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Hurd urges EU to 
drop ‘grand plans 1 
and raise efficiency 

British foreign secretary Douglas Hurd called 
on Britain's European partners to drop grand 
ambitions Tor further institutional change in 
the European Union and commit themselves 
to making the present administration work. He 
said the 12 should set as their first priority “the 
integrity and effectiveness or administration 
in Europe". The EU should do less but do it better. 
Page 18 

USAir predicts bigger losses: US Air. 
beleaguered US carrier In which British Airways 
holds a 24.6 per cent stake, said competition from 
low-cost carriers was likely to push first-quarter 
pre-tax losses to $200m, compared with $6lm 
in the same period last year. Page 19; Editorial 
Comment, Page 17; Lex, Page IS 

All Nippon Airways, Japanese carrier hit by 
weak demand, said it expected an annual pre-tax 
loss of of Y3bn ($2Sm). compared with a previously 
forecast pre-tax profit of Yffbn. Page 19 

Microsoft head condemns multimedia trials 

Bill Gates (left), founder 
and chairman of Micro- 
soft, the world’s largest 
personal computer 
software company, 
poured cold water 
on the value of most 
of the “multimedia” 
trials in the US and 
Europe. He predicted 
that trials based on 
home entertainment 
would prove to be 
dead ends and counterproductive to the establish- 
ment of a viable multimedia industry. Page 19 

Calls mount for Japan to cut surplus: 

Japanese business federation the Keidanren joined 
leading businessmen and politicians in urging 
the government to adopt voluntary targets to 
reduce Japan's surplus in the medium term. Page 7; 
Japanese companies to slash spending. Page 4 

German nuclear site checks resume: 

A court in Liineburg. Lower Saxony, gave the 
go-ahead for work to resume on investigations 
for Germany 's first full-scale nuclear waste disposal 
site in the disused salt mings at Gorieben, on 
the banks of the river Elbe. Page 18 

Hungary and Poland press EU: Hungary 
and Poland stepped up pressure to be made mem- 
bers of the European Union and to force the EU 
to open its doors to eastern Europe by the end 
of the decade. Page 2 

Hong Kong stock exchange plans reforms: 

The Hong Kong stock exchange, sixth biggest 
in the world, unveiled proposals including greater 
self-regulation among market players and tougher 
disclosure requirements, in line with its bid for 
increasing internationalisation. Page 22 

Mandela rejects white homeland: African 
National Congress chief Nelson Mandela rejected 
a demand by white rightwingers for a separate 
homeland in South Africa, saying it would never 
happen in his lifetime. Bophnthatswana spams 
election. Page 4 

BBA to shed 2,000 Jobs: UK Engineering 
group BBA said it would cut its dividend and 
shed 2,000 jobs as part of a rationalisation and 
disposal programme following a pre-tax loss of 
£12 An ($ 18.7m) last year compared with a £47.4m 
profit in 1992. Page 20; Lex, Page 18; Details, 

Page 25 

Russian telecoms sale: Russia Is due to 
offer 22 per cent of Rostelekom, its telecommunica- 
tions company which controls much of the coun- 
try's international traffic and practically all 
long-distance domestic traffic, to Russian and 
foreign investors next week. Page 7 

China's reforms ‘cause decay*: China's 
economic reforms have caused a dangerous decen- 
tralisation of power and contributed to social 
decay and rising crime, a paper published by 
the London-based International Institute for Strate- 
gic Studies says. Page 4 

Cambodia seeks long-term Investors: 

Hie Cambodian government has completed a 
draft investment law which it hopes win encourage 
investors interested in the country’s long-term 
development Page 4 

Brown attacks jobs policy: Shadow chancellor 
Gordon Brown said Britain would be the only 
country at the jobs summit of the Group of Seven 
leading industrial nations next week to press 
a policy of industrial deregulation. Page 8 


■ STOCK MARKET CHOICES 


FT-SE 100 : 

..-43059 

{♦ 27 . 9 ) 

(few York knertnne: 

YieW 

162 


S 

1.491 


FT-SE Euutack 100 

... 1,45544 

(+ 32 . 03 ) 

London- 



FT-SE-AM-Sav.- 

... 1,66455 


5 

1.4906 

( 1 . 4903 ) 

Nkkd - — 

. 19 , 011.88 

(- 154 . 12 ) 

DM 

25015 

( 2 . 5629 ) 

New Ywfc tarttae 


FFr 

56993 

( 8.71131 

Dow Jones M An „ 

...355255 

(+ 20 . 55 ) 

SFr 

2.1445 

( 2 . 1488 ) 

SSP Composte 

467.52 

(♦ 2 . 78 ) 

Y 

157.786 

157244 ) 

■ US LUNCHTIME RATES 


£ Index 

812 

(same) 



3 A% 


3 -mo Trees ESte YW . 
Long Bond 

-157994 
S 34 


YieM .. 

. 6 . 785 % 


■ LONDON MONEY 


3 -mo interbank 

LAe long gat Mure: - 

54 * ( 5 A%) 

.Jlar 1121 , (Marl 12 , i) 

■ NORTH SEA OB. (Argu*) 


Bran! 15 -ttey JApO ...« 

■ Gold 

S 1108 

113 . 48 ) 

New York Comex (Apr) 

£3759 

( 378 . 6 ) 


London . 


.53775 ( 376 . 6 ) 


■ STERLING 


■ DOLLAR 


New York luncttkiKK 
DM 1 J 183 S 

PFr 5*35 

SFr 14385 

Y 105.725 
London: 

DM 1.7184 p . 7198 ) 

PFr 58365 ( 5 .B 455 ) 

SFr 14387 [ 1 . 441 ? 

Y 105856 ( 105515 ) 

S Index 656 (sane) 

Tokyo dose Y 1055 


Asha 

Baton 

Betgram 

Cjpna 

tecfiRp 

DafunsBK 

Efflux 

firtanfl 

Franoa 

Gtafnaty 


seas 

Or 1250 
SMS 
1*26.00 
CE1.10 
CZKSD 
DNflO 
fcsiw 
FM14 
FWUJO 
DM150 


Greece 0350 

Hong King HSU 
MffgBY R18S 

teetam) M ?15 

Ma Hsffl 

toad 9*650 

lay 13000 

Japan VSQQ 

Jonfen JD 1 .S 0 

Kuk* FfeffiS 

Lehman USSiSO 


In* LFiffi 

hMa Unam 
Monaco MOMS 
IMtl R 400 
totprtt NBraSa 
Honor wen?. oo 
Oman 0R1-50 
Mfeon Rs40 
Rtfppnes P*® 
Poland 231000 
(tempi Esfiffi 


Qatar am 100 
SAaua sen 

Skippon SHOO 
9c** Hp KSLS0 
South Afcca R1 250 
Spain Pb225 
Swdsn SXri6 
Smb awn 
Syria SfSOOO 
Tima Dan 000 
Tialmy LI 3000 
UAE DH1200 


Central bankers rule out action to curb hedge funds 


By John Gapper in Basle 
and Our Markets Staff 

Central bank governors 
yesterday decided against any 
immediate move to curb the 
activities either of hedge funds or 
of hanks that use their own capi- 
tal to trade on international 
financial markets. 

Bank governors from the 
Group of Ten countries agreed at 
their monthly meeting in Basle 
that markets bad corrected them- 
selves and there was no reason 


to anticipate further turbulence. 

Most European bond and 
equity markets made healthy 
gains yesterday as hopes rose 
that the German engineering pay 
settlement at the weekend could 
give the Bundesbank roam to cut 
interest rates and open the way 
to lower rates elsewhere. 

There has been concern that 
US hedge funds, which are esti- 
mated to trade with at least 
&0bn of capital, have increased 
volatility in the past two weeks 
by selling bonds and trading 


financial derivatives. 

Mr Hans Tletmeyer, president 
of the Bundesbank anf i chairman 
of the G10 governors, said they 
had taken “a relatively relaxed 
view” of recent price falls. “It 
was seen to some extent as a 
correction of a development 
before, and the view was that the 
fundamentals are more or less 
sound. That means there is no 
reason for further turbulence,” 
he said. 

Mr Tletmeyer said central 
banks would examine further the 


activities of “hedging institu- 
tions". including hedge funds. 
“We are willing to examine 
closely what is going on with 
these new techniques, but we do 
not think that there is for the 
time being any need for specific 
regulations." he said. - 
Although some central hankers 
previously had expressed concern 
about the rapid growth of trading 
of derivatives such as interest 
rate and currency swaps, Mr Tiet- 
meyer said the governors had not 
reached a final decision. 


“We think we have got to live 
with these new techniques, but 
we will follow closely what is 
going on,” he said. 

There have been worries over 
the activities both of hedge funds 
- limited partnerships mostly 
managed from the US, which 
attempt to make big short-term 
gains on financial markets 
through leveraged and high-risk 
investments - and the propri- 
etary trading activities of banks 
ami investment banks. 

Hie Bank of En gland and the 


US Federal Reserve have been 
taking soundings among the 
banks they supervise to assess 
their exposure to hedge funds. 
The funds themselves are largely 
based offshore and fall outside 
the direct control Of hanking and 
securities regulators. 

Mr Tletmeyer also, said a big 
jump is the German M3 money 

Continued on Page 18 
Bond markets. Page 23 
World stocks. Page 38 
London shares, Page 31 


Major eases stance on 
boosting UK Bosnia force 


By Philip Stephens and 
Judy Dempsey in London 

The British government said 
yesterday it intended to take the 
initiative in international efforts 
to provide more troops for the 
United Nations peacekeeping 
forces in Bosnia. 

in spite of the misgivings of 
several members of his cabinet, 
Mr John Major, the prime minis- 
ter. all but committed Britain to 
providing extra troops. 

Mr Major said that Mr David 
Hannav, Britain's ambassador at 
the UN. had last night begun a 
series of meetings in New York 
with other potential contributors 
to co-ordinate the effort 
Ambassadors of the countries 
with troops in Bosnia and Croa- 
tia, including the UK. France, 
Canada and Spain, will be at the 
meetings, along with the US, 
which has a flew troops in Mac- 
edonia. 


General Sir Michael Rose, UN 
commander of the forces in Bos- 
nia, called last week for an addi- 
tional 10,000 troops to consolidate 
the UN's recent successes in 
establishing truces between Bos- 
nian Serb, Moslem and Croat 
forces in Sarajevo and other Bos- 
nian areas. 

In what amounted to a sharp 
reversal of Britain's previous pol- 
icy, Mr Major said: "What we are 
seeking to do is to try to rein- 
force the UN's own efforts by pro- 
moting a coherent and urgent 
and positive response to their 
appeal for more troops.” 

He indicated that he expected 
France and the US to be repre- 
sented at the New Yaik talks, 
adding: "I think there are a wide 
range of countries that may be 
able to help. We have beat in 
contact with a lot of them." 

Senior Whitehall officials said 
the change of heart had been in 
response to the rapidly changing 


situation on the ground in Bos- 
nia. The ceasefire in Sarajevo 
needed consolidation and the UN 
wanted to build on its more 
recent successes in Srebrenica 
and Tuzla. 

The officials said that Britain 
would be able to provide an addi- 
tional battalion - between 900 
and L2 00 soldiers - if its interna- 
tional allies agreed a concerted 
move to bolster the UN forces. 

Mr Major accepts that the US 
administration is unlikely to 
drop its fierce opposition to the 
early commitment of American 
ground troops. But Sir David will 
be pressing France and Britain’s 
other European partners to 
Increase their effort significantly. 

The UK’s efforts to increase the 
number of troops in Bosnia coin- 
cides with a push by the US to 
try to involve Serbia in talks 
between Bosnian Croats, Mos- 
lems and Croatian government 
officials in. Vienna. .. - 


Mr Charles Redman, the US 
special envoy to former Yugo- 
slavia, win travel to Zagreb. Sara- 
jevo and Belgrade, the Serbian 
capital, where he is expected to 
meet the president, Mr Slobodan 
Milosevic. 

"Everybody know that there 
can be no overall agreement 
without the Serbs,” a western 
diplomat close to the Vienna 
negotiations said yesterday. 

All three sides in Vienna are 
trying to draw up a constitution 
aimed at forming a federation 
between Bosnian Croats and Mos- 
lems in one part of Bosnia, but 
which will be linked with Croatia 
through a confederal structure. 

In the interim. General John 
Galvin, the former supreme allied 
commander of Nato forces in 
Europe, has been asked by Mr 
William Ferry, the defence 
secretary, to assist in the 
military aspects of the agree- 
ment 


Union split over how to share voting rights among 16 members 

Norway’s EU plans under threat 


By David Gardner in Brussels 

Norway's prospects of joining the 
European Union appeared to be 
in jeopardy last night, as neither 
Oslo nor Madrid would budge on 
Spain's demands for extra cod 
from Norwegian waters. 

As EU foreign ministers and 
Norway resumed membership 
negotiations - concluded last 
week on Austria, Sweden and 
Finland - the 12 remained badly 
split on how to share voting 
rights in a Europe of 16. 

Decisions on both issues must 
be provided by tomorrow to the 
European parliament, which on 
Thursday decides whether to 
start ratifying enlargement, in 
rime for the four to enter next 
January. 

On fish, Spain insists it must 


get back the 7,000 tonnes of cod it 
used to catch in Norwegian 
waters before it was barred in 
198L And it wants a guaranteed 
share of the 11,000 tonnes Nor- 
way ceded to the Union's four 
poorest members as part of the 
European Economic Area free- 
trade zone treaty of this year. 

Norwegian documents dating 
from 1978, provided by Spanish 
diplomats, show Spain had cod 
and other quotas in the Barents 
Sea. But Norway is refusing any 
extra quota, although it is likely 
to negotiate on the EEA fish. 

"We are exactly where we were 
before,” one Spanish diplomat 
said after a fruitless meeting last 
night between Mr Javier Solatia, 
Spanish foreign minister, and Mr 
Bjorn Tore GodaL his Norwegian 
counterpart 


Negotiators nevertheless hoped 
that EU efforts to find a formula 
for Norway to keep de facto con- 
trol of waters above the 62nd par- 
allel might induce Oslo to move 
on the Spanish demand. 

Mrs Gro Harlem Brundtland, 
the Norwegian prime minister, 
cancelled a trip to Stockholm last 
night to be on call in Oslo for the 
talks. And EU member states 
were poised to bring heavy pres- 
sure on Madrid if Norway moved 
at all, senior negotiators said. 

EU ministers went into closed 
session last night to try to 
resolve the voting dispute, with 
Spain and the UK showing no 
sign of flexibility on their refusal 
to shift the number of votes 
needed to block EU measures 
from 23 (out Of 76) to 27 out of 90, 
assuming four new members. 


France, Germany, the Benelux 
countries and Ireland want a 27- 
votes blocking threshold. 

Yet a further complication 
threatened to arise with the three 
Nordic countries' desire for a dec- 
laration underwriting their tradi- 
tions of open government 

EU weighs up votes, Page 2 
Hurd urges EU to drop 
grand ambitions. Page 18 



Bill Clinton walks in the grounds of the White House yesterday as 
accusations flew over the Whitewater affair Page 18 


Martin Marietta launches 
agreed bid for Grumman 


“I need a couple of raincoats 


By Martin Dickson In New York 

Martin Marietta, which has 
become one of America's largest 
defence contractors after a series 
of acquisitions, launched an 
agreed $1.9bn bid for fellow 
defence group Grumman yester- 
day. 

It is Martin Marietta's third big 
takeover deal in less than 18 
months and marks a further con- 
solidation of the US defence 
industry, which is rationalising 
in the face of a rapidly shrinking 
defence budget 

Maryland-based Martin 
Marietta is to pay $55 a share in 
cash for Grumman, which is 
based in Long Island. New York. 
Gr uniman's shares leapt $14Vi 
when the deal was announced, to 
stand at $54 at lunchtime. Wall 
Street enthusiasm for the deal 
pushed Martin Marietta stock up 
$1% to $46%. 

Martin Marietta bought Gen- 
eral Electric's aerospace division 
for $3bn in late 1992 and is 
currently in the final stages 


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of buying General Dynamics' 
space launch business for 
$20&5hl 

Grumman, which reported a 
1993 income of $120 .5m. or $3,50 a 
share. from continuing 
operations on sales of S3.2bn, 
used to be known primarily as a 
maker of military aircraft, such 
as the F-14 fighter used by the US 
Navy. 

However, a dearth of orders in 
recent years has forced it to 
diversify into electronics and 
data systems, and the only air- 
craft it now makes Is the E-2C 
Hawkeye. a carrier-based early 
warning aircraft. Its biggest elec- 
tronics programme is the J-Stars 
airborne surveillance system, 
which is based on an adaptation 
of a Boeing 707 airframe. 

Martin Marietta, with 1993 
sales of $9.3bn and earning s of 
8450m before special charges, has 
become the world's largest aero- 
space electronics contractor. 

Mr Norman Augustine, chair- 
man of Martin Marietta, said the 
two companies were complemen- 


GONTCHTSi? 


tary both in terms of their busi- 
nesses and geographical areas of 
operation. The acquisition should 
also mean an immediate improve- 
ment in Martin Marietta's earn- 
ings per share. 

The deal, taken together with 
the earlier acquisitions, wQL give 
Martin Marietta "critical mass” 
in every one of its product areas. 
The company did not expect to be 
making other large acquisitions 
in the near future. 

Mr Augustine refused to rule 
out job cuts as the result of the 
merger, and analysts expect a 
substantial rationalisation. Mar- 
tin Marietta has gained consider- 
able experience in cost-cutting 
from its takeover of the GE busi- 
ness. which led to the closure of 
about a dozen plants. 

Mr Renso Capo rail, chairman 
of Grammart said it had decided 
more than a year ago that it 
needed to make a strategic move 
to thrive in a shrinking defence 
market, and the Martin Marietta 
deal was the best option, giving it 
the support necessary for growth. 


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■ PARIS • 

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£> THE FINANCIAL TIMES LIMITED 1994 No 32,311 Week No 10 













FINANCIAL TIMES TUESDAY MARCH 8 1994 


NEWS: EUROPE 


Privatisation Poland and Hungary push on EU entry 

a By Lionel Barber bi Brussels with the goal of starting acces- Polish and Hungarian counter- international conferences and the principle, but not the thn- peans fle d ging market «ono 

B M || I #• sion talks in 1997. Poland parts. “joint foreign policy actions” ing, of EU membership AH’ the mies could n ot w ithstand m 

|l| Bill Hangary and Poland yesterday raised the possibility of tonne- These councils are the new with the associate EXJ mem- six ex-communist countries. shock of competition. 

stepped np pressure to be diate “partial membership” or vehicles for co-operation bers. Bat more work is needed Now the idea of a “wider Mr Andrzej Olechowsta, ro( 

made members of the Euro- the EU, through full partidpa- between the EU and the six cm justice and immigration. Europe” which would provide Ish foreign minister, press e< 

^ pean Union and to force the tion in the EITs foreign and “associate” EU member states: The Anglo-Italian initiati v e for faster integration is also bis EU counterparts yesterda 3 

-A. -B — v I — ^ w -r EU to open its doors to eastern security activities, as well as Poland, Hungary, the Czech is part of a broader reassess- being driven by fears about to consider “partial member 

■ M |||-k| >1 %/ Europe by the end of the justice and home affairs. republic, Slovakia, Bulgaria meat erf EU policy toward cen- Russian nationalism and the ship”. This would involve i 

B §4V/V/ )lJ B y decade. The diplomatic moves fol- and Romania. tral and eastern Europe which risk Moscow might seek to delay in Poland taking on ml 

Hungary said it would sub- lowed inaugural “association Foreign ministers also began at last Jane's European reclaim its sphere of influence, economic commitments 

mit a formal application to 
join the Union next month. 


By David Buchan In Paris 

Mr Edouard Ballad ur, French 
prime minister, has quietly sig- 
nalled bis reluctance to privat- 
ise Renault, the state-owned 
car maker, this year, in con- 
trast to his industry minister's 
continued enthusiasm for 
going ahead with the sale 
despite the break-up with 
Volvo. 

The prime minister's officials 
insisted yesterday that no defi- 
nite decision had been made to 
delay the car company's priva- 
tisation. 

But they did not refute a state- 
ment over the weekend by one 
of their number that, with last 
month's sale of Elf-Aquitaine, 
the oil major, bringing in 
FFr33bn t£3-8bni and the immi- 
nent flotation of the big UAP 
insurance group, prepared by 
decree last November, the gov- 
ernment’s goal of raising 
FFrS5bn from privatisation in 
1994 “will be met". 

Nor did the officials damp 
speculation that Mr Bahadur’s 
reticence applies chiefly to 
Renault, though 16 other com- 
panies remain on the govern- 
ment's privatisation list. 

Only last week, in an inter- 
view with the Financial Times, 


Mr Gerard Longuet, industry 
minister, said he still hoped 
Renault could be sold off this 
year - depending on the state 
of the stock market -as had 
been planned in the context of 
its merger with Volvo. An offi- 
cial at the prime minister's 
office insisted yesterday that 
any caution on Mr Bahadur's 
part was "not cyclical” and not 
related to the fear that recent 
volatility on the stock market 
might interrupt privatisation, 
as the 1987 crash did the last 
round of state assets sales. 

Some French press analysis 
of Mr Bahadur's reservations 
about an early Renault sale 
have highlighted resistance by 
the communist-leaning CGT 
union inside Renault and the 
prime minister's desire not to 
add to the trade unio n opposi- 
tion he is already meeting on 
wage legislation. 

Another possible factor men- 
tioned by observers is the fact 
that Mr Louis Schweitzer’s 
mandate as president of Ren- 
ault comes up for renewal in 
May. and that delay could give 
Mr Bahadur the chance to sub- 
stitute for this Socialist appoin- 
tee a political loyalist to take 
the company into the private 
sector. 


with the goal of starting acces- 
sion talks in 1997. Poland 
raised the possibility of imme- 
diate “partial membership" or 
the EU, through full participa- 
tion in the EITs foreign and 
security activities, as well as 
justice and home affairs. 

The diplomatic moves fol- 
lowed inaugural “association 
councils" between foreign 
ministers of the 12 and their 


Polish and Hungarian counter- 
parts. 

These councils are the new 
vehicles for co-operation 
between the EU and the six 
“associate” EU member states: 
Poland, Hungary, the Czech 
republic, Slovakia, Bulgaria 
and Romania. 

Foreign ministers also 
agreed to an Anglo-Italian 
plan for formal co-operation at 


international conferences and 
“joint foreign policy actions” 
with the associate £U mem- 
bers. Bat more work is needed 
on justice and immigration. 

The Anglo-Italian initiative 
is part of a broader reassess- 
ment of EU policy toward cen- 
tral and eastern Europe which 
began at last Jane's European 
summit in Copenhagen. At 
that time. EU leaders agreed to 


the principle, but not the tim- 
ing, of EU membership AH’ the 
six ex-communist countries. 

Now the idea of a “wider 
Europe” which would provide 
for faster integration is also 
being driven by fears about 
Russian nationalism «*»d the 
risk Moscow might seek to 
reclaim its sphere of iitfloenne. 

The chief obstacle to mem- 
bership is that the east Euro- 


peans flpdgipg market econo- 
mies could not withstand the 
shock of competition. 

Mr Andrzej Olechowski. Pol- 
ish foreign minister, pressed 
fais EU counterparts yesterday 
to ro wsiflar - “partial member- 
ship”. This would involve a 
delay in Poland taking on foil 
economic commitments while 
allowing immediate participa- 
tion In other areas. 


EU weighs up the votes and the cod 


8y David Gardner fri Brussels 

A han dful of votes in the 
European Union's council of 
ministers, and a few thousand 
tonnes of Norwegian cod. Last 
night stood between the EU 
and its biggest ever enlarge- 
ment. to take in Sweden, Fin- 
land. Austria and possibly Nor- 
way as new members. 

As negotiations at foreign 
minis ter level looked alm ost 
certain to stretch into today 
and possibly tomorrow, only 
the dimmest glimmer of how to 
resolve these two rows could 
be discerned. The two issues 
must be settled to allow the 
European parliament to decide 
on Thursday whether to start 
approval of the accession 
treaty in time for the newcom- 
ers’ entry next January. All 
applicants except Norway have 
settled their entry terms. But 
the dispute over votes could 
jeopardise prospects of early 
enfry for all four. Spain and 


the UK insist for different rea- 
sons on m aintaining the right 
of two large and one small 
member states to block EU 
measures in the council, under 
the EU’s weighted majority 
voting system. 

If the “blocking minority” is 
maintained at 23 VOteS, t he n 
the threshold of assent rises 
from 54 votes out of 76 to 68 
out of 90 onoe the four new 
members enter. A majority of 
the 12 want the blocking 
minority moved to 27. 

Votes in Council are distrib- 
uted roughly according to size 
of country. But with four small 
newcomers, the British argue 
that the relationship between 
size of population and voting 
strength Is being stretched 
beyond the bounds of demo- 
cratic legitimacy. “You could 
have a failed blocking minority 
representing 41.5 per cent of 
the Union’s population." a UK 
official complains. Spain wor- 
ries that a move to 27 could see 


the South out voted on Medi- 
terranean policy issues. 

The Benelux countries, 
Ireland and France are firmly 
in the 27 votes camp, but other 
countries are ambivalent Italy, 
on the EU's federalist wing. 


cult,” UK foreign secretary 
Douglas Hurd acknowledged 
yesterday. Euro-MPs are 
threatening to block accession 
unless the blocking minority is 
changed, and the Dutch and 
Belgians are warning that 


‘It doesn’t matter to us where these 
tonnes, of fish come from. But we 
cannot go home without them’ 


wards easier passage for Euro- 
laws, but equally wants to pro- 
tect interests like agriculture. 

Germany, which after unifi- 
cation gets only one vote in 
Council for every 8m Germans, 
against Luxembourg’s one vote 
for every 200,000 of its inhabit- 
ants. Is nevertheless concerned 
above all to ensure enlarge- 
ment goes ahead, preferring to 
put off voting reform until the 
1996 constitutional review. 

“This issue will be very diffi- 


their national MPa mi ght bait 

ratification if the Spaniards 
and British get their way. 

Mr Ken Collins, chairman of 
the European parliament’s 
influential environment com- 
mittee, warned last week that 
retaining the 23-votes blocking 
min ority could undermine gen- 
erally hi ghar green standards 
in the applicant states. 

The four have been allowed 
to retain different environmen- 
tal norms for four years, dur- 


ing which the EU woald review 
its standards, and hopefully 
upgrade them. 

Some EU negotiators specu- 
lated last night that some form 
of “solemn declaration” along- 
side the accession treaty might 
conceivably break the impasse. 
Spain would have to be 
assured that its Interests 
would be taken Into account; 
the UK would at the vary least 
need some guarantee that the 
1996 review would, match 
inhabitants to votes more 
closely. 

Resolution of the votes dis- 
pute looks unlikely until today, 
and seemed to be encouraging 
Norway to dig in its heels on 
fish, in the hope that if Spain 
got some satisfaction on verting 
it would moderate its equally 
insistent demands for Norwe- 
gian cod. 

Spain wants 7,000 tonnes to 
restore its “historic” catch, 
before it was barred from Nor- 
wegian waters in 1981, and its 


Belgrade theatregoers find a respite from the war 


H uddled in scarves and over- 
coats. a Belgrade theatre 
audience intently follows 
the argument between a grizzled 
Bosnian moneylender, played by one 
of Serbia's leading actors, with an 
Austrian officer who wants to marry 
Gago, his maid. 

“The Girl with Purple Hair", set in 
a period of turmoil as the Austro- 
Hungarian empire was collapsing, 
opened nearly a year ago. but tickets 
are still hard to get. 

Despite being shabby and 
unheated. Belgrade’s theatres are 
playing to capacity audiences for the 
second successive winter. With the 
price of a theatre ticket still only the 
equivalent to buying a Coke at a 


Belgrade disco, theatre is one of 
cheapest forms of entertainment. 

Although Serbian actors and direc- 
tors acquired a good reputation dur 

Cheap tickets mean 
capacity audiences, 
writes Kerin Hope 


ing the 1960s, it was only after the 
rump Yugoslavia was plunged into 
isolation by UN sanctions 20 months 
ago because of the war in Bosnia 
that theatres started filling up. 

Mr Milan Vlajicic, arts editor of 
the Belgrade daily Politika. says: 


“Most people can't afford to frequent 
restaurants any more, and cheap 
theatre tickets make it possible to 
have an evening out. But there's 
also a new, younger audience for 
serious plays, just as there was dur- 
ing the second world war.” 

Few new films reach cinemas in 
Serbia and Montenegro. State-con- 
trolled television dutifully reflects 
the growing nationalist influence in 
daily life, showing war films during 
the conflict with Croatia two years 
ago and. more recently, domestic 
soap operas with a discemibly Serb 
nationalist slant in the dialogue and 
jokes. 

Yet only one new play, “Dark is 
the Night” by Alexander Popovic, 


Serbia’s best-known playwright, 
takes the war for its subject. 

But for people who want to forget 
the grimness of daily life in the Ser- 
bian capital, there are comedies, 
classics and musicals - Fiddler on 
the Roof and Some Like it Hot are 
this season's hits. 

“The Girl with Purple Hair”, 
inspired by a short story of Ivo 
Andric, the former Yugoslavia's 
Nobel prize-winning novelist, 
touches indirectly on current issues. 

Ms Vida Ognjenovic, who wrote 
and directed the piece, says; 
“I wanted to write something 
that was relevant to our problems, 
there was no question about that 
Even so, it bad to be put in 


context and given some distance.” 

Financial constraints maan tha t 
sets are minimal and costumes mod- 
est in Serbian theatre productions. 
Hie costumes for “Gill with Purple 
Hair” were made from scraps of 
material which were collected from 
a leather factory because the Bel- 
grade municipal theatre, which 
staged the play. Is dose to bank- 
ruptcy. 

C oncert tickets are also in 
short supply, although more 
than 150 of Belgrade's lead- 
ing orchestral musicians have left 
the country in the past two years. 

While there is no official censor- 
ship. the Socialist party of President 


Slobodan Milosevic keeps a watchful 
eye on cultural activity. 

The National Theatre, the 
umbrella for the former Yugoslavia’s 
leading theatre, ballet and opera 
companies, was placed under new 
management in 1992 after Ms Ogqje- 
nevoic, then Its artistic director 
allowed Mr Vuk Draskovic, the dem- 
ocratic opposition leader, to address 
his supporters from its balcony in an 
anti-government demonstration. 

When the municipal theatre 
staged a new play about St Sava, 
Serbia's patron saint, which implied 
be bad been a spoiled medieval play- 
boy, nationalist demonstrators dis- 
rupted the opening night 

The play was not performed again. 


roughly half share of the 11.000 
tonnes Norway cedes to the 
poorest Union members under 
this year’s European Economic 
Area (EEA) free trade zone 
treaty. 

Under EEA arrangements for 
mutual access to waters, Nor- 
way also allows the EU 40.000 
tonnes of its cod quota from 
this year. But it is adamant 
that it will surrender not one 
fiah more -and even suggest- 
ing it could withdraw these 
quotas if it joins the EU and its 
membership of the EEA there- 
fore lapses. 

However, a Spanish fisheries 
official said: “It doesn’t matter 
to us where these tonnes of 
fish come from. But we cannot 
go home without them. This is 
not a bluff.” 


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FINANCIAL TIMES TUESDAY MARCH 8 1994 


3 


NEWS: EUROPE 


EUROPEAN NEWS DIGEST 

German public 
service workers 
in token strikes 

Several thousand German public service workers took part in 
token strikes yesterday, in a bid to keep up pressure far a new 
pay offer. The workers are casing fox a 4 per emit pay rise to 
m at c h inflation. The OTV public sector trade union has rejected a 
pay freeze, but there were hints yesterday that a low wage award 
might be combined with measures to secure jobs, as in the 
weekend agreement reached by gngtn wring workers. Mr Wring 
Schleusser, finance minister of North Rhine' Westphalia and 
negotiator on behalf of the 16 federal states, said a 2 per cent pay 
award from next January X wight he possible - ensuring a pay 
freeze in 1994. The union is semiring a deal on shorter working 
hours, as an alternative to redundancies in face of public 
service budget cuts. But it wants SO per emit compensation far the 
loss of earnings, which would push up hourly wage rates, 
although cutting overall wages. The employers' side is inrigting 
on a pay freeze, further cuts in fringe benefits, and improved 
working flexibility. Talks affecting 3.5m public sector workers 
reopen on Wednesday. QPBorm. 

Russia-Ukraine gas row talks 

Russian and Ukrainian officials axe to meet in Moscow tomorrow 
to try to settle a dispute over gas supplies to Ukraine which has 
strained relations between the two states and raised fears over 
the security of Russian gas supplies to western Europe, Gazprom, 
the Russian monopoly supplier of gas, said yesterday it would 
m a in tain the present level of supplies to Ukraine, of between 50m 
and 80m cu metres a day. This is enough to keep houses heated, 
but not enough far industry. Mr Mykhaflo Kovalko. head of the 
state committee on oil and gas, said Ukraine was distributing 
some 200m cu metres a day, but the extra on top of the Russian 
supplies was coming largely from storage. The dispute is over an 
unpaid Mil claimed by Gazprom to be running at RbsL500bn. JL 
Moscow. 

EC moves on night work 

The European Commission yesterday threatened Belgium, 
Fiance. Greece, Italy and Portugal with legal action over their 
restrictions on night work far woman when a did not on 
night work by men. Mr Padraig Flynn, ED social affairs commis- 
sioner, said the Commission believed the countries’ legislation on 
ni g ht, work went a gain ct tha eu*s policy on ypmi employment If 
the governments do not comply, it will take them to the Euro- 
pean Court of Justice. GT Brussels 

Moldovans reject Romania tie 

Moldovans overwhelmingly rejected a 50-year-old nationalist aspi- 
ration to reunite with. Romania in a national plebiscite an Sun- 
day. Moldovans ware asked whether they supported “an indepen- 
dent Moldova within its 1990 borders, which maintains neutrality, 
establishes ties with other nations and provides equal rights for 
all citizens." Of the two-thirds of the electorate who voted, 90 per 
cent voted Yes - to the question. JS Kiev 

Cabinet reshuffle in Bucharest 

Ru mania 's ruling Party of Social Democracy has announced a 
cabinet reshuffle to boost support for its 16-montb-old minority 
government It replaced the ministers of justice and transport 
with independent professionals, appointed one of its vlcfrpresl- 
rfpnte to the interior ministry, mid replaced Gen (Gculae Spiro in. 
the defence minister, with a civilian. VMBucharest 

Plan for Bosphorus tunnel 

Turkey is considering a tunnel to link Asia and Europe under the 
Bosphorus to ease Istanbul’s traffic problems. It would supple- 
ment Istanbul’s two suspension bridges over the Bosphorus, 
which are badly congested in rush hours. Renter 

ECONOMIC WATCH 


Greek consumer price rises slow 

t. !» ■ ... V / ’V • . .- 


The Greek consumer price 
index was up by just 02 per 
cent in February, from the pre- 
vious month, bringing the 
annual rate down to 11 per 
cent, from 1L1 per cent in Jan- 
uary. The slight reduction was 
due to a Ml in the price of 
clothing, shoes and consumer 
durables in the winter sales. 
However, in 1993, the con- 
sumer price index rose by 0.8 
per cent between January and 
February. Inflation in Greece 
fell to 12.1 per cent in 1993 
from -14.4 per cent in 1992 and 
Is expected to fall below 10 per 
cent in this year. 







■ Provisional new passenger car registrations in the European 
Union .fall by an estimated L8 per cent in February compared 
with a year earlier. The strongest growth was in Denmark, where 
registrations rose by 5&5 per cent The greatest decline was in 
Greece/where registrations fall by 345 per cent - 

■ German wholesale sales In January climbed a real 4 per cent 
from a year earlier and rose a seasonally and cal endar -adjusted. l 
per cent from December. 

■ The European Union issued its first figures on renewable 
energy production, which was equivalent to 43fan tonnes of oil in 
1992, or 6.7 per cant of £U primary energy production. 


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Brittan opens race to succeed Delors 

Lionel Barber on an undeclared campaign to become the next president of the European Commission 


T he official word in Brus- 
sels is that Sir Leon 
Brittan is not running a 
campaign to become the not 
president of the European 
Commission. 

This may surprise those 
watching the EU chief trade 
negotiator's tour des capilaks 
in 1994. a combination of pri- 
vate hints about presidential 
ambitions with a torrent of 
speeches on the future of 
Europe. 

Since the New Tear. Sir Leon 
has visited Athens, Dublin, 
The Hague, London. Madrid, 
and Rome. Copenhagen and 
Lisbon fallow soon. Paris and 
Bonn are t wfng - Tiptfl imtj i 
nearer the European summit 
in Corfu in June, when the suc- 
cessor to Mr Jacques Delors 
will be chosen. A book setting 
out Sir Leon's vision of Europe 
just happens to be coming out 
at the end of the month. 

Convention dictates that peo- 
ple do not campaign far the top 
executive post in Brussels, a 
job which is within the gift of 
the iig«4» of governments of 
the 12, not the people. Mr 
Delors himself was a dark 
horse In 1384, winning toe race 
only after Mrs Margaret 
Thatcher, thgn UK prime min- 
ister, reportedly vetoed the 
first French choice, Mr Claude 
Cheysscm. 

The Brittan campaign has 



Brittan: private hints and public declarations on Europe 


broken diplomatic precedent, 
but it has opened up the con- 
test A year ago, Mr Ruud Lub- 
bers, Dutch prime minister, 
looked certain to succeed Mr 
Delors on the grounds of 12 
years experience and small- 
state credentials. 

This last asset is perhaps the . 

mbSt Tm pnrtemt The (Vmrnmtt . 
<rfrm presidency usually alter- 


nates between the large and 
email Twp mh ar states. Mr 
Delors succeeded Mr Gaston 
Thorn (a farm or Luxembourg 
prime minister) who succeeded 
Mr Roy Jenkins, (a framer Brit- 
ish minister). 

Sir Leon has rmmag»»d to halt 
the “Lubbers bandwagon”. He 
has capitalised on the Dutch- 
man's sphinx-like riiencw on 


his own candidacy by setting 
out his own stall, starting with 
toe conclusion of the Uruguay 
Round of trade talks fast 
December in which he played a 
star role. ’The Gatt deal 
showed fhat Lwwi could deliver 
politically,” says a dose aide. 

So how many votes can Sir 
Leon count on? Possibly one, 
the British government; and 
that is by no means an advan- 
tage because the single most 
important challenge for the 
senior British commissi oner in 
Brussels is to convince the 
heads of gov ernm ent that he is 
not a stalking horse far the UK 
government and its zninl ipalfat 
vision of European integration. 
However, the British might be 
happy with a free-trading 
Dutchman at the helm with Sr 
Leon as trade negotiator. 

To overcome the hamW^p cf 
nationality. Sir Lean has put 
distance between himself and 
the government of Mr John 
Major. He supports the idea of 
a common European foreign 
and security policy. He his 
taken to chastising the US in 
public for not living up to Its 
free trade rhetoric. He has 
warned the UK on several 
occasions to take seriously the 
prospect of a “hard-core” of 
members states moving to 
European monetary Im * re ’ 

Most striking is his cam- 
paign to cultivate the French. 


For although there are plenty 
of people in Paris ready to 
demonise Sir Leon as an 
Anglo-Saxon free marketeer, 
there are others who are 
drawn by his charm, intelli- 
gence and panache. 

Despite clashes with the 
French government in the Gatt 
talks^ Sir Leon left enough 
“wiggle room” to secure a bet- 
ter deal on agriculture from 
the US, and to avoid opening 
up toe Europe film market to 
Hollywood. He was also smart 
enough to let the government 
of French prime minister 
Edouard BaUadur take the 
credit 

But Mr BaUadur himself has 
refused to be drawn on a suc- 
cessor to Mr Delors. Diplomats 
in Brussels suggest Paris 
would like to cut the Ccmmis- 
sion down to size, a recogni- 
tion that Mr Delors, after 
almost 10 years in power, was 
becoming too big for his boots. 
By contrast. Sir Leon is 
preaching the message of Com- 
mission restraint 

The crucial vote probably 
lies with Germany. There are 
persistent rumours that Chan- 
cellor Helmut Kohl Is sot as 
keen on Mr Lubbers as first 
thought despite his fellow 
Christian Democrat credentials 
and his long presence on the 
European stage. 

Last year, Sir Lean raised his 


candidacy privately with the 
German Chancellor; he was 
rebuffed. Also, the Brittan 
camp suggests that Mr Klaus 
Klnkel German foreign minis- 
ter, favours Sir Leon’s candi- 
dacy. Mr Kinkel is said to have 
appreciated Sir Leon’s success 
in balancing his independence 
as the EU's trade negotiator 
with the need to prevent Fran- 
co-German differences over 
trade from splitting the EU. 

Sir Leon is also paying atten- 
tion to the southern states, 
knowing that their preferred 
candidate - Spain’s prime min- 
ister Felipe Gonzalez - appears 
to have ruled himself out. His 
strangest card is that none of 
the “Club Med” members are 
likely to be enthusiastic about 
a northern liberal like Mr Lub- 
bers. 

Whatever the outcome - and 
the odds still look to favour Mr 
Lubbers - Sir Leon's secondary 
agenda may be simply to con- 
vert his new political capital 
into a big international job 
other than toe presidency of 
the Commission. 

At the least, he has avoided 
the mistake of his last bid for 
more power in Brussels, as 
attempt to become one or two 
vice presidents under Mr 
Delors. Two commissioners say 
he never bothered to ask for 
their vote, and subsequently 
did not even make the run-off. 



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4 


NEWS: INTERNATIONAL 


FINANCIAL TIMES TUESDAY MARCH S 


Gn 


China’s reforms ‘weakened centre’ 


Hong Kong property: prices up but shares down 

t /M'incfcx Hfl ^ g f en9 Piopertylnd®* 



LU 


UKEq 
UK fir 
Ml* 
U5 So 


By Alexander Nlcoll, 

Asia Editor 

China’s economic reforms have 
caused a dangerous decentral- 
isation of power and contrib- 
uted to social decay and rising 
crime, a paper published by 
the London-based International 
Institute for Strategic Studies 
says. 

To borrow the jargon of the 
European Community, Beijing 
first adopted 'subsidiarity' as a 
means to achieve economic 
growth, and now finds that 
once power has been trans- 
ferred to the most logical and 
efficient level. It is hard to 
retrieve." 


Singapore 
sentence 
upsets US 
residents 

By Kieran Cooke 
in Kuala Lumpur 

Singapore and US authorities 
have become involved in a 
heated debate over a owning 
and jail sentence handed out to 
a US teenager. 

Michael Fay. 18. was con- 
victed last week of spray paint- 
ing cars and being in posses- 
sion of Singapore flags and 
road signs. The teenager, a stu- 
dent at the Singapore Ameri- 
can school when the offences 
were committed, was sen- 
tenced to six strokes of the 
rotan (a heavy cane), four 
months jail and fined S$3,500 
(£1.480). 

Mr Ralph Boyce, acting US 
ambassador in Singapore, said 
there was a large discrepancy 
between offence and punish- 
ment. Mr Boyce said the paint 
was removed from the cars 
with thinn er. However “caning 
leaves permanent scars’* said 
the diplomat "In addition, the 
accused is a teenager and this 
is his first offence." 

Fay’s stepfather is the Singa- 
pore-based regional executive 
of Federal Express, the US cou- 
rier company. The American 
Chamber of Commerce in Sing- 
apore said It could not under- 
stand how the government 
could condone the permanent 
scarring of any 18 year old - 
American or Singaporean - for 
such an offence. 

"It is impossible to predict 
how this will effect American 
business activity but it is 
likely to cast a cloud over Sing- 
apore’s international reputa- 
tion," said the chamber. The 
US is the biggest investor in 
Singapore. 

Singapore’s ministry of home 
affairs said that unlike some 
other societies which may tol- 
erate acts of vandalism, Singa- 
pore had its own standards of 
social order as reflected in its 
laws. 

HK banks reject 
interest criticism 

Banks in Hong Kong yesterday 
hit back at a damning report 
from the Consumer Coun- 
cil - which claimed the colo- 
ny’s cartel on interest rates 
helped banks earn an extra 
HKSabn (£434m) in 1991 to the 
detriment of small depositors 

- by insisting the 38-year Inter- 
est Rate Agreement creates 
stability and that banks them- 
selves lose a total of HKSITbn 
serving the small savings cus- 
tomer. Louise Lucas writes 
from Hong Kong. 

The Hong Kong Association 
of Banks said the Interest Rate 
Agreement fostered stability 
by keeping interest rates in 
line with market forces and the 
government's economic policy 

- a need further underlined by 
the peg with the US dollar, 
which means Hong Kong inter- 
est rates must track those set 
by the US. However, the agree- 
ment pre-dates the peg by 
some 19 years. 

Bophuthatswana 
spurns election 

The cabinet of Bophuthat- 
swana. the nominally indepen- 
dent black homeland which 
forms part of South Africa's 
right-wing Freedom Alliance, 
said yesterday it would not 
register for April’s all-race elec- 
tions, joining the white right 
wing in boycotting the poll, 
Patti Waldmeir reports from 
Johannesburg. 

Zulu Chief Mangosuthu 
Buthelezi. whose Inkatha Free- 
dom party has registered for 
the poll, skd yesterday his par- 
ticipation was far from guaran- 
teed. as it depended on the 
result of international media- 
tion of the country's constitu- 
tional dispute. He said the poll 
should be delayed, a demand i 
which the African National | 
Congress adamantly rejects. 

Bophuthatswana 's cabinet 
decided against registration 
yesterday, and though it said a 
final decision would be made 
by the homeland parliament, 
the assembly is unlikely to go 
against the cabinet's wishes. 


The paper. "China Changes 
Shape: Regionalism and For- 
eign Policy”, written by Mr 
Gerald Segal, an I1SS senior fel- 
low. argues other countries 
need to recognise the decen- 
tralisation of power and 
develop policies for dealing 
with regional powers in China. 

But it “neither predicts nor 
advocates" China's dissolution. 
“Such dramatic dislocation 
would damage the prosperity 
of a fifth of mankind, wreck 
East Asian stability and lead to 
massive migration. 

“Power has been devolved to 
a range of actors, including 
township and village enter- 
prises, individuals and even 


overseas Chinese and other 
outsiders. Thus there is no 
simple struggle for control 
between centre and province.’’ 

The paper traces the impact 
on Beijing of the shift of deci- 
sion-making power to the prov- 
inces. Revenue to the centre as 
a proportion of the economy 
has fallen sharply os richer 
provinces have gained muscle 
to rebuff successive attempts 
to redress the balance: the lat- 
est is now under way. 

At the same time, the central 
government failed to develop 
finan cial institutions which 
could exercise macroeconomic 
control. “Beijing could no lon- 
ger Impose austerity measures 


on the national economy, and 
rich provinces could raise 
funds from local investment 
and abroad.” 

Provinces increasingly 
squabble among themselves on 
economic issues, sometimes 
seeking to exclude each other’s 
products from their markets, 
with Beijing apparently power- 
less to prevent such internal 
protectionism. 

Regionalism, the paper 
argues, could become a more 
serious political problem fol- 
lowing the death of Deng Xiao- 
ping, China's 89-year-old para- 
mount leader. 

“Perhaps the one certain 
thing about the succession to 


Deng is that no successor will 
be able to don such a strong 
mantle of leadership." 

Mr Segal finds a “fin-de- 
siecle feeling" of which the 
result is social decay, corrup- 
tion, criminal activity and “the 
increasing prominence of 
secret societies and cult prac- 
tices". 

Some of these features would 
be diminished if a strong 
leader were to emerge. 

Central control of the Peo- 
ple’s Liberation Army appears 
secure, but it is increasingly 
involved in money-making ven- 
tures closely linked to the 
development of individual 
regions. 



UK investors lead Manila in flow 

By Jose Galang in Manila 


British investors led the flow 
of new foreign direct invest- 
ment into the Philippines last 
year, according to government 
data released at the weekend. 

Of the total foreign invest- 
ments of $327.9m (£182m) regis- 
tered in 1993, $108. 6m or 33 per 
cent was from British inves- 
tors. 

Early last year. Shell Petro- 
leum, the Anglo-Dutch energy 


group, increased its investment 
in its Philippine oil refining 
and marketing subsidiary. It 
was from this that other com- 
panies in Britain had appar- 
ently taken their cue, officials 
said. 

British investments in 1993 
exceeded those from Japan and 
the US. traditionally the larg- 
est sources of foreign capital 
for the Philippines. 

Investments from Japan 
totalled $46 .2m. down 70 per 


cent from the year before, 
while the US total reached 
$35. 6m, some 37 per cent lower 
than in the year before. 

Foreign investments 
recorded in 1993 represented a 
slight decline from $328.01m in 
1992, according to data released 
by the Bangko Sentral, the 
country’s central monetary 
authority. 

It was the second con- 
secutive annual decline. In 
1992 the level was off 21 


per cent from 1991’s $415 .3 m. 

• The National Statistics 
Office announced that the 
average year-on- year inflation 
rate in February was 10.5 per 
cent 

The highest in two years, the 
month's accelerated inflation 
rate was fuelled by higher 
petroleum product prices and 
power rates. 

Annual average inflation in 
1993 was 7.6 per cent; forecasts 
for 1994 point to 8-10 per cent 


Khazakh election balance ‘tilted’ 


By Steve LeVbie in Alma Ata 

Parliamentary elections 
yesterday in Kazakhstan 
appear heavily weighted to 
strengthen the powers of Mr 
Nursultan Nazarbayev, the 
president, western diplomats 
and local officials said. 

Analysts believe the pro-Naz- 
arbayev tilt of the 754-name 
candidates' list was produced 
by national and regional gov- 
ernment officials who inten- 


tionally blocked many prospec- 
tive candidates and political 
parties including leaders of 
independent trade unions, Rus- 
sian and Kazakh national 
groups and journalists, from 
registering for the elections. 

It was unclear, however, 
whether the strong-willed Mr 
Nazarbayev would emerge 
with the kind of majority he 
would need to enact his moder- 
ately reformist economic pro- 
gramme. 


The government said the 
turnout in most regions 
exceeded the 50 per cent mark 
needed to validate the elec- 
tions. Vote counting will be 
completed on Thursday. 

The elections for a 177-mem- 
ber parliament, Kazakhstan’s 
first since the Soviet collapse 
two years ago, seemed certain 
at least to weaken some of the 
regional a nd national bureau- 
cratic forces that have so far 
resisted him. 


But they also appeared to 
inflame relations with the 
republic's ethnic Russian popu- 
lation and with Moscow 
because of a perceived govern- 
ment attempt to produce a par- 
liament with more Kazakhs 
and fewer ethnic Russians. 
Critics in Kazakhstan say that 
while Kazakhs outnumber eth- 
nic Russians 43 per cent to 36 
per cent, on the list of candi- 
dates Kazakhs had a majority 
of 75 per cent to 18 per cent. 



Fear of heights grips 
HK property market 

Simon Holberton on investor concern but 
no apparent let-up in fast-rising prices 


E ver since Mr Robert Ng, 
the youthful chairman 
of Sino Land, a Hong 
Kong proper t y developer, paid 
HK$4.4bn for two pieces of land 
for residential development in 
the New Territories last week, 
market observers have had the 
feeling they had seen it all 
before. 

In September and October 
1987 Mr Ng was (me of the big- 
gest players on the colony's 
futures exchange. It seemed he 
had the Midas touch. Black 
Monday came and Mr Ng- and 
many others - was all but 
wiped out 

Mr Ng has returned to ride 
Hong Kong’s bull market in 
residential and commercial 
property. At the luxury end of 
the residential market, prices 
have risen 350 per cent since 
1989; for commercial property, 
values have increased by 150 
per cent over the same period. 

Sino Land's purchase or the 
two sites at prices 20 to 30 per 
cent above expectations sug- 
gests to some that Hong 
Kong's property market is 
becoming overheated. 

“The higher the prices paid 
the more you have to think of 
risk," said Mr Archie Hart, 
head of research at Crosby 
Securities, a local Hong Kong 
brokerage. “The Sino deal 
makes sense if you think inter- 
est rates will continue to 
remain low, income growth 
will remain strong and there 
will be no crises. In a perfect 
world it looks like a clever 
deal, but is the world 
perfect?" 

Since the US Federal Reserve 
Board raised short-term Inter- 
est rates last month Hong 
Kong’s stock market has been 
trading uneasily in anticipa- 
tion of a rise in Hong Kong 
interest rates. Analysts believe 
it is only a matter of time 
before Hong Kong’s interest 
rates follow those in the DS 
because the colony’s currency 
is tied to the dollar. 

Such fears have already 
taken their toll on share prices; 
the Hang Seng fridar , having 
touched 12,000 earlier this year 
is now hoveling around 10.000. 
Last month. Hong Kong had 
the worst performing stock 


market of the 22 large markets 
surveyed by Morgan Stanley, 
the Wall Street investment 
firm. Since the beginning of 
the year the Hang Seng Index 
has fallen by 15.4 per cent 

Investors have been particu- 
larly savage in marking down 
property and bank shares. 
Since the be ginning of the year 
the property sub-index of the 

Hang Seng Index has faflan by 
17 per cent; and the finance 
sub-index has fallen 15 per 
cent. 

The weakness in property 
shares has been enough to 
cause companies to postpone 
planned capital issues. Great 
Eagle, one of Hong Kong’s 
l eading property stocks, has 
postponed a SHKSbn (£274m) 
flotation of a subsidiary. The 
underwriters doubted whether 
there would be gnffirfe nt inter- 
est in the deal. 

Investors have not been the 
only ones to be concerned 
about banks’ exposure to the 
property market. The Hong 
Kong Monetary Authority 
(HKMA). the colony’s quasi- 
central bank, which has been 
tracking banks’ exposure to 
the property market for more 
than two years, is also con- 
cerned. 

Recent data show that by the 
end of last year property lend- 
ing by Hong Kong banks 
accounted for nearly 38 per 
cent of bank loans made for 
use in the colony. Overall, 
lending for property rose by 
19.4 per cent; within that total, 
lending for residential mort- 
gages was up 15 per cent, while 
lending for property develop- 
ment and investment was up 
nearly' 26 per cent 

T wo weeks ago Mr David 
Carse, deputy chief 
executive of the HKMA, 
wrote to the Hong Kong Asso- 
ciation of Banks calling on its 
members to review their expo- 
sure to the property market 
and ensure that it is being con- 
tained within prudent limits. 
Mr Carse said that banks 
should try to restrain the 
growth of their lending for 
house purchases to around 15 
per cent a year -the pace at 
which Hong Kong's nominal 


gross domestic product is 
growing. 

In general, he said, banks 
should aim to keep their total 
exposure to the property mar- 
ket at around 40 per cent of 
their loans in Hong Kong. 
Those whose lending exceeds 
40 per cent “should consider 
how that percentage can be 
stabilised and if necessary 
reduced". 

Mr Carse said his letter was 
intended as general guidance 
for banks. A large part of bank 
lending goes to property “and 
it keeps going up and up", he 
said. But he added: “I am not 
worried about a collapse in the 
property market; it is still 
underpinned by strong 
demand." 

T his view was echoed by 
Mr Paul Selway-Swift. 
general manager for 
Hong Kong and China with 
Hongkong and Shanghai Bank. 
He said the bank was comfort- 
able with its exposure to resi- 
dential and commercial prop- 
erty. But he was less certain 
about prices being paid for 
development land. “Only time 
will tell if recent prices paid 
for land prove to be reasonable 
or far too high.' 1 he said. 

The supply and demand out- 
look for residential property 
suggests that prices are likely 
to remain under upward pres- 
sure. Hong Kong's developers 
released on to the market 
27,670 flats last year, 10 per 
cent fewer than forecast and 
well below the average of 
33,000 that was typical in the 
latter half of the 1980s. 

The end-of-year vacancy rate 
for residential property had 
declined to 39 per cent from 
4 2 pa* rent in 1992, suggesting 
that Hong Kong entered 1994 
with a tight market Relief for 
Hong Kong’s home buyer, how- 
ever, seems some way off with 
the forecast completion of 
33,000 flats this year and 3L800 
in 1995. 

Mr Hart of Crosby said it 
was difficult to judge accu- 
rately at what point in the resi- 
dential property cycle Hong 
Kong currently was. “I believe 
we are nearer to the top of the 
cycle than the bottom." 


Japan companies to 
slash capital spending 


Construction industry inquiry widens 

Moves afoot to lift 
politician’s immunity 



By William Dawkins in Tokyo 

Japanese companies are planning to 
cut capital spending even more 
steeply this year than last, leading to 
the longest investment decline in the 
post-war period. 

A respected survey of corporate bor- 
rowers by the Industrial Bank of 
Japan predicted that capital invest- 
ment will fall by 6.1 per cent in the 
year to March 1995. Japan’s economic 
gloom has for the first time spread 
from manufacturing into service 
industries, according to the survey of 
3,689 EBJ clients. 

This comes after a 5.6 per cent 
decline in the current fiscal year, 
already the biggest since the IBJ 
started taking the survey in 1969. The 
bank found "extreme bearishness" in 
most sectors for the first time in this 
recession. 

Service companies say capital 
spending will fall 0.4 per cent this 


year and 4.6 per cent in the coming 12 
months. Manufacturers expect spend- 
ing to fall 17.7 per cent in the current 
year and 10.3 per cent next 

This suggests that recant increases 
in industrial machinery orders, one of 
the few bright spots in the economic 
gloom, are only a weak indicator of 
recovery. Machinery orders rose 3L8 
per cent in January from the same 
month the previous year, the third 
monthly increase running, the Japan 
Society of Industrial Machinery Man- 
ufacturers said yesterday. 

Corporate demand for credit contin- 
ues to be weak, according to separate 
figures from the federation of bank- 
ers' associations or Japan. Outstand- 
ing loans by Japan's 11 city banks fen 
0.7 per cent last month, from Febru- 
ary 1993, for the second month run- 
ning. The lending balance dipped in 
January for the first time since the 
federation began collecting records 40 
years ago. 


By WffVram Dawkins 

Japanese public prosecutors are 
considering whether to lift a former 
construction minister's parliamentary 
immuni ty after his refusal to answer 
questions an alleged bribery. 

Mr Kishiro Nakamura, a lower 
house member of the opposition Lib- 
eral Democratic Party, yesterday 
defied investigators seeking fresh evi- 
dence in a widening inquiry into cor- 
ruption in the building industry. 

This will test whether investigators 
are determined to arrest Mr Naka- 
mura. So far, more than 30 construc- 
tion company executives and local 
politicians have been arrested in what 
has become the biggest corruption 
scandal since the second world war. 
But the prosecutors have so far 
stopped short of seizing a national 


politician or bureaucrat 

To obtain Mr Nakamura’s arrest 
the public prosecutor’s office would 
have to ask parliament’s permission 
to lift his immunity, a tactic last 
employed 26 years ago. Prosecutors 
want to question Mr Nakamura about 
allegations that while construction 
minister he had received YlOm 
(£64.100) from a leading contractor In 
return for persuading the Fair Trade 
Commission to drop a 1991 investiga- 
tion into bid rigging. 

The FTC subsequently announced it 
would file no complaints against any 
of the 66 companies involved, fuelling 
US anger over covert barriers to for- 
eign competition in the building 
Industry. This is the latest sign the 
purge against corruption is being 
stepped up, following the appoint- 
ment of a new prosecutor-general, Mr 


on the Lockeed scandals of the 1970s. 

His office announced yesterday it 
had assigned seven extra staff to the 
construction case, enlarging the tram 
to 35. 


Probe into 
share trade 
allegations 

By Emflco Terazono hi Tokyo 

Japanese financial authorities 
have started an investigation 
into suspected insider trading 
by employees of a leading drug 
company based in western 
Japan. 

Ten officials of Nippon ShojU 
an Osaka-based drug manufac . 
turer and wholesaler listed on 
the Osaka Securities 
Exchan ge's second section, are 
being investigated by the 
e x c h ange over alleged sales of 
50,000 shares in the company, 
before the Health and Welfare 
Ministry announced the deaths 
of three patients using the 
compa n y's herpes and shingles 
drug last October. 

The executives are alleged to 
have gained YlSOm (£961,000) 
by selling on information of 
the deaths, three days ahead of 
the ministry's announcement. 


Cambodia acts to attract ‘good’ foreign investment 


By lain Simpson bi Phnom Penh 

The Cambodian government has 
completed a draft investment law 
which it hopes will help its efforts to 
change the country's image from the 
home of the killing fields to an 
Investment opportunity. 

The law, which will be presented 
to donor countries at an aid confer- 
ence in Tokyo later this week, pro- 
vides a wide range of incentives to 
what Mr Sam Rainsy , finance minis- 
ter, calls good investors. "What I 
hope is that the good investors will 
drive out the bad," he said. 


Mr Rainsy. who has acquired a 
reputation as a fighter because of his 
outspoken criticism of his predeces- 
sors. wants to encourage investors 
interested in the long-term develop- 
ment of Cambodia. He wants to keep 
out those who are only Interested in 
making a quick profit and then leav- 
ing. 

Many of his criticisms are directed 
against Thai Investors, who have 
gained a reputation for short-term 
interest Mr Rainsy complains about 
a Thai "mafia” operating in Cam- 
bodia, which he says did corrupt 
deals with the old government 


Mr Rainsy insists that be Is not 
saying good investment depends on 
the origin of the investor “I don’t 
want to say that good or bad 
depends on the nationality. So far, 
we have seen many bad investors 
from neighbouring countries and 
many good investors from Europe 
and Japan, but I can give some 
examples of bad investors coming 
even from Europe and America.” 

Nonetheless, he has made bitter 
enemies among the Thai commu- 
nity, especially in one company 
which he says is the centre of the 
Thai “mafia" in Cambodia. Mr 


Rainsy alleges that he Is the subject 
of at least one murder contract 
He says his efforts to improve the 
investment environment will soon 
make Cambodia more of a magnet to 
foreign Investors than Vietnam: 
"People talk a Lot about investment 
in Vietnam but in five or six years. 
Vietnam has attracted only Sibn in 
foreign domestic investment, which 
is very little compared to its size.” 

"In Vietnam, there are many prob- 
lems for foreign investors,” he says. 

“First of all, Vietnam is still a 
communist country, with no politi- 
cal freedom. In a country where 


there’s no political freedom, it 
doesn't create the right environment 
for the private sector to prosper. 

So far, Cambodia has attracted 
very little foreign investment and 
the projects which have been started 
have largely been in Mr Rainsy’s 
"bad" category, buying up the coun- 
try’s natural resources for sale at a 
quick profit There is also no sign of 
foreign companies setting up offices 
in Cambodia at anything like the 
speed they are arriving in Vietnam. 

Nevertheless, given three to five 
years, the hyperactive finance minis- 
ter insis ts he could turn the ecoo- 


poured nearly $3bn (£2hn) j 
boaia - including one of t] 
United Nations operations 
has ever seen. 

Mr Rainsy believes the 
?roment will show the wor! 
investment has been wo 
“We will show the ini© 
community that Cambodia 
helping. In order to show 
have to demonstrate our 
our ability to help oureeh 
he said. 


0 


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Mexican frontrunner 
strives to make mark 


By Damian Fraser 
fei Mexico CHy 

Mr Luis Donaldo Colosio, the 
presidential candidate of 
Mexico's ruling Institutional 
Revolutionary party, has 
begun the difficult task of dis- 
tancing himself from the pres- 
ent incumbent. President 
Carlos Salinas. 

Mr Colosio, who was selected 
last November by Mr Salinas 
to be the party’s candidate in 
August's election, chose to 
dwell on his differences with 
current administration policy 
on the 65th anniversary of the 
PRTs hold on power on Sun- 
day. 

“The only continuity that I 
offer is change,” claimed Mr 
Colosio, who has previously 
been so closely identified with 
the current president that he is 
known as “Mr Salinas with 

hair ". 

For the first time Mr Colosio 
seemed to criticise the presi- 
dent "We know that the origin 
of many of our ills lies in an 
excessive concentration of 
power, a concentration that 
leads to wrong decisions, the 
monopoly of initiatives, abuses 
and. excesses," he said. “The 
reform of government will 
require a president who is sub- 
ject - strictly - to the limits of 
our republican and democratic 
constitution." 

PRT presidential candidates 
traditionally move away from 
the incumbent as the election 
draws closer. Even more than 
his predecessors, Mr Colosio is 
under pressure to draw up his 
own platform, partly because 



Luis Donaldo Colosio: offers continuity in change 


of a genera] perception that he 
is a weak candidate. 

Mr Colosio's campaign has 
suffered from the peasant 
uprising in the state of Chia- 
pas, and from the prominent 
role played by Mr Manuel 
Camacho in peace negotiations 
between the rebels and govern- 
ment 


Mr Camacho, who had been 
Mr Colosio’s rival for the presi- 
dential nomination, may still 
launch hims elf as a candidate 
of one of the opposition par- 
ties. While this is unlikely, he 
may decide to run if support 
for Mr Colosio declines. A Mori 
poll gives Mr Colosio 37 per 
cent public support. 


Brock to 
run again 
for US 
Senate 

By George Graham 

Mr Bill Brock, former us trade 
representative, announced yes- 
terday he would challenge 
Senator Paul Sarbanes of 
Maryland in November’s mid- 
term elections. 

Mr Brock, who served one 
term as senator for Tennessee 
in the 1970s, would, if elected, 
become the first senator since 
1879 to have represented two 
states in Congress. 

Credited with rebofldfng the 
Republican party apparatus 
after the Watergate debacle as 
cha fa-nmi* of the Republican 
National Committee, Mr Brock 
was appointed US trade repre- 
sentative and later labour sec- 
retary by Ronald Reagan. 

Mr Sarbanes, who has been 
expected to take over as chair- 
man of the Senate banking 
committee after the retirement 
of Senator Donald Riegle of 
Michigan, has WOU more Bin 

GO per cent of the vote in his 
last two campaigns. His voice 
has been heard most often on 
macroeconomic and budgetary 
issues. 

Nevertheless, he maintains a 
low profile, and could be vul- 
nerable to a Republican chal- 
lenge. 

In Maine, meanwhile. Con- 
gresswoman Olympia Snowe, a 
Republican representing the 
state's northern congressional 
district; announced she would 
ran for the Senate seat left 
empty by the retirement of 
Senator George Mitchell, the 
Democratic majority leader. 


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Rappers win copyright suit 


By George Graham 
in Washington 

Rap music won out over 
country reck yesterday when 
the Supreme Court decided a 
landmark copyright lawsuit in 
favour of rappers 2 Uve Crew. 

The Court ruled unani- 
mously that 2 Live Crew's rau- 
cous version of the 1964 Roy 
Orbfson hit “Oh, Pretty 
Woman” was a fair parody 
that could not be blocked by 


AcufT-Rose Music, holders of 
the copyright 

The case, which makes clear 
for the first time that commer- 
cial parody may constitute 
"fair use” under the copyright 
laws, has pitted not just rap- 
pers, whose music often uses 
samples of well-known rock 
hits, but also satirists and free 
speech advocates against a gal- 
axy of femous song writers. 

Mr Luther Campbell, 2 Uve 
Crew’s lead singer and song 


writer, had originally sought 
permission to use “Oh, Pretty 
Woman” and offered to pay 
royalties to Acuff-Rose. That 
permission was refused. 

Justice David Sonter, ruled 
that it made no difference 
whether the parody was in 
good or bad taste. 2 Live Crew 
used the bass riff of the Orhi- 
son original, as wen as its first 
line: “Pretty 1 woman, walking 
down the street-..” It continues 
in a mare bawdy vein, how- 


ever. . l4 _ 

More than *13m in royalty 
payments was at stake in the 
case. 

The Supreme Court rejected 
the copyright holder’s abso- 
lute right to refuse permission 
for the parody, hut it sent the 
back to a lower court for 
further evaluation of how 
much of the original song was 
used, and the extent to which 
the parody might harm the 
market for the original. 


NY spurns bizarre toilet plan 


By Rjchaul Tomfdns 
in New York 

There is some good news and 
some bad news for those feel- 
ing the call of nature on the 
streets of New York. 

The good news is that the 
city council has come up with 
an ingenious, if bizarre, plan to 
encourage the private sector to 
braid and operate public toilets 
in the metropolis- Companies 
wiH be allowed to erect two 
giant advertising pillars for 
every toilet built, so giving 
them the opportunity to profit 
from the advertising revenues 
they collect. 

'Hie bad news is that the 
scheme has become so mired 
in controversy that the council 
last week backed away from 
full implementation, instead 
opting for a small-scale experi- 
ment that will take at Leak a 
year to complete. 

New York is notorious for its 
lack of public lavatories. There 
used to be hundreds - in 
parks, public buildings, sub- 
way stations and open spaces - 


but they became the domain of 
drug addicts and vagrants 
when the city ran out of money 
to pay for attendants in the 
1970s, and nearly all were 
dosed. 

Apart from causing inconve- 
nience to New Yorkers and vis- 
itors, one side-effect has been 
intense irritation for propri- 
etors of bars and restaurants 


Some require considerable 
tenacity: the entry for the Mor- 
mon visitors’ centre in Lincoln 
Square warns that people 
wanting to use the rest room 
are expected to sit through an 
introductory talk, a videotape 
presentation and a question- 
and-answer session lasting 40 
minutes. 

The city council’s proposed 


City scheme to end lavatorial 
wilderness bogged down 


who find their toilets perform- 
ing a public function. Many 
express their annoyance with 
strident warning notices, such 
as: “Bathrooms are for the use 
of today’s customers only.” 

The shortage has also 
spawned an unusual literary 
sub-genre. A widely available 
book called “Where TO Go: A 
Guide To Manhattan's Toilets” 
lists little-known lavatories 
that can be used without 
embarrassment 


remedy was a plan to award a 
private sector franchise for the 
construction and operation of 
200 automatic, self-cleaning 
public toilets similar to the 
ones that have become wide- 
spread in London. Admission 
would cost 25 cents, but the 
operators* main source of 
income would be the revenues 
from Paris-style advertising 
pillars measuring 22ft Sins 

high and 5ft Bios in diame ter - 

two of them for every toilet. 


The originality of the 
scheme, however, has failed to 
impress New Yorkers. Commu- 
nity groups and local politi- 
cians have reacted with horror 
at toe proposed afforestation of 
the city with 400 pillars, while 
the private sector is concerned 
the revenues from two pillars 
per toilet will not be enough 
for them to make a profit 

Opting for caution, the city 
council has cut the number of 
toilets to 100 and the height of 
the pillars to 17ft But even 
these may never appear, 
because the council has 
decided not to go ahead with- 
out first inviting would-be 
operators to conduct on experi- 
ment with a maximum of three 
toilets and six pillars each. 

Given the level of public hos- 
tility to the pillars, the experi- 
ment seems unlikely to win 
many converts. If it foils, the 
city will either have to find the 
money for the toilets out of its 
own resources: or, more likely 
given the continuing budget- 
ary constraints, remain a lava- 
torial wilderness. 


Killings cloud El Salvador poll 


I n the run-up to much- 
vaunted national elections 
in El Salvador this month, 
the political violence which 
was a feature of the country's 
past continues to cast a cloud 
over its future. 

The vote on March 20 for 
presidential, parliamentary, 
and municipal offices been 
called the “election of the cen- 
tury,” as it will include candi- 
dates from conservatives to 
communists for the first time 
in more than 60 years. 

But dozens of killings, partic- 
ularly of former left-wing guer- 
rillas, and accusations that the 
government Is foiling to imple- 
ment fully a peace agreement 
signed with guerrillas in Janu- 
ary 1992, after 12 years of civil 
war, have led to concerns over 
whether the elections win con- 
solidate democracy. 

Human rights groups in El 
Salvador say the killings have 
had a chilling effect on toe 
campaign of the former 
left-wing guerrillas of the Fara- 
bundo Marti National Libera- 
tion Front (FMLN), and the left 
in general. 

The most recent report by 
the UN’s right monitor- 
ing division, released at toe 
end of December, printed to a 
“grave deterioration” in toe 
observance of human rights. 

FMLN leaders have com- 
plained that the government 
has not met its commitment to 
provide land to former fighters, 
and has tolerated the resemer- 


Democracy is threatened as a 
nation struggles to escape its 
past, writes Edward Orlebar 


gence of right-wing death 
squads. 

