200 337750 

3386 

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338026 

-07 

309106 

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1045 

Natharianda 

R 

18410 

-0008 

410-420 

18468 18309 

18428 

-07 

10438 

-05 

15375 

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1045 

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TOO 

7.1301 

-08275 

291 - 311 

7.1770 7.1223 

7.1330 

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7.1436 

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7.0778 

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170800 

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750 - 850 

171800 170000 

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135206 

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100 - 230 

135450 135860 

135815 

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1365 

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138006 

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78999 

*08104 

953 - 044 

78400 78744 

79174 

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7.9480 

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(Sftj 

18860 

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857 - 082 

18885 13825 

15882 

-0.7 

15855 

0.1 

15730 

07 

105.7 

UK 

(Q 

12175 

-00014 

173 - 178 

18250 15074 

15107 

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15164 

05 

15094 

08 

88.1 

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1.1722 

*08033 

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1.1737 1.1711 

1.1707 

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1.1791 

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1.41776 

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Aigenttna 

(Paao) 

08084 

*08002 

963 - 984 

08964 09961 


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(Cr) 

219588 

+388 

SOT -509 

219800 219580 

- 

- 

- 

- 

- 

- 

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Canada 

(CS 

12846 

*08039 

843 - 848 

1-3875 15813 

15883 

-15 

15808 

-1.5 

10081 

-10 

635 

Mexico (Maw Poaoi 

3-3735 

*0804 

710-760 

£3780 35700 

35745 

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35783 

-05 

35837 

-05 

- 

USA 


- 

- 

- 

- 

- 

- 

- 

- 

* 

- 

095 

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Aoatrala (AS 18713 

*00124 

708 - 717 

15 721 1J696 

15718 

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15710 

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15758 

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09.0 

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TOS 

72360 

-08013 

3S5 - 366 

7.7388 7.7355 

7.7365 

Ol 

7.738 

-0.1 

7.7822 

-02 

•a 

India 

TO 

312713 

*08013 

875 -750 

315750 315875 

31.4513 

-3.1 

suseea 

-2.9 

- 

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mm 

Japan 

(V) 

102866 

-0.48 

640 - 600 

103.130 102860 

102.46 

£4 

102.03 

25 

99.09 

29 

1475 

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TO) 

£5952 

*0.003 

947 -957 

25960 £5006 

£5877 

35 

2-5842 

1.7 

£6152 

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NmrZaofand 

(NZS 

1.7087 

-08065 

059-074 

1.7074 18965 

17006 

-15 

1.7132 

-10 

1.7349 

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TOa) 

27.1000 

■ 

000 - 000 

275000 28-9000 

• 

• 

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(SR) 

3.7506 

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3.7506 17503 

3.7511 

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3.7531 

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3.7066 

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315-322 

15322 15310 

15311 

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15306 

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48150 4. 7930 

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807860 

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61358 

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27JX75 

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278630 27.0(80 

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(BO 

25.1400 

-081 

300-500 

25.1500 25.1300 

255125 

-35 

2554 

-52 

2652 

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ato 


CROSS RATES AND DERIVATIVES 


EXCHANGE CROSS RATES 

Jibw 14 B Br DKr FR- 


OM 


HMr 


Pie 


SKr 9ft- 


£ 


CS 


Boa 



Ecu 


(Bft) 100 
(09) 5280 
(R=r) KL30 
(DM) 2088 
OS) 50.14 
W £110 
0=0 1638 
(NKi) 47.45 
TO 1981 
TO) ZS8Z 
(SKr) 4282 
(3ft) 24-41 
W SI-34 

(CS) 24-44 
(S) 3382 
(Y) 3298 
3984 


1981 

10 

1186 

3812 

9832 

0-402 

3.494 

9821 

3J66 

4.757 

8.141 

4841 

9-781 

4.840 

6430 

7837 


1688 

8222 

10 

£412 


4880 

£556 

£900 

1 


6314 £437 

0351 0.103 


3847 

7869 

3885 

4140 

7.101 

4849 

6514 

4852 

5-609 

5485 

0875 


0893 

£306 

0963 

1810 

£081 

1.186 

£495 

1.108 

1844 

1681 

1827 


1895 

1849 

1803 

0410 

1 

0842 

0860 

0846 

0895 

0490 

0854 

0407 

1824 

0487 

0675 

6873 

0791 


Yei per W MMi Kantr, Ranch Franc. Nonnn gM i Kronar. and O wid tah 

punima (nM) DM 125800 por DM 


<725 

2485 

2849 

9728 

2309 

100 . 

8683 

2242 

9388 

1182 

2023 

1154 
2428 

1155 
1568 
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5442 

£882 

3882 

1.120 

£729 

0115 

1 

£082 

1878 

186Z 

£330 

1829 
£794 

1830 
1841 
1783 
£158 


2188 

1188 

1£71 

4837 

1007 

0448 

3873 

10 

4.174 
6273 
ft 024 
5.145 
1082 
5.150 
7.128 
8945 
6359 
franc. 


0048 

265-5 

304.4 

1038 

253-1 

1088 

92.77 

2398 

10 & 

1288 

2162 

1238 

2598 

1264 

1708 

1684 

2002 


399.7 2385 4896 1848 4892 2857 3065 £522 


BIS EUROPEAN CURRENCY UNTT RATES 

Jon 14 Enon flat Change H*A(hxn M agreed Ohr. 

re Me ggaiiEBB on Pay can, rate v wia Ha a i MO 


1358 
1317 
1585 
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7899 
7606 
9899 
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1885 

1350 

1824 


0589 

6418 

0772 


1384 

13.48 

1822 


1 

0743 

1.172 


1025 

1000 . 

1205 


0083 

8512 

1 


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Sap 

Dae 


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Lroaat 

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H0i 

Low 

Eat. vot 

Open ta. 


Open 

Lataat 

Change 

«9»> 

Low 

Eat vri 

Open W. 

05071 

05078 

*05011 

05099 

00064 

87580 

01086 

Sep 

09791 

09806 

*05028 

05818 

05760 

27.198 

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08078 

06079 

*05000 

05091 

05078 

411 

1,190 

Dec 

05650 

05880 

*00003 


05800 

307 

1523 

- 

05075 

- 

- 

- 

8 

osa 

Mar 

- 

05960 

- 

0-9950 

- 

13 

368 


13 

0 

-7 

-11 

-21 

-27 


BoimmI meaaHiraw Cu ap miCnnw ii an. C i nwnM a — to tt uc wia n g wMn wti. 
Paroantaga rtiwagee aw far 6cm a poaafra change i Iphim a wd oawwcy. ttnwgm ca OTw— Bw 
ratio bamon two tpraadc aw paaaapidMm M>m na acaid metal and Esc owtir*l now 
Por a cmaocy, and fas aatan paoabad pamMage datotoa of Oat ononcy's motor rata mail 
Eeo carnal m. 

(17MB) Starting and total Lto auapandad Mao BfrA, ArfuaanBK cMouMad by tito nnandW Umaa. 
■ HB inU W 60 an, OFTKOTH P E3125P (cents per pcund] 


2102 

1258 

£154 

1024 

£152 

1556 

1595 

1327 

kataod 

QJMTOP6 

0792439 

*0001150 

-2-00 

8L16 

2410 

1408 

£470 

1.175 

£488 

1583 

1830 

1521 

rvNOlNWlw 

£19672 

£18327 

-00035 

-1.52 

554 

0254 

4500 

0543 

0001 

0542 

pwnw 

6244 

0519 

Belgium 

402123 

307357 

-00476 

-1.19 

558 

2004 

11.71 

£054 

0577 

2052 

1082 

152.1 

1255 

flanav 

154964 

153082 

-000211 

-007 

505 

8058 

0094 

0587 

0.041 

0087 

0063 

0022 

0l0S3 

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053883 

050216 

*000222 

082 

3.19 

7304 

4591 

0733 

O-TW 

07S 

01543 

56.78 

0463 

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7.43679 

755696 

-000585 

152 

£38 

1085 

1158 

1544 

0524 

1042 

1003 

1440 

1.197 

Spafa 

154550 

158566 

♦0-347 

300 

0.95 

79.17 

4526 

0511 

0386 

0511 

0568 

6011 

0500 

Portugal 

192564 

200838 

-0552 

4.04 

0.00 

100 

6543 

1025 

0087 

1.024 

0740 

7S53 

0631 







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10 

1.754 

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1.752 

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6.707 

1001 

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■ 6TWJ FPO PUIWBI (IKftQ ES2500 par C 


Sap 07211 07223 *08014 0.7233 

Dao 07244 07238 *08023 07244 

Mar - 07243 


WORLD INTEREST RATES 


07200 

07238 


34525 

198 

1 


38462 

640 

1 


Doe 


15182 


151 70 -08012 

15150 

15140 


15220 


15182 

15150 

15140 


20433 34894 

95 288 

1 15 


Strike 

Price 

Jm 

- CALLS — 
PUB 

Sap 

Jli 

— PUTS 

Aug 

Sep 

1025 

a.ta 

an 

9.12 


. 

013 

1080 

658 

659 

655 

- 

009 

058 

1076 

■457 

450 

458 

• 008 

058 

082 

1500 

252 

£74 

359 

045 

101 

150 

1528 

087 

104 

£01 

150 

£14 

£75 

1560 

051 

0 89 

1.12 

358 

3.78, r 

454 


MONEY RATES 

June M Ovar 

night 

On# 

month 

Three 

mths 

Six 

mths 

One 

year 

Lamb. 

Inter. 

Ola. 

rate 

Repo 

rate 

Pafrpum 

H 

5V& 

5ft 

5ft 

5ft 

7.40 

400 

_ 

week ego 

st 

514 

5ft 

5» 

594 

700 

400 

- 

Franc* 

5Mi 

SVfc 

614 

594 

6ft 

500 

— 

8.75 

week ago 

5M 

SH 

5ft 

594 

514 

500 

_ 

0.75 

Oarmany 

505 

606 

603 

603 

506 

800 

400 

5.10 

weak ego 

550 

505 

5-05 

5.10 

6.13 

600 

400 

520 

Ireland 

5ft 

5ft 

5ft 

5% 

Sft 

- 

- 

625 

mak ago 

5ft 

5ft 

5ft 

554 

Oft 

- 

— 

025 

my 

7S 

7V 

7JS 

8 

894 

— 

700 

700 

weak ago 

75i 

m 

714 

754 

SU 

— 

700 

700 

llwttiie, 1 

IMUmiHUUl 

508 

503 

5.04 

506 

522 

— 

525 

— 

week ago 

508 

503 

5.12 

5.15 

528 

- 

525 

- 

Swfaatoal 

SO 

414 

4ft 

4ft 

414 

men; 

300 

_ 

week ago 

4W 

4* 

4ft 

414 

494 

0025 

300 

- 

US 

♦ft 

414 

*4 

414 

6ft 

- 

300 

- 

week aoo 

4H 

414 

4% 

48 

5ft 

— 

300 

— 

Japan 

2ft 

2ft 

2ft 

2ft 

214 

- 

1-75 

— 

week ago 

2ft 

2ft 

2ft 

2K 

2» 

- 

1.75 

- 

■ SUBOH FT London 








Intorbonk Rrkg 

- 

4% 

4«t 

4ft 

614 

- 

- 

_ 

week ago 

- 

4% 

♦ft 

4% 

Sft 

- 

- 

- 

US Dotiar COs 

- 

4.15 

407 

409 

529 

- 

- 

- 

week ago 

- 

4.15 

408 

4.65 

5.19 

_ 

_ 

— 

SOR Ltaked Ds 

— 

3% 

3ft 

394 

4 

- 

— 

— 

week ego 

- 

m 

H 

SH 

4 

- 

- 

- 


tqjFFET DM1 m poirrta of 100% 


Sap 


<*Mn 

9683 

9452 

9459 

9452 


Sett price 
9587 
0457 
9452 
9458 


Chang* 

*085 

*086 

*084 

*084 


EOT. vof Open bit 
41858 185856 


high low 

9688 9489 

0458 94.75 

0482 9451 31306 

9458 94.11 19630 97716 

mumSjMFFQ LlOOOm ports of 10056 


Sm> 


Mar 

Jian 


Open Sett price Change Low EOT. vd Open int 

9£01 9156 4187 9281 9153 11007 43081 

9157 9156 4110 9159 9153 0313 50368 

9156 9154 -012 9159 0158 719 12850 

9085 9054 -012 9084 9055 388 7803 

HfnJMBflJFHJ SFrlm points of 100% 


CCU LfctiMd Da natdMtaKl moe eft 3 mft*: Gfl: e mute G& 1 
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» Tha Dartia arac D artcara than, Baik of Tokjo. Bardna 

idM m tiwai lor ■» dmwalte Manay Rataa. US I CDa and 


84- X LIBOR InMrtiank Bjdng 
ba*s OT 11 m aach wortting 


BDR LHMd Dapoaks (Dp. 


EURO CURRENCY INTEREST RATES 

Jun 1 i Short 7 days One Tine 


natten 


Six 


month 


One 

year 


Bdgfan Franc S 1 * -5 Sft-Si S>4 - 6^ 5H - 5V Si-54 SU-® 

Darfah Krone 5^-5 54p-5>2 fl-5% 6%>6% 0^*0 ft 3 * - 6 

D-Mark Si-4B 6i-4B 5i-4S ««f • <S Ut - <il * - A 

Dutch Gddar 5 - 4ft 5-4H 5 - 4JJ 5-4S 5-4^ 5d - 6& 

Ranch Franc 5>2 - 6»z - 6H 5<* - 5% 6^ - 8% 5ft - 5& 5JJ - Wi 

Portuguese Eta. 15M - 14(4 16^ - 15^ 15^4 - 1^2 14^ - 134p 13% - 12% 11% - 11% 
Spanish Poaota 7 % - 7% 7i4-7% 7fl - 7% 78.-7% 7% - 7» 8% - 7% 

Sttrtno 4%-4% 4%-*% 48-4% 5A-5i 5ft-5ft 6%-6 

SMsaFnnc 3% -3% 3i| - 38 4-3% 4% -4% 4% - 4% 4% - 4% 

Con. Ddfar 5% - 5% 5% -5% 8% - 5% Oft-ftJJ ftR - 6ft 7% -7% 

US Defer 4% - 4% 4ft - 4ft 4%-4% 4% - 4% 4fl - 48 5% - 5% 

tafailfa 8*2-7 7%-7% 7%-7% 7% - 7% 7%-7% 8%-8% 

Yan 2ft -2% 2% - 2ft 2% -2ft 2% -2ft 2% - 2ft 2% - 2ft 

Aafan SSlng 3%-3% 3%-3% 4ft-4ft 4%-4% Sft-Bft 58-5S 

amt Km ntioo ■» at far tta US Dalw nd Yhn. oHmik two dvl* node*. 

■ THWaS BWM1W P»OH HITUHM9 ^dATTR Paris Interbank Qflpred retd 



Open 

Sett price 

Change 

«0h 

Low 

EOT. ml 

Open H. 

Sap 

9508 

9507 

-002 

95.40 

9609 

7185 

29660 

Dec 

95-26 

8525 

. 

9S26 

95.17 

3447 

7773 

Mar 

9402 

9408 

-004 

9409 

9406 

1078 

6512 

Jun 

9407 

9407 

- 

94.71 

9405 

291 

0 

■ TOR 

h ■raarra icu runm (uffe) Ecu im points on 0094 



Open 

Sett price 

Change 

Hgh 

Low 

EOT vol 

Open ta 

Sep 

94.18 

9420 

*003 

9420 

94.13 

763 

12439 

Doc 

9305 

9401 

*004 

8401 

9302 

738 

8056 

Mar 

93.71 

93.76 

*003 

93.78 

9308 

a49 

3356 

Jui 

9302 

9301 

*009 

9306 

8302 

66 

0 

■ LffFE bum traded rat APT 






■ TOR 

B MOinil BUnODOUUUR (kM) Sim points of 1Q0M 




Open 

. Iwtwiti 

Chongs 

Wgh 

Low 

EOT vol 

Open ta 

Sep 

9403 

9408 

*004 

9409 

9402 

140029 

435018 

Dec 

94.13 

94.19 

*005 

94.19 

94.12 

128257 

amrws 

Mar 

9301 

9307 

*006 

9308 

9309 

51048 

270250 

■ HI TUASWTT MLL R7IUB8 0MM} Jim per 1O0M 



Jun 

95.78 

9502 

*004 

9502 

06.78 

3057 

8027 

Sep 

9628 

8503 

*003- 

05-33 

9428 

£115 

18,792 

Dec 

9408 

94.73 

*005 

94.73 

9400 

351 

7018 

AI Open fatoaal Iga, aa to prerfaua day 





■ UROMAflK OnKM (UFF^ DMIm poMfi Of 10094 




Strike 

Price 

vU 

ftug 

CALLS - 
Sep 

Dec 

Jii 

A«9 

PUTS 

Sep 

Deo 

9600 

013 

016 

019 

018 

006 

009 

012 

031 

grow 

003 

008 

008 

010 

021 

024 

026 

006 

9580 

001 

nm 

003 

005 

004 

005 

006 

069 

EaL tOL tBHL Ctih SS47 Putt 5497, FWaioua dayfa open ht, Oto 10«3M 

Piaa 12STO3 



■ roup s w im fuamc optwhs iffq sr* im powa at ioo% 



Open 

Sad price 

Change 

Hgh 

Low 

EOT vol 

Open ta 

StrOea 


- GAULS - 



Sep 

9400 

9409 

-002 

94.52 

9444 

21031 

51,180 

Price 

Sap 

Dec 

Mar 

Sep 

Dec 

9428 

9429 

■ 

9429 

0422 

12088 

39.190 

9525 

002 

028 

020 

0.10 

Mar 

9402 

9401 

-003 

9403 

9324 

10990 

34.707 

9680 

016 

017 

018 

019 

Jun 

93.71 

9305 

-009 

93.71 

9302 

5.1652 

28222 

9678 

007 

009 

Oil 

035 

■ THR 

B HOHTH nmODOLUlM QJFFEC Sim poirda of 100M 



EOT. vuL MaL COTk 15 Putt 30. nmfaus days waai inti. Cab 260 1 


Open 

Sett price 

Change 

Hgh 

Low 

EOT voi 

Open ta 






Sap 

8401 

9409 

*007 

9402 

9401 

85 

MX 






Dec 

94.12 

9421 

*006 

9423 

94.12 

60 

17W 






Mar 

9307 

93-99 

*009 

94.01 

9307 

80 

lose 






Jun 

93.72 

trim 

*008 

93.72 

93.72 

10 

266 







PUR 

Dec 

028 

042 

000 


MV 

049 

072 

080 


Prawtooa daft »o(, CaM 10832 Puta 18,103 . Prav. rfay*! open teu Ca»» 300.7*4 Pua 3S0573 


UK INTEREST RATES 


LONDON MONEY RATES 

■fta* 14 Over- 7 day* One Him Six One 

night nattai monm mortha monthp year 


4%-3%*a-xft«a-4a 5%-s sa-s* o%-o 

S»arSng CDs - - 4%-4jJ 5ft -5 5% - 5% e-5jj 

Treaaury BUs . 4% - 4H 

BPrfcBfc - - 4H-4S 4g-4% 5ft - 5% 

Lncii authority daps. 5* - 6% <il -«a 5-4B 5% - 5ft 5% - 5ft 6ft - 53 

DtacouOT Mariwt dap> 4% - 3% 4% - 4ft .... 

UK clearing bank bm landbig m 5% pv card tan Fabnnry 8. 1994 

Up M 1 1-3 3-6 64 9-12 


Carta at Tax dap. £100800) 

Cota el Tta dap. onder Cf 00800 fa 1 
Ak lander naa or raaouii 48P17pa 
ISM 


1 % 


3% 


3% 


■ *pc. 


3% 


A» tandrr raa *ti llaaou* 48tilTpa ECQD farad m 800 . Export Hnanca. IMa up day Ift* 

1004 Agaadou hr parted JUnS* lUUtoMZS, im.Schmnt§MaaaM7pe.Rahnnmimmtar 
potiod Apr30. 1994 ta May 31. ISM. Sdmaa H a V U32pc- Ftaanoa Hbhm Qaaa FMa Sfapa m 


Jim 1.1994 


t<UffqES00800 potato Ot IQOTt 



Open 

Sett price 

Change 

«9h 

Low 

EOT vol 

Open ta 

Jun 

9403 

9404 

*002 

9405 

9402 

7137 

80690 

Sop 

9429 

9408 

*006 

9406 

9424 

17807 

102937 

Dec 

9308 

93.72 

*005 

93.73 

9308 

24248 

139784 

Mw 

reran 

9304 

*008 

9305 

8208 

1111 3 

60082 

Traded on APT. AI Open Manat flga. 

an far preMoua day. 





OFTIOW (UffEJ £500.000 pofarts o« 100* 


Strike 

Pries 

Jun 

- CALLS - 
Sap 

Dee 

Jtil 

Sep Doc 

9475 

010 

003 

004 

am 

042 107 

9600 

0 

am 

002 

016 

065 100 

9525 

0 

0 

0 

041 

009 103 

Est vcL MOT Cato 6997 Pin 2740 ftarkwa rfayfa open lot, Cato 209039 Puts IWtW 


Residential 

Property 

PRIVATE 

ADVERTISERS 

please contact 
Sonya 
MacGregor 
071 873 4935 


To the Holders of 

R»**ruciUTWJ ObMostJons 
Batfrod by Srorior Akhu, BM. 

Pursuant to tho indonturo datod 
May 1. 1990, as amondvd and 
restated as ot June 15, 1990, 
between the lasuor and State 
Street Bank and Trust Company, 
as Trustee, notice is hereby 
given o»at (or the InlorMt Accrual 
Period June 10. 1 994 through 
September n. 1994. the rates 
appflcaWo to the Socurad Senior 
and Secured Senior SvbonXnatad 
Floating Rato Notes are 4.8625 
and 5.3125 respectively. 


LOW COST , u : r ^ 

SHARE DEALING SERVICE ^8 1 -944 0 1 1 


H 7 . 


MMIs-io'. i nh\| - H > > i j % ; m i \i n 
>! im 1 1< -.in 


BASE LENDING RATES 


% 

Adam&Corapefv — &2S 
Mad Dus Bank — . ..525 

MB Bade — . 525 

•HorvyAnubeetw &2S 

GUnkOlBaroA 525 

Bans Btoan Vtaea^a. 623 

Bank (X Coptic- 52S 

Back cl inland 525 

BankaUndb 525 

BarhotSroOand 525 

BeKfrfroBMk _£2S 

Brit BkcfUd East 525 
eBnaan SWpby ft Co Ud 525 
CLBankNadadand.^ 525 

CHbanftNA 825 

CyMtaBsrit S2S 

Tha Ceopanflw Bare. 525 

Coot* 6 Co 525 

OcdUytionae 625 

Cypna FopMar Bank .525 


% 

Duncan Uneto- 525 

Bw Back tinted _ 625 
RnandOT S Oan Bartr - 6 
*notwtR«Tftig6Co~525 

Gkcbank 525 

OGuinnasa Motion 525 
HabbBankM3Ztjrich.5ZS 
•Hambras Bark 525 

Haaabto&aaninvBk.625 

«HI3wuei. 525 

CHcwiACc.... &25 

Hcngtang&St»BpaL 525 

JLdan Hodgs Sank 525 

«LaapoklJi»Fh6SnS2S 

UoydBSttife 525 

Meghn| antic LOT 525 

MkMKJ Baltic 52$ 

"Mart Bating 6 

NatW bdtaMl ar.. 525 

•fraa Brothers.. ..525 


*nadMgheOu«n«*H 
CdporTOonUmfradlsna 
longer aulicrtaad as 
ataaMigMUion. 0 
RayriBkatScaHand^ S25 
•Sntifri&WMmcnSoca. 525 

TSB — S2S 

•Untied Bk of KuwOTt— 525 
UMyTiustBartic Pfc_52S 

WitonTwat 525 

WMgaKyUdM — S2S 
YtaridttiwBank 525 

• Members of .BritJah 

Merchant Banking 6 
SacuritlH Houaaa 

Aaa adMpn _ 

* friaricMaMMon - 


When you 
are trading 
futures on 
your own, 
information 
isavery 
valuaWe 


I 

To meettraden 1 needs for nariOTt - I 

and trading stratfgjruifonnMloe,ii« m 
erretedoorliaroAcrematnt fli gMt I 
-fr«!t oafln eiraatoni«a.YoQgit 

, a 


I 

~*D P ’^ i fr WIB.a WW WU 1 — 19 I 

yw bcooroe a mrup * 

er. Yon also have calMfcetccen to | 

our etclusire Wephone ‘hotllBoa,’ ■ 

with daibrnaitatualjab and B 

fading rectmBn aiw(M(i>a* (taa a fay I 

trading advisor. • N 


To meet traderj’ needs fiffiahtne ■ 
tionitwnl the tjpea of Kites «nd ■ 
J<»topbceth«i lWw o(o'OplS( m 
Pl*a«nt Made Eajy.'iste^tf fl 
step guide to thopwws, tad m . 

commoditv. ssssj 

w notion and haln f Int'i iJriii fiwm I 

I 


s 


-Brotn^ drafting jauthnw^ tawto 

wna^beensmingfctaiTstradera ^“or^taDBingyoBtBeo 
wee 1966 -sow know what kind 

fiSSSSStL "•rttiH— la-OTtaaa - 1 

h«^r3^V^iTr^ ,nprc ‘ MiMT own -pta BATIK aadt . a 

t-taJuaSSSE I 

close look rtLind-Wkhtaetf j 


i . 
«* 


Ste. 




SOTcotig. 


7M» Mfotaumn 


mm 2 A 72 m 

tsssser^r 

CoUtiiqrOtaeMIUD 
fiam:O50(MM3 


wnm.B^SSgg; 


HrihatBMteOeej^a p 

Mettosenuw 
otten aao7i-3«?.tim, utmmMm 
fiwKIMRHn 


— — oma ■ wro-aww i 

ini D-WALDOCK^^. cOMmNYJ 












FINANCIAL TIMES WEDNESDAY JUNE Ig 1994 


35 


WORLD STOCK MARKETS 


ftt:. 






- ^ 2*1 


.. “ '-t- 



EUROPE 

W5TW(Junl4/Sct4 


-WB> I— TM M 


LOreai 

Lsgmd 


l»IM K 


1.14B +51 V 

woo 4-iso 


♦ /- IWi IwW « 


+ /- 8B lilM W 


m 


► 7 - 


522 +1 024 sil « _ 


W LwW M 


► /- Wtt lami M 


AuaAk UHt 
EMUK IXIKM 

own nzu 

EACH 3.«0 
EVN 1,360 

Lannv 1406 
Mb MUr 
PflrtZm 031 
473 
248 
370 
017 
VIM 450 
WMbO 33«0lH 


“’IfsSPZS 3.0 
+8 1370 BS5 O0 
-IB 834 S3® w 
-B0 42B0 34M 04 
>30 1,713 1,100 14 

-SMB 1 ®®* 

-IB 1071 80S 14 


UOWK 

Nnwo 

a** 


229-40 

137 

1436 

142 

214JS 


+.10 


274207.10 14 «. AKDN 9X90 -40110419040 34 

-* 19710040 44 _ M« 4840 +.1DSX40 <8 — 

-11440 000 54 _ A/COM 20040 +1 40 229 117 JO 3.1 

-amaomiou _ /®™os*7£aora -jo bojo omo *a 

- 200 100 _ _ BOMM 3840 -20 4740 3840 34 

« a» 388 4J _ man 4£20 -M K 42 24 

+2 53S 382 64 _ GSM 8540 -K3D77408340 — 

0415148 3.7 _ OSM 1314081 -140 14S10UB 1-1 

MO* 1S3J3 -20 20017170 24 

Bawr 18820 + jBO KSJO tfHJD 14 

FMOpH 1540 -.10 23 1340 «J 

_ Omm* 10020 -4010030 

_ GtaOpR 


-1014SO 
-12 498 
-1 358 
-2 Ms 
-13 701 
-17 600 


931 2.1 
403 2.1 
171 2 A 
328 1 4 
548 24 
435 14 


-*8 44«0 3.411 T4 


■UUVUK£UBttmB(Jun 14 /Fra.) 


« arp 


.505 -103493 . 

=««s 


— ESI -27 9*5 770 £7 

§££ 38 *£S*Sii 5 

SS oigf-i MiS“ 

aeoM sa +7 reo sia 2 a 

460 -2 81043320 BJf 

48840 -S.10 7iM40L» 03 


24CKH 

-jorajgasjo _ serttlnaS! 


Z 37440 +05044520 SOW 84 

-W B JSJS B“ = 


-814401,130 - 

)£»0 11400 04 

+35 727DB.130 0.7 
-60 24001400 24 
„„ 1F ^ J2S -8 1409 775 12 

— BHHjta 17340 -14o 227 160 12 

— sum- 750 +10 080 707 __ 

3ndz/ta 721 _ 670 883 _ 

some 1J15 -3 14G0 1.460 24 

953 -2 1,100 845 14 

400 -6 531 338 44 

no -246 230 -m 44 

855 _ BIB 610 — 


-3 097 


► /-I 


-IB 

+8 


BIB 

784 


Ea 


— ff*M 

» <0 _ LUBxar 

~ HBpnijrr 133 -ijoisui) m — — zJffi 1 

«. wg*n 2102} -240 24420 2ML70 14 _ 

_ Mh 320 -1 33050 254 3JJ _ 

n.10 -JO 784840 82 _ 

74 


773 

1JQZ 

870 

1488 


770 

-18 S8S 735 _ 
-4 1403 1456 3.7 
-10 832 810 24 
- 11 1 , BIS 1 , 2 a 14 


73Z snot 

803 _ _ SWSW 

846 Bhokjt 

581 _ Shwttl 

425 1.7 _ ShaOn 
+13 50* 318 __ BmBW 

-SOigWim _ _ amsan 

— 811 406 _ _ Sb-ShS 

^fpljosJao Z zSSm 

-8 1.060 BOO _ _ 8un8M 


«aiw4280M —42*01705 1 7 |™ -6.10 700481“ U — 

Annul 7J10d -SO 8JB0 7«§ “ San 1480 -3 2470 1431 _ — 

Arted 4450 -“SJM+JWO _ “■ SacSan 0 OW +8 782 Me 17 _ 

ML 4.195 +16 4.670 4420 4J “ g°™ « Ugg -M 2400 1450 24 — 

Bttlx 17.130 -aSIBJBOITlK 24 „36§ +8 529 S38 - _ 


20280 -iSKKH 

““ 3B.100 -10oS^»j££b 
____ ! 445M -ssoaosiieauEo 14 

gSR" 33 

5?® -.,*00 _ 2,700 2200 16 

SSSP ^ -wsjgowoaS 

188 +2 202 1 M 84 

-70 0400 0.100 12 
♦12 1450 1230 22 
+10 0420 6470 72 
+6 3400 3210 34 

+10 a .^03,970 AA 
+10 4470 3450 *2 
-1014001480 24 


28840 — 4J0 37728030 42 _ 

HtTBTl 1W 

TjOln 2410 


— To 

— IMP 


S** 



^rasnsa z 

MW&SS 3 E 3 S = 

^ -aTo SU333 Z 



... u = PACIFIC 

:S££s 2 li z jm«u«n;vta) 

44 14 — . 

1440 


irdtf 


1420 

’S 

570 
387 
666 
581 
1410 
2270 
780 
8430 
030 

- = ^ 

-8 782 638 __ SunCon 533 

+101^30 7g _ _ SunOn 637 

_14« 988 04 _ SwnCp 1^50 

-15 840 512 _ _ SienSs 1480 

+3024001480 Z Z Surth, *S 

-8 no *28 _ _ SunLlM 4*4 

-40 675 780 12 ._ SamMar HR 


^§S*7SS =« 




0490 +10 0.180 8.000 ^5 _ 

9.100 -10010X00 5200 12 _ 

4.700 -10 iS5 4.180 24 _ 


(Axi147DnL) 


VOMMliaOaj 
ftnUB iSaw 
POtap 10.475 
Partin 3,150x1 


+30 3285 3270 * 8 

_ 8200 BJOO 12 

8.700 -10 72» 6280 1.7 

— 8280 8.000 4.1 

-. 1230 1239 82 
+1JD0 ULOOBifacio _ 
-*B 10,25 8498 2J 
-30 3280 3226 4.4 
_ 988 *20 3.4 
+20 8400 4230 4.1 



— WB 178.40 -3201KUD 153 12 

— MMV 58520 —1520 B35 54* 2.1 

142D -50 T/X4B 1.120 1.1 

2.416 -28 22112487 02 

838 -2 B70 87S 10 

1210 -40 1,191 887 _ 

— BAST 30020 -SffljS 278 27 

— MiwK 405 _ 510 430 IB 

— BnkpM 38320 +20 485 348 22 

35420 -8.70 40*80 339 at 


"*52»W5.0UO 42 „ DmH 4Z720 +120 53120 424 3.4 _ 
- 10 4230 2250 52 _ BMMT 7742JW -1420 B29 639 12 _ 


2209 48 
-2515.700 14.475 42 
— 1275 1282 82 
-26 17350 1<H0 42 

400 -2MJ5!l002jSo 24 
2270 — 2230 2240 42 


(Jui 14/Kr) 


835 _ 730 666 22 

228 -4 281 215 22 

201 -2 333 207 12 

5250 _ 7200 5.700 02 

BS12A 124.500 -500 HBR 1132Q5 0.4 

(Mko 980 -10 1.140 920 12 

-11 427 310 32 
-1 20325 162 21 
__ B16 397 23 
-20 843 445 22 
-8 278 213 CLS 
+3 425 332 22 
_ 1250 1.140 02 
+2 385 2S2 32 
-8 78321 586 02 

-5 737 
-3 BIB 
-4 675 
+2 485 
319 —220339.48 



CarlA 


DmOsfc 


332 

EMH 175 
FLSB 520 
BOtara 5-10 
ESS 221 
JyekeR 361 
LftmB 1400 
MIT A/5 277 

NMnB 655 
RHM 575 
SophsA 567>l 
SoChnB GOG XI 
Sigm 423tf 


TinDm 

lixOM 


530 02 
530 07 
473 07 
321 ZA 

30ffl _ 

040 _ 1J72 018 14 

220 -10 287 207 SS 42 


HMUWKJunM/MoI 


Amet A 

QAtof 

Bi$nA 

EnaoR 

wei 

KOP 

KhMo 

KoneB 

MWi'm 

Uebafi 


OtfonpA 

SS 


124 -4 15410250 12 

130 -4 118 139 12 

85 _ 105 80 

38 +404820^80 12 
171 -3 233 1TD 24 

1020 -,1017.401030 _ 
SfiJM +20 E» 46 24 
980 -M 706 
108 S 132 
IBS -1 347 
158 -5 250 

205 -IS 298 
200 -19 280 

83J* -ISO 102 
79 _ 1M 

8120 -20 102 


0620 -40 120 84. 


57543550 ZU 
-0 890 015 IS 
-0209*061} 238 12 
-1 528 i ' 3 3_7 

—820 061 750 1J 

_ , 1480 -30 1230 1.140 02 

_ OoOCnP 880 -SG1230 840 12 

(bnmdlk 32420 -2.70 388 328 3J 
Conmi 24120x1 -520 298 238 T.7 
DUW 49220 “7.50 BOO 46850 (L4 
MHr 740 -7 914 736 1.1 

Donna 480 -12 EBB 443 12 

_ Dt Bn 2Z540+I15B2SBJ5D 224 _ 

_ DacbBh 73520 -88B72072BJ1) 24 

_ OdWtlc 16220 -5 188 132 25 

_ Doom 559 -13 B07 SSI 45 

Drewk 279 „ 310 260 IB 

“ m*fik 377 — 460 40 Bl£0 370 X6 

“ ffit 567X1 -7 818 465 14 

Qmxxn 2S5 -4 307 260 1 2 

GWoctl 700 -15 715 500 2_0 

~ HmnbB 200 -8 W 188 32 

~ HBhQkn 1400 +10 1480 1,180 1X1 

— KntaPSOGJXkri —220 881 600 1.7 

~ mtz 378 -6 440 370 ZS 

— Hoctltf 1X174 -8 1482 1,040 14 

~ If cli* 33BJ0 -23TO502fi3 2.1 

— Ham 880 -1 1JM9 830 1 4 

— Horton 223 -3 253 222 2.7 

— K8 284 —4 324 284 34 

“ MW 389 -1 433 303 2.1 

— MBS 143 — 109 14143 _ 

— KnU 918 -6 849 51S 21 

— KIM 514 -9 668 451 24 

— KHD 13340 -2B0 18140 11110 __ 

KkxXW 145 -5 170 10270 3.4 

630 __ BOO 050 1 . a 

781 +T asu 895 1 5 

undo 883 -05 960 830 14 

Lttetf 308 -2 *10 352 22 

— LuMxi 187 SWIMi IBS _ 

— UltlPf 100 -4 216 156 14 

— MAM 302 -6 470 378 22 

— BUN Pf SIB -6 887 302 24 

—1020 48840 887 12 

... +2 822 7S5 _ 

213 +2 28617640 34 

2.740 -8034172740 0^ 

226 -0 282 210 _ 

626 — S305M4D 27 

782 -18 888 098 03 _ 
42140 -440 488 418 24 _ 

02 -64052340 420 24 - 
*24 335 34 — 
_ 1420 14*0 04 
-10 372 300 23 
-1 


-i nuo 79 25 

-JDB940B9J5 — 
-JO 0040 8540 21 
-.10 5740 40 1-0 

75 -1J20 0440 7340 14 
IIS -M 131 HMD 34 
5840 -40 88 54.3V S 2 

12140 ^501354011041 28 
8840 —.70 18056 SSJW 5.0 

FZMch 10840 +40 21540 U82D 44 

~ -XM1G0404040 1J 

. +230 238 187 34 

— 17440 —20040 IBS 21 

VnOOsa 62 —40 50404540 14 
WHDpA 112 +401335010440 1A 

HORKtAT (4X1 14 / Kroner] 


— AMAT 79 -250 112 79 4.4 

— ftgmA 107 -40 199 130 06 

_ CtwOM 1210 -,101040 1240 _ 

160 _ IK! 129 14 

_ 01 -340 114 8640 — 

— MOM 11040 — 140 

— Ibnrr 313 -S 380 

— LaVH 68 -21168) 

222 -340 *»■ 

180 -4 208 

260—305 

HUM 144 —16*40 

— SWBM 7540 -240 91 

74 -1 TH 

8140 +140 97 

112 — 122 0540 14 

120 -6 151 120 £2 

37 -1 0440 31 — 

80 -2 09 97 94 


NptB 


1480 
1,550 
1.180 
1,770 
688 

1,470 

_ taU 512 
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904 

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— 


INDICES 


US INDICES 


Jun 

1* 


Jkn 

13 


■199* 


m 


Jun 

14 


JUR 

13 


Jm 

ID 


Htfi 


-i» 


Uw 


sbwx pan 377 ) 


MOnknwxVUEQ 
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IB/2 


CnidKAUaitmzm 
Traded taW2n/91| 


10612 


41803 

1072.73 


2009.4 2340“ 3fi 
1051.1 TI3G.10 3/2 


42406 42236 4MEB SB 
10328 108402 122225 VS 


BB20 n«»ii 

Bnd 

Bowspa (201339 


1480.40 146448 146888 16*286 9(2 

fit 294680 302040 30SWUB lH 3800J0 


17756J0 2M 


198110 5 IS 
S/S 


48120 Bfi 
101108 M 


MS 


VI 


PCfta* 18 78) 

an dhwiwotii irp 

CSS Al Sr (M 83) 
Cta 40 (1/7/36) 


« 2291.12 238555 28BU7 BO 


*28 4 

Z7L9 


ms 


432J 

274J 


31/1 

ST/1 


0“S8PvK2n«3| 


207B04 210402 212U0 MBS 3/2 


1 09804 105252 105032 1211.10 280 


IMbOtappnAS 293805 2888.19 29B&.1B 330947 4/1 


Bn (1077) 


28274 


ft) 322600 1812 


«J743 3 0/4 


41700 5M 

31/3 


201202 56 


HBM* 14B 


258743 98 


2SO0Q 3 n 


MetNs MW9ffl975) 
Cnnpadtaf (19T9 
nanft*o§§ (t/l«3) 
out 

PEA Gen (31/12/801 


CtipM&ganSECinas 


)B SeartCWMO) 


SBF 250 (31/12/90) 
CAC 40(31/12/07) 


HZN*n01/l2fi8) 
Qmm*nww(l/l2SS 
(MX P0/12/B7)t 


nm sqsi/iasa 

Hong bag 
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tab 

BSESNKJ1B79) 



381276 

3770.71 

3878“ IBS 

329006 2Q» 

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4206.78 

4Z10JS0 

488809 23/3 

410800 20» 

SE3«-e“n0W78) 

558“ 

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581-31 

MLR 

4rt 

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195826 

185807 

218208 VS 

191347 m 

sarai nu 












£Ee“0B/V7S) 

2121 Of 

20650 

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333100 

4/1 

1740“ 14 a 


45*4.4 

45320 

4867 JO 4/2 

390120 414 

JSEHL (2H/7B) 

STZUAf 

smo 

“450 

672300 

14/B 

5440“ 19h 






Sort Kona 







38003 

372.16 

370.74 

4IUB 2/2 

38303 IS 

KnaaCnvB44/1/80r 

80322 

9232* 

02804 

57428 

2/2 

BK37 SM 






Sprt 







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1B9TJ 

17114 

tUUO 4/2 

HDL10 3/1 

MsWEEpmass) 

■WiM 

32103 

32551 

35831 

31/1 

30X73 ZQ» 






Swadwi 







1338.77 

133200 

135821 

158520 SB 

133200 13/8 

ABtastadoGan (1/2/371 

143800 

1438B0 

144880 

“OUB 

31/1 

1403“ 31/3 

1091 BS 

197708 

202072 

235503 SB 

1977 JB 13/B 

StoBBtost 












s*rt * In) pvn2/58j 128354 

T29B3B 

129508 

14035 

3V1 

153X73 05 

73808 

804.40 

81073 

mar IBS 

77033 20 

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9BSU2 

96873 

97XSB 

wa 

31/1 

W7JB 3S 

2236.4 

22BOO 

2299L5 

MG850 2/5 

222120 S3 

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2074.70 

210578 

213388 

227f.11 ies 

HMl-W 20 

mtatr^Bnasr 

EU9BJM 

Id 

5094“ 

848462 

E/t 

810403 19/3 






TWbxd 







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82SJ7 

033.B? 