“People are worried about 
what is going to happen once 
Onusal I the United Nations 
monitoring group] leaves - 
that the violations will 
return," says Mr Hector Dada, 
a political analyst 

The front-runner for Presi- 
dent is Mr Armando Calderon 
Sol of Ihe right-wing governing 
Nationalist Republican Alli- 
ance party, who comfortably 
leads Mr Ruben Zamora, leader 
of an alliance between the 
Democratic Convergence, a 
centre-left umbrella group, and 
the FMLN. 

A distant third is Mr Fidel 
Chavez Mena of the Christian 
Democrat party, whose popu- 
larity has plummeted as Mr 
Zamora’s has grown. Mr 
Chavez remains tainted by the 
failures of a disastrous Chris- 
tian Democrat administration 
in the mid-1980s. 

But about half of potential 
voters either remain uncertain 
about who to vote for or 
unwilling to state their prefer- 
ence. 

Mr Calderon was picked to 
succeed the current president, 
Mr Alfredo Cristiani. by the 
late Mr Roberto D’Aubuisson, a 


sponsor of right-wing death 
squads who founded the party 
in 1981 to defend the interests 
of toe business and land-own- 
ing elite against the perceived 
advances erf communism. 

Mr Calderon was formerly a 
popular mayor erf San Salva- 
dor. 

But he reportedly does not 
eqjoy the full confidence of his 
party, particularly among 
modern bring businessmen. He 
lacks the smooth public rela- 
tions skills of Mr Cristiani 

Mr Calderon has benefited 
from an expensive government 
campaign on television pro- 
claiming its achievements, 
which makes little attempt to 
distinguish itself from party 
advertising. 

But he is thought unlikely to 
secure the more than 50 per 
cent of the vote required for an 
outright victory. A runoff in 
April, probably with Mr 
Zamora looks likely. 

Mr Zamora, who is vice-pres- 
ident of the Salvadorean Con- 
gress, spent most of the last 
decade in exile, and is consid- 
ered one of the most able 
left-wing politicians in Latin 
America. 

By securing the backing of 
the FMLN, he has emerged as 


the country’s leading opposi- 
tion figure. 

Since becoming a political 
party last year the FMLN has 
been racked by internal divi- 
sions and has been unable to 
maintain the cohesion in peace 
which It achieved during toe 
war. 

Senior party officials admit 
the organisation is likely to 
split after the election, as some 
of its member groups have 
embraced social democracy 
while others are still ostensibly 
Marxist 

The end of the war has 
hrought the Salvadorean gov- 
ernment considerable foreign 
aid and soft loans to rebuild 
infrastructure damaged during 
the conflict Last year saw 5 
per cent growth, following 4£ 
per cent in 1992, the highest 
rates in more than a decade. 
The growth was mostly fuelled 
by a large influx of repat- 
riated capital and external fin- 
ancing. 

With inflation down to 12 per 
coat, record foreign reserves, 
and one of toe lowest foreign 
debt burdens in the Americas, 
the economy is in relatively 
good shape although highly 
dependent an remittances from 
compatriots in the US, who 
sent home more than 8800m 
(£547 9m) last year. 

But Salvadoreans are still 
not sure if the bad old days are 
really over. As Mr Dada says: 
“The psychology of terror has 
not finished.” 


Civil Aviation Authority 

AUSTRALIA 



REQUEST FOR 
PROPOSALS 

The Australian QvJI Aviation Authority (CAAJ Is currently 
designing a new system far selection and training of Ah- Traffic 
Control trainees. One of the developments as a consequence of 
this exercise is a move from mainframe simulation to 
woricaation/P.C. based smteatkin. 

The CAA Invites suitably qualified companies to examine a 
detailed functional specification that has been prepared by the 
CAA land Is provided with the Request for Proposal document) 
and put forward proposals to supply aid install stand alone p.g 
based simulators at various (orations around Australia. 

Responses to this Request for Proposal C94/I I are required by 
2.00pm. est on Thursday 14 April 1994 and must be lodged at 
CAA Tender Box 
Ground Floor, secondary Foyer 
Ma nag e m e nt Window 


CMI Aviation Authority 
Alan Woods Balkans 
25 Constttntton Avenue 
CANBERRA ACT AUST26O0 

Responses shaD not be accepted at any other lotatian. 

The Request for Proposal document or additional in form a tion 
is available on request from Mr Brian JCeedi on 

telephone 61 - 6-2684209 

or fax 61-6-2685695. 


THE AIRCRAFT 

for your 

~ — 1 BUSINESS 

CHARTER * SALES • MANAGEMENT 
ALG AEROLEASING 

Geneva 41-22/793 45 10 Zurich 41-01 /SI 4 37 QO 

ct/ct= 



■fJESE *2SL-V ' : L '3 
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June 27-Ai'v!u.ii 19. ] ( J94 








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FINANCIAL TIMES TUESDAY MARCH 8 1994 


i •. 


dor 


Mull* 


NEWS: WORLD TRADE 


Calls mount Making the telephones work in Russia 

Tan OH fill* Le y la B^ton on efforts to bring order to the market free-for-all of initial telecoms reforms 

•*** CCJIM JL \Jr Jl ~|-X ussia is due to offer 22 per 
-*■ cent of Rostelekom, its tele- 
's . XV communications giant, to 

Russian and foreign investors next 

IIIIIW 1*1 IIW week in the latest evidence of the J 

r r ■ 1># M Vjy w KiJF rhangp shaking np Its tplprernimimiftfl- 

.R tions sector. 


R ussia is due to offer 22 per 
cent of Rostelekom, its tele- 
communications giant, to 
Russian and foreign investors next 
week in the latest evidence of the 
rhang p shaking up its fplprewnmimiftfl- 

ttons sector. 

Bostelekom. which controls much 
of Russia's international traffic and 
practically all long-distance domestic 
traffic, is embroiled in a bitter debate 
over how much of a monopoly it 
should be allowed to restore after dis- 
enchantment in quarters with a 
market free-for-all 
Feverish, if piecemeal, foreign 
investment has meant the creation 
over the last few years of dozens of 
joint ventures with foreign companies 
and the pro vision of a range of ser- 
vices, at least for hard-currency pay- 
ing rffentg . which simply (fid not exist 
before. 

The result is that making an inter- 
national telephone call in Moscow has 
become easy rather than almost 
TmpnfiBihie - as it was under the old 
communist system, which discour- 
aged free canmnmicatton between, its 
own citizens and between itself and 
the outside world. 

The new Investment plans have 
ranged from a grand international 
project to build a fibre optic cable 
network anakfog across the Russian 
Federation from Denmark in the west 
to South Korea In the east - vastly 
expanding the number of interna- 
tional telephone lines available to 
ordinary Russian citizens - to a pri- 
vate telecommunications system 


By Michiyo Nafcamoto 
in Tokyo 

The Keidanren, Japan's 
influential business federation, 
yesterday joined leading busi- 
nessmen and politicians in 
urging the government to 
adopt voluntary targets to 
reduce Japan's surplus in the 
medium term. 

The move reflects incr easing 
public frustration in Japan 
over the government's inabil- 
ity to deal with mounting fric- 
tion with the US. 

Among the measures called 
for by the Keidanren is the 
adoption of future targets to 
cut Japan’s current account 
surplus. 

In a paper it said the Japa- 
nese government needed to 
reformulate Its US policy as 
soon as possible. 

The "period of reflection” 
was not long, it said, referring 
to a cooling-off period agreed 
between Tokyo and Washing- 
ton after failure to reach agree- 
ment cm key issues in frame- 
work trade negotiations. 

To Improve relations "the 
government must carry out its 
promises to the US In a reliable 
manne r," the Keidanren said. 
On the macro-economic side, 
the government should adopt 
voluntary medium-tenn targets 
for "a highly significant reduc- 
tion in the surplus,” as agreed 
between the two countries. 

This is the first time the 
business federation, has specifi- 
cally asked the government to 
adopt such targets and goes 
against stated government pol- 


icy of not adopting targets it 
cannot guarantee it will 
achieve or which could lead to 
managed trade. 

Mr Tsutomu Hata, foreign 
minister, said on Sunday that 
Japan could adopt a mid-term 
voluntary target to help create 
a better environment in negoti- 
ations with the 05 after recent 
talks ended in rtaadinriy While 
emphasising that it would be 
dangerous to set such targets 
at a micro-economic level, Mr 
Hata aaid it would be possible 
to calculate what part of GDP 
would be served by domestic 
production over the medium 
term. 

The Keidanren’s position and 
Mr Hata’ s remarks reflect a 
growing feeling that Japan 
must send a-clear signal to the 
US of its intent to reduce the 
current account surplus. 

In the immediate aftermath 
of a US-Japan summit last 
month, Mr Monhiro Hbsokawa. 
the Japanese prime minister, 
won acclaim for resisting US 
pressure to impose targets. 

But as the US has tightened 
the screw with its revival of 
the Stiper 301 trade act, which 
provides Washington with 
a mmuni tion to retaliate 
against what it considers 
unfair trade practices, the Jap- . 
anese public is becoming , 
increasingly frustrated with. I 
the government’s failure to 
smooth tensions. 

The Ministry of Finance, 
however, has staunchly 
opposed the setting of targets 
on the country’s current 
account surplus. 


Fish industry in US 
wary of Paris deal 


By Nancy Dunne 
fn Washington 

The US fish Industry reacted 
warily to a preliminary agree- 
ment reached last Friday 
between Washington and Paris 
over French government 
inspection delays of US Osh 
exports. 

“If you look at the history of 
French actions over the past 
few weeks there Is reason to be 
concerned," said Mr Dick 
Gutting, a vice president of the 
National Fisheries Institute. 

In response to angry protests 
by French fisherman, France 
placed an embargo on US fish 
early last mouth. Bowing to US 
pressure, it lifted the embargo, 
but instituted an inspection 
system which had the same 
effect and left fish rotting in 


storehouses near French air- 
ports. 

The US has sent an observer 
team to France to ensure that 
the inspection delays are at an 
mid. Washington is preparedfr> 
retaliate’ immediately^ if the I 
delays continue. 

“They said product will be 
detained and subject to inspec- 
tion if you are on a list of 
exporters who .have had prob- 
lems," said Mr Gutting. “We 
don't understand how you get 
an that list or bow one gets off 
the list" 

Meanwhile, a number of 
French Importers of. US fish 
have hired a lawyer to file a 
suit for damages, and the US 
industry has . begun to 
estimate its own losses for 
legal action. 


Container venture to 
boost Indian exports 


By John Sim kins in MRan 

Morteo, Europe’s largest 
manufacturer of containers, 
has agreed a joint venture with 
India aimed at increasing 
India’s food exports. 

Hue company, which is based 
In Genoa, Italy, signed a deal 
at the weekend with the Indian 
conglomerate, Dalmia-Mlttal, 
to produce KWJOO refrigerated 
containers a year at a Bombay 
factory due to open in May 
1996. 

Morteo said it would invest a 
total ctf $20m in the container 
factory which will be the big- 
gest in India and have an 
annual turnover of about $70m. 
Forty per cent of the new com- 
pany, Morteo Transfreight 


OECD Export Credit Rates 

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more than &5 years 7.45 P-05) 
Italian lira 6-36 

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Peseta 8JH (8J») 

Staffing 7.12 (8.72) 

Swiss franc W3 (5*4) 

US dollar for credHs ^ 

up to 5 years 5.43 (6.48) 

5 to as years 6-40 £09) 

m ow than &5 years 6.72 ta43) 

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Reefer Container, will be 
quoted on the Bombay stock 
exchange from October. 

The venture will receive gov- 
ernment aid through the Indus- 
trial Development Bank of 

India. 

The project is the first in 
Tndia for Morteo, which was 
privatised by the state holding 
group Iritecna a year ago, 
and bafl a strong p resence in 
China. 

India is a Mg exporter of veg- 
etables and fish and afaiH to 
increase its annual usage- of 
refrigerated containers from 
15,000 units to 50,000 over the 
next two years. Until now. 
industry has relied on contain- 
ers arriving empty at Indian 
ports. 


Davy wins 

furnace 

contract 

By Andraw Baxter 

Davy International, part of 
Trafalgar House of the UK, 
said yesterday it had won a 
contract worth about £75m to 
design and supply a blast fur- 
nace for China Steel in Kaohs- 
iung, Taiwan- 

The contract was awarded 
after more than two years of 
technical and commercial dis- 
cussions with C hina Steel, in 
the face of intense competition 
from Japan and Germany. 

The work will be handled by, 
Davy’s office In Stockton, 
northern England, and 
includes supervision of erec- 
tion and commissioning and 
training services. 

Davy said a key factor in ite 
selection was'Hs track record 
in South Korea, when ft sup- 
plied five blast furnaces to 
Posco, the steel producer. 



Calling Moscow; the biggest challenge is to provide infras tru c tur e where local calls are still Impossible rovA*** 


using cables in the Moscow metro. 

Mr Edouard Altenhoven, the Euro- 
pean Bank 'for Reconstruction and 
Development's team leader for tele- 
communications, says that until the 
Russian authorities can come up with 
a clear vision of where they want to 
go, “there's a good case to be made for 
chaos”. 

Chaotic development has at least 
brought ' some real improvements in 
service, which cannot.be said about 
Belarus, for in stem r**, which has only 
one foreign joint venture and little to 
show for it 

To combat some of the chaos, the 


Russian telecommunications ministry 
recently signalled a change in its poli- 
cies over mobile telephones. It threat- 
ened to deprive operators of licences 
unless they implemented their terms 
on deadline and it is insisting cm com- 
patibility between regional systems. 

“This is the first clever Idea and the 
first step towards civilisation in three 
years,” said nng Russian telecommu- 
nications expert who is an ardent sup- 
porter of market reforms. But he said 
that rhwnHr^ and sometimes cor- 
rupt, distribution of 70 licences 
around Russia to dozens of foreign 
companies - many of which either 


just sat on their licences or planned 
to build networks which were incom- 
patible with each other - was leading 
to “disaster”. 

The main challenge is to find ways 
of financing the upgrading of less 
profitable local infrastructure in a 
country where it Is still impossible in 
some places to make a local call 

Rostelekom, together with a num- 
ber of western companies, is working 
to finalise a 31 bn project known as 
“50 times 50” to link 50 Russian cities 
with 50,000km of fibre-optic cable. The 
American telecommunications com- 
pany US West has launched a finan- 


cial vehicle, the Russian Telecommu- 
nications Development Corporation, 
into which it and other investors plan 
to reinvest profits and through which 
they hope to raise more capital. 

Mr Stan Cramton, of US West in 
Moscow, believes Russia should have 
a telecommunications monopoly to 
“cross-subsidise” the less glamorous 
services with revenues from the more 
profitable international traffic. 

“There isn’t a single country In the 
world which did not develop its tele- 
phone infrastructure on the basis of a 
monopoly,” he said. He admitted that 
a monopoly would benefit large com- 
panies such as his which are accus- 
tomed to working long-term and want 
certainty about the future. 

Mr Gordon Mulr-Carby, responsible 
for emerging markets at London 
stockbrokers Smith New Court, says 
there will be some Institutional inter- 
est in the Rostelekom offering. 

“People have determined that at 
least in telecoms and consumer indus- 
tries thing s will reach rock bottom 
this year but then pick up,” he said. 
But although many would consider 
any risk would be discounted in the 
low stock price, he believed that oth- 
ers would be put off by the lack of 
transparency In a company such as 
Rostelekom. 

According to many western execu- 
tives, there is a need for local tele- 
phone services to reflect more closely 
their true cost But Russians warn 
that this would be politically difficult 
in a nation used to talking on the 
telephone for free, or close to it 


It takes quite a while to carve out 
a solid position in South America. 













- V * 




Is 128 years long enough? 


Many of today’s business people recognise the potential offered by the 
economies of Latin America. Both, individual and institutional i n vestors are 
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Such knowledge cannot be acquired overnight- It must be carefully 
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Determined to meet client needs 

One such bank is ABN AMRO Bank. Better known throughout South 
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wwnr- 1 — •- ---- 



FINANCIAL TIMES TUESDAY MARCHS 1994 


8 

NEWS: UK 


Commission in 


Labour raps Tory policy on jobs 


legal threat on 
shareholdings 



Gordon Brown accused the government of ‘wrecking’ action for job-creation nom: <«n a* uaar 


By Gasan Tett tn Brussels 
and Roland Rudd In London 

The European Commission has 
threatened European Court 
action against the UK if it does 
not scrap rules which allow the 
government to set a limit on 
foreign shareholdings in 
certain companies. 

The move seems likely to 
add to the tension between 
London and Brussels. It follows 
a long-running wrangle 
between the commission and 
the UK over the limits on 
foreign shareholdings set for 
British Aerospace and 
Rolls-Royce following their 
privatisation in IS87. 

It emerged yesterday that 
the EC had opened 
infringement proceedings 
against the UK over the rules, 
which are designed to protect 
companies deemed to have a 
strategic or security role. 

The commission says limits 
on shareholdings can 
sometimes be justified on 
national security grounds, but 
it feels the present UK legal 
structure is too flexible. 

"This isn’t just aerospace - 
it could be applied to a whole 
lot of sectors,” explained one 
commission official 

"What we are unhappy with 
is the fact that the minister is 
able to prohibit investments on 
the grounds of national 
interests." 

British ministers also argue 
that scrapping the limit would 
allow EC companies to take 
over UK companies without 
extending the same rights to 
British shareholders. They say 
complex regulations in some 
EU countries, such as 
Germany, in effect prevent 
takeovers. 

But the Department of Trade 
and industry said it would 
consider the request from 
British companies affected by 
the limits to raise the cap on 
foreign ownership from 29.5 
per cent to 49.5 per cent 

The commission says the UK 
law infringes single- market 
legislation, including laws on 
establishment and the freedom 
of circulation of capital since 


it makes distinctions between 
British and other EU 
shareholders. 

The dispute over the limit of 
foreign shareholdings In BAe 
and Rolls-Royce was 
temporarily resolved in 1989 
after the commission agreed to 
let the British government 
keep a limit of 29-5 per cent on 
foreign shareholding on the 
grounds of the companies' 
military significance. 

However, this agreement, 
which commission officials 
stress was only temporary, has 
now technically expired. 

Although commission 
officials deny that they have 
opened any proceedings 
against the British government 
over the BAe case yet they 
admit they are reluctant to 
prolong a situation which 
contravenes the spirit of the 
single market 

“We do not want this to be a 
precedent - certainly not for 
other privatisations," 
commented one commission 
official 

The commission yesterday 
acknowledged that Britain was 
unlikely to be the only country 
in the EU which infringed 
community law. In (he past, 
the community has raised 
concerns on controls on 
foreign holdings in other 
sectors with Portugal and 
France. 

The commission’s formal 
letter of protest to the UK 
government was sent at the 
end of December, and 
commission officials say they 
have not received a response, 
although the two-month 
deadline for a reply has 
passed. 

Under EU infringement 
proceedings, the commission 
would usually respond to a 
formal reply by issuing a 
M reasoned opinion " on the 
case. 

Where cases cannot be 
resolved by diplomatic 
pressure, the onmrmsBinn may 
then proceed to take the 
government to the European 
court of justice. However, only 
a minority of cases get taken to 
the European court 


By James Blitz 

Mr Gordon Brown, the 
opposition Labour party’s chief 
flnanrfai spokesman, yesterday 
claimed that Britain would be 
the only country at the jobs 
summit of the Group of Seven 
Leading Industrial nations 
next week to press a pohcy of 
industrial deregulation. 

“The philosophy toward tbs 
unemployed of “pile them high 
and sell them cheap* - the 
exclusive reliance on deregula- 
tion dogma - has not worked 
and will not work," Mr Brown 
said. He said the government 
was stQl "trying to export de- 
regulation at the moment - at 
a time when even America has 
rejected it” 

Mr Brown accused the gov- 
ernment of behaving like 
“wreckers" in opposing propos- 
als for coordinated action on 
economic growth and job cre- 
ation across the western world. 
He claimed that Bri tish minis- 
ters were “negative and carp- 
ing" towards an investment 
strategy to reduce unemploy- 
ment, and were politically pan- 
dering to the tree-market poli- 
cies of the Tory right wing. 

Mr Brown was commenting 
on the government's jobs strat- 
egy in advance of a G7 summit 
to be hosted in Detroit next 
week by US president Mr Bill 
Clinton. 

The s ummi t - which will be 
attended by Mr Kenneth 
Clarke, the chancellor of the 
exchequer, and Mr David Hunt, 
the employment secretary - 
reflects the Clinton administra- 


By Michael Smith 

Potential bidders for parts of 
the state-owned British Coal 
corporation were yesterday 
given a stark warning by the 
chairman that some producers 
seem certain to be “squeezed 
from the market” following the 
industry’s privatisation. 

Mr Neil Clarke said there 
would be fierce competition on 
supply, and between the buy- 
ers of the five regions of Brit- 
ish Coal, those leasing pits 
already closed by British Coal 
and importers. The scope for 
expanding existing sales out- 
side the electricity supply mar- 
ket was only about 3m tonnes, 
he warned. 


tion’s determination to look for 
solutions to the rising level of 
unemployment in the devel- 
oped world. 

Mr Brown plans to be in 
Washington on the eve of the 
summit to promote Labour’s 
ideas for a G7-wide approach to 
unemployment. In particular, 
he will c*»R for. 

• A pan-European cut in 
interest rates and the creation 


"This is not likely to be a 
war without casualties," he 
told the Coal Industry Society. 
“It would seem inevitable that 
ultimately some producers will 
be squeezed from the market” 

Mr Clarke also said that 
reductions in British Goal’s 
capacity brought supply and 
rigmand far closer to a sustain- 
able balance. This suggests 
such a balance has yet to be 
achieved and will reinforce 
fears that there will be more 
closures among the 17 remain- 
ing pits before privatisation. 

Mr Clarke’s co mmen ts were 
greeted with surprise and 
anger by private-sector miners. 
Mr Richard Budge, chief execu- 
tive of R.JJL Mining, which 


of a reserve of borrowed money 
to back investment projects in 
the European recession: 

• The rejection of deregula- 
tion as a “miracle cure” an d 
adoption of policies to Increase 
employes- and employee invest- 
ment in t raining ; 

• A series of fresh initiatives 
for job creation, including the 
waiving of National Insurance 
contributions for those employ- 


has already reopened one pit 
closed by British Coal and may 
bid for one of the five regions, 
said private-sector mines were 
used to competition. 

Another potential bidder 
described Mr Clarke’s speech 
as churlish. “If British Coal 
had got its costs down as it 
KhnnM have done ttw market 
now would be much bigger.” 

Separately, the Royal Institu- 
tion of Chartered Surveyors 
said the government would 
have to adopt a more commer- 
cial approach to the privatisa- 
tion of British Coal if the tax- 
payer was to get value for 
money from the sale. 

It criticised proposals that 
bidders for coal rights should 


ers who take on long-term 
unemployed people. 

Mr Clarke and Mr Hunt wOl 
today set oat their approach to 
the summit. In “Competitive- 
ness and Employment" they 
will reassert the government’s 
belief that a deregulated labour 
market is essential if Europe is 
to remain competitive, while 
stressing the need to promote 
training and nirflls 


pay a lump sum rather than a 
royalty on each tnnng of coal 
extracted. The TnstHfirtimi Raid 
that the freehold of coal and 
colliery land should remain 
with the coal authority. 

Apart from sales to the elec- 
tricity industry and of coking 
coal sales in the UK next year 
would be about 13m tonnes, of 
which British Coal would sup- 
ply at least 9m tonnes, said Mr 
Clarke. Some imports could 
not be displaced because of 
quality factors, so the maxi- 
mum scope for expanding sains 
would be about 3m tonnes. 

Mr Clarke said the expansion 
in British Coal's range and vol- 
ume of products would con- 
tinue. 


Britain in brief 



Officials 
battle over 
jobs benefit 

British government officials 
are locked In combat over the 
adminis tration of a new allow- 
ance due to replace the unem- 
ployment benefit system in 
April 1296. Both the social 
security de p a rtm ent and the 
employment department have 
promoted the change to a job- 
seeker’s allowance, but no 
decision has been taken on 
winch win administer it. This 
could Involve transfer of a 
budget of several billion 
pounds from social security to 
employment 

The Department of Social 
Security has included the bill 
introducing' the new allowance 
on its list of submissions for 
new legislation. But the 
employment department is 
understood to be keen to shep- 
herd tiie bin through parlia- 
ment - putting it in pole posi- 
tion to administer the new 
allowance, which will merge 
unemployment benefit and 
Income support. Both these 
benefits now come out of the 
social security department's 
budget of £80bn ($119.2tml 

Winning the argument - 
described by one official as 
“quite a scrum" - could more 
than double the employment 
department's £3.7bn animal 
budget. • 


Credit falls as 
tax rises loom 

A sharp drop In consumer 
credit for January yesterday 
suggested that people are tight- 
ening their belts ahead of tax 
rises due to take effect in 
ApriL Net lending to consum- 
ers fell to a seasonally adjusted 
£235m from £425m in Decem- 
ber. 

The government said the 
main reason for the drop was a 
decline In net lending by 
finanra bouses from £384m in 
December to £255m in January. 
Consumers also repaid £6m of 
credit card debt tn January, 
after borrowing £36m in 
December. After, debt repay- 


ment, new credit advanced in 
January was £4.74bn, down 
f rom ££90bn in December. 


Major probes 
leak of meeting 

Mr John Major, the UK prime 
minister , has launched an 
inquiry into how details of a 
private meeting he had last 
week with Mr John Smith, 
leader of the opposition 
Labour party, were leaked to a 
Sunday newspaper. The talks, 
on tomorrow's debate to renew 
the Prevention of Terrorism 
Act, “should not have been 
leaked”. It was important such 
inertings could be held in pri- 
vate. 

Mr Smith, who welcomed 
the move, had wanted to see if 
Labour’s disagreement with 
the government over , two spe- 
cific measures could be 
bridged before tomor row' s 
debate. Labour regularly vote s 
against the annual renewing 
of the act. 


I UC may extend 
MP sponsorship 

Parliamentary c andid a te s from 
the smaller opposition Liberal 
Democrat party may one day 
accept sponsorship from trade 
unions, the party said yester- 
day. 

Mr Alex Carlile, employment 
spokesman for the centrist 
party, said ahead of Its first 
meeting today with the Trades 
Union Council: “I would not 
want candidates to be 
beholden to a union but spon- 
sorship by iminns is certainly 
on the agenda.” 

Trade wninmi have tradition- 
ally sponsored Labour MPs but 
tiw TUC, th*> umbrella organi- 
sation for many unions, has 
shifted in the direction of the 
Liberal Democrats on many 
indTurfriqj relations over 
the past few years. 

Monks assault 
pop charts 

Benedictine monks have 
scored a surprise hit in the 
pop charts with a 20-year-old 
recording of 10th-century Gre- 
gorian chants. Canto Gregori- 
ano was re-released last month 
by EMI and has sold about 
500,000 copies - enough to 
send it to number two in the 
classical charts and to propel 
it more than 30 places to num- 
ber 32 in the pop charts. 


Coal bidders warned of ‘casualties’ 



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FINANCIAL TIMES TUESDAY MARCH: 8 1994 


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British business lobby 
on Malaysia trade ban 


By Kferan Cooke n Kuala 
Lumpur and Jimmy Sums and 
James BIKz h London 

A group of leading British 
businessmen - Including Lord 
Prior, chairman of GEC and a 
former cabinet minister - has 
flown to Kuala Lumpur in an 
attempt to persuade the Malay- 
sian government to lift Its 
trade ban on UK companies. 

The group - which includes 
Sir Charles Powell, a director 
of Trafalgar House and former 
foreign affairs adviser to Mr 
John Major and Baroness 
Thatcher - is engaged in an 
intense round of private diplo- 
macy with Malaysian nffiHaia 
to try to reverse the ban. 

There were conflirtfng gj gn« 
over whether this new m tes i on 
could persuade Dr Mahathir 
Mohammad, the 'Malaysian 
prime minister, to reverse his 
policy, which followed, allega- 
tions in British newspapers 
that UK companies bad paid 
bribes to Malaysia's politicians 
in return for contracts. 

Some British industrialists 
have taken heart from a week- 


end statement by Mr Abu 
Kamaradin, the Malaysian 
high ra nrmi <yj f i T T«* r in London, 
who referred to his govern- 
ment talking to “diplomatic 
channels" and to reopening 
“excellent contacts" because of 
"good relations over years". 

In London, one IgaHrp g gov- 
ernment minister was con- 
fident that the Malaysians 
were seeking a way to drop the 
ban on trade, and Chat the 
issue at stake was simply how 
they could do so “without los- 
ing face.". 

But there were few signs 
elsewhere of any movement an 
the issue. “I think the Malay- 
sian government is prepared to 
go aH the way on this, espe- 
cially if there is any retaliatory 
action by Britain", said Mr 
Razaleigh Hamah, the leader 
of one of Malaysia’s small 
opposition parties. 

The Malaysian opposition 
said the ban on British compa- 
nies should be lifted immedi- 
ately and called for both gov- 
ernments to release the text of 
the cfintm TOr sial 1388 memo- 
randum of understanding and 


official documents relating to 
the Fergau hydroelectric proj- 
ect at the centre of a row over 
alleged links between aid and 
military sales. 

Mrs Ra fld a h Aziz, Malaysian 
trade and industry minister, 
«^id Malaysia had nnthtng to 
lose by barring British compa- 
nies from securing government 
contracts. Mrs Rafidah said 
many European companies had 
contacted her nffiM awk-mg for 
details on how to submit ten- 
der bids for projects. 

John Tjdng the construction 
company, h ws decided to with- 
draw from p reliminar y tender- 
ing for a MS3bs (£75Gm) con- 
tract to build a terminal act a 
new international airport out- 
side Knsia Lumpur. 

British companies Balfour 
Beatty, GEC and Trafalgar 
House, along with Marubeni of , 
Japan, were to have managed 
the £3bn airport project. Malay- ! 
sia has announced that rim 
British will no longer be 
involved in the airport though 
it is unclear whether the com- 
panies have received any offi- 
cial notification. 


City wa 
broader 


By Alison Smith 

Changes to the law should be 
made to enable financial regu- 
lators to play a much greater 
role in d ealing with miscon- 
duct in the financial services 
sector, Mr Andrew Large, 
chairman of the Securities 
Investments Board, said yester- 
day. - - 

Mr Large, who heads the 
chief financial watchdog, 
called for new approaches to 
co-operation between regula- 
tors and the criminal authori- 
ties to ensure more effective 
investor protection. 

In a speech he urged a 
change to the law to enable 
both SIB and the Department 
of Trade and Industry to inves- 
tigate allegations of Insider 
dealing and market manipula- 
tian. 

He also called for SIB and 
the Stock Exchange to be given 
statutory powers to fine mem- 
bers. 

One of his most radical sug- 
gestions was that defendants 
who have pleaded guilty to 


tchdog calls for 
regulatory role 


crimes coming within the 
remit of the financial regula- 
tors should be allowed to 
imitertairo plea ba rgaining in 
open coart 

Resisting the argument that 
plea bargaining would compro- 
mise tile independence of the 
judiciary, Mr Large said it 
should be possible to devise a 
fair and open system for such 
negotiations. 

His message was that once 
regulators proved they could 
enforce the rules they would 
be in a better position to han- 
dle more matters relating to 
misconduct and to dispel fears 
that they might be “soft on 
white-collar crime”. 

Mr Large cited the agree- 
ment which SIB has reached in 
principle with the Serious 
Fraud Office, about which 
cases should he’ dealt with by 
th£ ragdatora and which ’by 
the c riminal courts. 

In general, the regulator 
would deal with -more techni- 
cal offences, where the victim 
was less obvious, and the ele- 
ment of fraud or theft might be 


harder to explain to a jury. 

There was a place, he said, 
for greater reliance on regula- 
tors to deal with potentially 
criminal cases involving fo re** 
they regulated. Mr Large’s 
comments came in the wake of 
a new emphasis on enforce- 
ment by regulators. Last week 
SIB exercised for the first time 
its powers to ban an individual 
indefinitely from investment 
business in the UK. and Lan- 
tro, the self-regulatory organi- 
sation for the life insurance 
industry, said it would impose 
heavier penalties on its mem- 
bers. 

Hiff speech underlined his 
belief that effective investor 
protection rather than rale 
books lay at the heart of finan- 
cial regulation. 

“Experience now begins to 
show that 1 the success or fail- 
ure of our regulatory system 
wffl be judged not by our abil- 
ity to -set up regulatory bodies, 
or to write rules, but to secure 
compliance with them and. in 
the fmal analysis, to punish 
non-compliance,” he said. 


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Heseltine 
urges 
delay on 
Channel 5 

By Raymond Snoddy 


Mr Michael Heseltine, the UK 
trade and industry secretary, 
has written to the National 
Heritage department calling 
for a delay in the decision on 
Channel 5*s a pproval 

Mr Heseltine, it is believed, 
has argued that the decision 
should be postponed until a 
government review of cross- 
media ownership rales has 
been completed. This is 
unlikely before the summer. 

Support e rs of a fifth televi- 
sion channel, which would use 
existing technology, fear that 
the DTI wants to kill the idea 
of the channel and reserve all 
-tiie available frequencies for 
the development, of digital 
television services. 

However it was Lord Young, 
a predecessor of Mr Heseltine 
at the DTI, who championed 
the idea of the channel to 
increase competition in the ! 
television advertising market 

last month, Britain’s Inde- 
pendent Television Commis- 
sion came out in favour of re- 
advertising the franchise for 
the fthaimri which ennld r each 
three-quarters of the UK popu- 
lation, provided the govern- 
ment guaranteed that the nec- 
essary frequencies would be 
available. 

A number of large media 
groups are intere s t e d in the 
channel tnrinding NBC, the US 
TV network; CLT, the Luxem- 
bourg-based international 
broadcaster; and a consortium 
which groups Time Warner of 
the US, MAI, the company that 
controls Meridian, the ITV 
broadcaster for the south of 
En gland; and Pearson, owner 
of the Financial Times. 


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Nationalhealth: diagnosis of the drug bill 


Drag expefKflhnoper person $1990 £} - Expenditure on timgyheaWi services 

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Indeot of drag costs per patient 

Ago. 


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Dispensing [ 
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Drugs budget ‘could save £500m’ 


By John Willman 
and DanM Green 

Britain’s National Health 
Service could save up to £50Qm 
($745 .3m) a year on pharmaceu- 
ticals if doctors adopted better 
prescribing practices, the 
Audit Commission, which 
audits local authorities and 
health-service bodies, says 
today. 

The savings would be 

enou gh to pay for an arlrHHnnsI 

80,000 hip replacement 
operations a year, the commis- 
sion says in a report published 
today. 

More than £45m a year is 
wasted on prescribing medi- 
cines of limited rifriicai value 
such as appetite and cough 
suppressants, nasal deconges- 
tants and anti-diarrhoeal 
drugs. Same doctors prescribe 
four timpR as many of these 
pharmaceuticals as others, the 
commission found. 

The commission says that 


immediate savings of up to 
£ 425m a year would be passible 
If every GP prescribed to the 
average standard of 50 good 
practices selected from around 
the country for the report 

In the longer term, savings 
could rise to £500m a year if 
doctors followed a 12-point 
plan set out in the report The 
recommendations include 
greater use of unbranded medi- 
cines, and regular reviews of 
repeat prescriptions and pres- 
cribing policies to avoid waste. 

The suggestion in the report 
that doctors should change 
their prescribing practices 
could mean sharp cuts in UK 
sales for several drugs compa- 
nies. 

The largest single saving 
would be the £100m which the 
report says is wasted by giving 
patients unnecessary anti-ulcer 
drags when they have mfidw 
oounplajnta such as dyspepsia. 
Ulcer drugs by 

the UK’s Glaxo, and Losec, 


from Sweden's Astra, are the 
two top-selling drugs in the UK 
with combined sales of more 
than £300m a year, according 
to figures from stockbroker 
Lehman Brothers. 

With other conditions, sub- 
stitution of unbranded drugs 
could achieve annual savings 
of £75m, the report says. A 
total of £&8m a year could be 
saved on one SmithKline Bee- 
cham drug alone: Teno rmin, 
for treating heart conditions, is 
the UK’s 12th most prescribed 
drug with sales of £30m a year. 
It costs up to four times as 
much as its uhbranded alterna- 
tive. 

The drugs companies said 
the repent is flawed In detail 
and conception. Glaxo said 
that Zantac can also be legiti- 
mately prescribed for condi- 
tions other than ulcers, and 
added that some 4.500 people in 
the UK die from ulcer rffogaag 
each year which “suggests an 
under-treated, not over-treated. 


area" 

However, Glaxo is among the 
companies which could benefit 
from the commission's recom- 
mendation for Increased spend- 
ing on steroids to ward off 
asthma attacks. It has the 
three top-selling asthma drags 
in the UK with sales of almost 
£200m a year. 

Of non-UK companies operat- 
ing in the UK, sales by 
Cyanamid of the US could be 
hit most if more unbranded 
substitutes were used. Its anti- 
biotic Mtuocin, which is the 
19th UK bestseller with sales of 
£26m a year, has several 
generic alternatives. 

Most non-UK companies put 
their selling effort into patent- 
protected drugs. Even here, the 
report says money could be 
saved because a new genera- 
tion of anti-depressives, which 
include Seroxat from Smith- 
Kline Beecham, are up to 10 
times as expensive as older 
drugs and no more effective. 



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10 


FINANCIAL TIMES TUESDAY MARCH S 1 W 



AN EUROPE 


With a greyer picture 
of the future in mind 


W 


'hile there are 
few trends 
which can be 
forecast with 
confidence 
over decades, there is one pre- 
diction that can safely be made 
about the countries of western 
Europe. Their populations will 
grow much older over the next 
40 years. 

In the 18 western European 
member states of the Organisa- 
tion for Economic Co-operation 
and Development, the number 
of people aged 65 and over will 
rise from 50m to more than 
70m between 1990 and 2030. 

During the same period, the 
number of people of working 
age will fall. The result is that, 
by 2030, there will be fewer 
than three people of working 
age in these countries for each 
person over 65, compared with 
five now. 

Similar trends ean be seen in 
other leading world economies, 
such as the US and Japan. The 
populations of the tigers of the 
Pacific Rim. such as Singapore 
and Taiwan, are also ageing 


ft 

fast 

ho 

But newly industrialising 

n 

r. 

countries, such as China, India 
and Brazil, will have a much 

at 

ID 

lower share of elderly people in 

a 

IB 

their populations over the next 

D- 

B» 

40 years. 

Yh 

Si 

Economists predict the age- 

5» 

B> 

ing of tiie population in Euro- 

7! 

pean countries will have an 

is 

If 

TS 

enormous impact on their 

economies and their interna- 

w 

tional competitiveness. But 

Er 

a* 

a 

there is little agreement over 

wm 

H 

what the impact will be. 

m 

a 

according to Dr Paul Johnson 

Nr 

j 

ffc 

of the London School of Eco- 


nomics. 

M 

w 

“Demographic restructuring 


could alter patterns of con- 
sumption. production, employ- 
ment, savings, investment and 
innovation,” he says. "But 
because of the interactions 
between these separate ele- 


The ageing of Europe’s 
population poses big challenges 
for the state and the 
marketplace, says John Willman 


meats, it is impossible to be 
sure of either the scale or, in 
some cases, the direction of the 
economic impact. Our under- 
standing of the processes of 
economic growth and of inno- 
vation is too primitive to make 
long-term predictions." 

This uncertainty extends 
even to the question of 
whether an ageing population 
wfil save more (to provide for 
old age), or save less as the 
elderly cash in their nest-eggs 
in retirement A trend towards 
lower savings rates could 
threaten economic growth in 
countries with more rapidly 
ageing populations. 

A series of theoretical 
studies has suggested that 
there will he a decline in the 
savings rate as the population 
ages. Yet, according to Profes- 
sor Claus Zimmermann of 
Munich university, there is 
clear evidence from all over 
Europe that the ageing popula- 
tion is saving more. 

“We are not clear why older 
people save so much,” he says, 
"but they do.” 

The economic consequences 
of ageing will be felt unevenly 
in Europe, as some countries 
face more radical demographic 
chang e than others. 

The greatest impact will be 
felt in Germany, where the 
population will decline by 
about 15m between now and 
2030. Today, a fifth of the popu- 
lation is 20 or younger and 
another fifth 60 or over. By 
2030, only 16 per cent will be 
under 20, 46 per cent will be 
between 20 and 60, and 38 per 
cent over 60. 

If ageing leads to any sort of 


competitive disadvantage, then 
demography could favour the 
economic performance of coun- 
tries such as the UK and the 
US. where ageing will be less 
radical. 

But globally it would be the 
newly industrialising coun- 
tries, such as China and Brazil, 
which would gain the greatest 
competitive advantage from 
demographic change For the 
first half of the gist century, 
they will have much younger 
populations than the econo- 
mies of Europe, Japan and 
north America. 

Whatever the uncertainty 
over the overall economic 
impact of ageing, predictions 
can be made about its conse- 
quences in some economic sec- 
tors. 

O ne is the much 
tighter labour 
market which 
will result as the 
number of people 
of working age shrinks. 
Employers will no longer be 
able to count on a flow of 
young people to meet their 
staff needs. 

They will have to hold on to 
existing staff longer, rather 
than letting them go at retire- 
ment age QT discharg in g them 
early as is now common. There 
will be pressure to increase the 
percentage of working age peo- 
ple actually in work - notably 
women who have left work to 
have children. 

Business will have to cope 
with changes in demand pat- 
terns as older consumers 
become more significant in 
their markets and younger peo- 


ple less so. Mintel the UK mar- 
ket research organisation, says 
"third age consumers” are 
emerging as a distinctive 
group keen to spend more on 
leisure, holidays and health- 
care. 

This group will increasingly 
want to make individual provi- 
sion for their pensions as cuts 
in welfare benefits reduce state 
support That will boost finan- 
cial services companies offer- 
ing personal pensions and 
other suitable savings prod- 
ucts. 

“The European advertising 
industry is just beginning to 
think about addressing the 
older consumer," according to 
Ms Danielle Barr of 3rd Age 
MarkuHng in London. "There 
are phenomenal opportunities 
for companies which recognise 
tiie growing importance of this 
market and can succeed in it” 

If European businesses do 
not recognise the opportuni- 
ties, many US competitors will 
American businesses have long 
recognised the Importance of 
selling to older people, says Ms 
Frankie Cadwell of Cadwell 
Davies Partners, a New York 
advertising firm 

Cadwell Davis, a subsidiary 
of Saatchi & Saatchi, the adver- 
tising group, specialises in sell- 
ing to the over-506, among the 
wealthiest consumers in the 
US. 

“We are interested in bring- 
ing expertise on products and 
services in the mature market 
to Europe;” Ms Cadwell says. 
“European companies haven't 
begun to address their ageing 
home markets as we have in 
the US.” 

Why that should be so is 
hard to explain. For, while 
there are many uncertainties 
in longer-term planning of 
business strategy, one fact is 
certain. The customers will be 
much older in 40 years than 
they are now. 


O 


Ageing Europe 



Ago structure switches towards the elderly 

Ratio of the number of people of working age. 15 years to 64 years, to support each person aged 65 years and over 
6 






n 


1990 3X10 2030 3X50 1990 2010 2030 2050 1890 2010 2030 2050 1890 2010 2030 2050 
France Germany Italy UK 



1890 2010 2000 2050 1880 2010 2030 2050 
Japan us 


Social expem&tere 

Burden per person aged 15-64 years 


1980=100 

2000 

2010 

2020 

2030 

2040 

France 

101 

105 

117 

129 

133 

Germany 

112 

119 

131 

157 

162 

Italy 

102 

109 

120 

135 

143 

UK 

98 

101 

106 

118 

117 

Japan 

112 

133 

136 

136 

150 

US 

97 

100 

118 

133 

132 


How to advertise to older poopto 

DontiBemodotelhatw© too young (ncrteredtotejoriDooW 

-ptcpteseettemsEMre as 10-15 y«re younger than they ore. 

• Show oMw people tawactfngwilh younger garwoswis In raa 

situations, active and enjoying what they ore doing. 

WomaBon and facto are appreciated: cute puns and otoacwe 
abstractions are not 

^ No hype.ro loud music, no quick cuts -but don't cut out gemrino 

emotions and foaflngs. 

Of-' Adopt an aUt-to-adult tone of voice- people tend to acquire 
wisdom with age, not lose ft. 


20 points about ageing in Europe 

1. Two out of three cwar-SSa who have ever Sved are aSva today. 

2. There are around 330m people aged 65 or werafivetod^. By 2050 
mere wB be 1.4bn. 

3. Thewoild*soictetcountry is Sweden: 18 per cent of Swedes 
are 65 or over. 

4. The average Eaupean woman of cMd-beatog age produces 1.7 
c h Bdren. Around 2.1 children are raqurad to replace the population. 

5b If Germany’s fart*ry raw remains at its anent level (iJJfls 
native population w be extinct within 300 years. 

8. Ireland and Iceland are the only wedem Beopean oouitiles with 
fenftty rates high enough to sustain that populations. 

7. The country wiih the lowest fertfity rate In western &rope is Italy. 

8. European curandy account for almost a tarfh of the woricfs 
population. In 2050 they wS be less than a Sfth. 

9. The number of over-65s in EuropewS outstrip me number of chNdren 
aged 14 and under around 2020. 

10. More than 50m western Bnpeans are aged 65 or over - a!mosM5 
per cento! the population. 

11. Of these, almost a quarter are aged 80 or over and l’ am are SO-pluS. 

12. By 2050 there wa be 70m western Europeans aged 65-plus - over 20 


per cent of the population. 

13. A man Rvfntg in the European Union aged 60 tan expect to BveuntU 78; 
a woman until 82^ . 

14. Almost hatfthe owr-80s In the SJ Ihre atone. 

i& There are nxigNy equal numbers of men and women a^d 60 In western 
Europe. But women outnumber men two-to-one between 8o and 84 and 
three-to-one between 90 and 94. 

18. Lass than 5 per cant of EU people In their stated are severely 
Incapacitated. Almost one in three in their eighties Is Incapacitated. 

IT. Ovrer-OOs to the EU would prefer to be caled "sartor ctftnne* or *oidor 
people*, accordng to a Euobarometer survey. They do not Bee to be 
cafled "dderfy*. "peratonera* or "gefttan okfies". 

18. Reel eoononfc gonth rales of up to 1.5 per cant a year are needed to 
pay the tnge a stogbg lor penriona over flip next 50 years- more If 
pensions so to rise with ewntogs. 

18b Pdbfc health apendtog for people aged 85 aid over is more man low 
femes Hgtar per capita than for the undBr-65e. 

20. Almost 80 per cent of EU eftbens befteve that that those In employment 
have a <4iiy to ensure, through contributions or tun, thtf older people 
have a decent standard of Bring. 


Tensions on health care and pensions 


Welfare state 


By John Willman 


T he greatest Impact of the 
ageing of Europe will be 
felt on the welfare state, 
the cost of which is already 
putting pressure on the public 
finances and international 
competitiveness of much of 
western Europe. 

The OECD estimates the pen- 
sion burden could double over 
the next 50 years, through a 
combination of an ageing popu- 
lation and the increasing cov- 
erage oF pension schemes. 

Over the same period, the 
number of western Europeans 
of working age will drop by 
more than 15 per cent leaving 
fewer people to generate the 
wealth to pay for pensions. 

The tensions will be most 


By David Goodhart 


I f the more dramatic demo- 
graphic projections are to 
be believed. European 
employers will have to perform 
a U-turn in their attitude 
towards older workers in the 
next 10 to 15 years. Companies 
which have been trying to per- 
suade 53-year-olds to take early 
retirement will be trying to 
persuade 70-year-olds to stay 
on a few more years. 

One issue is “eldercare” - 
allowing older employees to fit 
their work around caring for 
elderly relatives. Others 
include introducing a “flexible 
decade of retirement" (allow- 

Seaside 


Saga holidays 


By Michael S leap inker 


F our decades ago. a Kent 
hotelier called Mr Sidney 
De Haan decided the way 
to fill rooms in the off-season 
was to offer cheap holidays to 
retired people. 

Prom this idea grew Saga, a 
group with a turnover in 
1993-93 of Ei30m, offering holi- 
days. financial services and 
magazines to the over-6Qs. 
Saga understood that the 


acute in Germany, where there 
will be barely more than two 
people of working age for each 
person over 65 by 2040. Under 
current arrangements, social 
costs would climb from 33 per 
cent of GDP to more than 50 
per cent, says Mr Heino Fass- 
bender of the Frankfort office 
of McKinsey, the management 
consultants. 

Mr Fassbender predicts such 
increases will strain the inter- 
generational contract under 
which those in work pay taxes 
to finance the welfare state for 
those who have retired. 

“We are heading towards the 
point when it will be impossi- 
ble for our pay-as-you-go sys- 
tem to finance pensions and 
health care for the elderly," he 
says. 

The social security contribu- 
tions paid by German employ- 
ers and employees have 


ing people gradually to reduce 
their working time) and rede- 
signing jobs for the older 
worker. 

Curiously, European compa- 
nies have been doing little to 
reform their recruitment and 
retention practices with a 
greyer future in mind. The 
overwhelming trend is still 
towards early exit for the older 
worker, according to most ana- 
lysts of ageing and employ- 
ment 

One exception is the UK 
Do-It-Yourself retailer B&Q, 
which has deliberately target- 
ted alder people as employees. 
It has found a big improve- 
ment in performance, with bet- 
ter customer service , less tizne 
off sick and less pilfering. 

Eurolink Age, a European 


special needs of older custom- 
ers could be a market opportu- 
nity rather than a deterrent 
Other hoteliers also struggled 
in the off-season and they were 
prepared to offer Saga cheap 
rates for the package holidays 
it began to sell. 

On the customer side, no one 
was looking at what retired 
people needed on holiday. They 
(fid not want to climb steep 
Hnis to get to their hotels and 
they wanted someone to carry 
their suitcases. 

Mr Roger De Haan, the 
founder’s son, started out in 


already risen steeply to almost 
40 per cent of the wage bill 
Resultant higher employment 
costs are now widely seen as a 
factor in the country’s declin- 
ing competitiveness. 

Some steps have been taken 
to curb increases, including 
limiting the rate at which pen- 
sions rise and raising the 
retirement age. Pensions are 
already 20 per cent tower than 
they otherwise would have 
been, says Professor Jens 
Alber of Konstanz university. 

But there is little chance of 
winning support for more radi- 
cal measures, says Prof Alber. 
“The present system is 
endorsed by 80 to 90 per cent of 
people in opinion polls, even if 
it involves much higher contri- 
bution rates." 

And the government has 
recently agreed to a potentially 
costly extension of the welfare 

needed 


network concerned with older 
people, says that employer 
thinking about older workers 
is driven more by short-ter- 
mism than by ingrained preju- 
dice. When labour markets 
were tighter in the late 1980s 
some companies did start to 
think about holding on to older 
staff for hard-headed business 
reasons. “But that interest 
went on the back-burner dur- 
ing the recession, when labour 
supply was not really an 
Issue," says Ms Dorothy Berry- 
Lound of the Host Consul- 
tancy. 

As for eldercare policies, Ms 
Berry-Lound says very few 
European companies have 
thought much about them, 
comparing poorly with large 
US companies in this respect 


the business carrying older 
guests’ luggage to their rooms 
at his father's hotel He is now 
rhairmgn of the company. 

Retired people are far 
wealthier than when the com- 
pany started, he says. They are 
also more experienced travel- 
lers. Saga still offers one-week 
holidays at UK seaside resorts 
for as little as £100. But it also 
now sells trekking holidays in 
thp foo thills of the Himalayas, 
whale watching from Cape Cod 
and round-the-world cruises. 
Its most expensive round the 
world trips sell for £30,000. 


state with the introduction of a 
scheme for care of the elderly. 
Until now, this has been the 
responsibility of families. 

“While people know about 
the demographic trends, they 
don't yet appreciate the costs,” 
says Ms Stephanie Wahl of the 
Bonn-based Institut for Wlrt- 
schaft unri GesellschafL “The 
government is reluctant to 
enlighten them, because it 
would raise fears in the elec- 
torate in the run-up to Octo- 
ber's general election." 

The Institut advocates a 
switch away from the currant 
earnings -related pension 
scheme. Instead it recommends 
greater private savings for 
retirement, with a flat- rate 
pension as a safety net for 
those unable to support them- 
selves. 

This solution is backed by 
Mr Fassbender: “Sooner or 


Notable exceptions include car 
companies fbrd and Daimler- 
Benz, which offer career 
breaks of up to 12 mouths and 
flexible working time to carers, 
hi the UK, the BBC has estab- 
lished a support group for 
employees caring for older rel- 
atives, and the big clearing 
banks are also now offering 
carer packages. 

People who have to combine 
work with caring for an elderly 
person often suffer from stress 
which may affect productivity 
and performance at work. Such 
employees may also need to 
take days off work at short 
notice, leave work early (or 
arrive late), and may need time 
during working hours to talk 
on the telephone. Much of this 
is a cost to companies, which 


Saga has a holiday business 
in the US, as well as the UK 
American over-60s are richer 
than their UK counterparts 
and prefer to stay in hotels 
whose names they know, such 
as Hilton and Holiday Inn. 
Older British travellers prefer 
local hotels, Mr De Haan says. 

The group tried to offer Aus- 
tralian over-60s similar holi- 
days. but that venture failed. 
The Australian population Is 
too small to support a mass 
senior travellers* business. 

Northern Europe is a better 
prospect, Mr De Haan says. 


later, people will realise the 
need to increase the amount 
they set aside to live on in 
retirement,” he says. 

S imilar pressures will be felt 
across much of Europe as the 
population ages. Most coun- 
tries are pruning their welfare 
states in ways that will encour- 
age greater private provision. 

Countries such as the UK 
and the US which have already 
encouraged private pension 
provision will find it easier to 
promote a continuing switch 
away from public provision. 

And countries like the US 
and Australia, which are more 
open to immigration, face less 
serious demographic problems 
as younger migrants arrive 
and start families. Until the 
current recession, immigration 
has reduced the rate of Ger- 
many's population decline, 
bringing over 3m new inhabit- 


many feel they do not need to 
bear at present. 

On job redesign and career 
development, continental Euro- 
pean companies seem to be 
leading the way. Madame Fran- 
poise Doppler, a personnel 
manager at France's Aerospa- 
tiale, says that the company 
has analysed its workforce in 
terms of age, health and career 
structures. It has redesigned 
the content of certain jobs and 
is using more workers in a 
training/teaching capacity. 
Renault, where the average age 
of the workforce has risen 
recently to nearly 45, is taking 
a similar initiative. 

The flexible decade of retire- 
ment is more talked about 
than practised, although the 
privatised utilities in the UK 


Saga is in discussions which 
could lead to it offering its ser- 
vices on the Continent. 

Saga's offerings now include 
financial services as well. It 
acts as an insurance broker, 
finding motor, home and 
health Insurance for tbe over- 
605. It is not often realised 
older people are a lower risk 
for insurers, Mr De Haan says. 
They drive fewer miles and 
have fewer accidents. Because 
they are at home more, they 
are less likely to be burgled. 
And when they make insur- 
ance claims, they are usually 


ants in the last three years. 

“There would be resistance 
to the arrival of more immi- 
grants with current levels of 
unemployment,” says Prof 
Alber. “But as the economy 
recovers and there is again a 
shortage of labour, further 
immigration might be accept- 
able." 

But countries imposing the 
lowest welfare costs on busi- 
nesses stand to gain most from 
a decline in Europe’s competi- 
tiveness as the population 
ages. These will include the 
rapidly industrialising coun- 
tries of Latin America and 
Asia with their young and 
growing workforces. 

But it could also include the 
more mature economies of east 
Asia, which are emphasising 
the responsibility of families 
in caring for older rel- 
atives. 


have been taking some steps in 
this direction. Ike inflexibility 
of pension arrangements, espe- 
cially with pay-as-you-go pen- 
sion schemes in countries like 
Germany, can make this a 
complex option. There are 
fewer problems with funded 
schemes such as employers’ 
pensions in the UK. 

Despite growing exhortation 
by government and lobby 
groups, however, the activity 
rate of older workers in Europe 
is likely to continue falling 
until companies are again hit 
by a shortage of labour. Early 
retirement of older employees, 
often near tbe top of the earn- 
ings ladder, will always look 
tempting as long as there is a 
continuing supply of younger, 
cheaper workers. 


more honest than young peo- 
ple. he says. About half the 750 
staff at the group's Folkstone’s 
headquarters now work an the 
financial services side. 

Recession has had little 
effect on business. A more seri- 
ous threat Is low Interest rates, 
hitting the bank and budding 
society income of retired peo- 
ple. 

Saga says sales of its low 
cost UK holidays have been 
most affected. The over-6Qs 
who go on expensive trips 
around the world still appear 
to have money to spend. 


Fresh thinking 


I Employment 


break or whale watching at Cape Cod 


on old labour problem 


Extending 
the price of 
dignity 


F or the occupants of the 
St Bruno home for the 
elderly in the German 
Rhineside metropolis of 
Cologne, growing (rid Is a rela- 
tively genteel affair. Electronic 
doors whir open to ease wheel- 
chair access. When the annual 
carnival show took place in the 
packed dining room at the end 
of January, the spectacle was 
transmitted to 70 bedridden 
residents by In-house closed- 
circuit television. 

The 180 elderly people 
receive exemplary attention 
from a roughly equal number 
of well-qualified staff, includ- 
ing 59 nurses and five with a 
diploma in sports education. 

The centre, run by the Cath- 
olic charity organisation Cari- 
tas, boasts its own pottery kiln, 
a cafe called Oasis and a spa- 
cious chapel where Mr Fritz 
Stock. the 87-year-old resident 
priest, holds dally mass. Mr 
Einck helped set up the home 
10 years ago and is its most 
eminent resident 
“We don't want to be either a 
hospital or a ghetto," he says. 
“We offer a real culture of 
growing old.” 

It is a culture with which 
Germany as a whole is bamm- 
ing distressingly familiar The 
country with Europe’s most 
serious "greying" problem is 
ageing faster than it is develop- 
ing the means to pay for the 
consequences. 

Fees at the home range from 
DM2,700 a month for basic resi- 
dential care to DM4.600 for the 
130 occupants needing inten- 
sive nursing. The most acute 
cases pay DM860 on top of this. 
For most, payments are maHn 
directly from social security. 
St Bruno has no finan cing dif- 
ficulties at present In 10 years, 
that may be different. The 
inmates are shielded from the 
pressures of financial arithme- 
tic. Some have no idea of the 
degree of care lavished on 
them. More than 60 are regis- 
tered as mentally "confused. 

The home was built for peo- 
ple aged between 65 and 75. In 
the last decade, accordin g to 
Mr Siegfried Apolinarski, the 
director, the average age has 
risen to 84. The oldest is iqz. 
Ten years ago, mast occupants 
came to St Bruno as part of a 
transition from life at home. 
Now, most occupants make 
their entry from hospital Orig- 
inally. 80 patients were acute 


St-Bruno homo % l- 

In C<riogn 6 ;‘: 


But<?an it last? ■■■ ■. y,./ 
O^^^r^tireports 



nursing cases; now the figure 
is 60 per cent higher. Each year 
between 40 and 45 die. 

The centre, one of seven Car- 
itas homes in Cologne, lays on 
an ambitious programme of 
lectures and entertainment 
“We have to offer a wide range 
of activities," Mr Apolinarski 
says. “We’ve got some people 
here with doctorates." 

However, over afternoon cof- 
fee in the dining room, Mr Rob- 
ert Kaulbarch, a fit- and irrita- 
ble-looking 85-year-old. laments 
the lack of intellectual stimu- 
lus: “Many people here are 
round the bend." Mrs 
Katharine Buschwald, a 93- 
year-old ex-bookkeeper, takes a 
more charitable view: "I never 
thought about getting 
old . , . Now I am content." 

St Bruno's res iden ts are liv- 
ing out their last years, at best. 
In dignity, at worst, without 
being aware of the decay of 
their bodies and minds. Main- 
taining this service depends on 
Increasing resources flowing 
from the active sectors of the 
population. Hie pain of grow- 
ing old will soon be shared by 
those for whom a move to St 
Bruno's is decades away. 


Tomonow: The way foren 

An 80 -page pspwaort ajoteWq 
OwwtfcteWtfJijwritoMgbo 
"sfcbte tow ttfa room* al aph 
or ISO per copy, cheques Shook i 
to financial Tines 
sent to John Wftfta, Marietta 
O^ortmont Fkoxlaf Times, i 
Sot-ftw **Sitoge. Lontfafl SETS 


W**r Mvth 4 w* risen tarn Bam 
SA Compatoov and 

^ EC CboW MartwS, ftayrt 


1983. 


* 




i 






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i 






FINANCIAL TIMES TUESDAY MARCH 8 1994 


11 



u 



m r: 

■a • ' 




f 




BUSINESS AND THE LAW 


Appeal dismissed 
in nail-gun fight 


A TT/t The European 
/l\ ■ A Court of Justice 
has dismissed the. 
final appeal by 

Hllti. a nail-gun 
and fastenings 
■UnopcAN man ufacturer. 

COURT agatost an Ecufim 
- fine imposed by 
the European Commission in 1987 
for abuse of its dominant position 
to the market 

Upholding the Court of First 
Instance's judgment in favour of 
the Commission's decision, the 
ECJ rejected Hilti's claims that 
the CFI bad not applied the cor- 
rect legal tests in defining the rel- 
evant product market for the pur- 
pose of determining Hilti's 
dominant market position. 

The Court's decision confirms 
that the scope of an appeal from 
the CFI to the ECJ to competition 
cases is strictly limited to appeal 
on a point of law only. The ECJ 
said an appeal may rely only an 
grounds relating to the infringe- 
ment of rules of law, to the exclu- 
sion of any appraisal of the faf*u 
In the coarse of its judgment, 
the ECJ explained that the 
appraisal by the CFl of evidence 
put before it does not constitute 
(except where the dear sense of 
that evidence has been distorted) 
a point of law which is subject, as 
such, to review by the ECJ. 

HBti had appealed to the ECJ 
against the CFl’s judgment of 
December 12 199L The CFI dis- 
missed HUti’s application for the 
annulment of the Commission’s 
1987 decision imposing a fine far 
abusing its dominant position by 
conduct Intended to hSndun* entry 
or penetration of the timrirw* for 
Hflti-compa tlble nails by indepen- 
dent producers of nails for Hilti 
nafl guns. 

Hfiti manufactures a range of 
products used for fastening mate- 
rials in place, and in particular 
nail grms, cartridge strips, car- 
tridges and nails. These products 
are referred to collectively as 
“powder-actuated fastening 
systems” (PAF systems). 

The main dispute between Hilti 
and the Commission concerned 
the definition of the relevant mar- 
ket in which Hilti operated. 'Hie 
Commission found there were 
three separate markets for nail 
guns, cartridge strips (and car- 
tridges) and nails. 

ffilti claftnai there was a single 
market comprising all the fasten- 
ing systems which can be substi- 


tuted for PAF systems. Since the 
three components of the PAF 
systems made up an indivisible 
whole, mm said, these competed 
in one market, which included 
drilling and screwing systems. 

The CFI held on the contrary 
that the relevant product market 
in relation to which Hilti’s market 
position must be appraised was 
the market for H<*rigTi«d for 
HUH Tiafi guns. 

In its appeal, Hllti challenged 
the grounds on which the CFI 
arrived at this definition of the 
market, enahiwig it to con clude 
EHW was in a position of domi- 
nance. The ECJ rejected all the 
grounds relie d on by nira, finding 
that the CFI had adequately dealt 
with issues such as the inter- 
changeability of PAF systems 
with other fastening products. 

Hilti also challenged the 
appraisal of certain evi- 

dence and claime d that the CFI 
bad failed to take tntn consider- 
ation all the evidence presented 
by Hilti. Since no claim was made 
that the CFI distorted the ni« m r 
sense of that evidence, the ECJ 
said the - submissions relating to 
the appraisal of facts were inad- 
missible. 

In dealing with Hilti's n-iahnn 
that certain reasoning relating to 
the discharge of the burden of 
proof by the Commission was 
defective in the GFFs judgment, 
the ECJ found that the Commis- 
sion had based its reasoning in its 
decision on precise factual evi- 
dence, rather than supposition as 
alleged by HUtL 

The ECJ said the CFI bad not 
required any proof beyond that 
normally required of applicants in 
order to establish that their pleas 
In law were well founded by 
requiring Hllti to demonstrate its I 
view was well founded. 

The Court also rejected a claim 
by an intervener, Banco, that the 
ECJ increase the fine imposed on 
HHtl in view of the delay caused 
by BQltl’s behaviour. Since Banco 
bad not brought a rimflflr Haim 
before the CFI, the ECJ said it was 
not open to an intervener to 
request a farm of order from the 
ECJ different from that sought at 
first instance. 

C-5S/32 P, BOH v Commission, 
interveners: Banco (UK) lid and 
Profix Distribution Ltd, ECJ FC, 
March 2 mi 

BRICK COURT CHAMBERS, 
BRUSSELS 


Overthrow of 
ancien regime 


Jean Thibaud explains changes to 
French banking and company laws 



Facelift: French banking laws have recently been brought opto date 

company law and to restore some of 


L ast year, the newly elected 
French conservative parlia- 
ment modernised its bank- 
ing and co m pa n y laws. Sig- 
nalling a new pro-business attitude 
in France. 

By a law of December 31 1998. a 
number of changes were made 
affecting the Bank o f France and 
the credit and finanrtai markets. 
Action was taken to bring the 
French law on the netting of deriva- 
tive products, such as swaps and 
options, into Ttnp with the UK »nri 
the US. 

At its simplest level, netting 
involves the set-off of transactions 
against each other. When It works 
effectively, is recognised by the 
counterparties to a transaction and 
is designed to reduce insolvency 
exposures, it allows capital require- 
ments to be greatly reduced, since 
the credit and liquidity exposures of 
participants are also reduced. 

England has recently accepted 
netting as a basic principle of Insol- 
vency law and the US has also 
passed legislation permitting it, so 
that it can bring its capital ade- 
quacy rules into line with the 
recommendations of the Basle com- 
mittee of the Bank far In ternational 
Settlements. 

France has now followed suit 
The law of December 31 provides 
that, in the event of the bankruptcy 
of a French counterparty, French 
law fully recognises, and gives 
effect to dose out, netting provi- 
sions included either in regulations 
applicable to official markets, or in 
master farm agreements published 
by the International Swaps and 
Derivatives Association or by the 


counterparty to such a d e rivative 
transaction win not be charged an 
extra premium for counterparty 
risk; and second, banks will be able 
to show their net position with a 
French counterparty, thereby 
reducing their capital costs. 

The December 31 changes also 
clarify the law on repurchase agree- 
ments - instruments by which secu- 
rities are sold on a short-term basis 
with an agreement to repurchase. 
Until the law was passed, there was 
same doubt amqng the legal com- 
munity about the enforceability In a 
French court of a pension Bures 
(repurchase agreement). 

This was because the legal bases 
of this instrument were weak, the 
first being a mgninr an dnm of under- 
standing {accord, de place ) approved 
by the Bank of France in coopera- 
tion with the Association of Bank- 
ing Treasurers and the second, 
purely for the tax aspects, a simple 

letter from the M i nist r y of Economy 

and Finance to the AFB. 

The invaluable contribution of 
the new law is that it offers a safe 
legal framework for such transac- 


tions, arid it defines the large num- 
ber of instruments which may be 
subject to repurchase agreements 
(“repos”) and the Institutions which 
are authorised to enter into such 


foods, financial institutions, instrtu- 
tional investors, insurance compa- 
nies, non-profit corporations and 
unit trusts. 

The law also sets out the tax and 
accounting treatment of “repos", 
thereby creating the conditions 
required far the development of a 
real international “repos” market in 
Paris, such as currently exists in 
London and New York. 

The law of December 31 also abol- 
ished stamp duty on securities 
transactions entered into with a 
non-French tax resident on the 
Paris bourse. This measure is expec- 
ted to suppress one of the big Incen- 
tives for large French stockholders 
to sell blocks of shares on the Lon- 
don Stock Exchange through the 
electronic automated quotation sys- 
tem (Seaq). 

This measure, together with the 
success of the current privatisation 
programme, is expected to boost the 
volume and liquidity of the market 
on the Paris stock exchange. 

On the corporate side, the 
changes are designed primarily to 
provide a more flexible and modem 


the rights of banks and other 
secured creditors in the event of the 
bankruptcy of a French company. 

The law of January 3 1994 has 
created a new farm of joint stock 
company, the so-called “simplified 
joint stock company” (or “SAS” in 
French), which allows for much 
greater flexibility in, among other 
things, the decision-making process, 
management and the «Hngfan of 
shareholders than previously per- 
mitted under company law. 

T he essential difference is 
that the shareholders, sub- 
ject to only a few restric- 
tions, can organise the 
company as they wish. This type cf 
company is particularly suitable to 
both domestic and cross-border 
joint ventures between medium and 
large sized companies. 

French companies bad been lob- 
bying for such a simplified joint 
stock company for same thna. Previ- 
ously they had no alternative but to 
go into other European jurisdic- 
tions, in particular the Netherlands, 
to find the level of legal flexibility 
appropriate for certain types of 
joint ventures between large compa- 
nies. 

For the first time in the history of 
French company law, the law of 
December 31 1993 expressly permits 


the forcing out (“squeeze-out") of 
minority shareholders in a listed 
company. 

The issue was hotly debated in 
the parliament, and the French 
squeeze-out is subject to strict 
requirements. First, the majority 
shareholders should hold either 
together or “in concert” no less 
than 95 per cent of the capital and 
voting shares of the company. 

Second, the squeeze-out may 
occur only after a tender offer or a 
request for delisting, of shares has 
been made In accordance with the 
rules issued by the CBV, the regula- 
tory authority for the French stock 
exchange. 

Eventually, the minority share- 
holders should receive fair compen- 
sation that is “the appropriate com- 
bination in of value of 

(he assets of the company, the prof- 
its of the company, the market capi- 
talisation for the shares, the exis- 
tence of subsidiaries and the 
financial prospects for future busi- 
ness”. 

The national assembly also 
passed on January 10 this year a 
draft bankruptcy bill, amending the 
1985 Bankruptcy Act If approved by 
the Senate, it would significantly 
alter the rights of banks and 
secured creditors of a company 
ei ther under administration or In 
bankruptcy. 

The 1985 act favoured employees, 
and was aimed primarily at keeping 
the company alive and saving jobs 
by precluding banks and other 
secimed creditors from enforcing 
their security and selling off the 
assets of the company. 

The principal consequences of the 
draft bill for the banks and the 
other secured creditors would be: 
that fax the event of liquidation, the 
secured creditors would rank before 
the creditors who granted new 
money after an a dminis tration judg- 
ment; the tax authorities and social 
security would not be given prefer- 
ential rank hi respect of all their 
Haims; and that, in the event cf a 
bankruptcy, the secured creditors 
would be permitted to enforce their 
security by «*ntng off the assets of 
the company. 

For political and historical rea- 
sons, the French deregulation 
movement took place later than and 
was not as brutal as in other west- 
ern countries, such the UK or US. 

Even if these changes do not 
appear to be that spectacular from a 
UK or US perspective, they illus- 
trate a dear departure from the 
ancien regime. They show a clear 
political will decisively to integrate 
France into the worldwide econ- 
omy, and to offer to participants on 
the French markets the same types 
of legal instruments available in the 
mod industrialised countries. 

The author is an Avocat and partner 
cf Oide Loyrette Nouel the Paris- 
based law firm 


LEGAL BRIEFS 



Flotations mean 
business for 
City solicitors 

A flood of flotations has been 
good news for City solicitors. 
Unklaters & Paines was 
the leading legal adviser In the 
final quarter of last yean It was 
involved In 13 new issues as sol- 
icitor to the issue or the company. 

Clifford Chance and Ashnrst 
Morris Crisp were equal second 
for their Involvement in nine issues 
each. Slaughter and May was 
fourth with eight issues; Herbert 
Smith fifth with seven; and 
Freshfields, Norton Rose and 
Travers Smith Bndthwaite equal 
sixth with five each. 