119UB 1B/1 

BOUT 295 

Bataok SET pOM/75) 

137808 

137X04 

138341 

176373 

4/1 

1109 4M 


Dew donee 

to 

13 

Job 

10 

Jm 

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1994 

Id* LON 

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Bgk l m 

WHMtal 

378112 

377X45 

375X14 

397X30 

tnro 

359335 

(W5 

397X38 

pin/M) 

4132 

07/33 

Hm Santa 

0X45 

0X67 

9X71 

10501 

evil 

9X43 

(13S) 

18177 

(1B/10S3) 

5409 
tin nan 

IkBHpnt 181819 1G0B28 1605.17 M6229 15460Z 188829 

( 2 / 2 ) ( 2 QH) mm 

utltas 1B892 136.13 1B501 2Z7“ 177.7G 25841 

(30) 02/5 PU8«» 

DJ Ind. Daya 380817 (379808 ) Uw 374128 073800 ) (Thacradea+I 

Day's NJi 37072* (377900 1 Lew 37SO.es (S75101 ) (AcmtoM 

1232 

(OWE) 

1059 

0403 

Srtwterd and 

CtnparitB 4 

Poor* 

45X10 

45X67 

457“ 

48200 

m 

438J2 

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492“ 

earn 

4“ 

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fcrtMBMiy 


531“ 

531.48 

508159 

03 

51005 

(21/fl 

wm 

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pi*®3 

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40“ 

4X65 

4X54 

4UB 

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4140 

(4fl) 

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(1/1074 

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253.7B 

25X59 

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2B7J1 

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24114 

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02/04) 

448 

(25M«3 

total ih u 

4*1 .IB 

44104 

4*1.10 

417“ 

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427“ 

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2X31 

19/12/73 

NAEOAO Crap 

731 JO 

73425 

72X08 

goes 

tm 

10551 

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sous 

(181304 

54.87 

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■ RATIOS 


Jun 10 

Jun 3 

May 27 

Year ago 

£68 

£88 

£69 

£03 

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Jun 1 

May 25 

Year ago 

£44 

247 

£46 

£51 

2£31 

2341 

2341 

2S42 


Daw Jaw bvL Dtv. YWd 

S 8 P Ind. Dh/. jWd 
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45442 2BM 


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total 300 (1/1082) 
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179055 180251 1BB5.1I &BM 2(71 17W.T2 W 


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Fnm HP+1M (ZMVBq 1207.17 120743 122341 tmOl 212 
JCtaAgra(3VI2«q M 3(277 31£Z7 306.19 5/1 
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NEW YORK STOCK EXCHANGE COMPOSITE 


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FINANCIAL TIMES WEDNESDAY JUNE IS 1994 


4 pm doss June 14 


COMPOSITE PRICES 


NASDAQ NATIONAL MARKET 


4pmcto3eJuMl4 


«■* L * n -* S2 Pm ' 

ConBoued from previous page 

MW7M5 lift, it% vn 

-y^ agg-. zsioo ^ a j ^ 

57% 30ft sttaftm 029 9.4296 44 56% sift SB*! 

IKS* 14 3 S Si st _ 

B 2319 3b5j 39 3gjL a 

13$ nJSBtanonBr [128 22 776 12ft 19? - 

3%44%S*nnx <U4 u B 1755 So£ ££ 5 

25T8%MhGE* 1X8 DO 10 1474 iK W 
016 IX 9 338 9 all 

i8J ?fl IB 68 35% 35$ 35% -ft 
0.10 04 12 6512 22% — ^ ~ 


10 7ft 

40 34ft. -- 
26ft 19%SarW> 

26Z0%Stt*na „ 

S)% e ft Sara Dap *Z82 £3 11 425 
aft 13% Scaup 

Aaftuftsam 
®%54ft5dttP! 
fiiftsoftsaten 
33$ 2 5ft 

lift 


♦% 
ft +£t 
IS ft 

B ft! 



£64 20 151MCO 22*5 22ft m! +JL 

2H2a3 1l 425StfSS^?S 

1.42103 9 7902 1« 13? U? -ft 

26 104 35ft 35% 35ft -ft 
m 11 is 2234 ed m2 £% +5 

jjgjj* S? *% S3 3 

wa 1.0 13 2oi7 aft asg a ft 

S H lit B B -ft 
012 03 73 1318 38% 35ft 36% *1% 
110 0.7 13 68 14% 14ft U% 

'A “"SSflfr “ft sft ♦» 

021 09 201 23ft 23ft 23ft JL 


0.1B 13 317 1 

- - 0.70 4.3 8 2 1 

16ft 15ft Sad .4655 1.46 &4 6 ,6 

_22»ftS«a|pm* 056 13 39 5636 31 


ft 23ft 
10 10ft 
IBft 16ft 
15ft 15ft 
31 31 

27% 



fg&jare S3>* 

asss. a s s, s , 

»ft 2BS«waat 0J2 06 30 1811 29ft 

39ft 27ft Stota* OH) 13 5 4100 31 

**21 050 1J 17 4 31ft _ 

042 7.7 20 1130 25 24 

»% 082 17 13 329 25% 245 24ft 

®]5ft5»»W 022 1X2113828 17ft 16ft 17ft 

25 19ft ShanmitM 020 34 21 38S6 23ft 23ft 23ft 

1*> ’OftSW**'* 028 17 22 6 1D% 10ft 10% 

*5 SS? M? 4.7 20 764 B5ft 64ft eft +lft 

36ft 29% Show £L58 13 17 1447 32ft 32 32 +% 

! 5 b ®" 5 * 11 1174 left i»ft ieft ■ 

22ft 15ft 9MA0B1 « 0.10 05 2Z 531 20ft 18% 20 

20ft 17ft SWta PK M2 6.1 11 128 15ft 18ft 16ft 

S 8 SftSpteApp I nOO 7ft 7ft 7ft 

34ft Sbnet Bhk 1X0 24 13 90S 42% 42ft 42ft 

t^Saa** 28 4411 20% 20% 20ft 

lift Stator 1X8 82 35 75 13ft 13ft 13ft 

Bftantor D18 £4 47 63 6ft 6ft 6ft 

24J»17%Skyinax a«8 ZB 17 57 18ft 18 18% 

5 3%SLIMs* OJ06 1.4 16 102 4ft 4% 4% 

B% 4ft SnMlCuro 020 4.0 83 411 6 4% 5 

15ft 8ftSirtWn 114 2367 15 14% 14% -ft 

32 ft 26ft SKBchA 1.12 18 15 202 31 35ft, 30ft tft 

Si’ !• 23* SKBEqU 1.12 40 3818 28ft 27r 

24ft 18ft SmORlFd a52 26 13 Z76 20ft 19 

»20%Snu±*rJ 050 22 15 79 23ft 22 

44% 34% SfeOnT 168 20 18 143 37ft 37 

21% 17ft Snjder 01 * 024 12 25 1650 20% 

3* 23%S<*x*on 28 6694 20% 

33 28 Son* 1X8 26 9 4110 30ft 

fiJft Oft Saw 047 OB138 301 B1% Sift 61ft 

19% 12%Sc0tays 024 IX 61 1421 12% d12ft 12% 

46% « Sara cup 160 04 30 43ft 42ft 42% 

45ft 32% SlUICaM x 250 7.1 5 35 35 35 

24 19% S8UeraM 1 1.44 76 11 560 18% tflSft 19ft 

30 19%SO0M1 090 24101 930 21% 20ft 21ft 

22 17ft SCMWI 130 03 10 11 • 19 19 19 

21% laftSNtdCp 068 11 0 305621% 21ft 21% 

22 17% SthnQg 1.1B 6.1 S <762 19ft 19ft 19% 

33% 2fiftS(XJBrtG£ IXS 5.7 11 179 28% 28% 28% 

35ft 2flft SNETto * 1.78 U 58 8GB 33ft 33ft 33ft +1-39 

30 24% BWMr 004 0225999026% 28 28ft +% 

19% 15ScuTWGas 0.82 43 21 119 IBft 17% lift +ft 
18% ISftSouOltt&B ON 13 15 422 15% 16ft 18ft -ft 

30% 23% SRlWWi#5v 220 83 TO 203 26ft 25% 25% +ft 

12% 9 5{M0 Find 046 GlO 91 9ft Oft Oft -ft 


1 



♦ft 

+% 


7ft 5%Ei»«inqi 
19ft 14% Stf«BD 
39% 29% Sprtnox 


10 110 5% . 

012 07 16G6 16% 16ft 16ft 


05% 5ft -ft 


40ft 32 %^eMx 
18 13% SBC 
19ft T4SHOmn 
26% 14% SU Motor 


s 


130 40 II 130 30 <GSft 20% __ 

1X0 27 2618GB2 38ft 36% 36% -3ft 

040 25 20 300 16ft 15% IS +ft 

0.40 23 3 54 16 13% 19 -ft 

, . 032 IX 13 2359 18ft 17 19ft +lft 

12% 7% StsidPacm 013 1.4147 702 9 8% 8% 

38%26ftSKM OJ54 13 13 199 28% 27% 28ft 

30ft 24% Stondn 056 2.0 17 47 28 27% 27ft 

37 3l%SBntnagx 1X0 3X IB 627 33ft 32% 33 

44% 36% Sam* 1X6 12 20 <72 42% 42 42ft 

38% 37%Sta9oc 1X0 17 317 38ft 37% 38 

25ft 21% Stomdir 088 11 20 19 22ft 22 22ft 

11% 10SUUUV 0X4 04 61 10 HID 10 

S%24ftSklfHlA 080 2X 7 623 ZS^z 27% 27% -ft 

7% 9% SMB0RPX 020 19 6 54 7 8% 7 +% 

10 3%StodaaMn 008 axi25 3SM ulO 9% M» +ft 

35% 20ft&Mg5im 27 713 33% 33% 33% +ft 

10% TftSOWA 0.12 IX 4 100 Bft 9 8 

33ft 27ft SwuMMi 0X0 1X 36 28u33% 33ft 33% 4% 

18% 9% Stow DM 071 4X 38879 16ft 15% 16ft 4-1 
Z7%1»ft Stop Stop 20 1092 24 23% 23 

16% 13% EBGqu x 084 03 17 117 19 15% 15! 

41% 25Sk7di 9 1794 30% 30ft 

32 22% SUu 41 BOB 29ft 28% 33% 


._ I** _ . Til N Bto Cbm ȣ 

“to Stack Hr « E HMta [wtaOM 

29% 21% TJX OSS 14 14 5421 23% 23% 23% 

t lB%l4ftTWBM9 1X311X14 139 15ft 14% 14% 

77% 61 TO* 1X8 2X 19 480 99% 55% 68ft 

13% 7ft TZMefld x 110 08 101489 12ft 11% 11% 

38% 22% Tatar Fa 206 28% 29 29% 

7% 5%T«ejW o<2 01 11 286 7ft 7 7 

IDTtajPI 1X0 OO IB 12ft 12% 12ft 

34% Tratxtt 1.88 4J 20 949 39ft 38% 30% _ 

10ft Tman 2 7493 13 12ft 12% +ft 

30%TaF0f 090 IX 14 109Q 38ft 36 36% +% 

1Z> OftTarusiton an os 26 10ft 10ft 10ft +ft 

; 16ft TbcoBjOB 1X1 SX 15 349 2S% 2D% 20% -ft 


_ 23%Ttt1BL 080 2.1 18 S3 29% 28 
4 2% Teteaa 20 m» 3% . 

26%UftTlldjn 080 44 S21CJ79 19% 17$ 18ft . _ 

48ft 34%Ttk£to5A 1X5 U 8 37% 41 ft 40% 41% 

TOMftlBlinBX UB 15 1228962 5»ft S3 58 +1B 

54% 43%TtaaU 1X0 2X 41 64G 50ft 40% 49% +% 

30% 10ft TampICtftfttk 0.17 07 254 24% 24 24 -ft 

9% 6%lM*Uga> 060 BX 164 7 6% 7 +ft 

" 6%Tteto«H*0XO 04 639 7ft 7 7 



TXO 12 19Z781 48% 48% 48% + |ft 
TeppcoPto 2X0 92 II 43 29% 29% 29ft 

28 1815 26% 254; 20 +% 

006 IX 0 18 6ft e 6 

0X9 1.0 24 1009 9 7% 8 +% 

20 240 lift 11 11 

3X05X 14 5201 6463% 64+% 

3X3 8.4 Z100 5Dft 50% 50% 

0200X45 70 36% 35% 36 A 

172 09 15 8464 80% 77ft 79% +3 

0.40 2.1 23 15 19 19 19 

3X8 05 19 3130 32% 32% 32% _ 

1.10 32X 1 126 3ft 3% 3% -ft 

1X0 15 13 523 55ft 54% 55% +% 

225 3 4ft 4ft 4ft 

0X5 IX 118 10% IB% 18% 

^ 028 OX 81 30% 30% 30% 

44% 38 TtHrmoBoc 012 OJ 23 894 40% 30% 40 

29 22% 7MaU 0X9 27 8 322 25% 25ft 25ft -ft 

88 SBftTHMta 2J24 14 22 22 85% 65 65% +1? 

tB% ISftltoMitaa 040 2X 40 54 15% 15% if 

41% 29% Unman M 140 5X 16 11 40% 

23ft 18ft nowr •- 


31ft SOftTtnlym 
9% 5ft THtt 
9% 6%TtnataO$ 
12% 5% Tom 

51% aoToocoC* 
39%29%TesBM 

OBft 61 TdM 
21ft 19% Tam Pte 
C%31%T*OOa 
4% 2%TBdnto 
sa% 50% Team x 
4% 4llndnagr 
24% 14% TW CBp 
37ft 24% TMRnd 


23ft IS _ 

35% 29%T«aeyx 
44% 34ftTtoMni 
^ftaftTntiar 
37ft 31%TMai 
9 2%TBanCn> 
13% HTBnH 
4 TockJSJlp 

15" 

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19% ii%TMBraa 
nsoftTatHBH 
48ft 36% Tanrti 
30ft 23 Tare Carp 
35 27ftTDBOX 
23% 22% Tbaosmtx 
40% 32% wu 


11 TokhctaiCo 0-58 4.9 32 
2STatatE2X1 2X111.1 


l 

+ii 


040 IX 33 2286 20% 20% 20% 

0X0 OX GO 937 35% 35ft 35ft 
039 OX 67 4401 38% 37% 38 

1.0B 14 25 «SS 32 31% 32 

1.00 10 90 225 33% 33% 33% 

8 138 5% 5% 5% 

1X0 8J 4 12 12 12 

5 382 4% 4% 4% 

19 lift 11% 11% 

3 25% 25% 25% 

14 111 13% 13 13 

044 07 18 2 62 G2 52 

1.t2 17 11 834 41% 41 41% 

048 2X 17 USB 24ft 24% 24ft 
0X9 IX 13 1438 32 31% 32 

0.14 06 38 4 22% 2% 22% +.15 

_ _ . 23 2913 36 85ft 36% 

2B 22% Transoms 1X2 BJ 10 7100 23% 23% 23% 

57% 48% TTwam ZOO 17 9 293 54% 5454%+% 

5% 45% rnraaram x fUB 0.7 U 30 54% 54ft 54% +% 

ie% 14 Trmco 0X0 19 11 444 15ft 15% 15% 

14% 12ftHmscntH 5 3 14% 14% 14% -ft 

0X4 1.7 11 7 13% 13% 13% +% 

0X0 1.7 9I48Z7 35% 34% 35% +1% 
024 IX 15 11 14% 14ft 14% +ft 

2.50 72 2 34% 34% 34% 

12 2G2 10% 19% 19ft 
1X4 1X 22 1280 59ft 5B% 58% +% 
078 13 5Z7 23 22% 22% +% 

0X8 1.7 23 SOD 39% 30% 30% -% 
0X0 1X951034 35% 33% 95ft +1ft 
010 OX 62 3547108% 34ft 35% +1% 
29 736 3ft 03% 3% -% 
0X0 19 32 74 5ft 5% 5% 

012 IX 82 7% 7% 7% -ft 
064 3X 3 508 17% 17% 17% 

070 16 18 2 19ft 19ft 19% +ft 

040 OX 20 804 40% 47% 48ft +1 ft 
010 IX 3 424 Oft OB 9 
74 105 5ft 5% 5% 


17% If 
43 31% TfMr 
15% 13% Tnxfagvi 

g 34TrtC0nH5 
15% Time 
55 Trine 
24ft 21ft TrtCBn 
47ft 33TiMy 
40 31% Time 
34% 24% mai 
4% 3% Tucson B 
7% 4%n*nOp 
14% 6%TMUIa 
28% 14% Ten CM 
21ft l8%TMn0kc 
55ft 44ncaL 
10 STjeoT 

«ft STJIe 


29ft 23ft UJBRn 
8 5% US 
51% 47ft USFSfi 4.1 

36 20% use 

1ST 


- u - 

0X4 19 20 1117 20% 28ft 20ft -% 

34 23 Bft 9% 0% 

4.10 03 13 49% 48% -ft 

5 3101 22 21ft 21% 


1.12 4.0 


51% 49^2 USX Caaot 175 7X 


191598 27% 
18 49% 


_ . 27% 
049ft 49% 



18% l?SMdMta 038 10 ID 641 13% 12% 12% 

33ft Z3% Storm Hour 1X0 4.1 16 180 29% 29ft 29ft 

4ft 2ftSWwSto» 030110 0 4 2ft d?ft 2ft 

10% 10ft SO) ns A 1.10105 7 43 10% 10ft 10ft -ft 

6ft 4S»DhB" 024 4.1 5 748 6 5% ' 5% -ft 

7% BftSanEwor 0X8 5.1 55 34 Bft 5ft Bft -ft 

43% 33ft Gwnnr 040 IX 13 544 «2ft 41ft 41% % 

49 4ISHMTK 1X0 14 19 3092 048% 48% 49% +1% 

lift BSudttPf 1.19138 35 8% 8% 8% 

3ft Tft&nMI 2806 1% <H% 1% 

50ft <3% SUM 1X8 ZG 131389 48ft 48ft 49% 

14ft lift SupeFMI 036 2X 14 105 12ft 12% 12' 

49ft aOSWMar aiH 05 23 1771 34% 32% ' 

*0% 30% Sum 0X8 17 12 1386 32% 31% 

20 11%SU0Cton 016 IX 16 527 14 13% 1! 

23% 18 Stas KM 008 04 B5 20% 20 20 

27% 15%S*ltfx*TB 48 1540 24% 23% 24 

10% 7ft SyiKCWD 0X0 ZB ID 36 Bft 8% Bft 

10% l6%Sjowwfn» a« 15 18 339 18% 18 18ft +J53 

Z3% (2% Spam 1X4 4X 12 4524 23 22% 23 +ft 

29% 24 9na 038 1X21 8158 25% 24ft 24ft -ft 



-T- 

8% 5TC87BM 0X9 15 23 197 5% 5% 5% 

35% 28ft TCF HM 1 00 ZX 11 81 35 34% 34% 

9% 8 % TCWCduvS 0X4 BID 233 9% Bft oft 

48% 34ft TDKCnpA 047 IX 49 0 48% 48% 48% 

2ft IftTISMOB 0X0107 1 44 1% 1% 1% 


150115ft IML MB BBS 120% 119ft 120ft +1ft 

1 eft SftUDCIta 1X829X 4 134 5% 5% 5% -ft 

24ft1BftuaGop 1X8 BX 24 173 23ft 21% 22% +% 

11% 8%UMChc 13 209 9% 8% 9% 

27 2SftlMitac OXB Z2 18 400 25% 25% 25ft -% 

17ft 14ft (tattttx 
74% 58ft IMNr 
12fftlflO%IMMV 
50% 42ft UaCmp 
28% 21ft UiCM) 

13ft 10ft tMaa Cap 
54ft 45 LW3 150 
67 56UH94.50 

39>2 30%Uiaaex 

a 55ft UnPacz 
23%UnkrCIM 


OXB 2X 18 400 

OW OX 17 64 16% 15ft 15ft 
2X0 4.5 B S 62 81% «1% +% 
4-54 4J 15 823 105ft 104% 104% +1% 
1X6 12 68 645 48ft 47% 48 

0.75 Z7 27 3718 28 27ft 27% 

10 3] 10ft 10ft 10ft 

3X0 7J 7 48 47 48 

4X0 7.4 710 01 81 61 

138 7J 11 368 32% 32ft 32% +% 

1X0 17 17 5GB2 59% 57% SBft +1 

_ 064 2X 11 488 28ft aft »ft +% 

22 10ft UUMThk OJO 1.1 53 498 10% 1S% 18% ' 

S ftlHtfn 0 282 !| H % 

WlMto* 177201 7 3302 19% 10% 40% . 

3ft 2% Una Cap 23 100 3 2% 3 +% 


«■» W n 5b Dam hn 

■to leta Mr k E llh Hp It* Mi flm 

§ 68 44ft [NM Carp 0X8 ZD 12 2668 48 47% 47% +% 

»%Upfn 1X8 47 135058 31% 31% 31% -% 

15% USUCO 124 1J 7 60 19% 19 19% 

Bft ISLH he 0X0 7X0 10 IDft 10ft 10% +ft 

15% USX M 0X8 19434 2982 17ft 17ft 17% 

45% 30% LEXUS 1.00 17 8 M74 37ft 3tft 36% +% 

17% lAusxDta 0X0 f.3 17 342 15ft 14% 15 -ft 

J1 28$Uttp1.775 1.78 BX 4 27 27 27 

31% 27% UKap 1X8 07 15 269 29% 29ft 29% +ft 


- V- 


53% 44ft VF CP l 
24ft IBftHBreE 

7 4ft. VaH Inca 

6% 7ftVWaajrtx 0591Z4 
SftUtotolferi 1X0 1Z0 


1X8 Z6 12 934 4Sft <8ft 49% -% 

052 28 252 IBft 18ft 18% +ft 

0X8 1X131 95 5% 5ft 5% +ft 

100 8 7% 8 +ft 

110 10ft 10 10 -ft 


12^ fOftVHMOHIt 0LB4 73 190 11% 11% 1l], 


BftVanoM 79 756 

39ft »ft Wrtw 0X4 17 12 1128 
50ft 33ft Virtty 3 1850 

15% 13ft VRAM 1X6 7J 0 9 

78% 64ft VK6PS.0I] 5X0 7.7 5 


41ft SlftVHnM 
25% 20Vetota 
20% 20% Wn toe 
9(% 73ft matte 

i4ioftWunan 


, « 

« 34ft 34% 

«| 37 39ft +2ft 

14 13% 14 -ft 

55 ® 8fi 


19 119 30ft 30% 38% 

10 43 22ft 21% 22 

W 131 24l Z M 24ft 

1X3 ZO 24 1 938 77% 77 77% 

16 2D ltV% 18% 16% 

181134 18 17% 17% 

100 5.4 44 399 107 38% 37 

1X2 2.8 19 219 47ft <7 47ft 


- w- 


B% 20%MSM TB 277 21% 21ft 21% 

27% MM. HcMn 1X2 07 13 65 28ft 28% 28% 

®ft 13Wlta0tae 38 880 16ft 1Bl| 18% 

6% 30ft Mw 1X0 14.12 1465 35ft 35 35ft 

15 12% Hfldoertut 0X6 Z45O0 XuISft 14% 15 

§ S% 

87 0X8 1.7 19 869 40% 4lftt 

0X4 IX 17 ua 34ft 3<% 



42 : - 

35% 

29ft 

5% 2ft Vtaerhs 
72ft eowatara 
u% uftwe&Ewv 
42ft 99ft WnhS. 
25% aS%«BsMW* 

284221ft WarifS 
35ft 19%9taKJnt 


017 07 2410500 25ft 24% 
82 2% 


0X4 1.4 7 82 2% d2ft 

Z44 3j 4 33 2030 71ft 70ft 71 

1X0 84 25 187 1S% 15ft V 

2X2 07 14 10B 39ft 30 aft . 

1X8 48 a 04 22% 22% 22ft +% 

4X0 1X18 SB 237ft 236ft 237ft +ft 
048 IX 21 125 31ft 31ft 31% 

2W»manM OXB 4.0 0 25 2 02 2 



15% 14ft WEI* (OEQ 0X0 IX 17 203 19ft 16% 15% 

40 ft 38ft WtaoptflBn ZXB 01 27 287 37ft 37% 37£ -j« 


11 GftWMnBt 

a 24% VWkUk 

soft 7%VMcra 
20% 17" 


064 7.4 12 51 8% 

0.72 23 15 19 25% 
032 IS 12 2574 Bft 
0X4 OX 22 3499107ft 



4X0 25 20 10580150% IS 
024 1.4 21 3033 17 tlA 18^ 

- - _ 044 23 15 5 22 21ft 214 

18% 15ft Western E z 088 52 II 221 17ft 15% 18 

45 39ftWMba 3586 u46 44ft 45 . 

15% BftMMMm 12 956 11ft lift lift 

8%MBDft 55 8677 13% 13% 13ft 

. 34ft Wtatte 0X0 07 22 210 28% 27ft 28ft 

24ft 18ft MMn Mno 023 0X153 53n24% 24ft 74ft 

34% 28ft MHn Rat 1XS 08 10 337 28ft 28% 28% 

0X0 1.5 18 7209 12ft 12% 12ft 

832 6.4 D S 5 5 S 

» 1154 2Dft 19ft 19ft 
058 IB 5 92 19% 10ft 10% 


_ __ ««n Rat 

15ft io$m«e 
5% 4%«30nCM 
20ft l3%MMn Wuta 
28ft 15% wmtwc* 
a 2B% IWrcox 
51% 39ft Wpter 
21ft l7ftMeetiMr 


73ft 52ft War** 
14% 11‘ 


1.10 3X 40 431 31ft 31 31% +% 
US 2X 16 5330 42% 42ft 42% +ft 
010 OX 22 1432 19% 19% 19ft 


17 HftWWmia 

S iaftTNBkar 

25ft Wfcw he 
8% 5%WtoaH8e 
30% 22ft wean 
7 * 


*4 


1X2 21 17 1358 57 55ft 56% +1% 

13 14 12% 12 12 A 

0J34 2X 15 970 15% 15ft 15% 

18 71 14% 14% 14% 

1X6 5-2 18 47 29% 20% 29ft 

010 IX 14 115 7% Oft 6% 

0X4 ZB 13 B53S 29 28% 29 

0 05 08 14 81 8% 6% 6% 

020 IX 17 237 10% 10% 10’ 

1.44 12 14 221 45ft <5 . 

20 376 9% 9ft 9ft 

^ 1.4T 05 14 309 2S% 2Sft 25ft 

27%«ktPtoS» 1.78 08 11 83 23% 28% 29% 

1% iSWUoO 040 2X145 S3 16% 19 18 

35 28% WtooC&rpX 100 3X n 163 32 

a 22% MMX T 060 Z2 29 6237 29% 

IBftKotaW 018 OX 12 387 20% 20% 20ft +ft 

20ft 12%Wn«h 1.10 73 3 4851 15ft 15ft 15% +% 

1B>z 14%etrtJ«do 1X0 7 A 8 15% 15% 1. ’ 

3% Worktop 14 7S3 3% 03% 

43ft Motor 049 1.0 33 439 50ft 49% 

. leftwytoltoar* 0X8 1.0 19 91 17% 17% i . 

22ft IBftMpnsH 044 Z1 13 22 21% 21% 21ft 


I 44%Wtan0a 
BWhaeltopr 
aft WbcEn 



31% 31ft 
27ft 27ft 


-ft 



3 


lUUMHt 096 Z7 IS 348 


36 35ft 35ft 

.. 1% 14% 14ft 

22ft iBftuuDanM 020 1.1 10 33 19ft «B% 19ft 

50ft 37ft UttfOcre 003 0.1 19 2380 49% 49% 48% 

40 33% UOtoirai x Z7B 7X10 80 34% 34% 34% 


15% 12ft UtoOHAy 0.70 5X 71 B82 U% Hft 14ft 


S,! 


0X8 53 5 

_ . UWotoiAM 006 OX 

ft UUtfVkCto 
15% 6%U8Nr 
10% lift USfftG 

aft iBftusnar 
29>2 lOftUBtme 
41% 34% USUCp 
IBft lift USDM 
aft 15% USSUP 
48ft 38ft US«M 
72 58UUne 
14ft 12% UtfftatK 
18ft iSftlMmda 
34% 2£r% Mv Fooaa 
17ft 15%UMWHx 
ft AUnfeMadL 
12% OftIUtarOp 
28ft ITftiHHiCrp 
39 24ft Unto 



92 
92 

11 90 

012 IX 019389 tf_ 

0X0 1X 13 931 13ft 12 
39 111 21" 

2 1364 lBftfflBft 1 
1X4 33 9 292 37ft 37% 
032 1.6 55 1350 IBft 19 T 
0X0 04 5 8208 Z3ft 22ft 
Z14 51 37 9886 42% 42 

1X0 Z7 19 2ia 89ft 
092 5.8 13 49 14 

» 7 19 

0X2 Z7 15 500 33ft 
1X0 OB 11 » 17% 

0 50 A 
030 ZB 32 42 10% 

098 5X 10 411 18% 

090 ZB 22 4984 28ft 



1G§ 

l^a 1B% +ft 

28 % 26 % +ft 


- X- Y- Z- 

104% 87ft Kara* 300 2X <3 2242 103% 101% 102% -% 

54ft 5DXarm4lz 412 7X 3 64% 54% 54% 

52% 40»recorp 0X6 LI 23 133 52 Sift 52 +% 

25ft 20YMaaEgyx1X2 55 12 27 22ft 22% a% -% 

40 33% Tort W* OW 04 18 5B1 37ft 37% 37% 

230 4% 04% 4% 

3 481 9 8% 8% 

1.00 43 8 113 23ft 23% 23% +ft 

08211.1 90 7% 7% 7% +% 

040 31 15 848 12ft 12ft 12ft +% 

0X8 41 T9 122 ?lft 21% 21% +ft 


6S 4%2PPM 
13% 72mnEi 
24% 20%2H0ltod 
7% 8%ZtatoHC 
15% llft&re 
29ft 20% Zorn MX 
13% 12%2tagFini lit S3 
10% SftlurtuTalx OW BX 


159 12% 12% 12% -% 
377 9ft 9% 9% +% 


mre am mvw tr Mton 


Vady Mem md too la «nt ratocf On hH mr ik i ism. 

Stare ■ eto <r nek Mnd wuttag » S iwm a n» km km 
mto e« ym* Hrf+mj ranee ne dnnod <n a*m tain rare stack ati 
ttalm ataentt aaad. ms or ctatatan mnat esamnen mm gn 
tar MU aedmtax. SUM tgan am oBoecm. 
iHtaunr Wo mw Paul ato a rtadmd pks aock mm 
rtr km mtadM deAM V Wd 
mad n Qaafflea tan. return to 15% 
ipMiaM ttMmn yoM- 



Tk* totatan mga 
la® toe met mine ixHrea day iMkay PC pnea-aamei mta 
kto MUM e pax bi pramtae 12 rata pha a 



Utad »He tmtatmeyre 

Oy «x» ct ire d m axHUbtad. dm mud. rmhmti wr- 
neta hhMM a ex+Wn ■ta n to Mo ia bhuu ream 
pm-dMiead « refea k Ml pd yta z+Mre h U 


AMEX COMPOSITE PRICES 


4 pm dose June 14 


P 1 a* 

Stock Dh. E lotto fflp LowCtataChne 


Mittkipi 
Afflr tnc 
/Upkakid 
Am Mr Pa 


395 T\Vi 11^ 11^ 11$ -% 


3r100 Ift lft 1ft 

2 20 4 4 4 +% 

1X4 11 11 42 41 41 -1% 

ABStanrAiOWNW 37 20% 20% 20% 
Atndatd 0X5 2 1824 Bft 6% 0% 

AmEqd 3 257 lA tflA ifi +% 

AapahAmA 42 207 7ft 7% 7% -% 

ASRtoa 072 1 632 u2ft 2 2ft -»ft 

tatntoch 23 34 2% 02% 2% 

AW 5 779 5ft 5% 5ft ♦% 

0 15 fi F* F« "ift 

6 117 7ft 7ft 7ft -% 


20 204 21*4 wft SBft *ft 
*5 *13 

1H 9 21ft 21ft 21% ’ft 


Auto* A 

UH0G6H 055 0 2S 3 3 3 

aBdgatttr 073 IB 25 23% 23 23 

Bakkanr A 004 30 54 5ft 5% 5% -% 

Wayne 20 HM 21ft 20% 2D% +% 

BOM O 
Board 

BUtsIton 040152 _ „ 

So-BadA 51 135 18% 18% 1U. 

Bkamk* 050 41 143«S7% 7£A, 37% +ft 

BDwVBBey W 23 11% «0re 10 % 

Banner 36 59 S% 3ft 3ft +A 

Bpmkx 030 ID 142 22 21ft 21% -ft 

BnocaiA 1.04 15 981114% 14% 14% +ft 

Catnp 2 40 ft oft ft 

Caabrm 0X0 13 ziOO 22% 22ft aft -% 

Can Mec 028 S2 20 1 2% 12ft 12ft -ft 

anfasA 0X1 5 46S 3 2)2 2% 

Qtantm 5 11 2% 2ii 2|2 +»e 

Oarapton 47 46 32ft f 32ft +ft 

CMm 243 1925 4% 4' 

OaPft OMS 476 9% 9% 9 ! 

CkMFdA 001 231 5% 5ft 8- 




P/ 5b 

Stock Db. E 100a Mph bowCtaaCtaae 
Caataa 030 2Z 11 16% 1fl% 16% -% 
Compufcac o 28 % % % 

Coned FM 5 2 8 8 9 

CrosaAT A 0X4GE6 382 17 16% 17 

CtoenCA 040 42 91 18% 1«% 18% 

Crown CB OU 14 25 17% W 17 
Od* 0X3 82 22 19% 19 19 
CuatomaS* 14 10 2ii 2fi 


a Ms 
Msart 


DwW 


14 

29 

ID 

048 10 


1 


SD 1 1 1 -A 

78 19% 17% T7% +% 

28 5 4% 5 +% 

79 9% dB% 9% +% 


0« 15 

Uripto 1.72305 _ 

EdwBayx 0073822532 10% 10 

BtoEnA 0X0 9 39 12011 

EdtobRa 6 55 7% 

Ban 17 452. 77 

EngySenr 50 2491 

Epttopa io an ie 

Fabtada 0X4 12 39 

Rna A 320 16 2... 

FstOrj0nc 0X0 13 44 lift 

FktoetJ) 0X2 75 87 31% __ 

Fdrast La 29 1243 49 48% 

Frequency 2 2100 4 4 



G*m 

GHfdFtK 


Glftttatt 

Graenran 

euVCda 

KanOtr 

Hsstro 


MO 7 73 23%d22% 23 -ft 

0.72 12 934 SSd!&% 19% +ft 
0.70 30 152 17% 16% 1( 

2 B» % 6, 

35 172 6% 6 
034 21 115 3ft % 

351233 6 5% I 

0X8 14 4126 31% 1131 31ft -% 


p/ as 

Dhr. E loot Hfth LnrCteaa ctng 
4 W 3% 3 3% 

3 313 eXA 3% 3ft 

015 46 10 1^8 1C" “ 

14 101 10% 1C 



KM Cop 


4 442 Bft 6 9 
20 228 13% 13% 13% 

20 2 A\ ‘ ” 

21 <12 II 

60 177 



KogiEq 


Hum 2 84 

MadB A 0.44 29 237 297 . 