Figures from accountants KPMG 
show 73 companies joined the 
official London list in the final 
quarter of 1993, the highest 
number since KPMG began keeping 
records In the mid-1980s. 

Disputes option 

T he Delaware state legislature 
hoc unanimously passed 
the Summary Procedures 
Act, an alternative dispute 
resolution measure. This gives 
Delaware companies the chance 
to avoid jury trials for civil actions 
by opting to take their cases before 
a special panel of judges. 

Tort reform 

A more systematic approach 
needs to be taken to the 
reform of tort law 
worldwide, according to a review 
of the economics of law reform 
published by the Oxford Review 
of Economic Policy. 

The movement towards strict 
product liability In the US and 
Europe, for example, will have 
Uttle impact on product-related 
accidents, it says. Tort reform 
should be seen in the wider context 
of public policy towards regulating 
the quality of products, workplace 
safety and environmental damage, 
rather than as a response to events 
where victims are seen to be in 
need of compensation. 


French Banking Association (AFB) 


for over-th&counter transactions. 

The practical consequences of the - transactions: banks, securities 
new law are, first that a French houses, brokerage firms, mutual 


PEOPLE 


Racal chooses Richardson for data 


Racal Electronics, which has 
been dogged by bid rumours 
for months, is attempting to 
turn around its problem data 
communications operation by 
bringing in Martin Richardson, 
right, from elsewhere in the 
company to become c hairm a n 
and chief executive of Racal 
Data Group. 

Tim Holley, the previous 
incumbent, was last October 
named chief executive of Cam- 
elot one of the bidders for the 
National Lottery. 

Since then, Racal’s chief 
executive David Elsbury says 
he has spent several months 
“reviewing and vali d ating the 
new-product pipeline and 
sharpening the focus of the 
research and development pro- 
gramme.” Richardson now has 
until May to produce for the 
board “a detailed report on 
progress and plans for the 
business”. 

While Holley was based in 
the UK, Richardson has moved 
out to Florida, where much of 


the data group's business is 
located. Holley had spent more 
of hls time on the other, newer, 
side of the division, the UK- 
based Network Services. Peter 
Blair, 56, previously in charge 
of the company's advanced 
development activities, has 



also transferred to Florida as 
technical director of the data 
group. 

Richardson, 49, a former 
Plessey " executive who has 


been on the main board of 
Racal Electronics since 1985, 
earned his spurs recently by 
repairing the fortunes of 
Racal’s specialised businesses, 
in particular turning software 
subsidiary Racal-Redac’s large 
losses into respectable profits. 
He will have plenty of scope 
for action at Racal Data Group, 
where pre-tax profits in the 
year to March 1993 were just 
OZBm despite sales of £37Qm. 

As Mike Styles, an analyst at 
Credit Lyonnais Laing puts it 
“Richardson’s track record 
suggests he will Trevive the 
operation]. The question is 
how much time he haw got.” 
Yesterday, the shares closed at 
229p, up 7p on the day. 

■ Martin Burgess has been 
appointed human resources 
director of NCR; he succeeds 
Cheryl McNeal who is pro- 
moted to hq in Ohio. 

■ David Elder, president of 
PSION Inc, has been appointed 
to the parimt board. 


Bodies 

politic 


r Griffiths, former chief 
Ive of Guy’s Hospital 
has been appointed 
r of the King’s Fund 
and deputy chief exec- 
I the KING’S FUND, 
tin Rickards, md of 
1 UK, has been 
ted chairman of the 
ANICAL AND METAL 
S CONFEDERATION, 
s Whitby, md of Chart 
is, has been appointed 
an of The SOCIETY OF 
ICAL ANALYSTS, 
e Booth man, md of 
jr Unit Trusts, has teen 
deputy chairman of the 
JIATION OF UNTT 
S AND INVESTMENT 

i Furness, formerly a 


director of J Aron and Co (UK), 
the coffee trading department 
of Goldman Sachs, has been 
appointed director erf business 
development at The LONDON 
COMMODITY EXCHANGE; 
previously chairman of the 
LCE options market, Furness 
is an the LCE board and is 
chairman of its Coffee Market 
Committee. 

■ Trevor Smallwood, chair- 
man of Badgerline, is the new 
president of the BUS AND 
COACH COUNCIL. 

■ John Startrack, md of Twi- 
Hex, part of Tomkins, has been 
elected president of EEF 
SOUTH, the Engineering 
Employers Federation for the 
south and south east 

■ David Cameron-Moore, chief 
executive of BNP Mortgages 
Group, appointed chairman of 
The ASSOCIATION OF MORT- 
GAGE LENDERS. 

■ Mike Beard, director of cor- 


porate communications for the 
Taylor Woodrow Group, has 
been appointed president of the 
INSTITUTE OF PUBLIC RELA- 
TIONS. 

■ Viscount Weir, chairman of 
the Weir Group, has been 
Hortpri president of the FED- 
ERATION OF BRITISH ELEC- 
TROTECHNICAL and ALLIED 
MANUFACTURERS’ ASSOCI- 
ATIONS for the second time. 


■ Lady Howe of Aberavon, 
below, has been appointed 
president of thn UK committee 



need not fear 
ses of lauding 
ire going 
as a result of 
e equipment 
sec has just 
nd venerable 
rector, 70-year- 
having turned 
of ex Cable & 
in Lord Sharp, 
the December 

i old C & W 
a member of 


the board afTelspec Europe for 
some while. Chief executive 
Garth Riley said that at Che 
time of the listing he didn’t 
want to upset BT, one of its 
principal customers, by having 
two C & W types on the main 
board. “They were proof-read- 
ing the prospectus and it 
would have made their hair 
stand on end." Now the com- 
pany Is safely public, he reck- 
ons he has more room for man- 
oeuvre. What does BT say 
now? “I haven’t asked them," 


says Riley. 

other non-executive appoint- 
ments! 

■ Michael Haines, retired part- 
ner of KPMG Peat Marwick 
and former director of Nation- 
wide Bunding Society, at LAM- 
BETH BUILDING SOCIETY. 

■ Wisse Dekker, chairman of 
Philips Electronics, Peter 
Raven, formerly finance direc- 
tor of Ultramar, Bernhard 
Rumbold, at MATOL BOTANI- 
CAL GB. 


Redland 

constructs 

From specialist publishing to 
roof tiles, bricks and concrete 
- Paul Hewitt, 37, is moving 
from being .finance director of 
Euromoney to be finance direc- 
tor at Redland, one of Europe's 
biggest building material 
groups. ' 

Hewitt has been appointed to 
succeed Gerald Corbett who at 
the end of last year was 
announced as the new finance 
director of Grand Metropolitan 
the food and drinks group. 

Corbett, who leaves Redland 
at the age of 42, had managed 
the company's finwnrfni affairs 
far six years and had been par- 
ticularly adept in minimising 
the company’s tax and interest 
liabilities. Hie will be a difficult 
act to follow. 

Robert Napier, Redland’s 
chief executive said yesterday: 
“Over the last six years Paul 
Hewitt has played a key role in 
the successful growth of Euro- 
money including its interna- 
tional growth.” 

Euromoney Publications, 75 
per cent-owned by the Daily 
Mail and General Trust, lifted 
prefax profits by 28 per cent 
from £13 .8m to £17.7m in the 
year to September 30. Redland 
in the first six wmnths of last 
year increased pre-tax profits 
by 22 per £L08m. 

Hewitt, who win commence 
duties at Redland this summer, 
was educated at St Paul’s 
school and Cambridge Univer- 
sity before qualifying as a 
chartered accountant at 
Arthur Andersen. He has been 
finance director at Euromoney 
since 1988. 

■ Stephen Liddle has been 
promoted to md of Geoffrey 
Osborne Homes, part of the 
OSBORNE Construction 
Group. 

■ Norman Lambert, most 
recently a consultant, has been 
appointed md of the Stonewest 
Cox R estoration division of 
PETER COX GROUP. 

■ Alan Piggott has been 
amxdnted rawnnwrt nl iHr w-tnr 
faHsTONE A WEBSTER Engi- 
neering be moves from AAB 

Lunnn us Cr est. 

■ TINT ( THEM, the pharmaceuti- 
cal company, has appointed a 
new finance director, Geoffrey 
Cooper, 40. who Is joining from 
Isoceles, where he was group 
finance director of the operat- 
ing arm. Gateway Group. Cop- 
per was previously a manage- 
ment consultant with Spicers 
and Arthur Young. He replaces 
Grahame Sewell 


LEGAL NOTICES 


In tfceffigb Conn of Janice 1904 No. 0510 

Oiyraiy DMrioa 
Bridal Diuria RcfiMry 

EM THE MATTER OF 
THE COMPANIES ACT UBS 
AND IN 

THE MATH* OF 
MAQOIS WOLDS LOOTED 
Kaikc n hereby pm rial a psatka pmtemed 
10 Hot Majotyi IBjb CDmc of Jmicc, Briaol 
Dzttrid Rcgisxy on Ok 22 ad day oTMmqr 
1994 tor the conflrnmtcn of tha ea^a b m at 
As of ifc. above Mined y- y bu 
£725456 » £307.753 ■ <flrecrt to be bead 
before Hb Boon* lodge Weds OCocTbe Old 
CeiitdJ Home, Corn Surat, Briirol. o« 
Tfcmfaj die 24* <fcy of Mm* IS94. 

Any Qrtflior or Shareholder of die Qxnpaty 
dofchg » oppose to makiog of the Older Ear 
da aafimariee of te teed (wfeiedM oTcapfeal 
appear al rise li m e or lie bearing in 
penoa or by Gomel for thn. prepare. 

A copy of ibe aoM Peddon win he fanfcbed » 
any neb penoa requiring the same by the 
nHfcn n cnrtn oed Schama oo payment of ibe 
i r g nlnr d ( buy for ibe leie 
Doled ibb 4ib day of Modi 1W4 


hod loan 


la ttoHfeh Com oftaak* 1994 No. 03 II 

Chancery Dirbdac 
BriHol Dtaict HcgtaRy 

IN TOE MATTER OF 
THE COMPANIES ACT U85 
AN D IN 

THE MATTER OF 

MAGNUS DEVELOPMENTS L1M1XED 
Notfee b hereby ^eaduttpahiu pwooiri 
to Her Mijratyh High Chart of Jmfce. Bdnol 
Dfapfct Bq^Hiy on the 22ad day of FMbnmy 
1994 fin die coafianrioa of Ibe la dari l iw of 
die capital of ibe rime naned Qmpaqy bn 
£9417418 In £302.164 h dnetad to be heonl 
befoie Hi* Ham lodge Weefci QCmTfcc Old 
Connell Haase, Cora Street, Bristol, on 
Uansday the 34H (by of b4*di 1994. 

Any Qtdkor or of the |*i * y 

dadeag bj appae ibe i—lrim of dot Onkr fat 
du: coafinoarion of ibe arid of apaal 

ritoald appear u ibe disc of die hearing in 
penon or by Coamel Eh dm ptapaac. 

A copy of Ik arid Petition wg be ItoiMa d a 
any web penoa rcqelrisg ibe am by the 
nndameariaaed Sofidtoa an payment of the 
■phled « Imyi fonknm. 

Doled drii 4tb thy of Mandi 1994 
Michael Bans and Ooaqmy 
Read bouse 


Bridgwaw. Someaef TA6 5AT 
Bcfmee &JK 

SoBdtoa for be above saaod Company, 

InlbeHIthConit of Joatkx 1994 No. 0512 

Cbaaeoy fHvirioa 
BriHol Dtaia ReglaBy 

IN THE MATTER OF 
THE COMPANIES ACT IMS 
AND UN 

THE MATTER OF 
MAGNUS HOMES LIMITED 
Nodes it hataby fjvantal » pedrien paested 
id Her M^csiyfc High Cban of Joadcc, Brimri 
Dtada Begh&y on die 32ad day of tammy 
1994 for Ibe ** . .. S i m. i Inw of [be of 

die ciptad at the abow aaaard Company boa 
I lit 

iQCuTheOld 
, Cora Street. Bristol, as 
r tie 2«<h day of Much 1994. 


Bridgwucr, Somerset TAb SAT 
Befam c n: RJK 

Sofidwa fin die above Mined Goapaaj. 


In tbc High Oust of J 
Cbanony Division 
Briml Dtaia Kqpsby 

IN THE MATTER OF 
THE COMPANIES ACT IMS 
AND IN 

THE MATTER OF 



Dart ttda 4th day of 1 




Chat* Suit, 

Bridgmei; Someaet TAfi SAT 

Reference: JUK 

Salirimn lee tie above n a med Comp a n y. 


TAKE 

PRECISE AIM 


r; Y !■!. \ f!Xi; 
it il H 

/{(•,. i;rn Vt- v; 


/7.\ t. 

Ti if/'-, inf ’ w; 


TARGET 

THE 

BEST 


J'nr inl'.-m mi <:dr<-rl m lh;\- sa-fif'i rut!: 

Pit Slip Wri^lt-y uri '171 -S7" MUo 1 

.Atidr-u- r/yn*>k i mi >!7l-.-wo -II >'4 
< i :t r*-( li -Jti.-H". ■■'ti <i 7 l-lu 7 :; 77 y 


CONTRACTS & TENDERS 


DEMOCRATIC AND POPULAR 
REPUBLIC OF ALGERIA 

*nmi Hflnleriy of Honning 

Notice of eetiaeel nil niianiiiinral invit&tioo fbc the pmelectim 
of building com paniee to construct 2,000 urban public lodging* in 
Algiers. 

The Ministry of Hooting iamea a notice of tlie invitation for tandem 
in order to preselect national and foreign companies which will be 
rasponathl e for the imp tomentat i n n of a programme to bgDd 2.000 pnhhc 
lodgwgn financed by the Saudi Development Fund. 

This programme wiDhe divided as fUlowK 

- 887 lodgings in Vert* Sive, Bordj El KiHan 

- 324 lodgings in Bab Esnuar 

- 300 lodgings in Bab Exzomtr 

-SOB lodging* in Dar El Baida 

- 380 lodging* in Said Hamdine (Birhhadam) 

The implementation of tins programme win require the ability to 
mult li nlliHngilnaim«»a anri [tmelda ■ high tpali^y construction. 

Suitable companies will be allowed to tender for one or more 
sections of the programme. 

National Hid foreign companies wiD be able to swislgsmsta to form 
a jointly babie group within the framework of a partnership. 

This form of procedure is favoured in order to strengthen the 
realization capacities of nat i o n al companies. 

Interested companies can obtain a brochure specifying the terms 
and conditions from the Ministry of Housing at 'Direction des 
Programmes d 'Habitat et de la Promotion Immobilize**, 136 rue 
Didonche Mourad, Algiers, fr om 9 am. till 11 a.m. and 1 pjn. till 4 pjn. 

Tbe deadline for tenders is set at 30 days after the publication of 
this notice inviting for tender preselection. 

NB: The present notice of invitation for tender preselection replaces 
the previous notice which was published in the Algerian national press, 


* Supervision of Housing Programmes and Property Development 



It will examine the trends of 
management training and offer practical 
guidance for companies and Individuals 
building a training programme. 

For an editorial synopsis and 
infor ma tion on advertising opportunities 
please contact: 


Sara Mason 

Tel: 071 873 4874 Fax: 073. 873 3064 

FT Surveys 







l 





^^v*™*** 1 n>c^8nBSi8B887»sai*B8BBiBnRnnenwnn»0rHr scsnssr a^mqnsfWfriv 


12 


FINANCIAL TIMES TUESDAY MARCH S 1994 


MANAGEMENT: THE GROWING BUSINESS 


S ince the Berlin Wall fell in 
1989 and eastern Europe was 
opened to western invest- 
ment, not one of the world’s 
biggest computer makers has set up 
or bought manufacturing plants in 
the region. 

Yet a small British company is on 
the verge of taking just such a step, 
attracted by the low manufacturing 
costs and the quality of available 
engineers. Metric Components, 
which makes electronic point-of-sale 
(Epos) cash registers, will this week 
take management control of Temed 
SA, a medical equipment factory 
based in Silesia, southern Poland, 
and owned by the state. 

The deal is high risk. Apart from 
anything else. Metric might find 
that being removed from its main 
market makes it less responsive to 
its customers, costing it more in 
lost sales than it gains from lower 
man ufacturing costs. 

But Metric's deal does show that 
other smaller companies, which, 
would benefit from a lower manu- 
facturing cost base, can join the 
largest companies in buying priva- 
tised assets in eastern Europe. 

Metric's Epos cash registers are 
akin to s mall computers, not only 
recording transactions but helping 
the management of inventory and 
re-ordering. The machines are 
designed in Basingstoke, England, 
the electronics come from Far East- 
ern suppliers such as Lucky Gold- 
star, and the finished product is 
sold mainly in the UK. Until this 
week the machines were manufac- 
tured under contract in Poland. 

Job Maats, Metric’s Dutch chief 
executive, says the attraction of 
Temed - which is being sold 
through the Polish Privatisation 
Through Restructuring programme 
- is the opportunity of cutting the 

COSt Of inno vation. 

About 90 per cent of the cost of 
making a mould Tor the plastic cas- 
ing of the cash tills is the cost of 
engineers. With Polish engineers 
costing 10 per cent of their western 
counterparts, the saving is substan- 
tial. As a result, the risks involved 
in changing the design of a product 
are reduced because smaller batch 
runs become economic, he says. 

While the big computer compa- 
nies have chosen not to move to 
eastern Europe, Maats is not alone 
is extolling the attractions of the 
region. David Thomas, director of 
Schroder Polska, the Polish subsid- 
iary of merchant bankers Schra- 
ders, says ha is puzzled why more 
companies have not yet adopted the 
approach. 

“The Privatisation Through 
Restructuring programme is specifi- 
cally focused on the medium-sized 
companies in Poland," he says. 
Under this programme, a manage- 
ment group restructures and then 
privatises small and medium-sized 
enterprises in return for a fee, profit 
sharing and a commission on the 


Go east, 

young 

company 

Richard Gourlay reports on the 
opportunites offered by the Polish 
privatisation programme 



Job Maats if someone has the vision and a plan then Poland is idea V 


Tianrw Humphries 


transfer of shares to investors. 

It contrasts with the Mass Privati- 
sation Programme - in which 33 for- 
eign and domestic fund managers 
are being selected to ran 800 state- 
owned companies. 

“I have spoken at several confer- 
ences to try to open potential inves- 
tors' eyes to the possibilities of 
Investing in Poland," Thomas says. 
“Poland has had a reputation of 
being dominated by large industry.” 

One reason for the relative lack of 
interest in smaller Polish compa- 
nies Is a shortage of support for 


investors. The most comprehensive 
government investment guarantee 
scheme for eastern Europe Is pro- 
vided by Germany. But most of Ger- 
many’s Mittelstand companies have 
been more interested in manufac- 
turing plant in the Czech Republic, 
on the doorstep of their domestic 
market, 

There are other obstacles in the 
way of buying a manufacturing 
base in eastern Europe. Maats says 
it took at least 20 visits to negotiate 
the purchase of Temed. He says no 
one should underestimate the 


demands such deals make on 
top-level management time. “It has 
taken me a year to do the deaL I 
spent three years restructuring the 
Brazilian debt so I know something 
about negotiation." 

The finan cial structures are often 
complicated. A similar deal to buy 
Elzab, another Silesian state-owned 
company that makes mainframe 
computer monitors for the Russian 
market, fell through because Metric 
could not get the hanks to agree the 
restructuring terms. 

Maats eventually agreed a deal 
with the Ministry of Privatisation in 
which Metric first takes manage- 
ment control and an option to buy 
Temed for $lm (£600m) within two 
years. Central to the deal was agree- 
ment from Temed 's banks that they 
would write off half their debt and 
waive the substantial interest 
charge on the balance for a year. 

Any company considering this 
route must contend with cultural 
differences arising out of a history 
of central planning. Maats says this 
message came home when Metric 
was developing a plan with Elzab's 
management, a that was once 
in charge of 2^00 people. “It took us 
six weeks to realise the people had 
only ever implemented a plan com- 
ing down from the central plan. 
They had never initiated.” 

Metric had one big advantage 
that many unquoted companies 
could not turn to: a pile of cash. 
Last year, Maats reversed three 
companies, including the Epos till 
company, into a quoted shell, rais- 
ing more than £700,000 in the pro- 
cess. But much of the leg-work was 
done before this cash was raised. 

Nevertheless, buying a manufac- 
turing base in eastern Europe is a 
route more intrepid smaller compa- 
nies might consider if they are well 
enough structured to allow senior 
managers the time to negotiate 
deals. “If someone has the vision 
and a plan then Poland is ideal 
because the people are used to 
implementing a prepared plan,” 
Maats says. 

He says many factories, particu- 
larly in what is becoming known as 
Silesia Valley, own large amounts 
of technology and sophisticated 
computer-controlled machining cen- 
tres. And because the factories were 
hugely over-staffed, they have 
plenty of manufacturing space. 

“The real advantage is that there 
is highly qualified manpower with a 
historic Infrastructure which you 
can use for making new things in 
new ways,” he says. “What was 
done in the Far East can now be 
done in eastern Europe. There is 
better training, it is closer to mar- 
ket, no investment problems and 
the finance is available more easily 
across the region." 

That is the theory. Time wifi tell 
whether Metric was right to go to 
Poland or the big companies were 
right to eschew the region. 



Mike Warwick- 
Smith found out 
about the perils 
of letters of credit 
- the means by 
which payment 
is guaranteed for 
many exports - 
the hard way. He 
is managing director of Elsan, 
a Sussex company best known 
In the UK as a supplier of 
chemical toilets and healthcare 
chemicals. 

Elsan was shipping dis infectan ts 
to a new customer in the Middle 
East and one word was mis-spelt 
in a document The ship was 
loading. Correcting the error 
might mean having to send the 
consignment on a later ship - 
and risking losing the order. He 
decided to let the shipment go, 
but his new customer’s bank 
refused to honour the letter of 
credit because the documentation 
was not 100 per emit correct Elsan 
stood to lose about £11,000 - no 
small sum for a company turning 
over £2m, about 10 per cent of 
it in export markets. 

Everything worked out in the 
end because the customer came 
back for more. Buyer and seller 
agreed for the cost of the initial 
consignment to be paid off in 
instalments of cash, and 
Warwick-Smith never made that 
mistake again. 

But many other people still da 
Ian Campbell, director-general 
of the Institute of Export, says 
at least half of all letters of credit 
and their associated 
documentation have to be 
amended before payment can be 
made. 

Steve Beresford, NatWesfs 
export finance specialist In 
Manchester, says: “Compliance 
with credit terms and conditions 
is never easily achieved. About 
65 per cent of documents 
presented to us in Manchester 
in 1993 were discrepant on first 
presentation." 

In theory, letters of credit 
should be easy. An export 
customer opens one with his or 
her own bank. It amounts to a 
promise by the customer’s bank 
to pay the exporter's bank when 
the goods have been delivered 

To ensure delivery and payment, 
various questions must be settled 
such as currency, method of 
shipment, port of delivery, 
inspection certificates prior to 
dispatch - proving the goods are 
what they are supposed to be - 
and correctly descriptive 
accompanying bills of lading 
daring shipment Time limits are 
set for delivery and the letter of 
credit’s validity. 

If the details do not match 
exactly on all documentation. 


EXPORTING 

It pays 
to be 
precise 

Letters of credit 
are examined by 

Ian Hamilton 
Fazey 


or specified procedures arc not 
followed, the letter of credit may 
not be honoured Details do not 
necessarily have to be “correct" 

- such as through mis-spelling 
or typing errors in the letter of 
credit - provided they are 
consistently wrong In all the 
documentation. 

“It's mind-boggling,” says 
Campbell. “You have to check 
every word to make sure 
documents match each other and 
completely satisfy the conditions 
in the letter of credit. It’s the 
exact match that counts, not the 
intention, meaning or even 
spelling. You can forget all this 
’My word is my bond stuff.” 

Nor are all letters of credit what 
they seem. Michael Palmer is 
export director of Tenby 
Electrical, a Birmingham 
manufacturer of light switches 
and connectors. The company 
tarns over about £24m a year and 
exports are now at £8m. He 
received a £100,000 order in 
Nigeria, but had never heard of 
the bank issuing the letter of 
credit Also, it specified shipment 
by air freight which enables 
goods to be shifted - and stolen 

- faster at the receiving end. 

“We asked our UK bank to 

confirm the letter of credit It 
turned out the bank In Nigeria 
did not even exist It was a 
straightforward fraud." Palma* 
says. Other companies have been 
caught out in similar scams. 

Banks charge for confirming 
letters of credit If checking leads 
to amendments, there will be a 
further fee. Mark Runtewicz of 
the Bank Relationship 
Consultancy, which tries to get 
clients better deals with their 
banks, urges caution. 

“If bank charges work out at 
£120 and the transaction is only 
worth £2,000 - and that’s not 


untypical as an export order tor 
sale 

-S£2K— - 

an International bank which acted 
for both an exporter aim nis 
customer. The London branch 
charged £250 for confirming a 
letter of credit from the Hong 
Kong branch - In effect for 
confirming its own paper. 

Buniewtcz says exporters need 
to fofak more carefully about 
letters of credit Banks may like 
them because they offer security, 
but they are not always best, he 
says, for clinching an export sale 
and they add cost Their 
complexity also increases the risk 
of things going wrong. 

“The exporter should assess 
country risk and bank risk," he 
says- He thinks trade within the 
European Union will Increasingly 
be done on open account as in 
the UK. 

Both Warwick-Smith and 

Palmer say the basic marketing 
principle of knowing your 
customers and markets is what 
really matters. In some countries, 
payment in advance may be the 
only safe way of doing business. 
Letters of credit and export credit 
insurance may be necessary in 
others, but regular customers 

who pay on time can earn the 
right to trade on open account 
wherever they are. 

Barclays now offers an on-line 
system for letters of credit and 
export documentation, useful for 
companies with many transactions 
capable of standardisation. There 
are also several stand-alone 
software packages available. 
Generally, however, these systems 
are more useful for Importers 
wanting to open letters of credit 
in the UK. 

For smaller businesses, simple 
checklists of what to do when 
a tetter of credit arrives In the 
post may be more useful than 
anything else. UK clearing banks 
have their own versions, some 
better than others, so it Is worth 
collecting them. Sitpro. the 
Simpler Trade Procedures Board, 
an independent agency supported 
by the Department of Trade and 
Industry, also offers a checklist, 
which the Institute of Export is 
adopting under its own logo to 
offer members. 

Runiewicz recommends the 
human brain. “Software and 
gizmos are all very well, but they 
don’t solve the fundamental 
problems," he says. “Giving credit 
or not is a matter of judgment 
Exporters can help themselves 
a lot more. Letters of credit are 
like the instructions for making 
model aircraft They only work 
if yon follow them properly." 


BUSINESS OPPORTUNITIES 

READERS ARE RECOMUSOEOTO SEEK APPROPRIATE PROFESSIONAL BEFORE ENTERING WTO COMMtTMENTS 


BUSINESS SERVICES 



EwmzoNEa 

TECHNOLOGY 


ENVIRONMENTAL COMPANY 
SEEKS CAPITAL 


A California registered environmental company 
established four years ago with patented 
technologies for total destruction of hydrocarbons 
and other organic contaminants in waste water through 
oxidation w/ozone and U.V. lights, is seeking Investment capital. 

This is an opportunity tar entrepreneurial investors to enter water 
remediation markets in both the US and the world. Potential 
investors in the UK should ensure that they foil within article 9-3 of 
the Financial Services Act 1986 (Investment Advertisements), 
exemption order 1 988. 

Owners are willing to make a private offering of shares and may 
consider either a minority or a majority participation In the company. 
For further Information please contact: 

President, Envirozone Technologies, Inc. 

1371 Oakland Boulevard, Suite 303, 

Walnut Creek, California, 94596 USA 
Fax ft 510-946-6089 


TRACTOR UNITS 

WE HAVE A LARGE NUMBER OF USED 36 
TONNE TRACTOR UNITS, IN EXCELLENT 
CONDITION, AVAILABLE FOR HIRE FOR 
PERIODS OF BETWEEN 3 AND 36 MONTHS. 
MINIMUM 25 UNIT CONTRACTS. 

Offers to Box No. B2522, Financial Times, 

One Southwark Bridge, London SEI 9HL. 


CONSULTANTS IN LOGISTICS 

Davim & Robnan, the UK" a leading Independent management consultancy 
Hpivinlmafr in Inuupart, nmvhounnf and inventor? control, irbihw to acquire 
« mcrRB with a similar consultancy. Tho profile of tho ideal partner la likely lo 
include a proven track record o t BuCMoafiil aaeignmenca, high professional 
standard* and a dynamic young management team. 

t-rincipols only plraao contact: 

John R Roily, Chairman 
Davies A Robson Logistics Umjfaul 
The Coach House. Wading Street, Wccdon, Northanto NN7 4QC. 

Tel: 0327 349090 


FRANCHISE 
MASTER LICENCE 

Established franchise system in 
the United Kingdom is soiling its 
UK master licence. Master 
licence in other European 
countries also available. Profit 
centers include franchise sales, 
supply sales and royally income. 

This one of a kind service 
business with no competition is 
one of the fastest growing 
franchises in America. 

For information contact: 
Professional Carpet Systems 
Steve HofT 
1404) 362-2300 USA 
(404) 302-2888 Facsimile 


FUNDS AVAILABLE 
TO PURCHASE 

* Leucrs of Credit 

* Bank Guarantees 

* Other Acceptable Collateral 

* Backed by Private Invcstora 

THRU MAJOR WTL BANKS 

Capital support corf. 
US: (714) 7S7-IU70 • Ras: (7 W) 757- 1270 


GUARANTOR 

REQUIRED. 

System builder and developer 
based Surrcy/Middlesex seeks 
Performance Bond Guarantor 
to support expansion. 

Bonded amounts up to 
£500,000 any one contract 
for periods of Less than 12 
months. 

Priulpak only write te Box B2S2I. 
Ruanda! Tima. One Southwark Bridge, 
London SEI9HL. 


_ U* 

Regus 


Fully Furnished 
Offices 


Businesses Wanted 



• Furnished Offices 

• Secretarial Services 

• Personal Telephone 
Answering 

• Conference Facilities 

• Photocopier, Fax, 

Word Processing 

• Immediately Available 

• Flexible Lease Terms 

European Locations 


Amlcnbm 

.VMmlui Airport 

Ocrlln 

Bread, 

Copenhagen 

Dublin 

DuMciftorf 

Geneve 

Frankfurt 

Itwihnig 

Lnodoa TnMpr 

Lnunbuing 

Madrid 

*Urcu* 

.Munich 

Para 1 


♦11 JO b07 7100 

♦ II MO! into 

♦4V 10 HI *4 10 

♦ 12 2 SIS 77 II 
♦« IIUKfi 
♦HI 14 754 214 

149 21 1 D«» 
*41 22 819 19 19 
♦19 M 97( 447 

♦ 49 411 12 » W 
*44 7) 172 59 59 
MM HV9II 

t-u i m mi 

♦ 12 2 71k 17TB 
♦4909 59 04 7S 

♦II I 40 07 SO 07 

* 1404 292 33 S2 


U2SJV. 

[10 bxaliuml 

Aulnlu/Au H»l 1 JM 2100 

<27 lociluiB] 

Japan ♦OIK 179 1 151 

Your Partner in over 
SO Inlrnulional Suainc*. Location, 


You may be an MD of a dniman needing 
Gnanoes to do an KIBO or a hold tag 
co m p any wanting to divert ofa dlvtooo 
which no longer fit* or be a family 
company ownnr looking to retiro, 
CONFIDENTIALITY ASSURED 
To obtain details either fax or telephone 
Barry Coribatt of Cotta** Roofing Ud 
Tnlnphone: 081 078 till 
Fax, 081 870 1920 
Mrafcn- ■Tito SmtUM ft Mam Mbartlr 


West End Musical 

Offers investors die opportunity 
to back a brand new show 
with star casting and superb 
creative team. 

Far more information please 
Write ukBox B 2524, Financial Times, 
Ooc Southwest Bridge. London SEI 91 fL 


SEEKING PROJECT 
FUNDING? 

Contact Mutuefle In 
complete confidence. 

Tat 0865 67892 Fax: 0865 68909 


BUSINESSES WANTED 


CONFIRMABLE DRAFTS 
BACKED BY CASH 

* Issued in Your Name 

* Confirmed by Major lufl (tanks 
to Prove Availability of Fiuxh 

* Backed by Private Investors 

CAPITAL SUPPORT CORP 

US. (714) 797- 1070 • Fan (714) 757-IZ70 


mmmm 


ir v&aiyf 

©AMHuLarTHT^SS^K! 

t pm i i I Li— O .— *1 - w 

FSSSSESSSE ESSSSSSESE^ 


Wanted. 

Refurbishment/fitting out 
contractor. 


Our client, currently active in refurbishment and fitting out is 
looking to acquire similar businesses with a strong client base. 

Ideally the company would have a turnover between 
£5m - £20m. 

Please send your response to Ian Krieger, 

Arthur Andersen, 1 Surrey Street, London WC2R 2 PS. 


WEYERHAEUSER INTERNATIONAL 
SALES CORP. 

IN TACOMA, WASHINGTON UJSLA. 

EXPORTING QUALITY 
SOFTWOOD LUMBER AND PULP 
FROM THE UNITED STATES 
For farther inquiries, please call 
Pulp - 41-22-736-4256 
(Switzerland) 

Softwood Lumber area code (206) 9242746 
(United States) 


Large Outlets Wanted 
For Very High Quality 
I rish mineral water in all sues. 
Brand name or own label 
'principles’ only apply to 
Box BZ5G5, financial Times, 
One Southwark Bridge, 
London SEL 9tlL 


.Arthur 

Andersen 

,‘\rthur ANutRsaj&Ga SC 


LIQUIDATIONS! RECEIVERSHIPS 

Every week, every company that has 
gone Into liquidation awl ucceiv e iship. 

What they ifid, who the liquidator/ 
receiver Is ami their telephone lumber 
tor direct access. Winding up petitions + 
dozens oT auctions f Businesses far 
Salt Tho weekly journal for Ihe most 
comprehensive and authoritative 
nationwide coverage of tiqnidat«B». 
reccivaships and suctioas. 

Pot subscription details contact Page I: 
Td (0*72) 37I28& Fax: (0472) J71458 


MANUFACTURING/ 

ASSEMBLY 

S u cce ss ful, resourceful, private 
Company with blue chip Coskxoer base 
seeks expansion through stable supply 
parowrfiips. We offer ctean, 
disciplined. BSS7S0. air conflitoacd 
environment based Weal Muflonda. 
Write HK Bax B23 Ilk Financial Tunes, 
Oac S am hw ai fc Bridge, London SRI 9HL 


Arthur Andersen is aulhonscil by the Institute ut Chartered Accountants 
in England Jr Wales ig cany on investment business. 


BAD DEBTS? IMAOEOUATE CREDIT 
CONTROL? For a no nonsense, 
professional and commercially minded 
approach w these problems contact Active 
Business Support Limited Tel: 0789 
490601 Fax: 0789 480789 

MAYFAIR Accommodation address and 
telephone, Fox. Mall. Private office/ 
boardroom by the hour. EetaMtahed 14 
yeas -071 396 4333 

GROVESNOR ST. W1. Prostlgo tom & 
serviced Offices, Sec. tax ahori/long let 
From E75 pH. Tat 071 493 783a 


ENTERGLOSSA 

Well break for you all language 
harriers in Spain! Official Public 
Translators and Interpreters 
for all your bum n ow needs, 
(legal, technical, medical, etc.] 
Free estimates. 

Tfedcphone/FftcsimUe: 

34-3-265 75 56 Barcelona 


PHONg (gAJLLS 

Call USA only 20p/mln 
More savings worldwide 
Dial InL Telecom 
Tel: 081 490 5014 
Fax: 081 568 2830 


SOUTH AFRICAN Financial Executive 
Available tor tong or short term 
Assignments. FAX 071 9165350 

HARLEY STREET BUSINESS CENTRE 
Ftrily emteed offices, b usi ne ss address, 
boentoom, si aocraxtel aetvtaes plus tree 
Maphone ml mess a ge taking. For (urtrar 
dawta phone-. 071637 5606. 


CHANNEL 

ISLANDS 

Offshore Company Formation 
and Admin iAtralion. Also Ltocria. 
Panama A BYl ck Tout! offshore 
facilities and services, 

For tleimb and oppoounen «die 
Croy Tiua LnL Bdnxnn Hook. 

1* Bcbsou Rd, Si (Wei. Jersey. CL 
Tct 0534 78774, RuUMJMOI 
TLt 4IM2227 CDFORM C 


BUSINESS IN RUSSIA 

Mr. Mkhail Shiogaicv and bis 
lawyers of the Moscow City lawyer 
bar will provide complete legal 
support of your business in 
Today's Russia. 
Pbem/Froc 

07-095-930-02-88 (Moscow) 


COMPUTER SYSTEMS 

Our client, a computer systems bouse, 
specialising in turnkey solutions to 
the Private and Public sectors ig 
looking to acquire business with 
the following profile: 

■ TA><£3m 

- own S/W or sell other. 

- N/W, Midlands, or S/W 

- existing customer base 

MrS Verber 
Alexander ft Co 

17 St Ana’s Sq Manchester M2 7PW 


CERAMIC TILES 
SANITARYWARE 
INTERNATIONAL 
GROUP 

Seeks to purchase substantial 
distributor and/or manufacturer. 
Would retain management and 
finance expansion in UK and EC 
Write to Box B25I7, Financial 
Tbnes/)ne Southwark Bridge, 
London SEI 9HL 


OFFICE EQUIPMENT 


otvernaarrorroamnamsa 

IbdmafacHnalarfaiiiakiaitKMi: 

;■**»» OO-AMK 

Scorn Dan VaateHanfknn J3O-20DK 
HOOK 

BKtriaJHqtuirtagtsIdM) JESOOK 

Aaknd Piper Baddug flOOK 

(sunned pHtlw. MUM P Sara. M A A D^4. 
Ihdom^Wbdapiisa^ hpfcBlltoad. 
Cb cfcia I ra n. Gka. GUO 1AT [0242 2J7MI) 
Actbwtod iBcndra taaam tmtaoobr ifac 
CTmraid Anoctatae olchntned mtemum. 


MANAGING DIRECTORSHIP/ 
EQUITY STAKE 
Chstered Accomtant wUh substantial 
lunda seeks Managing Directorship 
and to purchase eoMty Slake In 
business located in South East 

TetuphorM S H Rom FCA 
on; 


COMMERCIAL FINANCE 
Venture Capital available from 
£250,000 upwards. Sensible 
Rates, Sensible Fees. Broker 
enquiries welcome. 

Ango American Ventuss lid. 

T* (0924J 20138S, Fax £0834} 201377 


SPAIN PRIKe LOCATION 35 Goff 
fetmago ptots ovahfala 9 £10000 each - 
plus snaro of remaining land bank. 
Fac 071 823 4480 Of Ga£ 0338 764 77ft 


MANUFACTURERS AND 

WHOLESALERS 
CASH FLOW PROBLEMS? 

IF SO WS CAN HELP! 

By purchasing your credit approved 
invoice* and advud eg you up to 
7W in goIl Minimum tie e 
transaction £2,000 pin*. 

Call 0208 850979 


Vehicle Contract 
Hire Business Wanted 

Established contract hire company 
wishes to acquire a business 
operating in a similar ttekl (fleet 
size up to 6000), preferably located 
in ihc Midlands or the Nurth. 
Rtpitto in strictest cottfuUrKt. 
Principals onfy write to Box B279Q, 
Financmi Times, One So uti i »u i i t 
Bridge. Loath* SEI 9UT. 


Established Going Concern 
required by individual with 
substantial funds. 

Any business minimum T/O £1M 
and PBT £100,000 hi South East 
considered. 

Reply in confidence to SH Ross FCA 
38 Wdbeck Street, London Wl 


Large Finnish 
Wholesale Co. 

Is footing for ail funds of (eotffe 
stocklots for women, children and men. 
Plea*e coo Bar Tribal oy. 

Fix: +3SLO-29775Q2. 

Address: PO Bo* fiO, 

02321 frpoa, Finland 
Tel: 4J5»MV297M78ar 
f 35S-49-4443M JaJoaeii 


Businesses Wanted 
Manufacturing Companies 

T/O up mc£2m 
Potential is Vital I n gredient. 

Cash Rich Group, Outck Decision. 

Write to Bos 82 S 2 B, Paandal Tones, 
One Southwark Bridge, 

London SEI 9 HL 


Massive Disposal 
of Major City 
Banks 

Office Furniture 


Dcsking, work stations, 
storage cabinets, 
beautiful reception 
units, meeting & 
boardroom babies & 
chairs, divider screens. 
Leather visitors chairs. 
Host of other items. 

Phone 081 549 9339 


Office Furniture 

Due to city bank order 
postponement we have a large 
quantity of quality executive and 
system ranges - conference and 
receptions. Large choke of 
veneers ^Walnut, Rosewood, 
Ash etc.) with discount of up to 
40* front R.R.P.! 
London showroom for viewing. 

Please contact 
UNEABURO LTD. 

0992 503313 



AUCTIONS 


WE WISH TO BUT IMMEtittATELY 50000 
pae sheets, pasted ootoura. tribal oy tax 
*368-0-2077502. phone +35frO-297lMrtl 

Of ♦ 3 88484446 6 4 


NEXT AUCTIONS 

of life assurance policies for 
investment will be held in 
Loodta on 17 March and 7 April 
and In Bristol on Thursday 24 Moreh. 
Telephone; 

H. £. Poster A CnuriLdd 
07I-40S 1941 for catalogue 

A Member of F1MIUIA. 


Appear in tho Frandal Times 
on Tuesdays, Fridays and 
Saturdays. 

For further information or to 
advertise in this section 
please contact 

Karl Loynton on 071 8734780 
or Melanie Mites 071 8733308 


* 


FINANCIAL TIMES 

. niton l (uunim kf<nn*i 









3 


|LM«%4 H*YK£ 


**** 

ft** 


M 

MANUFACTURING 
GROUP OF 
COMPANIES 


The Joint Administrative Receivers offer 
for sale, as a going concern, the busi- 
ness .and assets of a group of compa- 
nies, which trade as manufacturers of 
bulk storage and handling equipment 

3nd as designers and manufacturers of 
components for the railway carriage and 
motor coach industries. 


Principal features include: 

■ Internationally recognised trading namML 


■ Freehold industrial premises of 

164,000 sq ft in Scuntboipe. 1 


■ Annual turnover of circa £5m 


■ Extensive order book and enquiry level 


For further information contact the 

Joint Administrative Receivers - 

' J H Priestley aodR Fkhnent 

Po PPLETON & ^PPLKBV II 





* 


(In Administrative Receivership) 
The Receivers, .L K. Denney and N. J. Dargan, offer for sale the business 
and undertaking of the above MEN’S SUIT, JACKET AND TROUSER 
MANUEACTURER located near Barnsley, South Yorkshire. 

■ Leasehold factory at Thumscoc, near Barnsley - 1 5,000 sq ft - on a 
2. 14 acre she. 

■ Skilled workforce of 1 40 people. 

■ Turnover circa £? million. 

■ Blue chip customers with good order book. . 

For further, details, please contact Lindsay Denney or Sue Lewis at 
louche Ross & Co., 1 Wbod borough Road, Nottingham NG1 3FG. 
TeL- 0602 S0051 1. Tax: 0602 590979. 

V lWt n l it. actavwd Wil— lumw K'. > 


93 Queen Street, Sheffield SI 1WF 
Tet 0742 755033 Rut: 0742 768556 


FOR SALE 

DUE TO RETIREMENT 

Company engaged in national 
distrib uti on of engineering 
consumable products. 
Specialising in pneumatics rod 
flexible hose markets. Turnover 
dBm. Good profits. Based in 
North of England. 
Principals only reply to: 

Boor B2514, Financial Times, 
One Sonthmik Bodge, 
London SE19HL 


GLOBALIZATION! 

Are you searching 
for a base of 

ope rations/co mm uni ca dons 
in Canada? 

Import/Export opportunities. 

SOQUERONXNC. 

Rue 51 4-321 «5595 Tet 514-321-6399 




OF LADIES LEATHER - 
GARMENTS & KNITWEAR 
Old erabtiriud London based profitable 
busmen (uppijrmgwxes and upmarket 
rerafl. Freehold property. Retirement. 

Apply tw M A Stallman FCA, 

Jide Securities Ltd, 35 BaUanb Lane 
London M3 1XW 


Heavy Engineering . 

design and manufactur e. 

North of England. 
Turnover £10m. NAV 
£0-5m. Principals only. 

Box B2523, Financial TSmea, 

One Southwark Bodge, London SE1 9HL 


EUROPEAN 
RICE MILLING LTD 

(IN ADMINISTRATIVE RECEIVERSHIP) 

P. B. Finn and K. A. Morphy, the joint administrative 
receivers, offer for sale the assets of the above company. 

• Fully integrated quality rice processing plant incorporating 
friction and polishing facility, ancillary grading and colour 
setting. 

• Up to 3 tonnes per hoar throughput capacity. 

• Specially adapted 58 ,000 iq. ft leasehold premises in 
Harwich with current Customs A Excise bond. 

• Skilled local workforce available. 

For further information please contact K. A. Murphy at die 
address below. 

Fran Associates XiVlimT 

Temple Chambers H liiii 

SSS& ASSOCIATES 


THE CONSTELLATION HOMES 
SERIES OF COMPANIES 


The Director seek offers for the shares or 
assets of a series of companies set up 
under the Business Expansion Scheme to 
invest In residential properties let under 
Assured Tenancies. 

The properties owned by the companies 
comprise 284 freehold / leasehold 
properties based In Liverpool which are 
now let under a mix of Assured Tenancies 
and Assured Shortholds. 


For further Information please write, no 
later than 19 March 1994, to: 

J I Francis, Robson Rhodes, 
Daedalus House, Station Road, 
Cambridge CB1 2 RE 


Nord Group 



The Joint Administrative Receivers ofler for sale as a going concern the business 
and assets of Nord Systems Ltd and Nord Educe lion Ltd. The companies specialise 
In computer software providing a complete “turnkey solution". 

Principle features include: 

■ Software packages for. Environmental Health; Trading Standards; Public 
Analyst; Share Administration Schemes: School and College administration. 

■ Specialist software applications (or vertical market sectors using INGRES, 
UNIFACE and COBOL 

■ Highly skilled workforce. 

■ Annual turnover in excess ot £5 million including annual maintenance 
contracts in exCffiS ot £560.000. 

■ Extensive blue-chip and public sector customer base, 

■ BS575Q/TicK-IT certificatioa 

■ Leasehold premises in Leeds, Ilford and South Shields 

For further information contact the Joint Administrative Receiver. Martin Shaw, 
KPMG Peal Marwick. 1 The Embankment. Neville Sir eat. Leeds LSi 4DW. 

Tel: 0532 313000. Fax: 0532 313183 

KPM& Corporate Recovery 


LEONARD CURTIS 


BY ORDER OF THE JOINT ADMINISTRATORS 
CHARLES MACMILLAN FCA & DAVID SWADEN FCA 
IN THE MATTER OF 

MAROT LIMITED 

Offers are invited for the assets and business of this ladies fashion retailer. 

• Annua] turnover of business is In excess of £3*5 million. 

• Established brand name. 

• 10 fuHv equipped retail outlets situated in prime locations/ in Northern 
Ireland ana Scotland/ of which 5 operate under a Franchise. 

Enquiries should be addressed to Paul McGuire ah- 
Leonard Curtis & Partners/ Chartered Accountants 
Peter House/ Oxford Sheet, Manchester Ml SAB 
: 061 234 1955 Fix: 061 228 1 929 



ROBSON RHODES 


□round Accountant* 


RSM 


Oa^rtwad foaxv on au<*t wok and authorised To carry on 
kwMhnonttxniraM by toe NMfUa of Ctoiamd Accountants In 
Bngbnd and Wtrias 


HALIFAX, WEST YORKS, 


i . i . in => rri 


Investment. Hotel, Rest., 
Public Bars, adjacent well 
known High St. store. 18 
years left on current lease, 
next review 1997. Let to 
multi-operator, good covenant 
Present rent £72,000.00 p-a. 
F.R.I. lease. Offers excellent 
yield at £51 0,000.00. 
Faxforfufl delate to Mr Lewis 
061 761 5340 



IN HER MAJESTY’S HUGH COURT OF 
JUSTICE IN THE ISLE QF MAN CHANCERY 
DIVISION 

IN THE MATTER OF THE COMPANIES ACT 

1931 TO 1992 

AND 

IN THE MATTER OF THE HIGH COURT ACT 

1991 

AND 

IN THE MATTER OF ISLE OF MAN BANK 

LIMITED 

AND 

IN THE MATTER OF LOMBARD BANK ISLE 
OF MAN UNITED 

NOTICE IS HEREBY GIVEN that a Petition was 
on 1st March 1994 presented to The High Court 
of Justice of the Isle of Man by the above named 
Isle of Man Bank Limited (“the Bank”) for (inter 
alia); 

(1 ) A declaration that certain banking 
agreements have been by implication novated 
from Lombard Bank Isle of Man Limited to the 
Bank; and 

(2) An Order sanctioning the transfer by 
Lombard Bank tele of Man Limited of the monies 
held in certain accounts to accounts held with 
the Bank, pursuant to the Scheme annexed to 
the Petition; and 

(3) Such further and other relief as the 
Honourable Court shall deem appropriate. 

A copy of the Petition (having annexed thereto a 
copy of the Scheme) together with copy 
Affidavits will be open to Inspection at the 
address figuring below during normal business 
hours on any day (other than a Saturday or 
Sunday) prior to the hearing of the petition. 

AND NOTICE IS HEREBY FURTHER GIVEN 
that the Petition is directed to be heard before 
His Honour John William Corrin at toe Chancery 
Court to be held at Douglas on toe 9th March 
1994 and any person who claims to be adversely 
affected by the carrying out of toe Scheme may 
appear at toe time of hearing in person or by 
Counsel for that person, in which case such 
person is requested to give notice in writing of 
his intention to appear with toe grounds of his 
objection to toe under-mentioned Advocates. 

A copy of the Petition (having annexed thereto a 
copy Of toe Scheme) will be furnished to any 
person requiring the same at toe address 
figuring below at any time before an order is 
made on toe Petition, on payment of the 
regulated charge for the same. 

Dated this 3rd day of March 1994 

Cains 
Advocates 
15 Athol Street 
Douglas 
Isle of Man 
IM1 1LB. 


By Oder ot B-A. Upw Bn- Tnmat m B mm krfvy ar 
CJ. Ucflrido- Wo*kfaf*» CcoMy Cwtn No. 5 of 19WX 

PHEUP DAVIES & SONS 

Offer For Sale by Tender 
■ATLANTIS M 1 STEEL HUU.TKAWLBB 
WITH CURRENT TYPE 3* AND 51 PRESSURE STOCK LICENCES 
INSPECTION STRICTLY BY APPOINTMENT 
AncdonraV Office s- 

32 LONDON ROAD. HAZEL PROVE. STOCXPOBT. CHESHIRE SK74AH 
• tat 061-483 2637 Pnc 061-483 1433 


1004- UVE BUSINESSES FOB SALE 
and rtwof ambtatteMy on M2 118* 
F®C 071 706 3484 


LEGAL 



TEX COMEANBS ACT »» 

AND IN 

THE MATTER OF 
MAGNUS ESTATES LIMITED 
Modoc b fetnfar ghra tta i pstUoa premtad 
id Mtfoqrfc W* Cam oT Julia. Brinol 
DWricl Kcffcoy ob tke of Fdxwy 

1994 Bor the coefimwlM of Bo ndacdoa rf 

the espial el the above mmol Coaq »7 boo 
£306^69 » JD03AV7 ia dlreord » be hemid 
before Hk Bow Jndac Weeks QC at The OH 

COM.cil Ha nee, Con Street. Bristol, on 
Thsadoy tbo Mh dqr of link 199*. 

Any Creditor or Shmfeotakr of die Coropeny 
dcdri^i ft oppose Ibc nofcna ot *c Ollier for 
bcnberlaaoItrnldntetkBrfaiW 
should appear M the time of ike hearing In 


INTERESTED IN 
PUBLISHING? 

High potential, privately owned 
ESTABLISHED mignrine for sale. 

Highest offer secures. 

Write to Bax R2511, Financial Times. 
One Soathwnric Bridge, 
London SE1 9HL 


OLD ESTABLISHED 
TRADE FINANCE & 
CONFIRMING 
HOUSE FOR .SALE. 

WriK Ba B2SW. Koeadel Thom. 

One Sooflwc* Brirfy. I notion SE1 9HL- 


RECE'VEHSHIPS LIQUIDATIONS 

lr I..; nx;.riiJ 


CHESHAM. 

BECAUSE YOU ONLY SELL 
YOUR BUSINESS ONCE. 


And you want the right buyer. With 
confidential briefs from hundreds of 
acquisitive public company chairmen 
who are looking to buy successful, 
private companies worth £500,000 to 
£25 million, we ought to be able to help. 

So if you’re thinking of selling your 
business, contact our Managing Director 
to arrange a confidential discussion. 


CHESHAM 

AMALGAMATIONS 

The first name in merger broking. 


Chesham House, 2 Bentinck Street, London W1M 5RN. 
Telephone: 071-935 2748 


Retail Jewellers 

East Anglia 

Croydon & Sons Lid (In Receivership) 
is a prestigious firm of retail jewellers in 
East Anglia. In two branches the 
company provides restaurant facilities. 

■ Locations in Ipswich, Bury Sc. 
Edmunds and Norwich 

■ Annual Turnover £2.5M. 

■ 40 staff, including several long 
serving employees 

■ Established since 1S65 

For further details contact the Joint 
Administrative Receiver: 

Andrew Conquest, Grant Thornton, 
Crown House, Crown Street; 

Ipswich IP1 3HS. 

TeL- 0473 221491. Fax: 0473 230304. 

Grant Thornton • 


ThcUJymenJ 

Authorised by i 

England and 


firra of Gnu Thornton lmenuricuuL 
Intritutf of Chartered AflCjHnpum m 
dcs to cany on investment bonnes*. 




A copy of As arid Pcrfdoe wB bo flnfafed lo 
taj neh perm iwpritb* Uw same \*j ihe 
mdonmadooed SaldHa m pejsMefte 
iqpdood dmsge te Ao mam. 

Dned ttds 4th dsy aCSMtlSM 
MUmI md Qmpmy 


BddswMrf. SoaeiM TA6 SAT 
RefemmcMK 

Sctidnn for tbeptxneaaed Company. 


I n iii i ij ■ i . i i d iii .il l 


BUSINESS 

OPPORTUNITIES 


PAKTICI PATOH8/JOMT VENTURERS 
sought by dmtopor wito mekrocotd In 
horns murb and flu ua owalon. Tab 081 
" 871 8924. 


s 


CONTRACTS A TENDERS 


Central 
St atis tical 
■ Office 


Retail. Prices Index 


Contract for the collection of price data for the Retail Price* 
Index > 

The Central Statistical Office fCSO). an behalf of the Chancellor 
of tbe Exchequer, La conducting a' market test of the coUectioii 
of price data to be -uaed in the publication of the Retail Prices 
Index (RPI). At present, 150,000 prices for 500 different items 
are collected from retail and other outlet* at 180 locations 
throughout the United Kingdom (Including Northern Ireland). 
Additionally, some prices are collected cert trail jr. Data are 
collected daring a specified 3 day time -period In the middle of 
each month. 

A notice was placed in the Official Journal of the EC on 18 
February 1994. Tenderers will be sought from suitably qualified 
and experienced private sector organisations. The existing in- 
house team wiU also be invited to bid. 

Organisations Interested In tendering should Have regard to the 
notice in the Official Journal end respond by 5' April 1994. 
Copies of the notice can be obtained by writing to the address 
below. An infoimation meeting is being held by the CSO on 21 
March 1994 and organisations wishing to attend should contact 
Mr Stuart Ceil a of the CSO'a Retail Prices Branch on 071 217 
4357 (Pax 071 217 4307). 

' Retail Prices Branch 
Central Statistical Office 
Millbank Tower 
Mill bank 

London SWIP 4QU- 


For Sale by Formal Tender 

BAKERY AND RETAIL PUTS 

Manutecturinfl. Wholesale, Contract Bakem with 

3 Ratafl outlets, which Indudes 2 Coffee Lounge* (1 x licenced) 
Substantial Freehold Sfte and 2 Leasehold Sites 

Turnover Net etna C70(U00 

Expantfing and very profgabk business 

Situated East Yorkshire 

For Tender Brochura 

■TELEPHONE (0532) 4533431 

Nationwide Dlstribution-Transportation-Warehouaing 
Business operating out ot stx locations: 

* TUmover around £16 mill. 

* Nett assets around £2.5 mill. 

♦Profitable 

* This is a divestment sale 

* The business is a non-core traefing activity of a large group. 

FOR DETAILS WRfTFTO: BOX B2685 

Financial Tbnas, One Southwark Bridge, London SCI 9HI_ 


FOR SALE 

TOILETRIES BRANDS 

Nationally drHriboted established brands with recordable marker share. 
Year on year gr o w th last 6 years. ENORMOUS UNTAlflib POicw DAL. 
Saks 1993 £4 m. Projected 1994 £5m- 
Expeaed price £4m pins 

Ploase *riie a Bac B25I6, Financial Times, One SotnJtb-erk Bridge. Lenten SE1 9HL 


We are in contact with a substant i a l number of major PLC’e in 
mergers and acquisitions who are constantly looking to acquire 
sound companies. 

Wo would be pleased to from oonluJHng directors or principals 
of «w«p»wipg wishing to sail with minimum turnover £V» inflHou and 
pre-tax profits £50k with no upper limit. 

7ih fin Hun ilntaHH plonoo talephoam M«b * D unn AXXA. 
on 061-838 4280 or fox: 061-334 6723- 


EXCITING LEISURE 
OPPORTUNITY 


TOWN CENTRE SURBITON 

Suitable for a variety of leisure 
uses including health dub, nightclub, 
bingo and cinema 

Ready for immediate occupation subject to 
■ necessary licenses 

9,500 sq ft. Freehold 
Offers in excess of £1 million _ . 

ME flWtTHLf 


I C )\'l)i l\ 

071 629 8171 


Knight Frank 


11 &Rlltk'Vi 


FOR SALE 

Bayswater, London, W2 

3 Star Standard Hotel 

54 en suite Letting Bedrooms, 
Restaurant/Breakfast Room, Bar, Lounge Area 
and Reception. Adjoining London garden square. 

Offers In excess of 
£2,750,000 freehold 
Ref. 20/197 

For further details please contact Gerard Nolan 

071 486 4231 


CHRISTIE CD] 


By insiroctum of the Joint Administrative Receiver 

MARTIN H UNTON FCA MSPI of LEIGH & CO 

Re: UNITF1X LIMITED (Fnmltere Manufacturers! 

The Joint Administrative Receivers' agents offer ibe 
butanes* aixl assets uf tbe Company « a going amcerm 

* Prcviotui turnover in cxcesa of £1 m illion 
- Fully equipped production facility 

* Skilled aul experienced work force 
» Ma3*oidermd export customers 

* Leasehold factory of 60,000 square far jtpprox. 


OREETWQ CARD BUSINESS LaneaM. 
Yoita. m OBL eudrie. Wfli tul « ore am 
ap. ri WCM ofisom Arv raamebb 
Oder conaktored + SAV. T* 0*238839X1 


Al AdhcnbeneniboaUDpueMccFUdBStea 

Bca iinw TtaiwMQ NM flM t — * 























»*i«« aS t S i SSSS i I „ < , SMSSS[S8BSSSBB8SS!esMSSSf!fE f( . |Rst nmgmi stttanmnatif 


14 


FINANCIAL TIMES 


TUESDAY MARCH S !‘>'M 


\ 


« 


TECHNOLOGY 



An on-screen map indicates the ear*s position: soma systems show destination, direction and distance left to travel 

Drivers on the 
right track 

A better sense of direction will soon be widely available 
with electronic car navigation, writes Paul Abrahams 


Apple 

launches 

second 

Newton 

A pple Computer, which 
missed the target with 
its first Newton hand-held 
“personal digital assistant”, is 
taking a second shot Last week 
the company launched a cheaper 
version that corrects some of 
the shortcomings of the original 
product 

The Newton MessagePad 10 
is a pocket-size d electronic pad 
on which users can jot messages, 
diary entries, contact notes and 
the like, using a special stylus. 

Like the original, however, 
this product fails to live up to 
the expectations created by 
Apple. Apple have made only 
incremental improvements. 

The new model is narrower 
an d longer than the ori ginal , 
and has a cover to protect the 
screen. It also has more memory, 
for data storage, and longer 
battery life. The US price has 
dropped to $599 (£410) hum 

eCQQ 

ftKTJ. 

Most significantly, Apple has 
attempted to overcome Newton's 
notoriously unreliable 
handwriting recognition 
capabilities. 

Because users of the original 
Newton complained that they 
could not simply jot down notes 
without having to correct 

miminriw s tan/Hng s, the new 
Newton includes "deferred 
handwriting recognition”. The 
user can scribble away and then 
later go back to make 
corrections. 

The new Newton can, when 
requested, attempt to recognise 
letters rather thru) matching 
handwritten words with those 
in its dictionary. This is 
particularly useful for names, 
acronyms, technical terms and 
abbreviations. 

Still to come, however, are 
Wireless enirminniraHnnfl 

facilities for the Newton. Apple 
is working with Aniis and Ram 
Mobile, two US providers of 
wireless data communications 
services. 

The third Newton, due in 
September, will be a tablet-sized 
(approximately 14 in by 8 in) 
device with a screen twice as 
big as the pocket versions. 

Louise Kehoe 


O ne of Japan's many mys- 
teries is how to avoid 
becoming lost in Tokyo. 
The characterless and 
poorly sign-posted Tokyo street 
plan, full of tangled alleys and dead- 
ends. occasionally punctuated by 
raised expressways, is a naviga- 
tional nightmare for both locals and 
foreigners. 

Help may be at hand, however. A 
satellite network launched by the 
US defence department looks set to 
produce a consumer product revolu- 
tion. Electronic car navigation 
systems promise to help people who 
find it difficult to read maps not 
only in the Japanese capital but 
throughout the world. 

The network, known as the 
Global Positioning System (GPS), is 
based on 25 satellites which cover 
the globe. They were launched to 
help military aircraft, ships and 
vehicles locate their position. A side 
benefit is that they can be used to 
locate civilian vehicles. 

The satellites, equipped with a 
precise atomic clock, transmit both 
the time and their orbital position 
at regular intervals. A receiver in 
the vehicle calculates its position by 
measuring the time it takes for the 
satellites’ signals to arrive. An on- 
board computer needs to receive 
data from three satellites simulta- 
neously to calculate the vehicle’s 
position to within 30m. 

A liquid crystal screen then dis- 
plays a map of the local area and 
the vehicle’s position. The details 
for the map of Tokyo are taken 
from a CD-Rom that supplies geo- 
graphical details of the whole of 
Japan. As the car moves, so its posi- 
tion is constantly updated. Some 
systems can show the destination, 
the direction being taken , and the 
distance left to travel. 

The driver can use a remote-con- 
trol device to make the display 
zoom from individual streets to a 
bird's-eye view of entire cities, 
regions and highway networks. A 
talking help feature can even indi- 
cate when to change direction. 

The GPS system is not perfect 
Jun Ichi Shibata. general manager 
of the new media division at Pio- 
neer. the Japanese electronics 
group, admits that in heavily 
built-up areas tall buildings create 
reception problems. In the worst 
cases, says Atsushi Matsuda, gen- 
eral manager of the mobile electron- 
ics group at Sony, the receivers can 
obtain a fix only half of the trmp. 

One way of improving accuracy is 
to use dead reckoning. A combina- 
tion of geomagnetic sensors or 
gyros can be used with speed sen- 
sors to determine the distance and 
direction travelled by the 
vehicle. 

Another system is to use beacons 
installed along the road to fix the 
car’s location. Some manufacturers 
have also developed software that 
uses the premise that cars only 


drive on roads, and tries to match 
the road pattern against the possi- 
ble location of the car. 

In spite of these other systems, 
both Sony and Pioneer, which domi- 
nate the sector with more than 90 
per cent market share, expect GPS 
to become the dominant technology, 
not least because of its relatively 
low cost. The cheapest retrofit 
systems can be installed for as little 
as Y145.000 (£923) including a 4 in 
liquid crystal display. Top-end 
equipment costs as much as 
Y 600,000. 

Sales growth of car navigation 
systems has been explosive, though 
from a low base, says Shibata. Only 
9,000 units were installed in 1991. 
but sales could reach 250,000 this 
year. His company reckons the mar- 
ket was worth about Y50bn during 
the 12 months to March 31 last 
year. 

Sony and Pioneer control most of 
the retrofit market, but the original 
equipment market - supplying nav- 
igation systems to vehicle manufac- 
turers - is much more fragmented. 
Suppliers include Alpine, Kenwood, 
Clarion, Nippon Denso, Aishin, Mit- 
subishi Electric, Sumitomo Denko, 
Toshiba and Matsushita. 

Although the Japanese Naviga- 
tion Association has set up two 


standards, few of the competing 
systems are compatible. Without 
economies of scale, the cost of 
developing software remains high, 
says Matsuda. This could limit mar- 
ket growth, he warns. 

Both Pioneer and Sony believe 
that navigation systems could 
become extremely significant con- 
sumer products if adequate soft- 
ware can be developed. 

"In Japan we have high hopes far 
a large market to develop, given the 
success of navigational systems 
already. Adding value to the maps 
will make all the difference,” says 
Matsuda. 

T he Japanese government is 
sponsoring a beacon-based 
technology, the vehicle infor- 
mation communication system 
(Vies), which could give the market 
a big boost 

The system, which uses high fre- 
quency radio signals, is designed to 
provide details of accidents, traffic 
conditions, weather, route recom- 
mendations and even parking avail- 
ability. The idea is that such infor- 
mation could be incorporated on the 
digital maps. 

Shibata says Vies will give a huge 
push to the market, although 
exactly when the infrastructure will 


be completed remains unclear. 
Installation is under way in Tokyo. 
Os aka and Nagoya, and a nation- 
wide system is being considered. 
However, implementation is bogged 
down in discussions between the 
various ministries involved. An 
alternative system based on per- 
sonal communication networks is 
being sponsored by the Tokyo 
police. 

Vehicle navigation systems will 
soon be available outside Japan. 
Sony is launching a system with 
Etak, a US-based group owned by 
Rupert Murdoch's News Corpora- 
tion which has supplied the digital 
maps. Pioneer expects that it will 
launch navigation products in the 
US and Europe in 1995. although 
the exact timing depends on the 
availability of software. 

Sony says it is looking at how 
best to protect such expensive hard- 
ware from theft This is not a prob- 
lem in the Japanese market, but 
could limit growth in the US and 
Europe. 

The prospects for “gaijin" (for- 
eigners) lost in Tokyo remains 
bleak, however. Sony and Pioneer 
say the market for maps of Japan 
using roman script is simply too 
small for software manufacturers to 
justify the Investment. 


The betting i ndustry is trying out 
computers, says Max Glaskin 


Bookmakers 


have a flutter 


B ritish bookies are having a 
flutter with new technol- 
ogy in an attempt to win 
customers. Although the 9,800 off- 
coarse betting shops in the UK 
handle a substantial part of the 
gambling industry’s £8.Sbn turn- 
over, they have been slow to 
become computerised. Bookmak- 
ers are not gamblers themselves 
and their customers are conserva- 
tive. 

Interactive touch-screen bet 
vending machines are being 
tested in two shops run by the 
small Hampshire chain of Bet- 
point and in two of Ladbroke Rac- 
ing's 2,000 shops - in Dudley, 
West Midlands and Newcastle. 
Ladbroke 's financial director Paul 
Usher says that if they prove pop- 
ular he could spend £10m “quite 
easily and qnite quickly” to 
install them throughout the coun- 
try. 

The Betpoint customer terminal 
is a touch-sensitive video screen, 
on-line to a network of computers 
at the company’s headquarters. 
The screen shows all the sports 
for which betting is available; the 
user touches a sport option to list 
all the relevant events. By 
choosing and touching, customers 
can get down to a list of runners 
in a specific race. They can even 
read form detail about horses, rid- 
ers and trainers in race meetings. 

Next they choose the type of 
bet and the stake. Coins or notes 
go into a slot and the machine 
prints out a betting slip. A human 
cashier pays out to winners. 

Betpoint managing director 
Chris Latter was a systems 
designer and formerly head of 
computer services for commodity 
broker Philip Brothers. He 
believes his customer touch- 
screens will cut staff and other 
costs. Combined with a behind- 
the-counter computerised settling 
system, which ensures accurate 
payout and helps the managers to 
assess their liabilities In real 
time, the Betpoint package costs 
£150 a week. The average betting 
shop in the UK turns over about 
£7,000 a week. 

Usher does not see automation 
as a route to cutting staff: "We 
are primarily interested in 
improving customer service.” 


Ladbroke is testing a modified 
version of the Betpoint system in 
two shops. It also has a second, 
similar system. Form Challenge, 
that allows the customer to enter 
bis own knowledge of raring into 
the touch-screen terminal and see 
a race simulation before placing a 

bet. _ , 

Form Challenge has been devel- 
oped by UK software company ISP 
ppH uses form data from CNS of 
Hull. It is partly aimed ut attract- 
ing younger punters, who aro 
more familiar with video screens. 

Bill Hagaxth. IT director at Wil- 
liam Hill, which has 1.700 shops, 
is cautious about luring younger 
customers. “The existing bet cap- 
ture and settling operation is 
extremely efficient.” be says. 
“And we must uot alienate any of 
our customers." 

The most computerised betting 
organisation in the world is 
Britain's Tote, the body responsi- 
ble for managing on-course 
pooled betting at race meetings. It 
must pay out winnings immedi- 
ately. based on the total of all 
stakes received right up to the 
race start. AU of Its 160 off-course 
shops. 64 on-course shops and its 
160-strong operator telephone bet- 
ting service are networked to a 
Stratus mainframe in Wigan. 

It has Installed optical mark 
readers in 1,000 betting shops. 
Punters mark a pre-printcd multi- 
ple choice card, which the cashier 
feeds into the reader. Within a 
second the data are In Wigan. 

The Tote's IT manager Bob Cub- 
itt says the organisation has dab- 
bled with bet vending machines 
but again there is coition about 
upsetting loyal customers: “We 
all want to make betting exciting 
and fun. The technology is there 
hut the customer Interface must 
be right” 

Wll the punters oven need to 
go into a betting shop? Already 
Betpoint sells software for £20 
that turns any PC with a modem 
running Windows into an on-line 
betting terminal. Macintosh and 
Dos versions come out this sum- 
mer, as weD as a hand-held con- 
sole that does the same thing as a 
domestic television set Technol- 
ogy could make betting so easy 
that betting shops disappear. 


# 


OUR CHAIRMAN 



We know that today’s baby talk will turn into tomorrow’s 

BUSINESS NEGOTIATIONS. WHICH IS WHY WE’RE WORKING FOR 

FUTURE GENERATIONS. OUR R&D CENTRES 

in Europe and around the world are 

GENERATING EXCITING NEW IDEAS - TO 
IMPROVE BUSINESS COMMUNICATIONS AND 
BRING PEOPLE CLOSER TOGETHER. 

Our MANUFACTURING PLANTS IN COUNT- 
LESS COUNTRIES ARE PRODUCING PRODUCTS 
THAT ARE EVEN MORE ECOLOGY FRIENDLY. 

Already, Canon office equipment is 

SETTING FAR HIGHER STANDARDS. 

But it’s still just the beginning. 

We WANT OUR FUTURE CHAIRMAN, OR 
CHAIRWOMAN, TO BE PART OF A PEACEFUL 
AND PROSPEROUS SOCIETY. ALONGSIDE 
YOUR OWN CHILDREN. 


TO RtCE!\E A FREE BiXflET OUUININu CANON’S CAKINO, SHAKING PHILOSOPHY, CONTACT. 
Canon Eurom N.V, PO. Box 2262. 1 180 EG AMSTHVKH. The Nethduank. 