Men CD 03) 6 15 Il4% 4% 

MMJi 18 9% 5% 

MOO0A 13 5 7% 7% 

MSREqK 75 10 % % 

HatPW 7 90 3A 3A 3A +A 

NTTOlA 0X9351 1830 24% 24% 24% +ft 

M&CanOK CL20 10 12 9% Bft 8ft 

ItanatE' 122 13 B% 6 8% 

MVP 12 10 9% 9% 8% 

OdaBcsA 34 135 U9% (Bft 9% 

0241521306 32 31% S2 +% 

' i 15% 1B~ ’ 


C 0X0 991301 15% 


16% +ft 


PI Sto 

Stock nr. E 100s Up LnrORc Qmg 

PariEl OBO 47 IB 11% 11% 11% 

PamPx 1X4 1 2 2 22% 22% 22% -% 

PMLD* 0X4 19 792 97% 66% 66% -1% 

PtownyAx 0L5D 19 10 39% 38% 36*2 J z 

Fly Gem 012 28 157 22ft 21% 22 -ft 

PMC OJE 17 07 15% 15% 15% 

PnsktoA 0.10 1 230 lH 1% ill 

RBoeAkd 31 2 29% 29% 29% 

RS&WCp 3 177 6% 9% 6% 

HrMBn 0 7100 1% 1% 1% 

SJWOorp Z1D 10 7100 36% 38% 35% 

StMMon 19 66 17% 17% 17% 

StadB OM 12 265 11% 11 11 

25® ^ 

^2 9% 

41 41 

15 15% 

30 30 


3 


HM 21 67 3 

Tab Ptota 020 52 3 9 

TaODWx 036 61 234 41 
TtanedH 69 839 15 . 
Tltennoka 32 215 30ft 


TotPHA 020 21 360 15% 14% 

TnanMy 1 203 2% 2% _ 

TUmn 10 592 1% 1% ll 

TtonMex 7 707 6% 5% 

Turer&A 0X7 66 87 18% IBft IB 
TrariM 007082 628 19 19% 1C 

uidFoMEA snoo 
lATbadSB 020112 7 

UtaPWs 19 33 

US CMU 100 IS 


If 749 

VbcomB 2423 

bsaaerM 28 1236 

Wntaner 060 W 313 

WHET 1.12 20 162 14ft 1 

■Men OE0 13 73 29 ' 

xytnrat* 4 94 4,% 



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We will deliver vour daily copy of the FT to your home or to your office at no extra charge to you. 
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■J3NANClAL^n MK 

.taT ■ — - 




n a i 

Stock Dh. E 100c Hgk Lew Lata Cteq 
ABSlnds, 020 20 B 15 15 15 

ACC Carp 012 09 482 17ft 19% 16% -% 

team E 71 7790 19% 15% 16 tft 

AcmpMta IS 489 22% 22 22% 

Am&nCp 29 125 2D% 19% 20% +ft 

^toPkecta 194000 17% iflft 17 +% 

ADCTtfe 31 4081 39>4 38ft 38ft -% 

AWnotm 22 174 16% 1S% IB 1 ; +1 

AUkSer* 076 21 143 35 34% 34% -% 

Adobe Sys 020 222601 28 27 27% +% 

Adwnce C 7 774 10% 9% 10ft +% 
A* Logic 7 463 4% 4% 4% 
MiWym 7 151 5% ® 5ft 
MiTam 25 149 14% 14ft 14ft 
Attaaau 020 20 842 40 39 »»j 

Aflyrna* B 17 13ft 13 13 ♦% 
AttoicyRB 21 1364 12% 12% 12% -% 
A»to*a 010123 882 11% 11% 11% 
AUCapr 031 15 728 24 25% 23% -ft 

AknADfi 2X4 20 503 57ft 59ft 57 +1 
AfcfcnCp 3B3229 20ft 2S% 25% +% 
AWkl 0X8 17 378 25% 25 25% +% 

ABetfiSW 15 47 7% 7% 7% -% 
ABenOta 052 151100 37% 37% 37% 
AWoPh 5 55S 10% 9% 10 
AflOCapax 7XD 12 194 14ft 13% 13% -ft 
AW ftp* 080 12 2S3 14% 13ji 13fi -}{ 
AtaeKBC 032 2D 240 3% iO 3 
Ato Gold 006 8 125 1j| ill Tji T< 
Atom CD 29 6685 20% 28ft 29% +1 

Am Btrtff jfl.72 8 1403 22% 22ft 22% +% 
AmOyln 14 30 14% 14% 14% 

AikManao 22 903u23% 23% 23% +ft 
Am uad a 14 got aft 9% a% 

Am Scftw 0X3 171074 5ft 5 5ft +% 
Amtilwys 3*7179 20% 19% 20ft Jfl 
AmGrtA 0X0 IB 7132 29ft 28ft 28% +,» ( 
AmklP 1 992 1ft 1 A IA -A 

Aatokn 2X0 7 146 47% 47 47ft -ft 

AmPwrCow 375824 20% 10% 20 
Am Tray 10 135 13 12% 13 

Amour Inc 17 9866 46ft 44ft 44% .% 

AimwtlCp 006 22 723 15 15ft 16+% 

AimRn 4 288 9ft d8% 9 -ft 

Aitosglc 15 684 17ft 19% 16% -ft 

Artoysts 049 14 93 17 16ft 17 +ft 

AnangdAm 1X0 14 55 17ft 17ft 17ft 

Andrew CO 21 7132 38 38% 37% 

Andros An 8 252 16ft 15% 16 

ApQjaaEn 030 25 19 12% 12ft 12% +ft 
APPBIo 82105 Oft 5% 6ft +ft 

AppkUW 277431 41% 4»ft 40% +ft 
ApftoC 048 2413728 27% 26ft 27, V +£ 
APffeteos 004 35 1696 15 14 14 -ft 

ArtnrOrx 054 43 464 19ft 18% 10 +ft 

Arctao 028 22 125 30 29ft 30 +ft 

Argonaut 1.16 7 1Z7 27% 27 27% 

Armor A! 084 21 2134 21% 21ft 2lft 

AxnMdtn a40 » 34 10% IS 19 

ASX Op 3 22121111 13 13& +i 

AqjeaTet 24 915 27% 27 27 

AGSDcCamm 272 zi 26 24% 24% -1% 

ASltach 103469 15ft IBft 15% +?, 
van 16 222 olOft 9% IDft 
Afl SEA* 032 20 B51 27ft 29 1 4 Z7 
Airttek 048 191981 40% 48% 49% +ft 
Autoatfa 13 5*7 4 3% 3% +ft 

Awnaata 092 17 277 u6% 8ft 8% +ft 


n as 

Pt» on. c m up iw to ttag 

DBbShope 020 21 10 7ft 7ft 7ft +ft 

MtobEn 032 23 23 15ft 15 15% +ft 

DebftGa OM <5 26 30% 30% 30% +ft 

Detoamps 0« 11 283 22ft 21% 22% +ft 

DdComp 290067 2flft 27% 27% -ft 

DtdaOSDQ 015 18 53 15ft 15 15 

DRW 33 449 39% 38 38 -ft 

DepGbrx 1-80 B 939 U32 3lft 32 +% 

Damn 03) a 41 s,’, 8ft 8ft -,l 

DHToeft 17 55 21 21 21 

DVDBB on 8 154 17ft 16ft 17ft +% 

Dtflnd 14 559 16 15ft l^ -% 

DIB Mm & 225 12ft lift 12 -ft 

Ug Sound 6 87 1% 1% 1ft 

ngSyat 7 321 3% 3ft 3% *ft 

UonexCp 15 203 33ft 33 33 -ft 

DttoYm 020975 297 9ft 9% 9% 

CHAPbot 2 514 4% 3ft 3ft 

Dear Go 020 241791 25 24 34% +]> 

Darflh Mn 0X8 14 4 13 13 13 - ^ 

Dreafiw 11 17 8 B 8 +ft 

DrasSom 12 830 11 10% 10ft +% 

Dray GO 03< 20 1077 Kft 23% 24 »ft 

DtugEntpo QH8 53 31 5% 5% 5ft 

06 Ben* 1X9 19 53SU337, 32% 33% +% 
EUm 043 12 209 15% 16% 18% +ft 
DwrFV 030 24 8u33% 32% 32% 

Bynatotta 7 4ir 21ft 20ft 20*2 


elCp 
CeaBme 
oa TM 


BPasofl 

BeckSa 


-% 

-% 


BedArtt 

EmanAes 

EnadmQ) 

EngyiMra 

EnraSw 

Enamtac 

FtUtyOl 

EftesnB 

BMd 

EneSto 

Exaoyta 

Beta* 

EtadaBK 

ExpuK I 

EanpMn 


5 36 4% d4ft «% 

21272 4|* 4 4% 

3 16 1ft 1ft 1ft 
019 24 2337 18% 18% 18% 

237 605 7% d7% 7% 

2 575 2ft 2,1 2,1 
ID 208 10% IDft 10ft +% 
099 48 221 48 47ft47.77 +.90 

1915131 17ft 16,5; 16% 
ft 829 7% 7ft 7ft -% 
271442 6% d6 9% 

41 5 11% 11% 11% +% 

83 64 2% 2% 2% -% 

2 350 3% 2ft 2ft -ft 
010 16 14 4 3% 4 +% 

048141 7283 Sift 50% 51 +1% 

1500 7ft d7 7ft 
68 102 15ftin4% 15% -ft 
19 3296 16 15% 15% -ft 

0 25 Tft Tft 7ft -% 

15 1601 22ft 21% ZT% -ft 
010 21 971 in Oft 18% 18% -% 
21 298 13% 12% 13 +% 


- B - 

BEIBx DX8 94 43 6 dS% 5{i 


9 92 12 11% 11% -% 

BatarHWt 59 11A A 

BrterJ 009 123420 19A 19ft 19ft +£ 

BkMlB 024 3 19 14 14 14 

Banetac IB 777 22ft 21% 22ft +% 

EMtSoutlix 044 11 312 IBft IBft 18,% 
BeitoraQ) 040 9 79 19% 19ft 18ft -% 
BeMOrth 090 13 1S8u22% 21% 22ft +ft 
Bants Geo 032 16 482 33ft 32% 33% -% 

Basset F 090 15 30 29 28% 28% -ft 

BkyWaw OM 14 64Su26% 25% 26ft +ft 
Bsybtoks 140 14 1072 63% 62% 62% -1 

BBSTFtn 1X9 9 728 30ft 30 30,'. +,4 

BE Aero 221919 9ft 8% 9ft +% 

BeaiDOK 029 33 2 14,% 14% 14£ +i 

BenSJnry 15 324 17 19 17 +1 

Bert)ByWR*044 15 331 40ft 39% 40 

BHAGIP 012 15 69 10ft 8% 10ft +1ft 
91 UK 92 97 4% 4% 4ft 

BgB 018 16 6 lift lift lift -ft 

BtattoyWxaOB 13 167 12ft lift 12ft +ft 
fiogen 331597 32 31ft Jlft -% 

Banoel 174145 10 9% 10 +ft 

Block Ikg * 1X4 11 265 30 29ft »+1& 

BMC Salta 16 2267 52% 51% 52ft +% 

Boatmen S 1X4 11 2333 34ft 34 34ft +ft 
BobExau 027 20 684 22 21 ft 22 +», 

Boole 6 B 15 10 30% 30% 30% *% 

Borland 32899 9% 8ft Bft +% 

Baton Bft 07B 5 667 34% 32ft 34% +2% 
Boston 1C 43 3577 ID 9% 9ft -ft 
BradyWA 068 182421 45% 44% 44ft -Ift 
Branco* 0X0 27 277 12 lift IlH +i 

BranoS 024 17 832 Bft 7ft 8 

BSBBncp 075 9 3 28% 29% 20% 

BTSMpng 048 7 200 3% 3 3%+% 

BdfleS 28 1121 19% 19 19% +% 

BuflOewT 24 91 14 13% 14 +% 

Bur Br*kl 31 26 9 8% 9 -% 

Btokwstfl 58 36 32 (B1 31 

Butafllg 6 185 2^2 Wft 25i'i +1% 


- c - 

CTee 183 16 25% 25% ZS% 

Cabot Med 0 851 Bft 8 8%+% 

CBdSchwps 1X7 15 152 27% 27% 27% +ft 

CathuComOXO 21 1460 17ft 17ft 17% +ft 


- F - 

Fan Grp 11 4 4% 4% 4% 

Fan Cp 0X4 12 218 5ft 4ft 5 +% 

mat 0X4 52 732 33% 33 33ft +% 

FHPhd 15 5383 25% 24% 24% +% 

F&ranK* 3 174 3ft 2ft 3 

FtfttrnwJ 1X3 16 462 u55 54% 55 +% 

HOyOtt 5 907 4ft 3ft 3ft -A 

FtgpkA 0X4 0 382 11% 10ft 10ft 

Henet 303361 22% ?1ft 21% +ft 

FstAfcama 1x0 121GS2 35ft 35ft 35ft 
FkatAm 0X4 8 Z76 34 33% 33% 

FsfflcOMo 1X0 11 41 28 25ft 25ft -% 

FMCcDk 0X0 21 131 24% 24 M % 

FstSedy 1X4 I21298u3lft 30% 31% +ft 
FSTcol X 1X9 10 709 44% 44% 44ft +ft 
fatWedn 036 7 105 9% Bft 8ft -A 
FeUaMc 0X2 7 432 24% 24 ft 24% 
Ftndtar* 1X8 11 36 47% 47% 47% +ft 

Ftrtmss 44 806 7% 7ft 7,1 

Ftaerv 20 273 21 20% 21 +ft 

RowH 18 295 9% 6% 8ft 

FODdLA 0X9 183755 Bft 8 6ft +ft 
FoadLB 0088121580 9% 8 5ft 

Faamost 1X8 10 27 32 31ft Jlft -% 

Fdractmer 12 286 13% d13 13 -% 

F’kDKBSK 030 33 80 34/» 34ft 34% 

Faster A 39 335 3ft 3% 3ft +,% 

Rib Rn 1X4 12 904u30ft 29% 30ft +ft 

FStEastn 1.12 38 202 26ft 28% 28ft +% 

FstRrtx 040 B 175 18% 19% IIP4 -ft 

« HfflMl 1.18 11 152n28ft Z7% 27% -% 

Fitter W 058 23 113 37ft 36% 38% -% 

FUtonfin 054 11 1B0u21% 21 21ft +ft 

Flam 0X4 18 7 14fttf14ft 14ft -ft 

FutowMOfl 78 5ft 4ft 5ft 


- G - 

GIApp 9 5 4% 4ft 4ft 

GUtSwvx OD7 2D 124 14 13% 13% -% 

Bates 0 39 3 3 3 -ft 

GanWRs 10 18 4ft 3% 3% -% 

GeWCD 018156 15 Bft Bft 6ft 

GM Bhd DAD 17 2B 17ft 1fi% 16% -*4 

Guntyto 19 38 uS 4ft 5 

Gmsfefli 4 282 12ft 12 12ft -% 

Getter Cp 4X9 41 428 25 24% 24% +ft 

Baantac 137 58 4ft 44%+% 

Gareyma 68 472 29% 29 2Bft +% 
attain a 040 10 525 17%tf17ft 17ft 
GkbteBBL 012 17 776 23 22% 22ft +ft 

Stoat A 080 16 17 15% d!5 15 -ft 

Gtetl Stoat 11 45 5 5 5 

Good Guys 18 464 14 13% 14 +A 

BMdsPne) 020 2D 717 22% 22ft 22% +ft 

GradcaSys 35 88 2% 2 2%+% 

(Bate 020 752002 23ft 22ft 23 
Green AP 0X4 11 12 18% 18ft IBft -ft 


n to 

Stock DkL E Ilk HU law Last dog 

-K > 

K5H8B one 12 29 23% 23 23 

toman Cp 044 5 342 9% 5ft 9,** -% 

KflttoiCpxOAO 12 264 30% 29 2012 +13 

toteyOi 73830 0% 7% 7ft -% 
WJySt 072 21 579 26% 25% 25% -% 

Kamtty 011 12 43 7 0ft 7 +ft 

Mmbal 084 14 1B5 2^4 24ft 25ft +% 

lOrscfwr 15 52 Tft 6ft ?& +,» 6 

KUh9T 48 2744 35^2 3Sft 3^9 +% 

KnwtedBS 4 <299 9% B% B7+ +% 

*HA 1 1971 5 A +A 

Kang he 184 2326 20% 19% -U 

KuMCItr S 8 553 14ft 14 14% -A 


-L- 

Ladd Fun 1 012 45 SS5 8% 67% 7-ft -ft 

lm teen 31 3096 raft 27 27% +1% 

Lancaster x 064 21 382 49ft 48% 48% +% 

Ucrtc OSG 1ft 98 15% 18 18 -ft 

Ltottftfipn 371180 29ft 29% 29 ft 

Lanopbcs 10 4 7% 7% 7% +% 

Lasaracpe 81 19! 5>2 ■&% 5% 

Lance 5 181562 16% 17% 18% +ft 

Lawson Pr 0*8 16 864 23<4 22ft 22ft -L Z 

UWS 23312465 17 16ft 18% -% 

UP Cp 018 5 25 S S 5 

LfXhMS 10 44 13 12ft 12J2 +£ 

Legem CP 18 751 Xft 29ft 30% +% 

LMtftBcx 078 10165Ou33% 32% 3^2 +ft 
LHaTacn* 0X0 15 21 IBft 17% 17% -% 

Ldetee 22 24 4ft 4% 4ft 

LDyMAx OXB 13 1682 14% 14 14% +% 

LkiBr 99 DOOIIBft 117117ft -ft 

LheotnT 052 14 168 15 14% 15 +% 

UndsayM! 13 26 31% 30ft 30% +ft 

LavoTee 0X4 36 1235 45% 44% 44% 

Car 040 18 2 36ft 36ft 36ft +2ft 

UwmnGpPDAB 29 BSD 23ft 23% 33% +% 

Lone Star 22 184 7% 7% 7% 

Lo&bD 4212BSS 53% 51 ft 53ft +lft 

LTXCp 1 944 2ft iC 2 -ft 

LVIM 05 4 11 31% 30ft 31% +% 


M3 Cm* 005 2116132 24% 23% 23 JJ +,'« 
MS Car's IB 179 21 20ft 20ft +% 
tW 0« 41 227 13%dl3% 13% ft 
UaasonGE 1X6 14 39 33ft 32ft 33 +ft 
maPwr 13 284 29 ft 28ft 29 
Magna Brp 078 12 56S 19% 19 10% -% 

MtbBm 12 219 8% 6 5 

Marram CP 30 205 11 10ft 10% -% 

Marne Dr 13 505 5ft 5 5,V -f 6 
Market Cp 9 223 39ft 39ft 39% -% 
ttaqnect OrtOO 1% 1% 1% -£ 
Maruta 19 15 9% Bft 8ft •% 
tte5hknltAa44 10 280 10ft T0>« 10>4 
Mart* 080 11 1128 21% 21ft 21% -% 
Ktstac 10 70 8ft 8^2 8ft +ft 
Madm M 41 754 54% 54 54% +% 

Maxtor Cp 0 3714 6 5% 5% 

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MankG 0X4 22 3399 11% 11% 11% +% 
MertanLB 088 11 188 20% 20% +% 

Mercery G *070 85586 30% 30 30% +ft 

Merthn 1X6 125720n33ft 32% 33+% 
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MeftodBA 008 16 258 16 15 15% +ft 

MlchatoF 0X0171274 12 11% 12 +ft 

MtchNatB 2X0344 1228 76% 74% 75% -% 
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Jsotilnc 028 16 10 10% 10% 10% ift 

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J&BFh 0J54 16 435d2fift 25% »>< +ft 
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- N - 

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N&rdDeNBt 2712466 30ftd37ft 37ft -lft 

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MotSQnl 12 178 17ft 16% 16% -lft 
NStoUn 4 11 5ft 5ft 542 

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HW Air 14 1156 13% 13ft 13ft 

(Mefl 82522105 18% 16ft 16% -ft 

HoMha X 2212 33% 32ft 33% +1% 

NSC Cup B GO 3ft daft 3ft 


- O - 

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OctaCun 15 2380 20 19% 20 +% 

dfl 14 1080 13ft 13ft 13% 

OglebayN 080 8 2100 24% 24% 24% 

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OpOCtoR 20 79 S2 21ft 21ft -ft 

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Orbatach 099 23 406 &ft Tft Bft -ft 

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PTalcm 1X2 15 44 23ft Zft 23 +% 

PaoRCre 24 545 SBft 58 57% +1% 

Paranenc 325091 18 26% 27% +% 

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PitrtBdil 15 bbo 6 ds% 5ft -ft 

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pnomra as 541 5ft 4% 5i‘« +A 

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15 180 18ft 18% 16% 

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006 53 77 10% IDft 10% +ft 

31 2184 10% 10ft 10ft +ft 

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0X0 47 2090 22ft 2lft 22ft +ft 
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saiuero 11 1568 17}i 17ft 17ft -ft 
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sate Tec 0X8 201024 18 17ft 17^ 'ft 

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StrucUDy 21 2313 10% 9% 10% +% 
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SuralODoB 0X0 26 37 22X9 22ft 2Z99 +.11 
SummUBc OM 14 341 103 22% 23 +ft 

SumnrtTB 39 3044 31 ft 28% 28% -tft 
Sun Sport 15 70 6ft 5% Bft +ft 
Sthifc 1111003 21 20 20ft -ft 

SreOTra 331808 n32 30 31% +ft 
Sytasartc E0150B1 92% 50% 52ft +% 
Symartec 34 940 12% 12% 12% +,’, 

Synaloy 038 18 65 IS 19% 18% +ft 

synotom 68 14 3& 3,% 34 

Synergoi 2 574 9% 0 Bft +4 

SyneUc 61 561 IS 14ft 14% -ft 

syrapdea 153637 18% 16% 18% 
SyStmSoR 012 18 289 14% 14% t4% -ft 
sytfem&co 28 1798 18% «7 17% -% 
Systanad 25 716 Bft B Bft +ft 


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TJDMPt 052 19 798 31ft 30% 30% -ft 
TBCCp 17 08 13ft 13ft 13ft -, 1 , 

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Tscrtha 10 7721 16>2 15% 18 +ft 

TecrttaanxCLSO 1 4 42 54% 52ft 52% -1% 

Taketec 2 145 0% Bft 9% 

1efc»S)6 8 542 151, 14% 15 

TahCorank 30311507 21% 20% 21ft +% 
Tetot* 7 3797 5 4% 4% 

TedabB 224244 31ft 30% 30% +% 

TabonCp 001 91 567 15%; 14% >4% -% 
Tatra Tec 73 53 9 8% 8% +ft 

TavafhADH 027 24 1874 24% 23% 24 -% 

ThrwCom 3111538 45% 44% 45% +% 
TJ hi 022 37 311 24% 24 24% +*4 

Total Med 2 406 4ft 3% 4 -ft 

Taiga Mar 0X2 39 28 85% 65% 65% +% 

Tom Brown 8518S3ulB% IB IBft 

Tapps DO 0283503501 7ft 6% 7 -ft 

TP Enter 3 125 7ft 7 7 

Tranwdd 10 33 lift 10% 11ft +% 

TiHMdckx 1X0 12 8 43ft 42% 42% -ft 

Ideas* 0 449 3ft 3 3 -.ft 

TrtkUe 51 149 10% 9% 9% -% 

TnetcoGkC 1X0 10 26 21 20 2D -ft 

Tseng Lab 0X0 121378 7ft 6% 7 -ft 

TjnFdA OXB 18 2407 23ft 22% 22ft -ft 


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UCUesGS 1X0 13 19 15% 15ft 15% 

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Unfed 9 040 9 ID 70ft 10ft 10% -ft 

UrtUg* 024 21 20u27% 27ft 27% +% 

Urttrta 1.40 22 2340 41ft 41 41 ft -ft 

US Banth * 088 11 5403 28 27ft 2712 +,'« 

US Energy 20 27 4% 4% 4% -ft 

1ST CBp 1.1210 382 14ft 13% 14% 

Utah Mad 11 450 7ft 7 7 

Ltd Tote* 10 73 47 46 46*2 +% 

tax 16 41 5,1 5ft Sft 


- V- 

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vngrdCe* GG2283u34ft 33ft 34 +ft 

Vertm 181930 lift 17 17 -ft 

Vfcor 36 390 23% 23ft 2Jft J 2 

VtoartfW 8 235 I5dl4ft 14ft -% 

VMitaC 22 5851 18%d16l2 T7ft -1 

VLSTaeh 31 1070 14% 14% 14% -A 

VUnB 084 17 64 94 93ft M -ft 


- w- 

WanerEn 010 22 533 29ft 28ft 28% -% 
Wamdecn 75 438 4% 4,*, 4% +, 1 , 
WKMMSaoa 72706 21ft 21% 21ft +% 
WasUFfidSL 080 9 462 22% 22% 22% -ft 
mhUdA 0X2 10 108 26 35% 25ft 

WasuPHjOM 18 990 Sft d24 25ft +»2 
WD-40 2X9 15 3M 40 39 39 -1 

Waosk 21 594 4% 3% 3% -, 1 , 

Wad One 07212 821 32 31% 32 +ft 

Wtfufa 61221 12ft 11% 12ft +,’, 

SA 1 m ufttnift 14ft -ft 

UMS«n 11 19 2% 2% 2% 

Whntte 098 23 1768 47ft 48ft 47ft +% 
MnsSoonOB 79 1354 35ft 34 ft 35 +% 
WflUtaiL OXB 12 86 14ftd13% 14ft +ft 
wmngtx 040 2B2401 20% 16ft 20% +lft 
wppGiapJiun 21 m 3ft 3,', $2 
WyiMfrCtbOAD 4 479 6ft 6 6% 


- X - Y -Z - 

Mw 2411682 38 3^2 37% +1ft 

XomaOup 2 551 3ft 3ft Sft -A 

Ye>M DM 29 1419 20 19 20 +t 

YPrtRSdl 45 138 4% 3% 4% +% 

ZtaneUtai 1.12 ID 43 41% 41 41 





38 


WORLD STOCK MARKETS 


FINANCIAL TIMES 


Wednesday June 15 1994 


AMERICA 


Benign CPI 
data bolster 
Dow rally 


Wall Street 


US stocks rallied yesterday 
morning on economic news 
which suggested that the Fed- 
eral Reserve was unlikely to 
tighten monetary policy again 
in the next few weeks. 

By 1 pm, the Dow Jones 
Industrial Average was 26.32 
higher at 3,809.44, while the 
more broadly based Standard 
& Poor’s 500 was 2JS0 ahead at 
461.90. Volume on the NYSE 
was moderate, with about 166m 
shares traded by early after- 
noon. Advancing issues led 
declines by 1,195 to 773. 

In the secondary markets, 
the American SE composite 
climbed L16 to 444£2 and the 
Nasdaq composite added &94 at 
735.64. 

The catalyst for the morn- 
ing’s sharp upturn was the 
May consumer price index, 

.Sham price & Index rebased 

T 08 ----- : : 



Jan 1994 
Source: FT Qraphm 


Jim 


released by the Labor Depart- 
ment just before the markets 
opened. The CPI showed a 
benign 0.2 per cent increase for 
the month, or a 25 per cent 
gain on an annnaHspri basis. 
When the volatile food and 
energy sectors were excluded, 
consumer prices were up 0J3 
per cent. Both figures matched 
the consensus forecasts of 
economists, relieving anxieties 
over a potential sell-off in 
bonds. 

In the event, treasuries 
posted moderate gains, as news 
of a 0.2 per cent slide in May 
retail sales reinforced the con- 
viction that the economy was 
not overheating. 

Still, the gains imirte in the 
equity markets overshadowed 
the progress made by bonds 
during the morning, as stocks 
continued to assert a measure 
of independence from fixed- 
rate securities. Equity inves- 
tors viewed the morning’s 
news as favourable because it 
increased the odds that the Fed 
would wait until the end of the 
summer before lifting rates 
again. 

Such a scenario was particu- 
larly supportive for stocks 
which were most vulnerable to 
a slowing economy. The same 
group was in the vanguard of 
yesterday’s rally. 

Caterpillar, which had led 
the Dow industrials during the 


S Africa firm on rise in bullion 


Domestic institutional buying drove Johannesburg higher ahead 
of today's expiry of futures contracts, while a firmer gold bullion 
price also lent support 

There were late gains tn gold shares after bullion seemed 
ready to break out of its current narrow trading range through 
the $335 an ounce level after midday, before slipping back by the 
close of trade. 

The overall index advanced 41 to 5,762, industrials 14 to 6,723 
and golds 56 to 2,121. 

Among the most actively traded issues, De Beers added 75 
cents at R11&25 and Anglos R2 at R247. In golds, Vaal Beefs 
strengthened Bll to R421 and Kloof RUB to R54.75. Oryx, the 
developing mine, jumped 30 cents to R5- 

Foschini, the retail clothing and jewellery group, moved for- 
ward B&50 to ft 107.50 following satisfactory annual results. 


FT-ACTUARIES WORLD INDICES 


EUROPE 


Bourses find late support from bonds 


winter, showed fresh signs of 
vigour, jumping $3% to $109’/*- 
United Technologies gained 
$1% to $67% and Allied Signal 
added to $36%. 

In telecommunications, 
Sprint dropped $2% to $37% 
after announcing that France 
Telecom and Deutsche Tele- 
kom had agreed to take a 20 
per emit stake in the company. 
AT&T, however, was urging 
the US government to condi- 
tion its approval of the deal on 
agreements by France and Ger- 
many to open their telecoms 
markets to foreign competi- 
tion. Its share price edged $% 
ahead to $55%. 

Exxon continued to feel the 
repercussions of Monday's 
court ruling, which may allow 
pifltrTtiffc in the n™n Valdez 
oil spill to pursue an estimated 
$15bn in punitive claims 
against the company. 

Analysts were divided in 
their recommendations follow- 
ing the decision. AG Edwards 
lowered its rating on the issue 
from buy to hold but Pruden- 
tial Securities urged its clients 
to add to their holdings. In the 
cross-current, the stock slipped 
$% to $59 and led the NYSE’s 
most active list on volume of 
3.6m. shares. 

Canada 

Toronto was lower at midday, 
the TSE-300 composite index 
losing 9.40 at 4,197.36 in volume 
of 27.29m shares. Declines led 
advances by 319 to 264, with 
298 issues unchanged. 

flflins in precious Tngfcais and 
transport issues failed to offset 
lasses in financial services and 
media stocks. Bank of Mon- 
treal fefl C$% to C$23% and 
CIBC was C$% lower at C$29. 

Mexico 

Equities moved higher in early 
trading in a technical rebound 
following Monday's 4 per cent 
fall- The IPC index was up 9.81 
at 2/100.93, also supported by 
firmness on Wall Sheet 

The market had tumbled on 
Monday following the rejection 
by the Zapatista rebels in Chia- 
pas at the weekend of the lat- 
est peace initiative. Telmex 
ADRs were quoted $% higher 
at $58% in New York. 

Brazil 

Sdo Paulo saw high volume 
ahead of today’s futures index 
settlement; equities were up 2.1 
per cent in local currency 
terms at midsession, following 
a 4 per cent gain just before 
noon. 

The Bovespa index was 
standing 630 higher at 30,100. 
Brokers said that turnover was 
unusually large at Cr363bn 
($168m) due to a high volume 
of option deals. 

Telebras preferred was up 2.4 
per cent at Cr85.02 while EHec- 
trobras preferred rose 1.4 per 
cent to 0436.51. 


Encouraged by lower US retail 
sales and CPI data for May, 
European bond markets recov- 
ered from early lows yesterday. 
writes Our Markets Staff. 

Equities followed suit, but 
dealers were inclined to ques- 
tion the intraday rally, and 
strategists to remember the 
inflation arguments following 
this week’s West German 
wholesale price data, up 0-5 per 
cent over April and far ahead 
of market expectations. 

FRANKFURT went to 
extremes in the pre-bourse, 
when the Ibis-indicated Dax ‘ 
index hit a low of 2JM8.74, and 
after hours when it recovered 
to 2,088.44, 4.02 higher than on 
Monday evening. 

There were sizeable recov- 
eries in the post-bourse, with 
Volkswagen at DM453.70, up 
DM15.70 from the day’s low, 
and Thyssen, at DM280, up 
DM15. But Mr Detlev Klug, 
head of sales at B Mefcder in 
Frankfurt, said the market was 
walking on thin ice. 

Arbitrageurs, he said, had 
been talking for a couple of 
days about taking the market 
down to 2,050; after they 
achieved that aim, the Septem- 
ber bund future recovered 
from 91-54 to 9230, and short 
covering took over in equities. 

On the day, volume recov- 
ered from DM5.gbn to DMS.Tbn, 
but the daily figure covers the 
24 hours until the official 
Frankfurt close at 13J0 local 
time. In that period, the Dax 


ASIA PACIFIC 


FT-SE Actuaries Sha.-e Indices 


JiM 14 


Opm 1030 1IJK 12Q0 1XOO 


THE BK3PGW SSflES 
HDD 1300 Bam 


FT-SE finback TO 

FT-SE fawn* 200 


1377.07 

1«5J8 


07820 

MRS! 


137854 

1408.40 


U75JG9 137U0 
14*36 14057 


137434 1381*1 13 
WOMB WKL33 HHU 


1 13 


Jun 10 


Jm 9 


4al 


FT-SE Ernrack TO I38U2 1411.45 

FT-SE BwObatU ZOO I41ZM 143230 

an mm ohm* «***■* no ■ tow* sbo - unit 

dropped 3L08 to 2/174.7D. 

PARIS ended firmer, 
although the CAC-40 index 
drifted down to yet another 
low of 1,956 before US data 
prompted a return to strength. 
The index closed up 14-33 at 
1. 9 91 Q9 . 

Turnover was nearly FFWbn. 

There was activity in L’Or- 
6aL the cosmetics group, fol- 
lowing the announcement after 
hours on Monday that it was to 
purchase four of its distribu- 
tion companies controlled by 
Nestle and Mrs Lfliane Betten- 
court, daughter of L'OrdaTs 
founder, for FFr&Bbn. Analysts 
commented that the deal was 
likely to have a positive effect 
on earnings, and strengthen 
the group’s presence- in world 
markets. The shares rose FFr51 
to FFr1,145, still 175 per cent 
down from the year’s high 
recorded at the end of January. 

Pechiney, the aluminium 
producer, slipped FFr9 to 
FFr15220 after forecasting that 
1994 would be a difficult trad- 
ing year, with improvement 
likely in 1995. 


140837 I4BL74 

14303* 10028 

H0> U7XM203- lOUB 


10030 


AMSTERDAM found s u pp ort 
after the US data, 
the AEX index, ending 0.30 
down at 40L63 after a session 
low of 39423. 

KPN remained very active 
on the second day of trading, 
encountering proGt-taking 
after Monday’s extremely busy 
performance. The stock lost 20 
cents to FI 50, but off the day’s 
low of FI 49.90, in volume of 
some 8m shares. 

KIM, up 80 cents at FI 51.60, 
said that its present strategy 
was focused on alliances rather 
than a merger with another 
airline. 

MILAN lost 33 pear cent as 
foreign investors raised cash 
ahead of the Mediobanca and 
Mondadori issues, although 
prices steadied late in the ses- 
sion as domestic funds 
returned as buyers. The Count 
index registered a fall of 2438 
to 71736, slightly below the 720 
point level at which the mar- 
ket bad been widely expected 
to find technical support 

Mediobanca picked up L154 
to L15383 after Monday’s 4 per 


cent slide which came as 
shareholders cleared the way 
for a rights issue to raise at 
least 

Mondadori lost LS60 to 
Ll 8300 ahead of news as the 
market closed that its issue 
had been priced at Lis.000 a 
share, which was at the top 
end of expectations. 

Fiat fell L135 to L6.498 in vol- 
ume of 33 -5m shares amid 
reports of heavy selling by two 
M ilan brokerages. 

ZURICH reduced some of its 
early losses in a technical 
rebound after Wall Street’s 
firmer opening and the rally in 
US bonds. The SMI index fin- 
ished 43 lower at 2,7403. 

Roche certificates helped the 
tone picking up from a low of 
SFr6,7lO to finish SFr35 higher 
at SFr6,700 as BZ Bank 
launched 500,000 call warrants. 

inter est rate worries contin- 
ued, however, to take their toll 
on the financial sector. CS 
Holding lost SFr6 to SFY575, 
while, among insurers, Winter- 
thur bearers fell SFrlS to 
SFr720 and Zurich bearers 
were SFril lower at SFrl.369. 

MADRID’S late upswing left 
the general index up 1.35 at 
32238 in turnover of Pta323bn. 
Volume was lifted by Telefon- 
ica, tipped by Prudential Secu- 
rities and up Pta40 to Ptal360 
in nearly 6.4m shares. Endesa, 
up PtaMD at Pta63S0. also 
lifted the market 
TEL AVIV fell 43 per cent 
after Bank Hapoolim, the coun- 


try's largest commercial bunk, 
predicted slower economic 
growth for the rest of the year. 
The Mishtaitim index closed 
833 lower at 176.83. 

ATHENS reversed five con- 
secutive days of losses, rising 
2.7 per cent as construction 
shares rebounded on expecta- 
tions that the first inflows 
from the European Union's 
Delors II financial aid package 
would become available soon. 

The genoral index rose 21.9ft 
to 847.35 in moderate volume « 
1.2m shares as the more posi- 
tive mood spilled over into 
other sectors. 

VIENNA was pulled down by 
weak bond and foreign equity- 
markets. and further losses 
were expected ahead of Fri- 
day’s option expiries. The ATX 
index fell 20.02 or IS per cent 
to 1.072.78, with all 19 of its 
constituents falling. 

WARSAW tumbled another 
9.4 per cent to its lowest level 
since last October, the Wig 
index falling S2&3 to 7.934.0. for 
a two day fall of !&3 per com. 
Dealers said that some fate 
buying suggested that the 
two-day slide was losing 
momentum, although the 
worry remained that since 
trading remained dominated 
by short-term speculators, any 
gjiin?; might provoke a further 
sell-off. 

Written and edited by WlHfam 
Cochrans. John Pi a and NBchMl 
Morgan 


Helsinki 
down 2% in 
Nordic slip 

Nordic markets, early donees 
by and large, derived little 
benefit from yesterday** &■*> 
pran bond market recovery, 
writes William Cochrane. 

The exception was Stock- 
holm. which came hack tom 
an early fall of IS per cMt to 
end with the OMX Indeat a 
token 2.26 higher at LIOU& _ 
Helsinki took a * per coot 
tumble, the Hex indue doting 
33.7 lower at 1.6574 as tom 
mulb. particularly from YU- 
met. the engineering company, 
and Rautaruukkl. the Steal 

Finland 

AM** to twopo *nvA i 



Nikkei declines as dollar falls against yen 


Tokyo 


A sharp fall in the dollar 
against the yen and jitters over 
the situation on the Korean 
peninsula prompted profit- 
taking, and the Nikkei 225 
average closed 0.9 per cent 
down, writes Ermko Temnrno 
in Tokyo. 

The index was finally off 
15884 at 2L35&97 after opening 
at the day’s high of 21,495.70 
and declining to a low of 
2L304.16 an profit-taking in the 
afternoon. 

The dollar's drop to the Y102 
level and North Korea’s 
announcement of its with- 
drawal from the International 
Atomic Energy Agency offered 
domestic financial institutions 
and investment trusts an 
opportunity to take profits. 
Traders noted heavy selling 
orders around the 21,500 level. 

Meanwhile, deaims were at a 
loss to explain the sudden 
appreciation of the yen. “Trad- 
ers are blaming Genian poli- 
tics, but it is more likely 
that the lack of activity is 
creating a vacuum for specula- 
tion," said Mr Dick Beason, 
economist at James CapeL 

The Topix index of all first 
section stocks shed 9.93 to 
1,702.80 and the Nikkei 300 
receded 2.05 to 309.66. Declines 
led rises by 693 to 315, with 175 
issues unchanged. Volume 
totalled 470m shares, against a 
previous 423m. In London the 
ISE/Nikket 50 index was 1.16 
firmer at MO&50- 

Export-oriented issues were 
hurt by the higher yen. HifaChj 
retreated Y20 to Y 1090, NEC 
Y30 to YL2G0 and Sony Y5Q to 
Y6&0. Low-priced, large-capi- 
tal shipbuilders and steels, 
which led the recent rally, lost 
ground on profit-taking. Mitsu- 
bishi Heavy Industries, the 
most active Issue of the day, 
fell Y16 to Y812. 

Speculative favourites were 
supported by individual inves- 
tors. Tseki, the agricultural 
machinery maker, saw a new 
high for the year, rising Y17 to 
Y519, and Kubota, the textile 
maker, advanced Y15 to Y504. 

Minebea, the ball bearings 


company which had rallied 
recently on support by specula- 
tors and dealers, lost Y24 to 
Y876, declining heavily for the 
second consecutive day. 

In Osaka, the OSE average 
eased 78.62 to 23.66K56 in vol- 
ume of 53 An shares. Nintendo, 
the video game company, 
moved ahead Y17D to Y6.62G. 

Roundup 

In the absence of Hong Kong, 
closed for a holiday, and weak- 
ness in Tokyo, the region's 
markets searched for direction. 

SEOUL was hit hard by 
North Korea's decision to with- 
draw from the International 
Atomic Energy Agency. 

The composite index weak- 
ened 19-52, or 2.1 per cent, to 
903.72 in volume of 34.9m 
shares, against Monday’s 
30.9m, as investors retreated 
awaiting devel opme nts. 

KUALA LUMPUR closed off 
the day’s lows as a fresh round 
of rumours of an early general 
election in Malaysia prompted 
bargain hunting in the after- 
noon. The composite index 
ended 4.44 down at 1,013.49, 
after touching 1,00690. in vol- 
ume that shrank to lS3An 
shares from Monday’s 46L7m. 

Perstima appreciated 65 
cents to M$690 amid rumours 
of a change in ownership. 

SINGAPORE had a quieter 
day after Monday's strong 
showing by Malaysian shares 
traded over the counter, and 
the Straits Times Industrial 
index dipped 17.62 to 2£7a30 in 
volume down to 125m shares 
from a previous 358m. 

Some rotational activity was 
seen in selected index stocks. 
Sembawang lost 40 cents at 
S$11.10 and Inchcape fell 30 
cents to S$5^5. 

SYDNEY was broadly higher, 
helped by mining stocks, 
which were lifted by the rise 
in commodity prices. The AH 
Ordinaries index improved 7.2 
to 2,076.6 in A$445m tur nover . 

In the natural resources sec- 
tor, Western Mining forged 
ahead 26 cents, or more than 
3 per cent, to A$8.40. BHP was 
8 cents higher at A$18.70 and 
CRA 4 cents up at A$l&9& 


TAIPEI ended off the day’s 
best on late selling. The 
weighted i ndex gained 25.51 at 
6,09834 in TS75u7bn turnover. 

The electronics sector con- 
tinued its strong pe rforma nce. 
Acer adding T$4 at TS77 and 
United Microelectronics T$M0 
at TS129. Financials were also 
strong, led by Cathay Life, up 
TS6 at TS26L 

BOMBAY closed higher on 
late buying in selective shares 
by foreign mutual funds, and 
the BSE 30 index put on 128 at 
4,133.13. But the overall mood 
was weak ahead of tomorrow's 
end of account in specified, or 
“A”, shares on Thursday. 

Indian Hotels, which is 


expected to announce a bonus 
issue tomorrow, finished 
unchanged at Rsl,350. 

MANILA slipped back in a 
market devoid of new develop- 
ments. The composite index 
lost 50.14 at 2336.05. Turnover 
rose to 677m pesos. 

Philippine Long Distance 
Telephone, San Miguel and 
Manila Electric suffered bouts 
of profit-taking. The latter's 
“A" shares showed the day's 
heaviest fall, 23 per cent at 290 
pesos. PLOT dipped 2 per cent 
to l £30 pesos and San Miguel 
“A” L5 per cent to 99.50 pesos. 

BANGKOK fell back as 
investors took profits late in 
the day, particularly in the 


finance sector. The SET index 
ended 0.16 softer at 1,378.88 
after fluctuating between l <375 
and 1,390. Turnover was mod- 
erate at Bt8£b. against Mon- 
day’s Bt7.6bn. 

The finance sector was the 
most active with some BtXibn 
worth of shares changing 
hands. Finance One firmed Bt4 
to Bt4l8. 

KARACHI moved upwards 
on brisk trading in blue chip 
stocks as Imperial Chemical 
Industries announced that it 
might set up a new plant. The 
KSE 100-share Index climbed 
11.47, or 0.5 per cent, to 
2.230.53. 1CI rose Rs6^0. or 3.7 
per cent, to R&U&50. 


Jan 

Scmr* vt taviro 


group, (ailed to Impress tiw 
market - the shares dropped 
FHI2 to FM8-I ami FMlfiO to 
FM42 respectively. 

Copenhagen revorred fa 
recent recovery, with the tear 
chip KFX index toting IM* 
103.61 and Oslo's all-share 
Index hitting a new 1904 tew 
of 599.33 before dosing fc$* 
off at 600.75. r 

Mr Peter Troo at UnJMak 
said that liquidity had bans a 
major concern: in Norway, Am 
to Norsk Hydro’s NKttJte 
rights issue; in Sweden, (Mi> 
log the Pharmacia privatisa- 
tion; In Denmark, with ttt . 
debut of Tele Danmark: and te 
Finland, where Nokia, a star 
performer, will soon As 
looking for more than M 4tet 
The region, said Mr Trim, 
had also been depressed by 
bond market weakness since 
February 4: In Sweden, six- 
month rates rose from 8J to 
7,1 per cent over the period; hi 
Norway, they moved up from 
491 to M4 per cent; and la 
Finland they jumped from 488 
to 5.31 per cent the price far 
letting the economy rip after a 
major devaluation. 


Joint* compfled by The Financial Tonne L XL, Goldman, Sachs & Co. and NatWfest Securities Ltd. h conjunction %Wi the (nsBtusa of Actuates and the Faculty of Actuates 

NATIONAL AND 

REGIONAL MARKETS MONDAY JUNE IS 1894 FRIDAY JUNE 10 ISM — — — DOLLAR MJCX — — 

Figures to pa ra nttwoea US Day’s Fond Local Loc* doss US Pound Local Yea- 

show number of Ones OoOar Change Stwfcg Yen DM Currency K chg ON. Outer Staffing Yen DM Cumney 62 we* St week » 

<* =*** Indae % Index Index Mm Intta on day Yield Index Index Index Index Index Ugh low (approx) 


Australia (S9) 

17333 

02 

169.78 

113.40 

148to 

157.20 

03 

381 

173.66 

17071 

11438 

15031 

15730 

188.15 

13018 

13435 

Austria (tTJ- — 

_ 1S2M 

IS 

17028 

118.08 

15067 

16066 

07 

132 

179.79 

175.75 

11006 

15533 

166.49 

185.41 

14290 

148.15 

Belgium $7) - 

167.33 

OS 

' 163J3 

109.09 

I43to 

140.14 

-02 

334 

18033 

183.12 

108.99 

14332 

14044 

17837 

14232 

144-40 

Canada (1°^ — 

— 128.42 

-0.7 

125^5 

83.73 

110.16 

128.39 

-02 

284 

12938 

127.17 

8487 

11212 

128.64 

14531 

121-46 

12090 

Denmark (33} 

.. 286,81 

1£ 

25088 

187M 

23029 

225.47 

OA 

131 

25X74 

24045 

T6887 

21833 

284.63 

776.73 

20738 

217.18 

found 02} 

— 136.75 

-OS 

133.48 

89.10 

117.31 

157.78 

-1.1 

082 

13737 

13535 

9023 

119.07 

198.46 

156.72 

8534 

9138 

France (97) 

—16354 

-1.3 

15804 

10&63 

14Q29 

14438 

-2.1 

3.12 

165.73 

16233 

10836 

14335 

147^43 

18537 

14830 

157.13 

Qermsiy(SCQ„ 

-13183 

-02 

13059 

8056 

11052 

11052 

-13 

1.77 

136.08 

133.78 

8938 

11734 

11734 

14737 

10739 

11644 

Hong Kong (56) S7ZJ0 

OO 

364.01 

243.13 

31909 

37043 

00 

331 

37288 

36638 

24433 

32330 

37043 

50058 

871.42 

29020 

Ireland (Id). 

— 196.03 

(L3 

181 sa 

121m 

16058 

177.27 

-03 

3.43 

18538 

18235 

121.77 

18038 

17733 

20833 

15533 

10438 

Italy m. 

87JJ6 

-aa 

85.16 

S389 

7485 

10085 

-3.1 

134 

8032 

87 J1 

6830 

7733 

10731 

87.78 

57.88 

6665 

Japon (469)_ 

_100L34 

in 

\SL3Q 

108,48 

142.70 

10048 

07 

071 

18335 

181.18 

10739 

14210 

10738 

18834 

12434 

164-48 

Malaysia (96) — „„_475.86 

in 

48431 

31013 

40003 

474^7 

09 

1.70 

47082 

4S287 

30937 

408.10 

47082 

62133 

31231 

S47.13 

Mradco(lS) 

.203248 

-1£ 

198445 

1326.48 

1743.61 

748058 

-1.1 

1.04 

206040 

203048 

135036 

179019 

757238 

284738 

1436.19 

144233 

NeOwtetd pq 199.08 

OO 

10434 

-f 29.81 

17a 79 

16808 

-1.1 

334 

189.13 

196.77 

13080 

17260 

169.88 

207.43 

18432 

16835 

New Zaaana fl-*l 

— 69.04 

-i.i 

67.40 

46.02 

5913 

6226 

-13 

084 

6984 

8887 

4538 

6054 

6239 

7739 

48.77 

4931 

Norway P3)_-, 

— 186/28 

i.i 

18085 

120m 

16863 

18000 

02 

184 

18335 

18015 

12037 

15833 

179.60 

20042 

16031 

13232 

SingufXTO (4<) 

--34W1 

QJ2 

333.BS 

£22.88 

29300 

2A1A1 

0.1 

1J4 

341.10 

33533 

224.03 

2S535 

24136 

37832 

24246 

26837 

South AMca (S9) 

273.70 

1.4 

272.05 

161.71 

239J37 

29209 

1.6 

218 

27484 

27029 

18059 

23630 

287,54 

29028 

17533 

196-19 

Staht ra 

— 142.74 

-09 

13903 

9006 

122j44 

14048 

-1.5 

384 

14388 

14135 

9437 

124.79 

148.75 

155.79 

11033 

13002 

Sweden (9$ ..... 

_2ia« 

-02 

207.49 

J38LS9 

1BX34 

24028 

-08 

1.61 

21X10 

208 30 

13938 

184.71 

24838 

23135 

16335 

17662 

Swt&Briond (47L- 

— 161.05 

06 

157JJ0 

105.00 

138.10 

13023 

-OS 

1.74 

18033 

15782 

10532 

13837 

13934 

17638 

124-46 

12931 

LHtad Kingdom (205) 

-1H7J9 

-OS 

182.92 

122.16 

16075 

18092 

-13 

410 

18832 

1E.13 

123.70 

16333 

16013 

214.96 

17032 

17733 

USA (BIS). 

_187J7 

ai 

18280 

122.10 

160.B4 

187-27 

ai 

ZB6 

18736 

18X89 

12287 

182.13 

16735 

19634 

17695 

18833 

BJ ROPE (718). 

-164.62 

-05 

18069 

10733 

141^1 

16338 

-13 

004 

18539 

16259 

10683 

14035 

15837 

17838 

14138 

14837 

N0rtSc(11Q 

— 20328 

0.2 

13043 

13234 

17438 

20041 

-04 

1.40 

20284 

19931 

13331 

17090 

20015 

29030 

1G632 

16835 

fodfic Basil (750) 

-173.78 

1J 

188.60 

11028 

14005 

11733 

OS 

1.02 

ITTto 

16865 

11238 

14070 

117.18 

173,78 

134,79 

157.79 


—.169.78 

as 

188.73 

11070 

145.64 

132.48 

-0.1 

184 

16882 

15687 

11038 

14833 

13238 

170.78 

14138 

16337 

North America feszsi 

—18382 

0.1 

17904 

119.72 

167J1 

18333 

Ol 

286 

18047 

18037 

12032 

15003 

183.04 

182.73 

17537 

179.16 

Strops Bt UK (573) 

_ u&ao 

-C4 

145.05 

96.89 

\2TA7 

136.01 

-13 

241 

14027 

14074 

0635 

12939 

13832 

1S7A7 

12X37 

12735 

Pacfflc Ex. Japan (201) 246.16 

02 

242J24 

iei to 

212J8 

222.78 

Ol 

288 

24787 

24338 

18232 

21436 

222.47 

29631 

18238 

190-70 

World Ex. U8 (1651) 

-.17081 

as 

188.73 

111.37 

14032 

136.78 

-ai 

186 

18882 

18735 

11131 

14738 

1K36 

172-51 

14294 

15337 

WbrM Ex. LM (1965) 

- 174M 

as 

189.90 

17048 

748L31 

14072 

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202 

17334 

17031 

11330 

15018 

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179L5B 

1SX22 

16066 

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—174.62 

04 

17046 

113.85 

148.79 

15039 

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221 

17388 

171.04 

114-28 

15080 

16039 

17838 

168.00 

18204 

world Ex. Japan (1701) 

-18031 

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177 X 

118.87 

15033 

17046 

-04 

289 

18280 

17041 

11937 

158.18 

177.13 

19530 

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171477 

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-0.1 

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Copyright The Fm*rtea Ten IMM. Gddnan. Sane and co. m nbMw O ec w W w LMbd. W 
Latest prions were unauMla lor ns edOon. Motets dead IMWfc AugMs « Hong Kong. 



WPO 



The Commerzbank report 
on German business and finance 6/94 


Deposit insurance: 

a major strength of German banking 


A sound deposit insurance scheme is 
aua im portant asset for a banking system. 
And the substantial losses suffered by 
BCCTs customers when it collapsed 
three years ago provided further evidence 
of the need to offer depositors adequate 
protection. But in any case deposit in- 
surance is crucial to the stability of the 
banking system. Its very existence is 
sufficient to prevent rumors of financial 
difficulties at individual banks from 
causing a general run on banks. 

By international standards, German 
banks offer depositors a high level of pro- 
tection. Indeed, private-sector institutions 
guarantee each customer's deposits for 
up to 30% of the bank’s equity capital, 
which means that, even at smaller banks, 
deposits are folly insured for up to several 
million D-marks; at the public-sector 
savings basks and credit cooperatives, 
they have in effect unlimited cover. 

EU harmonization 

The extent of depositor protection 
varies greatly within the EU, a situation 
which a directive drawn up by the Coun- 
cil of Ministers is designed to regulate. 
Originally, an upper limit was envisaged 
for deposit insurance in order to predude 
cross-border competition in this area. But 
this would have violated the principle of 
agreeing on certain minimum standards 
while allowing member states to opt for 
higher national coverage levels. Conse- 
quently, the directive, which becomes 
effective on January I, 1995, merely 
introduces a minimum cover equivalent 
to Ecu 2 0,000. 

Under the new system, banks from 
other EU countries operating in Ger- 


The EU rating prevents 
German banks from offering 
generous protection abroad.” 




St 

'■a** 


many are entitled to participate in the 
local deposit insurance scheme on a 
voluntary basis and thus provide more 
■ cover. Yet German banks will not be 
allowed to offer their 
own more generous level 
of protection elsewhere 
within the EU.^ Their bran- 
ches abroad will only be 
able to guarantee depos- 
its to the - lower - extent 
permitted by the host 
country. As a result, this 
ruling would seem to be 
at odds with the principle 
Of home-state regulation; 
it also impedes compe- 
tition. 

Critics of a compre- 
hensive system of cov- 
erage sometimes claim 
that if deposit insurance 
is overdone, the result can 
be harmful. In this con- 
nection, they cite the S& L 
crisis in the U.S. during the 1980s as a 
case in point. Strong depositor protec- 
tion allowed banks to lend imprudently 
and gave their customers a sense of 
false security. However, if their deposits 
had been given less cover, the smaller 
banks would have been at a competi- 
tive disadvantage, as funds would have 
moved to other banks which are “too big 
to fan*. After all, most savers would find 
it too costly to judge a bank’s soundness. 


Finally, the record of the German 
banks is ample proof that very generous 
deposit insurance is compatible with 
sound banking practices, provided that 
the banks themselves are responsible for 
running and financing the scheme. 

Worldwide, the national systems of 
deposit insurance will face cross-border - 
competition in the future, and in seme 
cases countries will have to raise their 




j <a r* 

■ - (felAAIWtfl v - s,'" -i- 




■ y ft fflwB h i, ijTZZ 

.. Spain - ? % > "j 


? mm at a bMfc't 

tttSOOfftf- «> ot arntont* -'P 
Bpw £20*000 ' r;-. /: . • 


existing level of protection. Moreover, 
some form of cover will also be required 
in the area of settlement and custody 
of securities; an EU directive w now 
forthcoming. 

While the existence of a sound 
deposit insurance scheme does not necca* 
arily cause banks to cast prudence over- 
board, it can prove to be a welcome Ufa 
belt in today’s turbulent world financial 
markets. 


COMMERZBANK 

German know-how in globai finance 


VIEWPOINT i. pnmud •> * mri« M (In |pNn.iioNl bdMWu iri flmwwtel conrauitr by CMMnbuk EcdsmIc Ihm* „ 

immwehmi paw: Alna-Aa. A wtete. Aitew. Bwgb . lt. SmmUee. Mftn. Boitey. Bnm.li. Bud^,, ^ 

Gfentter, CrMd Cqwa. Hoaj Kong, [mnkal. Akuu. iokUMiteus, Kit*. LorJbb. Lm /Utgalm, Madrid, fcUnwiw Dub ' b i- °* nM * 

Oate, Flute. Pnga*. do luore, S(a PHI4, S««iL Shaagtad, Stefipare. Sh IteribHi, SydMi. Tbhrtn, Tokyo, Torogia. Wtruw, Zurich. it>. Wiiia. MlsA, UqKbv, Nn YSult, 


I 


< 






FINANCIAL TIMES SURVEY 


Telecommunications in Business 



The high value of business in the 
financial services sector is a 
powerful driving force behind 
competition, liberalisation and 
innovation across the 
telecommunications industry, 
writes Andrew Adonis 

A crucial role 
in companies 
large and small 

If 


ever have telecommuni- 
cations been so vital to 
business success. From 
being one important service 
among many, telecoms have 
become strategic to most busi- 
nesses. And as reliance on tele- 
coms has increased, the range 
of the industry’s services con- 
sumed by the corporate sector 
has risen. 

This is as true of small as of 
large businesses. The local 
plumber, who a decade ago 
relied on a “plain old tele- 
phone” and possibly a spouse 
to take messages, will now 
very likely have a pager, a cel- 
lular phone, and two home 
phone lines complete with 
answerphone, call-waiting, fax 
and other value-added services. 
If he or she belongs to a larger 
organisation, there mi ght also 
be a personal computer net- 
worked to the parent compa- 
ny’s hilling, ordering and mess- 
aging systems. 

At the other extreme, tele- 
coms is the lifeblood of the 
financial services sector. Fur- 
thermore, the value and con- 
centration of business in the 
financial services sectors of the 
main industrialised countries 
are powerful driving forces 
behind competition, liberalisa- 
tion and innovation across the 
telecoms industry. 

R esearch recently com- 
pleted by the London 
Business School for Lon- 
don's City Corporation on the 
telecoms infrastructure of the 
industrial world’s principal 
financial centres hi g hli ghts the 
important social, industrial 
and economic knock-on effects 
of those trends.* 

Based on a study of telecoms 
and financial centres in 
France, Germany, Japan, the 
US and the UK. the LBS 
reaches five conclusions of sig- 
nificance far beyond the finan- 
cial services sector 
• A financial centre’s com- 
petitive advantage in telecoms 
is “much more likely to be a 
consequence of the differences 
in tariffs, product choice and 
reliability than of differences 
in the technology employed." 

• Telecoms account for 
about 8 per cent of the fin ait- 
cial service sector's spending 
on goods and services, a signif- 
icantly higher percentage than 
that spent by other sectors. 

To put this in perspective, 
about 35 per cent of aD interna- 
tional calls from the US origi- 
nate in New York City; 80 per 
cent of all telecoms spending 
in France originates or ends up 
in Paris; more than a quarter 
of all the UK's cellular mobile 
calls are made within London's 
M25 orbital motorway. In each 
case the financial sector is but 


one aspect of the concentra- 
tion, but nonetheless a critical 
one. 

• The value to telecoms 
operators of business gener- 
ated by financial sectors is 
leading to massive infrastruc- 
ture investment in them 

Fibre-optic grids and new 
switching and transmission 
technologies are providing 
broadband and other advanced 
services down to the level even 
of medium-sized businesses 
requiring a few dozen lines. 
This is particularly true of the 
financial districts of London, 
New York and Tokyo, where 
the volume of business is 
greatest and several operators 
now provide fibre grids. 

• The availability of 
advanced services at competi- 
tive prices is, in turn, helping 
to preserve the concentration 
of financial services. 

A few years ago it was fash- 
ionable to believe that modem 
telecoms would encourage a 
migration of business away 
from established centres, with 
business districts disintegra- 
ting and “teleworking” becom- 
ing ever more prevalent There 
is evidence of this in some sec- 
tors. but the LBS study sug- 
gests that in Rnanr.iai services 
the disparity between network 
provision in established cen- 
tres and beyond may be having 
the opposite effect acting as a 
strong incentive to continued 
concentration. 

• The value of the telecoms 
business in financial districts 
is serving as a powerful stimu- 
lus to competition between 
operators, with many new 
entrants building their own 
local infrastructure to by-pass 
the former monopoly suppliers 
and customise their own ser- 
vices. . 

Where competition is 
allowed, the effect has been to 
reduce tariffs, widen product 
choice, improve overall service 
quality, make multiple-sourc- 
ing a rule for most businesses 
- and, once again - to help 
preserve concentration. In 
three of the five centres - New 
York, London and Tokyo - the 
market for the carriage of 
‘voice’ traffic over public net 
works is largely liberalised, 
and competition between oper- 
ators is fierce 

In New York, “competitive 
access providers" (Caps) by- 
passing the local network of 
Nynex, the regional Bell opera- 
tor, have taken, about 60 per 
cent of the former monopoly 
operator’s private-line busi- 
ness. Mr Richard Jalkut, chief 
executive of Nynex’s New York 
operations, says: “They have 
turned us upside down. We are 

Continued on next page 


IN THIS SURVEY 


Phone call prices are falling 


npetftion is forcing 
wi the cost of telephone 
s in Europe; European 
com tariff comparisons: 
Page 2. 

Mobile communications: 
subscribers set toe 
» as world cellular 
ulation tops 35 million: 
Page 3. 

Liberalisation of 

communications in 

ope: Page 4. 

Mobile data services: 


IC*CV T MIS' 

yju’b serrefc 
nrri me 

v o&pl&s „i 
A tlWRlHty 



sb'fl a Cinderella sector: 
Page 4. 

□ Outsourcing and 
contracting-out: Page 4. 

□ GSM digital cedidar 
networks: Pages 5-6- 

□ Satellite-based services 
- from blueprint to reafity: 
Page 6. 

□ Paging marketer Europe 
fogs behind: Page 6. 

□ Electronic commerce: 
route to papeMfee trading: 
Page 7. 

□ Facswnie usage: soaring 
popularity: Page 7. 

□ Packet switched data 
services: Page 7. 

□ North America: 
signposts on the digital 
highway: page 9. 

□ UK market new battles 
loom: Page 10. 

□ Calling cards aid smart 
card technology: pages 10 
and 11. 

□ Computer-telephone 

integration: route to 
commercial gain - page 11. 

□ Video-conferencing 
developments: Page 12. 

□ Cordless phones help 
cut costs: Page 12. 

□ Era of the ‘virtual office’: 
12 






Editorial production: 
Michael Wiltshire 


Ct T p ^! Ba - COfrtrote Open around the dock: this Cable and Wbeloss nrtwo* Runagwiiem centre to ^ 

the Maxat Sateflfta compan/a two London teleports. A third London teteport, coating £2m, w fl open « August rnum-Ongua! staff, working 365 days a year, providing global communicetions for imittinattonal companies 

Licensed Price-Fighter 

vc; 



Telia is licensed to deliver 
international calls from the UK. 

Telia, the Swedish telecommunications company, is now 
licensed to provide international telephony services in the 
United Kingdom too. Through the new Telia Operations 
Centre in London, UK business customers are connected to 
Europe and the world at highly competitive tariffs. . 

Operating Sweden's national telecom network for more 
than 140 years, Telia delivers advanced digital network 
services nationwide. Our service performance is second to 
none, yet telephony costs are among the lowest in the world. 

One of the first operators to face competition on our 
home turf, Telia is no stranger to international business either. 
In fact, we are deeply engaged in several major development 
projects across Europe, east and west. 

Coordinating their technologies and service programmes, 
Telia, PTT Telecom Netherlands and Swiss PTT Telecom 
have formed Unisource - the first pan-European telecom- 
munications company. Unisource provides a single point of 
contact, a seamless European network and global data, satel- 
lite and messaging communications services for customers 
across Europe. 

Meanwhile, the Telia Operations Centre in London 
delivers first rate telephony services at reduced cost for UK 
based companies with an eye for European opportunities. 


For more than a century , Telia has been the 
leading telecommunications operator in Sweden, 
the world s most open telecommunications 
market. Besides the national telephony network t 
the company successfully operates NMT and 
GSM mobile nehoorks. Outside Sweden, Telia is 
directly engaged in operations and development 
projects around Europe and beyond. 

Telia International A B 

P.O. Box 4646, S-116 91 Stockholm, Sweden. 
Telephone: +46-8-743 75 00. Fax: +46-8-743 77 13. 

Telia International UK Ltd 

114A Cromwell Road, London SW7 4 ES. 

Telephone: +44-71-416 03 06. Fax: +44-71-416 03 05. 



Your Swedish Telecom Partner 


N. Sulh«rlmd/NP3 









u 


FINANCIAL 


FT SURVEYS INFORMATION 

77w FT’S next communicatfons-refated survey will be: 

COMPUTER-NETWORKS & COMMUNICATIONS 
To be published on June 28, 1994. 

This survey will look at the management of computer 
networking - networks are inherently complex, both in 
physical construction aand logical design. A raft of prob- 
lems have been thrown up which companies must address 
- from network integrity and security to the control of 
corporate data. 

Other themes of the survey will include the Internet; 
network security; client-server systems; the operating 
systems debate; business applications; open systems and 
interoperability; plus mobile communications technologies 
that make it possible to tap into networks while on the 
move. For a full editorial synopsis, see the London tele- 
phone numbers below. 

SURVEY SYNOPSES Tel 071 873 3763 


SURVEY SYNOPSES Tel 071 873 3763 

Fax 071 B73 3062 

FORTHCOMING SURVEYS LIST Tel 071 873 3763 

Fax 071 873 3062 

BACK NUMBERS 

£1.30 up to one month previous. Callers at FT shop - £1. 
£2.00 one month to one year previous Tei 071 873 3324 

SURVEYS INDEX (past two years) £3 Tel 071 873 3213 

REPRINTS Quotes available for minimum 100 order 

Tel 071 873 3213 


ADVERTISING 


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EDITORIAL Background information should be sent in 
writing to the Commissioning Editor for the survey con- 
cerned, Number One Southwark Bridge, London SE1 9HL, 
or fax 071 873 3076 or 071 407 5700 

Cheques and postal orders lex the FT Surveys Index and Beck 
Numbers should be made payable to Financial Times Ltd. 


TELECOMMUNICATIONS IN BUSINESS g 

Competition forces down prices 


Contmned from previous page 

doing things now which we 
had convinced ourselves three 
or four years ago were impossi- 
ble.” 

For instance, Nynex now 
provides 1.5 MBit circuits 
within 24 hours, which a few 
years ago used to take Nynex 
six months. 

The largest of New York’s 
“Caps”, MFS, has just 
launched a network in the City 
or London, offering local ser- 
vices across its own infrastruc- 
ture and re-sale facilities 
beyond. It is the fourth opera- 
tor in the City to build its own 
infrastructure, and another 
two are in the offing. 

In addition, upwards of a 
dozen re-sale operators are 
established, aiming particu- 
larly at high-tariffed interna- 
tional traffic. 

Take the case of one of the 
UK's largest Insurance compa- 
nies, with a large office in the 
City and a network of more 
than 50 centres across the 
country. The company now 
boasts three City of London 
suppliers - BT, Mercury, and 
WorldCom, a US international 
re-sale operator. It Is looking at 
both MFS and Colt, another US 
operator launched earlier this 
year which is bunding its own 
City infrastructure. 

T am after not just price but 
resilience, ” says the company’s 
manager. 


E ur op ean tariff c om parisons’ ■*.“ 

Montftfy costa for a muWnatiooaf company ki the capital city (June ’l, 1S94) 
Spain 

•'Portugal _ 1 *® n * 

Austria 
Germany 
Greece 
Italy 

Luxembourg 
Switzerland 
average 
Denmark 
Netherlands 
Ireland. 

’ France 
Belgium - 
Finland 
Sweden 
*. Norway 
UK (BT) 

UK (Mercury) 


USdokare ' 400 
86i«e* TtotteWOmnl C6m, BtMnage 

Resilience - back-up capac- 
ity in case one operator fails - 
is a key factor, many telecoms 
managers are keen to “dual 
source” to improve their resil- 
ience; and resilience, in turn, 
male ps tTipm reluctant wholly 
to sever their ties with the for- 
mer monopoly operator, how- 
ever great the price savings on 
offer from its competitors. 

A report by the New York 
City Partnership in 1990 esti- 
mated that a loss of service in 


a key business district for a 
single day could disprupt 
financial transactions worth 
more than £L trillion. 

Significantly, the insurance 
mmpany mentioned above still 
sends about half of Its 
long-distance business over 
BT, on grounds of resilience. 

In France and Germany, the 
other two centres studied by 
the LBS, the “voice” monopo- 
lies of the state operators will 
remain in force until 1998, 


under the timetable for tele- 
coms liberalisation agreed by 
the European Union’s Council 
of Ministers last year. 

The liberalisation of mobile, 
satellite and value-added ser- 
vices has already led to strong 
competition, particularly in 
virtual private netwo r ks for 
large corporate customers. 

Within a year, MFS plans to 
open shop in Paris and Frank- 
furt, offering services within 
fho Umi+w of the EU rules. 

What is comp etition doing to 
prices? 

Without doubt it is forcing 
them down, but (me needs to 
be wary of simplistic generalis- 
ations. The graphs of price lev- 
els (see chart below), taken 
from a recent study of business 
tariffs in the UK, France, Ger- 
many and Italy by Analysys, 
the Cambridge-based telec o ms 
consultancy, reveal a complex 
picture. 

In almost every sector sur- 
veyed, the UK came out with 
lower telecoms prices than the 
other three countries. But it 
also had lower prices a decade 
ago, before liberalisation and 
the privatisation of BT. 

The relative gap between the 
UK and the others has not 
changed greatly over the 4 
decade - indeed, for interna- 
tional calls it has narrowed sig- 
nificantly. The principal UK 
gainers appear to be very large 
- IPO -fine plus - businesses. 

Furthermore, the gap 
between Mercury and BT has 


narrowed progressively in the 
past few years, as competitive 
and regulatory pressures have 
forced BT’s tariffs sharply 
downwards. It is a similar pic- 
ture in the US, where fierce 
competition between AT&T 
and MCI has etead fly eroded 
the tariff gap between the two 
carriers. 

In mobile and other val- 

Compantes are not 
merely seeking cheaper 
services, but also 
resilience and back-up 
capacity in case one 
operator fails 

ue-added sectors, competition 
is si trenched in jjs m >d is 

spreading fast across Europe. 
The UK’s fourth mobile cellu- 
lar oper ato r was launched ear- 
lier year; auction of 
PCS licences In the US next 
year wifi farther, intensify US 
competition; a nd com- 
peting operators are spreading 
fast across mainland Europe 
and Asia-Pacific. In fixedfine 


’ 3 • !“V«- •• V .rr 


services, although competition 
is likely to he fiercest in finan; 
dal centres, the US and UK 
OTparipncp suggests that it wifi 
extend well beyond in due 
course. “Caps” are entrenched 
in most large US cities; legisla- 
tion before Congress could 
bust the Baby Bells' re ma i n ing 
local monopolies. 

In the UK, central Manches- 
ter is about to become as hotly 
contested a market as central 
London, with three operators 
building infrastructure in addi- 
tion to BT Mercury. 

The trends are the same 
across the rest of the developed 
world. Australia and New Zea- 
land have undergone radical 
programmes of telecoms 
deregulation; Hongkong Tele- 
com’s local monopoly is to be 
abolished next year; and 
numerous other Asia-Pacific 
states are proceeding down tire 
same road. 

For businesses able to grasp 
the potential of choice and 
technological advance, the 
opportunities are legion. 

fc Jenny Ireland, “The bnpor- 
tance of Telecom m u ni cations to 
London as an International 
Financial Centre," Corporation 
of London, Guildhall, London 
EC2P2EJ. Free. 



With one of the largest telecommunications networks at its 
command, MCI can make a lot of things happen for its customers. 

We can transmit voice, data and imaging signals between over 
250 countries worldwide, and we can do it quickly, easily and 
N— 7 fjy with clear, high-quality connections. Such state-of-the-art 


capabilities provide the 
international business- 
man and woman with a 


wide range of attractive options 
that literally put the world at his 
or her fingertips. 

We can offer technologically 
unsurpassed global messaging 
services, trouble-free country- 

to-country calling, and ^ 

even a private network 
that can be tailor-made 




MCI. 

Can 

do. 


to meet your company’s 

specific requirements, ensuring a global accessibility and account- 
ability of the highest and most intelligent quality. 

In fact, MCI offers its customers more overseas services than 
any other company, which is perhaps why we are the world's 

fastest growing international carrier. For more infor- 

mation please call 071 331 7900. , 

fltcS 1 N Can do, we know what it means. MCI can do. 




C MCI International Inc. 1804. MCI, its logo, ns well an the name* of MCla other products and services inferred to heroin, are proprietary marks ol MCI Cotmnunica lions Corporation. 





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*> 

* 


T hree significant trends 
axe evident in the cellu- 
lar mobile industry 
across the developed world; 

□ First, the tentative entry 
of the mobile phone into the 
consumer market. 

□ Second, the rise of compe- 
tition between rival operators 
within countries. 

□ And third, the migration 
from analogue to digital net- 
works offering greater capac- 
ity, enhanced features, 
improved reliability, and the 
capacity to “roam" across 
national borders. 

Yet the three are not moving 
in tandem. The UK has four 
network operators up and run- 
ning, with nearly four sub- 
scribers per one hundred peo- 
ple. 

Belgium. Italy and the 
Netherlands still have only one 
functioning operator apiece - 
in all cases the monopoly 
national taiaenma company - 
with two or fewer subscribers 
per one hundred people. 

Even the UK appears a back- 
water by the standards of the 
United States, which has six 
subscribers per one hundred 
people and is about to boost its 
already fierce mobile competi- 
tion by auctioning a host of 
new Personal Communications 
Systems (PCS) licences. 

Last year’s $13bn takeover of 
McCaw Communications by 
the US giant AT&T marks a 
decisive turning point, giving a 
significant impetus to the 
development of cellular tele- 
communications and their inte- 
gration with fixed-wire net- 
works. 

The past year has seen the 
more mature markets - the US 
and western Europe - grow at 
roughly similar rates. Growth 
has been much fester in east- 
ern European, Latin American 
and Asia-Pacific regions, but in 
all cases from a lower base. 
According to FT newsletter. 
Mobile Communications, 1993 
saw the North American mar- 
ket grow 43 per cent to 17.3m 
and western Europe grow 47 
per cent to &fim. 

By contrast, eastern Europe 
grew 129 per cent (but still 
only to 110,000), while Malaysia 
grew by 64 per cent, Argentina 
by 220 per cent, and China by 
300 per cent - to select from 
the other regions. 

China, however, still has 
barely 700,000 subscribers for 
lbn people - fewer than Swe- 
den, and only three times more 
than Switzerland. Nonetheless, 
even in the west the mobile 
phone still has a long way to 
go before it becomes a stan- 
dard business item, let alone a 


CELLULAR TELEPHONY 


Enhanced services on the way 



Across Europe, as waH as in Asia Pacific and the Mkkfle East, the 
new-genaratfon Global System for Mobile communications has entered 
service, in Germany and Denmark, Motorola handsets for the digital 
GSM networks have fatten to wider £100 In some promotion packages. 
The caller above is using a new-styte Alcatel phone 


World cellular population tops 35 million 


Data {an i (t&scrUiere In 
cdMoos In rats 2,3 and 4) 

Ebropv 

Rost at 
the world 

World 

total 

April 1990 

2.6 

5*2 

7.8 

November 1990 

82 

7.2 

10.4 

April 1991 

as 

8.8 

12.7 

October 1991 

4*4 

9.2 

1345 

February 1992 

4.7 

11.4 

16.1 

January 1993 

5.8 

17.0 

22*8 

July 1993 

7.1 

20.2 

2741 

January 1994 

8*9 

24*9 

33-8 


GROWING MARKETS: the world cefluiar population reached 334m 
by January 1984, according to the latest issue of the FT Newsletter, 
‘MobSe Communications.' However, the figure for western Europe 
alone rose by a motion in the first three months of this year. The 
csHiMar population in western Europe grew by 47 per cent last year, 
rising to &£m at the end of 1093. 