' *■*•. «*"**» 

' -Cm*’' bXJ 1— ~ 

A fTEAM'Kt fO WORK' WITH 


SO, TOGETHER, LET’S CARE. 







Dali: the myth 
unmasked 

William Packer reviews a revealing 
exhibition at the Hayward Gallery 


!-;• 

dm 





-1 ( ill! r 


* I 1: I 1 1 1 1 1 1 1 1 r -A 


‘Pearl Fishers’ 
revived 

T he imperishable angle can stand and delive 
“friendship” duet for with unaffected candour, 
the leading men in Of the two sworn friends i 
Bizet's LBS PichGUrS Imrp orHlt fho vt wrtii mioffnci 


T he imperishable 
“friendship” duet for 
the leading men in 
Bizet's Les P&cheurs 
de perles (1863), which is the 
one bit of the opera that every- 
body knows, . comes early in 
the first act While it got its 
vociferous applause at Satur- 
day's ENO revival, somebody 
behind me remarked, “Well, 
we can all go home now!” 

Not fair: amidst all the 
shapely, dewily original music 
that follows, the duet returns 
often enough (in frank reprise 
or thinly disguised) to delight 
its most besotted devotees. 
Besides, in Philip Prowse’s 
refurbished, campily elegant 
staging; the opera - virtually 
an opGra comique - offers one 
of the most appealing musical 
evenings in town. 

Sung here In very, plain 
English without poetical pre- 
tensions, The Pearl Fishers is 
set in a never-never-land Cey- 
lon, an exotic French-colonial 
dream a Id Pierre Loti. There 
is ample excuse for mock-East- 
era pomp, which might sub- 
merge the real charms of the 
opera altogether; instead 
Prowse opts for airy space and 
light, reserving decadent 
splendour for a few prominent 
objects like the central attar, 
and for some of the costumes. 

Beyond those there is only 
the wreck of a ship, and a 
giant awning with hanging 
lamps, and a large, knowingly 
tacky circle of Ught-bulbs in 
the sky. They serve very well 
- as does Prowse’s extra addi- 
tion to the cast-list* Imogen 
Claire as an omnipresent 
priestess (or something*, maybe 
the High Priest’s concubine), 
coiling and arching ballet!- 
caHy throughout like a malign 
fin-de-si&ele spirit silently 
manipulating the action. 
Against that tongue-in-cheek 
background, the romantic tri- 


INTERNA TIONAL 


angle can stand and deliver 
with unaffected candour. 

Of the two sworn friends in 
love with the virgin priestess 
Leila, Jonathan Summers 
makes a vehement Zurga, the 
baritone loser wbo eventually 
does the decart thing, and as 
the luckier Nadir - tenor, iff 
coarse - young John Hud»m 
offers enough sensitive feeling 
to compensate for some imper- 
fect suavity in Bizet's vocal 
line. 

Leila herself is Gillian Web- 
ster, a bright soprano: lovely 
liquid depths in her middle 
range, mature artistry in her 
dramatic pleas. Easier top 
notes, securer pitch and less of 
a petulant Hollywood starlet’s 
m anne r would make her an 
ideal heroine, bat she Is 
already a vivid and fascinating 
one. 

As the high priest Nourabad, 
Andrew Greenan wields his 
doughty bass-baritone to men- 
acing effect The keen ENO 
chorus achieves an almost 
French crispness (better than 
most ecftt-French choruses can 
manage nowadays), and the 
Viennese conductor Alexander 
Sander paces the score with 
clean style and despatch. Bits 
of Wagner’s Tarmhauser and 
even Tristan surface here and 
there, the more disarming 
because Bizet adapted than so 
coolly to his chaste Gallic 
idiom. 

All in all, only a stony heart 
could fall to respond to this 
artful, ever-fresh music; if any- 
thing, the ridiculously dated 
terms of the “drama" set it off 
in enhanced relief. 

Co-production with Opera 
North. In repertory at the Cob- 
seam until April 28, with a 
new conductor and principal 
singers in the later perfor- 
mances 


S alvador Dali The Early Years 
is one of those comparatively 
rare exhibitions which prop- 
erly challenges one's estab- 
lished view of its subject, and does so 
positively. If it does nothing for Dali 
the older mtm - that is to say Dali the 
poseur, self-publicist, self-mytholo- 
giser - it makes him, at least at first, 
more interesting, substantial and 
credible a figure. 

He was born at Figueres in Catalo- 
nia in 1804 and died not far away, at 
the little port of Cadaques, in 1989. 
This exhibition, leaves us with DaU in 
1931, at the age of 27 just tearing 
himself iwtp his mature persona as an 
artist and cm the brink of his brilliant, 
preposterous career. Of all the artists 
of our century, he alone stands with 
Picasso, the patronymic alone enough 
to summon up the very i dea of mod- 
em art to a popular public, innocent 
of Matisse or Pollock or Andy WarhoL 
Yet while Picasso, for all his tame, 
remains still to a great extent an 
object of controversy and scepticism, 
DaU has always been truly popular, 
accepted and familiar quite as much 
in his work as in his gleefully public 
personality. 

Such is the nature of true celebrity, 
and it says a great deal indeed for the 
imaginative power of Surrealism that 
DaU should still be every schoolboy's 
fevoorlte modem artist 
. Oh yes: but that you say, he was 
always so b rilliant a draughtsman 
and so wonderfully meticulous a 
painter. Just look at that ftnmamiiatP 
technique, those soft watches and 
flaming giraffes, and that vertiginous 
Christ on the Cross. Clearly he was a 
genius, whatever that is, and we do 
respect a genius. Such is the myth, of 
hhnswlf that DaK was so assiduous in 
promoting, and Is here so usefully 
exploded. 

What we discover is no precocious 
and preternatural talent, but only a 
normally interested and sensitive, if 
unacademic, adolescent Far from . 
demonstrating any exceptional abil- 
ity, the pages shown here of school- 
boy illustration, based an the graphic 
conventions of contemporary comic 
journals, show the difficulty he had 
with anything but grotesque distor- 
tion and ex ag ge ra tion - the staple of 
every school ma gaTinp there ever 
was. But the interest Is certainly 
there, as well as a certain inventive 
energy and ambition. 

So from the schoolboy to the- stu- 
dent painter at the local art school in 
Figueres, and again we find at first 
nothing exceptional, the work being 
fairly standard student stuff. Some- 
times it is clumsy and IH-formed, but 
intelligent and engaged in Its 
response to impressionism and sym- 
bolism and the more decorative 
aspects of expressionism. He begins to 
write a novel. He paints, a number of 


self-portraits, romantic, srif ■dramatis- 
ing images, long hair, broad hat, pipe 
in mouth, as moody as only a self-con- 
scious 17-year-old can be. 

At 18 he wins a place at the Acad- 
emy of Fine Art In Madrid, where he 
spends the next four years, for one of 
which he is rusticated for riotous 
indiscipline. And now emerges not yet 
the brilliant artist but certainly the 
brilliant student. In a remarkable 
sequence of paintings we follow him 
as he comes to terms with the cur- 
rency of the international 
avant-garde. He does so not with any 
profound originality, but with a 
steadiness and tateQigezice that does 
him credit The paradox Is that in his 
unselfconsciousness he is never less 
than true to himse lf. 

Picasso is his commanding interest 
at this time, and Picasso in all his 
aspects - cubist proto-surrealist the 
neo-classicist of the nudes on the 
beach and the realist of the portraits 
of his wife. And yet Dali is also 
looking elsewhere, and in a remark- 
able painting or a basket of bread, of 
1928, the year of his final expulsion 
from the Madrid Academy, be pays 
direct homage to the great Spanish 
realist tradition and to Zurbarfln in 
particular. He also looks to the mod- 
em Italian metafisid, to de Chirico, 
Sironi and, in one huge s^hamaHt* 
still-life especially, to CarriL 


M ost impressive erf all are 
the portraits and figures 
- his sister. Anna Maria, 
at Cadaques; a girl in a 
white dress that may well be her, 
seal from behind; his father. All are 
solid, simple and unaffected in their 
realisation, rich in the paint and bold 
in the drawing, and yet seen with that 
febrile clarity that already hints at 
the obsessively microscopic precision 
of the work to come. 

And then, from around 1927, begins 
the rilde. slow at first but speeding up 
over the next few years. Into the man- 
nerism, self-consciousness mid formu- 
laic eccentricity alike of imagery as of 
behaviour, upon which his global rep- 
utation still rests. Other surrealists, 
such as Bunuel, with whom Dali was 
associated, stand as considerable art- 
ists by the work they did. But for Dali 
it was the open embrace irf Surrealism 
that did for him, with its essentially 
arb itr ary and literary imag ery, gnd . 
infinite scope for more of the self-in- 1 
diligent same, and same again. The 
irony is only that it was Dali the' 
student who was the more interesting 
and truer artist 

Salvador Dali: the early years; Hay- 
ward Gallery, South Bank SEl, until 
May 30, then on to New York, Madrid 
and Barcelona. Sponsored in London 
and Madrid by tire Banco Bilbao Viz- 
caya. 



Before the slide into self-indtdgent Surrealism: Salvador Dali’s *Venns and Sailor*, 1925 


T he appearance on Broadway 
of a play by Harold Pinter is 
a rare enough occurrence to 
be worthy of mention; the 
current revival of No Man's Land, 
now playing at the Roundabout The- 
ater, deserves little more than that 
Meaning and menace burble beneath 
the elusive surface of this, and indeed 
all, of Pinter’s works, but surface, in 
this production directed by David 
Jones, is just about all we get - save a 
remarkable performance by Christo- 
pher Plummer. 

It is little wonder that No Man’s 
Land was, until recently, one of the 
least-produced of Pinter’s plays. Ralph. 
Richardson and John Gielgud's per- 
formances in its 1975 London premi- 
ere (which then played New York) 
were reportedly so memorable as to 
be called consummate, and other act- 
ors have been reticent to step into 
their shoes. No Man’s Land did not 


New York Theatre/Karen Flicker 

‘No Man's Land' on Broadway 


receive another London production 
until 1992, when Pinter himself 
appeared as Hirst, the ageing, alco- 
holic write- who lives in a Hampstead 
manse with two thuggish minders, 
with Paul Eddington as Spooner, the 
bedraggled and equally aged poet who 
weasels into Hirst’s house - and, per- 
haps, his consciousness. 

This production features Jason 
Bo bards as Hirst and P lummer in the 
showman’s rote of Spooner - which 
he digs into with considerable skill 
and aplomb. His Spooner is pathetic, 
but strangely dear, a faded dandy in a 
grimy grey suit and sfQy, narrow wool 
scarf that be tucks compulsively into 
his lapels. Quick - desperate - to 


please, he has a nervous giggle and a 
bizarre gait somewhere between a 
nnn<*g and a shuffle. Plummer’s char- 
acterisation hints at an intriguing 
layer of homoeroticism in the text - 
let us not forget that Hirst met 
Spooner on. the Heath and brought 
him to the house where he lives with 
two men who exist to please him - 
that is, sadly, not further exploited. 

While Pinter’s play is surely about 
(at least in part) the unbreachable 
gulf between people, that “no man's 
land . . . which never moves, which 
never changes, which never grows 
older, but which remains forever, icy 
and silent," Jones' production takes 
this idea too literally and too far - the 


almost total lack of connection 
between Hirst and Spooner keeps the 
audience from engaging in their word- 
play. 

Robards, though physically com- 
manding, gpAmp mentally an d emo- 
tionally absent IBs declamatory Hirst 
is oblivioas to Spooner from the start 
and when, at the end of the first act 
he does let down his guard 
(“Tonight . . . my friend . . . yon find 
me in the last lap of a race I had long 
forgotten to run") his confidences 
seem to come, if not from nowhere, 
then probably from alcohol - cer- 
tainly not from any growing relation- 
ship between himself and Spooner. 

The onstage atmosphere becomes 


even less charged with the entry of 
Hirst's servants. Fresh-faced Tom 
Wood plays Foster as an immature 
braggart while the role seems to call 
for a darker-hued approach. The usu- 
ally reliable John Seitz as Briggs has 
the right bulky, hooded-eyed look for 
the role, but his throwaway demean- 
our and Lazily executed Cockney 
accent bring with them not a touch of 
danger. 

No Man’s Land is full of mysteries 
about these men and their relation to 
one another, which will probably 
never be solved. It is a musing on the 
tenuousness of memory and the deli- 
cacy of human relations, and its plea- 
sures lie in the ever-shifting sugges- 
tions of meaning and 
counter-meaning that new mi niate as 
it unfolds. But performed as it is here, 
sans texture or mood, it seems less 
potent ambiguity than wilful obscu- 
rity. 


■ AMSTERDAM 

Concertgebouw Tonight Franz 
Weiser-MOst conducts London 
Philharmonic In works by Bartok, 
Mozart and Shostakovich, with 
piano soloist Mrtsuko Uchida. 
Tonight, Thurs, Sat (Kleine Zaal): 
Tokyo Quartet plays Beethoven 
string quartets. Thurs evening, Sun 
afternoon: John Adams conducts 
Royal Concertgebouw Orchestra 
in Adams and Copland. Sat 
afternoon: Alberto Zedda conducts 
Radio Chamber Orchestra and 
Chorus in concert performance of 
Rossini’s Stsabetta regina 
cPInghlltena, with cast headed by 
Martine Dupuy aid Rockwell Blake. 
Next Mon: Messiaen memorial 
concert. March 20: Alfred Brendel 
plays Beethoven (24-hour 
information service 020-675 4411 
ticket reservations 020-671 8345). 
Sun afternoon at Beurs van Serfage: 
^hillppe Errtremont piano recital 
020-627 0466) 

luriektheater Tonight, fit, Sun 
temoon (in repertory till March 
i); Alberto Zedda conducts Dario 
's production of II barbtere d! 


Stvlglla, with Vassily Gereflo, Monica 
Bacoill and Hong-Shen Li (020-625 
5455) 

■ BASLE 

Casino Tonight Vermeer Quartet, 
with cellist Antonio Meneses, plays 
works by Kurtag, Mozart and 
Schubert Tomorrow, Thurs: Horst 
Stein conducts Basle Symphony 
Orchestra in Messiaen’s TurangafHa 
Symphony. Sat Orpheus Chamber 
Orchestra, with soprano Barbara 
Hendricks (061-272 1176) 

■ BRUSSELS 

Mormale This month’s production 
is Rossini's Otello, staged by Luca 
Ronconi and conducted by Glanlufgi 
Geimetti, with cast headed by Chris 
Merritt and Leila Cuberfi. Next 
performances tonight, Thurs and 
Sun afternoon. Uwe HaHmann gives 
a recital on Fri (02-218 121 1} 

Pates des Beaux Arts Thurs: Jos 
van Immerseel piano recital. Next 
Mon: Laredo, Robinson and 
Kallchstein Trio plays piano trios 
by Haydn, Mendelsson and Brahms 
(0 2-507 8200) 

■ CHICAGO 

CHICAGO SYMPHONY 

Christoph Eschenbach Is conductor 
and piano soloist on Thurs, Fri, Sat 
and next Tues. The programme 
includes Beethoven’s First Piano 
Concerto and Dvorak's Eighth 
Symphony (312-435 6666) 

THEATRE 

• The Master and Margarita: this 
stage adaptation of Bulgakov's 
novel Is a collaboration between 
Steppenwoff Theatre Company and 


LooklngglaBS Theatre, era of 
Chicago’s best small ensembles. 
Opens on Sat (Steppenwoff Studio 
312-335 1656) 

• The Mesmerist Are Watson's 
play, set In 1884 India, about the 
leader of a spiritual society who 
is Investigated when her mystical 
powers are called into doubt Tffl 
April 3 (Steppenwoff 312-335 1650) 

• The Night of the Iguana: Robert 
FSIIs directs Tennessee WHtiams-' 
late play, with Wifllam Peterson as 
the debased minister dtawn to a 
New England spinster, played by 
Cherry JonesI Just opened 
(Goodman 312-443 3800) . 

■ GENEVA 

• Jean-Marc Luisada gives a 
piano recital on Thurs at Victoria 
Hall. Next Mon’s concert by 
Orpheus Chamber Orchestra Is sold 
out (022-310 9193) 

• A new production of BUy Budd 
opens next Tues at Grand Thd&tre, 
with cast led by Robert Tear, 
Rodney Gllfry arid Willard White 
(022-311 2311) 

• Maly Theatre of St Petersburg 

presents its widely-acclaimed 
theatre spectacle entitled 
Claustrophobia daily till Sat at 
Comfidte (022-320 5001) 

■ THE HAGUE 
AT&T Danstheater Tonight, 
tomorrow. Dutch National Ballet 
in choreographies by Petipa, Glen 
Tetley and Massine. Fri, Sab 
Nedsrianda Dans Theater in 
choreographies by Lionel Hocfte 
and Paul Ughtfbot (070-360 4930) 
Dr Anton Phffipszaal Tomorrow: 
members of Hague PHI harmonic 


Orchestra play Spohris Nonet aid 
Beethoven’s Septet Thurs, Fri, Sun 
afternoon: Janos FQrts conducts 
orchestral works by Haydn, Grieg 
and Dvorak, with piano soloist 
Stephen Hough. Next Mon: GQnter 
Plchler conducts Netherlands 
Chamber Orchestra In a Schubert 
programme, with violin soloist Ernst 
Kovadc (070-360 9810) 

■ LAUSANNE ■ 

Th&fitra Municipal A new 
production of Gluck's Iphlg&ile en 
Tauride opens on Sun, with cast 
inducting Audrey Michael and Simon 
Keenlyslde. Repeated March 15, 

17, 20, 23(021-312 6433) 

■ VIENNA 

OPERA 

Staatsoper Tonight, Fri: ballet mixed 
Ml. Tomorrow, Sat (also next Wed 
and Sat): Manon Lescaut with 
Tiziana FabbridnL Thurs: Samson 
et Dafflawtth Baftsa and Carreras. 
Sun: II trovatore. March 18, 21, 23: 
Carlos Ktefoer conducts Der 
RosenkavaHer (51444 2955) 
Voticsoper Tonight Sat Donald 
Run nJ des conducts Lady Macbeth 
of Mtsensk. with cast headed by 
Rebecca Blankenship. Tomorrow. 
Bizet's Pearl Fishers. Thurs: One 
Nacht in Venecfig. Fri: Der 
Vogeffdndter. Sun: Die Zauberflfite 
(51444 2959) 

CONCERTS 

Mustkverein Tomorrow, Thurs: 
Wolfgang SawaJfoch conducts 
Vferra Symphony Orchestra In 
Beethoven's Second Symphony 
and Bruckner’s Seventh. Fri aid 
Sat afternoon, Sun morning: Zubin 
Mehta conducts Vienna 


Philharmonic Orchestra In Wagner, 
Schubert and Strauss. Fri evening: 
Alfred Brendel plays Beethoven 
piano sonatas. Next Tues and Thurs: 
Dmitri Hvorostovsky song recital 
(505 8190) 

Konzerthaus Sat and Sun: Sandor 
Vegh conducts Vienna Chamber 
Orchestra in works by Verses, 

Mozart and Haydn, with piano 
soloist Zoltan Kocste. Next Mon: 
Borodin Quartet (712 1211) 
THEATRE 

Burgth eater has a new production 
of Ibsen's Peer Gynt directed by 
Claus Peymam (51444 2959). 
Repertory at Akademletheater 
includes David Mamet’s Oleanna 
and Pirandello’s Six Persons in 
Search of an Author (51 444 2959). 
Raimund-Theatar has a 
German-language version of the 
Kander and Ebb musical Kiss of 
the Spider Woman (Wlen-Tlcket 
58885). A new production of John 
Osborne’s The Entertainer opens 
at Theater In der Josefstadt on 
March 17 (402 5127) 

■ WASHINGTON 

OPERA/CONCERTS 

• Washington Opera ends its 
season at Kennedy Center Opera 
House with Un ballo in Maschera 
and Madama Butterfly, in repertory 
till March 20. Richard Margison and 
Lisa Gasteen head the cast In the 
Verdi Yan Yan Wang sings the title 
role in the Puccini (202-416 7800} 

• Mstislav Rostropovich conducts 
National Symphony Orchestra's 
concerts this week In Kennedy 
Center Concert Hall. This evening's 
soloist is percussionist Evelyn 
Glennie. On Thurs, Fri afternoon 
and Sat, Horacto Gutierrez plays 


Tchaikovsky’s First Piano Concerto. 
Other Kennedy Center events 
Include a piano recital by John 
O’Conor on Thura (202-467 4600) 

• Gflnther Herbig conducts 
Baltimore Symphony Orche s tra and 
Chorus in Beethoven’s Missa 
Soiemrtis on Thurs, Fri and Sat at 
Baltimore’s Joseph Meyerhoff 
Symphony Hall (410-783 8000) 
THEATRE 

• The Sisters Rosensweig: Wendy 
Wassersteln’s Broadway hit about 
the reunion in London of three 
American Jewish sisters. Opens 
tonight at Bsenhower Theater 
(202-467 4600) 

• Sight Unseen: Donald 
Maiguiies’ play about an artist 
facing challenges to his background, 
beliefs and souL Opens tonight at 
Olney Theater (301-924 3400) 

• The Wash: Philip Kan Gotanda's 
play about the. end of foe 40-year 
marriage of an Aslan-American 
couple. Directed by Joy Zinoman 
for Studio Theater. Opens tomorrow 
(202-332 3300) 

■ ZURICH 

Opemhaus Tonight, Sun afternoon: 
ballet mixed bill. Tomorrow, Sab 
La boh erne. Fri: Die ZauberflOte. 

Sun evening. Salome (01-262 0909) 
Tonhafle Thurs: Cannula Quartet 
Fri: Antoni Wit conducts Tonhadle 
Orchestra in Lutoslawski memorial 
concert, including the Plano 
Concerto (Krystian Zmerman) and 
Fourth Symphony (next conoarts 
March 18 and 24). Sab Garda 
Navarro conducts Barcelona City 
Orchestra to works by Gerhard, Falla 
and Ravel. Sun: Alfred Brendel plays 
Beethoven piano sonatas (01-261 


•■T-r- - - - 




16 


FINANCIAL 


TUESDAY MARCH 8 W?4 


Does the UK need a stock market for entrepreneurs? Ronald Cohen, left, and Sir Andrew Hugh Smith offer their views 


a In the nest few 
months, the 
London Stock 
Exchange is 
due to decide 
whether a sepa- 

PERSONAL SStfTEi 
- s“e the mS 

“official list”, to replace the 
Unlisted Securities Market, 
which the exchange plans to 
close. The debate can be 
reduced to a simple question: 
can one market cater for both 
large, stable companies and 
smaller, more Innovative, fas- 
ter growing, but less stable 
entrepreneurial ones? Experi- 
ence in the US and UK sug- 
gests that the answer is no. 

Entrepreneurial growth com- 
panies can be defined in this 
context as greenfield ventures, 
and companies with a short 
trading record, management 
buy-outs or buy-ins and compa- 
nies in high-growth and high- 
technology sectors. 

in the US, the Nasdaq 
exchange opened in 1971 in 
response to the burgeoning 
“over the counter” market for 
miiiKtPri shares. By the end of 
1993, Nasdaq had 4.600 compa- 
nies trading on it, double the 
number trading on the New 
York stock Exc hang e. Tradi- 
tionally the market has been 
for entrepreneurial companies, 
especially those focusing on 
growth sectors such as elec- 
tronics and biotechnology. But 
GO per cent of today’s most 
actively traded stocks in the 
US are listed an Nasdaq. 

During the US recession, the 
mimher of “initial public offer- 
ings" - the first time a com- 
pany's stock is offered to the 
public - fell from 570 in 1986 to 
135 in 1990. Since then it has 
risen rapidly to 520 in 1993. the 
third-highest number since the 
market's opening. Nasdaq 
clearly has a distinct identity 
which appeals to entrepreneur- 
ial companies. 

In contrast, the NYSE caters 
solely for larger, more stable 
companies. The av er a ge mar- 
ket capitalisation of the 2,331 
companies traded on it at the 
end of 1993 was $457m. against 
*216m for Nasdaq. 

In the UK, the USM was 
established 10 years later than 
Nasdaq, also largely in 
response to a growing over-the- 
counter market It was cheaper 
and easier to access than the 
Official List, and its companies 
were typically smaller, 
younger and more entrepre- 
neurial than those an the Offi- 
cial List The fell in the num- 
ber of new issues during the 


Special care for 
young companies 





Ronald Cohen: the US experience shows that the stock exchange cannot cater for all companies 


recession, from 103 in 1988 to 
seven in 1992, was more 
extreme than Nasdaq, but the 
volume of shares traded almost 
doubled between 1992 and 1993 
(despite only five new issues 
last year) as interest in smaller 
companies revived. 

The fall in new issues was 
exacerbated in 1990 by EC 
directives on the regulation of 
financial markets which 
eroded some of the differences 
between the regulations and 
costs of the USM and the Offi- 
cial List, and by the announce- 
ment of the (JEM'S impending 
closure, due in early 1996. 

The stock exchange, instead 
of anticipating the EC direc- 
tives and maintaining a gap 
with the Official List by elimi- 
nating the requirement for a 
trading record an the USM in 
line with Nasdaq, interpreted 
the drop in the number of com- 
panies wishing to float as evi- 
dence of insufficient demand 
for such a market 

Two pieces of evidence are 
often used to justify the claim 
that the Official List caters 
effectively for all companies, 
first, the recent rush of new 
issues on the Official List - 180 


during 1993, many of which 
were regarded as entrepreneur- 
ial companies which would in 
normal circumstances have 
gone to the USM. In fact this 
was partly because the market 
did not function as it should 
have in recession while, with a 
recovery in sight and a bull 
market, enthusiasm to invest 
in these companies has 
returned as investors know 

The exchange may 
view failures by 
entrepreneurial 
companies as a 
taint 

that they generally perform 
better than larger, more stable 
ones at ffita stage of the cycle. 

Second, the stock exchange’s 
recent decision to relax its 
entry criteria for the Official 
List and allow access to health- 
care companies with no trad- 
ing record. But why should 
biotechnolo gy c ompanies be 
singled out? Will the rules also 
be relaxed for other sectors 
such as electronics, special 


This announcement appears as a matter of record only. 


ABB Prvnf bmenska strojfma Bmo, s. r. o. 

The Czech Republic 


CZK 290,000,000 

Three year facility 


REVOLVING CREDIT FACILITY 


Arranged by 
ING BANK PRAGUE 


ING BANK 


Internationale 

Nederlanden 

Bank 

January; 1994 


to large companies. 

So a specialist market for 
high-growth entrepreneurial 
com panies is essential. A par- 
ticular management and mar- 
keting focus is needed to ran a 
market that directs attention 
to the activities of entrepre- 
neurial companies and attracts 
entrepreneurs. 

Nasdaq has succeeded, not 
because of- the trading system 
it employs nor its rule book, 
but because it is managed inde- 
pendently of the NYSE and the 
American Stock Exchange. It 
hag a dedicated management 
team whose objectives are to 
sustain it through both the 
good and the bad times m the 
economy, to exploit opportuni- 
ties and to defend it from 
e xternal threats 


a For more tiffin 
200 years, the 
London Stock 
Exchange has 
been the main 
•source of 

PERSONAL 


N asdaq has developed 
and sustained an 
image as the market 
for entrepreneurial 
growth companies, attracting 
new companies in new sectors 
as new tech oologies evolve. 

It is this focus wh ich attracts 
specialist marketmakers, bank- 
ers, brokers and institutional 
and pr iv ate invest o rs, who are 
primarily interested in entre- 
preneurial companies. Their 
involvement strengthens the 
market's ability to finance 
companies in recession and 
recovery. 

This specialist market 
should be as highly regulated 
a gains t fr a ud, as the Official 
List should cater for both insti- 
tutional and private investors, 
and should be inriapamiPTitly 
managed by a team with a spe- 
cialist knowledge of entrepre- 
neurial mmpantet in or de r to 
mnTlnriiin liquidity, it should 

be seen as the first constituent 
of a pan-European market 
which would link national 
markets for entrepreneurial 
companies across the Euro- 
pean Union. 

It is dear, in the light of US 
experience, that the stock 
exchange cannot cater for all 
types of companies through, a 
single market If it wishes to 
provide an effective market- 
place for entrepreneurial com- 
panies, in bear and bull mar- 
kets alike, it can only do so 
through a separate market, 
independently managed and 
enjoying a Higtiiwii w identity . 

The author is chairman of 
Apax Partners & Co, the inde- 
pendent venture capital and 
corporate finance group. He uxts 
a member of the stock 
exchange’s smaller companies 
working party 


materials or interactive media? 

In fact it is possible that the 
decision to relax the rules will 
be reversed as soon as some of 

♦hasp companion fail, as they 

inevitably wffi. The exchange 
may view such failures among 
entrepreneurial companies as a 
taint on its position as a lead- 
ing market for the largest com- 
panies. Its board, drawn bum 
those primarily interested in 
large companies, may seek to 
protect the image of the Offi- 
cial List by adding new restric- 
tions. 

Already, by closing the USM, 
it has effectively raised the 
minimum trading record for 
companies seeking a listing 
from two to three years. It has 
also introduced rules for bio- 
technology companies which 
state that directors and pro- 
moters erf these companies can- 
not sell shares for two years 
when the equivalent lock-up 
period imposed by the Securi- 
ties and Exchange Commission 
in the US is six months. 

The risk is that, in the 
next recession, these compa- 
nies will find that access 
to equity through the Official 
List is again restricted 


Vtfw for ““P®- 

— riEW — nies That 

function is still its central 
role. Yet recently, concerns 
have been expressed about the 
capital-raising options open to 
smaller companies, which are 
the motor of economic recov- 
ery. 

City investors, company 
directors, politicians and ven- 
ture capitalists all have differ- 
ent solutions to the problem of 
improvin g capital availability 
for small businesses. 

The stock exchange is com- 
mitted to playing Us part in 
providing all suitable compa- 
nies with access to capital- The 
question is how that can best 
be achieved. 

The stock exchange has to 
balance its statutory obliga- 
tion to ensure investors are 
adequately informed about 
companies with the unavoid- 
able regulatory cost to the 
businesses themselves. 

It is often assumed that the 
cost of a fisting on the stock 
exchange, typically between 
£250,000 and £500,000 - 
mostly paid to legal and other 
advisers - could be greatly 
reduced in an alternative mar- 
ket. But this could be done 
only by decreasing the level of 
investor protection. The readi- 
ness of investors to commit 
funds might then be corre- 
spondingly reduced. 

Last year the stock exchange 
set up a working party to 
investigate whether the clo- 
sure of the Unlisted Securities 
Market would create a gap in 
the funding arrangements for 
s mall companies and, if so. 
what might be done. The 
working party proposed repla- 
cing the USM with an “enter- 
prise market” that would have 
a regulatory regime similar to 
that of tiie Official last and 
tbe USM. 

The working party’s contri- 
bution was valuable, but Ns 
report adduced little hard evi- 
dence Of tile demand for an 
alternative market of this 
kind, or of the needs it should 
meet. Nor did it solve the 
problem of initial costs. 

Recent press comments sug- 
gest that the stock exchange 
has rejected the enterprise 
market proposals. This is 
untrne. Like any business 
planning a new venture, the 
stock exchange has commis- 


Two 
may be 
a crowd 



Sir Andrew, exploring options 

stoned research into the needs 
and concerns of small listed 
and USM companies, unquoted 
companies which may be con- 
sidering a flotation, profes- 
sional advisers and investors. 

The stock exchange also 
wants to find out whether 
investors would accept less 
detailed disclosure in the fist- 
ing particulars and a lower 

The record shows 
how the stock 
exchange already 
supports smaller 
companies 

level of regulation. If not, it 
would be difficult to make any 
new market substantially dif- 
ferent from the Official List 
An additional question is how 
far regulation could, in prac- 
tice, be reduced within the 
European Union regulatory 
e n v ironm ent 

It is wo rt h recalling that the 
stock exchange established the 
USM in 1980 to provide young, 
entrepreneurial companies 
with the means of raising 
equity finance. It offered 
access to puhlic capital to com- 
panies which could not qualify 
for a full listing, at much 
lower cost It was a great suc- 
cess for some years, because of 
those qualities. 

But the distinction between 


the USM and the Official List 
was later eroded as a result 
both of EU legislation and of 
lower costs arising from 
changes in the official listing 
"procedures of the. stock 
exchange. These changes coin- 
cided with the downturn in 
the UK economy, and Interest 
in the USM fen away rapidly. 

Other distinctions between 
the Official list and the USM - 
and indeed the working par- 
ty’s recommendations - are, in 
practice, illusory. 

For instance, the Official 
Tic* is open to companies pre- 
pared to release 25 per cent of 
their shares into public hands, 
with a market capitalisation of 
as little as £700,000. In fact 
few, if any, companies of this 
size would find public capital 
a cost-effective way of raising 
The total cost of list- 
ing makes this option uneco- 
nomic for most companies val- 
ued at only a few million 
pounds. Although USM compa- 
nies need release only 10 per 
cent of shares into public 
hands, many have chosen to 
release 25 per cent or more to 
avoid illiquidity. 

The stock exchange has 
already t*i«»n steps to broaden 
th e types of companies which 
can join the Official List. The 
-revised Yellow Book rules, 
published last year, extended 
access to research-based scien- 
tific companies without a 
three-year trading record. 

Several companies have used 
these particular rules success- 
fully, and a working group is 
considering further refine- 
ments to the mutual benefit of 
companies and investors. 

The record shows bow the 
stock exchange already sup- 
ports smaller companies. Of 
180 new businesses listed last 
year, 58 were capitalised at 
£50m or less - a widely 
accepted delineation of a 
smaller company. There are 
now 860 of these on our main 
market, nearly half of all 
domestic listed companies. 

Tbe stock exchange is com- 
mitted to proriding access to 
publicly subscribed capital to 
the broadest range of UK com- 
panies. We are actively exam- 
ining bow that range can be 
increased. In doing so we have 
to consider not only the inter- 
ests of companies seeking capi- 
tal, but of those who can pro- 
vide it, not least so that they 
can have the confidence to 
invest 

The author is chairman of the 
London Stock Exchange 


LETTERS TO THE EDITOR 

Number One Southwark Bridge, London SE1 9HL 

Fax 071 873 5938. Letters transmitted should be clearly typed and not hand written. Please set fox for finest resolution 


Action overdue on tube initiative 


From Mr Stephen (XBrien. 

Sir, In order to attract over- 
seas investors to London, as 
well as relieve the misery 
endured by Londoners on a 
daily basis, we must have 
greater investment in London's 
public transport system. The 
private sector has a real oppor- 
tunity to take a leading role in 
achieving this, under the gov- 
ernment's Private Finance Ini- 
tiative. 

Accordingly, we are con- 


Dig your way 
out of a jam 

From JAJ Rees. 

Sir, Your report “Channel 
t un na ilers aim for Alpine pro- 
jects” (March 3) suggests that 
there may be things for the i 
t mmeH era to do mueh nearer 
home. 

Why not build an inner ring 
road round London, Inside the 
Infamous M25 and deep under- 
ground? 

The construction could 
indude large car paries with 
escalators or lifts for upward 
connections to the main Lon- 
don tube stations. 

Such a project could keep 
the tunnellers going for years 
at a steady rate, and it would 
get the cars out of London, 
enabling the city to breathe 

a gain. 

JAJ Rees, 

7 HoOies Close. 

Newton Sotney, 

Burton-on-Trent, 

Staffordshire DEIS 0SB 


cemed that one of the first pro- 
posals to follow the initiative - 
to replace the desperately old 
tube cars running on the 
Northern Line - is still await- 
ing a decision in principle by 
the Treasury. 

Not only does a deal of this 
type make sound commercial 
sense, but it also meets Trea- 
sury guidelines for the realistic 
transfer of risk to the private 
sector - or at least, as the 
private sector has to date 


understood the guidelines. 

This straightforward, imagi- 
native project must be allowed 
to move ahead without farther 
delay. 

if new cars for the Northern 
Line cannot be secured, what 
future is there for private 
finance in public-sector pro- 
jects? 

Stephen O’Brien, 

London First, 

5 deoeland Place, ■ 

London SW1Y 6JJ 


Pollution costs catch up 


From Molten Baker. 

Sir, Your section on Europe 
and the environment focused 
heavily on the costs of environ- 
mental legislation to industry 
(Can Europe Compete?, March 
3). This is only half tbe story, 
because doing nothing about 
the environment is not a low- 
cost option. 

Pollution created by one 
company lands extra costs on 
to others, or society, often at a 
level for higher than the cost 
of prevention. The damage 
bring done tp buildings, monu- 
ments and forests by arid depo- 
sition from sulphur pollution, 
for example, probably runs 
into billions of Ecus. 

This is a bill that will have 
to be picked up sooner or later. 
It will be a great deal cheaper 
if the bill is paid by preventing 
emissions at source, and fairer 
if tins is charged to the pol- 
luter. It is only because such 
costs have been missing from 


the balance sheets erf compa- 
nies and governments that 
skimp in g on the environment 
has ever created the Illusion of 
economic commonsense. 

In many sectors, improve- 
ments in environmental prac- 
tice are about increasing effi- 
ciency in a way that assists 
economic performance. Wor- 
ries about competitiveness in- 
sectors where this is not so 
should be pursued through a 
new Gatt round designed to 
bufld a global framework for 
pollution control. 

The need for such a step was 
widely identified during the 
tortuous and Hawed progress 
of the Uruguay Round. It will 
be disastrous for us all if the 
global nature of many environ- 
mental problems puts a brake 
on progress because of narrow 
national interests. 

Mallen Baker. 

46 Fitzwalter Rood, 

Sheffield S22SL 


Competitive 
tendering 
still holds 

From Kate Taylor and 
Mark Cook. 

Sir, We should like to com- 
ment on the suggestion inher- 
ent in your reports "Rules on 
public contract tendering to be 
eased" (March l) and “Conflict 
alleged on tendering rules” 
(March 2) that new Treasury 
guidelines on the tendering or 
public-sector contracts will 
imply widespread and radical 
changes to the current prac- 
tice. 

Your report of March 1 
acknowledges that the guide- 
lines "will not involve cases 
covered by European Union 
rules requiring competition”. 
These rules catch most con- 
tracts for construction works 
exceeding £3,743,203 in value, 
supplies contracts exceeding 
£96,403 and contracts for a 
wide range of services where 
the contract value exceeds 
£ 149 , 728 . 

It ean be seen, therefore, that 
the vast majority by value of 
central government procure- 
ment contracts will fall outside 
the new guidelines and 
will remain subject to a 
requirement of competitive 
tendering, in which the suppli- 
ers from across the EU may 
participate. 

Kate Taylor and 
Mark Cook. 

PmsentA Go, 

3 Cobnore Circus, 

Birmingham, 

B46BH 


Swiss toll system could resolve lorry ban objections 


Fran Christian Carl, 

Sir, Anyone who has hiked 
in the Alps will share the 
Swiss and Austrians' environ- 
mental and aesthetic concerns 
about the growing volume of 
lorry traffic through their 
valleys. 

The approach chosen in the 
recant Swiss referendum, how- 
ever, raises important ques- 
tions as to how the problem 
should be remedied. 

Much editorial space has 
already been given to the polit- 
ical costs of antagonising Swit- 
zerland’s European Union 
neighbours as well as Austria 
by dosing Swiss roads to lor- 
ries by 2004. There has been 
less debate aver the economic 
costs. 


It is a well-known bet that 
quotas introduce unnecessary 
distortions by foiling to sepa- 
rate users at the margin- from 
the rest. 

A system of toll prints at the 
borders and within the coun- 
try, with fores linked to dis- 
tance travelled, weight per axle 
and emission, presents several 
clear advantages: 

• By reflecting the marginal 
costs of environmental and 
road-damage, the fores would 
push marginal f reig ht t ransi t 
towards alternative forms of 
transport (eg: rail); 

• Revenue raised from the 
tolls could be used in financing 
the development and expan- 
sion of traus- Alpine rail net- 
works, thus capturing a 


greater proportion of actual 
lorry cargo (and demonstrating 
the applicability of the system 
to Austria); 

• Although the scheme would 
involve imposing fores on 
domestic traffic (removing one 
of the major sticking points 
with Switzerland's over the 
present discriminatory pro- 
posal), it may nevertheless he 
acceptable to Swiss voters, in 
view of fare structure 
described above which would 
primarily hit long-haul interna- 
tional traffic; 

• Prom a practical point of 
view, the region, by nature of 
its geography, win not suffer 
from the diversion of lorry traf- 
fic onto minor roads, as is the 
case in France; 


• A toll system might be 
more acceptable than a quota 
system to the EU with respect 
to existing transport agree- 
ments and within the frame- 
work of potential EU member- 
ship by toe Swiss. 

By installing a toll system, 
the Swiss could not only limit 
political objections and solve 
their environmental problem, 
they could also set the example < ' 
and the pace for their immedi- 
ate neighbours with the sama 
concerns, as well as for those 
nations toying with the idea of 
road-pricing as a means of 
reducing congestion. 

Chris tian Carl. 

31 Meridian House, 

carton. 

Bristol BS8 1 JL. 





.FINANCIAL TIMES TUESDAY MARCH 8 1994 


FINANCIAL TIMES 

Number One Southwark Bridge, Loudon SEI 9HL 
Tel: 071-S73 3000 Telex: 922 186 Fax: 071-407 5700 

Tuesday March 8 1994 


Whitewater 

blues 


Yesterday's headlines suggesting 
that the Clinton. White House Is 
now seriously embroiled in the 
Whitewater affair will have 
caused groans in many foreign 
ministries. Not that Mr Bill Clin- 
ton's administration la uni versall y 
admired abroad. On the contrary, 
it has been the subject of much 
hand-wringing and eye-rolling 
over the past year. But the main 
charges against it were inexperi- 
ence. and lack of sustained atten- 
tion to foreign policy issues. The 
former defect is now beginning to 
be healed, in the nature of things, 
by the passage of time. The latter 
may not be wholly curable, but 
there have lately been signs of 
improvement. Nothing could be 
more certain to cause a relapse 
than for the president to get bog- 
ged down in a prolonged s candal 

The heartiest wish of all those 
foreigners who depend on or have 
to deal with the US must be that 
the affair could be got quickly out 
of the way. Alas, that is one thing 
that will certainly not happen. 
The special counsel appointed in 
January, Mr Robert Fiske, has an 
open-ended brief to look into a 
broad range of matters concerning 
the business dealings of Mr Clin- 
ton and his wife Hillary when Mr 
Clinton was governor of Arkansas. 
His investigations are expected to 
take about 18 months, which 
would be a miracle of speed com- 
pared to the inquiry into the last 
big political scandal, the Iran-Con- 
tra affair. That was recently com- 
pleted after seven years. 

A better hope is that while Mr 
Fiske is burrowing his way 
through a mountain of obscure 


evidence, public attention will 
move elsewhere and the adminis- 
tration wfll be able to concentrate 
on its political agenda. That was 
certainly what Mr Clinton and his 
advisers hoped would happen 
when Mr Fiske was appointed So 
far the opposite has occurred, 
thanks to the clumsiness of some 
of those advisers. Including the 
president's own legal counsel, Mr 
Bernard Nussbaum, who resigned 
on Saturday. He and nine other 
officials - five from the White 
House, four from the Treasury - 
have been subpoenaed by Mr 
Fiske to explain a series of meet- 
ings at whidi they discussed the 
scope of a federal regulatory 
inquiry into Madison Guaranty, 
the foiled savings and loan institu- 
tion at the heart of the White- 
water affair. 

Those meetings may have been 
entirely innocent, but their pur- 
pose is not clear. Inevitably suspi- 
cions have been aroused of a cov- 
er-up, or conspiracy to obstruct 
the course of justice. No one in 
Washington has forgotten that it 
was such a cover-up, rather than 
the original misdemeanour, that 
led to the downfall of President 
Nixon 20 years ago. 

There is as yet no reason to sup- 
pose that this affhir will have any 
such dramatic denouement. But 
its latest twist only reinforces the 
Watergate lesson. A president 
accused of wrongdoing, however 
trivial or implausible, must not 
only allow the matter to be inde- 
pendently investigated, but must 
bend over backwards to avoid any 
appearance of seeking to influence 
the outcome. 


Air logjam 


Ambitious plans for creating an 
open skies regime on air traffic 
between the US and the UK have 
run into difficulties. The two gov- 
ernments and their airlines are 
now bickering about who is to 
blame and there is a real risk of a 
trade- war over the Issue. 

How far yesterday's decision by 
British Airways to suspend fur- 
ther investment in its associate 
USAir is connected with this dis- 
pute is not clear. Commercial con- 
siderations on their own are prob- 
ably explanation enough: until 
USAir has a viable restructuring 
programme in place, further 
investment will be money down 
the drain. 

Nevertheless, the inter-govern- 
mental wrangle can hardly have 
helped. An essential part of BA’s 
strategy is to link its trans-Atlan- 
tic (lights with USAir's domestic 
US services through “code-shar- 
ing”. But the US has threatened to 
cancel this code-sharing arrange- 
ment, which comes up for renewal 
on March 17th, unless its airlines 
secure greater access to British 
airports, especially Heathrow. 
Britain, in turn, has threatened to 
retaliate by cutting the number of 
US flights to Heathrow. 

What on earth are two govern- 
ments which profess to want a 
completely liberal air traffic 
regime between their countries up 
to? Unless they smarten up their 
act pretty sharply, they will dam- 
age the interests of trans-Atlantic 
passengers and lose their author- 
ity to lecture third countries about 
opening up their markets. 

The snag is that both govern- 


ments' negotiating a gendas have 
been hijacked by their national 
airlines. This is damaging because 
the airlines, quite rationally, are 
lobbying for their own narrow 
Interests not their country's 
broader national interests. 

Each country's airlines would 
clearly prefer the other country's 
market to be opened while keep- 
ing their own dosed. BA wants to 
be free to expand in the US butis 
determined to slow the growth of 
competition at its valuable hub at 
Heathrow. Similarly, US airlines 
such as Delta and American Air- 
lines want greater access to 
Heathrow and other UK airports 
but are anxious to stall BA’s 
growth in the US. 

If one airline cannot secure such 
unilateral opening of another 
country’s market, they may well 
calculate It is better to keep both 
markets closed than press for an 
open skies regime. Partially closed 
skies provide them with some 
monopoly protection. 

Such an outcome, though, 
would not be in the broader 
national interest of either the US 
or the UK. Abolishing the current 
restrictions would lead to more 
flights between a wider range of 
airports in both countries. Greater 
competition would also drive 
down air fares and the consequent 
increase in transAtlantic travel 
would boost trade and tourism. 

For an open market to be negoti- 
ated, the governments will need to 
gain a wider perspective than that 
of their airlines. The prize of doing 
so is great and should be enthusi- 
astically grasped. 


Brazil’s inflation 


For the first time in years, there is 
a real chance for Brazil to put an 
end to its chronically high infla- 
tion. Much must still be done to 
ensure that this occurs, but impor- 
tant groundwork has been laid for 
a deep and sustainable reduction 
in an annual inflation rate now 
accelerating past 2,500 per cent 

After six unsuccessful anti-infla- 
tion plans in eight years, why 
should anyone take the latest seri- 
ously? The reason is twofold: the 
plan makes economic sense and 
politicians, through a chance com- 
bination of circumstances, may he 
disposed to back it 

First the politics. Brazil's presi- 
dent and its Congress - both 
potential obstacles to economic 
stabilisation - are currently weak. 
President Itamar Franco is con- 
tent to let his finance minister, 
Fernando Henrique Cardoso, han- 
dle the economy. Legislators have 
been shaken by corruption scan- 
dals and their puppet-masters - 
the state governors - are scared of 
the popularity of the left-wing 
presidential candidate, Luiz Indtfo 
Lula da Silva ahead of October's 
elections. 

The plan is a credible attempt to 
tackle the underlying cause of 
inflation - the budget deficit It 
also attacks the inflationary psy- 
chology and indexation mecha- 
nisms which make last month's 
inflation rate the effective base for 
next month's inflation. 

Erasing Brazil's chronic budget 
deficit Ls the harder part. The 
country’s 1988 constitution ear- 
marked such a high percentage of 
federal government revenues that 


it virtually guaranteed deficits. 

According to Malison da 
Nobrega, an economist and former 
finance minister, about 98 per cent 
of Brazil’s tax revenues are ear- 
marked for specific expenditures - 
most of it goes straight to the 
states - or for wages for govern- 
ment employees whose jobs are 
legally protected. This leaves the 
rest for current and capital expen- 
ditures, and paying debt interest 

A constitutional change passed 
last week will reduce for a two- 
year period the proportion of 
funds earmarked and provides, in 
the best case, a temporary basis 
for erasing the budget deficit The 
big risk is that in an election year, 
the government will give in to 
pressures to spend money. 

Even if all this works, it is unre- 
alistic to think that Brazil's infla- 
tion will be brought down to inter- 
national levels In one shot The 
best that can be hoped for is that 
the plan buys time to allow the 
government that takes over next 
year to complete the task. 

To do this, it will need the tools. 
Congress can provide those during 
the current constitutional revision 
process. This might include, for 
example, devolving more func- 
tions to the states, which should 
allow the centre to be placed on a 
sounder financial footing. It can 
also reform the political system - 
with the aim of reducing the frag- 
mentation of Congress and elimi- 
nating gridlock. This is a rare 
opportunity for a discredited Con- 
gress to raise its stock with the 
Brazilian public. It should grab it 
with both hands. 


R arely has someone 
entered democratic poli- 
tics and achieved such 
rapid success as Italian 
media magnate Silvio 

Berlusconi. 

The sheer energy and audacity of 
his plan to become Italy’s next 
prime minister at the bead of his 
four-month-old Forza Italia move- 
ment has wrong-footed his oppo- 
nents. From mid-January onwards, 
whan he announced he intended to 
fight the March 27 general election, 
the other parties have watched 
dumbfounded the seemingly unstop- 
pable ascendancy of Mr Berlusconi 
His own polls give Forza Italia 37 
per cent of the vote; other polls 
show large numbers of undecided 
voters but still give him the lead 
over bis nearest rivals, the left-led 
Progressive Alliance, with 25 per 
cent support or more. 

But as the election campaign 
gathers pace, chinks are appearing 
in the armour of the 57-year-old 
owner of the Fininvest media 
empire. The strict laws governing 
the use of electoral propaganda 
deprive him of bis principal instru- 
ment - exposure on his commercial 
television channels. 

Po litically , his alliance with the 
populist Northern League of Mr 
Umberto Bossi, essential to launch 
Forza Italia in the north, is under 
strain. In the centre and south the 
National Alliance, the rebaptised 
neo-fascist MSI movement of Mr 
Gianfranco Flni, ls ever more 
closely linked to Forza Italia and 
pulling Mr Berlusconi away from 
his preferred centre-ground to the 
right 

Mr Berlusconi is r unning a presi- 
dential-style campaign, encouraging 
the electorate to vote for him as the 
personificatian of a new force in 
Italian politics. But the number of 
Forza Italia candidates likely to win 
seals is unclear, and his supporters 
could choose either of his two main 
allies, both established parties. 

Whatever the outcome, Mr Ber- 
lusconi's entry into politics has 
transformed the election into a gen- 
uine contest between the social 
democrat model of government pro- 
posed by the Progressive Alliance 
and a conservative right wing 
preaching the virtues of business. 

The advent of the businessman- 
politician also raises serious ques- 
tions. Mr Berlusconi is no ordinary 
businessman. He has created 
Europe's second-largest media 
empire after Bertelsmann of Ger- 
many in 25 years. 

Fininvest is Italy's third-blggest 
private group with a provisional 
1993 turnover of LlUSOObn (£4.7bn). 
Mr Berlusconi owns three national 
television channels. These, plus 
advertising and programme links 
with regional stations, give Ru- 
in vest control over 85 per cent of 
Italian commercial networks and a 
45 per cent share of the national 
audience. His companies also 
account for 20 per cent of the 
domestic publishing market. 

In every venture so for he has 
come out on top - not least in his 
high-profile 1986 purchase of AC 
Milan football club, which he has 
turned into the most successful Ital- 
ian team of all time. 

Can a man who wields such influ- 
ence in politically sensitive sectors 
insulate himself from a conflict of 
interest once in high political 
office? 

The question is all the more rele- 
vant in a country where the cflvid- 


M r Silvio Berlusconi's 
entry into politics 
coincides with a deli- 
cate phase in the Fin- 
invest empire. The group is bur- 
dened by debts and has lost its 
identity as a result of rapid expan- 
sion In the 1980s boom, writes Rob- 
ert Graham. 

In 1992, the last year for pub- 
lished accounts, Fininvest profits 
were down to L21bn (£8 .5m). The 
accounts would have been in the 
red but for exceptional gains of 
L334bn, reflecting a mark-up on the 
transfer to ids brother Paolo of his 
newspaper and Cantieri Rianiti 
Milanesi building interest 
Arthur Andersen, the auditor, 
qualified the accounts last May, 
making observations about tax pro- 


Polymorphous 

polytechnic 

■ Everything in yesterday's edition 
of the FT’S sister publication - Leg 
Echos, the French financial daily 
- seemed normal, but for the 
prominence of the bylines. 

What was Jean Peyrelevade, the 
head of Credit Lyonnais, doing 
writing about the French economy? 
Or Jean-Loois Befla, the bead of 
the St-Gobain glass company, 
writing about German wage rows? 
Or Serge Dassault, the jet-maker, 
writing about devaluation of the 
French African franc? 

The answer is that they are all 
graduates of the Ecole 
Polytechnique. To help celebrate 
that elite institution's 200th 
anniversary. Les Echos invited 60 
of them to put their master-of- 
all-trades training into practice 
by producing the entire issue. 

Ex-president Valery Giscard 
d’Estaing was not required actually 
to turn up at the office to pen his 
editorial on “full employment". 

But 54 other poiytechnidens were 

caned in to work at Les Echos' 

Paris headquarters. "We selected 
the subjects for them, but they 
chows the angle of the articles," 
said a real Les Echos journalist 

Five of those absent abroad on 
business were converted Into 
special correspondents, with Jean 
Gandois, the boss of Ptehiney, filing 
a story from Chicago on 
the new US threat of “Super 


Robert Graham on potential conflicts of 
interest for a political mould-breaker 


The mogul is 
the message 



mg line between business and poli- 
tics has long been blurred for 
mutual benefit The incestuous rela- 
tionship between the two fostered 
the all-embracing corruption that 
has so discredited Italy's postwar 
political system. 

Moreover, Mr Berlusconi is him- 
self a product of this system. He 
made his first fortune in the rough 
and ready world of the Milan con- 
struction business, and was subse- 
quently a member of the powerful 
secret masonic lodge P2 that sym- 
bolised the shadowy parallel system 
of power in the Italy of the 1970s. 

Mr Berlusconi is one of the few 
top businessmen not to have been 
directly touched by the corruption 
scandals. Nevertheless, his brother 
Paolo, who now runs the family 
property business, has admitted to 
paying bribes to local Milan politi- 
cians to secure development pro- 
jects. Four of Mr Berlusconi's senior 
atrigg have been caught up in magis- 
trates’ investigations into illicit 
party financing: the Fininvest 
group, for example, is alleged to 
have given the main political par- 
ties substantial undeclared dis- 
counts in the 1992 general elections. 

“Having been freed from the cor- 
rupting situation where politics 
controlled business, we now risk 
Ming Into the opposite trap of poli- 
tics being under the thumb of busi- 
ness," commented Professor Luigi 
Spaventa, the budget minister and 
the candidate of the left's Progres- 


sive Alliance who is fighting Mr 
Berlusconi in a Rome constituency. 

Since his campaign started, the 
nearest Mr Berlusconi has come to 
conceding a potential conflict of 
interest was his move m January to 
distance himself from management 
of the Fininvest group. He resigned 
from all his man agerial positions, 
appointing a chairman, Mr Fidele 
Canfolonleri, his faithful aide and 
friend since student days. This fol- 
lowed a management shake-up last 
October, when he created the post 
of chief executive for Mr Franco 
Tato, a professional manager who 
bad been running the Mondadori 
publishing subsidiary. 

However, Mr Berlusconi retains 
ownership of Fininvest According 
to Fininvest officials, he and his 
family own 51 per cent of the group 
via 22 “box" holdings (Holding Ital- 
ians numbers 1-22) and the remain- 
der indirectly through two trust 
companies, Servizio Italia and Sat 
set up by the big state commercial 
bank, BNL. This structure reflects 
the traditional Italian concern to 
limit tax liabilities and to conceal 
the precise individual stakes held 
by family members. 

Mr Berlusconi has used the Fin- 
invest infrastructure as the core 
from which to organise Forza Italia. 
The national network of the move- 
ment's “clubs” (modelled on AC 
Milan supporters clubs) is liberally 
sprinkled with Fininvest employees. 
Some 40 executives from the group 


are devoting themselves to the cam- 
paign. At the same time an undis- 
closed amount of Fininvest money 
has been ploughed into propaganda 
and organisational activities over 
the past four months. 

The state's Media Watchdog Com- 
mittee, the ombudsman, has few 
teeth to control this sort of corpo- 
rate involvement in a political cam- 
paign. or indeed corporate owner- 
ship by a politician running for 
office. “There is no precedent for 
this kind of situation.” said a com- 
mittee spokesman. “The existing 
law does not envisage any trustee 
arrangement for the proprietary 
and beneficial interests of a media 
owner if and when they take public 
office. It is sufficient that he relin- 
quishes an executive role.” 

Mr Berlusconi has a lot riding on 
his campaign. It is far from dear 
that he would continue as a profes- 
sional politician if he lost This per- 
ception has prompted sceptics to 
conclude that Mr Berlusconi Is run- 
ning for office in part to protect his 
business interests. Mr Luciano 
Benetton, bead of the Benetton lei- 
sure wear group, said as much last 
week: “Silvio Berlusconi's love of 
politics is motivated by a fear of 
losing his television interests.” 

Mr Tato. Fininvest chief execu- 
tive, says quite openly. “If Berlus- 
coni loses, and the left wins, we risk 
losing one television channel imme- 
diately and a second within two 
years.” This could mean the loss erf 


Delicate digestive system 


visions of Ll72bn, and L437bn of 
funding extended to bay television 
rights for use in the Spanish mar- 
ket The 1993 results are likely to 
be depressed by stagnant advertis- 
ing revenues, the effects of reces- 
sion. the cost of debt service and 
greater tax provisions. 

“Fininvest is a typical product or 
the 1980s boom," observes Mr 
Franco Tato of Flniu vest’s Monda- 
dori publishing arm. “It didn't 
wont to become a conglomerate, 
bat became so with a policy of 
expansion at an costs. The original 
thread Unking all the activities was 
advertising. Bat it has been lost 


and all this expansion now has to 
be digested." 

The group has spread itself into 
four areas: stores (Standa and 
Euromercato); publishing (Monda- 
dori and Silvio Berlusconi Editors); 
television and cinema, known 
under the heading Big tv; and 
financial products. Almost without 
exception Fininvest has a good 
asset portfolio. However, many 
assets were bought at very high 
prices with expensive debt in an 
expanding economy. Real interest 
rates remain high and Italy has 
been in a recession for 18 months. 

Mr Tato considers all of these to 


be mature business areas with 
clear limits on growth imposed by 
anti-trust laws on expansion in 
publishing and the threat to TV 
licences. 

The group is carrying L3,S00bn of 
debt, high by Italian standards, 
reflecting the purchase of Standa 
and Mondadori la the 1988-91 
period. Finin vest's debt has leapt 
12-fold since 1988 from L293bn. 
Concern over the size of Fininvest 
debt among the group's creditor 
banks was one reason for Mr Tato’s 
appointment last October. 

Some LdOObn should be raised by 
the flotation of Mondadori-SBE 


Observer 


301” trade retaliation. 

And what about taking the role 
reversal the other direction, letting 
the hacks run some companies for 
a day? The businessmen's response 
was not overwhelming . . . 


Le Hezza 

■ Speculation about Michael 
Heseltine's intentions are 
threatening to get out of hand; his 
every move is now being 
interpreted as a bid for John 
Major’s job. 

What will his rivals make of his 
latest bid for the headlines - an 
exclusive and exhaustive interview 
in the French financial newspaper 
La Tribune? The gushing article, 
spread across the centre pages, 
concludes that Heseltine's political 
renaissance has been nothing short 
of miraculous. 

With the odds on Hezza taking 
over from Major shortening to three 
to one, Hezza has told friends that 
he does, indeed, have his heart set 
on higher office. But it is Francois 
Mitterrand's job he is after. 


Grow slow 

■ Whereas John Major’s 
predecessor used BBC Radio's 
Jimmy Young show to boost her 
loyal following among Britain's 
housewives, the main Impact of 
Mr Major's appearance yesterday 
was to confuse the financial 
markets. An alert Reuters hack 



support* 

picked up the PWs comments that 
Britain's GDP growth was currently 
2 per cent, with 2.5 per cent forecast 
for “next year”. In fact, the 
government is predicting 2^ per 
cent growth for this year and the 
Treasury confirmed that there was 
no change in its forecast. 

So did the Prime Minister get 
the figures wrong, or is he simply 
confused about which year it is? 


Pips squeak 

■ Who says the trade unions have 
lost their muscle? Barclays Bank's 
top brass must be quaking at the 
knees at the threatened response 


by the Banking, Insur anc e and 
finance Union to the bank's plans 
for compulsory redundancies in 
London and the south east 

Having foiled to win support for 
a strike, the union is rolling out 
Its secret weapon, an “Admobile". 
It's a lorry with a sign on the back 
telling Barclays, in no uncertain 
terms, that it must stop its sacking 
plans at once. 

It will circle Parliament Square 
several times next Thursday before 
making a ceremonial drive past 
Barclays new head offices. 
Managers bad better duck down 
or it might sound its horn. 


Return trip 

■ So BOC has finally found a new 
chairman, or rather an old one. 

The news that Richard Giordano, 
who headed the group for more 
than a decade, is re-occupying the 
BOC chairman's suite may be good 
for BOC’s shareholders, but some 
British Gas shareholders might 
feel a bit miffed. 

When British Gas recruited its 
new £450,000 a year chairman, 
Giordano undertook to reduce his 
other non-executive commitments. 
Now Giordano is adding the 
non-executive chairmanship of 
another company which is going 
through a bit of a rough patch, but 
promises that “his principal 
activities and office” will remain 
at British Gas. Presumably, this 
means that he won't be paid the 
£305.000 a year he commanded the 


17 

as much as a quarter of Fininvest ’s 
total revenue base. 

Mr Berlusconi’s grip on the media 
has become a principal focus for his 
opponents’ fire, which he has clev- 
erly countered by claiming that the 
state-run RAI broadcasting chan- 
nels are biased against him. 

He cannot disguise the fact, how- 
ever, that no other European gov- 
ernment has allowed one Individual 
to accumulate such television 
power. The Italian press irrever- 
ently refer to Mr Berlusconi as "Su 1 
Emittenza" (a pun on the address 
for a cardinal which literally means 
“his transmitter-ship"). 

His exceptional dominance of 
commercial television reflects the 
highly politicised world of the Ital- 
ian media. As a result of complex 
horse-trnding among the political 
parties the haphazardly devolved 
structure ot national television net- 
works was formalised In the 1990 
*Mami law'. The law confirmed the 
presence of three state-ruu RAI 
channels and six national commer- 
cial channels, of which three were 
for Fininvest. confirming its domi- 
nant market position. The only 
other network of note was Telemon- 
tecarlo, in the hands of the Ferruzzi 
group. 

M r Berlusconi got 
away with his near 
monopoly because 
the Christian Dem- 
ocrats and Social- 
ists controlling parliament were 
obsessed with retaining their 
manipulative hold of the RAI and 
its news programmes. At the same 
time both parties, and especially the 
Socialists through their leader, Mr 
Bettlno Craxi. were repaying Mr 
Berlusconi for his political support 
Mr Craxi's Socialist connections 
also helped pave the way for Mr 
Berlusconi to take a stake in 
Spam's Telocinco and in France's 
first commercial television station. 

Efforts to reform the law have 
consistently been blocked because 
the main parties refused to surren- 
der control of RAI. “Everyone 
recognises the Mami law reflected 
the position of the political parties 
at a particular time and this situa- 
tion of course no longer applies,” 
said a spokesman for the Media 
WatchDog Committee. 

Mr Berlusconi has already experi- 
enced pressure over his media own- 
ership. Under a 1992 law limiting 
cross-holdings of newspapers and 
television interests media, he was 
obliged to offload a majority stake 
in his newspaper, n Giomale. to his 
younger brother Paolo. This did not 
stop him this January ejecting the 
editor in a very public row, in a 
clear defiance of the spirit of the 
1992 law. 

Now, with the RAI in desperate 
financial straits and the links with 
the old political parties severed, a 
rearrangement of television licences 
has become an important item on 
the agenda of the next government 
The Progressive Alliance, domi- 
nated by the former communist 
Party of the Democratic Left (PDS), 
has said it will limit ownership of 
television channels to one per 
group. Even Mr Bossi. Mr Berlus- 
coni's electoral ally, has suggested a 
curtailment of his television power. 

Thus, even if Mr Berlusconi 
comes on the winning side, the 
question of Flninvest's television 
power cannot be ignored. If he 
loses, more than just his political 
ambitions will be under threat. 


later this year. But even If It pro- 
ceeds as planned, It may not be 
enough to tide Fininvest over the 
recession. Although Standa pro- 
vides almost half Finlnvest's cash- 
flow, it carries much of the debt 
and is the most marginal to the 
media/multimedia interests. 

Apart from considering asset 
sales, Mr Tato is restructuring the 
debt out of the Fininvest holding 
and into the operating companies. 
He also believes the ownership 
structure will have to be reworked. 
This has been tax efficient, but Is 
increasingly clumsy to manage. 
Also, In the light of the Ferruzzi 
group's collapse last year, the 
demand by the financial commu- 
nity for greater transparency in 
family holdings has increased. 


last time he was BOC's chairman. 

If Giordano was the natural 
successor to Pat Rich, who 
announced his surprise early 
retirement over six weeks ago, why 
didn’t BOC nominate him at the 
time? 


Punt a quid 

■ One of the more innocent 
cross-border activities between 
Ulster and Eire, the monthly exodus 
by northerners In search of the 
nearest southern newsagent to buy 
lottery tickets, is looking sickly. 

The republic's national lottery 
organisers handed out 139m punts 
In prize money last year and 
northern punters alone bought 27m 
punts of lottery tickets, about 10 
per cent of the total. The Eire 
lottery boys are worried about a 
big drop in takings, once the UK 
lottery starts up next year. 

But a half-empty bottle is also 
half full: Lotto fans north of the 
border are looking forward to two 
chances of striking lucky. 


Room service 

■ There are Grand Hotels and then 
there Is the up-and-coming Sheraton 
Grand Hotel in Edinburgh, A reader 
has just had his reservation 
confirmed - for a double room - 
at "£104 per romp per night 
Inclusive of VAT and full Scottish 
breakfast". 

Porridge oats, no doubt. 




18 



{FRAME 


Specified Worldwide 



l_B.PIastics Limited 
Tel: 0773 852311 


* 


FINANCIAL TIMES 

Tuesday March 8 1994 



Hurd urges EU to drop grand 
plans for institutional change 


By Philip Stephens, Pol itical 
Editor, in London 

Mr Douglas Hurd yesterday 
called on Britain's European 
partners to drop grand ambitions 
for further institutional change 
in the European Union and com- 
mit themselves to making the 
present administration work. 

In a speech directed as much at 
the warring factions in his own 
political party as at EU members, 
Britain's foreign secretary said 
the 12 should set as the first pri- 
ority “the integrity and effective- 
ness of administration in 
Europe". The EU should do less 
but do it better. 

Calling for less European legis- 
lation, value for money, a fight 
against fraud and the even appli- 
cation of EU law, Mr Hurd said 
governments “have for too long 


concentrated on designing future 
stages of European co-operation". 

He told the Belgian Institute of 
International Affairs in Brussels: 
“The people of Europe have the 
right to expect those charged 
with the administration of 
Europe to concentrate not just on 
the historical importance of the 
European endeavour but on the 
nitty-gritty which will decide 
whether it works". 

Mr Hurd called for other EU 
justice and home affairs minis- 
ters to back a new British initia- 
tive designed to combat criminal 
fraud against the Union's institu- 
tions. 

He said: “The true European 
vision In 1994 lies in making a 
success of what we have already 
agreed and extending that suc- 
cess to other parts of Europe." 

Mr Hurd’s aides said that the 


speech was not intended to pro- 
vide a complete picture of the 
government's approach to the 
next stage of European develop- 
ment 

But the emphasis on pragma- 
tism and the distinct scepticism 
about European ‘Vision" were 
interpreted at Westminster as 
part of a series of concerted 
moves to unite the Conservative 
party around a common stance 
for the European election. 

It was reinforced by prime min- 
ister John Major, who insisted 
yesterday that the Conservatives 
would fight the June poll on a 
platform opposing greater cen- 
tralisation of powers in Brussels. 

Distancing Conservative MERs 
from their alliance with members 
of the pro-federalist European 
Peoples party. Mr Major added: 
“We will fight the election on a 


distinctly British Conservative 
manifesto for the future of 
Europe." 

There were signs last night 
that the attempts to assuage Con- 
servative Euro-sceptics had 
annoyed leading members of the 
party’s pro-European wing. 

On BBC radio, however, Mr 
Major dismissed suggestions that 
damaging defeats expected for 
the Conservatives in the local 
and European elections could 
force him from office. 

Instead he emphasised his 
determination to remain in 
Downing Street Recalling that in 
1992 the Conservatives had 
secured the largest vote of any 
party in history, he said: T was 
elected to remain prime minister 
of this country at least until the 
next (general) election and 
beyond it if I win it" 


German court backs nuclear waste site 


By Quentin Peel in Bonn 

A local court in the German state 
of Lower Saxony yesterday gave 
the green light for further explor- 
atory work on Germany's first 
full-scale nuclear waste disposal 
site in the disused salt mines at 
Gorleben, on the banks of the 
river Elbe. 

The decision is a victory for the 
federal government in Bonn, and 
the nuclear industry. In the bat- 
tle with environmentalists and 
local state authorities to estab- 
lish proper nuclear waste dis- 
posal facilities at Gorleben. 

If the Gorleben site goes ahead, 
it is scheduled to provide facili- 
ties for long-term disposal of 
high-level nuclear waste and 
interim storage. That could mean 
Germany will no longer need to 


send highly radioactive nuclear 
waste for reprocessing in Britain 
and in France. 

The waste disposal plans for 
Gorleben have been resisted by 
the state governments of Lower 
Saxony for almost 20 years, by 
the conservative Christian Demo- 
cratic Union and the leftwing 
Social Democratic party (SPD). 

The decision on Gorleben may 
have an impact on state elections 
in Lower Saxony next Sunday. 
The SPD, represented by environ- 
ment minister Ms Monika Gri- 
efhahn, and its Green party part- 
ners in government, have 
insisted Germany abandon 
nuclear energy for power genera- 
tion. 

The court order means the 
state mining authorities must 
allow further exploratory work 


on the salt mino workings, and 
the state government must 
extend planning permission for 
the Gorleben complex as a whole. 
The court overruled objections to 
the plans by the local landowner. 

Yesterday's victory in LUne- 
burg was tarnished by a setback 
for the nuclear industry in 
another battle, in the neighbour- 
ing state of Hesse. A fire in the 
20-year old nuclear power station 
at Bibbs, near Darmstadt, meant 
the station could not be restarted 
as planned yesterday after rou- 
tine maintenan ce 

The fire has given Mr Joschka 
Fischer. Green party environ- 
ment minister in Hesse, ammuni- 
tion against Mr Klaus Topfer, the 
CDU environment minister in 
Bonn, over the plant Last week 
Mr Tbpfer used his federal pow- 


ers to order Mr Fischer to let it 
go ahead. 

Mr Fischer’s campaign against 
nuclear power generation has 
prevented the operation of the 
Siemens MOX plant at Hanau. 
where reprocessed plutonium 
from Britain and France is sup- 
posed to be turned into mixed-ox- 
ide fuel elements for reuse in 
Germany’s nuclear power sta- 
tions. By delaying that process, 
he has called the whole nuclear 
cycle Into question. There is pres- 
sure on the government and 
industry to allow direct disposal 
of nuclear waste - at a site like 
Gorleben - instead of reprocess- 
ing. 