The north American market grow by 43 per cent last year, rising 
to 17.3m from 12.1m. The fastest-^owbig cellular markets are h 
Asia - China experienced the highest growth-rate, rising by mors 
than 300 per cent from 160,000 sttescribere at the end of 1092 to 
644,000 sirtiscribers a year later. Details of the FT group's two telecom 
newsletters, Telecom Markets' and ‘MobSe Communications/ are araff- 
abte in London on teL 071-353 0305; tax 071-983 0846. 


mass consumer product. For 
all the talk of mobile networks 
competing with, or replacing, 
fixed networks, the virtually 
no organisations of any size 
make universal provision for 
their employees to have cellu- 
lar phones. 

hi the most populous mobile 
nations, the best analogy for 
the present state of the mobile 
phone market is that of a thtn 
sandwich In search of a thick 
filling . Two thin slices of the 
business market are currently 
being serviced - namely senior 


executives on the one hand, 
and travelling sales people pins 
tbe self-employed “reamers” 
(plumbers, electricians, and so 
on), on the other. 

In between, lies a mass of the 
employed who get no closer to 
a mobile phone that overhear- 
ing banal conversations on the 
train home. Typically, a com- 
pany will have a handful of 
mobiles available for staff on 
the move - but no policy of 
progressively extending their 
use. 

Henceforth, cellular phones 


can probably be expected to 
penetrate both the business 
and the consumer sectors in 
parallel, the one re-inforcing 
the other against a backdrop of 
progressively - but not precipi- 
tately - falling tariffs. 

Price redactions will owe 
something to technological 
advance; something to compe- 
tition between operators; and 
something to cultural atti- 
tudes, which at some point are 
bound to make that the mobile 
phone as essential as the 
fridge. That time may come 
fairly soon. If the progress of 
the UK market over the past 
year is any guide. 

In the UK, tariffs have been 
falling fast After eight years 
when Cellnet and Vodafone, 
the two original operators, lev- 
ied largely unchanged and 
almost identical tariffs, the 
past year has seen successive 
price cuts and a growing diver- 
sity of tariff packag es. 

Eighteen months ago the two 
operators began tapping the 
low-use market, with low sub- 
scription but high usage 
charges. Last s umm er the 


The US has six 
subscribers per 100 
people and is about to 
intensify competition by 
auctioning a host of new 
licences for Personal 
Communications 
Systems 


imminent launch of the Mer- 
cury One-2-One network in the 
London region obliged them 
first to drop their London tariff 
premium, then to introduce 
special discounts for users in 
the London region. 

The effect was dramatic. At 
the start of 1993, the business 
user had to pay 33p a minute 
for daytime rails in the London 
region. 

By the year-end that had 
dropped to 20p for those on 
new London tariff packages - 
though calls outside the region 
cost more on the tariff One-2- 
One charged business custom- 
ers I6p a minute, and 8p after 
9pm and at weekends. (One-2- 
One caused a stir In the indus- 
try by offering free local calls 
on weekday evenings and at 


UK cellular telephone tariffs 

Excluding 1 7.5 per . cent' VAT 


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. coses; off-peak cafe coat 10 pence a minute. 

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■'/: $kKirC!et&''p^^ Comnvjnfcatfonsi May 8. 199 4 


weekends, but only on a con- 
sumer tariff of little use to the 
typical business customer). 

The launch of a fourth net- 
work operator - Orange, 
owned by Hutchison Microtel - 
in April this year has not had a 
similar im part- on tariffs. But 
the Orange strategy shows a 
sophistication in its approach 
to the business sector which 
may also boost the market 

Orange's tariffs feature mm- 


between 15 and 540 minutes of 
free calls. 

Cleverly, most of them bun- 
dle in more reunites than the 
average business customer cur- 
rently uses - Le. between ISO 
and 200 minutes - but for a 
price below tbe equivalent for 
the same calls at peak rate on 
existing Vodafone and Cellnet 
networks, if paid for on a 
usage basis. The tariff struc- 
ture is clearly designed with 


prices are also coming down 
rapidly. It is now possible to 
get slim-line phones for the 
UK’s analogue networks For 
under £100. Phones for new 
digital networks are more 
expensive, but Mercury One-2- 
One cut the price of its digital 
phones - compatible with 
those for the Orange network - 
by £50 in the runup to the 
Orange launch, taking the 
cheapest to £170. 

In Germany and Denmark, 
Motorola handsets for the digi- 
tal GSM networks have fallen 


ntes of “free” calls bundled in .-ithe, company telecoms man- 
with the monthly subscription. ' ager and small businessman in 
The various packages include mind.Meanwhile, handset 


to under £100 in some promo- 
tion packages. 

Enhanced services are also 
on the way. Orange's Nokia 
handsets double as radio 
pagers and have screens which 
can display messages. 

Each handset can support 
two telephone lines distin- 
guished by different ringing 
tones. Their batteries support 
more than on hour's continu- 
ous conversation. 

Meanwhile, other operators 
are exploring the potential for 
integrating fixed and mobile 
services as a means of boosting 
their business appeal. Full 
integration with BT's fixed- 
wire service is prohibited by 
Cellnet 's licence, but possible 
departures include software 
enabling PABXs to switch calls 
to employees' mobile phones 
automatically, and switching 
enhancements for virtual pri- 
vate networks enabling calls to 
be passed to mobile networks 
without incurring fixed-line 
costs. 

The relationship between 
fixed and mobile networks lies 
at the heart of future growth. 
On the one hand, regulatory 
authorities on both sides of the 
Atlantic have been keen to 
keep fixed and mobile net- 
works separate, to prevent 
dominant (often monopoly) 
fixed-line operators from cross- 
subsiding their (competitive) 
mobile operations. AT&T has 
had to go some way to meeting 
this requirement in its take- 
over of McCaw, to appease the 
Federal Communications Com- 
mission. 

On the other hand, the 
future must lie in convergence 
- particularly as “personal 
numbers” and “intelligent net- 
works" divorces phone num- 
bers from particular handsets. 
Tellingly, the European Com- 
mission's Green Paper on 
Mobile Communications, pub- 
lished in April, calls for the 
“unrestricted" combined offer- 
ing of services across fixed and 
mobile networks within the 
overall time schedule for the 
liberalisation of fixed-wire 
voice services across the Euro- 
pean Union - Le. by 1998 for 
most of the 12 member-states. 

In other words, as fixed-line 
monopolies wither, conver- 
gence with mobile communica- 
tions will be allowed to pro- 
ceed. Given the speed of the 
withering, the all-in cellular 
and fixed-wire package may be 
just round the corner - for 
businesses and consumers. 

Andrew Adonis 


GSM networks: Page five 




4 


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IV 


FINANCIAL TIMES WEDNESDAY JUNgJSjg^^ 


TELECOMMUNICATIONS IN BUSINESS 4 


T he liberalisation of Europe's tele- 
communications systems has gath- 
ered unstoppable momentum. After 
years of acrimonious tussles, the ramparts 
of the EU's state telecommunications 
monopolies are exposed, and the walls 
have been been breached in numerous 
places. 

It would, however, be a mistake to 
believe that a fully competitive regime is 
immin ent. In their core voice market the 
former monopolies are likely to remain 
entrenched for years to come. Competition 
will be most intense in the data, mobile, 
satellite and value-added fields where the 
former monopolies' existing resources are 
relatively less substantial. 

Indeed, the building of the much- 
vaunted superhighways is likely to add to 
the armoury of the public telecommunica- 
tions operators iPTOs) as they face the 
opening of their core markets. Given the 
expense of extending fibre Into local net- 
works - estimated at £15bn for the UK 
alone - the PTOs are almost certain to to 
be the principal operators of fibre grids. 
Until effective inter-connection regimes 
are established, other operators wishing to 
offer services across these networks are 
likely to find it hard to gain fair access. 

The key to effective competition is the 
liberalisation of infrastructure and the 
establishment, country by country, of a 
regulatory structure independent of the 
PTO and its sponsoring ministry. For 
either policy to be made effective, at least 
in the early years, the government must 
be firmly committed to competition and 
prepared to distance itself from the imme- 
diate interests of its PTO. 

In Britain, where competition is the cen- 
trepiece of the government's telecoms pol- 
icy, both of the above policies have been 
pursued. Yet 8T commands nearly 30 per 
cent of the UK market, a decade after the 
abolition of its monopoly and the licensing 


Liberalisation of telecom systems unleashes a wave of competition across Europe 

Monopoly walls breached 


of a competitor. In EU states where gov- 
ernments are less enthusiastic about the 
merits of competition, rival operators win 
face a steep climb to establish themselves. 

Nonetheless, they start with three clear 
advantages over Mercury. BT's initial and 
largest competitor. In the first place, com- 
petition is already a fact of life in sectors 
other than voice. Almost every EU state 
has now licensed at least one competitor 
to the PTO in mobile cellular communica- 
tions. Barely a year after its launch, Ger- 
many’s Manesraann mobile consortium 

In Britain, competition is the 
centrepiece of the government’s 
telecommunications policy 

has at least as many subscribers to its 
GSM cellular network as has Deutsche 
Telekom to its GSM network; and a third 
German operator has been licensed. 

In France, the SFR competitor to France 
Telecom is thriving. In Belgium, the 
Netherlands, and Italy rivals launch ser- 
vices this year or next Some of the mobile 
operators are known to be interested in 
moving across to fixed-line voice services 
when the opportunity arises. 

The satellite and data sectors have also 
been opened to competition, with rival 
operators to PTOs now well established. A 
recent ruling in May by Germany’s Fed- 
eral Cartel Commission on Illegal subsi- 
dies paid by Deutsche Telekom to its data 
subsidiary could prove seminal. 


The Cartel Commission found that Deut- 
sche Telekom has been seriously hinder- 
ing competition in Germany’s liberalised 
data market, in particular in the provision 
of X2S data networks (known as “Datex-P" 
in Germany!, through subsidies from its 
monopoly voice and leased lines business. 

In all, subsidies of DML9bn were found 
to have been paid since 1989, the year 
Germany's data market was opened to 
competition. The findings have been 
referred to Germany's federal economics 
and telecommunications minis tries, which 
will have to decide what measures to take. 
Meanwhile, Deutsche Telekom claims to 
have reformed its accounting system to 
end the illicit subsidies. 

Four features of the case stand out, all 
of which are likely in due course to recur 
across the EU in the far larger voice sec- 
tor. First, the case was brought by an 
association of independent telecoms opera- 
tors. VTM. whose members now have 
about 10 per cent of Germany’s DM800m a 
year data telecoms market. The Cartel 
Commission would in all likelihood not 
have taken up the case but for the com- 
plaints. Secondly, the VTM association 
includes a host of national operators - BT, 
AT&T, and the Swedish, Dutch and Swiss 
PTOs for starters. 

Unlike Mercury in the UK, the big play- 
ers in the newly liberalising markets will 
be operators well versed in the tactics and 
practices of monopolists - and thus, per- 
haps. better able to seek to expose them 
elsewhere. 


Thirdly, it took five years from liberalis- 
ation for the claims of unfair cross-subsi- 
dies to be decided upon by the German 
competition authorities, and even then, 
the remedies remained unclear. Without 
dedicated telecoms regulators able to 
impose inter-connection regimes and 
accounting separation, entrants will find it 
slow and exhausting to gain legal redress 
for perceived unfairnesses tn the competi- 
tive regime. Finally. Deutsche Telekom 
had , by common consent, gone some way 
to meeting the complaints even before the 
Cartel Commission’s ruling. 

How Cast will competition in voice ser- 
vices develop? It has already started in 
cross-border virtual private networks (see 
article an outsourcing, below), and elabo- 
rate call-back and other regimes are being 
established to circumvent monopolies for 
some international traffic from business 
districts. But for the voice market as a 
whole, outside the UK and possibly the 
Netherlands, competition is likely to have 
to waft until the 199S deadline agreed by 
EU telecoms ministers last year - 
extended to 2003 for Spain, Portugal, 
Ireland and Greece, and to 2000 for Luxem- 
bourg. 

In practice, the extensions are unlikely 
to last as long as that. Mr Minhal Carpen- 
tier, head of the EU’s telecoms directorate, 
told a recent FT conference; "We do not 
expect that all the countries eligible foe 
derogation will fully use the additional 
five-year period. 

“This lias already been our experience 


for the initial services liberalisation step." 

What happens after 1998 - or whenever 
competition Is formally permitted in each 
state - depends upon a number of key 
decisions still to be taken, and tn particu- 
lar on three: the extent to which ' infra- 
structure is liberalised, the nature of 
national telecoms regulation, and the 
structure of regulation at EU level. 

The EU’s Bangemann committee of 
industry leaders, set up last year to exam- 
ine steps towards the “information soci- 
ety” and due to report to this month’s EU 

In core ‘voice’ markets, former 

monopolies are likely to remain 
entrenched for years to come 

summit, will make a tentative nod in all 
three iUmt-Homs Its summary cnnrfiisinng 
already published, argue for an accelera- 
tion of competition. It calls for “opening 
up to competition, infrastructures and ser- 
vices still in the monopoly area”, a signifi- 
cant development in the EU’s position if 
endorsed by the Council, it also advocates 
"removing nan-commercial political bur- 
dens and budgetary constraints impnsgri 
on telecoms operators” - which could be 
tafcwi as a clear reference to privatisation, 
the only sure means of keeping the politi- 
cians out of the month by month 
operations of the PTOs. The group also 
stresses the need to speed up the process 
of s tandar disation of network architecture 
to ensure foil interconnection of networks 


and interoperability of services- 

However, the Bangemann group appears 
to have sidestepped the critical area of EU 
regulation, concluding lamely: ad 
authority should he established at Euro- 
pean level whose terms of reference will 
require prompt attention." Such an 
“authority” could be anything from a US- 
style Federal Communications Commis- 
sions to a feeble college of national regu- 
lators — and its terms of reference any- 
thing from promoting competition and 
gptt-Hng - inter-connection disputes to acting 
mer ely as a forum for exchanges of views 
between national regulators. 

A recent speech by Mr Karel Van Miert, 
the EU’s competition commissioner, to a 
meeting of solicitors at S J Beniia, high- 
lights tiiA importance of decisions still 
to be taken on regulation. -Article 88 of the 
Treaty of Rome gives the EU tough powers 
over companies dominant in their mar- 
kets; but, noted Mr Van Miert, no formal 
prohibition daririmna . y garnat PTOs have 
hwan m ado ctnre nna a gains t BT in 1982. 

Why? "My services," he said, "have 
been struck Hnw and again by the reluc- 
tance of companies - even very big and 
powerful companies - to lodge formal 
complaints against PTOs for fear of suffer- 
ing reprisals." Furthermore, he com- 
mented, "lack of evidence” often precludes 
investigation even of those cases brought, 
for. evidence is Invariably hard to gather 
"in view of the unsatisfactory accounting 
practices applied by the PTOs.” 

In other words, accounting separation, 
and a pro-active regulatory Institution 
armed with firsthand knowledge of the 
internal world off the PTOs, is the essential 
pre-requisite for a frzDy competitive mar- 
ket Whether the EU will prove able to 
establish a regulator equal to the task 
remains to be seen. 

Andrew Adonis 


M obile data remains the 
Cinderella of the tele- 
communications 
industry. Although there is 
almost universal agreement 
that mobile data services will 
eventually grow into a sub- 
stantia] market, for the 
moment they are overshad- 
owed by the spectacular 
growth of cellular radio voice 
communications. 

The failure of mobile data to 
live up to early expectations 
has already prompted some 
suppliers to re-assess their 
strategies and reconsider 
investments. 

In the UK, for example, 
Hutchison Mobile Data ceased 
marketing its fledgling dedi- 
cated data service last autumn 
and is now expected to offer 
mobile data services on its 
recently launched Orange digi- 
tal Personal Communications 
Network later this year. 

Ovum, the market research 
organisation, noted in a report 
on mobile data published last 
year that early users of mobile 
data services have experienced 
"the very real and measurable 
benefits from mobile data in 
terms of reduced costs, 
increased efficiency and 
improved customer service. 
Furthermore, they have usu- 
ally achieved a rapid pay- 


back." The report conceded 
however that, “despite ser- 
vices being available on cellu- 
lar and public data-only net- 
works. the market has been 
slow to develop. Data-only net- 
works are facing an uphill 
struggle to attract subscribers 
and the number of data users 
on the cellular network is in 
the region of 2-5 per cent of 
the user base." 

By the end of last year 
Ovum estimated that there 
were just 325.000 users of 
mobile data in North America 

By the year 2000, there 
will be more than 9m 
users of mobile data 
services in North America 
and Europe 

and Europe with organisations 
using the services falling into 
two mam categories, vertical 
markets, particularly the ser- 
vice industries, and early hori- 
zontal markets involving 
industries with a significant 
service element in some aspect 
of their business. 

Typical applications involve 
transferring engineering, cus- 
tomer or product information 
to and from portable comput- 
ers, or retrieving information 


MOBILE DATA SERVICES 


Still a Cinderella sector 


from mobile data terminals 
such as meter readers. Other 
applications include keeping 
track of truck fleets or railway 
wagons. 

Despite this relatively slow 
start Ovum, like most other 
forecasters, believes that 
mobile data will soon take off 
- “by the year 2000 there will 
be more than 9m users of 
mobile data services in North 
America and Europe. This will 
represent a $7.6bn market for 
terminal equipment, network 
Infrastructure, systems inte- 
gration and airtime revenue.” 

Ovum says the driving 
forces behind the increased 
adoption of data services are a 
more mobile workforce; real 
user- bene fits; a growing 
demand for computing and 
communications on the move, 
and a growth in data commu- 
nications generally. 

It suggests, however, that 
the market is constrained by 
factors including customer 
concern over competition 
between mobile data services 


technology and the availabil- 
ity of net wo rks, price of equip- 
ment and excessively complex 
and expensive applications, 
lack of market unders tanding 
and belief that perceived risks 
outweigh cost benefits. 

Two of these factors, cus- 
tomer concern about which 
service to buy and the avail- 
ability of networks, are cru- 
cial. 

The mobile data market, 
while developing competing 
technologies, is conspicuous 
for its lack of standards, mak- 
ing potential customers ner- 
vous. This situation is exacer- 
bated by the bewildering array 
of data delivery systems. 

In the UK, excluding pager 
traffic, mobile data services 
are offered by cellular tele- 
phone network operators, ded- 
icated mobile data network 
operators and private and pub- 
lic access mobile radio net- 
works - all using incompatible 
standards and equipment. 

All of the options have their 
attractions and drawbacks. 


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For example, it Is possible to 
transmit data over an anal- 
ogue cellular telephone system 
such as the CeQnet or Voda- 
fone networks in the UK, but 
this is generally more diffi- 
cult, slower and considerably 
more expensive than transmit- 
ing data over the fixed public 
switched telephone network. 
As a result, relatively few 
business customers use cellu- 
lar telephone systems to trans- 
mit date. 

For analogue cellular cus- 
tomers who require date com- 
munications, one solution Is to 
to use a cellular modem. For 
example in the UK Vodafone’s 
mobile date service uses a cel- 
lular data link control (CDLC) 
modem enabling customers to 
transmit and receive error-free 
data over its network. It is 
also possible to use a cellular 
line interface (CLI) with a 
standard modem and some 
mobile phones. 

Data transmission over the 
new generation of digital cel- 
lular telephone systems, such 


as the GSM and PCN services 
in Europe which have just 
started up, should be simpler, 
fester and more reliable. 

The GSM specification 
includes a facility which will 
eventually allow any terminal 
- for example, a portable fee- 
simile winching or a notebook 
computer - to be plugged 
directly into the handset 

In the US, analogue cellular 
network operators led by 
AT&T’s subsidiary, McCaw 
Cellular Conmmnicatioiis, are 
upgrading their networks to 
accommodate a new ’open’ 
technology called cellular digi- 
tal packet-switched data 
(CDPD). 

CDPD enables data to be 
sent in blocks over existing 
networks using the ‘spaces’ 
between voice traffic. Because 
it provides the advantages of 
digital transmission without 
the need for expanded system 
capacity, it is very cost-effec- 
tive option. 

For customers who require 
voice and data communica- 


tions from a moving vehicle, a 
two-way public access mobile 
radio service such as the UK’s 
National Band Three (NB3) is 
soon to be available. 

NB3 customers buy their 
own communications equip- 
ment and then pay a fixed 
monthly subscription. They do 
not pay call charges. 

Meanwhile in the US, Nextel, 
a six-year-old New Jersey 
radio dispatch service com- 
pany, has bean using fli gftai 
technology from Motorola to 
create a nationwide network 

Potential customers are 
concerned over competing 
technologies and the 
sufficient availability of 
networks 

offering voice, date and paging 
as weQ as its established dis- 
patch services. 

Nextel’s services are expec- 
ted to compete with the high 
speed and low cost wireless 
data links provided by dedi- 
cated packet-switched date- 
networks such' as Ante — a 
joint venture between IBM and 
Motorola - and Bam Broad- 
casting in the US. 

Similar packet-switched 
mobile data networks, mostly 


based on Ericsson’s Mobttex 
technology, have been built or 
are planned " throughout 
Europe. 

In the UK where there are 
three surviving mobile data 
networks, Cognffo, Vodafone’s 
Paknet and Bam Mobile Date 
- a joint venture involving US- 
based Pam Broadcasting and 
BellSouth, France Telco m, 
Swedish Telcom and Bony- 


... ‘.i 


Although subscriber growth 
has been slow, Mr John Jarvis, 
Bam Meddle Date’s chief exec- 
utive, says interest Is acceler- 
ating -■ "we are beginning to 
see an Industry, with mass 
market characteristics tn 
turns of size mid potential.” 
he says. 

However, he acknowledges 
that although there is an 
increasing understanding that 
raohOe date can make a strate- 
gic difference to competitive- 
ness, "senior managers still 
require education on how to 
apply the technology to their 
businesses and derive commer- 
cial advantage.*' 

-•'.If -the "mobile data market 
does finally shed its Cinderella 
image, the competing technol- 
ogies wiU need to work hard 
.for custom. .... 

Paid Taylor 


Andrew Adonis highlights the debate of the merits of ‘outsourcing’ 


Wind blows 
both ways 


W ill or will not large 
organisations - par- 
ticularly multina- 
tional companies - be enticed 
into contracting out their tele- 
communications requirements 
to a single telecoms group7 Put 
differently, do they regard 
their telecoms as essentially 
strategic or non-core? 

Upon the answer to those 
questions depends the realisa- 
tion of the grandiose visions 
animating telecom operators 
worldwide. Alliances, invest- 
ments and strategies are being 
predicated on the emergence of 
a burgeoning market for ‘out- 
sourcing/ The jury will proba- 
bly be out for a few years. But 
while the issue is decided, 
opportunities galore will pres- 
ent themselves to large organi- 
sations - in the public as much 
as the private sector - seeking 
new services and a better deal 
for their existing telecoms. 

Most national operators now 
boast an outsourcing capacity, 
but the cross-border business 
is set to be most competitive. 
Predictably, American Tele- 
phone & Telegraph and British 
Telecommunications, the two 
most ambitious International 
operators, are at the forefront. 

Last summer AT&T 
launched its ‘World Partners’ 
venture with several Far East- 
ern operators, while BT forged 
a $5 3bn alliance with MCI, the 
second-largest US operator and 
bitter foe of AT&T in the US 
long-distance market. Both are 
aimed at exploiting the market 
for international outsourcing - 
variously estimated at between 
1,000 and 5,000 companies 
worth between $10bn and 
$20bn a year. 

The French and German 
state operators are also lining 
up. with an Eculbn alliance to 
provide advanced services to 
multinationals. 

However, smaller operators 
are just as fixated. In Europe, 
three of the smaller narinnai 
telecoms companies - those of 
the Netherlands, Switzerland 
and Sweden - have clubbed 
together to establish their own 
outsourcing joint venture. Uni- 


source. Telefonica of Spain is 
in talks about joining. Sepa- 
rately, Cable & Wireless, the 
former imperial UK operator 
with operations in 56 compa- 
nies - Is trumpeting itself as 
the Ideal “outsourcing federa- 
tion", and has established a 
special division for the pur- 
pose. 

At present, the straws in the 
wind are blowing both ways. 
Surveys show companies 
highly reluctant to outsource. 
Yet contracts are being sought 
and awarded, and the regula- 
tory regime in Europe is set to 
give a significant boost to out 
spurring. 

A UK industry survey, car- 
ried out among 439 large com- 
panies last year by the Tele- 
comm uni cations Managers' 
Association, last year, showed 
that more than 90 per cent had 
rejected the idea of contracting 
out their telecwmimmications. 
It found that only G per cent 
had decided to outsource the 
management of their telecoms. 
Fewer than half had consid- 
ered outsourcing; of those that 
had considered it, 45 per cent 
said they had rejected it 



Outaotncing aflows corapames to canoantate on core actMHeffand 
contract-out thelr.talecofriraquhMmiita. Pictured IteifearoequHsrdMtaro 
In London, aurrwxfod tyfafani mab n technology. - - noon: a*** Miwxxi 


because telecommunications 
were strategic to their busi- 
ness, while 44 per cent could 
see no cost benefit. Neariy one 
in four , feared ‘entrapment* by 
the outsourcer. . 

Mr G raham Mairing , rimir - 
man of the association, said: 
"Most large companies still see 
telecoms as a care activity, and 
are very reluctant to describe 


New $7m contract 


Apple Computer has 
awarded Computer Sciences 
Corporation (CSC) a new 
contract worth $7m over two 
years, to continue to manage 
the user ad mini st ra tion and 
biffing system for the 
AppleLink Network Service. 

AppleLink is the electronic 
communication and 
information system biking 
60,000 users of Apple 
computers worldwide via 
e-mafl, with bulletin boards 
and ffirartes offering 
in forma ti on on Apple 
pr ogr ammes and products. 

CSC, which has 28^00 
employees in 450 offices 
worldwide, is a leader fri the 
information technology 
services sector. Enduing 
outsourcing. Mr Mojtaba 
Ghassemran, president of 



Mr Mcjtaba Ghassarrdanof CSC: 
Apple contract retained 

tire services management 
cfivfdon, says CSC retains 
over 90 per cent of 
m^tendered co ntracts. 


their requirements in detail to 
a third party.”. 

Despite that, o ntaoun fo ig is a 
rapidly growing business 1 in 
the Ug and a munber ot large 
contracts have been awarded 
in the EU. Tb take but three 
large European developments 
of the past yean ■ . ' . 

• the' UK government has out- 
sourced its longdistance inter- 
departmental network - cover- 
ing 250,000 Civil servants in 550 
offices > to Meremy. 

• the Financial Network 
Association, a joint venture 
company, between 12 national 
public, telecommunications 
operators, six of them Euro- 
pean (Mercury, Deutsche Tele- 
kom; France Telecom, Belga- 
com, Telefonica and Rateable), 
has been cleared by the Euro- 
pean Commission on condition 
that. its- services were not 
cross-subsidised by revenue 
from . monopoly operations. 
Other members include MCI, 
the second largest kmg dis- 
tance carrier, KDD of Japan 
and Telstra of Australia. The 
company plans to offer speci- 
alised international network 
seivices to the flmmriai sector 
ih particular high-capacity net 
works .for the conveyance of 
data and image, it -will compete 
strongly with Swift, the body 


Cc m tte a ed on next page 



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FINANCI AL TIME S WEDNESDAY JUNE 15 1994 

Paul Quigley compares tariffs on the 
GSM digital cellular networks 
around the world 

The price of 
progress 


A s mobile telecommuni- 
cations become part of 
the central information 

highway wit hin basin esses 
both large and small , the tech- 
nology itself will be of less sig- 
nificance than the cost benefits 
it delivers. 

Yet, while GSM (Global Sys- 
tem for Mobile Communica- 
tions) is fairing up an unassail- 
able position as a world-wide 
technical standard for next 
generation digital cellular com- 
munications, wide variations 
in tariffs remain. 

Connecti on charges, and 
monthly access and call 
charges — the individ ual 
chargeable elements of GSM 
operators’ tariffs - all show 
striking differences . Some 
GSM carriers, operating in 
markets with limited or no 
competition, can exploit. their 


domestic market by offering 
inflated tariffs compared with 
those of neighbouring coun- 
tries. Others, in hi g hl y compet- 
itive cellular markets, are 
offering low GSM tariffs on a 
par with existing analogue cel- 
lular tariffs. 

Where value-added tax 
(VAT) rates are hi g h , such as 
in Denmark (25 per cent), Swe- 
den (25 per cent), and Finland 
(22 per cent), GSM tariffe are 
still among the lowest. But in 
countries where VAT rates are 
lower, such as Luxembourg (15 
per cent) or where there is no 
tax to pay, such as in Switzer- 
land, GSM tariffs are often 
high 

Over the last twelve months, 
more than 60 per cent of GSM 
operators have reduced prices 
for peak rate call charges. The 
largest reductions in prices 


-Natworic operator. . ■ = ■ : \ * 

' 1 tyteonaaptoon 


• ‘SFhajyg 
TelabafPimtagcf |! 

■ Pari bfo n Greece M 
•• STHF.Halla&p 
' . VtxtefbretftCB 

• ■. Hong Kong Tetecom CSb A 

• .-SrcorfrafamlB 

;.P1VAusiiyS 
ftetcom Norway ■ 
. NojdlcTei Sweden H 
Tdemobff Norway j|| 
TeteDanrrarit ■ 
■ •• Telia Mobittf Swedes ■ 
. •' CfenskeMoMtaefboll 
* SmarTooe Hong Koog JH 
fladfoftija Flnjafld ■ 
Teiaqoni Australia |j|| 
MIN South Africa.Hl 
Vodaconv Sou® Africa M 
.We^et 900 Hungary. H| 
TCtfecom FaTteod MJ 
- ■: Vodafooe Pty |j| 

Conivik Sweden JNj 
OpbaMobfeH 
:PTTTtateei|j 
PTTTrfoiotal M 

Ecu 

SourcsPauJOiftto ' ■ ■ 


w* | f ‘ / 
sr < *W' - ,! ! ' 


> i,. * 

JMHM 4V.V WiVti 

• TTTTj-i > \ 

• Pi*' 

■ — ••• 

HiP 2 f 2 ;:4'-- ■{•■ •' • ■ 

mm 2j6s - ‘ •' 
^5'aaas- Total coat of 

* T . . 30 minutes 

. (niand out-going 
tafldima per day i. ' 
H ; duing peak rate \ 

5 ai« '. over a one year .. 

* 1 ■ Period 


PPPPP 2,1*3 ; aising pea* rate 
' ' over a one year •. 

9$*" \ ' 1. i^.r- 

yJv- 

• • aiooo. . ■ . aooo b gpoo . 


Cost-savings drive 
‘outsourcing’ trend 


Continued from previous page 

jointly owned by international 
banks to manage their main 
network functions. 

• In April a ground-breaking 
contract, worth up to Ecu500m 
a year, was awarded by 30 of 
Europe’s leading multination- 
als to British Telecommunica- 
tions and an alliance of AT&T 
and Unisource to build a pan- 
European telecoms network 
linking the facilities of the 30 
companies. The 30, which 
include Rank Xerox, ICI, Phil- 
ips, ABN Amro and ABB, have 
formed a European telecoms 
association aiming to gain tar- 
iff reductions and upgraded 
services .by acting jointly to 
provide for their telecoms 
requirements. 

The prospect of savings erf up 
to 40 per cent on the compa- 
nies' existing bills for cross- 
border European traffic was a 
key stimulus to the associa- 
tion. Those savings, in turn, 
depend upon a vital aspect of 
the existing EU telecoms 
regime, which permits compe- 
tition between carriers for pn- 
vate networks, although 
monopolies for voice traffic 
will continue until at least 1998 
on public networks. The associ- 
ation's network qualifies as 
private because companies will 
not be allowed to communicate 
with each other across it. 

The distinction is an uneasy 
attempt by the European Com- 
mission to encourage the 
development of pan-European 
networks without undermining 
national telecoms monopolies 
before state companies have 
time to adjust to competition. 


The effect, however, win be to 
give a significant boost to out- 
sourcing via the franchising of 
private networks. Signifi- 
cantly, the European associa- 
tion draws on US experience, 
where a group of large compa- 
nies - some of them members 
of the European group - oper- 
ates a pan-US private network 
to provide enhanced telecoms 
facilities at special rates. 

The scope for savings is con- 
siderable. A telecoms “bench- 
mar knur” report carried out 
this year by the UK’s Trade 
and Industry Department 
found that while public net- 
work charges were broadly 
comparable in the US and 
larger European states, the 

Thirty multinationals are 
linking up in a new 

pan- European network 

price of high-capacity leased 
private circuits was v astly 
more expensive in Europe. 

Reuters, which has the larg- 
est private telecoms network 
in the world, claims that it 
would save 90 per cent of its 
outgoings for leased lines in 
Europe if the equivalent net- 
work were in the US. As the 
DTI noted: “Such high costs 
not only increase the costs for 
business, they also suppress 
business activity by ma k in g it 
uneconomic to offer certain 
types of service or to carry out 
some business activities." 

At the end of the day, cost 
savings are likely to ‘drive’ 
outsourcing. The potential for 
them is considerable - for the 
proactive customer. 


FWfrflST* 


tor a w ‘ raHn ^ F^lehms 

t-tmoxid 7W-*. .««**t* 

- r ni -in mil fabian al Faxcast Europe LinHted 

K™* —7 ^1-wT Fax: +4471 351 7655 


TELECOMMUNICATIONS IN BUSINESS 




■■ r v.“ “ * • 

"? -r 

.■ *: .Tateccma^qricl. 


Total annual pin* tax 


. access charge 


Costs compared: GSM digital 

Currency: Ecu 

Crafty GSM operator Comec’n 


cellular tariffs 


AUSTHA , 


^ridkbtHNIc^f* - I . j j j 

I 1 »'s; i ! 

/ • * r SIP Italy - » I ; ! S 

- r ■ j wmmmam ■ ■ 

'^TN^wtugsf'.. I | 

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i ' j^V«fafeoc,tS<' j — ( [ V | B| j 

, J ' ' :*??■ ■. - : 4«0S6 .;-<»% • ■ & *ao%. 

iTgirni) ^ ^ . pifeachanosf ter bwca »h rah^Brk s ;loi » *iai^ri^'opa« a t to MajrtflB3^May'tB94(%) 


PlVABtlta 
Ba lg aaai 
Dassk BaUttalefan 
TaMaonfc 
TefBcam FWaad 
RadkAgfa FUad 
nance Tfann 
SfH F ranc a 


HDKKHG 


8MGART, 


PasafoK Greece 
STET turns 
SmartToae kaag Knag 
Haag Kong IWacen CSL 
Westd 900 Mnoaiy 


have been made by Coxnvik in 
Sweden, and by the two Portu- 
guese operators, TMN and 
TeleceL France Telecom and 
its rival network, Sodete Fran - 
caise du Radiotelephone (SFR) 
have also reduced peak rate 
ft>Ti charges by around 20 per 
cent, but are still the highest 
in overall cost terms. 

hi Switzerland and Luxem- 
bourg, peak rate call charges 
have increased by 64 per cent 
and 55 per cent respectively in 
the last year, as the Swiss ami 
Luxembourg telecoms authori- 
ties make the most of the 
absence of competition in 
GSM 


At the other extreme, Dansk 
Mobfltdefan which has mare 
than 70 b00 subscribers on its 
Sonofon network, compared 
with around 5,000 at ffdg time 
last year, bag i tv-top g»d peak 
rate call charges which were 
previously much too low. 

How do tariffs line up for a 
typical user on the business 
tariff rate who uses a GSM 
telephone within the bound- 
aries of the home network for 
thirty mfnntftg per day, during 
the peak rate period, for five 
days a week, over a forty-eight 
week year? 

French users are likely to be 
paying the highest prices for 


GSM. France Telecom’s Itineris 
network which has been in 
commercial service for nearly 
two years has the highest over- 
all cost at present, and a fairly 
low subscriber total of around 
150,000. 

SFR tarifEs are also high in 
relation to other countries. 
Total costs have, nevertheless, 
fallen an both French GSM net- 
works by up to 20 per cent ova: 
the last year. 

In Germany, where GSM is 
experiencing rapid growth 
(with more than 1.2 million 
subscribers), tariffe are also 

Continued on faring page 


NORWAY. 


PfHHUBAL . 


SOUTH AFRICA. 


SS> Raly 
PAY UnGSia 
TaWwoM Nanny 


HTH Sooth Africa 
go da con Sooth Africa 


NonBcTM Sweden 
SorfsaPTT 
PIT Tretad 


AUSTRALIA. 


Tele co m tastnUb 
Opta MoMe 
Vodafone Ply 







Transpac Network 
Services. 
What it takes. 


The quality of your coiporate information system depends 
on a data transmission network that is perfectly 
adapted to your needs. 

The Transpac network lets you choose 
from a wide variety of access facilities. 

It also interfaces with multiple protocols to interconnect 
your local networks and connect your equipment 

Going further, value added services provide you with more 
security and flexibility, offer you customized network 
management, and enable you to automate your exchanges. 

> The entire service range is available seamlessly throughout 
Europe and extends to over 80 countries worldwide 
via the Infonet network. 

Transpac, your France Telecom Group partner, guarantees 
you the quality, adaptability and development potential 
only a world-class operator can offer. 

Contact your Sales Engineers : 

Tel: (071) 379 47 47 - Fax: (071) 379 88 24 


France Telecom 
' Network Services 




VI 


iwuiurm timrs WEDNfiSOA^ J(JNH 15 I9W 


TELECOMMUNICATIONS IN 



Paul Taylor looks at advances in satellite-based services 

From blueprint to reality 


IrNttian system overview 


Within five years a new 
generation of telecommunica- 
tions satellites is likely to pro- 
vide a truly global mobile tele- 
phone service, using light- 
weight pocket-sized handsets. 

Already, plans for satellite 
mobile communications 
systems such as Iridi um, Glob- 
alstar and Inmarsat-F have 
become a hot topic for discus- 
sion in the industry. 

Geo-stationary satellites play 
a key role in fixed and mobile 
telecommunications networks, 
providing voice, data and video 
links over continents and 
oceans, maritime gnd aeronau- 
tical communications where 
land-based systems are not an 
option and global positioning 
and tracking services for mili- 
tary and rammprri ftT custom- 
ers. 

On both sides of the Atlantic 
they are increasingly used to 
provide cost-effective two-way 
Vsat (very small aperture ter- 
minal) satellite voice and data 
telecommunications services to 
businesses. Datamonitor, the 
market research organisation, 
expects European satellite 
business service revenues to 
grow from about $140m in 1991 
to $365m in 1997- the fastest 
growing segment of the satel- 


lite wimmimlwilinns mark et 

Satellites can also provide 
telecommunications facilities 
to geologists, journalists, aid- 
workers and others in remote 
regions of the world using 
briefcase-size portable termi- 
nate, such as those supplied by 
Inmarsat, the London-based 74- 
member International Mari- 
time Satellite Organisation. 

Inmarsat uses five opera- 
tional satellites to provide ser- 
vices to 40,000 

customers, 
most of them 
in its specialist 
maritime and 
aeronautical 
markets. 

Geo-stationary communica- 
tions satellites usually operate 
at an altitude of around 22500 
mUpg in contrast, most of the 
latest proposals are based on 
low-earth orbit (Leo) satellites 
which operate at between 400 
and 1,000 miles. 

Over the past few years, 
about half a dozen Leo-based 
systems have been unveiled by 
ftiterpatinr iai consortia. As Mr 
Robert Rosenberg of the Wash- 
ington-based Insight Research 
organisation points out, "it 
doesn’t take a lot at money to 
slap a proposal down." 