In Lower Saxony the present 
government says it will not allow 
direct disposal unless high-level 
radioactive waste is limited. 


White House takes political 
offensive over Whitewater 


By Jurek Martin in Washington 

The White House yesterday 
began a fully fledged assault on 
the Republican party, charging 
that it was exploiting the White- 
water affair to cover up its own 
political shortcomings. 

Mr George Stephanopoulos, the 
senior presidential adviser, said 
on breakfast television of the 
Republicans: “They can’t run on 
the economy, they can’t run on 
healthcare, they can't run on wel- 
fare. they can't run on crime, so 
they're trying to exploit this 
issue.” 

However, picking up argu- 
ments used by vice-president A1 
Gore on Sunday. Mr Stephan o- 
poulos conceded that the White 
House damage control team “cre- 
ated a lot more damage than it 
controlled". The leading member 
of that team, Mr Bernard Nuss- 
baum, the White House legal 
counsel, announced his resigna- 
tion at the weekend. 

But Mr Stephanopoulos added 


that the president had ordered 
full cooperation with the inde- 
pendent Whitewater counsel, Mr 
Robert Fiske, and had created 
"fire walls" to prevent even the 
appearance of improper consulta- 
tion between the White House 
and departments of government 

“We're going to get back to 
work on the big issues, and let 
the special counsel do its work,” 
he said. This message was also 
conveyed on television by Mr 
'Mack* McLarty, the White House 
chief of staff, and Mr Paul 
Begala, another presidential 
adviser. 

Yesterday, one prominent 
Republican, Congressman Jim 
Leach of Iowa, also warned his 
colleagues about loose talk of for- 
cing President Bill Chnton from 
office, implicit in a weekend 
interview by Senator Phil 
Gramm of Texas. Mr Leach said: 
“I think it would be very inappro- 
priate to put forth the notion that 
the presidency is in jeopardy.” 

Mr McLarty said he did not 


think either the president or Mrs 
Hillary Rodham Clinton knew of 
the controversial meetings 
between White House and Trea- 
sury officials at which the inves- 
tigations into the failed Madison 
savings and loan institution, at 
the heart of the Whitewater 
affair, were reportedly discussed. 

Mr Stephanopoulos Insisted 
these briefings were perfectly 
routine. Mr Roger Altman, the 
deputy Treasury secretary, bad 
previously held similar sessions 
with congressional staff and the 
media, he said. These sessions 
was first disclosed by Senator A1 
D 'Amato, the New York Republi- 
can, members of whose staff 
attended Mr Altman’s meetings, 
Mr Stephanopoulos said. 

Mr Joel Klein, Mr Nussbaum's 
deputy, has ordered White House 
officials to destroy nothing 
related to Whitewater until It has 
been determined what is relevant 
to Mr Fiske's inquiries. 


Editorial Comment, Page 17 


Central banks 
reject curb on 
hedge funds 

Continued from Page 1 


supply in January - growth at an 
annualised rate of 20.6 per cent - 
would not affect the Bundes- 
bank’s long-term monetary tar- 
gets. The M3 figure led to a sharp 
fall in bond prices when it was 
disclosed last Wednesday. 

He said there was "no reason” 
for markets to remain concerned. 
“The M3 figures are to some 
extent due to special factors, and 
of course we hope their influence 
will disappear over time, and our 
monetary policy is targeted to a 
whole year," he said. 

Bond traders will focus today 
on the Bundesbank’s announce- 
ment of its latest round of securi- 
ties repurchase agreements. Most 
traders expect another round of 
variable-rate repos. 

On the bourses yesterday, 
Frankfurt rose 2.4 per cent and 
continued higher after hours, 
while Paris advanced IB per cent 
and Amsterdam put on 2^ per 
cent London rose 27.9 to close at 
3,305.9. 


FT WEATHER GUIDE 


Europe today 

A complex low pressure area will draw mild 
and moist air from the Atlantic over hie 
southern parts of Britain, the Benelux, 
Denmark and southern Scandinavia, 
producing cloud and. especially In England 
and south-west Norway, periods of rain and 
strong to near gale force south- westerly 
winds. Scotland and Ireland wBI have sunny 
spells mixed with showers. High pressure will 
keep France, Italy and the Alps dry with 
sunny periods. Spain and Portugal wHl have 
abundant sunhine and temperatures in the 
20s. Greece and Turkey will also be sunny 
but afternoon temperatures mil be cooler 
than in south-west Europe. Lapland and 
Finland w9l stay wintry with light snow and 
’ temperatures below freezing. 

Five-day forecast 

Greece, Turkey and Cyprus will be unsettled 
as low pressure develops. However, high 
pressure will keep southern and south-west 
Europe sunny and dry. A westerly air current 
wfll give changeable conditions over northern 
Britain and Scandinavia. Wintry showers will 
occur in northern Europe. The mainland of 
western and eastern Europe wifi have 
scattered showers. 

TODAY'S TEMPERATURES 



Situation at IS GMT. Tomperatums madman tor day. forecasts by Mateo Consult of the Netherlands 



Maximum 

Belfast 

ram 

11 

Cardff 

ram 

13 


Gafadua 

Belgrade 

faff 

18 

Chicago 

fax 

0 

Abu Dhabi 

fair 

30 

Benin 

ram 

13 

Cologne 

fair 

15 

Accra 

an 

32 

Bermuda 

fair 

23 

O' Salaam 

fair 

31 

Algiers 

3U1 

20 

Bogota 

sun 

20 

Dakar 

lair 

24 

Amsterdam 

cloudy 

12 

Bombay 

fair 

33 

Dallas 

thund 

11 

Athens 

fair 

10 

Brussels 

to* 

14 

Delhi 

sun 

32 

B. Aires 

doudy 

28 

Budapest 

cloudy 

14 

Dubai 

sun 

28 

BJham 

drnd 

15 

Chaoen 

shower 

10 

Dublin 

rain 

13 

Bangkok 

star 

34 

Cairo 

fair 

IB 

Dubrovnk 

fair 

17 

Barcelona 

mm 

17 

Cape Town 

lair 

25 

Edtaburgh 

shower 

11 

SaiinS 

cloudy 

7 

Caracas 

bar 

25 

Faro 

sun 

20 


Our service starts long before takeoff. 

Lufthansa 

German Airlines 



Frankfui 

cloudy 

15 

Mrta 

sun 

17 

Rta 

thund 

28 ! 

Geneva 

fair 

11 

Manchester 

drzzi 

14 

Riyadh 

sun 

30 

Gibraltar 

Mr 

17 

Mania 

fair 

32 

Rome 

sun 

17 

Glasgow 

rain 

11 

Melbourne 

fair 

20 

S. Frsca 

cloudy 

20 1 

Hamburg 

ram 

11 

Mffldco CUy 

fair 

24 

Seoul 

rah 

4 

HetsmW 

snow 

0 

Miami 

fair 

27 

Singapore 

fair 

30 1 

Hang Kang 

cloudy 

24 

Milan 

lair 

17 

Stockholm 

shower 

S ] 

Honolulu 

fair 

28 

Montnal 

dear 

3 

Strasbourg 

fair 

IS 

Istanbul 

Jersey 

Karachi 

shower 

cloudy 

aun 

9 

11 

32 

Moscow 

Munich 

Nairobi 

cloudy 

fair 

aun 

1 

IS 

29 

SSZ 

Tel Aviv 

shower 

fair 

fair 

22 

20 

IB 

Kuwait 

sun 

28 

Naples 

sun 

18 

Tokyo 

rain 

13 

L Angeles 

fair 

21 

Nassau 

fair 

27 

Toronto 

dear 

2 

Las Palmas 

shower 

21 

New York 

fair 

12 

Tins 

aun 

19 

Lima 

fair 

27 

Nice 

fair 

14 

Vancouver 

sun 

10 

Lisbon 

sun 

2t 

Nicosia 

shower 

16 

Venice 

tak- 

14 

London 

Mr 

16 

Oslo 

cloudy 

B 

Vienna 

doudy 

16 

Lux.bot>g 

fair 

12 

Paris 

far 

14 

Warsaw 

rain 

9 

Lyon 

Madeira 

Madrid 

fair 

shower 

lair 

13 

19 

19 

Penh 

Prague 

Rangoon 

lair 

34 

14 

31 

Washington 

Wellington 

Winnipeg 

cloudy 

doudy 

deer 

16 

17 

-6 

Majorca 

aun 

18 

Reykjavik 

snow 

1 

Zurich 

for 

14 


THE LEX COLUMN 

BA’s special relationship 


Anyone believing that British Airways 
would act as USAir's sugar daddy now 
knows that It will be sparing with the 
financial lollipops. But given that BA 
did not plan to invest any more money 
until 1996. that reassurance is some- 
what superfluous at this stage. It 
rather suggests BA is playing to three 
broader galleries. BA’s reticence will 
help USAir talk tough to the trades 
tminna in its efforts to cut costs. It will 
also help calm shareholders' fears that 
it will throw good money after bad. 
BA comments may also be an attempt 
to take some sting out of the current 
controversy surrounding future 
UK-US aviation arrangements. 

USAir is certainly in a sorry state 
having lost $Llbn over the past three 
years. The winter weather has caused 
severe disruption. But more worrying 
is the impact that low-cost rivals are 
having on USAir’s main routes. It will 
take time and drastic action to address 

that threat. 

BA is relatively protected from 
USAir’s losses given it receives a fixed 
7 per cent coupon on its $400m of 
preference shares. That, though, will 
provide little comfort If USAir is 
forced to seek protection from its cred- 
itors. But BA’s exposure to USAir Is 

not jUSt ffnftnrfal- The aBianre forms a 
central strut In its global strategy and 
its collapse would badly tarnish its 
expansion plans. That Tna]r« it all the 
more unnerving that BA appears to 
have little canted over its destiny in 
the US. 

BBA 

Over a 10-year spell, shareholders 
have little reason to think kindly of 
their investment in BBA. Equity 
shareholders’ funds are barely equal 
to the amount that they have sub- 
scribed in rights issues. Total returns 
- including dividends - are somewhat 
shy of what might, have been earned 
In the building society. A year ago the 
company raised £3 28m an the basis of 
a maintained dividend, yet investors 
now find that the promise is valid for 
a single payment. After a decade of 
frenetic dealing and fund raising, only 
merchant banks and lawyers have rea- 
son to rub their hands at the mention 
of BBA’s name. 

With a new chief executive, Mr Bob 
Qoarta, investors most decide whether 
the future will be different from the 
past The company gamely argues that 
its new-found seal for cost cutting wOl 
produce margins hi excess of 10 per 
cent. And wMLe the reduced dividend 
leaves a sour taste in the mouth, it is 


FT-SE Index: 3305.9 {+27.9} 


BBA 



probably the right pragmatic decision. 
It is certainly a marked contrast to 
Lucas, which continues to fund its 
excessive payout in increasingly con- 
voluted ways. 

Rationalisation and slow recovery in 
the continental European car market 
will improve returns. Some of the 
industrial operations are already op to 
the mark. Aviation, however, faces a 
longer struggle to justify its place in 
the portfolio. Investors will have to 
decide whether they trust Mr Quarts 
to knit a coherent whole from dispa- 
rate parts. Hie has a good reputation, 
but it is not an enviable position from 
which to start. 

UK economy 

Yesterday’s disappointing consumer 
credit figures are meat Ear the bears of 
the UK economy. Taken with lower 
mortgage landing by hanks and build- 
ing societies in January, the statistics 
point to consumer confidence falling 
away in the early weeks of the year. 
Belated appreciation of the extent of 
April's tax rises may be to blame, or 
simply renewed caution following 
unusually high borrowing in Decem- 
ber. 

Either way, the figures are at odds 
with the strong retail sales recorded in 
January. It may be that seasonal 
adjustment over the Christmas and 
New Year periods the sales data 
less reliable than usuaL The December 
sales figure was, after all, perplexingly 
weak. 

Other evidence - such as yester- 
day's report from the Finance and 
Leasing Association - suggests that 
demand for lag-ticket Items such as 
cars is holding up well enough. Febru- 


ary’s retail sales figures, expected next 
week, may help clear up the confu- 
sion. , „ 

On that basis the lowest level of 
consumer lending since August should 
not cause too much alarm just yet. 
The three-month rolling average 
remains hwaithy enough, in what can 
be a highly erratic series. Still, any 
further fell in the savings ratio - 
which will be necessary to sustain 
consumer spending when tax 
increases start to bite in earnest - 
should show up clearly in future con- 
sumer credit figures. If low borrowing 
in February establishes a downward 
trend, there will be reason to worry. 

British Vita 

Two years on from its last rights 
issue British Vita still has a large por- 
tion of the proceeds in its back pocket 
Even through the depths of recession, 
cash flow has been strong enough to 
finance capital spending well ahead of 
depreciation and a string of small 
deals Given the dwindling returns on 
rash - and the fact that the shares 
have underperformed the equity mar- 
ket by 20 per cent since the rights 
issue - shareholders might fed disap- 
pointed on both counts. 

With GO per cent of turnover in con- 
tinental Europe, the outlook for sales 
growth should be brighter from here 
on. The snag is that Vita finds itself 
sandwiched between chemicals suppli- 
ers looking to increase prices and cus- 
tomers in the automotive industry and 
elsewhere trying cut costs. Margins 
may suffer further if the giants of the 
chemicals industry make annual price 
rises stick in ApriL With its shares on 
a price earnfrig g multiple well above 
the market average, a well-judged 
acquisition would not go amiss. 

Reuters 

Yesterday’s 4 per cent rise in Reu- 
ters’ shares to a new all-time high 
illustrates how the media company 
remains hot news. Since reporting its 
annual results last month. Rentas has 
risen 10 per cent while the FT-SE-A 
All-Share index has slid by 5 per cent 
Some of the buying stems from techni- 
cal factors. With about half the shares 
being held overseas, UK fund manag- 
ers have been scrambling to re-weight 
their portfolios. That demand has 
squeezed the price higher in thin vol- 
umes. The risk is that the surge may 
tempt US investors to take profits, 
tarring the UK’s current drought of 
Reuters’ shares into a deluge. 


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OUR SINGLE OBJECTIVE 


In the last four months we have provided intermediate 
capital for the following transactions: 


U.K. 


S.L.D. HOLDINGS LTD. 
£90,000,000 

MANAGEMENT BUYOUT 

£6,000,000 

MEZZANINE CAPITAL 
ARRANGER & UNDERWRITER 

KJKSS INHUME™ ATI 

caoui* 

iirSt iimiiii' 


FRANCE 

ENTRELEC SA 

Amount not disclosed 

MANAGEMENT BUYOUT 
FF 70,000,000 
MEZZANINE CAPITAL 
ARRANGER & UNDERWRITER 

-SJCJ INTERMEDIATE 
TAPI TAIL CKOLP 


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ITALY 

L. BUHFETTI SPA 
In excess of 
Lit 200,000 ,000,000 
MANAGEMENT BUYOUT 
Lit 30,000,000,000 
MEZZANINE CAPITAL 
ARRANGER & UNDERWRITER 


rJTSl INTERMEDIATE 
aCEcwtuuwiur 
rsSt'lwin 




U.K. 


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MULTIPART DISTRIBUTION LTD. 
£54^)00,000 

MANAGEMENT BUY IN 

£3/750,000 

SENIOR PREFERENCE SHARES 
ARRANGER & PROVIDER 


INTERMlDUrE 
5>£<5f iniiiiu 






CONTINUING ACTIVE INVESTMENT ACROSS EUROPE 

mZTmSL INTERMEDIATE CAPITAL GROUP 


LIMITED 


t>2-n3 THREADNEEDLE STREET. LONDON EC2R SHE. TEL: 07|-i,2K <*k^IK 
Managing Directors: Torn Bart) am Jean-Loup de Gersigny Andrew Jackson James Odgers 

MEMBER OF IMRO 


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FINANCIAL TIMES 



COMPANIES & MARKETS 


©THE FINANCIAL TIMES LIMITED 1994 


Tuesday March 8 1994 



■ , \ 
5 ' 


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v: 


✓ 


IN BRIEF 


Setback for 
Wallenberg group 

hrvestor, tim mam holding company of Sweden's 
powerful WaHenberg family, reported a sharp 
fall In 1993 as reverses at Saab-Scaufca, the vehicle 

and aerospace gro«p, and a fidl in capital gains 

left profits after financial items at SKr4i0m (S52m), 
down from SKri.4Sbn. Page 20 

Small concepS 

The Geneva Motor Show win see a number of 
new concept cars unveiled. Hie joint venture 
between the Mercedes-Benz German luxury car- 
maker and SMH, the Swiss pioneer of cheap smd 
cheerful watches, to develop a micro compact 
car is the most dramatic sign yet of the determina- 
tion of carmakers to develop a new market for . 
nrinlcars intended solely for use in congested, 
densely populated cities. Page 20 

Refitof for bonds 

After giving up as nnirh as six months’ worth 
of gains in the past four weeks, European bond 
prices are staging a modest recovery. Page 21 

Blueprint for Hong Kong SE 

The Hong Kong stock mtrhangn unveiled its blue- 
print for the next three years and beyond, with 
proposals including greater self- regulation among 
market players and tougher disclosure require- 
ments in line with its bid for increasing internation- 
alisation. Page 22 

1MI hold bade by computer losses 

IMI, the international en gineering group, saw 
pre-tax profits nudge up to £7D.2m (gUttim) in 
1993, but its advance was held back by losses 
. in its computer business and by the re stru ct uri ng 
of its fluid power division. Page 24 

Recession takes foB on British Vtts 

British Vita, the foam and fibre group, saw profits 
phmge from a restated £5Z3m in 1992 to £83Am 
($49m) last year as the recession in continental 
Europe took its toil. Page 25 

Dabt collector folia 13% 

fotrum Justitia, Europe’s largest debt collection 
group, suffered a 13 per cent fall in. profits to 
£13 3m (520 An). Page 26 

Down and out on the farm 


Ilnbmuoimqhx 

office 



Speakers last week in Budapest at the Agra 
Europe conference on agriculture, agribusiness 
and file food industry in central and eastern. 
Europe, gave a graphic account of the phmge 
in production and form employment that has 
followed the collapse of communism and the 
old Comecan trading system. Page 30 

Malaysia and Singapore taka a tumble 

Malaysian equities fell 6.1 per cent after a 5^ 
per emit gain in the week before, while the Singa- 
pore market took a 4£ per cent tumble. This left 
them 14.1, and ULl per cent lower on the Tear 
so far. Back Page 

Companies In this Issue 


ANA 

19 IMI 

24 

Aacom 

21 tirinan Justitia 

28 

Aztec Mining 

22 Investor 

20 

BBA 

23. 20 Wa Motors 

22 

BCH 

20 Lk^ds Chemists 

as 

BOC 

20 MAI 

25 

Badgertne 

28 MadoanHimtsr 

21 

Brau und Bnman 

19 kticrosoft 

19 

Bristol & West 

2B Mondadorf 

17 

British Airway* 

17.19 Norsks Stog 

22 

British Polythene 

2B Outokumpu ' 

22 

British Vtta 

25 Partcdean Leisure 

28 

Cendover investments 

28 Perkins Foods 

28 

Cwrafour 

21 Peugeot 

20 

Comwefl Parker 

28 Plot Petroleum 

26 

Country Casuate 

28 Portion Mi 

29 

Cupid 

25 PosGoid 

22 

Daewoo Motor . 

22 Process Systems 

25 

Domestic A General 

24 Rogers Comma 

21 

Rnexa 

20 Seangyong Motor 

22 

Rnkwest 

17 Stands 

17 

Goldstar 

22 Tldcetmaster . 

24 

Grolsch 

19 Trust Bank QKZ) 

22 

Gt Portend Estates 

28 USAir 

17,19 

Guinness Pest 

26 vabrwt 

21 

HertonsGrois) 

29 Wembley 

24 

Hyundai Motor 

22 WteMUer 

19 

Market Statistics 

fAmual reports service 

32-33 Foreign exchange 

36 

Benchmark Govt bonds 

23 68(8 prices 

'23 

Bond Mures and options 

23 Ldta equity options 

Been rage 

Bond prices and yields 

.23 London den senrica 

32-33 


CornmodMas priest ■ 30 

DMdenii announced, IK 24 
BB curency rates . 38 

Eurobond prices 23 

Ftad interest indees 23 

FT-AWorid hfcw BaekPme 
FT Gold Urns index BackPage 
FT/BMA M bond swe 23 
FT-SE Acbwles Mew 31 


London trad options ( 
Managed fink amice 
Money mriceta 
New Mi bond issues 
Recant femes. UK 
Short-term lot rates 
U6 Merest Mm 
W orld Slock Marioabi 


Chief price changes yesterday 


Ado iobo ♦ si 

Bq*r 357 + « 

DeuHcte Bwk SOBS * las 

+ 6J 
<79+19 


QottdnU 615-37 


Stop & Step 27 + 2» 

Leu Dar 75K * S3* 

Hut Tee* IBM * 2M 


34-38 

38 


31 

38 

23 


Accor 730 + 20 

MrUqMe 800 + 30 

BnakaOe 635 + 23 

CM Med 407J2 + 21 2 . 

EsribrtR 775 + 39 

VUonc 270 + 17-8 

TOKYO (V«4 

cafe compear isio + <o 
HMtadmn <73 + 24 

1380 + 70 


BafStmS 

Bur 

UoMCHp 


37M - 2K 

32* - 1* 

78 - 1M 


CHjcdaFYe 823 - 22 
IsoTaraMK 867-37 
OrtxCarp 3300 - 140 


BA’s global strategy is being tested by US carrier’s ability to cut costs, write Paul Betts and Richard Tomkins 

US Air expects its deficit to deepen 


U&Air, die beleaguered US carrier in 
which British Airways holds a 24.6 per 
cent stake, yesterday shocked the air- 
line biJim ti'y by anneini dng fW com- 
petition from low-cost carriers would 
drive it even more heavily into losses 
tins year. 

Analysts had been looking for a 
recovery in the airline’s p er for mance 
after five years of losses. But USAir said 
pre-tax losses in the first qua rt er alone 
were likely to rise from 561m to 5200m, 
while for the year as a whole the deficit 


was expected to be even worse than last 
year's 5349m. 

USAir e off fi i' m wd that ra would not 
invest any more money in the airline 
until it was dear that an effective cost- 
reduction programme was in 
the company's financial performance 

improved. 

It also said it was planning to meet 
union leaders late yesterday, raising 
e x pe ctati ons it is poised to con- 
front employees with plans for a 
re str uc turi ng involving reductions in 


jobs, wages and conditions of employ- 
ment. 

: USAir shares tumbled 51% to 58% in 
early trading, their lowest since October 
199 L 

Mr Seth Schofield, the airline’s chair- 
man, president and chief executive, 
one reason for the first-quarter loss was 
thakunusually severe winter weather in 
the north-east - USAir’* ™»h? market — 
had farced it to cancel about 8 per cent 
of its Sights In January and February. 

But the main reason for the compa- 


ny’s grim financial outlook, Mr Scho- 
field said, was USAir 1 * need to cut fores 
in response to the steady expansion of 
low-cost carriers in many of its east 
coast markets. 

Last month USAir announced that it 
was cutting business fores indefinitely 
by up to 50 per cent on routes between 
96 cities in the eastern US. The move 
was in response to competition from 
Southwest Airlines and Continental Air- 
lines, two low-cost carriers which have 
made inroads into its markets. 


Other large US carriers have 
responded to low-cost co m pe ti tion by 
cutting jobs and increasing productiv- 
ity. But TJSAir has so for made little 
progress in cutting costs, so lowo* fores 
will translate into bigger losses. 

BA has Invested nearly 5460m in 
USAir and was due to invest another 
5450m between now and 1998. But yes- 
terday it said it would not commit any 
more funds “until the outcome of the 
restructuring is known.” 

Lex, Page 18 


Gates says most 
multimedia trials 
are dead ends 


By Alan Cane In London 

Mr Bill Gates, founder and 
chairman of Microsoft, the 
world’s largest personal com- 
puter software company, yester- 
day poured cold water on the 
value of most of the “multi- 
media’* trials, in the US and 
Europe. 

Describing the cur rent flush of 
interest in multimedia as a form 
of collective mania , he predicted 
that trials based on home enter- 
tainment would prove to he dead 
ends and would be counter-pro- 
ductive to the establishment of a 
viable multimedia industry. 

Multimedia and “information 
superhighway” are descriptions 
of developments expected to lead 
to the delivery of a range of lute- 
active services and information 
to the office and the home 
through a single channel - a Mo- 
phone line, for example, or a 
compact disc connected to a per- 
sonal computer. 

Multimedia has generated con- 
siderable attention over the past 
six months as co mpani es in the 
entertainment, c nmtMin<w>tinn<i . 
and computer sectors have 
formed expensive alliances to 
exploit the possibilities. 

Mr Gates, believed to be the 
richest man in the US and with a 
record as a technology forecaster, 
said many of the companies 
experimenting with multimedia 
ware misguided. They were con- 
centrating on single services, 
such as “video-on-demand”. 
rather than a broad range of ser- 
vices, and they were focusing on 
t he home rather then business. 
“Video-on-d e mand** implies that 
customers will be able to select 


videos of their civri*w from an 
electronic library end have them 
delivered to their television s et s. 

Mr Gates sa id : “Many of the 
time schedules you hear about 
and many of the approaches will 
prove to be dead ends. The first 
place for widespread usage of 
this technology will be in busi- 
ness. It will involve low-cost 
video conferencing, electronic 
mail and group networking. 

“Once business is using multi- 
media, then we «m move to the 
home envi ronment- My expecta- 
tion is that these early pilots will 
be disappointing. The revenues 
ge n er ate d and the nqag» wifi not 
justify the huge infrastructure 
costs. I am sorry to see these 
trials being done at afi." 

Mr Gates, in the UK to talk to 
British Telecommunications 
among others about multimedia 
collaboration, was speaking only 
a week after the start of largest 
video-on-demand trial, organised 
by Thne-Warner, the US cable 
television organisation, was post- 
poned until the autumn for 
improvements to the software 
- Mr Gates' mmimmta must be 
seen in the light Of Microsoft’s 
ambitions to set the agenda in 
mammedia. It is investing mmg 
5100m a year in multimedia 
developments and recently 
announced it would test its 
multimedia software In collabora- 
tion with Tele-Communications 
(TCD, the largest US cable opera- 
tor. 

Mr Gates raid Micr osoft would 
begin testing home multimedia 
services in the US and Europe in 
1996. Hie did not expect substan- 
tial returns on his invest ment for 
five years. 


New York prtoM at TMOpm. 


BM 


Bar & WAT A 

Booh 

CaflenCmi 

CtaNBm 

cone 

driven 

Doomfc&Sn 

EarnM 

EknfcmmiUb 

HSBC (75p rie) 


42M + 
125H + 
304 + 

<5 * 

067 + 

529 + 
121 + 
275 + 
1870 + 

14K + 
588 + 

887 + 
148 + 


ANA warns of loss 
and lower dividend 


By McMyo Nakarooto 

and Pate Abrahams In Tokyo - 

All Nippon Airways (ANA) 
yesterday said it would post a 
loss for the year ending this 
month - its first loss for 22 years 
- and cut its dividend. 

The Japanese carrier, hit by 
continuing weak demand, expec- 
ted a pre-tax loss of Y3bn (S28m) 
this year, compared with a previ- 
ously forecast pre-tax profit of 
Yfibn. 

The operating profit estimate 
has been revised down to Y769bn 
from an earlier Y782bn. The divi- 
dend is to be reduced to Y3 from 
the Y4 paid .for 199208 when mu- 
tax profits totalled YlS-Sbn. 

The aiTtina said that both inter- 
national mu! domestic operations 
were down nearly 3 per cent, but 
it had been hart most by the con- 
tinuing slump in the domestic 

markwt 

Deregulation had enabled rival 
JAL to eat into the domestic mar- 
ket, ANA’s stronghold, while the 
airiiiw faced gr o w in g competition 
from other forms of transport, 
such as rapid rafl. 


Competition on international 
routes, where ANA has been 
building its presence since 1986, 
was fierce as the popularity of 
discount air fares spread. 

Japanese airlines have been 
struggling to maintain profitabil- 
ity after a slowdown in air travel 
and increased competition from 
lower-cost foreign carriers on 
international routes. 

hi particular, the high cost of 
airport development has bear a 
huge burden on Japanese air- 
lines, which also face some of the 
highest personnel costs in the 
world. 

ANA is also paying a high 
price for its ambitious expansion 
in the late 1960s. 

Japanese employment practice 
makes it difficult to cut costs sig- 
nificantly by making large-scale 
redundancies. Instead, ANA is 
pr iming unprofitable routes and 
reducing malwtmumrp costs. - 
Capital investment in hotels 
and airport facilities is also being 
cut Last year the company was 
forced to sell aircraft to raise 
cash and may have to repeat that 
exercise this year. 


Risks give 
rich uncle 
pause for 
thought 

H as USAir has harem-ip the 
Achilles' heel of British 
Airways? The answer 
will depend on the success or fail- 
ure of the latest restructuring 
plan proposed by the sixth larg- 
est US carrier. 

Sir fafa Marihsll, BA’s chair- 
man and architect of the UK air- 
line’s globalisation strategy, yes- 
terday insisted that BA would 
not withdraw from the Initial 
5400m Investment it made last 
year to acquire and maintain a 
24.6 per cent stake in USAir. But 
in the same breath he conceded 
that he was not prepared to 
invest any additional money in 
the US partner until it had 
secured approval for its recovery 
strategy. “It Is not right for us to 
commit our shareholders' funds 
until the outcome of the discus- 
sions be t w ee n USAir, Its unions 
and employees become clear.” 

Of all the i n vestments in other 
ai tiinaa made by BA during the 
last 18 months - at a cost of 
around 2830m - the equity stake 
in USAir- bias' been by far the 
most ambitious. The rationale 
was to give BA access to the 
world’s largest aviation market 

T he partnership, fiercely 
opposed by big US earners 
such as American Airlines 
and Delta, has given BA the 
opportunity to pick up and 
deliver passengers in the heart of 
the US marke t throu gh a ticket 
code-sharing agreement with 
USAir. BA also anticipates even- 
tual cost benefits through jeant 
purchasing, engineering, market- 
ing and management informa- 
tion. 

But the partnership haa always 
been seen by City of London ana- 
lysts as a calculated gamble, 
hinging an US Air’s ability to put 
together a recovery strategy 
while BA helps to keep it afloat 
BA Is partly insulated from 
US Air’s losses because its 24.6 
per cent stake consists of prefer- 
ence shares yielding 7 per cent 
Bowero, Mr Chris Avery, avia- 
tion analyst at Paribas Capital 
Markets, says BA’s investment in 
USAir “is possibly the greatest 
area of risk for investors in BA 
over the next tew years”. 

Other analysts warn that there 
is still a risk that USAir will be 
forced to seek protection from 
creditors, under the US Chapter 
11 bankruptcy rules, unless it can 
secure the backing of unions and 
employees for sweeping restruct- 
uring. Should this happen, BA 
could find itself in the same boat 
as other European carriers, such 
as KLM Royal Dutch. Airlines and 
Scandinavian Airlines System 
which have been forced to make 
heavy write-ofls on their invest- 
ments in fiTnonriany troubled US 
airlines. 

To complicate matters, BA’s 
investment In USAir has. also 
become embroiled in a long run- 
ning transatlantic aviation dis- 
pute which threatens to reach a 
climax In the next few days. 
American Airlines and Delta 
have pressed the US government 
to revoke the existing bilateral 


Grolsch shifts German strategy 


By Ronald van da Krol 
to Amsterdam 

Grolsch, the D utch brewer with 
i mport ant UK links, signalled a 
shift in its policy towards 
Europe’s biggest beer market by 
anveffing plans to se& WkhUer, 
Its German brewery, only three 
years after acquiring the com- 
pany. 


7)1 

IN 

NftnUtan 

Mara 

273 

M 

+ 

s 

1ft 

Wtekfiler is to be sold for an 

muflnnlntMl price to one of tiie 

5* 

91 

2158 

+ 

III 

81 

country’s largest brewers, Brau 

16 

g 

IMS fry 

160 


6 

und Brannon, In exchange, for 

22 

SMMCNd 

1164 

+ 

« 

tiie Germany company's commit- 

83 

Ttanpyta 

14# 

+ 

. 2 

ment to iHwidl? tbs distribution 

IS 

9 

112 

BM 

BMW Wi 

207 

288 


a 

of Grolsch lager in Germany. 


■ 

7 

Grolsch said the partnership 

2M 

EMUbrekBsc 

18 

_ 

s 

with Bran und Brunnen would 

31 

27 

824 

_ 

14 

boost- its beer distribution in 

8 

HWMi> 

734 

- 

14 

Germany more quickly than by 


following its original aim of 
using Wtekfikr to gam gradual 
access for the Cfrdbch brand. K 
now expects more than 6,000 
cafes in Germany to stock 
Grolsch within the next few 
years. 

Two weeks ago Grolsch 
announced an agreement with 
Bass, tiie UK’s largest bre wery, 
to set up a joint venture to mar- 
ket and distribute Gro&ch lager 
in Britain and Ireland. . 

Grolsch’s 1991 acquisition of 
Wickfiler was bailed then as a 
bold but rare attempt by a for- 
eign brewer to c apture part of 
Germany’s fragmented beer mar- 
ket Grolsefa restruc tu red Wickfl- 
ler and reduced its range of 20 
local beers to three main 
regional beers. It also halved the 


workforce to 400 and dosed t he 
Wuppertal operation in favour of 
the main brewery in Cologne. 

However, the company said 
yesterday that the timid towards 
c on c e ntration in German brew- 
ing had placed zt in a dilemma - 
either to match the pace of 
acquisitions by bigger German 
brewers or to find a German 
partner for distribution. “We 
think we can grow quicker this 
way. Bran und Brmmen’s distri- 
bution cover the whole 

corartry with the exception of the 
southern tip of Bavaria." 

Grolsch, which owns Buddies 
Brewery in the UK, declined to 
give the sate mice for Wlckfller 
or comment on earlier reports 
that it paid around FI 100m 
(552m) for it in 199L 




British Airways: Global expansion gathers pace 


-5^0 Mar-1992: Deutsche EM. sat up by HA and Osman barrio; buys saaffi 
• / • . ; Gasman akfne. 

9 Sopt 92: BA buys 49.9% of TAT. French regional oarrior baaed at Paris 
Orly, from where TAT has started International operations hi'BA ootours. 
Coat El 5m 

9 Nov 82: BA pays £1 for virtualy bankrupt Gatwridc-feand Dah-Atr. 

Cost E45m (in debt and other nabBdoa taken on) 

v.s-O. J^T^'^palrwatatolnUSAkviBpiachaaaofaMivBrtibto p rafftfarioe 
_• / . x- ,'-ahtm»<fcb 24A» voting rights. Stake maint ai ned through support of 
pi 98m pluȣ67a*. 

** paptec o4Aamjaa.CoM E3Q4*n 


Total cost: £629m 





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aviation agreement between the 
US and the UK and withdraw 
BA’s ticket code- sharing rights 
With USAfr On Mamh 17, unless 
Britain grants US carriers more 
open access to London’s Heath- 
row airport 

Should tiie US carry out Its 
threat to withdraw BA’s code- 
sharing rights, the UK govern- 
ment Is likely to retaliate by cut- 
ting the numb er of US ser- 

vices to Heathrow. “Not to renew 
our code-sharing would consti- 
tute a violation of the UK-US 
treaty agreement,” Sir Colin said. 
Code-sharing was one of the 
main reasons for the investment 
in USAir. 

Although some analysts have 
suggested that an all-out UK-US 
aviation war could provide BA 
with an elegant opportunity to 
disentangle Itself from USAir, Sir 
Colin said a withdrawal was “not 
on the cards”. Nor, he added, had 
BA underestimated the chal- 
lenges at USAir. “What has hap- 
pened is the emergence during 


the last three to four months of 
widespread, very low price com- 
petition in the US - particularly 
in the east, mid-Atlantic 
north-east, which have tradition- 
ally been USAlr’s strongholds.” 

USAir bn« been fait hairier than 
its bigger US rivals by increasing 
competition from low-cost air- 
lines — such as Southwest and 
CALite, Continental's low-cost 
subsidiary - because of its reli- 
ance on the domestic market. 

But Sir Colin said he remained 
confident that USAir would 
resolve its restructuring chal- 
lenge to face the new competitive 
forces. Both he and Mr Robert 
Ayling, BA’s managing director, 
also said they were satisfied with 
the progress the UK airline was 
making with its other interna- 
tional equity partnerships with 
Qantas of Australia, TAT of 
France and Deutsche BA. 

“TAT is becoming a bit of a 
success story ” said Mr Ayling. 
The French carrier was success- 
fully rest ru ct u r i ng itself, reduc- 


ing costs by about 80 per cent 
Deutsche BA was also showing 
encouraging passenger load fac- 
tors of more than 60 per cent on 
its busiest routes. Both European 
airline partnerships were part of 
BA’s strategy to invest in the 
new European single aviation 
market winch, according to Mr 
Ayling, “will be our domestic 
market of the future”. 

Sir Colin confirmed BA was 
still searohing for a partner in 
the North Pacific region to com- 
plete its global jigsaw. But “at 
present we are concentrating on 
the partnerships we have done in 
the last 18 months.” 

The immediate priority was for 
USAir to get its bouse finally in 
order. The message yesterday 
from BA. the world's most profit- 
able airline, was loud and clear. 
Although Sir Cohn said relations 
between the two airlines 
remained “very good”, USAiris 
rich British unde has placed on 
ioe any plans to invest a further 
5450m in the troubled carrier. 


Why DO 




60% OF EQUITIES 
TRADED OUTSIDE 
HOME MARKETS 
COME TO 


ONE men 



London stock exchange 


With a turnover oi ES79.6 billion in 1993. London's International Equity Market consistently 
attracts investors in overseas equities through its BqukSty. immediacy and reputation for fair 
trading. For your compBmerrtary copy of our 1994 Fact Book, call 071-797 3830. 








FINANCIAL TIMES TUESDAY MARCH 8 1994 


20 . 

INTERNATIONAL COMPANIES AND FINANCE 


Setback for Wallenbergs 
as Investor drops sharply 


By Hugh Camegy 
In Stockholm 

Investor, the main holding 
company of Sweden's powerful 
Wallenberg famil y, yesterday 
reported a sharp fall in profits 
in 1993 as reverses at Saab- 
Scania. the vehicle and aero- 
space group, and a fall in capi- 
tal gains left profits after finan- 
cial items at SKr410m ($52m). 
down Cram SKrl.4Sbn in 1992. 

However, the group painted 
a brighter picture for 1934. It 
said income in the latter part 
of the year surged, mainly due 
to a strong recovery at Saab- 
Scania, Investor's chief off- 
shoot. producing a fourth-quar- 
ter profit of SKrl94m. com- 
pared with a loss in the same 


1992 period of SKrl470k 

The dividend was unchanged 
for the second year running at 
SKI5J25 per share and Inves- 
tor's most-traded B share rose 
SKr5.00 to close at SKrl91. 
Investor, which apart from 
Saab-Scania has strategic hold- 
ings in top Swedish industrial 
companies such as Astra, 
Ericsson. Electrolux and Stora, 
said its net worth rose over the 
year to SKr37.5bn from 
SKiSO.lbn. 

The value of Its strategic 
portfolio at the year-end was 
up 41 per cent at SKi27J6bn - 
lagging a 54 per cent rise in the 
Affarsvarlden general index. 
But a combination of sales 
from the industrial portfolio 
and positive cash flow from 


and a reduction in 
working capital tied up in 
Saab-Scania saw group net 
debt fall sharply to SKr4£5bn 
from SKr8.7bn. 

Income from capital gains 
fell to SKriAbn from SKi2.27bn 
as portfolio sales felL 

Profits at Saab-Scania fell to 
SKrl.66bn from SKr2.13bn. 
with the truck and bus and 
aircraft divisions reporting 
lower income, and a fifth suc- 
cessive Loss for Saab Automo- 
bile. which is jointly 
owned with General Motors of 
the OS. 

Saab-Scania sales rose 2 per 
cent to SKr27.65bn from 
SKr2659bn, but were down 10 
per cent after exchange rate 
advantages were discounted. 


BBA warns on jobs and dividend 


By Tim Burt in London 

BBA, the engineering group, 
yesterday warned it was plan- 
ning to cut its dividend and 
shed 2,000 jobs as part of a 
rationalisation programme. 

The moves have been forced 
on the company by a slide in 
profits in its motor compo- 
nents business and shrinking 
margins in its aviation arm. 

After charges related to 
rationalising the businesses, 
BBA incurred a £i 2 . 8 m pre-tax 
loss last year, compared with a 
£47.4m profit in 1992 . 

Mr Roberto Quarta. chief 
executive, said the losses had 
been exacerbated by £7&8m in 
rationalisation costs for ongo- 
ing businesses, of which 


£59.7m has been set aside for 
redundancies and plant clo- 
sures this year and next 

The results were hit by 
£ 17.3m of exceptional losses on 
selling or closing non-core 
businesses, while the group 
wrote off a £3 .8m investment in 
United Industries, the preci- 
sion tools and springs manu- 
facturer. These charges were 
offset by a profit of £l8.4m on 
the sale of Pacific BBA, its 
Austr alian subsidiary. 

Faced with heavy provisions 
and depleted earnings, Mr 
Quarta warned that the 1993 
dividend - unchanged at 7.5p - 
would be cut by up to 3p next 
year. “Earnings are not grow- 
ing fast enough to maintain 
current dividends - that 


is unacceptable," he said. 

The announcement 
prompted a 9p fall in BBA’s 
shares, which closed at 207p. 

Mr Quarta said up to 2,000 
jobs would have to go as the 
company refocused on its core 
businesses. Most of those job 
losses, coming on top off 1,000 
redundancies last year, would 

be in the automotive division, 
where operating profits fell 
4241 per cent to £21^m. 

The company is understood 
to have identified nine compa- 
nies which it would tike to sell. 
reducing subsidiaries to about 
40. Operating profits inched 
ahead to £99m, from £87 Jm, 
while turnover increased 7.2 
per cent to £L42bn. 

Lex. Page 18 


BCH to place $104m Aumar stake 


By Tom Bums in Madrid 

Banco Central Hispano (BCH1 
is to place 13.49 per cent of the 
equity it owns in Aumar, the 
toll motorway operator, via a 
global offering worth about 
*104m. 

The share sale, which will 
commence next week with 
Salomon Brothers acting as 
global co-ordinator, provides a 
rare opportunity for institu- 
tions to break into the tightly- 
controlled Spanish motorway 
sector. 


Aumar is Spain's second 
largest toll operator and its 
concessions, which are centred 
mainly along the Mediterra- 
nean coast, account for 25 per 
cent of the domestic toll motor- 
way network. 

According to James Capel. 
the London stockbroker, 
Aumar’s internal rate of return 
of 10.7 per cent is attractive 
against the long-term govern- 
ment bond yield. 

BCH, which controls 67.39 
per cent of Aumar. will remain 
the majority owner with 53.9 


per r*>nt of the stock. Under 
the terms of the bank's agree- 
ment with Salomon Brothers. 
937 per cent of the equity to be 
sold will be offered to interna- 
tional institutions and the bal- 
ance will be placed on the 
Spanish markets in an alloca- 
tion that will be split evenly 
between domestic institutions 
and small retailers. 

The Aumar offer is likely to 
be the first of several disposals 
by BCH from its industrial 
portfolio in order to strengthen 
its 1994 balance sheet 


BOC Group 
in surprise 
Giordano 
appointment 

By Andrew Bdger an London 


Carmakers gamble on small concept 

Kevin Done in Geneva sees the unveiling of the micro compact cars 


T he Geneva motor show, 
which gets under way 
today, will see a number 
of new concept cars unveiled. 

The joint venture between 
Mercedes-Benz, the German 
luxury carmaker and SMH, the 
Swiss pioneer of cheap and 
cheerful watches, to develop a 
micro compact car is the most 
striking sign yet of the deter- 
mination of carmakers in 
Europe to develop a new mar- 
ket for minicars for use in con- 
gested, densely populated 
cities. 

For several years carmakers 
have flirted with ideas for two- 
seater city cars with a length 
well below even the 3.05 metres 
of the British Mini, now in its 
35th year of production. Their 
appetites are whetted by the 
prospects of new growth 
offered by opening up a new 
segment at the bottom of the 
car market 

However, they have fretted 
over the economics of such car 
programmes. Small cars often 
threaten small profits, and at 
the <aing time the customer 
research has been confusing. 
The concept cars may look 
cute, be environmentally 
friendly, and statistics may 
prove that cars in cities are 
only occupied on average by 
12 persons, but will people buy 
two-seater city cars? 

Professor Ulrich Seiffert, 
research ,and development 
director of Volkswagen, 
Europe's leading volume car- 
maker has a small model of the 
VW Chico concept car on a 
cabinet in his office in Wolfs- 
burg. The Chico has been 
exhibited at many interna- 
tional motor shows, and it was 



Ford's Ka will goon display in Geneva today 


to be VWs city car of the sec- 
ond half of the 1990s. But it 
will never be built It allowed 
only 24-2 seating rather than 
room for four adults and VW 
has decided that the concept 
was not viable. 

Instead it is backing the idea 
of a cheap small car to be sold 
for under DM15,000 ($8,823). 
but which will carry four 
adults and some luggage. It is 
due for launch in 1996. It will 
be shorter than the new Polo 
supermini, to be unveiled later 
this year, but it will share 
many basic chassis platform 
components with the Polo. 

Volkswagen was the first 
carmaker to join SMH to study 
the concept of the so-called 
Swatchmobile micro car. but it 
pulled out of that project last 
year in the face of mounting 
financial problems. 

Mr Nicolas Hayek, chairman 
of SMH and the man credited 
with mast e rminding the rescue 


of the Swiss watch industry in 
the 1980s, claims that he did 
not lack for suitors for his 
Swatchmobile project, when it 
was abandoned by VW. 

By the end, the main rival to 
Mercedes-Benz was General 
Motors, the US carmaker. Like 
all its rival volume carmakers 
GM has long been studying the 
potential of the so-called sub-B 
segment of the European car 
market beneath the B-class 
superminis such as the Opel/ 
Vauxhall Corsa, the Ford 
Fiesta, the Renault Clio and 
the Nissan Miera. 

It was intrigued by the 
Swatch marketing expertise, 
and by SMH’s ideas for hybrid 
propulsion systems combining 
electric power and internal 
combustion, but like VW it has 
struggled to stand up the busi- 
ness case for a purely two-sea- 
ter urban car. It was also trou- 
bled by the safety issues raised 
by such a small car. 


The traditional volume car- 
makers are still experimenting 
and hovering an the brink, and 
at the Geneva motor show, 
Ford will unveil today its latest 
concept for a sub-8 car. the Ka. 
to farther assess the reactions 
of potential buyers. 

The ebullient Mr Hayek has 
never been plagued by the big 
carmakers' doubts. He says he 
has been driven by the convic- 
tion that there is a gap at the 
bottom of the market for “a 
high quality, environmentally 
friendly, low price car". The 
success of the concept will be 
supported, he says, by the 
classless Image of the Swatch 
brand, as well as by SMH’s 
experience in micromechanlcs, 
microelectronics and in the 
assembly of a high quality 
product using fewer parts. 

For Mercedes-Benz the joint 
venture with Swatch is the 
most tangible sign yet of its 
earnest to jump over its own 
shadow as it transforms its 
strategic product policy in the 
search for new markets. 

Mr Helmut Werner, Merced- 
es-Benz chief executive, claims 
that its traditional customers 
are on the move into new mar- 
kets, and the executive and 
luxury carmaker wants to be 
there to meet them. 

Behind dosed doors, Merced- 
es-Benz has worked for more 
than a decade on concepts for 
urban micro cars, and it 
believes that the time has 
come to roll the dice. 

"We intend to create a mar- 
ket segment which has hith- 
erto not existed in this form 
yet provides substantial 
growth potential," says Mr 
Werner boldly. 


Peugeot and Finaxa in FFr6bn cash call 


BOC Group surprised the 
London stock market by 
appointing Mr Richard Gior- 
dano as non-executive chair- 
man - only two yens after the 
American stepped down as 
chairman and chief executive 
of the UK-based industrial 
gases and healthcare company. 

Mr Giordano. 59, is best 
known as Britain’s most 
highly-paid executive during 
the early 1980s. He started 
work in January as the 
£450,000-a-year non-executive 
chairman of British Gas. Hk 

other non-executive director- 
ships include Grand Metropoli- 
tan, RTZ, Lucas and Renters, 
although be intends to reduce 
this number. BOC said his 
principal activities and office 
would remain at British Gas. 

BOC has appointed Mr Gior- 
dano, who had continued on 
its board as a non-executive, 
because of next month’s early 
retirement of Mr Patrick Rich, 
62, because of health prob- 
lems. Mr Rich, who had 
intended to stay on for two 
more years, recently gave up 
the post of chief executive to 
Mr Alexander "Pat" Dyer, a 
61-year-old American with 30 
years experience of the inter- 
national gases industry. 

Analysts said Mr Giordano 
"knew BOC inside oat”, bat 
the appointment looked stop- 
gap and did not answer longer- 
term questions about the suc- 
cession. Daring his years at 
BOC, Mr Giordano improved 
productivity and expanded 
into Asia Pacific, but made 
two acquisitions which proved 
expensive mistakes. 

BOC last month reported 
first-quarter losses as a result 
Of an £85m restructuring pro- 
vision. The group said pres- 
sures on industrial gas profit 
margins would remain intense 
until recovery gathered 
strength. Healthcare profits 
had suffered because of 
generic competition for its 
anaesthetic, Forane, on which 
US patent protection expired 
last year. 

BOC said Mr Giordano’s sal- 
ary had yet to be agreed bat 
“would entirely reflect the 
non-executive and part-time, 
nature of the appointment". 


By Alice Rawsthom 
in Paris 

Two French companies will 
today announce plans to raise 
capital through the bond mar- 
ket. Peugeot, the motor group, 
launches a FFr3.96bn ($67im) 
convertible issue and Finaxa, a 
subsidiary of the Axa insur- 
ance concern, is staging 
a FFrl.Bbn convertible 
issue. 

Peugeot, which last summer 
raised FFrLStan from a bond 
issue by its car subsidiary, said 
it had decided to go ahead with 


the exercise to take advantage 
of favourable market condi- 
tions following recent reduc- 
tions in interest rates. 

Peugeot said it planned to 
use the issue to restructure its 
borrowings. 

The timing of the transac- 
tion, which will involve the 
issue of 4m bonds at FFr990 
each, coincided with indica- 
tions from the French govern- 
ment that it might slow down 
its privatisation programme 
possibly by postponing the pro- 
posed sale of Renault, the 
other large French motor 


group. Peugeot, like Renault, 
has had a difficult time over 
the past year due to the 
intensely competitive condi- 
tion of the European motor 
market. 

It fell into the red with a net 
interim loss of FFrl.I2bn in the 
first half of 1993, against a defi- 
cit of FFr2.3bn in the same 
period of 1992. 

Its 1993 results are due to be 
published in late April. In the 
meantime Mr Jacques Cal vet, 
chairman, has consistently 
declined to comment on its per- 
formance for the fUU financial 


year. Meanwhile Finaxa, which 
is controlled by Axa, but also 
has the Paribas financial group 
as a sizeable minority share- 
holder, is today issuing 1.44m 
convertible bonds at FFr1,370 
each. 

Neither Axa nor Paribas will 
subscribe to the Finaxa issue 
thereby reducing tbelr hold- 
ings. 

Axa will retain control but 
with a stake reduced to 542 
per cent from 61.4 per cent 

Paribas’s holding mil be 
reduced to 23.6 per cent from 
26.7 per cent 


S KF cuts down vibration 



In developing their powerful new turbine-driven grinder Adas Copco were 
determined to reduce vibrations. 

As the world leader in pneumatic hand tools it was natural to call for 
the co-operation of the world leader in rolling bearings. Working with the 
Adas Copco team, SKF developed a special unit which constandy counter 
balances the grinding wheel and reduces vibration. 

Another problem was that the high speed of the new turbo grinder would 
have meant a shorter life for standard bearings. The SKF solution was to use 
hybrid bearings with balls made of ceramic material harder than steel and 
lighter. They can also run faster and last longer. 

A high technology partner in many industry development teams, SKF works 
closely with customers to solve problems quickly and economically. 

1993 SKF Group Results 

The SKF Group's sales during the 1993 fiscal year totalled 29,200 million 
Swedish kronor f £2.498 m) compared with SEK 26,649 m 
(£2,610 m) in the preceding year. Following adjustment for 
CTT Tools, which was included in the 1992 sales figure, and 
the effects of the weaker Swedish krona. Group sales 
decreased by approximately 4 percent, compared with 1992. 
The Group 's loss after financial income and expense was 
SEK -669 m, (£-57 m) compared with SEK - 1.777m 
(£-174 m) in the preceding year. 

In addition to earlier allocations , costs of approximately 
SEK 2 50 m(£21 m)for the ongoing nationalization process 
were charged against results for the year. During the final 
quarter of the year, a gain of approximately SEK 160 m 
(£14 m) was recorded, relating to the sale of fixed assets. 

The 1993 fiscal year was yet another year characterized by 
extensive restructuring activity within SKF. Cost reductions 
and continued personnel reductions were combined 
with productivity improvement measures, intensive market 
cultivation and an unchanged level of investments in 
research and development. 

During the final quarter of the year, however, an improvement in sales was 
noticeable and deliveries increased. The improvement applied to both the 
automotive and the machinery segment, as well as the after-market. 

SKF continued to reap successes in the automotive industry. 

SKF was appointed supplier for almost all of the bearing applications 
in the Saab 900. 

SKF also supplies Hub Units for such vehicles as the new Opel Astra, 

CitroSn Xantia and Fiat Punto. 

In the trucks segment. SKF is the main supplier of bearings for the FH series, 
Volvo's new truck generation. 

Prospects for 1994 

During 1993 the Group's results improved gradually. This development is 
expected to continue during 1994 and lead to a positive result. 


Average rare of exchange 

1993: 1 GBP= 11.69 SEK. 1992: l GBP= 10.21 SEK 


For farther information please contact SKF Group Public Affairs. S 415-50 GOteborg, Sweden. Tel: +40-31-37 10 00. 



FINANCIAL TIMES TUESDAY MARCH 8 1994 


21 


INTERNATIONAL COMPANIES AND FINANCE 


nviAii wwirMmco #mu niwvc 

Bond fund managers heave a sigh of relief 

Tracy Corrigan, Conner Middelmann and Sara Webb find modest signs of a recovery 


Carrefour keeps 
up recovery as 
profits double 


By Afice Rawsthom 
in Parts 

Carrefour, the largest French 
food retailing group, yesterday 
announced that it continued 
its recovery last year by mare 
than doubling net profits to 
FFr3.0lhn (5500m) in 1993 from. 
FFrL3Sbn in 1992. 

The group, which In 1992 suf- 
fered a sharp foil in profits, 
last year benefited from a steep 
increase in its exceptional 
gains. It made a windfall profit 
of FFrL36bn from the FFrtJJbn 
placing in March of a large 
minority stake in Castorama, 
the largest French do-it-your- 
self nhain 

However, Carrefour also had 
to make provisions to cover 
the closure of two hypermar- 
kets in Philadelphia. As a 
result it made total profits of 
FFrl.34bn on non-recurring 
items, against a compar- 


able loss of FFr4m in 1992. 

The group, like the rest of 
the French retail sector, last 
yen- experienced difficult trad- 
ing conditions. Consumer 
spending throughout France 
was depressed by the combina- 
tion of hi gh interest rates arid 
tears about rising unemploy- 
ment, although sales of food 
and other basic Items were less 
badly affected than other sec- 
tors. 

Carrefour m ust er ed a fL 2 per 
cent increase in sales to 
FFr123 J2bn in 1993 from 
FFr117 J4bn in 1992 while, prof- 
its before exceptional items 
rose by 24.8 per cent to 
FFrL68bn from FFrUMbn. 

The board proposed a divi- 
dend of FFr42 a share for the 
1993 financial year, an increase 
over its FFr35 payment in the 
previous year, tt also yesterday 
announced plan* for a one-for- 
one scrip issue. 


Worries cast shadow 
over Canadian banks 


By Robert G&toens 

Worries over interest rates and 
continuing property problems 
axe overshadowing Canada’s 
six largest banks after a strong 
first quarter. 

Earnings for the three 
months to January 31 were 
generally higher than expec- 
ted. Led by Royal Bank of Can- 
ada, the six reported net profit 
of CfLlSbn, up 43 per cent 
from a year earlier. 

The gains were driven 
mainly by the banks’ broker- 
age subsidiaries, reflecting 
booming stock markets and 
mutual fund (unit trusts) busi- 
ness. Also loan losses declined 
and non-performing loans 
eased. 

Return on assets and on 
equity generally improved and 
costs were held in control 

Mr A1 Flood, chairman of the 
Canadian Imperial of Com- 


merce, said he sees clear signs 
of economic recovery in North. 
America and Mr Allan Taylor, 
chairman of the Royal Bank, 
foresaw a return to a solid 
level of profitability in the fis- 
cal year to October 31 1994. 

But brokerage and invest- 
ment banking may not keep up 
the torrid pace of 1993 and 
“there’s nothing in the funda- 
mental economy to wairs bank- 
ing more profitable," said Mrs 
Donna Toth, bank analyst with 
Nesbitt Thomson hi Toronto. 

The commercial property ol- 
sis is still severe and Hke a 
niffiwtnnp around most banks’ 
necks, said another analyst, 
"and it’s not getting much bet- 
ter". 

Loan losses would linger, 
said Mrs Susan Cohen, of Dea- 
con Barclays de Zoete Wedd, 
but the bay variable is the 
course of short-term interest 
rates. 


Regulatory 
delay may 
hold up 
Rogers bid 

By Robert G&bens 
in Montreal 

Rogers Communications was 
yesterday considering a delay 
in the expiry date for its 
C$2.8bn (US$2. 08bn) bid for 
MacleanHunter, the 
publishing and cable TV 
group, from March 15 to the 
end of the month because a US 
regulatory ruling will proba- 
bly not be received by next 
week. 

Rogers, Canada’s biggest 
cable TV distributor, applied 
on March 3 for fast-track 
approval by the Federal Coan- 
numications Commission of Its 
proposed acquisition of 
Maclean Hunter's US cable TV 
business and licences. This is a 
key step In Rogers’ plan to 
acquire all of the group, 
including the OS and Canadian 
cable interests and Canadian 

pnhltehtng jmshtewea. 

Rogers has said it would 
eventually seD the US cable 
licences to help pay for Its 
overall bid for Maclean 
Hunter. But the FCC indicated 
it could not process Rogers’ 
application in time for the 
March 15 expiry date. It prom- 
ised to disclose its timetable 
late yesterday. 

The extension of the expiry 
date would give Maclean 
Hunter mure time to o rganise 
a con nt er b irL Maclean Hunter 
told shareholders yesterday 
they should delay tendering 
their shares to Rogers until 
the last moment so they could 
"consider any developments 
occurring prior to the expiry”. 

Shares deposited under the 
Rogers offer cannot be with- 
drawn after March 8 unless 
the offer is subsequently 
amended. Rogers was due to 
hold its animal meeting in 
Toronto today. 

Rogers and Shaw Communi- 
cations, Canada's third biggest 
cable TV co mpa n y, have now 
agreed to swap same of their 
cable systems. The result 
would be that Rogers would 
take control of the key 
Toronto area in return for sell- 
ing two western Canada 
syste ms to Shaw. 


Valmet sells unit for FM600m 


By Hugh Camegy 
in Stockholm 

In a significant pre-privat- 
isation restructuring within. 
Finland’s state-controlled 
industry, Valmet, the paper 
machinery and engineering 
group, is to sell its 
transportation and tractor 
business to Sisu-Auto, maker 
of heavy trucks, military 
vehicles and freight-moving 
equipment, for FMGOOm 
($I07Bm). 

Both companies are an. the 
list of state-owned groups 
which the centre-right 
government intends to at least 


partially sell, although no 
timetable has yet been 
specified. 

The sale is designed to 
narrow further the focus of 
Valmet, which is 78 per cent 
state-owned, on forestry 
industry processing machinery 
before implementation of the 
government’s plan to lower its 
stake to between 30 and 50 per 
cent. 

Vahnet said the move would 
have a neutral effect on profits 
- which reached FMLOQm last 
year - white strengthening its 
eqnity-toassets ratio. 

At the same time, the deal 
will transform Sisu-Auto. how 


96 per cent state-owned, from a 
company with sates test year 
of FM9l8m to a group with 
combined 1993 sales of 
FM4*26bn and production 
plants in Finland, Sweden, 
Germany, Portugal the TJS and 
Brazil 

The merged businesses last 
year produced profits after 
financial items of FMB2m. The 
government plans to lower its 
holding In Sisu-Auto to 
between 50 and 65 per cent 

Valmet is to retain a 24 par 
cent stake In the new company 
worth FM185m. This stake was 
part of the net purchase price 
ctf FMBOQra, Valmet said. 


This announcement appears as a matter of record onty. 



CONSOUDADA CARABOBO, C.A. 

U.S.$5 1,000,000 

Financing for modernization and expansion 
of cement facilities in Venezuela 

Guaranteed by 

Consolidada de Cementos C.A. 

and subsidiaries 
Arranged by 

International Finance. Corporation 


U.S.$41,000,000 

Long Term Loan 
Provided by 

International Finance Corporation 

and through participations - 

in the IFC loan by 

Diesdner Bank Luxembourg S A 
INGBank 
WestLB Group 

Banque et Caisse d’Epargne de l’Etat, Luxembourg 


U.S.$10,000,000 

Equity Contribution 

Provided by 

International Finance Corporation 


February 19*M 


T he agonies of the past 
month are finally easing 
for those bond fund 
managers who clung to eco- 
nomic fundamentals, while 
selling by hedge funds ami pro- 
prietary traders drove prices 
farther and further down. 

After giving up as much as 
six months' worth of in 
the past four weeks, European 
bond prices are staging a mod- 
est recovery. 

"We have become much 
more optimistic over the last 
few days that we have seen the 
worst,” said Mr Paul Abberley, 
head of fixed income at Lom- 
bard Odier. "The main thing is 
that the hedge funds seem to 
have stopped selling." 

Unlike hedge funds pro- 
prietary traders, traditional 
fond managers tend to *ain» a 
long-term view on their invest- 
ments, based on economic fun- 
damentals. From their view- 
point, European bond markets 
appeared a tt rac ti ve at the start 
of this year, even after disap- 
pointment over the Bundes- 
bank’s slow pace of interest 
rate easing set in. 

Logically, then, the Vi paint 
increase in US short-term rates 
should not have caused a turn- 
round. The economic cycle In 


the US is well ahead of Europe, 
and further easing of European 
interest rates is still widely 
expected. 

"In the big picture, we do 
feel the correction, and blood- 
bath (in European bonds) bas 
been overdone. In the last 
week we've been adding to out 
positions,’’ said Mr Jonathan 
Kelly, manager of Fidelity’s 
Global Bond Fund tn Boston, 
with about $750m under man- 
agement. ’ 

Investors have been particu- 
larly encouraged by the fact 
that European bonds rallied 
last Friday, while the US mar- 
ket fell in the wake of a sub- 
stantial drop in US unemploy- 
ment This rekindled hopes 
that the European market is no 
longer tracking the US market 

N ot surprisingly, 
though, investors are 
adopting a cautious 
stance, even to the prospect of 
this decoupling. 

"It is probable that we will 
now see a phase of decoupling 
from the US, but I don't think 
well go In the opposite direc- 
tion,” said Mr Karl-Wilhelm 
Knigge, senior portfolio man- 
ager responsible for interna- 
tional bonds at Union Invest- 


ibyasr benc hma rk bond* 

Yields {par cent) 

75 . 



ment GeseHschaft, which man- 
ages a total of DMSTbn. 

Mr Udo Behrenwaldt manag- 
ing director of DWS, Deutsche 
Bank’s ftrnd management sub- 
sidiary, agrees: "I don’t think 
Europe will totally decouple 
(from the US), but further rate 
cuts by the Bundesbank will 
help European bond markets 
achieve greater independence 


from the US Treasuries mar- 
ket” 

Given the lack of support 
from the US market, the 
rebound in European bond 
prices is likely to be somewhat 
constrained. 

Another check on the rally 
could be the number of long 
positions still in the market. 

“The ‘conventional’ fund 
management community is 
still very long (on European 
bonds) and will take the oppor- 
tunity to reduce exposure as 
the market moves up,” said Mr 
Abberley. 

Further, Mr Kirit Shah, 
international strategist at First 
Chicago, points out that "the 
pool of investors has shrunk 
significantly; hedge funds and 
aggressive trading houses 
won’t buy as madly as they did 
in the past”. 

Nevertheless, many bond 
fond managers say they are 
now cautiously Increasing 
their exposure to European 
bonds. 

Mr Nick Henderson, head of 
fixed income at Gartmore, said 
he was extending the maturity 
and putting new money to 
work in the European govern- 
ment bond markets as it was a 
good buying opportunity. 


"We have done some sailing 
but have remained long 
throughout; given that we are 
driven by market fundamen- 
tals, we had to stay long,” said 
Mr Abberley. He adopted some 
more protective positions by 
outright selling and by switch- 
ing from high to lower yielding 
bond markets, but now favours 
the high-yielding bond mar- 
kets. 

Fidelity also Increased its 
position in Europe last week. 
"All we've done in the (bond 
market) sell-off is reshuffle our 
positions . . . we’ve placed 
renewed emphasis on France 
and Italy by adding to our posi- 
tions and going along the 
curve.” 

T here are still some black 
clouds on the horizon, 
though. The European 
bond market could well prove 
vulnerable to a further rise in 
US interest rates or US infla- 
tionary fears, political disrup- 
tion in the former Soviet 
Union, or the US/Japan trade 
dispute. 

And without the heavy 
inflow of capital from specula- 
tive investors, the return to 
last year’s peaks could take 
some time. 


Statute change makes sale of Ascom stake likely 


By lan Rodger In Bern 

Ascom, the troubled Swiss 
te lacammuttlcatlang eq uipment 
group, was effectively put up 
for sole yesterday. 

The Swiss government 
approved a chang e m the stat- 
utes of the Haster Works Foun- 
dation, gnahting it to sell any 
or all of its 54 per cent voting 
stake in the group. 

Mr Heinz Frey, chairman, 
said there was now nothing 


preventing anyone from taking 
over the troubled group, 
although, he doubted that the 
foundation would sell part or 
all of its shares without the 
approval of the Ascom board. 

Ascom has a number of suc- 
cessful product lines, Including 
payphones, cordless telephones 
and corporate network 
systems, but It has been unable 
to develop a successful overall 
strategy or unified manage- 
ment ghma its creation through 


the merger of three Swiss tele- 
coms companies in 1987. 

In 1992, it fell into tike red, 
losing SFr46.4m ($32m) on sales 
of SFr&37bn. Last year, it is 
believed the group lost over 
SFr300m. The former chief 
executive, Air Leonardo Van- 
notti, was sacked in December, 
the finance director Mr Klaus 
Rfitscbi resigned in January 
and Mr Frey said he and two 
other of the 12 directors will 
stand down in May. 


Mr Frey said that the change 
in the Haster Foundation stat- 
utes also made possible equity- 
supported joint ventures with 
other companies In specific 
sectors. Yesterday, the group 
announced an intensification 
of Ascom’s existing co-opera- 
tion with Ericsson of Sweden. 
The two have signed a memo- 
randum of understanding to 
set up an Ericsson-controlled 
venture in public telecom 
equipment in Switzerland. 


Mr Fred Sutter. Ascom’s new 
chief executive, outlined a new 
group strategy, concentrating 
on three core business areas: 
telecom terminals, corporate 
networks end service automa- 
tion. Peripheral activities, such 
as cable television, hearing 
aids and mteroetectronic com- 
ponents, would be sold off or 
put into joint ventures. 

He said the group would 
break even this year and 
return to profit in 1995. 


£l- billion... 8 days 
... 5 continents 


.... '.i,-: • 

Burswood Propertylfiiist - Aus$304 million bought deal 
Sole underw^l^a3ftd broker. Executed ^M’ebraary l 994. 


flotation proceeds for BTR 

Joint sponsoiy sole mwldnvi^r and stockbroker. Impact pay 22 Februaagr ] 

IL’V 'Va 

•;:j Rdjelf^ Japanese Values - £90 million flo&jtioiit , J 
\'4Jy ' Impact Day 22 February 1994?; 

.. '•***'. / .*!•••,•*./' V A *. * VI • l 

HSBC Hbldings - £600 million enhari 
Underwriter said arranger, with cash alternatives in sterhnj 

. Underwritten 28 February 199$.' 

Sun Healthcare Group - US$83 million 
Sole lead manager. Closed 1 


1994. 


.’jdSfcrk. • 


rust - US$90 million con 

Iggfcfc Sole manager. Priced 2 .Ma? 



NatWest 



ars. 


. Global power in equities 


■ '• • ... ■; 



Issued iy NatWest Securities Limited, a Member of The Securities and Futures Authority and the Loudon Stock Exchange. 






22 


INTERNATIONAL COMPANIES AND FINANCE 


FINANCIAL TIMES TUESDAY MARCH S lW 


Hong Kong SE proposes 


broad reform 


Record exports 
for South Korea 
car companies 


By Louise Lucas 
fn Hong Kong 

The Hong Kong stock 
exchange, now the sixth big- 
gest in the world, yesterday 
unveiled Its blueprint for the 
next three years and beyond, 
with proposals including 
greater self-regulation among 
market players and tougher 
disclosure requirements in line 
with its bid for increasing 
internati onalisa tion. 

The consultative paper, 
which follows more than SO 


Return to 
profit for 
Norske Skog 

By Karen Fossil in Oslo 

Norske Skog. one of 
Scandinavia’s biggest palp and 
paper producers, announced a 
return to profit in 1993, helped 
by a successful cost-cutting 
programme and despite lower 
prices for the Norwegian 
group's main products. 

The group achieved a pre-tax 
profit of NKr4m ($536,800) in 
1993 against a pre-tax loss of 
NKr662m the previous year, 
due to increased production 
and lower finance costs. 

The board proposed a divi- 
dend of NKrl for 1993, after 
passing the payout in 1992, and 
forecast higher profits for 1994 
in spite of expected higher 
financial items. 

Last year revenue fell by 
NKr219m to NKr7.34bn due to 
lower prices for sulphate pulp, 
printing paper and building 
materials, which had also 
caused a decline in revenue of 
NKr2.2bn between 1990 and 
1993. Increased volume com- 
pensated for lower prices. 

The group achieved an oper- 
ating profit of NKr299m in 
1993, against a loss of NKr47m 
In 1992 when restructuring 
costs of NKr200m were charged 
against accounts. 

Norske Skog said that it met 
its goal to cut costs by i 
NKr700m between 1991-93. 


meetings with market profes- 
sionals and the relevant gov- 
ernment and private-sector 
bodies, proposes to switch from 
a common law-based regula- 
tory system to one which relies 
more on disclosure enforced by 
sanctions, conforming with US 
and international market prac- 
tice. There are also calls to 
remove the onus for vetting 
listing documents and disclo- 
sures from the exchange and 
place it directly on the issuers 
and their professional advisers. 

According to its proponents. 


By Christopher Brown-Humes 
in Stockholm 

Outokumpu, the Finnish 
mining and metals group, 
achieved a FM297m ($53m) 
profit before extraordinary 
items in 1993, ending a three- 
year run of losses despite weak 
market conditions. 

The result, a sharp turn- 
round on 1992’s FM360m defi- 
cit, was helped by the weaker 
Finnish markka, restructuring, 
reduced exchange losses and 
lower interest rates. 

However, the group will 
again pay no dividend, partly 
because of the uncertain mar- 
ket outlook. Mr Jyriti Juusela. 
chief executive, warned condi- 
tions would remain difficult in 


NEWS DIGEST 


Goldstar boosts 
profit by 147% 

Goldstar. South Korea's second 
biggest electronics company, 
increased net profits by 147 per 
cent to Won65.8bn for 

1993. Sales for the year climbed 
14 per cent to Won4,320bn. 
writes John Burton. 

Earnings growth was largely 
due to exports of consumer 
electronics, which were helped 
by the Korean won’s Call 
against the Japanese yen. 
Exports rose 17 per cent to 
Won2,330bn, with sharp 


self-regulation would speed the 
processes or listing approval 
and disclosures, now consid- 
ered too slow. 

A company listing in Hong 
Kong typically waits three to 
four months for the go-ahead; 
in the US this can be as shut 
as six weeks. 

The document warns that as 
the domestic market is 
approaching saturation in 
terms of companies seeking 
listings, the exchange must 
look to China and beyond both 
for new issues and investors, 


early 1994 although “demand 
for metals and metal prices are 
expected to improve moder- 
ately during the next few 
months’*. 

He promised further 
restructuring of the group’s 
copper products division, 
which remained in the red in 
1993 with a FM502m loss before 
extraordinary items. 

The group's three other divi- 
sions, base metals, stainless 
steel and technology, all 
reported profits, although low 
metal prices meant the base 
metals surplus sank to 
FM152m from FM404m. Best 
performer was the stainless 
steel division which lifted prof- 
its before extraordinary items 
to FM708m from FM349m. 


growth in C hina and south- 
east Asia. Domestic sales 
increased 11 per cent to 
Wonl.990bn. 

Berjaya to expand 
in Argentina 

Berjaya, the fast-expanding 
Malaysian conglomerate, has 
announced the expansion of its 
wide-ranging gaming activities 
to Argentina, writes Kieran 
Cooke in Knala Lumpur. 

Berjaya, headed by Chinese 
Malaysian entrepreneur Mr 
Vincent Tan, is taking a 30 per 
cent equity stake in a casino at 
Puerto de Iguazu, Argentina, 


and position itself to meet 
their needs. 

The exchange was also urged 
to look at ways of extending 
market automation - espe- 
cially in terms of trading, set- 
tlement and registration - and 
to speed up plans for develop- 
ing the listed debt market. 

Other Issues on the agenda 
include: 

• Putting a cap on the Com- 
pensation Fund, which now 
stands at more than EtK$280bn 
( US$36bn ), and using excess 
levy receipts for other initia- 


Group sales expanded to 
FM15.8bn from FMlS.lbn. 
thanks to the improved trend 
within stainless steel and tech- 
nology. Operating income 
a m un i ted to FM846m, against 
FM604m, while net finan cial 
expenses Cell to FM644m from 
FMl.06bn. Group debt has 
fallen and equity has risen fol- 
lowing the disposal of OM 
Group of the US and two share 
offerings. 

The F innish gov e rnment is 
looking to reduce the state’s 
50.1 per cent ownership of 
Outokumpu as part of its 
broader privatisation pro- 
gramme. Parliament has 
already authorised a reduction 
in the state holding to 33.4 per 
cent 


for |2.4m. Other partners in 
the Argentina project are 
reported to be Mirage Resorts 
of Las Vegas and Universal 
Casino Consultants of the UK. 

Rabobank pushes 
ahead 10% 

Rabobank, the big Dutch co-op- 
erative bank, reported a 10 per 
cent increase in 1993 net profit 
to Fll.lbn (S570m) and pre- 
dicted a further improvement 
in 1994, writes Ronald van de 
Krol in Amsterdam. 

Lending expanded 9 per cent 
last year. Funds entrusted to 
the bank by account holders 


lives to help the market com- 
munity; 

• Looking at creating Hong 
Kong depository receipts on 
regional blue chip companies; 

• More exhaustive disclosure, 
and the introduction of annual 
valuations of assets; 

• Abolishing the board lot sys- 
tem and scrapping share certif- 
icates - possibly along with 
the rules for spreads; 

• Reduction or removal of 
stamp duty; 

• Development of further indi- 
ces on the Hong Kong market. 


• Metra, the Finnish world 
leader in diesel power units, 
yesterday reported a profit 
after financial items in 1993 of 
FM472m, a sharp rebound 
from a loss in 1992 of 
FM4Cm. 

The group also announced 
the launch of two convertible 
capital note Issues of up to 
FM300m each to reduce bor- 
rowings. Net debt stood at 
FM4.6bn at the end of 1993, 
down from FMSbn, and the 
gearing ratio stood at 
2 . 0 5 . 

Metra, which has its main 
businesses in diesel engines, 
sanitary ware and security 
products, said it was raising 
the dividend to FM2.SQ per 
share from FM2.00. 


grew by only 2.3 per cent, 
which Rabobank attributed 
partly to a growing interest in 
other types of investments fol- 
lowing the general decline in 
interest rates. 

SNC-La valin posts 
gain to CSX 6m 

SNC-Lavalin, a big Canadian- 
based international engineer- 
ing and construction manage- 
ment group, posted a 74 per 
cent gain in 1993 net profit to 
C$16.3m (US$12m). or C$1.08 a 
share, on revenues of C$797m, 
up 6.5 per cent, writes Robert 
Gibbens in Montreal. 


PosGoId 
raises bid 
for Aztec 
Mining 

By NlkldTait 
In Sydney 

The bid battle over Aztec 
Mining, the diversified Austra- 
lian mining group, was 
stepped up yesterday when 
PosGoId Investments, part of 
Mr Robert Champion de Cres- 
plgny*s Normandy Poseidon 
group, announced it was rais- 
ing its cash offer to 74 Austra- 
lian cents a share. 

This compared with a previ- 
ous bid of 68 cents a share, 
and values Aztec at A$287m 
(US$206m). 

Aztec, which last week 
found a “white knight” in the 
shape of Pancontinental Min- 
ing, said it did not Intend to 
make any statement immedi- 
ately. The recommended 
merger with Pancontinental 
was an all-paper deal and 
Aztec shareholders were 
offered a mixture of Pan con 
shares and options in return 
for their Aztec stock. 

When the deal was 
announced, Pancon’s shares 
were trading at about AS1.85, 
and that deal was said to be 
worth 76 cents per Aztec 
share. However, the Austra- 
lian stock market fell back 
last week, lowering Pancon’s 
offer to below 70 cents. Yester- 
day, Pancon’s shares closed 
five cents op at AS1.70. 

The revised PosGoId offer is 
now free of certain conditions, 
meaning that the bidder can 
acquire Aztec shares in the 
market, where they were trad- 
ing yesterday at 68 cents. 
Ahead of yesterday's 
announcement, PosGoId con- 
trolled less than one per cent 
of its target’s equity. 

The other key is Alum ax, 
the US company which owns 
37 per cent of the target com- 
pany's shares. It had thrown 
its support behind the agreed 
merger, bnt said only that that 
it intended to accept Pancon’s 
offer "unless a better offer 
materialises”. 


By John Burton 
in Seoul 

South Korea's four main motor 
vehicle companies reported 
increased sales for 1993. 
although two remain in the 
red. 

Exports reached a record 
639.000 vehicles, benefiting 
from Ae depreciation of the 
Korean won against the Japa- 
nese yen. Increased sales in the 
developing world. Including 
south-east Asia, the Middle 
East and Latin America, were 
largely responsible for the rise 
in exports. 

Domestic sales were helped 
by low-interest financing as 
car companies competed to 
increase their market share. 

Hyundai Motor, the nation’s 
largest car company, reported 
a 39 per cent increase In net 
profits to Won5R2bn ($72m). as 
sales rose 18 per cent to 
Won7,180bn. It predicts a 18 per 
cent jump in sales to 
WonS^OObn for 1994. 

Exports rose 19 per cent to 
337,640 vehicles, and this year 
are expected to rise 14 per cent 
to 385.000. 

Domestic sales increased 9 
per cent to 443,600 vehicles and 
Hyundai predicts IS per cent 
growth to 535.000 this year. 


By Terry Hafl In Woffington 

Trust Bank. New Zealand's 
fifth-largest retail bank, is to 
raise NZ$200ra (USSiHm) by 
floating 22 per cent of the com- 
pany at NZ$2.10 a share, it said 
yesterday. 

It is expected that the 98m 
shares will be split in approxi- 
mately equal three blocks for 
institutional investors, clients 
of selected brokers, and bonk 


Last year the company had a 
46 per cent share of the Korean 
motor market 

Kia Motors reported net prof- 
its increased 24 per cent to 
Wonl&Tbn in 1993. while sales 
rose 25 per cent to Won4,li0bn. 
It predicts a 33 per cent 
increase* in sales to Won5,B0Qfan 
for 199*1. 

Exports grew 54 per cent to 
158,425 vehicles and are expec- 
ted to expand 64 per cent to 
260.000 this year, as Kla 
increases its US presence by 
establishing a dealership net- 
work. 

Domestic sales increased 18 
per cent to 521X000 vehicles last 
year, giving it 27 per cent of 
the Korean market 

Daewoo Motor narrowed its 
loss to WonfiObn in 1993 from 
WonSObn in 1992, and predicts 
a profit this year as exports 
increase 40 per cent. Sales rose 
29 per cent to Won2J2Q0bn and 
are predicted to jump 45 per 
cent to Won3.200bn in 1994. 

Ssangyong Motor reported a 
Won37Jbn loss in 1993 against 
a Won&Sbn loss in 1992. But 
sales rose 12 per cent to 
Won382bn. The results 
reflected increased competition 
in the market for sports utility 
vehicles, the company's main 
product. 


customers and staff. A further 
2.3m shares are being reserved 
for two of the nine regional 
trusts which control the bank. 

Trust Bank’s profit has risen 
steadily from NZ$l&3m in 1989, 
when it was formed, to 
NZ$62.4m (US$34.9m) in the 
year to September 30. In 
December the bank announced 
a record profit of NZ$3&4m for 
the final six months. 


Turnround at Finnish metals group 


NZ Trust Bank plans to 
float 22% of share capital 


This announcement is under no circumstances to be construed as an offer to sell or asa solicitation of an offer to buy any of these securities. 

The offering is made only by (he Prospectus. 


New Issue 


February 25, 1994 


6,000,000 Shares 

THE SOUTHERN AFRICA FUND, INC 

Common Stock 


Price $15 Per Share 


Alliance Capital Management LR— Investment Manager 
Investec Asset Management (International) Limited — Sab-Adviser 
S anla m Asset Management (Gibraltar) Limited — Sub- Adviser 
Merchant Bank of Central Africa Limited — Consul tan t to the investment Manager 


The New York Stock Exchange symbol isSOA 


Copies of the Prospectus may be obtained in any State or jurisdiction in which this announcement is circulated from only 
such of the undersigned or other dealers or liraters as may lawfully offer these securities in such State or jurisdiction. 

5,100,000 Shares 

The above sltares were underwritten by the following group of US. Underwriters. 


Merrill Lynch & Co. 


Smith Barney Shearson Inc. 


Alex. Bro wn& Sons Cazenove Incorporated A.G. Edwards & Sons, Inc. Lehman Brothers 


Oppenheimer& Co., Inc. 


PaineWebber Incorporated 


Wertheim Schroder & Co. 


Robert W.| Baird & Co. Cowen & Company Crowell, Weedon & Co. Doley Securities, Inc. 
Fahnestock & Co. Inc. First Albany Corporation First of Michigan Corporation 

Janney Montgomery Scott Inc. Kemper Securities, Inc. 

McDonald & Company Morgan Keegan & Company Inc. 

SccartUM,(lK. 

Piper Jaffray Inc. The Prineipal/Eppfer, Guerin & Turner, Inc. Rag en Ma ckenzie 

KaCG* iroraled 

Raoscher Pierce Refsnes, Inc. Raymond James & Associates, Inc. 

The Robinson-Humphrey Company, Inc. Scott & Stringfellow; Inc. Stifel, Nicolaus & Company 

Incorporated 


Interstate/ Johnson Lane 

Corporal ton 

Legg Mason Wood Walker 

Incorporated 


Sutro & Co. Incorporated 


Tucker Anthony 

Incorporated 


Wheat First Butcher & Singer 

CAmM.MARK£15 w 


900,000 Shares 

The above shares were underwritten by the following group of International Underwriters. 


Merrill lynch International Limited 

Cazenove & Co. 

Daiwa Europe Limited 


Smith Barney Shearson Inc. 


All nf these xrcurituui having 6 ant sold, this announcement appears as a mutter of record only. 

New issue February. 1994 

6,000,000 Shares 

Beazer Homes USA, Inc. 

Common Stock 


Dillon, Read & Co. Inc. Smith Barney Shearson Inc. 

Bear, Stearns & Co. Inc. CS First Boston Alex. Brown & Sons Dean Witter Reynolds Inc. 

(tcar p o rakd 

Donaldson, Lufkin & Jenrette A.G. Edwards & Sons, Inc. Goldman, Sachs & Co. 

StoritaCapailia 

Hambrecht & Qnist Kidder, Peabody & Co. Lazard Freres & Co. Lehman Brothers 

(■oapnatod linuiulnl 

Merrill Lynch & Co. Montgomery Securities Morgan Stanley & Co. 

iDCMpnbd 

Oppenheimer & Co., Inc PaineWebber Incorporated Prudential Securities Incorporated 
Robertson, Stephens & Company Salomon Brothers Inc Wertheim Schroder & Co. 

Imrfwaferf 


t 


NATIONAL 


Abbey National 
Treasury Services pic 

US$1,000,000,000 
Guaranteed Floating Rate 
Notes 1999 

Notice is hereby given that 
the notes will bear interest at 
76563 % per annum from 
H March m4 m3 June J99f. 
Interest payable on 8 June 1994 
will amount 10 USS9.62per 
US$1,000 note, US$9633 per 
USSIO.OOO note and US$962.3.1 
per USS 100,000 note. 

Agent; Morgan Guaranty 
Trust Company 

JP Morgan 


R1DOELTON U MIXED 
HKSUNJMMM 

FWb* Role Bond. Am ZSW 

Ctiwraufecrd by 

ttBtMMmiranaMiiMjLwna 

Winter b bereb, pnn Am for Ac lama 
poms fn, IS Murk. 1VU la Mu HCTM. 
(both dun iaclu.i.c) I he foicieil 

rate to* ben rUol si S.e ij% per ms 
taere* mtk u» Is SCjXanba. IW wm 

nafncor 


1DCD3UHM6 JW HJtDUnUX» 
TpDcteB Beal 


WanOc, Lkailed 
AgctU Ban* 



This armouncamant appears as a manor of raeoni only. 

BPIH! 

BioQuest Venture Leasing Partnership L.P. 


The undersigned organized this partnership to provide lease 
financing to biotechnology and biomedical companies. 


Financial Advisors: 

MeesPferson Inc. H.C. Wainwrigfit & Co.. Inc. 

Placement Agents: 

MeesPSerson N.V. H.C. Wainwrigfit & Co., Inc. 

in an offering of Limited Partnership interests valued at: 

$ 29 , 086,141 

Genera! Manager 

Aberlyn Capital Management Limited Partnership 

January 1994 







Hank plansi 
ul share 


FINANCIAL TIMES TUESDAY MARCH 8 1994 


23 


INTERNATIONAL CAPITAL MARKETS 


Bund prices lead widespread rally in Europe 


By Comw MdcMmann In 
London and Patrick 
Harveraoo in New York 

German government bonds 
opened sharply higher on news 
of last weekend’s wage settle- 
ment in the German engineer- 
ing sector, pulling the rest of 
Europe up with them. While 
some of those gains were 
eroded by intra-day profit-tak- 
ing, bonds firmed again in the 
afternoon, on the back of buoy- 
ant US Treasuries to close up 
to a point higher on the day. 

Again, activity was mostly 
futures-driven, with long-term 
investors still on the sidelines. 
“The market remains very 
fragile and nervous, 1 * said a 
London bond salesman. 

■ Bunds opened sharply 
higher ozl the engineering 
wage deal, which was widely 
seen to facilitate further cuts 
in German shortterm interest 
rates. This feeling was 
reinforced by comments from 


Mr Theo Waigel, the German 

frnar>^ f> m twiste r t rim fttrirt that 

if the wage situation stabilises 
further, there would be more 
room for interest rate cuts. 

All eyes are sow on the 
Bundesbank, which is dup to 
call for bids today cm its latest 
round of securities repurchase 
agreements, for allocation 
tomorrow. While some traders 
are hoping for a fixed-rate repo 
significantly below last week’s 
minimum rate of 5.97 per cent, 
most expect another variable- 
rate repo, where banks bid the 
rate they are wilting to pay. 

In the likely event of a vari- 
able-rate repo, “the German 
banks w3L;probe the downside 
on rates,” predicted Mr Step- 
hen Dtdake, bond strategist at 
PaineWebber, who expects the 
minimum rate to fall by 
around five basis points. 
However, some say cots in Ger- 
man short-term rates are 
unlikely to give the longer 
maturities a trig boost 

“The lnn g end of the [bund] 


market has decoupled from 
monetary policy ” said Mr Exit 
Shah, international market 
strategist at First Boston. 
“Bundesbank easing may 
prompt brief rallies at the long 
end, but nothing sustainable.” 
Moreover, he says rallies are 

GOVERNMENT 

BONUS 

likely to trigger more selling 
from investors still holding 
long bund positions- “I rtiteir 
there's still quite a bit of sell- 
ing yet to materialise." 

The June Bund fixtures con- 
tract stood at 97.24 in late trad- 
ing, up 0.96 point on the- day. 

■ French bonds staged a 
strong rally, triggered by the 
rise in bunds and further 
fuelled by strong overseas buy- 
ing in fee futures prfs. 

The March notional bond 
future ended at 126038, Up 1.4B 
paint on the day. 


■ UK gflts were also pulled 
higher by bunds, with traders 
reporting some cautious inves- 
tor buying. 

However, some participants 
said the rally could be 
short-lived. “I’m not sure I 
trust this - it all a bit 
too easy,” said a gift salesman, 
“if we don't get a decent cut in 
the [German] repo rate, it 
could all go sour again.” 

The June long gilt future 
rose VA points to U2fi, off 
sli g htl y from its intraday high 

Of U2||. 

■ Europe’s high-yiekters, Spain, 
and Italy, also posted gains but 
slightly underperformed their 
core counterparts. 

The Italian March- bond 
futures contract on rose 
by 0.56 points to 112.74. 

. The Spanish March bond 
future, traded in Madrid, rose 
to 102.40, up 0.57 points. 

■ US Treasury prices posted 
solid EF»tec yesterday morning 


in the wake of firmer overseas 
bond markets and tows* crude 
oil prices. 

By midday the benchmark 
30-year government bond was 
slightly below its high for the 
morning, up A at 93 A and 
yielding 6.782 per cent The 
two-year note was also firmer 
at the halfway stage, up A at 
99ft, to cany a yield of 4825 
per cent 

In the abs ence of fresh US 
economic statistics, the market 
took its early lead from Euro- 
pean markets. There, bond 
prices had rebounded following 
the news that a strike by metal 
workers bad been averted by a 
last minute wage settlement 
with employers. 

. The strength overseas set the 
tone few a firm opening in New 
York. Prices advanced further 
later in the morning, as the 
market reacted to a notable 
decline in oil prices. Some 
short-covering by dealers ai<n 
contributed to the session's 
gains. 


Irish Treasury may 
launch global issue 


By Sara Webb 

IRELAND’S National Treasury 
Management Agency is consid- 
ering the launch of the first 
ever global bond issue denomi- 
nated in Irish punts. 

INTERNATIONAL 

BONDS 

Syndicate officials believe 
such a deal would meet with 
considerable interest from 
international investors, given 
that they are significant hold- 
ers of Irish government bonds 
and that the availability of 
Eurobonds denominated in the 
Irish currency is fairly limited. 

Mr Michael Horgan, deputy 
director of domestic debt at the 


National Treasury Manage- 
ment Agency, said gross new 
issuance is. expected to be 
I£SL25hn in 1994, covering the 
government's borrowing 
requirement and redemptions. 

He added that the Treasury 
is considering whether to 
launch a global bond issue, and 
is looking at the possibility of 
borrowing at the long end of 
the yield curve, but would not 
be drawn on the size of the 
deal, which is rumoured to be 
about I£500m. 

The devaluation of the punt 
earlier this year scared off 
many foreign investors, who 
h ad held as much as 30 per 
cent of the Irish gilt market 
Mr Horgan said foreign owner- 
ship foil to about 15 per cent 
Just after the devaluation but 


NEW INTERNATIONAL BOND ISSUES 


US DOLLARS 
Skoptaank* 


Amount Coman 
m. % 


75 


Maturity 


100.00R Apr. 1890 (L2SR 


CS Rrat Boston 


Funicawa Sectric Cot 
Furuhawa Bacate Co4 


lObn. 

lObn 


M 

(b) 


10Q.16R Jun.1996 025R 
lOOOSn Mar.1900 0.15ft 


DKB Inter na tional 
Date Europe 


FRENCH FRANCS 


Coflnoga 


306bn 2.00 (c) Jaa2Q01 206 - Soctttt GtanMa 

1-075bn 3.00 jd) Jeo2001 205 - Bsnque Partes 

16n 6475 9596R Apr.2004 54250 +78 (5HH-04) CCF 


Rna l toons and nravcatofcto rates stated. The yield spread lower relevant governm e nt bond) at launch la n ppled *V Vie lead 
manager. SConvortible. (floating rate note. R: ted »■ otter price; tea raa show® at the m-oriar level, a) 8-mth Ubor 8tL b) 3-mtti 
Ubor <3 Issue price: FFr880. Radeinpd u n price: FFr1224. Gonv raflo: 1. far 1. Cs Ss M s from 1/1/00, eufafact to 10QH nie. at 
FFr1224. 4 Issue price: FFr1370. Redemption price: FFr1664. Corn rata 1 tor 1. Catele from 1/1/97, subject to 115%, rule at 
ou s te d value, e) Short 1st capon. 


has returned to earlier levels. 

Nervousness in the world 

hnmri ma ri nitB nrmtfnnpr; to pre- 
occupy borrowers and inves- 
tors a ™4 syndicate nffiriah hart 
few other prospective deals on 
which to comment 

The Republic of Turkey 
recently mwiptafari roadshows 
for its girded nfffirinp fo the 
US, and market participants 
axe waiting to see whether it 


goes ahead with the launch, 
given the market background. 

The deal is expected to be at 
i flturt |50Qm in and possi- 
bly as large as 8750m, accord- 
ing to Salomon Brothers, 
which is joint lead , and book- 
runner with Merrill Lynch for 
the issue. Turkey Is apparently 
still considering a whole range 
of maturities. 

• Australia Post, which is fac- 


ing increased competition from 
private carriers following a 
cabinet decision last autumn, 
is raising A$23Sm through an 
issue of five-year notes, N ikki 
Taft adds from Sydney. 

The government-owned busi- 
ness said that the fund-raising 
would provide around AJ200m 
of new investment, as well as 
refinancing maturing bank 
loans. 


Liffe mulls 
move to 
bigger 
premises 

By Tracy Corrigan 

The London International 
Financial Futures & Options 
Exchange is considering mov- 
ing to larger premises, just 
over two years after the com- 
pletion of its Cannon Bridge 
headquarters at a cost of 
around £35m. 

If trading volume continues 
to grow at the current rate of 
100 pm* cent a year, “the prob- 
ability is that we will need to 
And a larger trading noor,” 
said Mr Daniel Hodson, Lifters 
chief executive. 

Its growth rate has Anther 
accelerated this year, as the 
recent sharp foils in govern- 
ment bond prices have spurred 
activity in the futures mar- 
kets. 

Ioffe's most active contract, 
the Buromark future, trades 
around 300,000 lots a day, 
compared with 500,000 con- 
tracts a day for the Eurodollar 
and T-bond contracts traded in 
Chicago, the world’s biggest 
contracts. 

Mr Hodson stressed that any 
decision will be made by 
Liffe’s board and its members. 
The exchange could increase 
floor space at Cannon Bridge 
from 25,000 to 35,000sq ft but 
if the decision is taken to look 
for a new site, the exchange 
will aim for l 00 , 000 sq ft of 
trading space. 

Mr Hodson said that, given 
the size requirement, a new 
site would probably have to be 
built from scratch, at an esti- 
mated cost of around £100m. 

He added that, while other 
options would be considered, 
“Liffe is at foe very heart of 
the City of London" and would 
be unlikely to move outside 
the Square Mile. A decision is 
expected some time this year 
but no specific site is being 
considered at present. 


Australian SE to 
set up Asian board 


By Nikki Tait in Sydney 

The Australian Stock 
Exchange is keen to set up an 
“Asian board” of perhaps two 
dozen Asian-based stocks, 
which could form a recognisa- 
ble sub-sector of the Australian 
Stock market 

According to ASX officials, 
this could become a reality in 
as little as 12 months, although 
the initial number of stocks 
might be half the targeted 
sum. In the medium term, an 
ASX “Asian index" based on 
these stocks, and even some 
derivative products, could be 
feasible extensions. 

Mr Ray Schoer, head of 
operations in the ASX’s compa- 
nies department, says the 
exchange is currently talking 
to some 20 Aslan companies 
about listings. Assuming no 
sudden dive in share prices, 
perhaps half of these could join 
the market this year. 

Such companies, he carefully 
stresses, are not just casual 
inquirers. Nor are they inter- 
ested in a secondary listing. In 
all cases, the Australian mar- 
ket would be the place where 
the bulk of the trading in their 
shares would be conducted. 

According to the ASX, the 
geographical spread within 
this group of potential market 
newcomers is fairly wide, 
although Guangdong province 
in southern China dominates. 
Of the 20 -odd interested candi- 
dates, 15 come from China, 
including II from Guangdong. 
One emanates from Singapore; 
two from Papua New Guinea; 
one from Malaysia', and two 
from Korea. The business 
activities involved range from 
maniiftifft nifa g to The 
list includ es nrio hawk. 

Why should any Asian com- 
pany choose to have its shares 
traded in Australia? Mel- 
bourne-based Sino Securities, 
which HandlriH the first nhina 
listing on the ASX last year. 


has two explanations. The first 
is to raise new capital, and 
attract a “diverse book” of 
shareholders in the process. 
The second Is to acquire the 
“status” of a Western quote. 

In both regards, Australia 
has something to offer. It 
houses a sizeable Western 
investment community, and a 
fund management industry 
which has grown significantly 
as private pension money has 
surged. Yet it also sits within 
the Asian time zone and has an 
expanding Asian population. 

The ASX is also fairly acces- 
sible to Western investors. It 
only came into existence when 
the state exchanges merged in 
1987. It lagged badly in terms 
of transfer and settlement 
systems, but, having updated 
these and introduced a Flexible 
Accelerated Security Transfer 
process offering investors a 
statement of shareholdings 
rather than certificates, it can 
fairly claim to be user-friendly, 
especially for non-locals. 

The downside is that it lacks 
the clout and kudos of a mar- 
ket like New York. Companies 
seeking large funds for expan- 
sion, for example, would not 
find Australia very suitable. 
The nation seems capable of 
ploughing only some A$2Qbn 
(US$143bn) of new money into 
the stock market annually. 
“The total market capitalisa- 
tion of the first dozen entrants 
might be around A$500m” 
says Mr Schoer. 

If expectations are realised, 
the Asian influx will mean a 
ri gnifirgnt change to the ASX’s 
profile. At present, the market 
houses just 50 overseas stocks, 
oat of a total of 1.155 compa- 
nies, most of which emanate 
from other English-speaking 
nations. Business In a few 
shares, such as Hong Kong's 
Dairy Farm, is brisk. But for 
many of US uk multi- 
nationals, these listings are 
largely cosmetic. 


. Inc. 


i4 


i ■ • ,- I- 


„ \ 



1 WORLD BOND PRICES 1 

BENCtflAARK OOVERNMENT BONDS 

Had Db/s Week Month 

Coupon Dale Rica . change Yield ago ego 

Italy 

■ NOTIONAL ITALIAN GOVT. BOND 0TF) FUTURES 
(LIFFE)" Un 20&n IQOtha of 10QN 

FT-ACTUAfVES FIXED INTEREST DEMCES 

Price tndcee Mon De/a Fri Accrued 

UKOtoe Mar 7 change % Mar 4 Mareat 

xd *5 
ytd 

— Low coupon yield — — Medhen coupon yfarid - — High coupon jriaid — 
Mar 7 Mw4YhagoMar7 Mar 4 Yr. ego Mar 7 Mar 4 Yr. oqo 


Aiatrafa 
Batgfcjm 
Canada * 
Denmark 


Gammy 

My 


NMhoriands 

Site 

UKGBto 


U&Trawy' 


9-500 

08/04 

1140900 

-1080 

7.17 

591 

528 

70SO 

04/04 

1020500 

+0050 

609 

596 

557 

6.500 

06AM 

953500 

+0440 

7.18 

590 

553 

7.000 

12/04 

103.4600 

+1.100 

.604 

560 

509 

nnnn 

05/98 

1090700 

+0000 

503 

542 

522 

5500 

04AM 

06,0600 

+0090 

6L17 

518 

508 

a 000 

oam 

98.1200 

+0070 

6.12 

509 

579 

6L500 

OIAM 

98MOOO 

+0080 

9LO0T 

908 

842 

4000 

own 

1050330 

+0270 

300 

307 

306 

4000 

00fl» 

1020900 

-0420 

407 

300 

302 

5760 

01AM 

970800 

+1080 

604 

608 

576 

10000 

10/03 

1120500 

+0350 

806 

564 

708 

6000 

08/99 

96-16 

+14/32 

534 

532 

606 

8.750 

11AM 

96-26 

+00/32 

093 

593 

539 

8000 

10/06 

• 116-29 

+42/32 

7.12 

7.13 

571 

5075 

02AM 

96-27 

+13/32 

501 

518 

593 

MSB 

08/23 

93-09 

♦27/32 

578 

570 

532 

6000 

04AM 

960200 

+1020 

602 

606 

510 


Open Settpdca Change Hty Low Ert. wl Open Int 
Jin 11180 112.93 OSS 11022 112.46 42689 103393 

Sap - 11548 +0-88 0 2 

■ ITALIAN OOVT. BONO (BTP) FUTURES OPTIONS (UFFQ UraflOOm lOOtoeoMOOM 


1 Up to S y«n (23) 

2 5-15 yeera (M 

3 Over 15 yean (8) 

4 hredee ma hhe (6) 

5 AH stock* (81) 


12708 

+024 

12707 

102 

2.07 

6 yte 

533 

544 

646 

-557 

588 

574 

570 

600 

559 

15409 

+080 

15304 

1.72 

513 

15 yi» 

7.04 

7.17 

706 

7.14 

7.27 

508 

708 

700 

527 

17572 

+141 

17408 

071 

303 

20 yn 

7.18 

700 

703 

7.14 

727 

523 

709 

701 

536 

20596 

+1.10 

20571 

242 

1.47 

tried. f 

. 703 

7.41 

531 







15043 

+074 

14801 

103 

202 
















feidnt-Maad 






Prica 

Jun 

Sep 

Jun 

Sep 

6 Up to 5 years (2) 

18510 ’ 

+020 

187.73 

074 

1.41 

11290 - • 

204 

304 

2.16 

306 

7 Over 5 yeera (11) 

18447 

+106 

18208 

009 

079 

11300 . 

206 

nnn 

205 

302 • 

8 AS stocks (13) 

18594 

+096 

182.19 

007 

QA5 

11390 

2.11 

208 

203 

590 








isw — 

Mir 7 Me 4 Yr, ago 


10% 

Her 4 Vr.ago 


205 

321 


282 

328 


201 

248 


1-68 


1.7* 

3.10 


MB 

328 


Eat voL total, Ctoa SOM Pun lose, ante dqTa open W. Cate 97817 Pun *7822 


Debenbme and Loans 


London daWm. "Now Yort frtd-tey 
t (tea ente yWd frdtes wttrtofclno tte at T2S par < 
Pitoan US, UK to 32iWB. oOm b dactaal 

US INTEREST RATES 


Ytoda: unto mate wanted, 
by oonraakteita) 
■SpreaaMMStareiwtert 


■ NOTIONAL 8PAM3H BOND FUTURES CMEFF) 


Lundftiw rates 


Mnantt. 


Bloter loan rata . 


OnetaonBi. 
B Itaoaarti. 
5 Iterate 
3ft Sknanfi- 

- Onejraa- 


Tnowy Bte and Bond Vkftb 
330 T\no jnr . 


Open Sett price Change Hfeh Low Eat voL Open kit 

1 00.10 10248 +057 103-10 10200 89248 77.81 B 

103-00 10213 +095 10200 101.70 15453 60332 


Ml Ttejrar- 
3J» FNajaar — 
3-86 linear 
428 »jar 


404 

822 

W9 

633 

Ml 


JWt 


UK 


■ NOTIONAL UK GOT FUTURES (LffT^r £50,000 32nda of 100% 


BOND FUTURES AND OPTIONS 
France 

■ NOTIONAL ma+CH BOND FUTURES (MATTF) 



Open 

Sea price 

Change 

HBh 

Low 

Eat vot 

Open ht 

Mar 

113-00 

' 113-21 

1-07 

113® 

112-26 

3174 

16391 

Jun 

112-00 

112-24 

+1-07 

112-31 

111-28 

7S063 

152829 

8ep 

- 

111-28 

+1-07 

- 

- 

0 

0 


■ LONG ONT FUTURES OPTIONS {UFFQ E3O0OO 84the Of10<7% 


Mar 

Jin 


Optn 

128-28 

125.78 

12SJ0Q 


Sett price Change 
12868 +1-48 

126.16 +1-42 

125.40 +1^*2 


High 
12ft 80 

125.00 


Low 

12522 

12534 

12434 


■ LONG TBW FRENCH BOND OPI10NS 0MTV) 


Eta. wA 

256086 

Open tat 
134097 

State 

Mob 

tan 

■ CALLS 

Sep 

Jun 

75420 

91049 

112 

2-18 

2-34 

1-32 

303 

10409 

113 

1-46 

2-05 

1-82 

114 

1-19 

1-44 

2-35 


PUTS 


8ep 

2- 42 

3- 13 
3-82 


Strike 
Price 

125 1.75 2.12 2.02 060 099 135 

138 
127 
196 
129 

Em. voL ml Cate 40JKM Putt 44970 . tetore draft opan ht. Cate 327.175 Pite 3* 63*- 

Qerroany 

■ NOTIONAL GERMAN BUNP FUTURES QJFFiy OM25QJOO IQOlhe ot 10015 


Apr 

- CALLS - 
Jun 

Sep 

Apr 

— pure 
tan 

1.75 

2.12 

p rw 

000 

099 

1.10 

146 

- 

' 090 

. 103 

007 

102 

- 

- 

108 

023 

060 

- 

- 

243 

006 

040 

- . 

- 

519 


Eat w* Mat CMh 8408 Pu*a 8671. Pwrioa da/fc opao tat. Cote 81580 PUta 46453 


ECU 

■ ECU BOND FUTURES (MATy) 



Open 

Sett price 

Change 

Mod 

Low 

Eta. uol 

Open kit 

Mar 

9500 

9748 

024 

8520 

9740 

22142 

20841 

. ■ ■ \c Jun 

97.43 

9743 

+101 

9701 

9582 

177880 

220372 

Sep 

9709 

9704 

+098 

9709 

957S 

394 

4086 



Open 

Sett prica 

Change 

Mgh 

Low 

Eat ret 

Open hL 

Mar 

11510 

11846 

+106 

11806 

117.74 

2072 

15376 

Jun 

US 

9100 

92.60 

+106 

9204 ' 

9100 

71 

522 


■ US TREASURY BOND FUTURES (C87) 91 00n00a2ndao710tm 


■ B«tt»RnraB8OPTK)lf8(UFFgPM2SO000polnt»oM00W 


Strike 


CALLS 


PUTS 



Opan 

latest 

Change 

Hgh 

Low 

EM. voL 

Open hL 

Mar 

110-26 

111-10 

+0-16 

111-11 

111WS 

13JB0B 

104066 

Jun 

109-20 

110-07 

+0-18 

110-09 

109-20 

535034 

273484 

Sep 

106-24 

109-11 

+0-18 

109-14 

106-24 

1041 

34.773 


' 

Price 

Jut 

Sep 

JlU 

Sep 


9700 

107 

1.66 

004 

141 


9760 

1-09 

1.41 

1.16 

107 

\ -J '*• ’ 

9800 

006 

1.18 

143 

106 


Eat voL total, Cate 23800 Ml 27916 Pmtpua d«ft open tat. Qtai 220279 Ate 204074 

■ NOTIONAL IBXUM TBOt QBUIAN GOVT. BOND 

(BOBtXUFFQ’ DN26QOOO IQOtha of 100N ~ 


Japan 

■ NOTIONAL LONG TERM JAPANESE OOVT. 
jUFTQ YIQOm IQOtha af 10OT6 


BOM) FUTURES 


Jin 


Open Sett price Change High Low 
101.48 101.33 +033 101.49 101.25 
101^0 101.16 . . +043 101-51 10096 


&L vd Open ML 
’ 181 3264 

410 2423 


UK GILTS PRICES 


_Ytod_ _1BB3M. 

M ted Mrae+ar- Mpt Low 


Open Ctoae Change Hgh Low Eat ml Open EnL 
Mar . 11066 - - 11066 11065 52 0 

Jin 10086 - - 10084 10045 1893 0 

- UFFE cmwcm aadari on APT. At Opan In ta rae t apt — «w pwvtoua day: 


«_ -1KW- 

ted Wfaj+er- ■» law 


(0 a Mac +or- Hfc* Lew 


Shwta" ftte qpta R« TmN 

Bcdmiajeiaw is® 

12>2PC 1894 1Z08 

ItaMfaCtmcn 676 

UpclKti 11-31 

Eidi3peGu 98-95 SW 

!M*pcl»5 MO 

TtelZtpclBBStt — 11^0 

S«S=c=-S 

E*rill3 1 «» I998tt 1148 

ODwteonlOpelWB— 9M 

Pare 131, pc 1907# lL« 

BKll10bp:19W 038 

Tte Umc 1997# ft» 

tediitpe 1897 11-re 

Abe 1900 8.73 

■toSnvcimt--- rxo 
1te69ipc1B95-flBft~ 

14x16-1 - 11-® 

ItelS'speVBN 1JW 

£0312x1998 6» 

1te9>«Bl999tt 046 





1 12 l«pc IS 

TteioJdpeis* 

TteSXIMtt— — 
CU naakai UPtf0 1980- 


Tte 13 k 
10x3001 
TWdtt 



Mtfeaao 

10X2083 


9.92 670 12 

980 663 111 

&09 63* 

679 MB 
607 
693 

657 695 

692 

693 

634 785 nm 

1 . 47 694 WA 
634 787 lisft 


113% 

683 11112 
691 130% 

116% 
679 101 A 

684 SHI 


4 125% 
+B isn% 
+% 1«B 
+ti 1«% 
♦a iwa 

+% 138]| 

a is 

*a 5i& 
+8 123A 
+* llffl 
*U H74 


TWaai1%x2B0l-4 

181ft RndtaS 3*2X 99-4 

181& OBwwri«9iaxaB04_ 

103B Tte 5LX 2004^ 

tfexlOINA 

raft Cow 9 lj X 3305 

« Tte 12ljx 2003-6 __ 
!?« 73rt*200«tt 

IIS axana-«tt 

Tte11Lx«D8W 

IS 

110ft 

Si 

W39ft 

»B QaarNtetetea 

UtoilpcMOi 

TiMBVWsnoiBbM 
1*2 Qroflpc warn « — 

"g Tlcw9K20T2ft 

TteSwC2D95-«tt_ 

Tte fee 2013# 

7*K2D12-15# 

Tte SiX 201 7# 

Brtlfaen^lT 

1!0d 

nza 

m 

112ft .... 

108 „ . i i 

TO^ Ctetefae . 

Big War Uwn Shxtt 

BHt CaaSstctiML 

105% IteSxWM- 
97ft OwrabJ^x 
108% TteZ%pe. 


629 7.12 
430 615 79% 

587 788 1T7% 
653 580 9BH 

684 691 95% 

695 7.10 119ft 

621 729 U99 

739 786 lOdU 

781 7.171054*1 

60 729 1«% 

789 789 112 ■ 

641 730 14 VS 

7.70 7.11 IIOgM 


780 7.12108ft* 
721 7JB 42U 
780 7.13 11«ft 
787 7.13 n#S 
644 681 85%N 

783 7.12 109ft 
783 781 10GB 

789 7.11 119H 
880 732 MOft 



- 1S7ft 
144 644300ft* 

187 235 11' 

233 271 

257 288 

282 - 281 
278 250 
295 618 1 

aa &2i i _ 

385 523 135ft 

60 120 147ft 

119 38£ )«> 

. . 617 329 1«% 

44x0*90# — (1361) 119 331 1»ft ^ 

Pl iwp w ri taete ledeiiiFricai rate on p re lecte d tatadtonoifr) ION 
and CH SN- (b) Rpurea kt pera ntte — Wrew RP1 tee far 
tadwWip fe 8 mentha prior to Baud and fane been equated to 
feOMt fatten ol HP1 to 106 h Janrey 1967. Convwrton factor 
6646. HPI far June 1993E 1418 and (cr Januwy 1004: 1413. 

Othew Ptxad bata t a s! 





total tat ted nrar+v- MX Ua 


kU.MkSx'B' 

NMNaN#* stream. 
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606 

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— 

112% 


130 

110 

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126 

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422 


3R% 



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511 

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136% 

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72% 



78 

63% 

— 

400 

HB% 


130% 

117% 

— 

403 

136% 

— 

145% 

115% 

1107 


149 

—re 

169% 

ON, 


6 year yteid — — 15 year yfaid 28 y«d— — 

Mer 7 Mar 4 Yr. ago Mer 7 Mar 4 Yr. ago Ma 7 Mr* h.ago 


9 Debt & Lon (73) 


14650 


+183 14685 2.18 287 881 680 648 8.18 884 618 

abtNB. Coupon Qnnds Imr. 0K-7NW: latent BK-tOMit rtpre and ow. t tea ytod. yU Yaw u> date. 


FT FIXED INTEREST INDICES 

HeT Mb 4 Ma3 Mer 2 Mari Yraao HVjh- law* 

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FT/ISMA INTERNATIONAL BOND SERVICE 


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QULT EDGED ACTIVITY INDICES 

Mar 4 Mer 3 Mer 2 


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Feb 29 


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1488 1588 157.1 1503 140.4 

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— 400 113% 
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Osier Kowdbgnk 10% BSCS — 150 113 

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24 


COMPANY NEWS: UK 


CTTMANCIAL TIMES TUESDAY MARCH S 


Exceptional 
and computer 
side curb I MI 


By Paul Oheosertght, 

Midlands Correspondent 

IMI, international engineering 
group, saw pre-tax profits 
nudge up in 1393, but its 
advance was held back by 
losses in its computer business 
and by the restructuring of its 
Quid power division. 

Pre-tax profits for the year to 
end December were £70.2m 
against £68m. 

Earnings per share came out 
ahead at 13£p (13.6p). A same- 
again final dividend of 5.8p is 
recommended, to maintain the 
total payment at lOp. 

The figures were in line with 
expectations, but the promise 
Of further recovery, implicit in 
the results and carefully indi- 
cated in the formal statement 
of the r.hairman, Sir Eric Po un- 
tain, helped the share price 
rise 7p to 347p. 

Turnover increased to 
£LQ6bn (£1.01bn). 

Three of the lour main busi- 


ness groups - building prod- 
ucts, drinks dispensers and 
special engineering - had sig- 
nificant increases in operating 
profits. 

Only the fluid power divi- 
sion. where there was a decline 
in operating profits to £16.7m 
(£i6.9m), broke the pattern. 

Mr Gary Allen, the chief 
executive, reported a 3 per cent 
increase in trading volume in 
the US last year and a 2 per 
cent increase during the sec- 
ond half in the UK, but fails in 
Ge rmany . Italy and Spain. 

The troublesome titanium 
operations were in and out of 
profit during 1993. falling back 
into loss during the last quar- 
ter. Mr Allen expects the busi- 
ness to be in profit by the sec- 
ond half. 

With losses at the group’s 
copper tube plant eliminated 
by reductions in the cost base 
and a £30m investment pro- 
gramme, the group's problem 
area has been computers. 



Gary Allen (left) and Sir Eric Fountain: carefully indicating the promise of better performance 


Losses at Brook Street Com- 
puters led to the sale of the 
company, acquired in 1990, at a 
loss of £5.9in, shown in the 
accounts as an exceptional 
item. 

• COMMENT 

Computers replaced titanium 
and copper as the gr emlins in 
the IMZ figures, which showed 
the group poised lor, rather 


than actually enjoying, recov- 
ery. The computer problems 
should sort themselves out this 
year as new products from the 
division come on the market. 
r.fitB other engineering groups, 
tmt has been honing both man- 
ufacturing and financial effi- 
ciency during the recession 
and an improvement in market 

rendition*: would rapidly remo 

through to the bottom !in& But 


the prospects for that look 
patchy, suggesting a steady 
advance for the group this 
year, perhaps towards £90m 
pre-tax, and a much stranger 
move in 1995. With earnings 
going up to 19p a share, this 
would put the shares an a mul- 
tiple of 18. more keenly priced 
then some of their peers but 
demanding of their holders 
patience as a virtue. 


D&G increases 30% to £4.45m 


Wembley sells 50% of 


Royal Ordnance comes 
into the firing line 


By Paul Taytar 

Almost seven years after the 
government sold Royal Ord- 
nance to British Aerospace for 
SlSOm. a question mark has 
once again been placed over 
the future of the arms and 
munitions manufacturer. 

BAe confirmed at the week- 
end that it had been in talks 
for some weeks with Giat 
which could lead to some form 
of collaboration between the 

French stateowned arms man- 
ufacturer and its Ordnance 
subsidiary. 

The acquisition in April 1987 
not only strengthened BAe’s 
already substantial defence 
business but appeared to 
ensure a stable future for 300- 
year-old Royal Ordnance fol- 
lowing aborted plans for its 
stock market flotation a year 
earlier. At that stage Ordnance 
was a sprawling organisation 
employing 16,000 workers 
spread across 13 factories and 
two research and development 
sites. 

With the Ministry of Defence 
as it biggest customer by far It 
had annual sales of £440m and 
a forward order book of £80Qm. 
Sir Austin Pearce, BAe chair- 
man at the time, said of the 
deal: “We feel strongly we can 


inn-puna the business of Ord- 
nance." However, he added 
more ominously: "Clearly 
there are areas where we can 
improve Its efficiency" 

Four months later, following 
a detailed study, it b e c am e 
clear what Sir Austin had 
meant when plans were 
announced to close the Enfield 
plant - source of the 2m .303 
Lee Enfield rifles used during 
the First World war - with the 
loss of 1200 jobs. 

The job arts at Enfield were 
to be the fust of many as the 
1980s drew to a close and 
ifofonre spending was cut in 
the wake of the dramatic event 
in eastern Europe and the dis- 
integration of the Soviet 
empire. 

Since then Ordnance’s UK- 
based workforce has been 
reduced to 6,500. Some 2,100 
jobs have gone in the last two 
years and another 300 are to go 
at the company's ammunition 
factory in Chorley. Lancashire, 
under the latest round of cuts 
announced in January. 

BAe, which last month 
reported a £273m pre-tax loss 
despite recording a £345m 
profit before interest 3nd tax in 
its defence operations, does not 
break out figures for Ordnance. 

However, BAe describes Ord- 


nance’s operations today as 
"very competitive” and says it 
is "cash generative and 
broadly profitable" excluding 
the ongoing costs of rationalis- 
ation. 

Ordnance, which has annual 
sales of about £400ra. has been 
trying to build up overseas 
orders to help offset declining 
MoD expenditure. As part of 
this drive it acquired Heckler 
& Koch, a German small aims 
manufacturer, in 1991. 

In October the company won 
a crucial MoD five-year con- 
tract worth about ESOm to 
supply ammunition types rang- 
ing from small arms to tank 
shells. 

The contract, delayed after 
coming under Treasury scru- 
tiny, was won against fierce 
competition. 

However, highlighting the 
effect of defence cuts, the new 
ammunition order was worth 
only about half the previous 
five-year deal agreed In 1988 
and further job cuts and 
rationalisation measures have 
not been ruled out 

Even without the profit and 
loss figures it is clear that 
Royal Ordnance has not been 
the bargain some suggested it 
was at the time of the govern- 
meat sale. 


Pacer Cats in £17m deal 


By Richard Lapper 

Domestic & General, the 
domestic appliance insurer, 
yesterday reported pre-tax 
profits up 29.6 per cent to 
£4. 45m for the six months 
ended December 31. The 
interim dividend goes up by 
23.3 per cent to 925p. 

Despite depressed conditions, 
sales of extended warranties 
and annual policies increased 
by 242 per cent to £32.58m 
(£26 -23m). 

Other income fell by 92 per 
cent to £239,000 (£265,000) but 
after claims and commissions 
D&G’s trading activities 
yielded a surplus of £8.09m 
(£6 29m). 


Expenses increased to £&53m 
(£5.55m) and net Investment 
income rose to £3.12m (£2 -86m). 

Mr Colin Honey, managing 
director, said that it was "too 
early to comment” about the 
Office of Fair Trading’s investi- 
gations into extended warran- 
ties on electrical goods. The 
company is expected by ana- 
lysts to emerge unscathed from 
the affair. 

This is largely because the 
majority of its income is from 
direct mail or through manu- 
facturers’ gfhflmaa, rather than 
through sales of extended war- 
ranties through shops. Ana- 
lysts suggest that D&G’s poli- 
cies are, on average, between 
30 per cent and 50 per cent 


cheaper than its competitors. 

Earnings rose to 43.5 Ip 
(33.55p) per share. 

• COMMENT 

D&G produced another good 
set of figures yesterday and 
with the OFT’s Interest in 
extended warranty business 
likely to work in the compa- 
ny’s favour, there are no obvi- 
ous clouds on the horizon. 
D&G looks set to make pre-tax 
profits of between £9 3m and 
£&5m for the full year, continu- 
ing its strong earnings growth 
of recent years. A prospective 
yield of about 2 is half the mar- 
ket’s average, but - by con- 
trast - the multiple of about 20 

looks imifamanding 


Wembley, the leisure group 

which Hums the national sta- 
dium, is selling a 50 per cent 
stake in Facer Cats, its com- 
puter ticketing subsidiary, in a 
bid to comply with a banking 
deadline to cut borrowings by 
£40m, writes Tbn Burt 
Ticketmaster, the US com- 
puterised ticketing service, is 
paying £ilm cash for the stake 
and will be forming a joint ven- 
ture to develop the company. 
Sir Brian Wolfson, Wembley 
chairman said the joint ven- 
ture would assume £6m of 
Pacer Cats’ debt "The transac- 
tion. is worth £17m to Wembley 
and brings us close to the £40m 
demanded by our lenders. The 


banks are very comfortable 
with the position.” 

The sale follows the disposal 
of several assets last year, 
including National Leisure 
Catering, Yankee Doodle, 
another catering group, and 
the Needles HoteL 

It is understood the disposal 
programme is now within 5 per 
cent of the total repayments 
dne by March 31. 

Although the moves will sig- 
nificantly reduce Wembley's 
net debt, put at £139m at the 
interim stage last year, lend- 
ers. led by Barclays, have also 
demanded repayment of a fur- 
ther £10m by the end of the 
year. 




BUILDING PRODUCTS 



FLUID POWER 


FULL YEAR RESULTS 


"Prospects of higher demand overall, coupled with 
improved efficiencies, an ongoing investment 
programme and strong balance sheet, should result in 
further progress in the current year* 

Sir Eric Fountain , Chairman 

FULL YEAR TO 31 DEC 


1993 


1992 


Sales 

£ 1,065m 

£ 1,006m 

Profit 

(before exceptional items) 

£71.7m 

£68.0m 

Profit before tax 

£70.2m 

£68.0m 

Earnings per share 

(before exceptional items) 

14.5p 

13.6p 

Earnings per share 

13.8p 

13.6p 

Dividend per share 

10.0p 

lO.Op 


increased profits in three of the four core businesses 

benefits arising from increased market share, 

better productivity and lower costs 

gearing reduced to 25% 




IMI pic, PO Box 216, Birmingham B6 7BA. Telephone: 021 356 4848 



DRINKS DISPENSE 



SPECIAL ENGINEERING 


Close Brothers significantly 
ahead of forecasts at £16.7m 


By Simon Davies 

Shares in Close Brothers, the 
merchant banking and finan- 
cial services group, rose 83p to 
528p yesterday when the com- 
pany announced interim prof- 
its significantly ahead of fore- 
casts. 

The company reported pre- 
tax profits up by almost £10m 
to £16.7m for the six months to 
January 31. Analysts had been 
predicting figures in the region 
of £12m. 

Winterflood Securities, the 
smaller companies market 
maker acquired for £19m last 
April was a large contributor 
to the increase, accounting for 


about 40 per cent of profits. 

The remaining Close 
Brothers’ businesses also put 
in a strong performance, 
recording a 45 per cent 
advance. 

Winterflood benefited from 
the Increased activity in the 
stock market, and made record 
profits during the period. The 
company now ihhIcps a market 
in 1.150 stocks and is moving 
to larger premises. 

The merchant bank’s loan 
portfolio grew by 23 per cent to 
£34Sm. and the group reduced 
the percentage of bad debts. 

Corporate finance operations 
are geared to small and 
medium sized com panies, and 


1 DIVIDENDS ANNOUNCED 1 


Conns - 

Total 

Total 

Ciarent Data of 

ponding 

for 

last 

payment payment 

efiuktend 

year 

your 


BBA 


53St 

May 27 

5.25 

73 

7.5 

Brit Polythene — 

— fln 

7.75 

May 27 

A5 

115 

10 

British VKa .. 

— fin 

3.75 

May 9 

3-65 

7.4 

7.15 

Candover bivs — 

— fin 

7.05 

May 12 


11 

10.25 

Close Brothers ,..lnt 

St 

Apr 22 

12 

- 

11 

Cornwell Parker _ 

Bit 

1.7 

Apr 16 

1.7 

- 

5.7 

Domestic & Gen§ 

Int 

9.25 

May 5 

73 

. 

22.5 

Ml 

fin 

59 

May 16 

S3 

10 

10 

Entrum Justftia — 

— fln 


June 3 

2 

S3 

3 

Lloyds Chemists . 

— Int 

2.7 

June 10 

2 

- 

7.25 

Paribas French — 

fin 

1 

May 11 

1 

1 

1 

Parfcdean Leisure. 

fin 

1.3 

Apr 8 

- 

1 3 

- 

Parkkis Foods 

— fin 

2.7 

June 3 

Z7 

4.45 

4.4 


Dividends shown panes per share net except where otherwise stated TOn 
Increased capital §USM stock. VGion. 


Close Brothers has benefited 
from a surge in corporate 
activity among the smaller 
listed companies. 

Prompt, the company’s 
insurance premium financing 
subsidiary, saw a 32 per cent 
increase in volume in the 
period, while the asset leasing 
business also performed 
strongly. 

The interim dividend is 
raised to 5p (3J2p), payable 
from earnings per share up 
from U.9p to 2£2p. A 1-for-l 
scrip issue is also proposed. 

• COMMENT 

Close Brothers' shares fell 11 
per cent last week, in part 
because oT concerns that the 
company might be affected by 
a less confident stock market. 
It has provided a powerful 
defence at the interim stage. 
Brokers expect pre-tax profits 
to exceed £33m (previous fore- 
casts had peaked at £25m), 
which puts the shares on a p/e 
of 12. even after the shares’ 
meteoric performance yester- 
day. The momentum of the 
company's market making 
business may slow, but Close 
Brothers has a broad spread of 
businesses, which should per- 
form strongly in the economic 
upturn; the shares should do 
likewise. 


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BBY 


BANCO BILBAO VIZCAYA 


COMPLEMENTARY DIVIDEND 1993 


The Annual General Shareholders’ Meeting has 
approved the payment of a dividend of 169 pesetas 
for the financial year 1993 on all shares in issue, 
numbered 1 to 231,000,000. As three interim 
dividends of pesetas 38 each have already been paid, 
a comple m e nt ary dividend will be paid as follows: 


GnaaKridead 

55 ptas 

Date of payment: 
Payment: 


lax Net Dividend 
13.75 ptas 4L25 ptas 

on or after 11th April 1994 

As the Bank shares are 
represented by entries in the 
official register maintained by 
the Servian de Compensacidn y 
Liqmdaci6n. S.A. (.the "SCL"), 
the payment of the dividend 
will take place through the 
members of the SCL. 



US$125,000,000 

First Chicago Corporation 

Floatfog Rata Subonfi rated Capital Notes Due December 1998 
Nolimis hweby given thttlhe Rata of JnWt been fixed at 4% 

°"jf» relevant Interast fWient Dale, 
Ju " B . l?? 4 30 « reipect of L&J 100,000 

nomind of the Notes w!0 be US$1 ,022,22. 


March 8. I99A, London 

By: Citibank, KA., {bswer Services), Agent Bank CfTiBAN<0 



BankcFlreiand. 

UA $300,000,000 

Undated Variable Rate Notes 

t™ bwn fb»d o< a 87 S* end 

™ l»sra« POymanl Dots Juno 8 , 1994 

SSSSSl " “ pe< * * US * ,0Q - 000 ***** of *»NWwtU 

March 8, 199A, London 

By. Otwili. NA, (hiuar Swiea), Aparn Bqnk 


CITIBAMG 


DO YOU WANT TO KNOW A SECRET? 

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Daily Gold Fax - free sample 


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7 Svjq'Io.v S!rwl. London ?hj, UK - 
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Tel. 07)-?5 m 7! 7.1 
Fa*. 07 1-439 4944 














Unifieantiy 

* at £ 1 6.7a 


• COWttHT 


FINANCIAL TIMES TUESDAY MARCH 8 1994 

British Vita 
shows sharp 
fall to £33.7m 


By DavM Wtghton 

British Vita, the foam and fibre 
group, saw profits drop from a 
restated £5&3m in 1992 to 
£33.7m last year as the reces- 
sion in continental Europe 
took its tolL 

The figures also bore grow of 
trading and disposal losses 
relating to the group’s with- 
drawal from Spain. 

However, Mr Bob McGee, 
chairman, said that early indi- 
cations for the current year 
were "heartening”. 

"Across Europe conditions 
appear to have stabilised, 
albeit at 1993 levels. Some 
recovery is showing through in 
the UK while North America 
continues to exhibit steady 
improvement” 

Earnings per share fell from 
15.6p to 9.6p, but dividends are 
up from 7.l5p to 7Ap with a 
final payment of 3,75p. 

Mr McGee said that while 
volumes in most areas, apart 
from. Germany, had remained 
"reasonable", there had been 
increasing pressure on mar- 
gins. Excluding acquisitions 
and disposals, sales rose 2JS per 
cent to £712m. 

Germany, which accounts 
for more than a fifth of group 
sales, bore the brant of a cost 


COMPANY NEWS: UK 


tumbles 


By Tim But 


peripheral activities for dis- 


reduction programme which 
has reduced stiff in continen- 
tal Europe by 9 per cent 
Total rationalisation costs 
more than doubled to £5m. 

Mr Kanak Bhatt, finance 
director, said that price pres- 
sure had. been particularly 
Intense in automotive prod- 
ucts. which account tor same 
15 per cent of group sales. 

Iooa, the Spanish foam man- 
ufacturer acquired in 1988, had 
been "losing a fortune” on 
automotive components while 
the group’s Spanish plastics 
business was badly hit by the 
construction downturn. Both 
have been sold to management 
for nominal sOma. 

Thanks to a £73m rights 
issue two years ago the bal- 
ance sheet is strong, with gear- 
ing of 14 per cent 
Mr McGee said the company 
was particularly keen to 
expand in the US and eastern. 
Europe where its £6m foam 
plant in Poland win be com- 
nnssfcmed nwt month. 

Favourable exchange rate i 
movements boosted operating 
profits by £Lto and the group 
has switched to translating 
figures at average exchange 
rates, restating the 1992 
results. 

See Lex 


BBA, the engineering and 
motor components group, yes- 
terday unveiled a new manage- 
ment structure aimed at 
returning the company to 
profit 

For the year to December 31 
BBA swung from profits of 
£47.4m to pre-tax losses of 

The diversified group has 
reorganised its businesses into 
three divisions comprising 
automotive activities, aviation 
services in the US and a single 
industrial and engineering 
unit 

The scheme has been imple- 
mented by Mr Roberto Quarts, 

. chief executive, in a bid 
to refocus the company on cose 
activities and to identify 

Process Systems 
rises to $0.38m 

Process Systems, the North , 

Carolina-based maker of elec- 
tronic monitoring, metering i 
and energy management , 
systems which has a Loudon 
fisting, lifted pre-tax profits by 
68 per cent from $228,778 to 
$380,800 (£260,500) in 1993. 

The turnover advance to 
$15.1m (S12.4m) was ma inly 
a ttribut a bl e to i^ nd , m w i mar- 
ket penetration by the QUAD4 
solid-state meter into the elec- 
tric utility industry. 

Net profits were $405,300 
($226,776) fin* earnings of 0.73 
cents (0.41 cents). 


Each division bad been given 
set budget targets and 
chief executives have been 
appointed to see through 
a rationalisation strat- 
egy. 

In the 12 Twrvwfhg to end-De- 
cember that strategy contrib- 
uted to a £L7£m exceptional 
loss on plant closures and 
disposals - most notably on 
the closure of its friction 
materials plant in Belg- 
ium. 

The group also wrote off a 
£3 Am investment in United 
Indu stries , the precision tools 

and springs I I) tl fspJniw Ip 
which It has a 2L23 per cent 
stake. 

The exceptional provisions 
were offset only by an £18.4m 


gain on the sale of Pacific 
BBA its partly owned Austra- 
lian subsfcfiary. 

Mr Peter Clappison, finance 
director, said the disposals - 
including the £25m sale of 
three business since the year 
end - were part of an cm-gotug 
restructuring programme 
which would enable BBA to 
exploit any revival in its core 
businesses. 

He warned, however, there 
were few signs that such a 
revival was under way. 

In the auto m otive division, 
for example, operating profits 
fell to £2L5m (£37. 6m) on 
sales down 7.6 per cent at 
£574Jjd_ 

"There's been extreme price 
pressure in continental 
Europe, and we anticipate a 
further 10 per dgcHna in vol- 


ume output next year,” Mr 

ClappiSOn flddqfl . 

Profit margins in the divi- 
sion fell to L5 per cent in the 
second half of last year, com- 
pared with 5.6 per cent in the 
same period of 1992. 

Initial signs, meanwhile, of a 
recovery in the aviation busi- 
ness were undermined by 
“extreme overcapacity and 
reduced demand in the US air- 
line maintenance market”. Its 
second tmif margins fell 
shandy, down to L6 per cent 
from 4 JZ per cent in the last six 
months of 1992. 

The performance of the two 
divisions was offset by an 
improvement in the fawfairiTiai 
and engineering division, 
which enjoyed a 42 per cent 
increase in operating profits to 
£55£m. 


Piet Petroleum drops to £1.9m 


By Peggy HoOnger 

Piet Petroleum, the small exploration company, 
yesterday announced a 35 per cent drop in 
interim net profits from £2 jam to £L87m 
because of the absence of currency gains follow- 
ing the devaluation of sterling last year. 

Currency gains fell sharply from £L38m to 
£85,000. 

Mr Peter Everett, chairman, said the currency 
effect and net profits decline masked a strong 
underlying performance, with the operating 
return for the six months to December 31 77 per 

nwrit hi gher at <n fifim 

The return was achieved in spite of a marked 
weakening of oil prices from an average of 
$18.76 per barrel to $1513. 


Lloyds Chemists advances 16% 


Turnover rose by 57 per cent to £7-52m. 

The increase was largely due to an early con- 
tribution from the Scott field in the North Sea. 
which nime on stream in September. The com- 
pany reached record production levels of 737,400 
barrels of oil equivalent, of which some 220347 
had been produced by the Scott field. 

Piet was determined to continue its explora- 
tion programme, and had budgeted about £8m 
for projects this year. 

The company also said it intended to pursue 
further acquisitions abroad. Piet ended the first 
half with cash of £15 Am against £14J3m last 
year. Net debt was £I3Am, equal to 29 per cent 
of shareholders’ funds. 

As in previous years, there is no dividend. 
Earnings per share fell from 5J36p to' 3.62p. 


NEWS DIGEST 


By Peggy HoUnger 

Lloyds Chemists, the UK's 
second largest pharmaceuticals 
retailer, yesterday promised to 
step up dividend growth as it 
announced a 16 per cent 
increase in interim pre-tax 
prefits and a 35 per emit rise in 
the first half pay-out 

The dividend, up from 2p to 
2.7p, is covered moire than five 
times by feily diluted wm-ring s 
of i3J96p (I2.4p). Mr Allen 
Lloyd, chairman, said the 
group intended to Increase 
steadily the payment until the 
cover approached the stores 
sector average of more than 
twice. 

The decision reflected the 
board’s - confidence Is the 


group’s less acquisitive future, 
he It had been two years 
since the last large acquisition 
- that of Macarthy in 1992 - 
but Lloyds “continued to show 
good rates of growth”. 

Pre-tax profits for the six 
Trwmtbs to December 31 were. 
£283m on sales up by 

17 per cent to £460m (£394.7m). 

The largest sales advance 

rarno from pha rmafw nti- 

cals division, which increased 
net external sales by 44 per 
cent to ctgtgm (£85. 7m). This 
included an 80 per cent 
improvement in external sales 
to £94m at Barclay Pharmaceu- 
ticals, the wholesaler. 

The flu mason, which was 
earlier than expected, helped 
boapt sales in the retell divi- 


sion from £2843m to £307.7in. 
The company said hkefbr-like 
sales were 9 percent higher in 
the chemis ts shops, l per cent 
up in the Supersave Drugs- 
tores, and 3 per cent ahead in 
the Hhftapd & Barrett health- 
food chain 

The veterinary division 
increased sales by 19 per cent 
to £29 Jm (£243m). 

Gearing fell from 31 per cent 
to 25 per cent. The group 
announced a new seven-year 
loan farifity of flOQm (£68m) at 
7 per cent interest 

• COMMIT 

Lloyds is stressing its organic 
growth record in order to 
prove that the fingering doubts 
about accounting practices and 


quality of earnings are 
unfounded. While some con- 
cerns may have been allayed, 
others are beginning to appear. 
These fair-hide the potential for 
the wholesaling division, 
which is suffering some mar- 
gin dflutton in a competitive 
environment There is ai«t the 
question of a replacement for 
Mr Dick Steel, the departing 
ffmmra director These issues 
may well explain why the com- 
pany continues to trade at a 
substantial discount to the 
stores sector. Forecasts are for 
between £55m and £57m, put- 
ting the shares an a prospec- 
tive p/e of about 12. Their 
attraction may be enhanced by 
an improved yield of 3.7 per 
cent 


Cupid 

shares down 
on warning 

Shares in Cupid tumbled 27 per 
cent to 16p yesterday as the 
USM-quoted bridal wear, for- 
mal wear and nursery products 
group revealed that it would 
be “substantially loss-making 
in the current financial 
period.” 

• Revealing deepened interim 
losses Of £456300 (£168,000) in 
January, the group suggested 
It was nwpjMr whether It 
would return to profitability in 
the year, to March 31 and 
announced the launch of a 
re stru ct ure of the group, now 
ongoing. ; 


Mr Richard Shaw, chief exec- 
utive, has been temporarily 
requested hy the board to take 
no ex e cutive actions and he is 
presently in discussions with 
the company. 

MAI offer 
unconditional 

MAI, the television and 
financial services group, said 
yesterday that its £292m offer 
far Anglia Television had been 
declared unconditional in all 
respects, subject only to the 
admission to the Official List 
of the new MAT convertible 
preference shares becoming 
effective today. 

At 3pm an March 4, valid 
acceptances had been received 
in inspect of 43m Anglia ordi- 
nary shares (95.97 per ■cent). 


Notice to tea HoMere of the ootetendtag 
9% Convertible Bonds due 1989 
(the '‘Bonds’) 

of Merloni Overseas Limited 

(the’tmian 

UncondhionaUyand irrevocably guaranteed by, 
and convertible kite OnSneay Shares and Savings Shores 

of Merloni Etettrodomestici S-pA. 

Bhe-OuarmtoO 

NOTICE 1$ HEREBY GIVEN to fee holder* of fee Bonds feat to accordant* 
•rife Cmntfthm 0(a) q| the Bomb fee right nt afesotoiiM tar Onfimy Sbans 
awl Savings Shares of tbn Guarantor will, n ■ remit of fee derision oi Bn 
lesnar to redeem fee Bands on April 1. 1994, terminate at tea data at 
festoon m March 24, 1994. 

The holdenr of fee Bondi m lemindetf feat rata Matte 24, 19M hey nay 
euntea their right to convert ad or any M the Bonds keW by hem Me the 
Guarantor'* OnOnaiy States rad Savings Stares. 

Each Bond of Lira 5,908,000 may be eonwited is to Un 3,388,582 oi sack 
principal amonat bio Ordinary Shares ol tea Guarantor at a cmwofae prise 
el Lire 3,699 per Ordinary Share and Lire 1,911.418 nt sach principal 
amomtt Into Savings Shane ol the G *a raster at a cenvaishu price of Un 
1,758 per Savings Share, In accoidanca wife CandUioa G(a) el fee Bends. 

19 exercise such rigid fee bidden nf fee outstanding Bonds matt deliver 
neb Bonds at tee specified office of a Conversion Agent (Hated below), 
a ccompa n ie d by a duly ttflud and completed notice of s a bactipHo o In fen 
term obtetasMa tram such Convection Agrat, on or prior (a March 24. 1994. 
Sacfa onto once daly canplated and tfapniflad at afirwald wfe be fciwmctolo 
wifenoi fee consent of fee bsier and fee 6aarmter. 

Each Boad dafiveretf tor re d e mp Hos aad mascrfptitm ( co uvh sIb b) sbeeM bs 
delivered wife all munaterad Coupons appertaining thereto, faffing wbfdi 
tee Paying Agent wtH require payment id an ameanl egui to fee bee vain 
of nay seta missing Coupons. 

PRINCIPAL PAYING AND CONVERSION AOENT I 

KrwSt t fa n k OLA. I — teig wlM 
43, Bodmrd Roytf 
L* 2905 LUombewg 

PAYING AND CONVERSION AGENTS 
KrMMbmk M.V. CndttSulM* 

AienbMurtrMt? Pemdipletta 

B- 1000 BniSMt* CH-BOSIZutata 

Hra ovd by Mgfc xV O weee UmHvd 
Man* 8. 1094 


Citicorp Banking Corporation 
U.S. $250,000,000 

Guonntaod Hooting Beta Subordingtod Capita! Notes Due July 10, 1997 
Unconditional/ Guaiunteoci on a Subordfaiatad Bom nv 

cmcoRpo 

Anusnl to Pbnog rap ii [d) of the Tom* and ConetBiom of the Notes noiiav ii 
nerefcy green 4ujt dm period In respect at Coupon No. 37 wil run from March 
23, 1994 to April 25, 1994. A farther notice *41 be pubiiihod odnsing Rale 


of Interest and 1 


torch B. 1994. London 
r- GGbanh. NjA jkwr Servicer), t 


CITIBANK O 


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■ : ' V ' • V 

. . v r- *. * • ■«•• • 


HSBC Investment Banking 

Results for 1993 

The HSBC Group creates a new investment banking force 



-,.VT" 




Profit before tax 
Merchant Banking 
Securities 
Asset Management 
Attributable profit 
Capital Resources 
Total Assets 


1993 

£m 

253.0 

152.7 

67.9 

32.4 

191.6 

848.2 

13,425.8 


1992 

£m 

1.6 loss 
26.4 loss 

7.6 
17.2 


764.9 


12,181.4 


Pre-tax profit increased by 
£254.6m 

Attributable profit increased by 
£ 184.8m 

3 1 % return on capital resources 


“The HSBC Investment Banking Group had an outstanding 1993 , 
reflecting increased business flows between group companies 
against a background of favourable market conditions. Our unique 
strengths in South-East Asia were particularly important for both 
primary and secondary market activities. 99 

■ Bernard Asher, Chairman 

The HSBC Investment Banking Group, formed in 1993, 
co-ordinates the merchant banking activities of Wardley in the 
Asia-Pacific region and Samuel Montagu in Europe and the 
Americas, with international equity and equity-related securities 
distribution through James Capel and fund management through 
HSBC Asset Management. 