Iridium is likely to face 
fierce competition from 
Gfobalstar 


Turning these blueprints 
into reality is likely to he con- 
siderably more difficult and as 
KPMG Peat Marwick con- 
cluded in a recent study for the 
European Commission, "limits 
on finance and radio spectrum 
probably mean that only two 
or three of the systems win 
ever reach the launch stage." 

Among the front-runners are 
the $3.4bn Iridium project, con- 
ceived by Motorola, the US- 
based electron- 
ics group, and 
the $i.8bn 
Globalstar proj- 
ect developed 
by Loral, the 
US defence 

group. 

Zridzum will be based on a 
“constellation” of 68 small Leo 
satellites weighing 1,500 lbs 
ringi n g the earth at a height of 
420 nautical miles. Handsets 
tor use of the system win be 
dual-mode, also allowing 
to be made on the local cpilular 
network where available. 

When a call cannot be routed 
via tire terrestrial cellular net- 
work it wOl be relayed to the 
nearest satellite, transferring 
between satellites if necessary 
before being beamed down 
through one of 15 to 20 terras- 


Andrew Adonis on a contrast in paging markets 

Europe lags behind 


Until recently, Europe’s paging 
industry was at a less to know 
how to cou nte r the relentless 
rise of the mobile phone. The 
main casualty has been the 
consumer market, barely 
tapped by the pager, but the 
business sector has also lan- 
guished. 

Three explanations are put 
forward - technological, cul- 
tural and commercial. 

With its limited versatility, 
the pager is supposed to be 
inherently inferior to the 
mobile phone and destined for 
the museum, the late of "one- 
way cellular” telepoint ser- 
vices, such as Hutchison 
Whampoa's "Rabbit”, wound 
up last year, are cited to under- 
line the point 

Culturally, Europeans are 
often claimed to be naturally 
averse to indirect means of 
communication. On the com- 
mercial front, most of the com- 
panies operating paging net- 
works derive the bulk of their 
“mobile” revenues from their 
cellular phone businesses, 
where subscribers are far more 

numerous gnd Tnarg tn R higher 

So, it is argued, paging inevita- 
bly gets pushed to the side. 

The technological and com- 
mercial arguments are valid — 
up to a point Many of Europe’s 
paging operators are indeed 
obsessed with mobile tele- 
phony, and in the long term, 
technology will doubtless kill 
paging. But given the high 
price of cellular phones, both 
to buy and to service, the pag- 
ing obituaries appear to be 
ratter premature. 

The contrast between the US 
and Asia’s booming paging 
markets and the lacklustre 
European scene ought at least 
to give pause for thought 

With 760,000 subscribers, the 
UK is Europe’s largest paging 
market CTT Research, the Lon- 
don telecoms consultancy, pre- 
dicts that across western 
Europe the paging market will 
increase from 3JLm to 5m over 
the next decade. The US, by 
contrast has about 21m 
pagers. Singapore has more 
than 600,000, Hang Kong lux, 
Taiwan L4m and Japan 7.7m. 

According to CTT, the Asia- 
Pacific region as a whole has 
13.94m paging subscribers, 
which it estimates will more 
than double within a decade. 
China is the largest growth 
market but all countries are 
likely to see rapid growth. 

“It’s largely cultural,” says 
Mr Duncan Scott, CITs mobile 
analyst. He compares Hong 
Kong with Australia which, 
proportionately, has for fewer 
subscribers and a paging mar- 
ket resembling that of tire UK. 

However, the experience of 


Sweden over the past year cau- 
tions against the cultural alibi. 
A little over a year ago Mr Jan 
Holmgren, pa g in g marketing 
manager for Telia Mobiltel, an 
offshoot of the state telecom- 
munications operator TeJever- 
ket, launched a ca mpa ign to 
sell pagers in the high street 
and shift charges from a 
monthly rental to a per-call 
price charged to the caller. It 
has been a startling success, 
despite Sweden’s 10 per cent 
level of cellular penetration. 

"The crucial thing was to 
study the telephone market, 
not existing mobile markets,” 
says Mr Holmgren, an ex-Moto- 
rola executive. TM market 
research showing a potential 
paging market of L9m out of 
Sweden’s 8.5m population. 
"But people wanted a charging 
structure more attractive to 
the consumer.” 

Nearly 100,000 pagers have 
been sold through retail outlets 
in the 14 months to May. 
Pagers are for sale on the 
Sweetish high street for as tittle 
as SKrLOOO (£87), with no can- 

The number of paging 
subscribers in the 
Asia-Pacific region could 
more than double within 
a decade 

nection fee. Between 9am and 
4 pm the willing charge is SKr6 
(about 50p) and at other times 
and all day at weekends, it is 
SKrL5 - a huge price differen- 
tial with mobile phones. 

The new regime has had 
almost as great an impact on 
the business market as on the 
consumer market TM’s tradi- 
tional subscriber network has 
grown from about 70,000 to 
102,000 since last year’s launch 
of th e “calling party pays" 
(CPF) option, while a propor- 
tion of the new CPP customers 
are small businessmen. 

Other European operators 
are studying the Swedish expe- 
rience. Portugal, Finland, Swir- 
zerland, Ireland and Germany 
are either about to launch a 
“CPP" service, or seriously 
considering doing so. 

In the UK, Mercury Paging - 
the third largest network oper- 
ator after British Telecommu- 
nications and Vodafone - has 
taken a tentative step with the 
launch in March of a quasi- 
CPP service. Customers buy 
their own pagers for about £70, 
after which callers pay to leave 
messages at Mercury’s "0881” 
premium rate - 39p a minute 
at peak rate, 25p at other 
times. But customers still have 
to pay a monthly subscription 
- £850 for national coverage. 


against more than £30 on the 
standard rental-plus-calls 
alphanumeric option. 

“Already 2 per emit of calls 
into our bureau are on the new 
service," says Mr Chris Neary, 
Mercury Paging’s managing 
director. "It gets over the ini- 
tial perception that paging is 
expensive - for businesses as 
much as consumers.” With 
growth in the UK paging mar- 
ket of only 5 per cent last year, 
he views the move as essential 
to restoring the late-1980s 
record of about 20 per cent 

However, large monthly 
rental-plus-service charges 
based on zonal divisions 
remain the norm in the UK - 
except for Hutchison, which 
has only one zone for the 
whole country. Vodapage and 
Mercury have three zones. BT 
has six, its tariffs guide resem- 
bling a railway timetable. 

Pagers come in three sorts: 

• the simplest and cheapest is 
the tone-only radiopager, 
which bleeps to alert its owner 
that someone wants to get in 
touch with him or ter. BT*s 
option costs £10 a month to 
rent and use for one zone - or 
£6 if yon own the pager. 

• the numeric radiopager 
uses a small screen to display 
numbers - the ph on e number 
of the person who wants yon to 
call, or a coded message. It 
costs £1850 a month to rent 
and use with a bureau service 
from BT (one zone) - or £14 on 
the purchase option. 

• the alphanumeric radiopa- 
ger, which has a small screen 
showing text and numbers, 
typically up to about 400 char- 
acters though some display 
mare. With a bureau sendee 
this costs £28 a month to rent 
and use from BT - £20 on the 
purchase option. 

However, published price 
lists do not have a lot of mean- 
ing in the corporate environ- 
ment Large businesss users - 
taking 100-plus pagers - can 
get "up to 35 per cent off pub- 
lished prices," says one mar- 
keting director. 

The main development in the 
UK market has been the reduc- 
tion in the number of opera- 
tors, down from seven to four 
in three years. BT has more 
than 50 per cent of the market, 
with 418.000 subscribers; Voda- 
page - Vodafone's paging sub- 
sidiary - has about 200,000 - 
including subscribers to Air- 
call; Mercury has about 
130,000, and Hutchison 30,000. 

The most popular recent ser- 
vice innovation is the personal- 
ised bureau answering service 
(“Hello, this is Joe Blogg’s 
office Even the local 
plumber can now pretend be 
has a 24-hour secretary. 


trial gateways connected to the 
public telephone network or 
direct to its destination. 

Last August Motorola 
announced that after years of 
funding the research itself it 
had raised 5800m from an 
international consortium, 
blinding Raytheo n. Lockheed 
and Sprint of the US, R«n Can- 
ada and a consortium of 18 
Japanese companies Minting 
Sony, Mitsubishi and Kyocera 
as a first stage towards financ- 
ing the Iridium project. 

As prime contractor for Irid- 
ium, Motorola win be responsi- 
ble far ?^d budding 

the entire network and has a 
$25bn contract to maintain 
and opeate the system for five 
years after its commercial 
debut in 1998. By then. Moto- 
rola’s stake in the project is 
expected to have fad si from 34 
per cent to 15 per cent. 

The financing agreement 
appears to have given Iridium 
a lead in the race to build a 
satellite-based mobile tele- 
phone system based on Leo 
technology once the US Fed- 
eral r-rt mTTinrrirfltifYnR Commis- 
sion approves licensing later 
♦Ms year. 

However, Iridium is likely to 
face fierce competition from 
Globalstar which has secured 
5275m of fimding from an inter- 
national consortium that 
includes AirTouch Communi- 
cations (formerly PacTeD and 
Qualcomm of the US, Alcatel of 
France, Deutsche Aerospace, 
Vodafone of the UK and Hyun- 
dai Electronics of Korea. 

Globalstar will use 48 Leo 
satellites printing at 750 nauti- 
cal miles. It has been designed 
by Loral as a low-cost global 
access satellite-based mobile 
telephone system. Globalstar 
telephones will be similar in 

anri n>st tO di gital crflnlar 


telephones and will be able to 
make and receive calls any- 
where m the world. 

A key feature of tbe pro- 
posed Globalstar system is that 
all calls will be set up and pro- 
cessed on the ground by a dis- 
tributed gateway system. Load 
riarmc thp ground processing 
not only permits a more effi- 
cient, less complex and 
cheaper satellite network, it 
also uses, rather than 

b y pft ysvff . AriRfing iwninmnira . 

tions carriers. 

Because Leos are closer to 
earth rfraw Geostationary sat- 
ellites, they will work with 
much less powerful - and 
therefore smaller, tighter and 
cheaper equipment - Global- 
star’s dual-mode handset is 
expected to cost about 5750. 

But there are also disadvan- 
tages. Leo satellite technology 
Is coally and largely untested. 
Th e fatalTifea themselves win 
have a relatively short life 
span - between five to eight 
years for Iridium satellites 
compared with 10 years or 
more for conventional Geos. 

In addition, so as to provide 
reliable global coverage many 
more Lees are needed than 
would be the case with their 
higher-flying counterparts. 
This glen means a large mm - 
ber of launches, and an 
extended roll-out period. 

In an effort to overcome 
some of these technical and 
other problems and meet the 
conc er n s of some its members 
Inmarsat which had ori ginall y 
planne d to build its own Leo 
system , has opted instead far a 
system based cm a new inter- 
mediate circular orbit satellites 
orbiting at 10500km. 

The Imnarsat-P system will 
cost 52.41m and be developed 
by an affiliate company, at 
least 70 per cent owned by 



w . iinnw - w Hi 


The ultimate dream in mobBe 
communications is a truly global hand-bald 
phone service. It has come a step closer 
wfih financial backing for Motorola’s Irkfium 
satsMe telecoms system - described as 
the world’s biggest private sector space 
project; costing an e st i ma ted $3.4bn. 
frkfium wST be based on a ‘constellation’ 

of 86 sateBtas weighing 1^00 lbs, ringing 
the earth at a height of 420 nautical mBas. 
Meanwhile. Mr Bffl Gates and Mr Craig 


McCaw. two of America'* richeet technology 
ent repreneur*, recently aet out on an 
ambitious space odyssey: the creation of 
a $8bn global aataW oomm un l oi Won o 
system by the yaw 2001. ’The two 
bBBonairss, each using '• few mWon d o hrf 
as seed capital, aim to launch a fleet of .< 
840 small sataffltos Into orbit about 400 
mil e s above the earth. The Teledeaio system 
would offer wireless data, video and vote* 

communications sendees worldwide. . 


Inmarsat and its signatories, 
which will also invite outside 
investment. It will use 12 to 15 
satellites and be operational by 
1999 or 2000. 

To supplement revenues 
from voice traffic most of these 
new satellite systems also plan 
to provide facsimile, paging, 
computer data and position 
determination services. 

This will bring them into 
direct competition with 
another group of network oper- 
ators who pirn to use “tittle" 
Leos to provide non-voice tele- 
communications services - and 
with Teledesfc, a 596n satellite 
communications project 
backed by Mr Bill Gates, chair- 
man of Microsoft, and Mr Craig 
McCaw, of McCaw Cellular 


Communications, the No 1 US 
cellular telephone company. 

Tdedesic’s plans call for 840 
little Leos to be put into mbit 
435 miles above the earth. Tbe 
system, duo to como into oper- 
ation by 2001. is designed to 
deliver high capacity data, 
video and voice services world- 
wide using receivers and small 
antennas installed In homes 
and businesses. 

Just bow large a market 
there will be for these voice 
and other services by the end 
of the century is tbe subject of 
considerable debate. KPMG's 
study suggested that the value 
satellite delivered mobile 
phone services will reach 
Ecul0-20ba a year within the 
next decade. 


Among the prospective Mt 
work operators. Iridium 
experts to have 1 5m subscrib- 
ers by 2002 while Globalstar 
expects to be collecting tUbn 
in revenues from 2.7m sub- 
scribers by the same year, with 
subscriber number growing to 
I6m by 2012. 

Nevertheless, some analyst* 
question whether Leos make 
economic sense as a man mir- 
ket voice telecom delivery sys- 
tem in competition with much 
cheaper terrestrial-based net- 
works, while others caution 
that there are still formidable 
nuo -economic obstacles to be 
overcome, including the road 
issue of who should license 
and regulate these new global 
telecommunications service*. 


Variations in GSM costs 


We cal! it the Global Digital Highway.' 


It will improve your business communication worldwide. 


It will improve your business worldwide. 



Continued from previous page 


high. Mannesmarm Mobflfunk, 
the D2-Privat network opera- 
tor, and Deutsche Telekom 
Mobil's Dl network have main- 
tained high tariffs levels 
because of overwhelming 
demand, but D2 is down over- 
all while Dl is up on last year. 

Vodafone of the UK has 
reduced tariffs some 175 per 
cent in the face of growing 
domestic competition, hi Italy, 
state operator, SIP continues to 
exploit its monopoly position 
ahead of the award of the 
second GSM operator licence 
this year, as does Belgacom 
Mobile in Belgium. 

There are other variables 
affecting overall GSM cost 


*Umtisation’ - the way a call’s 
duration, is divided into time 
slices - varies from periods of 
one second for some operators 
to sixty seconds for others. 
Unitisation of calls is an area 
where GSM operators can 
differentiate themselves from 
competitors. 

In addition, some GSM 
operators charge a ‘multiplier’ 
based on a percentage of the 
particular type of call made, 
such as whether it is a 
domestic call or a cross-border 
‘roaming' cati. The cost of GSM 
te rminals can vary widely, too, 
from one country to another. 

New GSM services this year 
have been set up or are being 
opened in Jersey, Latvia. 
Malaysia, the Netherlands. 


Spain, and the United Arab 
Emirates. 

Second operators are also 
starting services in countries 
where there is already a GSM 
operator in the market These 
include Germany (with the 
launch at the end of May of the 
DCS 1800 network, E-Plus) as 
well as Cyprus, Hungary, and 
Italy. 

Beyond 1994, it Is expected 
that Russia and China will 
launch regional and provincial 
GSM networks, and GSM 
off-shoot, PCS 1900, is expected 
to make big inroads in the US 
digital oeDular market hi the 
meantime, the mass consumer 

market is being invited to join 
the personal communications 
revolution. 



utuiwoiini imc 



m- 

Mercury 



<e 










TELECOMMUNICATIONS IN 




■■ .* 





Paul Taylor reports on developments in ‘electronic commerce’ 

Route to paper-free trading 


I* 


I 

n 


> * 


' ' r 


• "r- 


S ince the mid-1980s a new concept 
- el ectronic commerce' - has 
crept into the lexicon of business. 
The widespread use of personal comput- 
ers and their growing integration with 
telecommunications systems has begun 
tomade paper-free trading a real possi- 
bility. 

Two business tools, electronic data 
interchange (EDI) and electronic mail 
are central to the operations of elec- 
tronic commerce - both are value 
added network services which allow 
their users to improve business effi- 
ciency by substituting electronic forms 
for their paper-based counterparts. 

EDI enables two organisations, usu- 
ally customer and supplier, to exchange 
business documents using standard 
electronic forms and their own comput- 
ers linked through a service provider 
who acts like a central post office, rout- 
ing the documents and messages to 
their destination and handling any 
‘data translation' needed between dif- 
ferent computers or message standards. 

Generally, EDI' is a faster, cheaper 
and more reliable means of exchang ing 
information, than the traditional paper- 
based business transaction chain and it 
provides other benefits including set- 
ting up an ‘audit trail' which enahlec an 
organisation to r.herfr and. validate elec- 
tronic documentation. 

These benefits have spurred growth, 
in the use of EDI in the US, where it 
originated, and more recently Europe, 
particularly in the UK Ovum, the tech- 
nology consultancy, estimated last year 
that the EDI market in Europe, includ- 
ing customer software and support will 
triple in size from just under Ecu200m 
(*232m) in 1992 to about Ecu 600m 
(¥696m) in 1997. 

The UK and the Netherlands are the 
most mature EDI markets In Europe 
although France, Spain. Sweden and 
Germany are catching up fast Among 
the service providers the market lead- 
ers in Europe are IBM and General 
Electric Information Services (Geis) 
which have pan-European networks 
and services. 

In the UK the market is dnwiwinf^ 
by International Network Services 


(INS) with an estimated 55 per cent 
market share. INS was jointly owned by 
Geis and ICL until recently when Geis 
bought out its partner - a move which 
industry analysts suggest si gnals the 
growing consolidation and rnternatimi. 
alisation of the EDI market 
INS provides three main EDI 'commu- 
nities/ INS-Tradanet, the main service 
for retailers and their suppliers. Broker- 
net for the insurance sector and Fleet- 
net for the fleet leasing-management 
sector. The biggest, INS-Tradanet, ban- 


small and medium-sized enterprises 
(SMEs) continue to show much more 
resistance than was expected to the 
adoption of EDL 

Fart of the reason for this may be 
that the advantages of adopting EDI for 
the large organisation with a high voir 
ume of regular transactions are rela- 
tively tangible and easy to justify on 
the basis of cost savings. However, the 
advantages for the smaller company are 
less immediately obvious. 

As Serna’s Denise Fellows, said at a 



In Europe and the US, the electronic data int er c ha n g e market ts growing stew&y. BN h 
becoming essential among auppJfers seeking business with the lager ratal chains 


dies more than fen documents a month. 

Between 8£00 and 10,000 companies 
and other organisations in Britain are 
estimated to be using electronic trading 
and the number has been gr owin g by 
about 20 per cent a year. But there is 
still much roam for growth. 

Other research, highlighted by Denise 
Fellows, EDI Business Manager at 
Serna, the leading systems integration 
group, shows that even among compa- 
nies which have signed up for EDI only 
a small percentage are trading with 
more than 100 companies and a very 
large percentage are trading with less 
than 10. 

Ovum’s latest Vans Markets, Europe 
report notes that the EDI market in 
Europe continues to grow steadily." and 
that, "most large organisations are now 
using, mipiiwiMitn^ or trialing EDL" 
However the report also noted that 


recent conference: “Over 70 per cent of 
EDtusers in the UK are ‘doing 1 EDI not 
because it has been planned or even 
because they want to, but purely 
because they have been forced by a 
major customer into using EDI to 
replace the current method of transfer- 
ring documents." 

In future, she believes the growth of 
EDI will be driven by two separate 
types of enterprises - organisations 
which take on EDI as “an enabling 
technology" because they are adopting 
new business practices such as central- 
ised purchasing, and large organisa- 
tions including natio nalised industries 
“where people are looking at EDI 
because they feel they can use EDI as a 
lever to introduce business change." 

Other changes are also under way. In 
the past, most EDI traffic has been 
based on industry specific or propri- 


etary application protocols. According 
to one estimate there are 26 differ ent 
versions of standards in the world, 
including 15 in Japanese. 

However, most new user-communities 
are basing their services an Edifact (an 
international standard) - and many 
existing communities u-vfag proprietary 
application protocols are moving 
towards Edifact By 1997, Ovum pre- 
dicts that 90 per cent of EDI traffic in 
Europe wBl be based on the Edifact 
standard compared with less than 50 
per cent last year. 

EDI users are also becoming increas- 
ingly sophisticated. Originally, EDI 
tended to be used only for basic trans- 
actions such as ordering anf i invoicing. 
However, as familiarity with electronic 
trading has grown, so has the range of 
information transmitted over EDI links 
and the number of different document 
types has grown to aroand 200. 

Unlike EDI, electronic m ail is a non- 
interactive service based cm sending 
computer originated messages across a 
computer or telecommunications net- 
work. 

Single terminals connected directly to 

public services account for almost 90 
per cent of e-mail traffic in Europe, but 
by 1997 Ovum estimates this will have 
dropped to 20 per cent with the remain- 
der accounted for by g a t e w ays to pri- 
vate e-mail systems. 

In the US, according to a survey by 
the Virginia-based Electronic Messag- 
ing Association, the number of email 
users is rising by 17-19 per cent a year 
and, as in Europe, a growing number of 
companies are extending their internal 
e-mail systems to customers and sup- 
pliers using service providers. 

Meanwhile, the Clinton administra- 
tion set out an aggres si ve timetable for 
the implementation of electronic com- 
merce in government in a policy state- 
ment last aut umn. 

All US government departments will 
be required to have systems in place to 
handle electronic documentation by 
1997. The move will affect the more 
than 300,000 companies including far- 
eign-owned businesses - which trade 
regularly with the US government 


John Williamson reviews the facsimile market 

Soaring popularity 


T homas Cook Holidays, 
the long-haul arm of 
the giant travel 
company, makes extensive 
use of facsimile to service 
its network of 363 agents and 
communicate with numerous 
overseas hotel groups and 
representative offices. 

Like many other high 
volume users, the company 
has found that a value-added 
fax service - in this case, 

BTs ‘FeatureFax’ - can take 
the sweat oat of getting Its 
messages across. 

With an estimated 46bn 
pages of information sent and 
received in 1993, fax is now 
the world’s most important 
text-based messaging 
technology. The popularity 
of the medium is based on 
its ability to handle a free 
mixture of handwritten or 
printed text, graphics and 
photo images. 

It also helps that terminals 
c o n fo rm to a set of 
international standards to 
guarantee any-to-any 
message transmission, and 
that the operation of a fax 
machine requires only baric 


manual dexterity. According 
to an AT&T estimate, 15 per 
cent of business telephone 
calls are now fax «tn». 

In some respects, however, 
fax has become a victim of 
its own success. Traffic levels 
are now so high in some 
industries that people have 
to queue to use machines, 
and called numbers are often 

engaged. Manwal fay 

operations can also be 
laborious for businesses 
which have to circulate the 
same information to 
hundreds or thousands of 

itea Hnatinma and IndulMng 

banks of additional fax 
machines and telephone lines 
to spread the load can be 
prohibitively expensive. 

Servicing a large fax 
mailing Brt and verifying 
the success of individual 
message delivery can be a 
logistical nightmare. 

Value added tax network 
operators offer a variety of 
solutions to the problems 
faced by businesses. 

“Broadcast” fax involves 
users such as Thomas Cook 
sending a document with a 
distribution list to the 
operator’s service centre. 

Computerised facilities 
then forward the document 
to servers controlling 


hundreds of fax inanlilnac 
which in turn tr ansmi t the 
document virtually 
simultaneously to all the 
intended recipients. 

This kind of service usually 
generates an individual 
header for each fax. 
automatically retries engaged 
numbers and provides a 
transmission record for the 
customer. Another 
value-added offering is 
“ store-and-forward, r with 
customers specifying the time 
of document delivery. This 
enables texts to be held over 
to a computer for 
transmission at off-peak call 
charging periods as well as 
delivery of individual 
messages at pre-arranged 
times. 

Both broadcast and 
store-and-forward fax save 
time and money, and release 

Worldwide, more than 

46 billion pages are 
faxed each year 

a user’s fax machine to 
receive urgent incoming 

messages. 

Newer services include 
“folio w-me,” in which 
travelling business executives 
dial into a fax centre to have 
their messages re-routed to 
different locations; and 
fax-an-demand, in which 
information is retrieved from 
a database in fax form by 
callers using a telephone 
keypad to specify the type 
of information required. 

Fax recognition is similar 
but employs special software 
to internet requests for 
information from marked-op 
standard forms or typed text 

In Japan, a centre for 
innovati ve fax systems, 
personal fax retrieval 
services have been 
established for some time. 

In these systems, a caller 
uses 8 public fax marhhiB 
to lodge a message in a 
numbered electronic mailbox 
for subsequent retrieval at 

any fax machine designate d 

by the caller a correspondent 

According to Vans Markets 
Europe, a continuously 
updated market research 
report by the UK’s Ovum 
telecoms consultancy, the 
supply side of the European 
value-added fax market is 
characterised by the 


involvement of two distinct 
types of company - the public 
teleco mm unications 
operators (PTOs) and the 
niche suppliers. 

Ovum says the market 
leader in 1992 was Cable & 
Wireless with an estimated 
16 per cent share of the 
business. Other Mg suppliers 
in that year were AT&T, 
whose Easy Link pioneered 
valued -added fax service in 
the region at the beginning 
or the decade, and BT, 
Onisonrco, Italcable, France 
Cable at Hadio, Deutsche 
Telekom and Sprint 

While the farger niche 
players operate their own 
K25 pocket data networks, 
their smaller counterparts 
rely on the public switched 
telephone network (PSTN), 
in some cases simply 
reselling PTO services. 

The niche suppliers hail 
from a variety of 
backgrounds. Some, such as 
Vital and Graphnet, have 
their origins in data-coms 
and messaging. Others, such 
as Ascom and Com wave, 
started ont as telecom 
equipment makers. 

In the short term, the 
commercial prospects for 
value added fax in tbe region 
look bright Ovum estimates 
European service providers 
earned about Ecu36.3m in 
1992 - a figure that is 
projected to grow twelve-fold 
to Ecu436m by 1997. 

The market has four main 
drivers: the present day 
ubiquity of fax machines; the 
relatively high price of 
“smart” fax machines which 
replicate some of the services 
of the value-added operators; 
keen competition in the 
market; and the desire of 
large fax users to cut costs. 
However, high levels of 
growth are unlikely to be 
sustained indefinitely. A 
challenge to third party fax 
services is evident with X.400 
e-mail, already preferred by 
many multi-site users for 
internal co mmunicati on. 

More serious competition 
will arrive in the form of 
integrated electronic 
messaging. An example is 
the addition of fax gateways 
to local area networks. 

Such technology eliminates 
the inefficiency of converting 
electronic output to paper 
before its electronic 
transmission over fax lines. 


Advances in packet switched data services 

Lower-cost options 



V is only as efficient as its internal and external communication, and that’s 

u P thJVloba! Digital Highway is able to help you. An information path that circles 
where the * D , Highway allows Cable & Wireless Business Networks to 

Drovide you with uninterrupted, cost-efficient communication throughout your whole 
provide you mome nt to think about your communications; imagine a radical 

company, a e shorter lead times; better research and development; more 

coherent* global marketing; now contact your local Cable & Wireless company. 



CABLE ft WIRELESS 

AN ALLIANCE OP THE V'lORID'S 
HOST CREATIVE 
COMMUNICATION COMMNE5. 


F or many types of enter- 
prise, buying-in a packet 
switched data service is 
an attractive proposition. 
With each user’s traffic shar- 
ing a service provider’s net 
work facilities, the packet 
option can be a low cost 
method of communicating 
data. 

Contracting-out tbe provi- 
sion and manag ement of the 
service also frees user 
resources and allows the 
organisation's staff to concen- 
trate on the core activity. 

Networks based on the 
internationally-standardised 
2L25 packet switching proto- 
col have been particularly 
successful in the industria- 
lised economies over the last 
two decades. 

Apart from the transfer of 
general in-house data between 
simple terminals at different 
corporate locations, K25 is 
widely used for applications 
such as electronic mail, elec- 
tronic data interchange, data- 
base access and information 
retrieval, and a broad spec- 
trum of message transactions 
including automatic teller 
machine operations and credit 
card authorisation. 

The French Mini tel Video- 
tex service, which logged 
Llbn calls in 1993, also runs 
on an Xj 25 network. 

This all adds up to large 
sums of money for the tele- 
phone companies which oper- 
ate public packet switched 
networks and the independent 
providers of managed data 
network services. According 
to Vans Markets Europe, the 
continuously updated report 
from the UK’s Ovum telecom- 
munications consultancy, the 
two categories of packet oper- 
ator generated business worth 
Ecu2.65bn in Europe alone in 
1992. 

While Sprint claims to be 
the world's largest packet net- 
work operator, Ovum says 
that the three European mar- 
ket leaders are networks oper- 
ated by national telephone 
companies - France Tele- 
com's Trsnspac, Telefonica's 
Iberpac, and Deutsche Tele- 
kom’s Datex-P. Ovum esti- 
mates that ST’S GNS has been 
eased out of fourth place by 
the Unisource combine of PIT 
Telecom Netherlands, Tolia of 
Sweden and the Swiss PIT. 

Among the biggest non-tele- 
phone company packet opera- 
tors in the region are the air- 


line service organisation, 
Socfete Internationale de Tele- 
communications A&ronauti- 
ques, IBM, GEIS, Sprint and 
AT&T/lstel. Ovum forecasts a 
European X.25 value added 
network (van) market worth 
EcuLBbn by 1997. 

Alan Taffel, vice president 
of marketing at Alcatel Data 
Networks, a big X_2S system 
vendor part-owned by Sprint, 
attributes the success of tbe 
technology to three main fac- 
tors. 

firstly, its designers speci- 
fied comprehensive error 
checking and management 
capabilities, allowing it to run 
over virtually any type of net- 
work, including those with 
poor quality links - "we used 
to joke you could run an XJ25 
network over barbed wire," 
says TaffeL 


Packet options liberate 
user resources, reports 
JOHN WILLIAMSON 


Secondly. K25 has built-in 
protocol conversion allowing 
it to connect dissimilar types 
of terminals. Thirdly, it has 
an access control mechanism 
for security purposes. 

The price paid for the abil- 
ity to run over poor qualify 
lines is that X-25 typically 
operates at modest speed. 
Although, as Taffel points 
out, 3L2S equipment can oper- 
ate at up to 2mbits/second 
much of the installed base has 
a speed ceiling of 64kbits/s. 

Given that the quality of 
transmission links in many 
networks has improved dra- 
matically since X25 was first 
designed, some experts now 
regard its error correction 
capabilities as an unnecessary 
overhead, and consider the 
technology unsuitable for 
high volume, high speed 
applications such as local 
area network interconnectioa. 

“The technology really is 
too slow for many applica- 
tions,'' argues Simon Good- 
win, network marketing man- 
ager at AT&T in the UK "It’s 
rock solid but very ineffi- 
cient" 

Part of the gap between 
packet performance and cor- 
porate requirements is filled 
by frame relay. This is essen- 
tially a stripped-down version 
of K25 which, without heavy 
error checking overheads, can 


run at speeds up to 45mbits/s. 
Even ou a 64kbits/s link, data 
throughput with frame relay 
can be 10 timss higher than 
with K25. At present there 
are around 10 frame relay net- 
work operators in the US, 
many offering international 
connectivity, 17 in Europe, 
eight in Asia, five in Canada, 
three in the Middle East and 
one in South America. 

In practice, frame relay is 
the Erst of a clutch of very 
high speed packet-based ser- 
vices and technologies. One 
fast packet sendee originated 
in the US is the Switched Mul- 
ti-megabit Data Service 
(SMDS). This appears in such 
networks as the Super Joint 
Academic Network (Supetfa- 
net) built by BT to link about 
SO universities research estab- 
lishments and hospitals 
around the UK and to carry a 
mixture of voice, data, image 
and video traffic. Both frame 
relay and SMDS can be run 
over asynchronous transfer 
mode (ATM) networks. 

Synoptics, a leading ATM 
vendor, says the technology is 
optimised for emerging, com- 
puter-intensive multimedia 
applications. 

The commercialisation of 
ATM could herald a big shift 
in the structure of the tele- 
coms industry overall ATM: 
Vendor and Operator Strate- 
gies. a recent report from UK 
telecoms consultancy, Analy- 
sys, suggests that power will 
shift to corporate users who 
are already Installing ATM 
and concentrating functional- 
ity and added value inside the 
boundary between private 
and public networks. 

“The player with the most 
to lose from ATM is the tele- 
coms operator," comments 
Peter Aknai, one of the 
report’s authors. “ATM 
threatens to reduce the opera- 
tor’s dominant role in the 
telecoms value chain to that 
of a commodify bit carrier.’’ 

Tbe East packet, multimedia 
age wffi be equally challeng- 
ing for the independent van 
operators - “if they can’t 
transport that volume of data, 
if they can't connect the appli- 
cations, then they are going 
to be marginalised," says Don 
Eungblut, managing consul- 
tant and a specialist in net- 
work services with PA Con- 
sultants. 

John Williamson is senior 
editor. Global Telephony 









As far back as 1918, you could call up a 
friend from a moving train in Germany. In 
1958, we launched our so-called “A” mobile telephone network. With the introduction of 
our “B” network in 1972, we also brought in subscriber direct-dialling. In 1985, our “C” 
network became fully operational: with a subscriber base of 850,000, it is one of the most 
successful analogue networks in the world today. 

In other words, Telekom has an enviable track record in mobile systems. So it’s only logical 
that, together with other European telecoms companies, we developed today’s leading 
worldwide standard for digital mobile communications - GSM (Global System for Mobile 
Communications). 

Naturally, GSM is also the basis for Telekom’s own D1 digital network. Telekom’s D1 sets 
new standards in overall quality, transmission security, capacity and service. By the end of 
1993, D1 will already provide coverage for almost all of Germany. 

Thanks to the GSM concept of international standardisation, you can already use your D1 
phonecard in many European countries. 

And, of course, you yourself can always be contacted in those countries under your 
T(S" d ^4 7T287 uTi personal D1 phone number. But it doesn’t matter in which of these countries 
KSfcs y°u And yourself, or in which GSM- 

Fax! +1 212 424-29 89 j-l -l , • , -w-v ■* 

compatible system you insert your D1 card, 

** * ^ ” 86 88 you’ll always benefit from the fact that 
j&itii ££$?!! Telekom has put all its wide-ranging ^ 

Fax: +32 I! j j expertise and its comprehensive mobile “ 

EHTfglll! communications know-how into the 

International Key development of GSM. 

Account Management _ 0 B e 

% Ml 3 1 8 n Telecommumcations made in Germany. We tie markets together. 










FINANCIAL TIMES WFn\TP<^>Av JUNE 15 1994 


TELECOMMUNICATIONS 


BUSINESS 9 


M any acres of newsprint have been 
? evot ^_ to the wonders of the 
Un £ e 2 ding US “teractive multi- 
mema revolution. which wffl supposedly 
f* transform Americans' home lives^Many 
teleco mmun i ca tions experts thmir thatUS 
busi^ea wffl be the first to want, and 
benefit from, some of the new services. 

And, since US telephone companies are 
leading the world in the deployment of the 
sophisticated new communications net- 
works needed to provide these services, 


Martin Dickson on the impact of the interactive revolution 



Multimedia may give US an edge 




competitive edge by early adoption of mul- 
timedia offerings. 

Perhaps the most obvious example is 
video conferencing. Equipment already on 
the market allows desktop collaboration - 
that is. staff in different locations working 
together to manipulate data, while simul- 
taneously holding video telephone conver- 
sations. Their desktop computers need 
only to be linked by the twisted comer 
pair wire traditionally used to link tele* 
phones, though they also need to have 
narrowband ISDN, a relatively inexpen- 
sive technology which allows ordinary 
phone lines to transmit not craly voice but 
video and data si gnal 

ISDN is widely regarded as an interme- 
diate technology, which will sooner or late 
be superseded by broadband fibre optic/ 
coaxial cable networks allowing huge 


amounts of data to be send down commu- 
nications lines. 

But ISDN and falling prices tor desktop 


establish a basic market for video confer- 
encing services. 

The quality of desktop video conferenc- 
ing pictures is still far from perfect (about 
IS frames a second, compared to SO frames 
tor full motion film). But Mr Andy Grove, 
chief executive of microprocessor giant 
Mel, which has developed its own, rela- 
tively in expensive videoconferencing sys- 
tem, reckons that the industry will get to 
30 frames a second in a couple of years. 

He sees a substantial business market 
developing, since the video conferencing 
can save both time and air feres. “The cost 
of this thing is demonstrably saved by one 
trip avoided." 

US local telephone companies are now 
upgrading their systems to allow a much 
greater flow of multimedia services to 
business customers and hnm> consumers. 


Bell Atlantic, the regional telephone 
company serving states from New Jersey 
down to Virginia, recently announced that 


However, both local cable television 
operators and the long-distance companies 
would like a larger slice of the vast local 


uau Uiuocu mai D IVCbWUlA UJDUCliU 

equipment division as project leads- and 
systems integrator tor its Jllbii broadband 
network. Pacific Bell, which serves the 
fiaiifnirtiaw market, has chosen AT&T for 

a similar role. 

But despite these tv* structure t 


11CLWUZ A. □jDLCiito Hifli&ci, WUUc mH Dtujy DtiUd, WHICH ttlC 

project leads- and barred from the long distance market by 
s Sllbn broadband the anti-trust settlement, would like to 
which serves the break into that area, 
chosen AT&T for The local phone companies would also 

— — — like to attack the 

The structure of the muHiinedia local . monopolies 


hold moves, the - #h . enjoyed by the cable 

structure of the mul- mdustry ' and die companies role compail j es them- 
timedia industry, in it, remain far from dear selves. But at at pres- 


and the telecommu- 
ideations companies’ role in it, remain far 
from clear. At present, America’s local 
telephone companies - notably the seven 
Baby mi* spun off from long-distance car- 
rier AT&T in a 1982 anti-trust court settle- 
ment - have virtual local monopolies on 
telecommunications business in their 
areas, and charge l o n g distance carriers 
like AT&T hefty charges to complete the 
last mile or two of calls. 


ent they are forbid- 
den by law from providing video 
entertainment services of their own. 
though they can act as conduits far others. 

There is one important exception to this: 
Bell Atlantic last year won a court case 
giving it the right to provide its own video 

progr ammin g 

Following its lead, many other l oc al t ele - 
communications companies now have sim- 
ilar cases pending before the courts. But 


the cable companies, in a flurry of legal 
action, recently filed suits to have tele- 
communications groups barred from build- 


mg viaeo networks uum me reoerai com- 
munications Commission, which oversees 
the industry, imposes elaborate new rules 
on how these would be financed. 