These businesses continued to operate under their well-established 
names but work together to deliver investment banking products 
and services around the world. They operate in 37 countries and 
employ 4,100 staff. Market leadership has been consolidated in a 
number of the group’s product lines: export and project finance, 
private client services, securities distribution and new issue 
business in Asia. 


This advertisement has been approved by James Capel & Co. Limited, a member of SFA and the London Stock Exchange. 
Registered Office: Thames Exchange, 10 Queen Street Place, London , EC4R 1BL, United Kingdom. 


Member HSBC Group 









26 


COMPANY NEWS: UK 



Adverse currency movements and problems in Swiss office behind the decline 

Intrum Justitia falls 13% to £13.9m 


By Simon Davies 

Intrum Justitia, Europe's 
largest debt collection group, 
yesterday annmnirwl a foil in 
profits for 1933 because of the 
impact of currency declines on 
Nordic profits, and problems in 
its Swiss Office- 

Pre-tax profits fell by 13 per 
cent to £l3.9m <£i6m) on turn- 
over of £83.6m, down from 
£88. 9m. The fall In Nordic cur- 
rencies reduced operating 
profit by £l-2m. and the com- 
pany said that in constant cur- 
rency terms, pre-tax profit 
increased by 6 per cent during 
the year. 

Mr Bo Gfiranson, chief execu- 


tive and the company’s largest 
shareholder, said Intrum Justi- 
tia was aiming to increase the 
number of cases handled by 20 
per cent during 1994, from the 
year-end level of 2.83m. These 
cases had a gross value of 

£L4bn. 

The company said it would 
expand through organic 
growth rather than by acquisi- 
tion. Mr GOranson described 
Europe as a “virgin market" 
for debt collection, offering sig- 
nificant potential for existing 
and new offices. 

Operating profits fell by 21 
per cent to £I4.2m despite sta- 
ble operating expenses. How- 
ever. the net interest charge 


fefl to £910,000 (£L73m) because 
of lower interest rates and cash 
generation, which reduced 
gearing from 72 per cent to 415 
per cent 

Intrum Justitia performed 
strongly in the early stages of 
the recession, when companies 
are forced to improve cash 
management. But as econo- 
mies have contracted, growth 
in new bumness and the collec- 
tion success rate have slowed. 

The company was adversely 
affected by management prob- 
lems in its Swiss operation, 
which resulted in a £2m drop 
in operating profit in 1993. 
These have been resolved. 

Mr GOranson said Intrum 


Justitia bad increased market 
share in most of its markets. 
The UK. which accounts for 
about one-third of profit, 
France and Germany ail per- 
formed strongly, and further 
growth is expected in the cur- 
rent year. 

ffarnifig g per Share rose mar - 
glnally to 9.3p (9-2p) and the 
directors have recommended a 
final dividend of SL2p, lifting 
the total pay-out to 3ip. a 10 
per cent increase. 

• COMMENT 

Intrum Justitia has been 
viewed with some suspicion by 
investors, due to the slightly 
dark reputa tion of the debt col- 


lection industry. Its latest 
results provide little cheer, but 
the future holds more promise- 
profits should rise to about 
£l7m in 1994. boosted by a 
tumround in Switzerland. This 
puts the shares on a prospec- 
tive p/e of 10.7. Impending gov- 
ernment initiatives on late pay- 
ment should help broaden 
demand for debt ran<vHrm ser- 
vices in the immature Euro- 
pean market Lord Hollick’s 
MAI owns 19 per cent and has 
for some time been rumoured 
to be keen to increase its stake. 
The current share price 
reflects little of this, and offers 
significant potential upside in 
the linger term. 


Badgerline 

By Ancfrew Bolger 

Badgerline Group, the Avon-based bus 
company, yesterday reported profits 
broadly in line with the forecast 
made when it came to the market in 
November. 

The group's shares, floated at 115p, 
closed 5V*p higher at I25%p. 

The year to end-December saw pre- 
tax profits more than double to £&9m 
(£3 .2m) from a turnover £5m higher at 
£i32m_ 

Mr Trevor Smallwood, executive 
chairman, said all the group's operating 
companies had performed well 


more than 

He expected last month's £23m acqui- 
sition of PMT Group, the Staffordshire- 
based bus company, to be earnings 
enhan cing- The purchase pushed Badg- 
e rime's gearing above 150 per ce n t, but 
this was expected to be reduced signifi- 
cantly by cashflow during the current 
year. 

The group said a recent Office of Fair 
Trading report into the activities df its 
Thamesway subsidiary at Southend had 
cleared the company of anti-competitive 
practices. Its main competitor in the 
town had been sold by the local council, 
which would stabilise the market 
Thamesway bad made a meaningful 


doubles to 

contribution as a result of unproved 
tr ading conditions in the Southend area 
in the second half of the year, and full- 
year benefits were expected to continue 
into 1994. 

Barigprlina arparfg a decision SOOU OH 
the public inquiry concerning its Ken- 
sington depot in Bath, where Safeway 
wants to build a supermarket Should 
the planning application be blocked. 
Badgerline would write down the 
depot’s value in its balance sheet by 
£S-2m. 

If the plan goes ahead, the group will 
relocate to a new depot and gain £7.5m 
in free cashflow. 


£6.9m 

Mr Smallwood said that while it was 
too early to make any predictions about 
trading during the current year, he was 
satisfied that the policies Badgerline 
had pursued would enable the group to 
the progress of the past few 

years. 

Earnings per share rose to &6p (4-Ip) 
compared with the prospectus forecast 
of 7.flp. 

The group said it would start paying 
dividends in the current year. Had it 
been listed from the beginning of 
last year, the board would have recom- 
mended a notional net dividend of 
4.1p. 


Parkdean Leisure just 


ahead of forecast 


By Maggie Uny 

Parkdean Leisure, the holiday 
park operator which, floated 
last October, just beat Us £L4m 

prospectus forecast with oper- 
ating profits Of £t - 41m, a gains t 
£L3m, for tim year to Novem- 
ber. The shares, issued at 120p, 
dosed unchanged at 163p. 

With the benefit erf the £7.Sm 
net proceeds of the float for six 
weeks, interest charges fell 
from £800,000 to £600,000 and 
pre-tax profits were up 61.6 per 
cent at £811,000 (£502,000). 

Mr Gr aham Wilson, manag- 
ing director, said in spite of the 
worst summer weather he 
could remember and weak con- 
sumer confidence, Parkdean 
had sold 13 per cent more holi- 


days in 1993 and had increased 
occupancy rates from 74.7 to 
75.1 per cent on top of a 5 per 
cent rise in capacity. 

This year had started better 

with bookings up 6 per cent by 
volume and 10 per cent by 
value. Capacity for the 19^1 
season would be up less than 3 
per cent, and like-for-like 
prices were about 3 per cent 
higher. 

The float bad cut net debt 
from £6 -5m to £L35m. and gear- 
ing was 13 per cent at the year 
Mr Wilson said it should 
peak in March at about 25 per 
cent. 

He said he was now looking 
at acquisitions, but had turned 
some down as being too expen- 
sive. The prospect of an 


^larged P rou P he,p ^ 
’arkdean improve discounts 
rom suppliers, partly offset- 
iae the extra costs of being a 
luoted company, he fma. 

Turnover was 8.5 per cent up 
it £9.22m. Touring income fell 
0 per cent as caravan owners 
toyed at home in wet weather. 
iut hiring Income rose B per 
:ent. The two contributed 40 
>er cent of group sales. Retail 
ales made 43 i«er cent of the 
otal, with bar sales up ti per 
lent. Caravan sales rose 25 per 
lent, although gross margins 
rare lower. 

Earnings per share were 65p 
Sjp) but on a pro forma basis 
vere &9p against a prospectus 


Guinness Peat holds near 10% 


stake in Premier Investments 


By Nikki Taft 
in Sydney 

Sir Ron Brlerley’s Guinness 
Peat Group has emerged as the 
holder of a near-10 per cent 
stake in Premier Investments, 
a small quoted Australian 
investment and wholesaling 
company previously headed by 


Mr Solomon Lew. 

Mr Lew, who announced yes- 
terday that he was stepping 
down as a director of Premier, 
is better known as the chair- 
man of Coles Myers, one of 
Australia's largest retailers. 

Last year. Premier was the 
focus of much controversy - 
and an Australian Securities 
Commission inquiry - over a 
deal in 1989 which involved 
Premier in buying a block of 
9.22m Coles Myers' shares. 

Originally, a private Lew 
family company called Etiket 
had undertaken to buy these 
shares for AJS.12 (£4) each. But 
Premier offered to purchase 
the same block for A$9 each. 


allowing Etiket to pocket the 
balance of 88 cents a share in 
return for cancelling the ear 
lier purchase agreement. 

The ASS paid by Premier 
matched the price it paid for a 
block of institutionally -held 
shares in Coles Myers at the 
same time. However, the mar- 
ket price for Coles Myers' 
shares when the deal closod 
was AS8.62. Certain disclosure 
requirements were also 
breached. 

Yesterday, Premier said that 
it had offered UK-based Guin- 
ness Peat a sent on the board, 
and that its new shareholder 
bad nominated Mr Gary Weiss 
as its representative. 



Citibank is proud to have been 
named Asiamoney's 1993 
Investment Bank of the Year and 
Commercial Bank of the Year. 


Our commitment to Asia spans more than 90 years, and today we have over 15,000 employees in 
360 branches in 25 countries. We look forward to continuing to help our clients meet their financial 
objectives throughout Asia, and around the world. BECAUSE THE CITI NEVER SLEEPS! 


arm CatUnk. n . K CwUL u * member of 5FA and IMRO. 


CmBAN<& 


Country Casuals in line 
with City expectations 


The directors of Country 
Casuals Holdings, the women's 
wear group, are confident that 
pre-tax profits for the year 
ended January 31 1994 will be 
in line with market expecta- 
tions. 

Although over the last two 
weeks the trading pattern had 
been adversely affected by 
poor weather, the core busi- 
ness was currently running 4 


per cent above last year, with 
the Koto chain showing a 31 
per cent rise. 

The directors said that year- 
end sales in the care Country 
Casuals brand were 5 per cent 
higher at £3G.lm while gross 
margins “significantly 
improved" over those achieved 
in the first half. 

The shares were unchanged 
at 167p. 


Are you dealing in over $1 ra? 
Fast, Competitive Quotes 24 Hours 
on 071-329 3333 or fax 071-329 39 19 


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chabts, SSSSS^SSSSSSSS 




27 


financial times Tuesday march 8 1994 


® BANK OF TOKYO GROUP 

THE BANK OF TOKYO GROUP continues to provide our clients with a range of high quality services in the field of 
Corporate Finance on a global basis. Our goal is to gain the confidence of our clients and to build up and maintain 
a lasting business partnership. Integrity in all our transactions is our highest priority. 

Shown below, are examples of transactions the Bank of Tokyo Group has carried out on behalf of clients. For more 
detailed information about our range of services, please contact any of the Bank of Tokyo Group offices listed below. 


GLOBAL CORPORATE FINANCE IN 1993 



M & A AND SIR/ 

itegic Alliance 

NISSAN EUROPE -NV. 


ACSYSINC. 


MITSUBISHI CORP. and 


YAMATO SCALE CO.. LTD. 

has increased iis shareholding in 


has acquired 


SODEXHO 


has acquired 

NISSAN MOTOR IBERICA SJl 


JWP BUSINESSLAND JAPAN 


have acquired 


METRO EQUIPMENT CORP. 

through a take-over bid 


CO., LTD. 


a minority interest in 





(Subsidiary of JWP INC) 


SOGO SHOKUHIN KLK. 



The undersigned acted as 


The undersigned acted as 


The undersigned acted as 


The undersigned acted as 

Financial Advisor n> 


Financial Advisors io 


Financial Advisor to 


Ruanda] Advisor to 

Nissan Europe NV. 


JWP Inc. 


Sogo Sholcuhin K.KL 


Yamaio Scale Co., Ltd 

Tokyo Sotiedad de VaJorcs y Bolsa 


The Bank of Tokyo, Lid 





(Espaaa) S.A. 


The Bank of Tokyo Trust Company 


The Bank of Tokyo, Ltd 


The Bank of Tokyo, Ltd 


TOSHIBA CORP. 
has entered into an alii with 
PICTURETEL 


TATSUMTYA KOGYO CO., LTD. 
has increased its shareholding in 
AUTOMOTIVE DISTRIBUTORS LTD 


VOLVO CARS JAPAN CORP. and 
IWATAYA 

have entered into dealership 


NIPPON SANSO CORP. 
has acquired 

exclusive sales right from 

TOP OF THE LINE SPpRTSKTTE 


PONY CANYON INC. 

GOLD MOUNTAIN 
ENTERTAINMENT and 
CHERRY LANE MUSIC INC 
have formed a joint venture 

The undersigned acted as 
Financial Advisors to 
PictureTel 


The undersigned acted as 
financial Advisor to 
Tatsumiya Kogyo Co- Lid 


The undersigned acted as 
Financial Advisor to 

Volvo Cars Japan Corp. 


The undersigned acted as 
Financial Advisor to 

Nippon Sanso Corp. 


The undersigned acted as 
financial Advisor to 

Pony Canyon Inc. 

The Bank of Tbkyo, Ltd 

The Bank of Tokyo Trust Company 


The Bank of Tokyo, Ltd 


The Bank of Tbkyo, Ltd. 


The Bank of Tbkyo, Ltd 


The Bank of Tokyo, Ltd 


INTERNATIONAL LEASE 



CANADIAN HELICOPTER 


BURLINGTON NORTHERN 


AMERICAN HONDA MOTOR 


FUJITSU FULCRUM 


— 

JAPAN AIRLINES COMPANY. LTD. 


MALAYSIAN AIRLINE 

CORPORATION 


RAILROAD COMPANY 


CO., INC 


TELECOMMUNICATIONS LTD. 




SYSTEM BERHAD 





(Subsidiary of 


(Subsidiary of FUJITSU LIMITED) 









HONDA MOTOR CO.. LTD.) 







Secured Note Financing 


U.S. Leveraged Equipment Lease 


UJS. Equipment Lease 


U.K. Lease 


Boeing 747-400 Aircraft 


Two Boeing 737-400 Aircraft 



of 




of 


Japanese Leveraged Lease 


Japanese Leveraged Lease 



Double Stack Container Cars 




Land and Buildings 


Arranged by 


Arranged by 

Arranged by 


Equity arranged by 


Arranged by 


Arranged by 


BOT Lease Co., Ltd. 


BOT International (HE.) Limited 

BOT Financial Corporation 


BOT Financial Corporation 


BOT Financial Corporation 


Bank of Tokyo International limbed 


and other leasing companies 


and other financial companies 


STRUCTURED AND PROJECT FINANCING 


CAMDEN.COGEN,.£IMITED 


, BCH ENERCj^EOPTED . 
PARTNEKSfaifi- 


PAGBDLAO POWER PROJECT 


COMP^jjjIA CONTRACTUAL 


MALAYSIA LNG 1&2 PROJECT 


COLVER POWER PROJECT 

PARTNERSHIP 





' MENERA CANDELARIA 






- 

. 


Philippines 


Chile 


Malaysia 


Electrical generating station 

Gas-fired cogeneration facility • 


Resource recovery smd 










wasce-coenergjr facilities 


Hopewell Holding limited 


Phelps Dodge Corporation 


PFTRONAS/SheU 


U.SJL 







Sumitomo Metal Mining Co., Ltd 


Mitsubishi Corp ./Sarawak State 





U JSA. 




Sumitomo Corporation 







The Bank of Tokyo New York Group 


The Bank of Tokyo, Ltd 


The Bank of Tokyo, Ltd 





The Bank afTokyo New York Group 


acted as 


acted as 


acted as Intercreditor Agent 


The Bank of Tokyo, Ltd. 


Union Bank 

acted as 


Administrative Agent, 


Co-Financial Advisor and 


The Bank of Tokyo New York Group 


acted as 


acted as 

Senior Tranche Agent 


Arranger and Account Agent 


Arranger of the JE3QM Loan 


acted as Trustee 


Arranger 


Managing Agent 







OKTEDI 


CEDAR RIVER PAPER COMPANY 


HYUNDAI LNG VESSEL 


SHEFFIELD HEAT AND POWER 


WESTERN HARBOUR TUNNEL 


NORTH GOONYELLA COAL 

COPPER/GOLD/SILVER MINE 






PROJECT REFINANCE 




PROJECT 

' " “ ‘ 


Recycled corrugating medium 


Republic of Korea 




Hong Kong 



Papua New Guinea 


manufacturing (riant 


Hyundai Merchant Marine Co., Ltd 


Regional heating system 
of the dty of Sheffield 


Cross Harbour Tunnel Company 


Australia 

BHP Papua New Guinea 


U.S.A- 






cmc 


Sumitomo Corporation White 







U.K. 




Mining Limited 

the Bank of Tokyo, Ltd 


Hie Bank of Tokyo New Yotk Group 


BOT International (H JC) Limited 


Bank of Tokyo International limited 


The Bank of Tokyo, Ltd 


The Bank of Tokyo, Ltd 

acted as 


acted as 


acted as 


acted as 


acted as 


acted as 

Manager 


Co-Agent 


Arranger 


Sole Lender 


Lead Manager 


Arranger 







SlTHEflNDEPENDENCE 


SUPERIOR RECYCLED 


UNITED WHOLESALE, INC 


BAKER & TAYLOR 


OAKWOOD HOMES 


UB VEHICLE TRUST 

POWER PARTNERS, UP. 


FIBER CORPORATION 






CORPORATION 


NO. 91 



(A subsidiary of 




Information and 





Gas-fired co-generation facility 


MINNESOTA POWER) 




services 


Installment sales contract 


Sale of debt participation in 








securitization 


leveraged lease financings of 

U.SA. 


Project financing of a recycled 


Secured revolving line of credit 


Revolving credit facility 




automobiles and light trucks 



" pulp facility 









Union Bank 











acted as : 


Arranged by 


Arranged and Agented by 


Arranged by 


Arranged by 


Arranged by 

Agent 


BOT Financial Corporation 


BOT financial Corporation 


BOT Financial Corporation 


BOT Financial Corporation 


BOT Financial Services, Inc. 


FINANCIAL ADVISORY SERVICES 


PER W.AJA STEEL 


LEYTE GEOTHERMAL POWER 


U.S. PREFERRED STOCK 


ESTABLISHMENT of 

Steel Making Shop and 


PLANT PROJECT 


issued by 


GERMAN JOINT VENTURE 

Section Mill Project 




DAINICHISEIKA. INC. .. 


of 



Philippines 


(Subsidiary of DAINICHISEIKA COLOR & 


SVENSKA 

Malaysia 


Kanematsu Corporation 


CHEMICALS MPG. CO- LTD.) 


(Subsidiary of CHIDORIYA) 

Tomen Corporation 




The Bank of Tokyo, Ltd 







The Bank of Tokyo Trust Company 







acted as 



The Bank of Tokyo, Ltd 


The Bank of Tokyo, Ltd 


Financial Advisors to 


The Bank of Tokyo, Lid 

1 acted as 


acted as 


DAINICHISEIKA COLOR & 


acted as 

Financial Advisor 


financial Advisor 


CHEMICALS MFG. CO., LTD. 


Financial Advisor 


• Tokyo 

The Bank of Tokyo, Ltd. Head Office 

Corporate Advisory Division 

(03) 3245-9449 

• DOssekJorf 

The Bank of Tokyo, Ltd. 

Financial Services Department 

(211)36670 

• Los Angeles 

Union Bank (Bank of Tokyo Group) 
Corporate Advisory Department 

(213) 236-5685 

Project Finance Division 

• Osaka 

The Bank of Tokyo, Ltd. Osaka Office 

(03) 3245-9665 

• Madrid 

The Bank of Tokyo, Ltd. 

(1)435-2536 

• Toronto 

The Bank of Tokyo Canada 

(416)865-0220 - 

Financial Advisory Department 

• London 

(06) 201-9015 

• Milano 

The Bank of Tokyo, Ltd. 

(02) 669931 

• Hong Kong 

The Bank of Tokyo, Ltd. 

862-7888 

The Bank of Tokyo, Ltd. 

Financial Services Department 

(071)216-1050 

• New York 

- 

• Singapore 


Bank of Tokyo International Limited 

Special Finance Division 

• Paris 

The Bank of Tokyo, Ltd. 

(071)628-8111 

(1)42-61-58-33 

The Bank of Tokyo Trust Company 
Financial Services Department 

• Boston 

(212) 782-4120 

The Bank of Tokyo, Ltd. 

• Sydney 

Bank of Tokyo Australia Ltd. 

2208111 

(2) 255-1111 

Banque Europtenne de Tokyo SJL 

(1)49-26-49-92 

BOT Financial Corporation 

(617) 345-5613 










COMPANY NEWS: UK 


Disposal profits boost outcome by £ 1.1m 

British Polythene rises 28% 


By David Wighton 

British Polythene Industries. 
Europe's largest polythene film 
producer, increased its profits 
by 28 per cent to £ 15.4m in 1993 
helped by a £20.6m rights issue 
which reduced interest charges 
and Siam of disposal profits. 

Underlying earnings on a 
fully diluted basis edged up 
from 24.75p to 25p. 

Turnover rose by a fifth to 
£212m and Mr Cameron 
McLatchie, chairman, pre- 
dicted it would top £250m this 
year. “Our b usiness is growing, 
and with considerable success, 
in difficult conditions,’' he said. 

Half of group sales go to Brit- 
ish food retailers, either as 
plastic bags or transit packag- 
ing. and British Polythene's 
shares have underperformed 


on worries about a potential 
squeeze on margins from the 
hard-pressed supermarkets. 

Operating margins slipped 
from 8.19 per cent to 7.84 per 
cent, with profits from con- 
tinuing operations up only 
2 per cent to £14JSn on turn- 
over 9 per cent higher at 
£193m. 

Mr McLatchie said that 
excluding £500.000 of reorgani- 
sation costs there was an 
improvement in margins 
between the two halves. But 
this was partly because of a 
reduction in raw materials 
costs. 

"Retailers are being very dif- 
ficult, but they have been diffi- 
cult for a long time.” he said. 

Mr McLatchie said that some 
retailers had defected after 
the £8.4m acquisition of a rival 


plastic bag manufacturer from 
Sonoco a year ago. “They 
are not comfortable with 
sole suppliers." But he stressed 
that the loss of customers had 
been expected. "We have kept 
half of the real business and 
moved the spare equipment to 
China." 

British Polythene has formed 
a joint venture in China which 
will start producing small, thin 
retail bags towards the end of 
the year. 

The company will offer 
retailers the choice of UK or 
Chinese-made bags, but Mr 
McLatchie warned: "If retailers 
end op buying everything from 
China there will no customers 
left for their shops." 

The final dividend rises to 
7.75p for a total up 15 per cent 
to 11.5p. 


• COMMENT 

The largest supplier in a 
mature commodity market, 
British Polythene has shown it 
can generate good profits 
growth by hoovering up its 
smaller, often struggling, 
rivals. This cannot go on for 
ever - though with 25 per cent 
of the market there appears 
enough scope for the next few 
years - and Mr McLatchie is 
not optimistic that the frustra- 
ting search for good acquisi- 
tions in Europe will bear fruit 
But the more immediate worry 
is the threat to marg ins from 
cost-cutting supermarkets. The 
shares have picked up over the 
past month, and on forecasts of 
£l75m are now trading on 16 
timpg forward warning s- Until 
the trend in margins is clearer 
that InnTrs high enough. 


Gt Portland 
pays £5.9m 
for freehold 

Great Portland Estates, the 
property investment and 
development group, has 
acquired the freehold of Guild 
House, Swindon, for £5.9m 
cash. 

The 53,000 sq ft office build- 
ing, developed In 1980, is the 
headquarters of Book Club 
Associates, the Reed Interna- 
tional /Doubleday Joint ven- 
ture. 

The current lease runs untQ 
2005, at an annual rent of 
£570,000, subject to review in 
1995 and 2000. 

Mr Patrick Hall, deputy 
managing director, said: 
“Since the commencement 
of our rights issne In June 
last year, we have now 
Invested a total of more than 
£82m in new acquisitions, 
which in a full year should 
add more than £7.4m to rental 
income.” 


Perkins Foods down sharply 


By Maggie Uny 

Oversupply in the pirn market, a move to a 
new factory and losses in canned mushrooms 
contributed to a £2.5m fall in .1993 pre-tax profits 
to £19.6m at Perkins Foods before exceptional 
costs of £3 5m. 

As promised, the final dividend is being held 
at 2.7p to give a 4.45p (4.4p) total The shares 
rose l’Ap to 76Vip. 

Perkins grew rapidly through acquisition in 
the late 1980s. Mr Howard Phillips, chief execu- 
tive, said the emphasis now was on cost reduc- 
tion and productivity. The group had won some 
significant new supermarket customers. 

Mr Ian Blackburn, finance director, said the 
group was protected from the competition 
between UK supermarket groups as only about 
a quarter of its sales were in the UK. with the 
Netherlands accounting for more than half. 

Group turnover rose 8 per cent to £382. Lm, 
with volume growth of 6 per cent in the group's 
manufacturing activities. Operating marg ins feU 
from 7.1 per cent to 55 per cent 

In the frozen food division, which now 
includes mushrooms, operating profits fell from 
£15. 6m to via 6m The division suffered the prob- 
lems in the pizza market, but also had the 
benefit of a £l-2m insurance gain in 1992 from a 
fire at a pizza plant Perkins has closed Sunbird, 


its lossmaking frozen vegetable business, 
treated as a discontinued business. 

Chilled foods profits fell from £45m to SMm, 
largely because of extra costs, of up to £lm, at 
Baxter meat products when production was 
moved. Fresh produce recovered ground lost in 
1992 when bumper crops hit prices. Profits there 
were up from £5. 7m to £7 An. 

Interest charges took w arn (£L7m). Earnings 
per share were 45p (9.5p) after exceptional 

• COMMENT 

If 1992 was billed as a year of consolidation for 
Perkins. 1993 was one of rationalisation. The 
acquisition record is now shown up to be mixed 
at best, with companies bought now being 
closed. With earn-outs coming to an end some 
vendors are heading for the door, not that Per- 
kins is sorry to see them go as new management 
is being brought in. Another £l.7m of deferred 
consideration could be due in 1994, of which 
perhaps half will be taken in shares. Then in 
1997 redemption of the first D-Mark convertibles 
loom, although Perkins now has the facilities in 
place to cope. Interest cover may look good at 9 
times, but that ignores preference dividends of 
around £3.7m after tax. After two down years, a 
yield of 7V* per cent says more about the shares 
than a prospective p/e of 9% on tentative fore- 
casts of £20m for 1994. 


Bristol 
& West 
expands 
to £41. 3m 

By Anson Smith 

Bristol & West building 
society, the UK's tenth largest, 
yesterday announced pre-tax 
profits of £4l-3m for the year 
to end-December 1993, a rise of 

5.6 per cent on the £39. lm for 
1992. 

It also restated its 1992 prof- 
its as £I4m in the fight of new 
accounting standards which 
affect how the sale of some 
freehold property is presented. 

The society's provisions for 
bad and doubtful debts fell by 

14.6 per cent, to £635m 
against £74. lm. 

Mr John Burke, chief execu- 
tive, said that the provisions 
charge underlined the fact 
that until a relatively recent 
change in approach, the soci- 
ety had sought to reach 
arrangements with borrowers 
in arrears rather than moving 
more quickly to repossession. 

The society said that the vol- 
ume of residential mortgage 
arrears fell by 45 per cent to 
£71m. 

Mortgage advances rose by 

11.6 per cent to £1.1 lbn 
(ES97m). while net receipts of 
retail savings more than don- 
bled to £230m (£101m). 

B&W's wholesale funding 
fell to 25.1 per cent of shares 
and deposits, against 275 per 
emit in 1992. Total assets rose 
to £S.24hn (£7.73bn). 

Mr Burke said that the soci- 
ety was pressing ahead with 
the sale of 46 branches in 
estate agent chains Hamptons 
and Bristol & West Property 
Services. The remaining 
branches - about 70 in Hamp- 
tons and about 30 in BWPS - 
will be retained. 

The groop’s cost/income 
ratio was 56 per cent, down 
slightly from 57 per cent in 
1992. The society’s cost income 
ratio was 44 per cent (45 per 
cent). 


Candover Investments 
optimistic on prospects 


By Paid Taylor 

Candover Investments, an 
investment trust specialising 
in management buy-outs, 
increased net assets per share 
by 16 per cent in 1993 but pre- 
tax profits fell by 19 per cent to 
£3An. 

Mr Roger Brooke, chairman, 
said that although 1993 had 
been "a relatively quiet year, 
both for investments and real- 
isations" there had been sev- 
eral encouraging new develop- 
ments towards the year-end 
“which should herald a period 
of greater activity." 

In particular, he said, the 
profits of many of Candover’s 
investee companies had bene- 
fited sufficiently from the 
improved economic environ- 
ment to enable them to plan a 
listing for their shares this 
year or next. 

About eight portfolio compa- 
nies are currently planning flo- 
tations which, if completed 
successfully, could lead to a 

strong uplift in Candover’s net 

asset value. 

Net assets rose by 16 per 
cent to £69.4m (£59An) while 
net assets per share rose to 



Roger Brooke: expects a period 
of greater activity 

3l0p compared with 267p at the 
end of 1992 - a smaller 
in c rea se than the 23 per cent 
gain in the FT-SE-A All-Share 
Index. 

However, net assets have 
shown compound growth of 21 
per cent in the nine years since 
Candover was listed. The FT- 
SE-A All-Share Index has risen 
12 per cent a year over the 
same period. 

The decline in pre-tax prof- 


its. from £4.lm in 1392, was due 
partly to the impact of lower 
interest rates, which reduced 
the return on Candoveris cash 
balances. The company had 
cash of ££.6m at the year end. 
In addition the group earned 
fewer financing fees. 

In a quiet year for transac- 
tions Candover. together with 
its funds wider management, 
invested in two larger buy- 
outs - Gardner Merchant 
and Economic insurance - 
three smaller buy-outs 
and a number of follow-up 
investments in portfolio com- 
panies. 

The main realisation during 
the year was the flotation of 
Motor World in February 1993. 
Since the year-end Midland 
Independent Newspapers has 
also applied for a listing. 

Fully diluted earnings per 
share fell by 24.4 per cent to 
10.33P (13.67P) but, because of 
the "pood prospects for further 
growth of both assets and prof- 
its." the final dividend is being 
increased by 8.5 per cent to 
7.05p (6.5p) making a total of 
Up (1025p). 

The shares closed up 2p at 
337p. 


Decline in furniture division 
cuts Cornwell Parker to £1.3m 


By David BtackweO 

A sharp decline in the 
furniture division’s contribu- 
tion helped to halve pre-tax 
profits at Cornwell Parker, the 
furniture and fabrics group, 
from raqfrn to £1.26m for the 
six months to January 3L 
Group turnover eased to 
£43m, against £43.1m, which 
included £1.18m from discon- 
tinued operations. Earnings 
per share fell from *L6p to l-8p. 
but the interim dividend is 
being maintained at I.7p. 


Mr Martin Jourdan. chair- 
man, described the opening six 
months as extremely difficult 
However he believed that the 
worst was behind it for the fur- 
niture division “so long ns the 
imminent increases in personal 
taxation do not seriously affect 
demand." 

Operating profits from the 
furniture division, which 
includes Parker Knoll, fell 
from £2. 32m to £426.000 on 
turnover of £22.7m (£23.6ml Mr 
Jourdan said the over-50s tar- 
get market for Parker Knoll 


chairs had been affected by ' 
lower interest rates, which had 
reduced older people's dispos- 
able income. 

An attack on a younger mar- ' 
ket had not been “as successful 
as we had hoped", however, in 
reverting to the core market * 
Parker Knoll now had signifi- 
cantly higher orders than a 
year ago. 

The fabrics business turned 
in a strong performance, with ‘ 
operating profits up 19 per cent 
from £923,000 to n.l m on turn- 
over up from £l83m to £20 An. ‘ 


f 


* 


INTERNATIONAL ECONOMIC INDICATORS: PRICES AND COMPETITIVENESS 


Yaarfy figures are atmm in Max farm with me common base year & 1385. The reel exchange tala to an Index throughout; other quarterly and monttty S gum show the percentage change caret me cc rreapondmq period in the preman year and me pcattfuo untom oftenriee stated. 



■ UNITED STATES 

Cteerar Ptkxtactr ri 

IM 

ttwr 

M 

■oragt 

rata 

■ JAPAN 

Cfteonsr Nte 


lk* 

tow 

Bte 

■ GERMANY 

Cira. Pnstater 


u* 

Iter 


■ FRANCE 

Camr — 

priest plow 

Eaten* 

tw 

IM 

Nte 

Mteag* 

IM* 

■ ITALY 

pdCM 

Piateor 

«rt*» 

Mnp 

IM 

Mae 

coats 

M 

■HM|I 

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■ UNITED KINGDOM 

CM MW 
prira pitots ts*P 

IM 

Iter 

CM 

M 

■■mb* 


ises 

100.0 

100.0 

100.0 

100.0 

100.0 

100.0 

100.0 

100.0 

100.0 

1002 

100.0 

1002 

1002 

100.0 

1002 

1002 

100.0 

100.0 

100.0 

1002 

1002 

100.0 

1002 

1002 

100.0 

1020 

100.0 

1020 

100.0 

loo-o 

1985 - 

1986 

1015 

98.8 

1022 

99.4 

85.0 

1002 

952 

101.4 

103.4 

1182 

99.9 

972 

103.8 

1032 

1072 

102.5 

972 

1042 

1012 

103.4 

106.1 

1002 

104.8 

102.7 

1013 

103.4 

101.4 

107.7 

104.5 

942 

1888 

1987 

105.6 

100.7 

103.8 

98.7 

75-2 

101-2 

922 

103.1 

100.8 

1232 

100.1 

95.1 

ioa.o 

107.1 

111.0 

1052 

972 

107.8 

1032 

1042 

111.0 

1032 

1113 

1053 

1022 

107.7 

1043 

1162 

1029 

94.6 

1887 , 

1688 

109.9 

1032 

1089 

99.1 

71.1 

1022 

922 

1072 

962 

131.1 

101.4 

962 

113.0 

1062 

110.1 

1082 

1028 

111.1 

1032 

1022 

1162 

1062 

118.4 

1027 

1002 

1120 

1027 

1222 

1029 

102-4 

1868 . 

1989 

1152 

108.5 

110.0 

101.1 

742 

104.9 

942 

114.0 

96.1 

123.8 

1042 

992 

1172 

1082 

1072 

1122 

106.4 

115.4 

1052 

99.8 

1242 

113.1 

125.8 

1123 

1033 

121.8 

113.9 

1372 

1126 

1013 

1988 

1990 

121.5 

113.8 

naa 

1042 

73.4 

1082 

95.7 

120.1 

982 

1082 

1072 

101.0 

1232 

1102 

1102 

1162 

107.1 

120.5 

1092 

1032 

1312 

1172 

134.7 

1129 

1062 

1332 

121.0 

1521 

1232 

1023 

1990 . 

1991 

128.6 

1103 

117.3 

1072 

74.1 

111.8 

982 

1242 

101.8 

1142 

110.7 

103.4 

1312 

115.0 

108.4 

1202 

1052 

12S.8 

1132 

101.7 

140.3 

121.7 

1472 

1313 

1043 

1412 

1273 

162.4 

131.7 

106.1 

1981 

1998 

1993 

130.4 

134.3 

117.7 

1192 

1202 

123.4 

108-1 

105.4 

74.0 

76.4 

1132 

115.3 

952 

942 

125.6 

1252 

111.1 

118.1 

1332 

115.1 

1192 

1042 

1042 

138.8 

1212 

1112 

1122 

123.1 

125.6 

1042 

101.1 

1302 

1332 

1152 

1052 

1072 

147.7 

153.9 

124.0 

128.7 

1552 

1382 

101.4 

86.7 

1424 

1427 

1313 

1327 

1721 

180.9 

1333 

1322 

1033 

952 

1882 

1983 

1st qJr.1993 

32 

2.0 

ZB 

-12 

773 

12 

-1.1 

-02 

7.0 

1242 

42 

02 

na 

9.7 

1132 

Z1 

-22 


4.4 

109.4 

42 

a 1 

2.8 

4.4 

824 

1.8 

26 

4.7 

-27 

923 

1st qtr.1993 

2nd qtr.1993 

3rd qtr.1993 
«h qtr.1993 

March 1993 
April 

3 2 
ZB 
Z7 

3.1 

3-2 

2.0 

0.7 

03 

ZO 

zs 

2-5 

23 

3 JO 

23 

2.5 

-23 

-2.7 

-23 

-22 

-2.1 

75.8 

76.1 

762 

77.0 

75.0 

12 

12 

12 

-1 A 
-12 
-2.1 

0.7 

0.4 

02 

52 

4.7 

1322 

1402 

1372 

42 

42 

3.7 

-02 

-02 

-02 

na 

na 

aa. 

5.4 

12 

1112 

112,0 

112.3 

ZO 

22 

2.1 

-3.4 

-3.4 

-22 

na 

aa 

aa 

1092 

1062 

1072 

4.1 

43 

4.1 

29 

43 

3.9 

21 

4.1 

28 

620 

87.S 

85.1 

1.3 

1.6 

1.6 

4.0 

43 

29 

5.0 

4.4 

43 

-13 

-03 

03 

94.9 

98.7 

963 

2nd qtr.1903 
3rd qtr.1993 
4th qtr.1993 

12 

-12 

1.0 

26 

127.7 

42 

02 


82 

1132 

22 

aa. 

3.4 

aa 

109.6 

42 

i4 

2.7 

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843 

12 

27 

42 

-2.6 

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1993 March i 


SL2 

2.1 

23 

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1092 

42 

27 

26 

na 

65.1 

1.3 

4.0 

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953 

April- 


3.0 

1.3 

23 

-22 

752 


-1.5 









22 

aa 

- 

aa 

1092 

43 

29 

2.6 

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892 

13 

4.0 

43 

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95.1 

May 

duty 

Z8 

1-3 

23 

-23 

77.1 











13 

aa. 

2.6 

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108.5 

42 

4.1 

4.1 

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89.7 

72 

4.0 

43 

-02 

94.7 

Am . 

Mr 


2.8 

0.5 

23 

-2.7 

75.9 

12 



5.4 


42 



3-1 

1102 

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- 

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1062 

4.4 

42 

4.1 

na 

882 

1.4 

42 

5.0 

-1.0 

97.0 

September 

October 

November 

December 

January 1994 

February 

2.7 

2.8 

2.7 

2.8 
2.5 

0.4 

02 

0.3 

0.2 

0.2 

23 

23 

3.3 

33 

-ZB 

-ZB 

-22 

-3.7 

-2.0 

752 

752 

78.7 

772 

7 72 

12 

12 

02 

12 

1.4 

12 

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-2.1 

-2.1 

-22 

12 

02 

1.7 

-0.8 

5v4 

8.9 

42 

1392 

1382 

1382 

1352 

133.7 

4.0 

32 

32 

3.7 

32 

32 

-02 

-02 

-02 

-0.1 


1.4 

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-32 

113.7 

1132 

112.1 

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106.7 

106.4 
1072 

107.5 

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42 

42 

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4.4 

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27 

4.1 

42 

29 

29 

na 

na 

na 

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826 

821 

85.0 

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843 

1.7 

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1A 

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1.9 
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3.6 

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33 

4.5 

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4.0 

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-03 

03 

03 

0.7 

12 

963 

982 

953 

963 

97.4 

99.1 

August J 
September ; 
October- 

llreiemhte 
IwVWhvw . 

December ' 
1894 January 1 


8°«to, Italy - total producer prkws, UK - manutachrad products. Earnings Mate not seoecnaly adjusted, rafora to earnings h iraewfecturing flicwpt Franca 
countries - manufacturing Industry. Rate exchange rate; JP Morgan real effective exchange rate index versus IS Mustrtal country cmenctes, adjusted for change 


Nra York. Consumer pri ces : not aea eot W y actuated. Pnxfcjcer priooe: not smsonaBy adjusted, US - 
end Italy (rage rates In industry). Hourly except Japan (monthly) and UK (weddy). (Mt 
In rotative wholesale price of domestic mantriactuea. A fal in the Index IncS ca te a im pro ved 


flntahad goods, Japan - manufactured goods. Germany - industrial products. Franco - Intermedia , 
seeeonaiy arfustad, measured in domestic curenctes. Germany - mining and manufadutag. after , 
co mp eti t i veness. 


Multicurrency Capability 


n,«WHiir<iM««n<iii 


Republic of Italy 

7300300300300 

ys per c ent - Notw dneMOl 



Province of Ontario 
CaiLSuaynqooo 

ZS per cent. Banda due 2024 




eg Kyocera 

Kyocera Corporation 
US $500000000 


IS2S percent- Notes due 1998 
nrifhVWiinnts 



In January 1994, Daiwa was a Lead or Joint-Lead Manager 
in the above transactions, totalling over US. $5 billion. 


DAIWA 


This advertisement has been issued and approved by Daiwa Europe Untiled, a member ofSFA and LSE. 


Chargeurs 



1993 results 

(FF millions) 

1993 

1992 

Net sales 

8,602 

10,080 

Operating income 

69 

357 

Net income/|lo5s) 

(97) 

724 

Capital expenditures 

730 

750 

Net equity per share (FF) 

1,069.22 

1,119.28 


Despite an improvement in its results during the second half of 
1993, Chargeurs recorded a 17.4% decline in sales and a loss 
of FF 97 million for the year as a whole. These weak results were 
due to the severe recession in European economies, with the 
exception of Great Britain, and restructuring costs and provisions 
of FF 408 million. 

The outlook for 1994 is brighter. In the industrial sector, Chargeurs 
will benefit from having brought its production capacity in line 
with demand in 1993 and from sales growth, particularly in the 
United States, the Far East and Great Britain. For entertainment, 
the full year accounting of BSkyB by the equity method will have 
a favorable impact on results. 




CHARGEURS 

Chargeurs - 5. boulevard Malesherbes 7S008 Paris 


This advertisement is issued in compliance with the require- 
ments of The International Stock Exchange of the United 
Kingdom and the Republic of Ireland Limited (the “London 
Stock E xc h ange") and appears as a matter of record only. It 
does not constitute an invitation to the public to subscribe for or 
purchase any securities of Franklin Resources. Inc. 

Application has been made to the London Stock Exchange for 

all of the issued common stock of US$0.10 each m the Company 
to be admitted to the Official List. Dealings arc expected to 
commence on Uth March, 1994. 



Authorised 

500,000.000 


FRANKLIN RESOURCES, INC. 

(Incorporated with limited liability in the 
State of Delaware, United States of America) 

INTRODUCTION 

to 

THE OFFICIAL LIST 

sponsored by 

CAZENOVE & CO. 

Issued and fully paid 
82.253,292 

in common stock of the Company of 
par value US$0.10 each 

Franlj™ ReMuras, Inc. i, a large financial services o^niation 

X hcad ‘*r t ? re “"“0 in San Marco. California Fran- 
Min prima ry brancss » providing investment managemenu 
="d drsrribrmon services for ihc funds operated 

usirn ahm-n 3,s ‘ ■*» comprised 

USSU4.. bilbon of funds under management. ^ 

Ustfag partiorlars have been published and copies may be 

l»» from thTcompany 
AanourcemenQ Office. London Slock Exchange. London Slock 
Exdtange TWe^ CapcICoun Entrance, off Ranholomc* Une. 

Mareb 1994 o/rf “ MKm “"ty- “P 1“ and including 10th 
March, 1994 or during normul business horn* on any wekday 
(Saturdays and public holidivt . JV “ 

22nd March, 1994 from: P d) up IO and “ dud,n » 

13 At ball Crescent 

Edinburgh, EH3 8 HA 2 ££ 

0 , „ . London, EC2R 7AN 

8th March. 1994 





















29 



till*' 



"etits 

speets 


Kv divisio, 

irker to fj: 


«***!- fcitautKHi 


A 




FINANCIA L. TIMES TUESD AY MARCH 8 1994 . 

■ COMPANY NEWS: UK 


Cautionary tale for investors 

Peter Marsh looks at Porton International’s disappointing record 


P ortou International, the 
biotechnology company 
with a disappointin g 
record which provides a can- 
tionary tale for potential inves- 
tors in the sector, is close to a 
decision to pat itself ap for 
sale. 

The privately owned com- 
pany has engaged merchant 
bankers Kleinwort Benson to 
examine -whether other phar- 
maceutical businesses mi g h t 
be interested in buying it. 

A stock market flotation is 
another option .likely to be con- 
sidered. 

The aim of the initiative is to 
provide a possible escape route 
for institutional investors 
which put £76m into Porton. 
during the 1980s on. the basis of 
profits projections which the 
company has failed .to deliver. 

In its last full year in 1992 
Porton turned in a pre-tax . 
profit of £3m on sales of 
£49.un. 

Several of the investors have 
expressed disappointment that 
the- company foiled to live up 
to- early expectations. But fol- 
lowing mflwflgpmcHt charges 
at Porton the investors now 
say they are relatively confi- 
dent about its immediate 
future. 

One investor said: “There 
has been a sea change in the 
way the company is being run. 
There is a much greater will- 
ingness to tell shareholders 
what is happening and it's got 
much better credibility with 
customers.” 

Another investor said: 
“There's no doubt that collec- 
tively a lot of Institutions made 
a minfrafeg in hacking thin com- 
pany in the way we did but we 
are generally more hopeful 
now.” 

Porton was set up in 1982 by 
Mr Wensley Haydon-BaiDie, its 
former chairman. He stepped 
down from executive responsi- 
bilities nearly two years ago 
after a series of discussions 
with shareholders and other 
executives. 

Mr Haydan-Bafllie’s re place - 
men t as chairman Jg Lord f!ML 
ver, who is chair man of 
En glish nhina clays and is the 
former head of the Cranfield 
Institute of Technology. 

Mr Haydon-Bafllie, who stni 
owns about a third of the com- _ 
pany, raised the finance for 
Porton from several Wg institu- 
tional investors including 
and General, Sun ■ ADi- .. 
anca, Lloyds Batik and the pen- 




Tony Goven the company is close to putting itself up lhrrale 
after failing to meet its drug development and profit targets 


sion funds of British Telecom, 
Imperial nhaminai industries 
and the Post Office. 

He raised eyebrows by sell- 
ing some of Ms shares in Por- 
ton to other investors in 1986 
for 224m. In 1987 and 1988 he 
obtained dividend payments 
from the company totalling 
some £l.im, in addition to 
drawing a salary of about 
£95^)00 a year. 

Porton was considered 
lmimunl among biotechnology 
companies in the UK and us 
for the large amount of cash 
which it -raised early in Its life 
and the fact that the founder 
was able to make a lot of 
money out of the company 
before the company had proved 
itself. 

The company placed much 
store in its early financial pro- 
jections on an anti-herpes med- 
ication which took longer than 
expected to develop M then 
four years ago failed to prove 
effective in clinical trials. 

Partly as a result of this set- 
back, the company failed by a 
long chalk to achieve' the profit 
of £140.6&i in 1990 which inves- 
tors had been told in a plan- 
ning document issued in.. 1966 
might be achievable. 


The company became a 
byword for spending large 
sums of money on its opulent 
office In Mayfoir and also on 

Mr John Burke, the compa- 
ny's former chief executive 
who left last August, was paid 
£450,000 in 1989, {ratting him 
among the top 50 UK manufac- 
turing executives that year in 
terms of salary. 

As part of his settlement 
with, the company on his 
departure Mr Burke received a 
payment of £660,000 which will 
be charged to the accounts in 
the second half of last year. 


M r Haydon-Bafllie also 
caused a stir by 
employing a per- 
sonal security adviser, a for- 
mer member of the Special Air 
Service, to ward off inquiries 
from journalists. 

This dislike for publicity 
meant that several BharghoUi . 
ers in the mid 1980s accused 
the company • of excessive 
secrecy. 

They said this made 
it hard fin- them to find out 
details, of, Jiie .{Company's 
progress. " 

Mr Tony Gover, a long-time 


business associate of Mr Hay- 
don-Bafllie who helped him set 
up Porton and is the compa- 
ny’s vice chairman , says the 
company is trying to put such 
problems behind it and adopt a 
more conventional manage- 
ment style. “We are in a differ- 
ent era now,” he says. - 

Mr Alistair Stokes, brought 
to as chief operating officer to 
1992 from Glaxo, the UK phar- 
maceuticals group, .says: “We 
may not have such a big future 
as we thoug ht, at on«? time, but 
it’s still a bright future.” 

One of the changes is that 
the company has established 
quarterly meetings with its 
shareholders In London and 
Edinburgh to keep- them 
informed. 

As for Its products, rather 

than prwp^jmiBing Hip develop- 
ment of new medicines, the 
company is concentrating on 
cranking up sales of its portfo- 
lio of drugs mainly aiwnarf at 
hospital use for treating rela- 
tively rare conditions. 

These include Dysport, a 
medicine used to treat neuro- 
muscular conditions, and 
Erwinase for leukaemia. 

The company also mflk<« a | 

range of vaccines, for use 
mainly in the defence industry 
for protection against certain 
kinds of chemical warfare 
a gents , and has research agree- 
ments to exploit scientific 
advances at St George’s Medi- 
cal School in London and the 
Centre for Applied Microbiol- 
ogy and Research near Salis- 
bury in Wiltshire. 

Kleinwort Benson is doe to 
finish its review this spring. 
Among the options likely to be 
considered for Porton are a 
. merger with another drugs 
group or a flotation on rite 

Stock ftTchnng p 

One person dose to the dis- 
cussions said he would “be sur- 
prised” if a bigger pharmaceu- 
tical company to mrpwxtg 
some interest in bidding for 
Hib group. 

A pharmaceuticals analyst 
said: “As a small vertically 
integrated pharmaceuticals 
operation, with a range of facil- 
ities from research laboratories 
to tried and tested production 
plants, Porton has hewn quite 
successfnL 

Ttis a different image to the 
one Porton was trying to proj- 
ect at one stage as a developer 
of world beating medicines, 
but it’s probably more realis- 
tic." 


Hartons losses reduced to £4.52m 
in depressed market conditions 


Hartons Group, the Sheffield- 
based distributor of semi-fin- 
ished plastics, yesterday 
reported a £L73m reduction in 
pre-tax losses to £4J>2m for the 
year to December 3L 
Mr -Charles Lenox-Conyn- 
gfaflm, chairman, said “consid- 
erable strides” had been made 
to resolve the main areas of 
concern at a time when mar- 
kets remained depressed by the 
recession. 


He said the 1993 deficit was 
mainly because of poor perfor- 
mances In France and Spain 
where attributable losses 
amounted to £3.S7m and 
£605,000 respectively. 

to the UK, trading activities 
produced higher profits, to the 
Benelux countries, a profit was 
achieved in the second half 
after a weak start to the year. 

Turnover of continuing 
operations totalled £47m 


(£51 .3m), generating operating 
profits of £548,000 (£544,000). 
Losses per share were cut from 
85p to 5.flp. The preference div- 
idend has again been deferred. 

Hartons will concentrate all 
of its resources on tha develop- 
ment of Us distribution busi- 
nesses in the UK and the Bene- 
lux countries following the sale 
of its French subsidiary. Com- 
pletion is expected tins month. 

The group continued to gen- 


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PBPUBS AND DOWNS 

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MONEY 




FINANCIAL flMtS 


erate cash and reduce borrow- 
ings throughout 1993. The sale 
of the French offshoot will 
improve the position further, 
leaving hank borrowings at 
about £7.5m against £13. 1m at 
the beginning of 1993. 

Noting a recent rise to the 
share price the directors said 
proposals were being consid- 
ered which might or might not 
inefi to a substantial acquisi- 
tion. 


IN BRIEF 


ANDAMAN RESOURCES is to 
talks with a view to acquiring 
a number of revenue-producing 
businesses. Consideration for 
the proposed transactions 
would be funded via a share 
placing. 

BABCOCK INTERNATIONAL 
has exchanged contracts for 
the sale and leaseback of 
Woodall-Duckbam House. The 
property has been sold tor 
£16m to Legal & General 
Assurance Society and has 
been leased back for 25 
l years. 

BRADSTOCK GROUP has 
agreed torn for the acquisi- 
tion of 918 non-voting A shares 
and 500 voting preference B 
shares - 51 per cent and 
25 per cent of the issued 
capitals respectively - of its 
Bradstock Hamilton subsid- 
iary. 

CASTLE CAIRN Investment 
Trust has received shareholder 
approval to change its name to 
Ptarmigan International Capi- 
tal Trust 

CRT GROUP has created a new 
multi-media publishing divi- 
sion and recruited Mr Mark 
Edwards from Microsoft to 
iw»a d the operation. 

SHEFFIELD INSULATIONS , 
has received valid acceptances : 
to respect of 631m (94.4 per i 
cent) ordinary shares of I 
Freeman Group, for which it 
has made a recommended 
offer. The offer has been 
declared unconditional in all 
respects. 

TELSPEC. the electronic tele- 
connmmfcatiops company, has 
entered a joint venture with 
Tesla Stropkov of Slovakia for 
marketing and field support in 
eastern Europe of Telspec’s 
products. Telspec has 67 per 
cent of the joint venture. 




my Silcock Express is in talks 
with Toleman Holdings regard- 
ing the acquisition of Tole- 
man’s vehicle distribution 
operations. 


N\ 


INDUSTRIVARDEN 




Definitive accounts report for 1993 

B Consolidated earnings after financial items, but before „ " _ , . u 

sales of listed stocks, tolled SEK 366M [258). Including ^ "» CPN 

sales of listed stocks, consolidated earnings amounted to ?? 

SEK864M (229}. ■ ■ 

250 “ 

■ The value of the portfolio of listed stocks on Decern- ^ 

ber 31, 1993, was SEK 10,048 m (6,513). Adjusted for 
purchases and sales, the value of the portfolio rose by 150 
66 percent- The General Index rose by 54 percent 100 

■ On February 28, 1994, the value of the portfolio of 50 

listed stocks was SEK 10,907M, with hidden reserves o „ 

totaling SEK 6,900M. Adjusted for net purchases of 1990 1991 1992 1993 

listed stocks, totaling SEK 369M, this represents an ' — 

increase of 5 percent since year-end 1993, compared 
with a 10 percent increase in the General Index. 



Market value of listed stock port- 
folio and hidden reserves 


SEKM ■ Book value ■ 
12,000 

10000 

8,000 


I Hidden reserves 


1990- 1891 1992 1993 F0b28. 

1994 


■ Inductus' earnings after financial items more than 
doubled, totaling SEK 283M (128). 

■ PLM’s earnings after financial items totaled SEK 82M 
(220), which corresponds with the full-year forecast 
presented in the 1993 interim report. 

■ Net asset value at year-end was calculated at SEK 301 
(1 86) per share and CPN. Net asset value as per 
February 28, 1994, is calculated at SEK 310 per share 
and CPN. 

■ The Board of Directors proposes that the dividend be 
increased by SEK 1 to SEK 9 per share. CPN interest 
would thus amount to SEK 10.35 per CPN. 


AB Industriv&rden 

Box 5403, S-1 14 84 Stockholm, Sweden 
Phone +46 8 666 64 00, Fax +46 8 661 46 28 


[Birmingham 
M id shires I 


Building Society 


£150,000,000 


Floating Race Notes 
Due 1995 


Inrerest Race 
5.225% per annum 

♦ 

Inrerest Period: 

7ch March, 1994 to • 
7th June, 1994 

♦ 

Interest Amount per 
£5,000 Note due 
7th June, 1994: £65.85 

♦ 

Interest Amounr per 
£50,000 Note due 
7chjunc, 1994: £658.49 

♦ 

Agent Bank 

Baring Brodies A Co., Limited 


■•I* 


Sime 

Darby 


Sime Darby Group 
INTERIM ANNOUNCEMENT 

HIGHLIGHTS OF UNAUDITED CONSOLIDATED RESULTS FOR THE HALF-YEAR ENDED 

31ST DECEMBER 1993 


The Kingdom of 
Denmark 

USS1 .000,000,000 
Floating rate notes 1997 

The notes will bear interest 
at 3.70313% per annum from 
& March 1994 to 8 June 1994. 
Interest payable an 8 June 
1994 mill amount As US$9.46 
per US$1,000, US$94.64 per 
USS 10.000 and USS94&36 per 
US$100,000 note. 

Agent: Morgan Guaranty 
Trust Company 



1993 

RM Million 

1992 

RM Million 

1 

j 

TURNOVER 

3,913.0 

3,324.6 

i 

f 

PROFIT BEFORE TAXATION 

419.7 

374.7 

i 

t 

J 

4 

EARNINGS 

203.9 

170.9 

EXTRAORDINARY PROFITS 

19.1 

1.7 

i 


Sen 

Sen 

. i 

EARNINGS PER SHARE 

13.0 

10.9 

4 

. V 

j 

DIVIDENDS PER SHARE - GROSS 

3.5 

3.5 

i 

i 


§] Profit before tax for the six months to 31st December 1993 is 12% 
a higher than that for the previous half-year. Higher profits were 

& recorded by most of the divisions, particularly the Malaysia and 

Hong Kong regions. 


*>?y 


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^PWjClALT lMES TUES DAV MARCH S 1W 

COMMODITIES AND AGRICULTURE - 


Cominco in C$145m plan 
to replace Trail smelter 


By Bernard Simon in Toronto 

Cominco. the Vancouver-based 
metals producer, will spend 
C$145m (US$106 ,5m) to replace 
the lead smelter at Trail. Brit- 
ish Columbia, which has failed 
to meet expectations since it 
was installed four years ago. 

Cominco has abandoned the 
German technology, known as 
QSL. on which the troubled 
facility was based. Instead, it 
has turned to a process known 
as Kivcet. which is in use at a 
Smelter in Kaa^ltlistan 

The QSL technology was 
supplied by Lurgi, a subsidiary 
of Metallgesellscbaft, the Ger- 
man metals and industrial 
group. Cominco has demanded 


compensation for the failed 
technology. An official said 
negotiations with Lurgi were 
continuing. 

Cominco also announced a 
C$25m plan to expand zinc pro- 
duction at Trail, which is one 
of the world’s largest metallur- 
gical complexes. The two pro- 
jects will increase Trail's 
annual lead smelting capacity 
from 100,000 to 120,000 tonnes, 
and zinc capacity from 230,000 
to 320,000 tonnes. 

The Kivcet lead smelter, 
which is expected to be com- 
missioned in 1996, will reduce 
lead emissions by 70-80 per 
cent and alleviate another pol- 
lution concern by consuming 
large stockpiles of residues. 


The expansions have been 
delayed by wrangling between 
Cominco and the British 
Columbia authorities over indi- 
rect taxes and the ownership of 
two hydro-electric dams near 
Trail owned by Cominco. 

As part of the decision to go 
ahead with the Trail expan- 
sion, the province will pay 
Cominco C$5 1.5m for the rights 
to expand the dams' generating 
capacity. Cominco will retain a 
15 per cent Interest in income 
from the dams, starting once 
the lead and zinc expansion 
projects have been paid off. 

The QSL smelter operated 
briefly after it was completed 
In late 1989, but has been idle 
since March 1990. 


Chile issues copper plan ultimatum 


By David PMng in Santiago 

The Cyprus Amax/Lac 
Minerals consortium, which 
last year offered $S55m for 51 
per cent of the El A bra copper 
deposit in Chile, has been 
given until May 15 to sign doc- 
uments. The ultimatum, deliv- 
ered by Codelco, Chile's state 
copper company and the pro- 
spective joint-venture partner 
of the US/Canadian consor- 
tium, carries with it the possi- 
bility of legal action. 

If the consortium backed 
down on its original offer, 
“Codelco has the possibility to 
reject it. . . and to use the 
courts to get compensation for 
any losses suffered”, said Mr 
Jorge Bande, Codelco’s 
vice-president for development 
The consortium last month 


postponed the agreement after 
discovering that ore grades 
might be lower than originally 
estimated. 

Ms Patrice Merrln Best, 
vice-president corporate and 
Investor relations at Lac Min- 
erals, said the ’’due diligence 
process” had begun. This gave 
the consortium the right to 
make further tests, which 
would be completed by mid- 
May, she said. 

Asked whether statements 
from Codelco had soured nego- 
tiations, Ms Merrin Best said: 
“We have goodwill and good 
faith and both parties hope 
that this can go ahead.” She 
pointed out that Mr Bande had 
expressed confidence that an 
agreement could be worked 
out. 

A mining executive in Sant- 


iago said the public jostling 
between the joint-venture part- 
ners did not augur well “It’s a 
bit like getting married when 
you've started fighting even 
before you've got to the altar,” 
he said. 

Mr Jorge Rodriguez, acting 
Codelco president, said that if 
negotiations with the consor- 
tium broke down. Codelco 
would probably call a second 
round of bidding. 

Under Codelco' s original 
rules, failure to conclude a deal 
with the highest bidder was to 
have resulted automatically in 
the start of negotiations with 
the under bidder. An executive 
at BHP Minerals /Magma, sec- 
ond in last year's bidding, said 
he thought the consortium 
would still be interested in 
developing El Abra. 


Sugar rise ‘may run out of momentum’ 


By Richard Mooney 

The recent upturn advance In 
sugar prices may run out of 
momentum, says London trade 
house E. D. F. Man, because of 
a lack of “prompt physical off- 
take”. But it expects prices to 
be maintained by “a back- 


ground of tight fundamental 
[supply/demand] balance and 
the expectation of offtake later 
in the year. 

In its latest Sugar Situation 
report Man says the "much 
anticipated upward trek in 
prices has started despite per- 
sistent uncertainty surround- 


ing import demand prospects”. 

It notes that import demand 
has languished, “plagued by 
political procrastination and 
administrative delays". But, 
“surprisingly", market interest 
in potential Russian, Chinese 
and Indian demand “show lit- 
tle sign of fatigue”. 


EU‘ offers hope to eastern Europe’s fanners 

Alison Maitland on the prospect of an end to subsidised competition from the west 


T he prospect that the 
European Union might 
stop subsidising its farm 
exports to eastern Europe will 
be welcomed by the hard- 
pressed agricultural industries 
of the former communist bloc. 

EU export subsidies were 
strongly criticised at a confer- 
ence in Budapest last week by 
speakers from Hungary. 
Poland and the Czech republic, 
which are struggling to 
restructure their farms and 
food businesses as part of their 
drive towards EU membership. 

The subsidies will come 
under the spotlight at a Euro- 
pean Commission session later 
this month. It will examine 
how the C omm on Agricultural 
Policy and other EU systems 
can be modified to help eastern 
Europe progress towards the 
market economy and faster 
integration with the west 
Export aids, together with ad 
hoc EU trade barriers, were 
blamed for preventing east 
European produce from com- 
peting on world markets and 
for damaging the few remain- 
ing healthy sectors of agricul- 
ture in these countries. 

“One of the main reasons for 
our present problems is that 
our expectations of retrieving 
east European markets have 
not been fulfilled so far 
because we are regularly 
beaten in the competition on 
export subsidies, mainly by the 
exporters of the European 
Community,'’ said Mr Andras 
7am , managing director Of Ter- 
impex, a leading Hungarian 
meat trading company. 

Speakers at the Agra Europe 
conference - on agriculture, 
agribusiness and the food 


industry ih central and eastern 
Europe - gave graphic 
accounts of the plunge in pro- 
duction and farm employment 
that had followed the collapse 
of communism and the old 
Com earn trading system. 

In Poland, a foil in real 
Income and the freeing of agri- 
cultural and input prices has 
led to a halving in agricultural 
income compared with 1989. 
Poland is no longer a net 
exporter of meat, milk prod- 
ucts and eggs and only fruit 
and vegetable exports have 
held steady. 

The collapse of state forms, 
which exceptionally in Poland 
covered only about 20 per cent 
of arable land before the 
reforms, has pushed up the 
proportion of idle arable land 
from 1 per cent to 9 per cent 

In Hungary, 20 per cent less 
land was sown to crops last 
year than in 1991 because of a 
lack of finance and the uncer- 
tainty surrounding land owner- 
ship and privatisation. 
Drought made things worse, 
causing a 43 per cent fall in the 
cereal harvest compared with 
the average for 1988-1990. The 
average wheat yield was 3 
tonnes a hectare, the lowest for 
more than 20 years. 

A drop in meat consumption 
and a rise in input costs have 
led to large-scale slaughtering 
and a sharp foil in livestock 
numbers. In Hungary, the 
once-important pig sector has 
declined to just over 5m ani- 
mals compared with a peak of 
10m in 1983. The number of 
cattle is less than half that of 
20 years ago. In Poland, cattle 
numbers have dropped by 24 
per cent and pigs by 15 per 


cent in the past three years. 

Rural employment has been 
battered. In Hungary, about 
150,000 people had lost their 
jobs by September 1992, repre- 
senting 14 per cent of employ- 
ment in the food and agricul- 
ture sector, because so many 
state forms and food process- 
ing enterprises went bankrupt. 

Mr Rene Stetchen, European 
agriculture commissioner, said 
there were signs in some coun- 
tries last year of a recovery in 
crop production, but the live- 
stock sector was still in 
decline. None the less, those 
countries had the potential to 
be "significant exporters of 
food.” The EU had to help 
them by going beyond its 
recent association agreements 
with six central and east Euro- 
pean countries and speeding 
up the opening of its markets. 

T he current review of the 
EU's Phare aid pro- 
gramme for eastern 
Europe should Zook at "how 
one could help change form 
structures, in particular in 
relation to the development of 
co-operatives, in order to 
rationalise production and 
domestic distribution net- 
works”. he said. That should 
overcome some of the difficul- 
ties caused by the fragmenta- 
tion Of f armland and assets. 

Mr Stetchen also highlighted 
the paradox facing eastern 
Europe's agricultural policy- 
makers. 

In order to be accepted into 
the EU and to make a smooth 
transition into world trade, 
they must shun some of the 
core measures of the GAP. 
That theme was developed 


by Prof Stefon Tangermann. a 
leading agricultural economist 
who advises the European 
Commission, the World Bank, 
the Organisation for Economic 
Co-operation and Development 
and the United Nations Food 
and Agriculture Organisation 
on agricultural strategy. 

Prof Tangermann said 
Poland and Hungary in partic- 
ular had opened their food 
markets fully to international 
competition after the collapse 
of communism, but that the 
plunge in form prices bad led 
to pressure from farmers for 
protectionist measures. 

“There is a trend towards 
introducing more protective 
agricultural policy instruments 
which have a certain similarity 
with those of the EU, in partic- 
ular variable levies and export 
subsidies.” he said. 

Shadowing the CAP could 
present these countries with 
an intolerable financial bur- 
den, warned Prof Tangermann. 
According to one economic 
model. Hungary, Poland, the 
Czech republic and Slovakia 
would be spending more than 
Ecu3.5bn (£2.65bn) on export 
subsidies by 2000 if they tried 
to match EU farm prices. 

That scenario assumed that 
their farm output recovered, 
domestic consumption expan- 
ded only slightly and net 
exports thus rose significantly. 

Prof Tangermann predicted 
that by 2000 central Europe 
could have an exportable grain 
surplus of about 10m tonnes, a 
sugar surplus of 2m tonnes, the 
potential for net exports of 
800,000 tonnes each of beef and 
pork, and a butter surplus of 
about 400.000 tonnes. 


-Governments in central 
Europe should consider 
Whether their current ten- 
dency to adopt 'CAP-1 Ike' apt- 
cultural policies is in their best 
interests. “ he said. 

-The optimal policy would be 
to be cautious about the level 
of support they proride to their 
fanners until the time they 
accede [to the EU].” 

The argument found an echo 
among speakers from Poland 
and the Czech republic. Mr 
Andrzej Kwiecinski. head of 
the agricultural policy analysis 
unit that advises the govern- 
ment. said Poland could not 
afford to finance an EU-style 
system of protection. 

“The focus should be not on 
the present CAP. which in 
coming years will be signifi- 
cantly modified due to the 
MacSharry reforms and the 
Uruguay Round of the Gatt, 
but rather on the probable 
model that will take shape in 
the European Union in 10 enr 
even 15 years," be said. 

Mr Tomas Doucha, bead of 
the Czech agriculture policy 
unit, said his country had to 
avoid the danger of land being 
abandoned and rural areas 
depopulated by adopting a pol- 
icy of “sustainable agriculture 
in accordance with the progres- 
sive elements and tendencies 
of the CAP". 

In a striking parallel to the 
current debate in western 
Europe, he said farming in 
eastern Europe would have to 
concentrate not only on food 
production, but also "the envi- 
ronment. natural resources, 
the landscape, and the social 
and cultural traditions of our 
rural regions". 


MARKET REPORT 

Coffee futures break resistance to reach three-month highs 


Lo ndon Commodity Exchange 
COFFEE futures climbed to the 
highest levels since mid-De- 
cember yesterday and some 
traders suggested a test of 
resistance at last year’s highs 
might be on the cards. 

The May position broke 
through resistance at SL2S0 a 


tonne early on and that 
attracted fresh speculative pur- 
chases. notably by investment 
funds. “The buying came from 
all over this afternoon,” said 
one dealer. “It’s all looking 
quite positive.” He did not rule 
out an assault on the SI .300 
level Others were less bullish. 


confining their short term pro- 
jections to a test of the next 
band of resistance between 
Si .280 and SI.288 a tonne, 
where fresh producer sales of 
coffee were thought likely. 

COCOA futures also ended 
the day firm, although they 
still showed little sign of 


breaking free of the recent 
trading range. 

Base metal prices were 
largely on the defensive at the 
London Metal Exchange. Sell- 
ers had the upper hand, deal- 
ers said, and downside chart 
points were coming under 
threat by the close. 


COPPER'S retreat from 
$1,920 in the morning left the 
market vulnerable after lunch, 
and although signs of nearby 
supply tightness remained the 
three months delivery price 
closed $8.25 down at $1,908.50 a 
tonne. 

Compiled from Renter 


COMMODITIES PRICES 


BASE METALS 

LONDON METAL EXCHANGE 

(Prion from Amagamatod Metal Trading) 
ALUMINIUM. 88.7 PURITY (S par tonne) 



Cash 

3 mths 

Ctose 

1 2S7.5-&5 

1290.5-1 

Previous 

1280-1 

1302-3 

rtgh/low 

I27B9/1274.5 

130171283 

AM Official 

1278.5-7 

1297-7.5 

Kerb close 


1284-5 

Own Ire. 

26X672 


Total daly turnover 

29.430 


■ ALUMINIUM ALLOY (S per tonne) 


Ctosa 

1221-6 

1216-7 

Previous 

1220-5 

1215-20 

HlgMow 


121771215 

AM Official 

1230-40 

1210-20 

Korb dose 


1210-5 

Open M. 

3,533 


Tool daSy turnover 

851 


■ LEAD (S per to met 


Close 

431-2 

445-6 

Previous 

441.5-2.5 

4SS-6 

HlgMow 


480/442 

AM Official 

442-5 <3 

45X5-7 

Korb dose 


448-9 

Open int 

36.035 


Total dally urtover 

1X773 


■ NICKEL (& per tome) 


Ckae 

5475-85 

5533-5 

Previous 

5605-15 

5860-5 

HlgMow 


5705/5510 

AM Official 

5580-5 

5630-40 

Kerb dose 


5510-6 

Open Int. 

50.385 


Total deny turnover 

14.487 


■ TIN (S per imte) 



Ctooe 

5282-7 

5342-4 

Previous 

5275-85 

5325-30 

rtgh/tow 


5400/S305 

AM Official 

5310-5 

5359-60 


Kerb dose 
Open Iffl. 

Total dally turnover 


5300-5 


20.100 

7.401 


■ ZINC, special high grade IS per tonne) 


Close 

918-9 

935-8 

Previous 

91X5-75 

934-4.5 

HlgMow 

91 9.5 

939/932 

AM Official 

9198-20 

838-6.5 

Kerb dose 
Open *TL 

109.618 

937.5-85 

Total daHy turnover 12.977 

■ COPPER, grade A (S per tome) 


Close 

1692 3 

1908-9 

Previous 

1901-2 

1914.6-S 

WgMow 

1697.5 

1021/1902 

AM Official 

1897-8 

191 7-B 

Kerb dose 
Open Ire. 