The cable industry argues that the local 
companies will try to use their telephone 
monopoly profits to subsidise their multi- 
media infrastructure investments, with 
telephone subscribers left paying higher 
bills. Several bills before Congress could 
cut through this complex jostling for posi- 
tion as the two industries converge. Law- 
makers in Washington are trying to 
impose a comprehensive multimedia 
framework on the nation, but it is far from 
clear that the bills will reach the statute 
book as lobbyists for all sides try to gain 
the upper hand for their industry. 

The legislation would allow new compet- 
itors, including cable companies, the right 
to compete with local phone companies 


and use their facilities to interconnect 
with consumers. Phone companies would 
be freed to enter the cable market. The 
Baby Bells would be allowed into the long 
distance market - though there is strong 
disagreement over how quickly. 

The US wireless market, which is grow- 
ing strongly, is also in a state of consider* 
able uncertainty. Participants are anx- 
iously waiting for the FCC to set a 
timetable and final rules for the auction- 
ing off of licences for personal communica- 


tion services - ugntweigm mooue 

phones which could provide a significant 
challenge to the established cellular tele- 
phone industry. 

The PCS lobby claims that further 
delays could damage PCS’s chances of 
competing against cellular and other wire- 
less technologies, such as enhanced speci- 
alised mobile radio. The FCC is widely 
expected to hold auctions next December. 

The only certainty in all this is that the 
US telecommunications industry Is set to 
go through several more years of upheaval 
and consolidation as it experiments with 
the best regulatory and corporate struc- 
tures for the multimedia age. 

But whatever emerges seems likely to 
have a strong competitive framework, 
which should be good news for business 
customers as it will hold down communi- 
cations costs. 


Geoffrey Wheelwright on the shake-up in North America 


US cable companies have bold plans, reports Martin Dickson 


Signposts on the digital highway Battle of converging industries 

T l*, yh Americ an tel ecoms biggest impart may be in other of software to do that welL There are US cable television companies, traffic, because they own sev- a large suburban swathe of Mr Reed Hundt, the ne' 

industry is in the grip at an industrial sectors where those many software companies, including which have enjoyed spectacu- eral so-called Competitive Washington DC. the local cable airman 0 f the FCC. denie 

acquisitions and reoreairisational hvhnnlnmM vill hl4n imnnMn MtpmenA Hut Pm «tu r l I nn +n can *Wc lav Rmmth nnat. Aa nas» on Aaaan- 1-i 1-4 1L.1 A.1 : :il J.1. 


T he N orth American telecoms 
industry is in the grip of an 
acquisitions and rnir ganlmtinnnl 
frenzy brought on by a desperate desire 
to remake itself in advance of the arrival 
of the much-hyped “digital highway” 
or “Information superhighway". 
Governments and cable television 
interests also want to get their own 
way in deciding the path this “hi gh way” 
will take, so the rush has been on to 
make deal after deal that will give 
telecommunications “content” to offer 
users of the highway and enrmg h 
strategic partnerships to make sore 
that their particular section of the 
highway is not a dead end. 

The truth behind all this hype is that 
the future could see the creation of two 
or more digital highways in the US. 

One is likely to be controlled by cable 
and satellite TV operators and the other 
by regional phone companies. Given 
the huge political and financial will 
required to make such a thing happen, 
it is most likely to take place first in 
the US (with much of Canada probably 
coming along for the ride) - and much 
later, if at all, in the US and Europe. 

For the past few years, as groundwork 
for the digital highway has been laid, 
companies in both sectors have been 
scrambling to build strategic alliances. 
AT&T and the regional BeD operating 
companies (known as RBOCs) have built 
the largest number of alliances with 
technology companies — while cable 
television firms are scrambling to catch 
up. 

The strongest political supporter of 
the information highway concept is 
Mr A1 Gore, the US vice-president, who 
has vigorously championed its 
development in US political circles aid 
bas repeatedly spoken of what he thinks 
its impact will be. One of his biggest 
pitches to US taxpayers to support the 
development of the information highway 
has been cm the subject of job creation. 

“All . . . applications (for the 
information highway) enhance the 
quality of life - because they do, they 
will spur economic growth. After all, 
even the quickest glance at the telecoms 
sector of the economy shows what it 
means for jobs," he says. “Over half 
of the US workforce is now in 
information-based jobs. The telecoms 
and information sector of the US 
economy accounts for more than 12 
per cent of the GDP. And it’s growing 
faster than any other sector of our 
economy. Last year total sector revenues 
exceeded $700bu. And we expo rted ov er 
$4$bn of telecommunications equipment 
alone. _ , 

When AT&T sold the first cellular 
phone, they said there would be 900,000 
of them by the year 2000. We have 18m 
now. And it’s still 1993. The predictions 
for mobile telephone users for th e year 
2000 now total 60m. This kind of growth 
will create thousands of jo bs in the 
communications industry. But the 


biggest impact may be in other 
industrial sectors where those 
technologies will help American 
companies compete better and smarter 
in the global economy. If we do not move 
decisively to ensure that America has 
the information infrastructure we need, 
every business and cons u mer in America 
wffl suffer.” 

So the real question in many people’s 
minds is who will control access to the 
highway - as well as the stops of interest 
along the way. The telecoms and 
wrt w fahiwimt businesses have 
the most noise about how they think 




Mr Ai Gore, US vice-president: strangest political 
supporter of the Information highway 

they will control the way the 
information highway develops - but 
they apparently have not reckoned with 
the determination of the personal 
computer industry. In particular, they 
have not taken account of the 
enthusiasm of America’s second richest 
man -Mr Bill Gates, co-founder and 
chief executive of Microsoft - for the 
development of tins delivery system. 

He believes that the PC industry will 
be a key player in the development of 
a national and international information 
infr as tru c tu re - and already has 
advanced plans for Microsoft’s role in 
that infrastructure. Bill Gates see the 
starting point as information services 
delivered to millions of consumers 
through devices attached to 
“int e ractive” television gets. 

“There will be a new device in the 
home connected up to the so-called 
information highway that will he a 
replacement for the video game or the 
TV or the PC," be says. “You wffl. be 
able to call up any movie or show that 
has ever been made. Ton’ll be able to 
call up advice on medical things or 
shopping or travel. You’D be able to 
find people of common interests, to video 
conference with people that you know. 

“It wffl be quite a general purpose 
device. It will take a lot of b u sine s ses 
and change them. It will require a lot 


of software to do that welL There are 
many software companies, including 
Microsoft, that are starting to see this 
Opportunity. We’ve hired several 
hundred people to work on this even 
though it wont come to realisation 
for over five years.” 

Bffl Gates says the company “wont 
get any revenue for at least three years” 
from this project and “wffl spend many 
tong of millions on it in the meantime.” 

So what is it that has given Microsoft 
such huge volumes of patience? The 
simple answer is the realistic chance 
to make every home in America spent 
money on Microsoft software: The 
software would be contained within 
the system that delivers the information 
to the TV set 

Microsoft recently gave a 
demonstration of how this service could 
augment p xli d ing TV entertainment 
People watching a live baseball gaum, 
for example, could use a handheld 
controller (not unlike the Mud provided 
for use with video game systems) to 
choose from a series of on-screen 
pictures (to the left-hand side of the 
main picture) to bring up on-screen 
statistics on either of the taanm, any 
of the players, up-to-date out of town 
scores, current position of players on 
the field - and even order tickets (using 
a credit card) to the home team’s next 
game. 

By tuning to an all-music TV cbamiPi, 
meanwhile, people can augment their 
viewing with information on the artists 
ringing the song, details about the album 
It came from, what other aThmru the 
artists had released and, of course, the 
chance to order the album by credit 
card. 

The ultimate mix of computer 
technology, consumerism and TV, 
however, would come with use of the 
shopping channel — where consumers 
could design “virtnal shopping mans’ 
in which they were the only customers. 
These would work by haring the 
consumer designate which shops they 
would like to frequent (from either an 
on-screen or published catalogue) and 
the system would then respond by 
displaying a videogame-style 
representation of a maD with shop 
fronts. 

Consumers can then use the handheld 
controller to “walk through" their 
custom-designed on-screen malls - 
stopping at the shops whose goods they 
might be interest e d In buying. These 
would be represented by on-screen shop 
fronts which, when entered, would be 
replaced with an onscreen catalogue 
of the goods available in that shop. 

Mr Gates says that many telecom 
companies are talking to him about 
this plan - Including US West, TCI, 
Time/Warner and AT&T - “it’s the 
feeding frenzy or gold rush around 
digital convergence,” he says. “There 
are many people who are trying not 
to be left out of the activities.” 


US cable television companies, 
which have enjoyed spectacu- 
lar growth over the past 20 
years, now plan to compete for 
teleco mmuni cations business 
with telephone rampant, as 
the characteristics of the two 
industries converge. 

To take one example: in the 
city of Rochester, in upstate 
New York. Time Warner, the 
local cable television company, 
intends to offer a telephone 
service as early as next year in 
competition with Rochester 
Tel. the existing telephone 
monopoly, which is voluntarily 
opening up its wiarimt 

Technological breakthroughs 
mean that customers wffl soon 
be provided with interactive 
multimedia c ommunicat ions 
services, delivered down the 
wires which each company 
runs into US offices and 
h omes. 

The cable companies, there- 
fore, want to expand their cur- 
rent range of broadcast offer- 
ings to include interactive 
services — such as home shop- 
ping - and telecommunica- 
tions services, which may 
inrhirift forms of wireless com- 
munications as well as wired 
ones. For their part, the tele- 
phone companies want to 
invade the cable companies’ 
entertainment territory. 

Late last year this conver- 
gence of interests led to several 
merger proposals - with a lot 
of ballyhoo - between cable 
and telephone companies. 
Notable among these was a 
s cheme to enable Bell Atlantic, 
the regional telephone com- 
pany, to take over Tele-Com- 
munications. flu* lpwdfng cable 
company, in a deal that could 
have been worth up to $22bn. 

However, the Bell Atlantic 
deal fell apart So did a less 
ambitious alliance between 
Southwestern Bell and Cox 
Enterprises. The companies 
concerned laid the blame on 
the Federal Communications 
Commission, the regulatory 
agency, which has forced the 
cable industry to cut the rates 
it charges for basic services by 
17 per cent It is now uncertain 
whether the two industries will 
compete head-on, rather than 
cooperate, to provide America 
with new multimedia services, 
or whether alliances will make 
a comeback, albeit on a less 
grandiose scale. A mixture of 
both seems likely. 

In recent years, the cable 
companies have been nibbling 
away at telephone business 


traffic, because they own sev- 
eral so-called Competitive 
Access Providers - companies 
in metropolitan areas operat- 
ing hi ghly offiHpnt fibre Optic 
networks which cream off cor- 
porate bulk traffic. But full 
telecommunications competi- 
tion, across a broad range of 
customers and services, still 
faces considerable regulatory 
and business hurdles. 

First, the local telephone 
companies have long been 
cosy, state-regulated monopo- 


a large suburban swathe of 
Washington DC, the local cable 
company is seeking regulatory 
approval to start offering a 
telephone service in competi- 
tion with Bell Atlantic, the 
local telephone company. 

There Is an additional twist 
here: the Montgomery cable 
company is itself owned by a 
large “Baby Bell" local tele- 
phone company. Southwestern 
BelL It would be the first time 
a Baby Bell local telephone 
company had competed with 




US cable companies are keen to expan d their communication services. 
Above: a tra tnoo , right, b shown how to spfice a cable at US West 


ties: regulators allow them to 
make a decent return on their 
investments, so long as they 
fulfil an obligation to provide a 
“universal service", enabling 
anyone to have a telephone at 
home at reasonable cost 

Competition is b eginnin g to 
break down this system, but 
there is still a long way to go. 
In Rochester, Time Warner’s 
way to enter the market was 
smoothed by Rochester Tel 
ttanTf, deciding that it was in 
its own best interests to create 
competitive local conditions. 

Rochester Tel recently won 
approval to split itself into two: 
a closely regulated transmis- 
sion business and a less regu- 
lated service operation. It 
agreed to interconnect its own 
system’s customers and those 
of Time Warner, and to stabi- 
lise its prices for seven years. 

Other local telephone compa- 
nies are hardly rushing to copy 
Rochester, although Ameri- 
tech, the large Chicago-based 
company, has offered to open 
up its market (provided it is 
allowed to enter the 
long-distance market from 
which it is currently barred). 

But much of the pressure for 
change is likely to come from 
the cable industry. For exam- 
ple. in Montgomery County, 
Maryland, which encompasses 


one of its siblings. 

Regulatory restraints apart, 
many cable companies face 
capital constraints in building 
the modern, sophisticated 
systems required to operate a 
fully interactive entertainment 
and telecommunications net- 
work. Hie industry is up in 
arms over the 17 per cent rate 
rollback demanded by the FCC, 
which is estimated to have cut 
some $3bn from the sector's 
$20bn revenues. 

At the same time, the much 
larger regional telephone com- 
panies are in the throes of 
huge capital investment pro- 
grammes to advance the infor- 
mation highway. Bell Atlantic 
recently said it would spend 
$Ubn on network improve- 
ments in the next five years. 


Mr Reed Hundt, the new 
chairman of the FCC, denies 
that the price cuts will delay 
building the information super- 
highway. He says the agency 
wffl closely monitor the effects 
of cuts on the sector and make 
adjustments, if necessary. 

The industry also complains 
that the FCC has taken away 
its incentive to add new chan- 
nels to its systems - although 
a large number of television 
production companies have 
planned new networks focused 
on subjects as varied as golf, 
antiques and health. 

In order to encourage new 
services, the FCC says cable 
operators can take a 7 A per 
cent profit when they add a 
basic cable channel to their 
sy s tem, in addition to recoup- 
ing their costs. But the cable 
companies , which use to have 
more scope to raise consumers' 
hills when adding channels , 
say the FCC has offered too 
little to make additions finan- 
cially worthwhile. As a result, 
they are now more interested 
in unregulated services, such 
as pay-for-view films , home 
shopping, or “i la carte" chan- 
nels. which the viewer selects 
and pays for in addition to the 
basic cable service. 

But despite the current 
gloom in the cable industry - 
which contrasts sharply with 
the euphoria at the time of last 
autumn’s BeD Atlantic deal - 
the sector seems certain to 
play an important role in the 
multimedia revolution by vir- 
tue of its programming skills 
and technological base. 

The local telephone compa- 
nies may be less ardent suit- 
ors, but it is possible that cable 
companies wffl link up with 
large long-distance operators - 
AT&T, MCI Communications 
and Sprint - which are all 
keen to expand their tentacles 
into the local arena. They 
would be formidable rivals to 
the regional phone companies. 


Canada is aiming for a new national ‘information delivery infrastructure' 


Tiger leaps into video-on-demand business 


T he quest for diversification 
faced by many of the world’s 

largest telecommunications 

organisations is well under way in 
Canada - where the roles of govern- 
ments, as well as the existing near- 
monopoly of a few large telecommuni- 
cations and cable television providers 
are changing- 

On the cable television front, some 
of the country’s leading cable televi- 
sion providers (the largest of which 
has diversified into the provision or 
long- distanc e telephone services) were 
given a boost last week by the 
announcement from the Canadian 
Radio-Television and Telecommunica- 
tions Commission iCRTC) that it 
would grant approval for seven new 
English language and two new 
French language spedahty television 
channels for marketing next year- 
The move follows months of hear- 
ings by the CRTC of some 48 applica- 
tions for ffle provision of 
and the announcement by the com 
try’s leading telephone companies 
that they wanted to get into R enter 
tainment business via the planned 

“information highway**. 

A survey which was conducted _y 
one of the country’s l^ding PoUmg 
organisations - the Toron£based 
Decima Research - over the tun 
period when the hearings wereu?aer 
way - found that 72 per cent erf the 
respondents believed that Cana 


competitiveness in the next five to 10 
years would depend an the country's 
ability to provide a “sophisticated 
info rma tion delivery infrastructure". 

Respondents to the Decima poll 
were reported to have seen key roles 
for federal and provincial govern- 
ments, industry, and academia in 
developing information infrastruc- 
ture. 

The poll also apparently showed the 
need for cooperation among those 
four big gro ups with findin g s that 92 
per cent of respondents believed tech- 
nological changes now taking place 
would fundamentally alter the way 
people did business in the future. 

Furthermore. 74 per cent frit Cana- 
dian society would see more changes 
in the next two years than in the last 
10; 60 per cent believed technology 
had improved the quality of life for 
the average Can adian . 

The poll also showed that 85 per 
cent agreed that most businesses and 
governments had not yet fully real- 
ised the economic potential of the 
information highway- 
It is perhaps with these results m 
mind that in April the Stentor group 
(a consortium of the country’s largest 
telephone companies) revealed plans 
for a broadband information highway 
that, it estimated, would require some 
C$lObn of new investment and would 

create 12,000 jobs. 

The group predicted that between 


80 per cert and 90 per cent of Cana- 
dian businesses and homes would 
have access to these new services by 
the year 2006 under what it called the 
“Beacon Initiative”. 

The plan nails for the establishment 
of high-tech wonders - such as “vir- 
tual” courtrooms, virtual classrooms, 
remote diagnoses by doctors and “vid- 
etna- demand " movies. 

Stentor appears willing to put its 
money where its mouth is in making 
this investment, however, with 

The plan calls for the 
establishment of high-tech 
wonders - such as virtual 
courtrooms, virtual 
classrooms, and remote 
diagnoses by doctors 

announced plans to spend some 
C$50Qm on network enhancements, 
the creation of a new company to 
supply multimedia software to the 
establishment of a venture capital 
fund to assist small companies that 
want to create produces for use on the 
“highway”, 

Rogers Communications, the coun- 
try’s largest cable television prorider, 
is fighting back and recently 

anwnrmrpri plans for COTxaimpr t rials 
of a new borne video delivery technol- 
ogy developed in the US by Microsoft. 


the computer software giant, and TGI, 
the US cable television firm. 

The Microsoft/TCI venture (which 
has been code-named “Tiger'') marks 
the first of many much-publicised 
moves into the fastgrowing “video an 
demand” business. 

Microsoft says that ft will provide a 
folly scalable media file-server solu- 
tion that can be used from desktop 
computers right up to the dtywide 
deployment of cable television 
Images. 

Computer companies Compaq and 
Intel have also demonstrated the first 
continuous-media server hardware 
bared on this Tiger technology. 

The idea behind it is that it should 
provide a lower-cost way of delivering 
video-on-demand by using standard 
personal components and asynchro- 
nous mode transfer (ATM) switches 
as part of the delivery mechanism - 
bringing down the cost of entry into 
pioneering market. 

Microsoft says that it wffl allow 
thousands of users to gain “split- sec- 
ond" access to thousands of media 
files (such as movies, music videos or 
TV shows) and allow laserdisc quality 
control of them - including the abil- 
ity to pause, reverse, fast-forward and 
jump ahead to specific parts of the 
media file being currently played. 

Mr Nathan Myhrvold, Microsoft’s 
senior rice president, advanced tech- 
nology. says he hopes this move will 


start to dispel the notion that only 
very high-end, expensive systems can 
be used to deliver rideoon-demand. 

“Some people assume that video-an- 
demand is a hardware problem for 
massively parallel machines, but it's 
really a software issue." he says. 

“Once you have the right software, 
you can implement tt in man y ways - 
on personal “Tigers* for individual or 
workgroup use, corporate Tigers’ for 
small or mid-sized private networks 
or city Tigers’ for large-scale, metro- 
politan service areas.” 

Tiger is based on Microsoft's exist- 
ing Windows NT Advanced Server 
software and will be tested In Seattle 
by employees of both Microsoft and 
US cable television giant TCI as part 
of a plot project this year - with 
more widescale testing in Canada, 
Seattle and Denver in 1995. 

The data from these tests wffl 
partly determine the eventual release 
date for any products based on Tiger. 

Microsoft is betting that Tiger will 
appeal strongly to cable television, 
telephone, utilit y and private network 
companies and will be used to deliver 
services such as telecommuting, video 
messaging, information navigation, 
corporate multimedia servers, televi- 
sion post-production work, shopping 
irincfc pro duc tion and business trans- 
action processing. 

Geoffrey Wheelwright 


Situation and Perspectives 
of World Telecommunication 
Markets 


M In order to dispose of data on the current 
situation of telecommunication markets around 
the world (radiographies by sector, market 
segments of geographic area; terms of supply, 
etc.)' 

■ To better understand the ongoing changes 
(short term tendencies of new markets; economic 
evaluation of emerging technologies, etc.) 

■ To keep up with investment policies and 
industrial strategies (alliances, diversification, 
internationalization) of main world players 

IDATE 

proposes the expanded and updated 1994 
edition of two sector-based reports O: 

-Telecommunications Equipment 
Manufacturers and Markets In the World 
- Telecommunication O p er ator s In the World 



(*) earn report also includes monographs of the work! players. 
The English vemions-wffl be avaSsbte hi June 1994. 

Reports avaBabb In the same collection: The World Ffltrr and 
Television Market Semiconductor Industries and Markets 
aratmd theWortd. . 







'-■'“■'Si 


FINANCIAL TTMEgWFDNlM»>AVlUNKI3IW4 


TELECOMMUNICATIONS IN BUSINESS lO 


Competition will benefit the corporate sector, predicts Andrew Adonis 

Battles loom in UK market 


T he UK telecommunica- 
tions market, already 
arguably the most open 
and. competitive in the world, 
2s about to become a veritable 
battleground- The main benefi- 
ciaries will be the corporate 
sector - particularly large tele- 
coms users in the City of Lon- 
don. 

The qualification “arguably" 
is needed because of the con- 
trast with the United States, 
where competition is mare stri- 
king. American Telephone & 
Telegraph, the largest US 
long-distance carrier, has been 
forced by competition to relin- 
quish more than 35 per cant of 
the long-distance market. 

In the UK, British Telecom- 
munications still boasts a 90 
per share of the total market 
for telecoms services, and 
according to most analysts' 
projections it will loosen its 
grip by only about three per 
.cent a year. 

BT is not under the same 
nressure from “por tal access” 
regulation as AT&T. The US 
carrier has to gain its custom 
through the evpllffit- rhnira of 
customers in each case; by con- 
trast, in the UK it is only the 
customers motivated to desert 
BT who have to act Inertia 
T>u»ans staying with the former 
monopoly supplier. 

The absence of “equal 
access" in the UK undoubtedly 
gives BT an advantage over 
AT&T, and is a prime source of 
contention between the opera- 
tors in their cMms about the 
“equivalence" of their respec- 
tive home markets. However, 
ST’S 90 per cent market share 
is not a meaningful compari- 
son with AT&T's 65 per cent 
BTs mam competitor. Mer- 
cury fl flwrainnfcatiwns - 30 per 
cent owned by Cable & Wire- 
less, the UK's former imperial 
operator - started building its 
network only in 1984; outside 
the City of London, and in the 
residential market nationwide, 
it has only recently become a 
strong competitor to BT. 

Moreover, until a change in 
the regulatory regime In 1991, 
Mercury was BTs sole compet- 
itor, whereas AT&T has had to 
fight head-on with MCI, Sprint 
and assorted re-sellersformore 
than a decade. 

The 1991 regulatory review 
gave as big a boost to UK cam- 


petition as the initial privatisa- 
tion of BT and licensing of 
Mercury in 1984. It abolished 
the BT/Mercury long-distance 
duopoly. And tire government 
declared itself ready to licence 

alwin st any rnmprtwtt te|(win« 

provider to offer services, on 
their own networks or across 

those of other operators, except 

for rival international infra- 
structure to that of BT and 
Mercury. 

Since 1991 more than 40 new 
operators have been licensed to 
provide UK telecoms services, 
both long-distance a-nd local 
(the latter still largely a 
monopoly in the US). The 
effbct has been to boost compe- 
tition in all the main sectors. 
Taking in turn, there 
have been three main conse- 


about to launch a service in 
Yorkshire geared particularly 
at the business market The 
Leeds-Sheffield business axis 
has a high concentration of 
corporate custom, and Mercu- 
ry’s influence has been patchy 
in the region. 

Energis and the electricity 
rampanipg are thus mobilising 
the country's pylons. The rail- 
ways are being used for the 
same purpose by Mercury and 
British Rail Telecommunica- 
tions - a free-standing subsid- 
iary of the soon-to-be-priva- 
tised British Rail, which is also 
planning to enter the corporate 
market It was perhaps Inevita- 
ble that someone would soon 
exploit the canals too. 

However, the form of exploi- 
tation is novel: GET, telecom- 


British Telecom has established "Win Back” 
targetted at larger corporate clients 


queuces for the corporate sec- 
tor 

• An intensification of 
long-distance competition. The 
National Grid, supported by 
the 12 privatised electricity 
companies in England and 
Wales, has established its own 
telecoms operator, “Energis ", 
which is erecting a third 
long-distance fibre-optic net- 
work across the National 
Grid's pylons. 

v?m»rrg jfl rTnfm^ that its over- 
heads - in both senses of the 
term - are markedly lower 
than BTs and Mercury’s, and 
it is about to start offering a 

i-nrntmimial service. Rnargis is 

touting headline figures of 
around 15 per cent off existing 
long-distance tariffs, and has 
already won a 20-year contract 
with the BBC to operate a 
broadcast n etwo r k for the dis- 
tribution of the corporation’s 
television and radio services in 
the UK. 

Several regional telecoms 
operators have also been 
licensed, mostly electricity 
companies working more or 
less in conjunction with Ener- 
gis. The mast ambitious is 
Torch Communications, a joint 
venture between Yorkshire 
Electricity and Com- 

munications (the long-time 
independent local operator cov- 
ering Qie city of Hull), which is 


munications equipment manu- 
facturing joint venture 
between GEC and Siemens of 
Germany, has dubbed together 
with British Waterways to 
offer socalled “dark fibre” - a 
fibre-optic network without 
electronics for sale “wholesale" 
to other operators or busi- 
nesses wishing to use it to tai- 
lor their own networks. 

Fibreway, the new operator. 
Is making only a modest 
investment at the outset, but 
its potential is considerable if 
long-distance telecoms 
becomes an essentially com- 
modity business for large users 
and telecoms retailers. 

• The start of local competi- 
tion, particularly in the City of 
London operators. 

From an industry perspec- 
tive the most far-reaching 
advance since the 1991 regula- 
tory review has been the emer- 
gence of competition in the 
“local loop", which appears to 
be overturning the conven- 
tional wisdom that competing 
local supply is uneconomic. 

The most visible local cmn- 
petition is coming from the 
operators, mostly US-owned. 
which are building combined 
ca ble te levision and telephone 
networks in urban areas. The 
cable companies believe the 
economies of scale available 
from dual provision have revo- 


lutionised the economics of 
local telecoms supply. Their 
commitment is far fr om half . 

hearted: about £6bn is being 
invested over the next five 
years, with most of urban and 
“commuting" Britain set to be 
cabled. North American tele- 
coms operators are to the fore, 
led by Nynex, US West, South- 
western Bell and Bell c'annAn 
Telewest, a joint venture 
between US West and TCL is in 
the process of a London flota- 
tion, expected to be flu* first of 
many. 

So for, the cable operators 
have concentrated on the resi- 
dential sector, selling cable 
telephone on the back of televi- 
sion. About 40,000 business 
Unas have been out of 

a total of about 400,000. But as 
tiie larger city networks - 
notably Nynex in Manchester 
- get under way, the attraction 
to the corporate sector will 
increase. 

For many large businesses, 
bigger gains likely to be had 
from the free-for-all oc cur ring 
in the City of London, where 
no fewer than three new opera- 
tors are currently building 
their own infrastructure. 

Colt and MFS, both financed 
fay wen-established US opera- 
tors, are bmkfing fibre grids, 
inter-connecting with other 
long-distance operators, specifi- 
cally for the corporate sector. 

Their omphalic is different — 
Colt is a dedicated local opera- 
tor; MFS also whmifa to enter 
the long-distance re-sale mar- 
ket, and has ambitious plans to 
build similar grids in other UK 
cities, building on its US expe- 
rience as a highly successful 
“competitive access provider" 
(“Cap"), offering direct fibre 
imifs to the long-distance carri- 
ers for larger businesses in 
major cities. 

• The development of a 
thriving resale market 

The City at London has also 
spawned a growing array of re- 
sellers - operators leasing 
capacity from others and re- 
selling it at a discount to stan- 
dard tariffs, in many cases pro- 
viding their own switching 
facilities and direct links to 
customer premises. 

Waridcozn, Sprint, ACC and 
Esprit, the first three US 
groups and the third a private 
UK-based operator with offices 


across Europe, are the compa- 
nies most frequently encoun- 
tered in the re-sale market. 
They focus on international 
traffic, but most also offer a 
re-sale service within the UK. 

WorldCom now has more 
than 200 customers and five 
switches of its own, and pious 
to offer an indirect access ser- 
vice later tins year targetted at 
email arw3 medium-sized busi- 
nesses. 

BT and Mercury are both 
reacting vigorously to the new 
challenge. Both have kmg 
offered volume discounts. 

More than half of BTs busi- 
ness traffic now goe s through 
one of five discount schemes, 
offering savings of 16 per cent 
off standard tariffs to the high- 
est volume users. 

Mr Michael Hepher, BTs 
managing director, says that 
volume discounts are likely to 
become larger still - which 
will push Mercury to follow 
suit. 

BT bas also established “Win 
Back" teams, targetted at 
larger corporate clients. It 
Harmc th» taimre are already 
bearing fruit, with more than 
£200m of business won back 
from Mercury. Returners 
include Citybank, the Pruden- 
tial, and National Power. BT 



- - - * 4 

TWacomraunfcatkiRS research: tear physicist Jenny Uankxm worittop wW> 

Laboratories at MartJeshsm Heath. In ft* tatecoma wortd of the futon*, with oo-ownanowiw wwa w 
office and home, high definition, fua-cotour. threo-<ftnwwionaI fmafl** bvcotno the norm. 


claim. Since BT is not allowed 
to engage in preferential pric- 
ing. its "win back” appeal is 
based on overall packages of 
services and customer support 

Standing back from the bat- 
tleground, is the competition 
delivering the corporate sector 
better services at cheaper 
prices? 

One is inevitably dealing in 
court terfactuals, but a recent 
study by Analysys. the Cam- 
bridge-based telecoms consul- 
tancy, gives some support to 


the idea that price competition 
is serving larger business well. 

The Analysys study* shows 
tariffs for UK businesses lower 
than those of France, Germany 
and Italy. On the other hand, 
they have been so since before 
the privatisation of BT and lic- 
ensing of Mercury in the early 
1960s. Only for larger busi- 
nesses does the differential 
appear to have increased with 
any consistency. 

Since the large corporate sec- 
tor has been the most intensely 


competitive over the past 
decade, two plausible argu- 
ments could be made. First, 
that competition brings down 
prices more rapidly Second, 
that it distorts pricing, benefit- 
ing those sectors which are 
competitive at the expense of 
others. As competition spread^ 
to all sectors over the next 
decade, the truth will be 
revealed. 

* Curiw the Cost Analysys, 
Casilf Street, Cambrtd*#'- 
price 12*5. 


UK CABLE NETWORKS 


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Three years ago. the British 
government surprised the 
global telecommunications 
industry and delighted cable 
television operators by ruling 
that cable companies in the UK 
could build combined cable 
television and telephone net- 
works. 

The decision not only ended 
the BTMereury duopoly, but 
gave the cable network build- 
ers a bead start by banning BT 
from offering entertainment 
services over its telecommuni- 
cations network for a decade. 

Overnight, Britain became 
the most liberalised cable tele- 
vision market in the world and 
a test-bed for cable telephony 
services. As a result cable com- 
panies - many US-owned - 
have piled into the market. 

“Everyone is watching to see 
what happens in Britain." says 
Mr Robert Rosenberg, a tele- 
communications analyst with 
New Jersey-based Insight 
Research. 

Allowing cable television 
companies to also offer cable 
telephony services provides 
them with an important early 
second revenue stream which 
some many analysts now 
believe will eventually over- 
take cable television revenues 
themselves. 

As Data quest Europe noted 
in a recent report “In the early 
days of cable it was generally 
assumed that pafafe telephony 
would be a marginal activity 
with marginal costs ... the sit- 
uation has changed considera- 
bly - some operators are now 
seeing revenue streams which 
in some instances are rivalling 
cable TV revenue." 

Ms Cathy Burrows of Data- 
quest believes the ability to 
provide telephony services has 
fundamental implications for 
the economics of the cable 
industry. Although small mar- 
gins on residential telephony 
initially prompt the question: 
“Is it worthwhile?" 

Dataquest believes the 
answer is an unequivocal *yes,’ 
because it provides cash to 
grow the business, lifts pene- 
tration rates and reduces 
churn. 

“The main attraction is a 
combination of business and 
residential telephony,” says 
Dataquest Cable TV alone is 
calculated to have an 8 to 10- 
year payback period but the 
addition of telephony halves 
the forecast payback period to 


between 4 to 6 years. 

It is calculations like these 
which have fuelled the recent 
boom in UK cable industry 
investment. So far. about 
£1.7bn has bees spent building 
cable networks passing some 
3m homes, part of a projected 
ElObn investment programme 
stretching into the next decade 
mchirtigg £l.2bn to the current 
year. 

Even the decision last mouth 
by three UK cable operators. 
General Cable, Comcast UK 
Partners aud TeleWest. the 
UK's largest cable company, to 
postpone stock market flota- 
tions because of market condt- 


incl tiding 18,000 business lines. 

The association predicts that 
exchange line connections will 
rise to more than 700.000 this 
year. Even then with more 
than 20m lines. BT's domi- 
nance of the UK telecommuni- 
cations market is not immedi- 
ately threatened. But together 
with Mercury marketing its 
long-distance network to resi- 
dents. cable operators do 
appear set to make a signifi- 
cant dent in BT's market 
share. 

Dataquest forecasts that 
business and residential cus- 
tomers for cable telephony will 
be renting l ,5m telephone lines 


to use BT or Mcnairy. 

Payments to BT and Mercury 
represent the largest telecoms 
cost of the cable companies so 
the cable companies want tu 
cut their interconnection 
requirements to n minimum 

For the moment it scents 
likely that the UK will remain 
a unique test-bed m Europe for 
the cable telephony market. As 
Dataquest notes, the regula- 
tory environment is so differ 
eat in the UK from the rest of 
Europe that there ts little 
chance that other countries 
will allow cable TV voice tele- 
phony in the next five years. 

Some data communications 


UK customers pay lass for phone Ones: Kalian callers pay most 

Four European countries compared: average cost par tins in equivalent 1994 UK£* 



1988 

1989 

1990 

1991 

1992 

1993 

199-T 

UK - Mercury — 

1.837 

1.814 

1.724 

1.644 

1,520 

1.456 

1.480 

UK - BT 

2.209 

2,177 

2,106 

1,977 

1.688 

1.601 

1.625 

France — — 

2.686 

2.149 

2.103 

2.057 

2.039 

1.964 

1.771 

Gw many — 

2.588 

2.597 

2.335 

2.104 

2.065 

1.943 

1.938 

Ray «... 

3,555 

3.539 

3.386 

3.140 

2,903 

2,794 

2.609 


for TOO -line business customer - see also charts on Page Two of this survey. 
Figures based on tariffs in lores on January 31 of each year. Data sounse: Ane/ysys. 


tions is unlikely to put a break 
on UK cable industry invest- 
ment - although it may give 
encourage slightly more con- 
servative valuations. 

Altogether more than 130 
cable franchises have been 
awarded in the UK and 62 are 
already active with a total of 
about 650,000 subscribers. 

Network operators in the UK 
claim cable telephony provides 
both residential and business 
customers with substantial 
savings on call charges - typi- 
cally between 10 and 20 per 
cent - as well as other advan- 
tages including itemised 
monthly billing. Companies 
market cable and telephony 
services together, often with 
discounts for customers taking 
both. 

But as Dataquest noted the 
popularity of cable telephony 
services has surprised even the 
operators. In some areas the 
take-up of cable telephony ser- 
vices is r unning at more than 
50 per cent 

By the end of March, 46 cable 
franchises had installed almost 
350,000 telephone lines - 
including 38,000 business lines 
- in more than 30 areas, 
according to the Cable Televi- 
sion Association. A year earlier 
the figure was 126,500 lines 


out of a total of 29.3m on the 
public switched telephone net- 
work in 1997, representing five 
per cent of the market and will 
generate annual revenues of 
almost £70Qm 

Other research from Bar- 
clays de Zoete Wedd suggests 
that by the year 2000 cable 
could be costing BT up to £ibn 
a year in lost revenues. BT is 
expected to recoup some of 
that lost revenue in charges for 
linking cable systems into its 
trunk network, but it will be 
competing for business with 
Mercury and other new 
long-distance telephone compa- 
nies. including Energis, the 
National Grid subsidiary, and 
perhaps even the cable compa- 
nies themselves. 

The cable companies have 
already announced plans to 
build the backbone of a 
national telecoms network to 
rival those of BT and Mercury 
in the UK by mid-1995. They 
plan to create six regional net- 
works covering London, the 
Midlands, the north. East Ang- 
lia. the south coast and Scot- 
land. Fibre-optic and micro- 
wave links will permit the 
companies to run joint pro- 
gramming and send regional 
telecom traffic across each oth- 
er’s networks without having 


services are allowed over cable 
in France and there is pressure 
for similar concessions in other 
countries including the Nether- 
lands, Belgium and Denmark. 
Mr Karel Van Miert. EU com- 
petition commissioner, last 
month threw his weight pub- 
licly behind a full and speedy 
liberalisation of Europe's cable 
television infrastructure. 

However the commissioner, 
outlining the role of competi- 
tion policy in telecommunica- 
tions, said his aides were 
studying the impact of allow- 
ing cable TV companies to 
offer services already open to 
competition but ruled out con- 
sideration of voice telephony. 

In contrast pressure is build- 
ing in the US to follow the 
UK’s lead and allow cable com- 
panies to offer telephony ser- 
vices and vice versa. Already 
so-called competitive access 
providers have been growing 
quickly competing against the 
local Bell companies to provide 
businesses with access to the 
long-distance carriers. 

Now, with the backing of 
Congress, the US regulatory 
structure looks set to loosen 
further. 

Paul Taylor 


Paul Quigley highlights benefits of smart card technology 

Wider financial link-ups 


More than just a colourful 
piece of plastic, the smart card 
is set to tran sfo rm the way in 
which users access and benefit 
from communications and val- 
ue-added services. 

For this reason the possibili- 
ties for strategic alliances 
between the leading players In 
both telecommunications and 
banking are vast 

Many of the big telecommu- 
nications carriers already offer 
cards of varying capability, 
based on magnetic strip tech- 
nology or on account numbers 
which have to be keyed in. 

Banks, too, see smart cards 
as forming part of the process 
of ‘disintermediation’ of the 
financial sector, whereby cus- 
tomers' transactions will be 
handled by phone, bath fixed 
and mobile. 

The new entrants into this 


arena are the digital cellular 
communications operators, 
who are poised to unveil inno- 
vative services in partnership 
with other industry sector pro- 
viders. 

GSM (Global System for 

Mobile Commit- 

nications) and 
its sister tech- 
nology, DCS 
1800, are part 
of the new gen- 
eration of digi- 
tal cellular networks which 
use smart card technology as a 
fundamental part of the system 
architecture. GSM smart cards, 
or SIMs (Subscriber Identity 
Modules), provide authentica- 
tion fix' the user to the net- 
work. and store vital personal 
information about the card 
holder. 

With older analogue ce l l u lar 


The technology offers 
many alliances between 
telecoms and banking 


telephones, there was no direct 
association between the user 
and the telephone. The user 
was essentially anonymous, 
and the handset established its 
authenticity to the network. 

With GSM, a handset with- 

out a SIM is 

useless. When 
inserted into a 
slot in the 
handset, the 
SIM card logs 
on and trans- 
mits the user’s encrypted iden- 
tity ready for use. What makes 
these cards ’smart’ is an intelli- 
gent microchip embedded in 
the plastic. The key technologi- 
cal breakthrough is in the inte- 
gration of re-usable Eeprom 
(Electronically Erasable Pro- 
grammable Read Only Mem- 
ory) chips on to thts single 
microcontroller. 


The chips used tn GSI 
DCS 1800 are based nrou: 
Hitachi HS310 chip, stori 
to eight kilobytes of in, 
tiou. Data can bo update 
communicated with rer 
and repeatedly after thi 
has been issued. This is 
mental to the power ant! 
bility of the SIM cant 

The chip makes possili 
convergence or multiul 
vices, functions and a* 
tions on to a single smart 
It Is here that the (elect 
nications carriers, the fin 
institutions and the digit 
lular operators ace a s, 
rant marketing potent! 
the future. 

Thus. Mercury 0he-’2-O\ 
DCS 1800 personal comm 
tions network operator 


Continued on next page 


I 



* 


ft. 

k 











■ • h 


t 



I 



-J 

■P 


Information communication technology (ICT) in Europe 

European Union and European Free Trade Association (Etta) market value in millions ECUs 


Squipiiwnt / twice m 

1891 

1892 

1093 

1M4 

1995 

CAGfi, % 
1091-03 

GAGR, % 

Computer hardware 

Office Equipment 

LAN hardware 

Oilier data communications 
Data communion's hardware 
IT hardware 

42,483 

0555 

1,242 

1,406 

2£48 

53.686 

40,260 

9,192 

1,668 

1,507 

3,173 

52.625 

39,032 

0,766 

2J017 

1,599 

3JB16 

51.434 

SQ ) «»S 

8,708 

2£D3 

1,843 

3£46 

52X80 

40,657 

0813 

2^19 

1,814 

aqgg 

53,403 

-4.1 

1.2 

27.4 

06 

ISA 

-2.1 

SLO 

03 

7.2 

05 

4a 

13 

O Hardware maintenance) and 

support sarvfcss: 








Services 
Total IT market 
Service providing equfpmt 
Customer premises equtomt 
Data network services 

Voice network services 
mstatetJon/rnaintenance 

Total telecom 
Total ICT 


44,755 

47.162 

49,359 

51,628 

53,866 

5l0 

46 

115,621 

118*461 

120.778 

125,120 

130370 

22. 

36 

21,235 

19,610 

18,190 

17,090 

16,510 

-7 A 

-4.7 

10,546 

10781 

10337 

11,101 

11,290 

13 

1.6 

11,356 

13^24 

14,706 

16,185 

17,279 

136 

&4 

77,672 

80097 

83,705 

101,873 

110477 

9l8 

as 

3£11 

0341 

3A74 

3,901 

0693 

4J0 

3.1 

124,018 

132^333 

141,012 

149,950 

150,249 

66 

66 

230638 

251,294 

261,760 

275*070* 

ainwap— 

45 

52 


^The ICT totat market value for 1994 of Ecu275.070 is equal to S319.081; “the 1995 forecast Is equal to *335.959. Data source: European 
fotormaiton Technology Observatory - ETTO. 94: Lyonar Strassa 18. D-60528 FranJdurt/Maln, Germany. Pries Ecu40. plus VAT and mailing cost 


Andrew Emmerson highlights computer-telephone integration 


Converging technologies 


offer commercial gain 


O ne of the most over- 
worked expressions In 
the information tech- 
nology field Is the ‘genuine 
breakthrough' and often the 
more strident the hype, the 
less significant the advance. 

Computer-telephone integra- 
tion or CTI (also known as 
computer-supported tele- 
phony), however, has been 
introduced with little fanfare, 
yet it is generating new oppor- 
tunities, not just by cutting 
costs but also by creating new 


business possibilities. 

In spite of constant talk of 
the convergence of computer 
and telecommunication tech- 
nologies. CTI is harnessing the 
power of the computer to the 
telephone in ways never 
dreamed of before. 

Enterprising organisations 
are using CTI to seize the com- 
petitive edge, especially in 
enhancing their level of cus- 
tomer service. Providing first- 
class service calls for innova- 
tive techniques and CTI pro- 


vides an effective answer. 

For example, National Break- 
down, a leading car-recovery 
organisation, needed a mecha- 
nism enabling it to provide 
help more efficiently thaw the 
Competition - crucial when a 
stranded motorist will call on 
whichever organisation offers 
the fastest assistance. 

CTI allows National Break- 
down to do this. Using the 
company’s system, a motorist 
who's car has broken down can 
call from a toll-free roadside 


telephone. The National Break- 
down operator needs to ask 
only two things: the car's regis- 
tration number and its location 
(even the latter will not be 
needed once caller identifica- 
tion from phone numbers 
becomes available). 

The rest of the process Is 
automated. From the registra- 
tion number, the computer 
instantly identifies the driver 
and the details of his or her 
vehicle, enabling the operator 
to greet the driver by name 


Andrew Adonis looks at calling card operators and charges 

Billed for business 


T he business travel sector 
is one of the most 
lucrative and fastest 
growing markets for telecom 
operators. Calling cards are 
currently the main product 
on offer, but a growing array 
of facilities is in the making , 
geared particularly to the 
international traveller 
anxious to avoid language 
barriers, national telecoms 
bureaucracies and inflated 
international call charges. 

In the US, cards are 
a fiict of life, with more than 
100m in circulation. The three 
main longdistance operators 
- AT&T, MCI and Sprint - 
compete on price and service 
quality, and a host of other 
operators also offer the 
facility. Touch-tone or 
voice-response systems for 
inserting PIN numbers are 
the latest innovations, with 
a wide variety of billing 
arrangements on offer to suit 
personal and business needs. 
AT&T even offers a 
translation service for 
travellers with language 
problems. 

In Europe, calling cards 
bave been slower to catch on, 
even in the business market 
This Is perverse, given the 
relatively greater volume of 
international business travel 
in Europe, and with it the 
greater inconvenience 
involved in malting calls - 
to say nothing of hefty 
telecoms tariffs, particularly 
after the mark-up charged 
by most European hotels. 

According to Eurodata, a 
tariff consultancy owned by 
21 European telecoms 
operators, western Europe’s 
9m business travellers a year 
nearly 700m telecoms 
transactions during 
cross-border business trips 
within Europe - 85 per cent 


are international. In total 
business travellers spend 
about Ecu3bn on telecoms 
services. About half erf that 
sum goes to hotels, the rest 
to telecoms operators. 

Calling card tariffs are at 
a premium to standard tariffs, 
bat are lower than the 
mark-up charged by the 
typical European hotel. So 
telecoms operators have a 
large vested interest in 
encouraging a shift to card 
calls: they stand to net a 
higher proportion of the 
existing Ecu3bn thaw they 
currently receive, and the 
lower tariffs ought 


total size of the market. 

Yet only 51 per cent of the 
travellers surveyed by 
Eurodata carry a card - 
either a calling card or a 
credit card - with a telephone 
function, while awareness 
of services on offer was low. 
In fine with US experience, 
the researchers found that 
“when abroad, travellers will 
only use those telecom 
services that they know from 
their own country - it makes 
sense, therefore, to educate 
bumness travellers and 
promote services in their own 
country.” For most of 
Europe’s national operators, 
the education and promotion 
is just beginning. 

In tiie US. where AT&T in 
particular has been battling 
with hotel chains for a 
decade, the typical hotel 
charges 75 cents for access 
to calling card or freephone 
numbers, with no attempt 
to bar access. Indeed, many 


hotels advertise calling card 
access numbers in hotel 
bedrooms, aware that ease 
of access is now a significant 
factor in choice of hotel by 
business travellers. 

In Europe, by contrast, 
hotels typically charge a 
much higher connection fee, 
and sometimes bar access to 
calling card or freephone 
numbers altogether. 
Moreover, nnlflrp the US there 
is no standard regime: a 
random FT survey of six large 
central London hotels foond 
that two levied no calling 
card access charge, one 
charged £l per ckO, one £1.50. 


one £2 and one £2.50. For any 
business traveller planning 
to make more than a few 
calls, it pays to check on the 
policy of each hotel - and 
travel equipped with a variety 
of cards. 

An invitation from the FT 
to business travellers earlier 
this year to tell their tales 
of telecoms woe brought a 
flood of responses. TeUmgly. 
almost all came from 
consultants or executives in 
partnerships footing their 
own bills. Travellers whose 
bills are paid for them seem 
more indifferent to 

extortionate hotel charges, 
a fact company telecoms 
managers would do well to 
address. 

A typical complaint came 
from a reader charged £82 
by a hotel in Nottingham, 
En gland, for a 22-mhmte 
off-peak call back home to 
Singapore. His concern was 
not just about the size of the 
bill, but at the hotel’s failure 


to make rinar the of the 
mark-up, which was disguised 
by a per unit* tariff. Another 
traveller in England, who 
used a BT calling card to 
avoid the mark-up, was 
caug ht by a ‘facilities charge' 
of 20p a minute. (“Whatnot? 
A charge for inc oming calls 
- after all, they have to be 
handled by the operator . . 
he noted acidly.) 

Almost aH calling cards 
come free, with calls billed 
either to a credit card 
statement or a sepa ra te 
account (which, in the case 
of national operators, can 
often be the home telephone 
bill). 

As a general rule, European 
cards are cheaper for 
intra-European calls, but US 
cards are cheaper for 
transatlantic calls. For 
example, the US carrier 
Sprint boasts a US-UK tariff 
on its ‘Foncard* which is a 
fraction that of BTs 
*ChargecanL’ For UK 
travellers. Mercury is cheaper 
than BT for most 
long-distance calling -card 
calk, though BT has wider 
international coverage. 

However, just as the calling 
card is becoming as essential 
as a passport, it is being 
superseded. In May, AT&T 
launched what it claimed was 
the first international mail 
box service for travellers 
wanting a 24-hour base for 
receiving and sending 
messages and faxes wherever 
they might be. 

Called “WorldFlus”, the 
new service gives subscribers 
a mail box and service centre 
accessed via touch-tone or 
voice-response. 


Calling cards have been slower to catch on in Europe 
than in the US, even in the business market 


significantly to increase the 


Further card partnerships 


Continued from previous page 

in the UK, in partnership with 
Barclaycard, has launched a 
service enabling subscribers 
who use Barclaycard to contact 
specific departments for vari- 
ous information and financial 
transactions. 

The SIM connects the sub- 
scriber to a number of services 
by offering the ability to select 
from a menu displayed on the 
handset screen. Though this 
mow is not a fuH-blown mani- 
festation of a multi-service 
smart card (the SIM card, is 
still not a credit card in itself), 
it does represent a start. While 

the Mercury-Barelaycard initia- 
tive is primarily geared 


towards the management of 
personal finance, there are 
clear applications, too, for busi- 
nesses users. Companies may 
be able to manage variable 
costs more effectively by direct 
payment of bills for sales force 
personnel or mobile staff 

Another application being 
tested is the payment of tolls 
on roads. In Germany, GSM 
smart cards are being used in 
conjunction with road tolls in 
pilot trials to test the feasibil- 
ity of payment for road usage. 

In a related smart card devel- 
opment National Westminster 
Bank, Midland Bank and BT, 
have formed a joint venture 
consortium, Mondex UK, to 
exploit the capabilities of the 
smart card. The Mondex part- 


FT SURVEYS INFORMATION 


For details of forthcoming FT surveys, calt 


0891 446100 

Calls charged at 39p/min eh-P r 

and 49 p/min at all other tmes_ 

Overseas callers. i« UK: 



nere hope that bank notes and 
coins will be replaced by their 
smart card. 

The Mondex card is like an 
empty electronic purse .which 
has the ability to download Le 
extract “cash" in the form of 
an electronic data amount 
from the user’s bank account, 
either down a permanent or 
mobile phone line or through a 
conventional ATM dispenser 

which is Mondex-compatible. 

Used in tandem with the 
Mondex card is the Mondex 
electronic wallet, a handheld 
device, similar in size and 
appearance to a pocket organ- 
iser, which manages the elec- 
tronic nfluh transactions to and 
from the Mondex card. The 
user inserts the Mondex card 
Into the Mondex wallet which 
transfers an electronic cash 
amount on to or off the card. 

The Mondex card uses the 
same H8310 family of micro- 
chips as is used in GSM smart 
cards so it will be possible to 
telebank by connecting a Mon- 
dex wallet with the card 
inserted to a GSM handset so 
the wallet and handset are 
effectively turned into a mobile 
ATM cash dispenser. 

It is conceivable that instead 
of a mobile subscriber paying 
for mobile phone calls by con- 
ventional means such as by 


cheque or direct debit, cellular 
operators will incorporate 
Mondex-type capabilities into 
their SIM cards as another 
method of paying for mobile 
telephone calls. Suitably 
equipped with Mondex card 
reading equipment, public pay- 
phones, retail stores, hotels 
and many other establish- 
ments can use this method of 
transaction as a substitute for 
cash 

The benefit to commerce is 
the eradication of the security 
risks associated with handling 
and moving money; the bene- 
fits to users are manifold. 

Users will need to distin- 
gulfih between the terms *mnl- 
tirsavice’, ‘multi-function’, and 
’multi-application'. One card 
may have many different func- 
tions but be used solely within 
one closed environment, while 
another card may operate in 
many environments but only 
perform one function. 

Between these two is a 'grey 
area’ where a card may have 
links with different service pro- 
viders offering the same ser- 
vice - or many different ser- 
vices. 

The commercial implications 
of these ‘oneto-one, one-to* 
many, and many-to-many* per- 
mutations are complex and 
fraught with difficulties. 
Accountability is certain to be 
important, and the issues sur- 
rounding it have yet to be 
resolved. 


order. She 
greets the customer by namw 
and then asks if, for example, 
the word processing software 
ordered three weeks ago is sat- 
isfactory. Not only is customer 
business handled more effi- 
ciently, clients feel better deal- 
ing with a firm which appears 
to value their custom. 

In many other retail and 
commercial operations comput- 
er-assisted telephone centres 
are already the norm. Hotel 
and airline reservations pro- 
vide a dear illustration of how 
linking telephone agents to 
computer systems improves 
both customer service and the 
ability to sell effectively. 

As more business is done by 
phone, the role of CTT will 
increase. Telephone hankfng is 
now well established and buy- 
ing insurance by telephone is 
the fastest growing sector in 
the financial services market 

CTI is also used to assist 
staff making a large number of 
calls, reducing the time wasted 
on ineffective calls. This appli- 
cation is used widely by banks, 
finance houses and credit 
organisations for speeding up 
the recovery of debts. It may 
increasingly be used for tele- 
phone selling, as in the US. 

But CTI is not only for use 
by large-scale enterprises. The 
technique works just as power- 


fully at the other end of the 
scale, enabling the one-man 
business to take on much 
larger firms. 

Imagine, for example, you 
want to turn your spare-time 
business into one earning 
full-time profits. You sell spe- 
cialist books and video tapes 
by mail from your home but 
find that an answering 
machine is a poor substitute 
for personal service while 
you’re away at the day job. ■ 
By adding a card and some 
software to your PC and it 
becomes an 
automated tele- 
phone atten- 
dant, inviting 
people to key 1 
to place an 
order, 2 to hear 
information on 
your products. 
3 to order a cat- 
alogue or 4 to 
leave a mes- 
sage on other 
business. 

The cost of 
this add-on Is 
less than £500 
and small busi- 
nesses across 
the US are suc- 
cessfully 
exploiting the 
idea. 

For large organisations, the 
opportunities to save costs are 
even greater, using staff 
resources more effectively and 
matching the number of phone 
lines rented exactly to the level 
of business handled. 

Productivity increases of up 
to 300 per cent have been 
claimed by the Bank of Scot- 
land, while a debt recovery 
firm's collectors can now con- 
tact more than 200 defaulters 
in a day compared with fewer 
than 60 previously. 

In the US, the computer com- 
pany Tandem cites the case of 
a system it installed for an 
electricity simply company. Its 
client has claimed savings of 
$3m a year and managed a full 
payback on its investment 
within four months. 

The UK company Datapoint 
quotes the experience of a 
bank using automated dialling 
systems which it supplied. In 
the first year of operation, 
accounts handled rose by 33 
per cent, promises to pay ro6e 
by 65 per cent and all this was 
achieved with existing staff. 
These may be exceptional 
cases but they are indicative of 
the technology's potential. 

Although Cn is a relatively 
new discipline, it is based an 
mature technology. Organisa- 
tions adopting CTI are gaining 


and refer to the car make and 
model. 

On-screen maps pinpoint the 
car’s whereabouts and also 
indicate the nearest garage, 
sending help on its way within 
minutes. 

Retailing is an equally com- 
petitive field, in which CTI also 
has an important role to play. 

In the US, MicroWarehouse 
uses Cm to maintain its posi- 
tion as a leading mail order 
supplier of computer software 
and accessories. 

Customers ring a toll-free 
number and 
before the call 
has been 
answered, cal- 
ler identifica- 
tion tells the 
computer who 
is calling. 

Thanks to thin 
information 
and CTI, the 
sales agent 
who answers 
the call already 
has on screen 
the name, 
address and 
credit card 
number of the 
customer, and Claude 06an heads Euneteom - 
the details of the Joint venture of France 
his or her last Telecom and Deutsche Telekom 




brt rag ated communications: a manager at Sun Affiance, one ot the 
worfefs largest Insurance companies and a pioneer in FT applications, 
keeps fo touch with the mobfle sales team. He also uses Lotus Notes, 
the workgroup computing environment, for a database of proffes of 
brokers and a central hub for account administration 


WbrkhrMi Information and 
Commatdcatioas T ec hn olo g y 


1803 total market; 
$89801) (ESOflbq) 


Japan IBM 


PKo*«,7»*«n 
Haraxonatna 

rf 1 1 ii re 1 1 ■ ■ l 

&no*po<ry 



US 37% 


6 wB w n tewe l e lkWt)ifaiwiww 


an undeniable ad vantage over 
the competition and the mar- 
ket for these systems is set to 
grow considerably over the 
next few years. 

“A key factor in keeping 
pace with change in today's 
business world is the ability to 


integration is vital for 
competitive advantage 


communicate efficiently at all 
times - whether it be by voice, 
data or image - regardless of 
Location," says Mr Claude 
Olier, pictured above, left, 
chief executive of euneteom - 
the joint venture of France 


Telecom and Deutsche Tele- 
kom. 

In a deal with International 
Business Machines in March 
this year, euneteom - officially 
spelt without a capital E - 
signed a contract for the deliv- 
ery of high-speed, managed 
transmissions services to 40 
IBM locations in France, Ger- 
many and other European cen- 
tres. 

The services will be con- 
trolled by eunetcom’s network 
operations centre in F rankfo rt, 
which will go into operation on 
July 1, says Mr Olier. 

The euneteom network also 
has ‘hubs’ in France, the UK, 
Netherlands, Belgium. Spain, 
Italy and the US. By the end of 
this year, hubs will be added in 
Sweden, Singapore and Japan. 

This month, euneteom 
signed a worldwide, $200m out- 
sourcing service agreement 
with the New York-based Dun 
& Bradstreet, a leading pro- 
vider of information, software 
and service, for the services 
currently provided by the 
international ‘DunsNet’ net- 
work - euneteom will provide 
all of D&B’s worldwide data 
communication needs for a 
five-year period. 


Outsourcing: the winds blows 
both ways - see Page Four 


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TELECOMMUNICATIONS IN 


A new technique in distance learning' 
is being pioneered by Boston Uni- 
versity in the US. Working with 
united Technologies Corporation, it has 
set up the “virtual university” at which 
some 160 distance learning students attend 
live video tutorials. Tutor and students 
watch each other on a computer screen, 
asking direct questions as they would in 
the classroom. 

Classes are conducted by the tutors from 
an electronic speaker’s podium, named 
Socrates. The podium has an overhead 
slide projector In the normal way. but also 
has a built-in computer screen. The screen 
displays the video imag e of the students as 
well as computer data: charts, lecture 
notes, maps or a whiteboard. To bring an 
individual student into view and conduct a 
personal conversation, the tutor presses a 
set of controls underneath the screen. 

Socrates is a Car cry from the office 
‘cinema-size’ video conferencing units of 
the mid-1980s. It reflects the dramatic 
advances in video conferencing technology 
in the past year or so. The average system 
is small enough to be moved around on a 
trolley - “roll- a bout" system is the new 
industry term. 

As costs fail further, a surge In 
demand for video-conferencing 
is expected next year 

But the latest systems which will appear 
on the market this year will run on a 
personal computer. People will be able to 
run the video conference as part of their 
normal computer software. 

The personal computer systems will be 
sold as a card which slots inside the PC 
unit - although some manufacturers are 
working with video conferencing suppliers 
to buUd the technology into their 


Monica Horten reviews developments in video-conferencing 

Electronic Socrates takes a class 


machines as a standard feature: for exam- 
ple, Compaq, the pc-maker Is working with 
Ptcturetel, which invented Socrates. 

PC systems- -have been anticipated for 
some time, but technical difficu lti es have 
meant that they have overshot the manu- 
facturer’s original timetable for shipment 
There Is still confusion as to which 
systems are or will be available and when. 

Heidi A ghnami of Dataquest the Indus- 
try analyst believes that only Ptcturetel 
and VTel now have products shipping in 
volume. But several are scheduled for the 
next few months, including ICL, GPT, 
Northern Telecom, BT. IBM and Olivetti. 

PC systems will operate via the ISDN 
telephone services. ISDN is practical 
because it is a dial-up service: and because 
it provides the necessary bandwidth for 
video transmission for the same cost as an 
ordinary phone call. 

A video call needs a minimum of 
128 Kbits/s for the system and an accept- 
able picture quality. Ideally it should have 
384Kbits/s. 

One ISDN call provides 128Kbits/s; two 
or more calls can be joined together tech- 
nically to provide higher bandwidth. 

In the past, users had to employ expen- 
sive leased lines, or order a special circuit 
from their telephone company for the 
duration of the call: these circuits typi- 
cally cost about £1,000 per hour for a 
trans-Atlantic call; over ISDN, the cost is 
closer to £100. The low cost of ISDN - 
which has only become widely available in 



TWa true' video conferencing system - not merely a “talking heads 1 approach - offers video, 
autSo, e l ect r o ni c document and computer-finked facilities. The VTEL MedaMax system, produced 
n Austin, Texas, is dBstributed by IPC In fo r ma tion Systems and other conference apedaRsIs 


global business centres in tbe past 18 
months - bas already been important for 
tbe growth in sales of roll -about video 
conferencing systems. 

Vendors such as Picture tel are looking 
at an Increase of 60-70 per cent in sales 
this year over last year. And Heidi Agh- 
nami predicts a compound annual growth 
rate in revenue of 103 per cent from video 
conferencing equipment for the years 


1992-1997. Another factor has been the 
decreasing cost of the hardware. The aver- 
age roll-about unit costs between £12,000 
and £20,000 - reflecting a fall of more than 
50 per cent on the £40,000 price tag two 
years ago. The PC- systems will cost 
between £3.000 and £5,000. These are 
expected to show an even faster increase 
in sales, with a predicted annual growth 
rates of 156 per cent in the next three 


years. Such predictions are attracting new 
participants - which will sharpen market 
competition. Azlan. a UK-based network 
distributor making - its first moves to dis- 
tribute video conferencing, sees increa sin g 
demand from its customer base, especially 
for systems which can link in to local area 
networks. 

Azlan will sell roll-about systems from 
Sony Broadcasting - Itself. new to video 
conferencing — and is asswwing offerings 
from pc system suppliers. 

Nick Coutts, group strategic marketing 
director, expects a surge in demand next 
year when prices have settled down even 
farther - “for all sorts of technology prod- 
ucts there is a price point of £2,000 per seat 
above which it becomes hard to justify. In 
about 12 months, video conferencing will 
reach that figure.” he says. 

Intel, the semi-conductor manufacturer, 
is introducing a product called ProShare, 
expecting to launch it lata: this year. Pro- 
Share is a PC system which will combine 
its Indeo video coding software with an 
ISDN card and a video camera. 

But Intel departs from the other suppli- 
ers in that ProShare does not use an HL320 
codec - the hardware which contains com- 
pression/decompression algorithms to 
enable the video transfer down a tele- 
phone li ne H.320 is the industry standard 
- and ensures that systems from different 
manufacturers can talk to each other. 

*TL320 has been a market enabler,” says 
Steve Gandy, manager of teleconferencing 


systems at British Telecom. “It means that 
customers can buy a system without hav- 
ing to worry who they are tal king to." 

Accenting to Heidi Aghnami, the non- 

standard approach, is unlikely to succeed 
in the long ter*" PC systems will not only 
be connected to other PCs but to froll- 
about’ systems and will need standard 
communications protocols in order to do 
so. 

“Intel will have to make a firm decision 
to go along with industry standards. Expe- 
rience has shown that proprietary stan- 
dards don't work in ^he long term,” says 
Aghnami. 

However, Intel has bought a 10 per cent 
stake - In VTel, based in the US, which 
supplies EL320 systems of all sizes. Indus- 
try observers believe this could be a move 
to gat to grips with the standard, without 
overtly backing ft. 

The HL320 standard Is also bong farther 
advanced by a consortium backed by com- 
puter and telecoms industry heavyweights 
such as AT&T, Hewlett-Packard, BT, GPT, 
Northern Telecom. 

The group focuses on PC systems. It sees 
a need for the video transmission standard 
to address personal computer software 

Vendors such as Picturetel are 

. looking at an Increase of 60-70 
per cent In sales this year 

applications in a common way, so that 
customers will he able to tranks' data 
between different software applications 
across a video conferencing link. 

For example, a speaker in a video meet- 
ing might want people at the other end to 
have copies of spreadsheet figures. At the 
moment it is difficult to achieve, but the 
new standard - known as the T series - 
aims to resolve the problems. 


E ver since the first tele- 
phone was demonstrated 
by Alexander Graham 
Bell in 1876, telephony has 
been associated with the office 
and workplace. 

The traditional PABX (pri- 
vate automatic branch 
exchange) and the hard-wired 
extension still plays a pivotal 
role in most offices but in 
recent years a new breed of 
cordless telephone equipment 
has begun to appear. 

Cordless telephones have 
been available for use in the 
home for more than a decade. 
Generally these simple systems 
include a portable handset 
which communicates by radio 
with a fixed base-station which 
is connected to the public tele- 
phone system. 

However, In recent years 
technical advances, particu- 
larly the switch from analogue 
to digital radio transmission, 
has greatly increased tbe scope 
of cordless systems enabling 
high-capacity systems, capable 
of serving hundreds or even 


CORDLESS PHONES 


Ways to cut call failure rates 


thousands of business users, to 
be built. 

The advantages of cordless 
business systems are easy to 
appreciate. In particular, work- 
ers are no longer tied to the 
desk where the hard-wired tele- 
phone sits and incoming wills 
have a much better chance of 
reaching their intended recipi- 
ent. 

Surveys have shown that up 
to two-thirds of all business 
calls fail to reach their target, 
in about half these cases the 
person called is somewhere in 
the building, but can not be 
found - European industry 
spends about £10m a year on 
on-site paging and PA systems 
in an attempt to alleviate tbe 
problem. 

Cordless systems can reduce 


the call failure rate substan- 
tially, improving efficiency and 
customer satisfaction while 
cutting the cost of returned 
calls. 

Ericsson, the telecommunica- 
tions equipment manufacturer, 
claims that cordless business 
system customers can save up 
to 30 per cent of their bills as a 
result 

In addition, cordless systems 
can save on running costs. 
Most organisations r unning 
medium-sized or large PABX 
systems spend around 10 per 
cent of the capital cosy of the 
system on rewiring and other 
reconfiguration operations. 

Market analysts have pre- 
dicted that these advantages 
will help cordless business 
systems capture between 20 


and 3>) per cent of tbe market 
by the turn of the century - 
equivalent to between 15m and 
20m telephone extensions. In 
Europe, alone it is estimated 
that the market could be worth 
$15bn. 

S ystems manufacturers 
such as GPT Communi- 
cations Systems, a joint 
venture between Germany’s 
Siemens group and Britain’s 
GPT, tend to be more cautious 
suggesting that cordless 
systems could take between 10 
and 15 per cent of the market 
by the year 2000. 

Either way. there are several 
obstacles to overcome - in par- 
ticular there are two main 
competing cordless business 
system technologies, CT2 



This annotwewnertf appears as a matter reran! only. 


Telefonica Internacional 
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Syndicated Short Term Bridge Facility 


Arranged nnd undent ntten by 

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Societe Generalc. 

Sue ur»nJ «i K-jwnfl 

TTie Fuji Bank Ltd., 

Simirofni I'jpann 
Managers 

Banqiie Piiribns S.A.. 

SururcuJ in Esfiana 

Banca di Roma Spa.. 

Sucursal rn filspafia. Madrid 

Royal Bank of Canada. 

SiH-unnl in Espur'ia 

The Long Term Credit Bank of Japan (Deutschland) AC 

Hie Samvit Bank Ltd.. 

Snciinul in Kanina 

Agent 

ABN AMRO Bank N.V. 


Bunqiie Natinnalr de Paris 
Bonk of Tok\o Ltd_ 

Sunioal in I'^puriu 

Commerzbank AktieiigeselNohaft. 

hiirursalni ['l?|<aria 

Morgan Guaranty Tnist Company of Ne* York 
The Chase Ma tiluitian Bank. N. A.. 

Sui'iirKil on K-.pafin 


Banco di Na|ioli Spa.. 

Suiursal i-ii 

Insiiiuto de Crwiito Ofiriai (ICO) 
The Dai-lchi Kangyo Bonk Ltd.. 

SiKurvol « K*pumi 

TheSakiirn Bank Ltd.. 

Swiiriiilni K?paiiu 


Mav. 199* 




ABN’AMRO Bank 


(Cordless Telephony 2) and 
Dect (Digital European Cord- 
less Telecommunications.) 

CT2 was the first digital 
cordless technology to be 
developed in the UK during the 
1980s and has been adopted as 
an interim European standard. 
It is the same technology used 
for Telepoint services in 
Europe and elsewhere. 

GPT Communications 
Systems and Canada’s North- 
ern Telecom have been supply- 
ing cordless office systems 
based upon CT2 digital tech- 
nology - BT also supplies re- 
badged Northern Telecom 
systems. 

Northern Telecom, which is 
also developing a Dect system 
for up to 1,000-users in con- 
junction with Olivetti, 
launched its Companion CT2 
cordless business systems in 
Europe in March last year and 
has sold over 900 systems in 13 
European countries and the 
Middle East since then and 
over 2,000 systems worldwide. 

“We believe that cordless 
will be a key differentiator in 
future PBX markets,” said Mr 
Chris Wade, director of per- 
sonal communications systems 
for Northern Telecom Europe. 

Among recent customers for 
the Companion system has 
been Boehringer Ingelheim's 
French subsidiary. The phar- 
maceuticals group installed a 
companion system at its Reims 
site which bouses 350 employ- 
ees in a dozen buildings in 
December. 

The system, which has 
replaced pagers and walkie- 
talkies for mobile employees, 
has since been expanded and 
will cover 60 extensions by the 
end of this year. 



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CT2's supporters claim ft Is a 
proven cost-effective technol- 
ogy ideally suited to small and 
medium sized offices or sites. 
Mr David Wright, International 
Marketing manager for GPT, 
claims that for mast customers 
the technology itself is irrele- 
vant - "the issue is: which is 
going to be cheaper?” he says, 

Cordless systems offer 
big savings for business 
customers’ phone Mis 

and that will mostly depend on 
volumes. 

For the moment, CT2 hand- 
sets cost around a third of the 
price of their Dect rivals. And 
Mr Wright believes CT2 will 
continue to have a price advan- 
tage, in part because of the 
adoption of the technology out- 
side Europe, for example in the 
Far East 


Mr Wright says that perhaps 
surprisingly, customers so far 
for GPTs iSDX 100 cordless 
system in Britain have mainly 
been in the retail and manufac- 
turing sectors, rather than 
offices. 

For example, one High Street 
retailer has Installed cordless 
systems to enable its managers 
to return to the shop floor, 
rather than be stuck in the 
back office. 

Meanwhile, Axis Holdings, a 
Liverpool-based manufacturer 
of extruded polythene film and 
FVC profiles; has installed a 
cordless system to enable staff 
to respond quickly to custom- 
ers. 

Systems based on the rival 
Dec t stan dard, whichis backed 
by ETSI (the European Tele- 
coms Standards Institute) and 
was designed to solve theprob- . 
lem of providing cordless tele- . 
phones in high-density busi- 
ness environments such as 


offices, begun to appear last 
• year. 

The Dect standard has been 
adopted by 'five of Europe’s 
largest telecommunications 
equipment suppliers - Alcatel, 
Ericsson, Nokia, Philips and 
Siemens - which between 
them represent nearly 70 per 
Cent of the European PABX 
market. 

They argue that Dect 
systems have significant 
. advantages over C7F2, particu- 
larly for heavy use within 
large office buildings or for 
mixed voice and high speed 
data traffic. 

Ericsson has been one of the 
most active promotors of Dect 
syst e ms and launched its Free- 
set system in Europe last 
antrrmn although it has been 
selling' similar syste ms outride 
Europe for some time. 

The Freeset system works as 
an ‘add-on* to a company’s 
existing phone network and 
comprises three main, compo- 
nantg a radio exchange which 
~ connects to tbe host PABX or 
~ key-system - or directly to file 
local telephone exchange in 
the case of a company using a 
centrex service; a number of 
low-powered radio base sta- 
tions each of which can sup- 
port’ up to 12 simultaneous 
calls, and up to 600 cordless 
handsets, 

For larger systems, a num- 
ber of radio exchanges can be 
networked together. 

Freeset systems have been 
installed in manufacturing fac- 
tories, hospitals and ‘offices of 
the future’ such as. Digital 
Equipment’s futuristic head- 
quarters in Stockholm. . 

A 160-extension Freeset sys- 
tem has been Installed in Digi- 
tal's *Natural Office’ where 
staff do not have permanent 
working positions. The system 
will be expanded to handle 600 
extensions this year/ 

. Paul Taylor 


THE VIRTUAL OFFICE 


More mobility for - staff 


E ven the greatest fan of information 
technology (IT) and new working 
methods would not suggest that 
the days of the conventional office are 
numbered. 

Bat tbe rising price of travel and office 
space and tbe falling cost of remote 
comparing are challenging business 
people to re-examine the reason for 
commuting to work, since many tasks 
which rely on information processing 
can be handled just as effectively outside 
the office. 

Often, a job can be performed equally 
well from home, from a hotel bedroom, 
from a car or from an office hired by 
the hour at an airport - meanwhile, 
the person at the other end of the 
telephone may be unaware that his 
opposite number is not in a conventional 
office. 

This Is the concept behind the ‘virtual 
office.’ It is not another expression for 
solitary teleworking or for working 
normally from home and visiting the 
office once a week - although it may 
include these practices. 

The virtual office still generally 
implies team work as employees of a 
larger organisation, the essential 
difference being that information 
technology removes the need for the 
business office to be in one fixed 
location. 

Implicit in this the concept is some 
degree of computer literacy although 
staff do not necessarily have to relearn 
their baric skills. Home and mobile 
phones can be programmed to dial 
straight into the employer’s internal 
phone system, while desktop and 
portable computers can also be 
programmed as Virtual nodes,’ meaning 
that users can log on to shared company 
computer systems exactly as if they 
were in the office and connected directly 
Into the local area network. 


No additional user techniques are 
required so the user is ‘at work’ as soon 
as he or she picks up the phone or 
switches on the c ompu ter. Affordable 
digital ISDN phone lfa**? a nd 
earier-to-nse software make logging .. 
on to corporate networks simple, with 
barely any delay detectable. 

Computers, photocopiers, fox machines 
and laser printers have also all shrunk 
in size and price, allowing companies 
to equip their employees at moderate 
cost with compact, powerful office 
technology that fits into any small room. 

The isolation of tbe virtual office can 
be a drawback and many employers 
who favour this system ensure that 
staff visit the corporate office regularly - 

The US sets the pace In virtual 
office systems, with more than 25m 
peopte working from home 

to keep in touch and to retaforce the 
feeling of belonging to a team. 

In cases where eye-to-eye contact is •’ 
felt to be Important, videophone 
technology from BT and others may 
become an increasingly affordable . - 
solution, although it could prove a-p dor . 
substitute for genuine human - 
interaction. 

There is no shortage of lively contact 
in many virtual office jobs, however. 
Sales people, for example, spend most 
of their tone out meeting customers; 
and customer -support staff spend modi 
of the day on tbe phone. Mothers may 
‘telework’ part-time while tewdrng their 
young families. For these people, the 
move to the virtual office concept . . 
no real change to their lifestyle. • . 

The US sets the pace in virtual office - 
applications, with more than 25m people ! 
working from home. A leading domestic 
appliance company no longer requires • 


its customer service personnel to come ' 
to work; instead they stay at home. 

Their employer equips each worker 
with acompany plume and computer, 

- finked to the corporate database by 
ISDN digital telephone tine. - . 

/. ■ CustomercaHsto the support line 
are directed automatically to an agent 
. sitting at home who can tog into the 
company database to check parts, ' 
numbers and prices, arrange for. parts. . 
to be sent, or credit cards to be debited 
and evenprocess refunds. 

Few would suggest that thavirtnai 

office will supplant the habitat and 

structure of office life as we know It, 
nor-wuuKt its exponents claim its 
methods would suit all kinds of 
operation. Butter certain tasks and 
situations where staff normally work 
without constant supervision and have 
; no pressing need to visit an office daffy, 
the virtual office will become an 
Increasingly viable, cost-effective’and - 
desirable way to work. 

• The convergence of low-rori: computers 
and telecoms has made It possible to 
set up video conference calls, work on , 
designs and pass fifes backwards and 1 
forwards without ever leaving home. - 

The key: is the ISDN telephone t ry 
available in the UK from BT and 
Mercury. This allows computer jpfa 

to be trahsfoed by phone. T3ie concept ~ . 
, te called multimedia conununfeatitm -■ 
and.aH leading computer h a rdwa re add 
software suppliers haveproducts 

available. 

. For example* in the UK, Flextelte .... . 
Sandbach has totredneed a transferable 
phone number - users acquire a fixed; 
phone number that does not alter when ■■ 
they move location. The system 1 
‘translates 1 -tfatennmber to their real ' - 
number. ... 

■ ^ AtkIibw jErnmerson 




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