243.742 

1908-9 

Total tO*i turnover 4X930 


X LME AM Official E/5 rate: 1.4887 

LME Ctostog 05 rate: IMIS 


Spat 1-4910 3 0)00:1.4866 6 mOn. 1.4633 9mttMCl.482T 

■ HIGH GRADE COPPER (COMBO 



Oafa 

Open 

□ace 

Chugs Hgh low 

u vm 

tear 68.40 

-1.10 99 JO 6& 10 

4522 1,385 

Apr 88-40 

-105 8X35 8X20 

1.148 200 

May sxh 

-1.05 B935 89-20 36,363 1,783 

ten 8X45 

■<LSS 8X60 8X60 

845 5 

JN 8X40 

-080 89.10 6X05 

6,801 1.644 

ten 8X40 

•060 

388 

Total 


K/A 5588 

PRECIOUS METALS 


■ LONDON BULLION MARKET 
(Prices ernpHed by N M Rothschild) 


QflM (Troy OCLJ 

S price 

£ equv. 

Close 

377.40-377.00 


Opening 

37660-377.20 


Morning fix 

377 JX) 

253.360 

Afternoon fix 

377.50 

252.965 

Day's High 

377.50-377.90 


Day’s Low 

378. 75-377.15 


Previous dose 

376.40-37X80 


Loco Lrin Mean Odd Landing Rates (Vs USSJ 


J.15 6 months 

339 

2 months ... 

3.18 12 months 

181 

8flver Fte 

p/tray 02 . US cte equiv. 

Spot 

351-25 

5ft} 

3 months 

355.35 

527.60 

6 months 

356.50 

533.00 

lywr 

38X60 

545-55 

Goto Coins 

S price 

t equiv. 

Kruqerrond 

378-381 

ZS4-2S7 

Maple Leaf 

38XT5-3S0.60 

- 

Now Sovereign 

89-92 

60-83 


Precious Metals continued 

■ GOLD COM EX (iQO Troy oz.; S/troy ox.) 

Sen Day*i Open 

price change Kgb tow tat VoL 

Mar 37X3 -JJ - - 3 5 

Apr 3769 -1.7 37X7 3117 70,733 18913 

Mar 37X0 -1.7 ... 1 

Jm 373.1 -1.7 38U) 37X3 34,438 1.177 

Aug 381.4 -1.7 382.1 3813 5J46 248 

OCl 3835 -1.7 388.3 384.8 4,113 

Total 14X078 10,123 

■ PLATINUM NYMEX [50 Troy oz.; 5/tioy oz.) 

Apr 3338 -U 395.0 3934 13m 2478 

tel 3945 -29 396-5 394.5 4.101 1.035 

Dot 39X0 -20 3970 3989 1.122 29 

Jan 395.4 -2.0 - - 5Z8 4 

Apr 39X5 -29 398.5 39X5 525 21 

Total 19£79 3JM2 

PALLADIUM NYMEX (100 Troy oz.; S/troy oz.] 


tear 131.55 +1.05 58 3 

Jin 131.55 +105 131.90 13100 4070 516 

Sv 13125 +125 13200 13100 398 12 

Dee 130.75 +125 - • 179 10 

Total 4,705 541 

■ SILVER COMEX (100 Trey oz.: Centarirey az.) 

Mar 

SI 7.8 

-62 

nwn 

5172 

2043 

178 

A|V 

5182 

■63 


- 

14 

27 

teey 

R?nn 

-03 

52X0 

5202 

64J50 

10.483 

M 

524.5 

-64 

S3Z0 

5242 

17.189 

5Z2 

San 

52X6 

-64 

5378 

5292 

4.079 

659 

Dec 

534.4 

-X4 

54X0 

5342 

X911 

21 

Total 




10X882 11833 

ENERGY 






■ CRUDE OX 

NYMEX 142,000 US grita. S/barel) 


Latest 

Day'* 



Open 



price 

dang* 

Mgh 

Low 

H 

Vot 

AW 

14.14 

■033 

1427 

14.14107,494 27.498 

Hey 

14.42 

■0.30 

1468 

14.34 

62848 

12.528 

Jon 

14.59 

■0 27 

1482 

1424 64.956 

8.192 

M 

14.82 

-0.19 

1459 

14.74 

27810 

4,613 

tag 

1X00 

-O.IB 

1X16 

1433 

1X185 

1.111 

Sep 

1X18 

-0.18 

15 34 

1X10 

1839/ 

676 

Total 




439,130 80,703 

■ CRUDE OX IPE (S/barrel) 





Latest 

Day's 



Open 



price 

dame 

Hgb 

Low 

M 

Vet 

Apr 

1X10 

-025 

1X40 

1105 

59854 

1X802 

Hay 

1323 

■0.29 

1145 

1118 

41,273 

X171 

Jua 

13-39 

-0 30 

1X60 

1388 

1X911 

1.036 

Jill 

1339 

•024 

1176 

1X59 

9.460 

1.455 

Aug 

1X75 

-0.21 

1X91 

1X73 

S.661 

415 

Sap 

1X89 

4L2S 

14.07 

1189 

1390 

300 

Total 




133252 3X832 

■ HEATING on. HYMEX (42.000 US gate. cAJS gaBs.1 


latest 

Day's 



Open 



pte 

change 

HW 

Lew 

kit 

YU 

Apr 

44.10 

■0.79 

4*95 

4X65 

47,629 

11.801 

Hay 

42J0 

■0.73 

4110 

42.40 44883 

4807 

Jun 

42.75 

-0,55 

42 95 

4X50 

28 JOB 

7 77fl 

JN 

4X35 

-020 

4180 

4X20 

1X594 

1.680 

tag 

44.10 

-0.45 

44.45 

44.15 

X391 

658 

S«P 

4530 

-0 35 

4X50 

4X30 

7JJ94 

190 

Tetri 




17X486 21883 

■ BAS OIL B? (SfoAKi 





Sett 

Day's 



Open 



Price 

ctwope 

»*ri» 

Low 

tat 

vm 

Har 

137 J5 

-X* 

13X00 

137.00 

2X449 

7806 

Apr 

13X75 

-220 

13X50 

13X50 

26.715 

4.044 

■ay 

13X50 

-120 

13725 

13X25 

13819 

877 

Jin 

137 JO 

-125 

13880 

137.25 

1X340 

1,118 

tel 

13925 

-1.50 

14025 

139.00 

11803 

563 

Aog 

141 JO 

-1J0 

14120 

141.00 

5,114 

115 

Total 




121838 

1X245 

■ NATURAL QAS KYMEX (1QOOO mmBtiu S/mnBBL) 


latest 

Defa 



Opna 



price 

dtaege 

«* 

Lon 

lot 

Vat 

Ate 

2.14S 

-OJTO 

2.160 

2.140 

1X172 

8,496 

May 

2.125 

-0819 

1145 

2.125 12J77 

2539 

Jm 

2.110 

■0814 

1120 

1110 

9806 

2.041 

Juf 

2.100 

-0808 

2.110 

2.10Q 

8832 

131 

Abb 

2.110 

-0.008 

2.120 

2.110 

8878 

433 

Sm 

2.135 

-0805 

2.140 

2135 

10283 

287 

Total 




116803 

16(319 

■ UNLEADED GASOLINE 




HYMEX (42000 US gtftj cUS grilsj 




latete 

W* 



opes 



price 

dange 

Mgh 

Low 

tet 

tfol 

Apr 

44.10 

-183 

44.75 

4385 35.623 

8,309 

May 

44.05 

-XB8 

4580 

44.75 40.442 

4,990 

Jon 

4X85 

■0.75 

4680 

43 JO 17800 

2.646 

tel 

4X85 

-0.77 

4X25 

4X90 

6882 

1.904 

Aeq 

4X00 

022 

4X20 

4X75 

5,421 

427 

Sap 

4X00 

-0A7 

4X10 

4X30 

2.504 

74 


Total 


111,971 14368 


GRAINS AND OiL SEEDS 

■ WHEAT LCE |E per tonne) 

Sait Day's Open 

pilca change Hlgfa law tat Vet 

Mar 101.75 4115 101.75 101.50 105 

May 103.35 - 103.10 10290 2.074 

Job 10395 +0.15 - - 465 

Sap 90.75 -050 - - 192 

Her 91.85 -025 - - 1,103 

Jan 93.75 -055 93.75 9X75 408 

Total AAU 

■ WHEAT CBT (S.DOObti min; cants/BOlb bushel) 


SOFTS 

■ COCOA LCE (E/torma) 


Sait Day's 

price dungs Mgb Loir 


Open 

tot 


Voi 


MEAT AND LIVESTOCK 

■ UVE CATTLE CME (4100Qt»; oents/lba) 

Salt Day's Open 

prim donga High tsa tot *N 


43 

Har 

809 

+8 

900 

897 983 

122 

Apr 

7X900 -0.300 77875 76800 

39808 

7,994 

f14 

May 

918 

+8 

920 

911 23897 

994 

ten 

7X225 +0250 7X275 74800 

20832 

1831 

- 

Jri 

330 

+6 

933 

924 14783 

392 

tetg 

71375 +0.125 73.450 73825 12.031 

1872 

- 

Sap 

941 

+4 

945 

942 11,175 

S4 

Oct 

7X700 +0.025 73800 73825 

9876 

623 

- 

Dm 

954 

+3 

957 

952 17,444 

45 

Dm 

73850 - 71975 71900 

2841 

37 

0 

Har 

971 

+2 

974 

569 22.492 

57 

M 

73875 - 71750 73875 

823 

2 

163 

TOM 




107866 1JB4 

Total 


84871 

11880 


■ COCOA CSCE (10 tonnes: Srtonnasj 


Har 342/2 +1/6 344/4 340/4 6830 2.570 

May 345/0 +1/2 348/4 34310 78815 14,710 

Jri 331/4 -1A 334/0 33tV« 95810 18830 

Sep 333/0 - 335*4 331/0 15825 535 

DM 341/2 -1/0 343/0 341/0 20,130 670 

Mar 344/2 -I/O 10 

Total Z1B820 37865 

H MAIZE CBT (XOOO bu min; oanta/Gfllb bushel) 

Har 

280/0 

+2/4 

281/0 

278/8 23809 22,580 

Hay 

288/2 

+2/2 

288/4 

280/0649830 91835 

Jri 

291/0 

+2/2 

291/4 

288/4538805 47.100 

Sap 

277/4 

+Tffi 

27B/0 

2781012X415 

9,480 

Dm 

284/4 

+4W 

265/2 

2B3/BZ70880 25870 

Har 

Z7W4 

+0ffi 

271/2 

Z7Q/0 17845 

290 

Total 




1838M 198810 

HI BARLEY LCE (E per tonne} 


Otar 

10480 


104.50 10450 134 

f 0 

May 

10480 


- 

- IBB 

- 


9280 


- 

- 110 


tear 

94.75 


- 

98 

- 

Jan 

9X75 


. 

3 

. 

Mar 

9780 


- 


- 

Tetri 




no 

fO 

■ SOYABEANS CBT &D0Qtai n*c centa/BOH buatwQ 

Mir 

08X14 

-1/0 

68am 

665/D 29890 

18885 

Hay 

67W6 

HV2 

674/0 

889/4320840 97875 

Jri 

672/2 

- 

675/8 

870/0228810 64390 

Aug 

6B4/4 

+1/0 

888/4 

864/0 37.490 

5850 

Sap 

652/0 

+2/0 

656/0 

881/0 18885 

2,495 

He* 

641/G 

+1/0 

845/2 

6415)13X290 20870 


■ UVE HOGS CME fW.OOatw; cents/tos) 


Har 

1167 

+17 

1155 

IIS 

275 

81 

Apr 

48.450 

-0225 4X875 4X300 12,179 

2854 

tew 

1185 

+19 

1108 

1157 388<7 7.172 

Job 

54725 +0.100 54725 54450 

9806 

1,158 

Jri 

1206 

+18 

1210 

1182 

17.150 

1.183 

Jri 

XI I*? 

-0825 54.100 53800 

X333 

238 

Sap 

1225 

+13 

1225 

1210 

7.712 

239 

Aog 

51875 

-0850 52.150 51850 

1720 

248 

Dm 

1256 

+13 

1257 

1245 

8423 

137 

Oct 

4X150 

-0875 4X300 4X100 

1834 

154 

liter 

Total 

1208 

+12 

1295 

1275 

9,712 25 

B9JH8 8837 

Dm 

Total 

40075 

-0075 49850 49875 

1,272 

30860 

37 

3802 


■ COCOA (tCCO) (SPRVtonne) 


■ PORK BELLIES CME (40JXXPba; cants/lbs) 




Men 

.91253 


10 dq luarqja . 


. 912.78 


Pm. day 

90553 

91X10 


■ COFFEE LCE (S/tome) 


Mar 

1253 

+18 

12S 

1240 

835 

IS 

»W 

12© 

+16 

1270 

1250 1X932 2.925 

Jri 

1257 

+19 

1280 

1241 

9859 1,197 

Sap 

1254 

+15 

1253 

1241 

4.455 

1« 

No* 

1253 

+14 

1248 

12*1 

1227 

208 

•tea 

1248 

+10 

1245 

1245 

5884 

35 

Trial 





3X817 4,883 

H COFFEE •C' CSCE pT&XXta, centsffin) 


•tar 

TITS 

+185 

7785 

7X15 

334 

74 

«w 

7X90 

+180 

7X20 

7780 29838 5883 

Jri 

8080 

+X96 

8035 

7980 

7^58 

682 

Sap 

81.45 

+O.B9 

8180 

IMI-TO 

5809 

19* 

Dm 

8285 

+X85 

8285 

82.00 

3836 

1© 

Uar 

8X40 

+080 

8380 

8X40 

1,061 

2 


Total 

■ C0FH3i 0OO) (US certa/pound] 


47,311 *784 


Total 


788220200,180 


■ SOYABEAN OB. C8T (GO.OOttbs: cemaflb) 

Mir 2X04 -0.04 2820 2727 0.080 1581 

Kay 2798 4105 2820 2792 35538 5292 

N 2751 -OOO 2X12 27.78 25.125 1146 

Aug 2752 -003 77.70 Z7.38 7547 743 

Sap 77.13 - 2750 2658 7.090 303 

Oct 2X47 +057 2X70 2X35 5.321 207 

Total 99588 12598 


Mar 4 

Comp, daly — 
15 (by average 


Price 
. 7183 
. 7X88 


ftw. Day 
7X84 
7X80 

■ No7 PHEMUM RAW SUGAR LCE (cwUBflbrQ 

llay 1X00 -057 1255 1255 1.435 20 

JM 1X50 - - - 2.737 

Oct 11 JB -052 130 

Jm 11.73 

Total 4502 20 

■ WHITE SUGAR UCE (Srtontw) 


Uar 

1B0.7 

■08 

1918 

1908 

1931 

1879 

tea, 

33X40 

-1 AO 34X00 33480 

7,628 

843 

May 

1918 

■08 

1928 

191.4 32808 

itQt 


■•pqgn 

+0.40 33280 32X00 

4,485 

993 

Jid 

1928 


19X3 

192.0 24,029 

2JM1 

Del 

30580 

♦1J0 30780 305 00 

3837 

167 

Aug 

1918 

+0J 

1828 

191.0 

7.157 

572 

Dec 

30X40 

+180 30480 30220 

128 

9 

Sep 

1B9.7 

-XI 

1918 

16X7 

5,450 

306 

Har 

30X70 

+180 30280 30080 

341 

IB 

Oct 

18X3 

■XI 

1888 

18X3 

2818 

75 

tear 

301.70 

+180 302.90 30290 

197 

5 

Tetri 





85881 

11,888 

Total 



1X52D 2 JM 

■ POTATOES LCE (C/tonne) 




■ SUOAR IV CSCE (112,000ta; centa/t») 



1515 +25 15X0 14X0 1.359 

1685 +105 1085 15X1 884 

1305 - - - 2 

805 

1055 .... 

12X5 - 157.0 12X5 

X404 

■ FREIGHT (BIFFEX) LCE (SlO/Inde* pom) 


Apr 

Kay 


Mar 

Apr 

Total 


78 

Hay 

11.78 

-an 

1195 

11.78 

62.878 

X7D0 

198 

Jri 

1282 

-aw 

1X14 

1X00 

29J7S 

1371 


Oct 

1TA8 

-0JI5 

1183 

11.43 

2X499 

1387 

_ 

Har 

11.18 

■X07 

1197 

11.13 

6841 

1818 

_ 

May 

11.12 

-aw 

1180 

11.17 

1JX9 

73 


Jri 

11.10 

-086 

0 

0 

887 

44 

323 

Total 




12X31017895 


■ COTTON NYCE (505008*9,- centsAbS) 


Mur 

1139 

-5 

1140 

1140 

301 

12 

rite 

7X17 

+0.19 

7X50 

77 JO 

430 ea 

Apr 

1202 

+5 

1205 

1206 

1.176 

32 

■w 

7794 

-022 

7795 

7X91 

24,758 7.770 

May 

1200 

+5 

1205 

1200 

223 

0 

Jri 

7X27 

998 

7X40 

7795 

1X534 2910 

Jri 

1DS7 

+4 

. 

. 

584 


Oct 

7692 

+022 

7690 

7SJS 

2884 896 

Oct 

1240 

+10 


. 

241 

. 

Dm 

7125 

+X40 

7X25 

7X70 

11840' 1041 

■tea 

1288 

+13 


. 

74 

. 

Mar 

7132 

+0L22 

7170 

7150 

436 64 

Tefal 





am 

SO 

Tetri 





5291315,174 

BM 

Otaaa 

1112 

Frav 

1110 





■ ORANGE JUICE NYCE (IXOOODMCi eents/lbg 

Brl 





Har 

10X00 

+190 

10X00 

10790 

824 147 








■V 

111.05 

+X15 11125 100.35 

1021 8S9 








Jri 

11100 

-X20 

moo 

11190 

4958 344 








Sep 

11590 

990 

11490 

114J0 

T983 110 








KM 

Jm 

114.75 

11X*5 

-XI5 

-xao 

11443 

11150 

II 

1.187 182 

1438 1711 


J Trial 


IfU 

16973 1857 


Taa 

There was goad but irregular (femgna, imports 
the Tea Brokers’ Association. Brightest and 
good medum ©381 Atricarn wen 5 to 15p 
aaaler except Pekoe Dust* which moved 
higher. Meduns opened fully 4m but tended 
oaaer towards the Ctosa. Plainer descriptions 
add well and often advanced. Caytons mat 
goad competition but pricos were geranriy 
lawn-. Offshore: goad general demand at fuly 
firm to dean rates. Quality IftOp/kg. good 
median 14Qp/ko. medium ISSpfkg. low 
medium SOptatj. The highest price reatad this 
weak was 22?pAg for a Rwanda pf.1. 


VOLUME DATA 

Open Interest and Volume data shown tor 
contract s boded on COMEX, NYMEX, CBT, 
NYCE. CME. CSCE and 1PE Crude Ol ae one 
day In 


INDICES 

■ REumts (Base: i6/Mi=.ioo) 


Mar 7 Mar 4 month ego year ago 
1798.4 1790.1 1778.1 17605 

■ CRB ftmrea (Base: 4/8/56-100) 

Mar 4 Mur 3 month age yam ago 
22088 22019 228.44 20750 


Hey 


Mg 

Feb 


Total 


56500 +5.150 56550 5X150 
57.725 +0525 57500 57JS0 
57500 +0200 57525 57.330 
5X200 +4L2Q0 55X25 54J00 
5X800 - 58500 5X000 

5X550 -0.100 - 5X550 


417 

6,705 

2^21 

455 

18 

3 


53 

1,397 

304 

48 

3 

2 

1505 


LONDON TRADED OPTIONS 

Strflc* price S tonne — Cads — — Puts — « 
■ ALUMINIUM 


(88.7%) LME 

May 

Aug 

May 

Aug 

1275 „ 

42 

09 

38 

48 

1'VYI 

31 

67 

50 

80 

1325 

22 

48 

65 

74 

H COPPEH 





(.Grade A) LME 

May 

Aug 

May 

Aug 

1850 

65 

113 

28 

44 

1BQO 

56 

86 

48 

85 

IIKfl 

34 

62 

78 

81 

■ COFFEE LCE 

May 

jut 

May 

Jii 

19f¥i 

81 

96 

16 

39 

1250 

4S 

68 

34 

81 

1300 

27 

48 

82 

91 

■ COCOA LCE 

May 

JuZ 

May 

M 

900 . __ ._ 

39 

66 

21 

35 

925 ~ 

25 

52 

32 

47 

950 

19 

41 

51 

61 

■ BRerr crude ipe 

Apr 

May 

Apr 

May 

1300 _ 

- 

• 

17 

41 

1350 _ „ 

- 

4S 

48 

68 

1400 .. 

5 

28 

- 

- 


LONDON SPOT MARKETS 

■ CRUDE OIL FOB (per bamri/Apr) -tor 


Dubai 

S11.78-1.86w 

-0.425 

Brent Blend (datedi 

$13.03-3-06 

-097 

Brent Bend (Apr) 

SI 107-109 

-0-40 

W.T.I. (ipm eat) 

S14.14-4.18 

-048 

■ OX. PRODUCTS NWE prompt ddlvwy OF Items) 

Premium GesaAne 

SI 50-152 

-10 

Gas 08 

S141-142 

-39 

Heavy Fuel Oil 

*80-81 

-09 

Naphtha 

SI 33-1 34 

•10 

Jet Puri 

3156-158 

-29 




■ OTHEH 



Gold (per tray oz>f 

$37790 

+190 

SOver (per troy ozJX 

524J5C 

+1.00 

PtoBnurti (oar tray oz.) 

S391JSS5 

+035 

PaNadurn <pw tray oz.) 

$130.75 

+100 

Capper (US prod.) 

9100c 


Lead (US prod.) 

3100c 


Tin (Kuala Lumpu) 

14.15/ 

+0.07 

Tin (Now York} 

24490c 

-100 

Zinc (US Prime WJ 

Unq. 


GatUe wo/gfritt 

126.320 

+1.17* 

Sheep (Bva writfit}T4 

121. 76p 

+293* 

Pigs (Ks weight) 

84. IQp 

+4 56* 

Lon. day sugar vm) 

*288.40 

+190 

Lon. day sugar (w%) 

*344.00 

+150 

Trip & lyte ateport 

£30690 

+100 

Barley (Eng. toed) 

Unq 


Make (US No3 YaBow) 

Unq 


Wheat (US Dark North) 

Giaoox 


Rubber (Ap^f 

6X25p 

■025 

Ri«»r(May)f 

68LSQp 

■025 

Huftber(KL RSS No! Apt) 

24030m 

-090 


Coconut Oi (PUBIS S62XQK +5.0 

Pofen OB (Matey J§ $386.01 

Copra (PhǤ SMQ.0 

Soyabeane (US) C1BS.0 -15 

Cotton Outlook a Index axeoc +1.40 

Wooltops (S4a Super) 383p +3 

E par tame utoww oflMmua sorted, p pancoflai S eenafo. 
r rtjpgsig. m Mrianten certyflg. w Mr. t JUSw. » *0* 
MsyT London rifeL 5 OF Bwwdan. * Br*wi 
nttM cum. * 3«eap (Uw P«e*. ‘ Ownpe yn 

weak. pnj ririn nri prices. 


CROSSWORD 


No.8,39S Set by QUARK 



ACROSS 

1 Search thoroughly in place of 
conflict (6) 

4 A proverbially quiet stretch 
(8) 

9 People rise for teacher (6) 

10 Wrongfully sold a tie removed 
from society (8) 

12 Bit of mischief left the old 
vessel (4) 

13 TeU tales that could introduce 
preview (5) 

14 The last letter seen in cold 
metal (4) 

17 Steals roofing material and 
leaves some behind (5J,4) 

20 White pillow’s In disarray, an 
elusive thing (4-1-3-4) 

23 Swagger without an element 
of balance? That’s a pain (4) 

24 Fellow will always provide 
means of support (5) 

25 Wine that’s mainly in motion! 
f4) 

28 Leave car at dance stadium In 
the US (8) 

29 Parisian setting? (6) 

30 Regular piece of music for the 
service (8) 

31 Grab the Ashing equipment 
(6) 


DOWN 

1 Student goes in to take pari 
over (8) 

2 Sailor Is overcome by chap's 
narcotic (8) 

3 A giant's curious (4) 

5 Military establishment In 
base where everyone's taiwn 
In 02) 

6 Behold local's empty lounge 
(4> 

7 End. of the cattle? Could be in 
the soup (6) 

0 Infer the editor’s included in 
foe leader (61 

12 Marathon entrant will be 
(eventually) (2,3 ,4,3) 

15 Active music around the 
street (5; 

16 Cares about the Ascot meet- 
ing? (5) 

18 Get down to fix the fuel indi- 
cator (8) 

19 Capacity put out with a diet 
(8) 

21 Put money on and gee's 
beginning to go slow! (6) 

22 Provide support for articles 
put aside (6) 

28 Plano in Oxford University 
Society's musical composition 
(4) 

27 The singer's keen ou turning 
up 14) 


Solution to Saturday's prize puzzle on Saturday March 19. 
Solution to yesterday’s prize puzzle on Monday March 21. 


JOTTER PAD 



# 



4 



fi ! 



i. 


i 














'■-Si 


!! H 


FINANCIAL TIMES TUESDAY MARCH 8 1994 


LONDON STOCK EXCHANGE 


MARKET REPORT 


FT-SE 1Q0 regains 3,300 in moderate trade 


By Terry Byiand, 

UK Stock Market Editor 

A stronger performance from bond 
markets across Europe, including 
British government securities ce nt 
UK equities .ahead by nearly 28 
points yesterday to close comfort- 
ably above the Footsie 3,300 mark. 
London finished near the best of the 
day, helped also by a good start to 
the new Wall Street session. Trad- 
ing volume remained moderate but 
gathered pace as gains were 
extended. 

The renewed vigour in European' 
bond and stock markets followed 
the pay settlement in the German 
engineering industry which encour- 
aged hopes that the Bundesbank 
will be able to make a further 
reduction in interest rates soon. 
The optimists hope for good news 


either today, when the Bundesbank 
will disclose the shape of its repo 
tender, or tomorrow, when the 
result of the tender is announced. 

Share prices opened higher but 
were slow to extend their early 
gains as some continental European 
markets slipped back from early 
peaks. But sentiment turned stron- 
ger as the session progressed and 
the Footsie showed a gain of more 
than 82 points before closing at 
3,305.9 for a gain on the day of 27.9 
points. However, London lagged 
behind the recovery in the German 
stock market 

Several equity strategists told cli- 
ents that the stock market was stag- 
ing a recovery, KMnwort Benson 
Securities stressing that the finan- 
cial sectors had been oversold. Nat- 
west Securities pointed to improv- 
ing dividend prospects. This week 


Option DadMtaAfc 
Mario 




Apr 18 
piece from 


brings trading results from a range 
of leading UK companies, including 
BAT Industries and RTZ. which wifi 

be HMnnpH for the latest inriingtinii^ 
of the pace of recovery In the 
domestic economy. 

The FT-SE Mid 250 Ww added 
10.4 at 3337.7. The MM 250 has out- 
performed the FT-SE 100 Index by 7 
per cent since the turn of the year, 
and NatWest Securities predicts a 
further ffll t pnrfo rmHTira thin year. 


Seaq volume, said to have been 
supported in the second half of tile 
session by a trading programme 
from a UK investment bank, 
totalled 5763m shares, compared 
with 58lm on Friday, when retail, 
or customer, business was worth 
£1.44bn. Retail volumes, the sound- 
est test of market activity, have 
remained at relatively modest levels 
during the sell-off of the post fort- 
night but have now begun to show 
signs of improvement. 

There was support for the finan- 
cial stocks which have been so 
badly hit in the shakeout of the past 
fortnight Fears that some of these 
active players in global securities 
markets might have suffered severe 
losses seemed to abate and Inves- 
tors focused on the dividend 
improvements announced recently 
by scone of the sector leaders. 


The powerful rally in bond mar- 
kets, which fbdled a strong rise in 
UK gflts yesterday, soothed some of 
the worries over losses in these sec- 
tors. Hu UK equity market, having 
suffered no more than moderate 
selling pressure during the global 
shakeout, now seems ready to bene- 
fit from a recovery. 

"Investors can now find good 
value.” commented the strategy 
team at Nikko Europe. Credit Lyon- 
nais Laing, keeping its year-end 
Footsie target at 3,750, was another 
to maintain that the rise in bond 
yields does not signal any “rever- 
sal" in the economic factors which 
have been driving equities higher 
for the past 18 months. Lyonnais 
Laing behoves that hopes for eco- 
nomic recovery will not be disap- 
pointed by the current corporate 
results season. 


FT-SE-A All-Share Index 


1,800 


1.700 ri-A/ 


Equity Sham Tradwf 

’nvnowby velum* (mBtat Ewtajdng: 

Inn-carton burin** end ewHMM tWWMr 

1*00- ~T .r 


1,550 I ‘ 

Dk Jk 

Shock FT Uoftw S3 

■ Kay Indicators 

IrnflCM and ratios 


Fop Mar 
1094 



FT-SE 100 

FT-SE MW 250 

FT-SE-A 350 

FT-SE-A AB-Shara 
FT-SE-A AB-Share yWd 

3305.9 

3937.7 

1674.0 

1864^5 

3.45 

+27 
+114 
+11.9 
+11 J27 
(3.460 

FT OrtHnary indax 
FT-SE-A Non Fins pto 
FT-SE 100 Fid M8T 

10 yr Qftt ytokJ 

Long Bftt/aqUty yid ratio: 

2584/4 

2ZJ33 

3293.0 

CL94 

2.14 

+20 A 
(22-20) 
+23.0 
(7J8) 
B-1^ 

Best performing iteton 

1 Banks 

+2L2 

Wont performing Motors 


9 Marita 










iimiaiiwiu 




+1.7 




5 Merchant Banks 


— +1.5 

5 Oil Exploration & Prod 


-as 


vv - mouth hie 


crossword 

• i 

i Jk ii 

\ mm V 

I « ■ 
lllll 

I ■ * v 
V 


Reuters 
at new 
peak 

News and electronic 
information group Reuters 
Holdings saw Its share pries 
jump to an all-time hi gh yes- 
terday. Dealers lifted their quo- 
tations and deterred some UK 
fund managers who were des- 
perate to increase holding s 
The stock jumped 81 to 2l59p 
with, the additional help of a 
repeated buy 

from perennial bull Mr Brian 


Newman of agency broker 
Henderson Crosthwaite. 

There was also some interest 
ahead of a dinner in New York 
last night between senior Reu- 
ters executives ami US fund 
managers and a meeting with 
US analysts today. The rise 
was further exacerbated by a 
$3 gain in the US traded ADRb 
on Friday. 

However, the basis for the 
squeeze lay in the persistent 
reluctance of US investors to 
sell stock since the figures an 
February 8 and ahead of a 
share spilt an April 18, Anar 
tysts said that because of this 
unwillingness to sell, UK mar- 
ketmakers were unable to get 
hold of the stock and were con- 


sequently marking up prices: 

Mr Alastair Smellle of Leh- 
man Brothers said that as 37 
per cent of the stock is held in 
the US and a further 6K per 
cast by the Abu Dhabi Invest- 
ment Authority, UK funds are 
seriously underweight Their 
drive to redress the situation 
has seen the Reuters share 
juice climb by almost 13 per 
cent since the February fig- 
ures, against an FT- Actuaries 
All-share Index which has 
slipped by ■IS per cent 

McAlpine placed 

The market's most active 
stock was Alfred McAlpine, 
the construction group, which 


EQUITY FUTURES AND OPTIONS TRADING 


A firm opening on Wall 
Street together with a more 
positive performance in 
bonds, helped to underpin 
an advance in stock index 


futures Been from the outset 
writes Joel KIbazo. 

Early buyers for the Uffe 
March contract on the FT-SE 
100 which opened at 3,280 


■ FT-SE 100 MOBt FUTURES (UFFE) E25 per ftji Index point 



Open 

Sett price 

Change 

Ugh 

Low 

Eat voi 

Open bu. 

Mar 

3280.0 

3205.0 

230 

33150 

32750 

17533 

50286 

Jun 

3310.0 

33000 

+220 

33210 

32800 

7822 

17853 

Sep 


33200 

+230 



0 

625 

■ FT-SE AMD 200 M1EX FUTURES (UFFQ E10 par MMndw point 


Mar 

3335.0 

30500 

+200 

30600 

30300 

156 

580 


W FT-SE IMP 230 INDEX FUTURES (OMLX) Cl 0 per fli Index port . 

Mar 38400 39658 +15L5 39548 3937.0 8 2.873 

Jun 39688 5 

Al open MmM Agues are lor previous dey. f Boot votams ahnm. 

■ FT-SE 100 taDEX OPTION [UFFE} (*3307) £10 par fi4 tndaw point 

31 SO 3200 3290 3300 33» 3400 34» 3800 
CPCP. CPCP CPCPCPCP 

Mar ISO B 1» 11^ a0>2 23b » 43b 17 74 7 T13 3 W3 1 20Bb 

far WBb Z7 132b 40b Mb 58 71b 78 SO 107 32 139 2BbT77b«b 220 

lay MB 47 IK St 131 W 102b 102 79 T28 88 157 42 191b 20 229 

Jun 211b ® 175b 73 147 B3b lMb114b*b 141b 79 170b 57b 203 44 240 

Onef 295b 129b 205175b 199 224 TffTb 280 

C*i 0;®a"Put* 7,1 St 

■ Hjroamgnr-sEimwccxcirrioMtufflggiOpaffuiiixkKpofcw 


3126 3178 3228 3278 3328 3373 3425 3475 

MV 174 5 127 B 84b Mb 38b 31b a 58 11 90b 4b 134b 2. 180b 
Apr 108b 22 150b 32b lit 47b BSb 67b 61 92b 41 122 29 UBbMb lKb 
m 216 40b 148b 69b BBbH2b 50 171 

Jm 227b 49b 181 81b 1S?b126b 87b IBS . 

Sapt. ZM 77 209 109b «3b «1 MBb203b . 

Q* 2B3 Pta 3855 - itoMykg Mi mhm. PnetiaN those are baaed on rattans* prim. 

} Lnoo rated «4*y mDKH*. 

■ EURO STYLE FT-8E MP 2S0 INDEX OPTION (OMLX) E10 per Ml Index port ■ 

3080 4000 4090 4100 41SQ 4200 42S0 4300 

Hr 43 41 24 BB 12 107 7 150b 1 200 3 245 2b Zb 

Apr 75 SBb100b42b 132 29 IBS IB 12 7b 5 

CMa 0 Pm* 0 seutaBent pitax mi wtona h Man ■ 460pm. 


sent it forward in thin trading. 
But for a brief mid-mom log 
ssfl order, March continued 
to push gently forward. 

Just when a luB In trading 
appeared, the strong 
performance of WaH Street 
brought renewed demand, 
particularly from independent 
traders, and a gentle squeeze 
was noted in March towards 
the dose. 

Having traded at a 
premium for most of the 
session, March ended at 
3,295, a 3-point discount to 
Hs fair value premium of 
about minus 8 points. 
Turnover was 17,533 
contracts. Substantial rolling 
forward into June saw 
volume in that contract of 
7,922 lots. 

The FT-SE Mfci 250 March . 
futures contract on the Uffe 
stood at 3,950 at the official 
dose, with 156 lots having 
been traded. On the rival 
OMLX, the same contract 
finished at 3,937.7 on volume 
of 9 contracts. 

In the Uffe traded options, 
volume fell to 32,813 
contracts, including 13,955 
in the FT-SE 100 option. 

J. Satnsbury, the most active 
Stock option, traded 2,287. 


FT - SE Actuaries Share Indie 


FT-SE 100 3305. 

FT-SE MM 280 3937. 

FT-SE MM 250 « Im Trusts . 3952. 

FT-SE-A 350 1874. 

FT-SE SmtaCap 2026.1 

FT-SE SnuMCap ax fcrw Trusts 20094 

FT-SE-A ALL-SHAPE 166M 

■ FT-SE Actuaries All-Share 


tty's Year- 

Mar 7 crifla* Mar 4 Mg 3 Mar 2 ago 1 

3305V +08 3278.0 3248V 8248.1 28573 

3937.7 +4X3 3927.3 3907 J) 3801 X 3119.7 

3952X +02 3843.0 39233 30173 31313 

10748 +07 1882.1 16473 1B47J9 1457.1 

2026.17 +4X22023352020882021.82 166093 

200827 +02 2005. 10 200381 200484 1664.72 

168455 +07 185328 1638.96 184013 143822 


i he UK Series 


Ot. Earn. P/E Xd nr* Total 

ylstd% yield* ratio ytrt Rattan 


322 5.61 

313 421 

322 52S 

351 5^44 

2.72 345 

388 377 

345 520 


10 MINBML EXIRACnONflS) 

12 Extractive Industries^ 

15 08. htoflistad(3J 

18 CT ExoioraUon 8 Prodflil 

20 QEN MANUFACTURERS^ 

21 BuMng & Constructional) 

22 Bufcflng Malta B MerctepO) 

23 CtemfceWaa 

24 ttvwsBM Industrial:# Q 
28 Bactranlc & Baot E*Jipf34) 

26 Enginaaring(72) 

27 Engineering, VohWoa(iq 

28 Flirting. Paper 8 Pd<eC27) 

29 TaxtBea & Apparalt22) 

30 CONSUMER GOODS** 

31 BrowerieapT) 

32 Spirits, Wtaas & CJdaraflO) 

33 Food Manutactucwa(23) 

34 Household Goods(12) 

36 Health Care <201 

37 Pharmaceutfcala(1C) 

38 Tobaccofl) l 

40 sem/KEspiot 

41 DMrtbutowPI) 

42 Lriwre S Hotato(2Z) 

43 Medta(38l 

44 HMaBera, Foad(17) 

45 RataBam, G«ml(43) 

48 Support Sorvicas(40) 

48 Transport 6 ) 

51 Other Ssrvicea & Butinw attZl 
bo ununesm 

62 BtocMdtytlT) 

64 Oaa Dtstributtor<g 
66 Talacaxmiiunlcaitoiwfq 


70 HHAHOALSflOS} 

71 BanKsflOl 

73 IrauranosflO) 

74 Llta Aaatmcefq 

76 Maretwrit BsrfcNB) 

77 Oflier Frtswupg 

78 Proowiy<4gt 

80 HWESTUff *" 1 Twusrema 

88 FT-SE-A ALL-SHAHQS54J 


Da/a Year Oh. Earn 

Mar 7 cfra>M tari M3 Ms2 ago ytaMtt ytajdH 

SB2.58 +002558.132538232531^1 2158.40 350 422 

1961.16 +1 A 3906.48 388378 368375 328420 315 421 

248527 +08 2472882451.10244301201340 362 426 

IBB2J2 -02 188927 188324 1886-68 2118.60 31B 379 

215428 +02 H3823 212426 211304175820 343 377 

1500.66 -0.1 150222 1504.40 150127 81420 226 120 

2274.72 +0L2 22SB.73 226026 2247271531.10 310 226 

242921 +OA 241379 2409.71 2383E8 219920 321 4.70 

211028 +1.7 207321 2071.08 20B122 182320 422 422 

211522 +02 2087 AO 208525 20B0lB8 180220 348 376 

197720 +08 1858.88 183824 192&7B 147420 2.78 291 

2402.10 -02 240319 238427 237120 182420 424' 329 

W31.45 +02 300828 287429 286422295040 228 428 

192820 +02 192020 190826 191379 1884.70 339 310 

>94039 — 2940A1 290226 289303 2831.10 390 390 

228820 +0.1228424 226372 2280.19 216380 388 722 

717827 +0.1 317424 313226 314311 2931.00 323 377 

>40397 +02 239925 2398.18 239382 2S11 AO 390 7.00 

{83028 -0.1 283221 2841A0 2856.27 243310 323 BAB 

183124 183043 183302 183329 181620 226 319 

714380 -05 318073 3093.95 306428 326120 426 729 

I13S.ES! +02 408627 400379 403086 405220 427 7.69 

Ml 827 +02 21 0223 206380 207928 183420 2.77 625 

111821 311723 3104,10 308421 285420 372 424 

axtfo +072307.61 228721 229345 178520 307 428 

132923 +2.1 3256.66 321358 3199.09 225050 128 381 

166327 +02165120160828160377 215370 373 826 

1757.73 +021753771737271737.74160720 2.71 327 

176360 +1.0 174392173822173371 1570.70 224 347 

>632.73 +07 2B15A4 262229 262017 208380 319 344 

131369 131318 131352 131220 134320 361 329 

>51829 +04 2507.14 248225 250051217350 387 392 

>37124 -1.0 2396.01 240002 240225 1722.40 348 1044 

n 29.06 +02 212225 2103A6 Z1 07 AO 2037.40 522 ■ t 

27425 +12 223307 221049 221227 203420 347 333 

i USB. DO -04 186S2S 168220 188325 179820 4JB 1368 

790.72 +021780871763771762.84157378 347 348 

141098 +12 237929 236374 238422 192820 322 313 

1104.77 +2L2 303727301028 303314 2384.00 338 425 

97323 -05 1382-47 1381.89 139096 135220 424 720 

>60821 +04 259928 256042 2603.41 2B0390 4.47 428 

108328 +12 303828 302300310007 230820 226 727 

100823 +0.1 2005.62 200022 200621 137120 322 338 

78383 ' +02 177344 1768.76 176373 115000 345 315 

196365 +02 295022 293221 293370 228340 2.16 1J3 

68425 407 105328 163928 1640.13 143822 345 330 


21.73 1048 121345 
2524 1127 143222 
2321 1128 143228 
22.42 319 126025 
3720 357 154325 
3424 323 153022 
2305 313 127334 

P/E Xd ad}. Total 
raBo ytd Ratum 

2365 420 1008.74 
2528 020 106397 
2305 625 89329 
3326 OOP 107332 


1725 1347 96328 
1329 924 1001.75 
2028 1823 104124 
1392 225 97857 

1727 020 98823 
2226 146 103720 
1528 2*JV 97427 
1315 ooo aao-70 
2318 . A12 101725 
2426 1.48 106308 
2721 1129 112381 
3020 426 1134.47 
1226 128 961.19 
2320 4.18 91925 

1727 1.18 105122 
3370 318 100974 
4226 072 110382 
1723 360 94124 

11.77 1385 857.82 
* 020 84087 
2223 028 94528 

828 34B 98328 

2223 427 123243 
24.16 1304 82828 
2626 2228 905.11 
1429 924 91420 
2720 020 88374 

1723 1007 80623 
2324 1019 104345 
4228 220 98627 

57.70 1016 9BQ4S 
2328 313 1Z75L34 


■ Hourly movements 

OM 820 1020 1120 122 0 1320 1420 1520 1310 M^Vdsy Uw/dsy 

_ 32BT0 32B73 33012 32907 32942 3291/4 32937 33012 33038 33107 38872 

SSJJSkW ^72 39332 38352 3831.7 3932.1 . 39312 3933.0 3835,1 39372 89331 39272 

FT^SIate t«9M 16702 .1871.9 16672 18682 1867.7 168B2 16712 16742 10739 16652 

1M D( FT-se ioo Kagh a/sapn lo« aao«i 

■ fT-SE Actuaries 350 Industry baekete 

0pnn Bjoo iptw 1120 1220 «L00 1420 1520 1310 Cto— Prawtous Change 

. - ' ru 7 14433 14337 1437.5 1440.9 14402 14412 1442.8 14432 14433 14422 +04 

OdgaCrMOl 14«.r mi*? 31192 31092 3112.1 311Z7 31212 31131 31303 -172 

5?™ CeuW “ SI 18882 16702 18535 1852.1 18442 16432 18432 18492 18532 18812 -72 

J2E 9089.9 31042 3121.8 31092 31172 81172 31232 31844 31430 3W3.0 30733 +87.7 

fc -+^ h»jfa«i+i«dta8aui6wla»us«.LiaaMeM«aBiBnMM s» a ti ti fati a rn T>»FinantiM'nir>Ba 

bsMan n +«i *s tasSn* M and tte FaeJy el Asturias uxtar a smtad m 01 swnd nht. 


slipped 5 to Slip' after news 
that an 11 per cent-pius stake 
In the group, some 6^7m 
shares, had been placed In the 
market 

The stake, owned by Dmnez, 
of France, was add. to stock- 
broker Charterhouse Tfiney at 
300p a share and passed on to a 
number of UK institutions at 
304p apiece. By the close of 
business, turnover in McAlpine 
shares reached 

The strong performance yes- 
terday of builders merchants 
shares augurs well for this 
morning's market debut for 
Graham Group, the UK’s 
fourth-largest builders mer- 
chants group being hived off 
by BTR. Graham shares, 


TRADING VOLUME 


■ Maj or Stocks ymterday 

VoL CkMlng Dq^a 


ASQA Qnupt 
Abbay Ntdontit 
MWfFUnr 

XSX& 


UDO «b 
1.7DD W 
67 


Aaaoe. BHL Ports 

Bflrtt 

BATSHta-t 

BET 


Bit 

grp*** 

BTftr 

Bn* ol ScaUndf 

aTLttet 

Booxar 
Boofat 
BnMSlft 
(ML Aaraapao+t 
BrtM Akway+t 

BrkHh Ga+t 
BMALand 
BrNMiStatff 
Eml 

Bunuft Casbott 
fiwtoo 

Cat+a&WV+f 

Cwtuy ScfXMppMt 

Caior Cttxjp 

Cndoit 

CadBriCam-t 

CODtiaan 

ComnuMat 

g?a. 

Dlnn* 

Cmu Bbcl 
E aat Mdand Bact 
&0 China On 

ensMcriaaOif 

OnunUM 

FW 

n»pn» 

RntanACDLLT. 

ftrtSF 

Oan. Acddnd- 
OomnlBactf 

Olynmxl 
Guraafct 
Grand Matt 


9«vm 

636 

46 

2j00 

504 

-7 


358 


7JS00 

2671* 

46>1 

2 /aao 

vx 

261 

43 

5S6 

43 

rat 

568 

-1 

8GB 

1004 

42 

MOO 

403 

44ja 

1^00 

135 

+l£ 

797 

483 

42 

7ia 

722 

43 

11.000 


44 

712 

345 

-1 

4^00 

9RM 

443>i 

325 

a 

0900 

375 

+ii 

1.600 

2D 7 

-a 

0300 

817 

46 

2000 

53* 

+1 

1900 

363 

46 

wm 

426 

533 

41 

623 

514 

49 

731 

310 

46 

7.800 

430 

Ah 

7400 

320 

+1 

161 

435 

♦1 

2JUG 

M3*z 

42 

B+4 

178 

49 

4A00 

631, 

-L 

1200 

477- 

-+13- 

ion 

484 

~4.i 

18 

978 

331 

404 

4 

1400 

967 

*22 _ 

3,400 . 

20! 

4C 

71* 

SOI 

-4 

1JB9 

275 

« 

747 

530 

46 

60 

463 

43 

166 

975 

46 

484 

211 

-3 


OKN 

Gukne«t 
HSBC (7Gp 


KKo-n - 

Scapat 

Johnson MBfflwp 

3Sf 

taefcrotat 
Land SaotaVart 

Laporta 

Leon & Ganaralt 

IBP. 

London Bact 

Umtw 


IBS B+8 
1.100 62* 

1.700 505 
S6V «ST 
230, 668 

1200 m 

1,100 130 

353 2B2 

2A00 260 

8.700 3«S 
MOO 605 

M 903 

1200 548 

MOO 480b 
42B 082 

<200 185 

1200 996 

4500 929 

2,000 0S7 

110 435 

MOO 206b 
207 
1200 »» 
80S 178 

1200 347 

2200 751 

740 990 

273 

1200 BOB 
173 613 

2200 200 
200 720 

213 9W 
804 
997 

2200 
1,400 


Maria &^anc«t 3200 420 

MMmds Etaot 836 (B3 

Morrison (WmJ 9,100 120b 

wet ^ 2200 200 

NMMwtSankt 3200 405 

NrfmfAwwt 1600 473 

Hast 484 216 

North Wtat Watsrf 1.700 507 

NtartWRl Qsot . 200 070 

Northatn Fhoritt 1200 222 


301 664 +1 

1200 689 *13 

. 1^00 226 17 

649 1112 +12 

032 -1 

972 -1 

816 421 

200 +0 

627 2159 +61 

7.200 160 40 

Z30O 441 40 

2JM0 284 -1 

4.300 373 -7 

113 1123 ♦10 

523 550 4b 

760 363 -13b 

2^00 401 -7 

0.900 120b J 2 

MOO IBB -1 

1.000 ass -9 


HsSdO?CQfenant 

RtxMt 


MSU 

Soanh&Naw.f 


mMki ol Un London Stock exchange and 71* AioneM TlmeB LimtodTha FFSE Matiga flhara 


a in* TT i h .h, 4 s«ri sarrin maria at ma unan mm* m urn* >si 

■FT-SE* arid foi«ta- « Wnj «*22?T «*» » ■» «* * VM* ■■ 

Mkm m oidiad W WM »Mp6>V. T w 


BmSoitck 1,900 IBB -1 

O aa g oBBi t 1.000 ass -6 

SMBri) ThWt A 1200 656 

eMDanapmt 4400 706 44 

Stabrit 3,100 622 46 

aouSpEata 1S9 2M 45 

Bnrim |WJ4J A 102 511 -2 

8nwh 9 Nwhaarf MOO 14»b -1 

emHBasctaRt 1JSUO 400 44 

BmN BMdan U&t 667 967 49 

SMtnM. STB 483 42 

Soudwn Baott 147 000 -3 

South Watas Eto. 67 721 -6 

SMhWMWWr 146 564 -3 

South WaK. Baez. 714 639 -10 

Scnnh«n WMnr 204 370 +1 

aarnom Chart&t 1^80 1104 446 

awMwuw 263 227 +1 

Soa ABhaioat S 02 345 43 

TUN 2.400 2*7 44 

TiapapT IflOO 439 48 

TSOt 4JSOO 293 43b 

Tarmac 4400 200 

Tntt&Lvk) 602 403 42 

Tayfar Wcodmw 1JOO 166 -6 

Thaoot SJOO 231 b +1 

Ihamti WBtarl 505 330 -2 

Thom FWt 666 1114 +16 

7qt7*fc«t iOOO 203 46 

ThdiOaHajai 1200 m -2 

UMpata 180 376 

466 1118 413 

UrtMd Btaodtaf i/ao afiO -4 

UU Hnnapm 761 689 *14 

VtxMmst 690 610 *0 

WartMpfiQgt 160 69* +10 

WBBoonwP 393 Mo *3 

Watah Wnr 82 643 -7 

M tawri WMV 322 696 *1 

VMtnadf 88S 561 

WtaaMdott £000 401 40 

WlCanai 524 907 -1 

Mnw , 300 230 45 

VUMtarf 3® 800 +W 

YertoMriB att. 786 645 -2. 

IMMWnr 263 525 -8 

Zamoaf 969 792 

BtMd on hxinp wtm tar a Mtaatod of maior 
aemhtaa riaOi noutfi *» 8EAQ nytaon 
rwtanhv until 430pm. Ttadaa of on# ntita" » 
m im raundad down, t taSoBMi ■> FT-SE 
lOOlndn coraatuan: 


offered for sale at 183p, are 
expected by marketmakers to 
Open around the I95p mark. 

Graham is seen as a major 
threat to Wolseley, one of the 
bunding materials sector’s real 
successes over the past decade, 
and Travis Perkins. The latter 
rose 9 to 335p and Wolseley put 
on 19 at 899p. 

Close Brothers, one of the 
market's lesser known mer- 
chant banks, delivered a spar- 
kling performance, the shares 
spiralling upwards to close 83 
higher at 528p after the bank 
announced more than doubled 
half-year pretax profits, a 56 
per cent increase in the 
interim dividend, flnri a one-for- 
one sczfp issue. 

Other merchant h anks 
clawed back some of the big 
losses of recent sessions, with 
S.G. Wartmrg closing 10 firmer 
at 839p. 

The hi g h street hawks staged 
a strung rally after the recent 
heavy setback in the sector. 
Standard Chartered, due to 
report preliminary numbers 
tomorrow, raced up 49 to 1164p 
after Credit Lyonnais Laing , 
the stockbroker, was said to 
have forecast a 24p dividend 
total and pre-tax profits of 
more than £44Qm. 

Talk of switching out of Bar- 
clays and into NatWest ahead 
of Barclays figures, due tomor- 
row, drove NatWest shares up 
13 to 495p but restrained Bar- 
clays which settled only 5 bet- 
ter at 5I7p. 

BP featured prominently in 
the market’s most active 
issues, with a block of 4m 
shares traded at 370p and a fur- 
ther 1 -Itti at the same price. 


NEW HIGHS AND 
LOWS FOR 1993/94 

NEW worn wm- 

olii (i) Haw. ape n_ im*. bum mails a 
MOHS Aim; Epm+n, SHIP, GHBKM6 

M BASF. a*/*. Pnw, twmsurem CQ 

Em Hatataw. HaMbm, PIVE1 BW EJ INDUS 
mcooMM.MenwcacLBcruuFn 
Abacus, AIM. ctotaft, Eumtam. NoUa PH. 
Vmh, BtWMMNQ (7) Am* Copco B. 

Fmr. MangmM Broraa, Spte-Saeo, 
SymonM. ISnoiH Wtgoo tan. WS, 
VEMCLES m VbBwmbw, EX17MC1WB MU 
R KHHon Gold. NEM, sums Bfeda, 1=000 
IIANUF (6 Owtata (60, KtiuL HEALTH CAM 
p> F+nwri, BHMJRANCC tl) DtmMta 6 
GenamL RMBTMBITTItlMTll P) Mtaafcn 
EUn. ftmBtr, MVEBnnrr COMFAMBS p| JF 
Jwi unuRE a Honui n Bm 
9 WAT A Noam Mum. RMk Ogmmuon, 
UTC ABBURANCS p] Ubmy Ltal Amoc AMa. 
MSXA n JaTnMtn Plaaa, ftautam, OIMH 
RNANCIAL p) CanwBa, OnniBM* 
BU8NI 69 CMdMtun. CMngaa pfnm, 
PAMBI A PACXD n Brit Mytaan* 71/2pe Prt. 
F4eg«4 a. SpapL VMBmoughk FIMFeRTY n 
Boim ttaRffl Pmp. Ro+dHiMn, RETAURt, 
FOOD P) Farit Food, SUPPORT SBW8 0) 
AdenM. CRT, CetnpuMe Ptoptai ConxmB* 
Smvm. Krinwnin. 3«m«. S+tn, AM6BBCAHB 
M Barr A WUtapB A. 

NEW LOWS paj. 

QtLTS n Thm. ape 1664, E*eh. 12 Hdc 1864. 
Bo+v ISMpc ISO*. BUUJMHa A CN6T1W P) 
Wss»n*W Scaltak&io, FOOD MAHUF p) 
Datapak. msurahce p) minSbei Omv Oap, 
PmriumTniM, MVE81MKT 7RU8T3 P) 

Bvtag Bmp. Emt>_ OIL IXPU3RAI10N A 


the stock. The shares put on 5 
to608p. 

News that Ladbroke was 
considering returning to the 
casino business after a 14-year 
absence helped the shares 
climb I'A to 2Q0p. Demand for 
Statds following a recent round 
of presentations to institu- 
tional investors saw the shares 
gain 2% to 89p as turnover hit 
l+>m* 

Manchester United's Premier 
league (Meat at the weekend 
weakened the shares, off 7 at 


OBHRM. p) BriMi AJacAmn, T6XTLB8 A 
APFNIHL P| OupHL AMBBCAMB PI 


The stock closed a net 4 higher 
at 367p after turnover of llm 
shares. 

Cadbury Schweppes weak- 
ened 4 to 494p ahead of results 
tomorrow. Many observers are 
still convinced they will be 
accompanied by a big rights 
issue to mount a full hid for US 
drinks group Dr Pepper. Hills- 
down, which reports results on 
Thursday, edged up a penny to 
178p. 

Kingfisher bounced with 
UBS said to be recommending 


Pharmaceuticals group 
Glaxo slipped 12 to 695p 
against the trend as some 
investors took profits following 
Friday's sharp rise. 

Media investment group MAI 
gained 8 to 273p after It was 
announced that the nFfor for 
Anglia Television had been 
declared unconditional. Anglia 
lifted 5 to 639p. 

Carlton Communications 
bounced 22 to 967p after recent 
sharp falls as Hoare Govett 
continued to recommend the 
shares. 

Hickson International, the 
speciality chemicals and tim- 
ber treatment company, 
improved 4 to 204p as Investors 
responded to a reiterated buy 
note from Kleinwort Benson. 

Shares in engineering group 
BBA Group, fell 9 to 207p, after 
it announced hi ghe r than 
expected provisions and indi- 
cated a reduced dividend pay- 
out for the current year. 

Confirmation that British 
Aerospace was in talks with 
French arms manufacturer 
Giat, over collaboration in 
munitions, sent the shares 8 


ahead to 510p. Sentiment was 
further boosted by reports that 
the ceiling on foreign owner- 
ship of the shares would soon 
be raised by the government 
from its present 2&5 per cent 
to 49.5 per cent 

The same sentiment, 
together with a squeeze saw 
Rolls-Royce add 6 to 180p, with 
volume reaching 6m. 

Reports, confirmed after the 
market dose, that British Air- 
ways was p lanning to suspend 
further investment in USAir in 
which It has a 25 per cent 
stake, depressed the stock. The 
shares eased 4K to 430p, In 
trade of 7.8m. 

Conglomerate Safer were in 
demand ahead of today's fig- 
ures and the shares put on 6 to 
205p. 

Other big moves 

An announcement by North- 
ern Leisure that Its accounts 
are to receive an £8£m boost, 
together with positive remarks 
on current trading, sent the 
Shares eUmWng 10 to 51p. 

USM-hsted Cupid, the manu- 
facturer of bridal wear, lost 
favour in the marketplace after 
the board issned a profits 
warning and the shares 
plunged to a new low. Cupid 
said it would be “substantially 
loss-making^ in the current 
financial period and the shares 
slid 6 to 16p. 


Christopher Price, 

Peter John, Joel KRnzo, 
Steve Thompson. 

■ OOwr statistic* Page 23 


LONDON EQUITIES 


LIFFE EQUITY OPTIONS 


PlAl 

Option’ ■ By Jti Pel A0f Jti OK 
ASflHjoni BOO«maSM 64 7 2ZH2M 

C834 J 650 15* 2814 38% 29 49K55K 

240 25 32 17% 5H 14H IBM 

0258 ) 2601ZM Z1 27 14 2fl 29 

ASM ED • BH11» 3 5H 7H 

fW) 70 2tt 5T4 7 M 12 14 


BfXAtann 420 23M 3614 4411M2SH 31 
(*430 ) 460 6K17K2K4 35K 48 54 

5MUBA 380 2BHaSM 46 12 205 31 Ji 
[■400 ) 420 12 28 34 29 4054 <8 

Bools 500 46 6414 Bill- 5 IBM 21 

rS38 } 550 14 2514 3414 2BM 43 45K 

DP 360 It » 3B B17HZ2M 

rSE7| 380 ■ 151422)4 27 34 30 

BtttiSM 140 miSHim B 111314 
rT43) 160 2% 7 11 19 2314 2B 

Bm 500 43 5BH 67 7 17 23 

rS32J 550 122614 «1 26 42 47*4 

ttta&Ms 475 2014 3714 - 1414 2014 - 

r<7B } 500 1114 2014 3314 31 48 50H 

CDOftBuUs 500 4614 SB 64 514 19 2414 
[■MB J 650 14ft 28 36 20H 4434 4614 
Coon IMm BOO 23 4234 4714 IBM 27 36 
riSCI ) 660 6U 2014 2414 52 56 6B 

IQ 750 1814 30 4814 32 4814 58 

[-751 ) 600 BM 21 2B73M61M 91 

nmtiHur 600 3114 4514 SB 17M 30 45M 
(VOS ] 660 11 24 86 51 68M 75 

Hod Sacur 700 32» «V* 61H B26M30M 

(718 J 750 9 13 27M 36 57 59M 

Mata i S 420 ISM 2814 3SM 8M a 22 
1*428 ) 460 4 12 18 34M44M 46 

MM 480 461489146711 614 14M 2114 
(*466 ) 500 21 36 4BHZ1H31M 39 

BtintiujF 360 24 32M4DH 9 21 H 27 
f372 } 390 804 1814 Z7 25M38M43M 

Shafl Tran*. 700 1514 34 41 2214 32 *154 
(-708 ) 750 314 ISM 22 B9G8M73M 

Santas* 220 M 2114 26 6 ISM ISM 

1*227 ) 240 4K 12 IBM T7 2SM 27 

Titaigw 106 9M ISM - 6 11 - 

pl 08 ) 116 • TIM - 11M IBM - 

IM9WT 1100 3BM 5BM 75 2654 3714 5ZM 

(11181 1150 13M 26M 81M 61 BB 81 

7HIKM 750 25 47M69M27M 42 55 

(*753 | - 800 7M 26M 3BM 64 7314 B5H 

Optai Itagr Aop Mb* Itay Aog Nov 


460 4614 S2MB1M 
500 17 36 4014 

180 25 SIM 3614 
200 1ZM20M 28 
330 25M33M 38 
360 BM 1BM2NM 
tar Jna S*p 

130 6M IB 21 
140 4 11 WM 


9M 16M22H 
27M35M41M 
* BM 14 
12 18 24 
9M 16 2214 
29 34 36 
Mar Jan (tap 

BM 14 IB 
13M20MZ4M 


Optai tat Aiq *+ tay Aug tar 

BtitAn 500 46M O0M 6Z» 2SM 44M 57M 
(HID ) 550 27 44 61 65 73M 65 

BAT kata 460 4149M6BM111BH28M 
(■082 J 500 IBM B36M32M 42 SOM 

vm 360 MM S3 89 18 18 25H 

(-374 ) 380 TOM U 25 30M. 35 42M 

BritTckcos 420 38M42M47M 5M 14M 19 
P443 ) 460 11M 21 Z7 24K34M 40 

cater sa 483 ism - - 23 - - 
P4BS| 542 4M - - 63M - - 

EtalBK B00 6K4 70M 78 7 20 Z7H 

CV46 ) 660 2B40H47M 26 44 51 

fitanna 500 38M 51M BZ» 17M 28H 34M 
tV34 ) 660 14 2BM 49 47M 57M ttM 

EEC 300 23M 28XTM B13M 17 
P3131 330 7M12M17M22H 31 34 


P1H) 
Lucas Ms 
r«B) 

P AO 

craz) 

PWotfon 

nw) 

il-i 

imaorafii 

r325 ) 

FQZ 
r*S8) 
Redati 
rS72 > 
ftyP kMCB 

ran) 
Teno 
r23i > 


C400 ) 
Option 
BAA 
( 10 ( 0 ) 
ItasaWr 
PSM) 
Option 
Abbey mu 
(*497) 
Amtad 
P37M ) 
Barctays 
CSW) 
Btae Ckcta 
(153 ) 


WfestaHn 

P177) 

Unto 

ns7> 

Ml ftMuar 

r<72) 

Scot power 
C401 ) 
Seas 
( 120 ) 
Rata 

raw) 

Tsrmac 

ran) 

Ttan ai 

mra 

Tsa 

raw) 

Dntttaa 

faw ) 


— am Pits — 

Msy Abb Mw tfe Aug Mar 
260 18 21M 2B 3 10 14 
280 7M 12 IBM 16 21 24M 
120 rm 23 27 7M 1214 IBM 
ISO 12 U a 13 1SZ2M 
200 25 31M 35M 5 9M 14M 

220 12 IBM 28 13H IBM 25 
680 W7IM BB 14 28H 42)4 
700 » 49 BOM 36 53M69M 
ISO 24 29 33 4 BM 11 

200 11M 17 22 12 17M20H 
300 2914 35 3914 7 11M 17 

330 IBM IBM 24M ZSM 28 32M 
B50 42MB4M79M 33 46M 6W4 
BOO 19% 41 57 64 74M88M 
550 37 48 6B22M33M 46 
BOO 132SM35M55M 04 75 
260 2114 30 30 IBM 19 25 
300 13 204 27 25 3IM35M 
220 IBM 24% 30M BM 13H IB 
240 7 15 21 21 25 29 

000 38M B9M77M24M 42 53 
050 W 37 55 55 70H80M 
390 23% 30% 37 MM 21 W 28 
420 8% 17 24 34M 39 45 
Apr Jed Oct Apr JJ oa 

1000 33 55 7S 25 45% 54 
1050 14 32 02% 50H 74 82 
500 37% 40 51M 8 2D 24 

550 5 18 ZSM ZSM 46 52 


460 4BM 43 64 2M 12% 19 

500 0H 20% 33 20% 31 38M 

35 3% B B 1% 3M 4H 

40 1% 4 BM 4 0 7% 

500 24 38 00 ISM 25% 35 

550 4 18% 32 47 5444 64 

330 28 36 48 2 12 IBM 

380 7% 1BMI0M13M27M 35 
300 23% 28% 32 1» 8% 12 
330 5% 11 16H 13H 23 25 
200 14% 2SH 28 4 9 IBM 

220 5% ISM 18% W 19 27 

USD » 22 25% 1 6 8% 

190 5 9 14% 7% 17 19 

14019% *7 32 1% 7 13 

100 5% IB 22% 8 IB 23 


Rises 

Feta 

Seme 

60 

3 

5 

4 

0 

11 

62 

68 

70 

171 

102 

406 

59 

32 

108 

127 

58 

335 

12 

25 

9 

105 

102 

184 

214 

22 

224 

00 

39 

29 

880 

452 

1383 


RUBS AND FALLS YESTERDAY 

British funds 

Otter Rxod Interest - 

Mineral ExtraoHon - - , , 

Qeneral Manufacture! . . . . .... 

Consuitr Goodn 

r^nrfcfMf , , 

Uatlqs 

Hnandata 

Investment Trusts — - 

Others . 

Totals 

On bated an ii>OM compsnlM Msd an th* London Blsn 


TRADmONAL OPTIONS 

RratD«fin09 March 4 last Dactaratkjna Jms2 

Last DvaSUigs March 21 For sattenwnt June 13 

Calae ABIanoa Has, Anaco, B*autard, QoldauMl Res, Hanson Win, MBurati, 
Ransamaa, Raflant Carp, SaatoN B. Saatctri, TIptiooA, World FMda. Puts; BaO- 
dbney. Puts 5 Cab; Avaaco, Hanson Wta, Lonrtsa. 


LONDON RECENT ISSUESe EOUfTIES 


400 19% 
500 2% 
390 It 
420 4 

120 4% 
130 1% 
260 15% 
290 3% 
200 8 % 
220 1 % 
1100 36 
1150 9 

240 17 
260 •% 
200 8% 
290 2 

OSD 20% 
700 BM 

Apr 


31% 41% 6 20 28M 

MM 26 30 44 48% 
STM 48 5 14M 24% 

T7 25 22H 30H 41 

8 11 3M 7% 9% 

4% 7 11 15 IBM 

20% 29% 3% 14% 19% 

10 18 10 27 31% 
WMMH BM IBM 21% 
7M 10% 22% 29% 34 
83% KM MM 37% 64% 
3BM 87 45 64% 91% 
20% 34% 2% 9 14% 

ISM 24 11% 18% 2S 
IB 26% SM 13% 18% 

9 16% 19% 25 3IU 
B 74 14 38 52% 

20% 5114 48% 68 31% 
JK Oct APT M OH 


ssue Amt 
price pekl 
p up 

m. 

cep 

(Emj 

199S/M 

Hgh Low Stock 

Ctoea 

price 

P 

+/- 

Nat 

cBv. 

CSV. tta 
CM. 1 M 

WE 

not 

140 

FJ». 

2006 

17B 

1S3 Alpha Abporta 

173 

+3 

M4J03 

Z2 

23 

193 

- 

FP. 

1.10 

oh 

1 *Care UK Wrta 

5- 

■1*2 

- 

ta 

- 

- 

105 

FP. 

352 

118 

115 CedsnMa 

115 


FW1J&1 

23 

2.1 

16L0 

160 

FP. 

101 J3 

151 

149 CHroedence 

148 


w 

- 

- 

- 

124 

FP. 

244 

166 

143 CMcei Coirvuttas 

152 

-3 

- 

- 

- 

20 

§90 

FP. 

6.72 

173 

106 Comp Rn Sal 

143 

45 

N- 

- 

* 

223 

SO 

FP. 

1384 

60 

47 fetal New Tiger 

49*1 

*a 

- 

- 

- 

- 

50 P-P. 

104 

58 

55 Erwroy Capital 

5B 


- 

- 

- 

- 

- 

- 

VJ01 

28 

4 Do Wwisnta 

2B 


- 

- 

- 

— 

130 

FP. 

322 

155 

130 RneH 

148 


R3L3 

2*3 

23 

1 92 

- 

FP. 

244 

102 

93 Fleming Japan C 

101*2 +1*2 

m 

- 

- 

- 

170 

FP. 

74.1 

170 

159 Gaktaborautfi MUi 

168 

-1 

wms 

2j8 

2 A 

135 

— 

FP. 

834 

74 

68t| Quengdong Mpt 

B9V 

- 

- 

- 

- 

- 

FP. 

448 

2Sh 

18*2 Do Wenonte 

20\ 

+i 

- 

- 

ra 

- 

100 

FP. 

674 

103 

94 Htanld bwTet 

108 

+3 

- 

- 

- 

- 

_ 

FP. 

6.63 

61 

46 Do Warrant* 

51 

43 

- 

- 

- 

- 

50 

PP. 

4674 

49 

40*2 KMmwtl Eure Pvt 

411* 


- 

- 

a - 

- 

- 

FP. 

38j0 

43 

37 Do Wartsots 

38 


- 

- 

- 

- 

50 

FP. 

206 

52 

49 Mthras hv Tst 

51 >2 


- 

- 

- 

- 

_ 

FP. 

248 

28 

25 Do Warrants 

20 


m 

- 

- 

- 

no 

F.P. 

S&2 

120 

117 Partakto bm 

lie 


BNSJ3 

1J5 

*2 

73Z 

_ 

FP. 

321 

200 

198 Ptamtigwi (ntlC 

198 


- 

- 

- 

- 

126 

FP. 

194 

133 

125 Redstone Tech 

129 


RIO 

2 A 

23 

103 

100 

FP. 

574 

96 

94 Saracen Value 

96 


- 

- 

- 

- 

- 

FP. 

440 

43 

40 Do Warrants 

40 


- 

- 

- 

- 

100 

FP. 

42.1 

98 

89 Tehran Inv 

93*2 *2*2 

-a 

- 

- 

- 

— 

FP. 

3.78 

52 

40 Do Warrants 

42 


- 

- 

- 

- 

200 

F.P. 

3X4 

216 

211 TMbk 

211 


A&8 

22. 

as 

17-4 

118 

FP. 

552 

140 

130 Tring Inti 

130 

-8 

RN3-8 

2.1 

3.7 

15-4 

153 

FP. 

- 

160 

153 Untied Carriers 

160 


- 

- 

- 

- 


1 hboriuedon. 5 Ptacdng price. FJ>. nap-paid aactrCy. For i 
» the (hide niha London 3tara Senfo*. 


RKUfTS OFFERS 


Stan 950 i 

rwe) 700! 

HOCltab 8501 

roes j goo] 

Reuter* 2100 
(■21581 2150 

Option I 

Bots-Rojca 180 

na?) a» 

-uxl^hgao* 
based on doakig i 
Mach 7 Tate at 
PutN 10,030 


Issue 

price 

p 

Amount 

paid 

up 

Latest 

Ftanun. 

date 

1998AM 
Hah Low 

Sleek 

dosing 

price 

p 

+or- 

20 

M 

11/3 

36pm 

3pm 

Beautord 

4pm 


92 

M 

11/4 

13pm 

11 pm 

Bistort 

13pm 

42 

4>4 


14/4 

6pm 

3pm 

Cara UK 

Ivor 

-2 

42 

W 

14A 

18 pm 

8pm 

CBMdmut 

8pm 

-ih 

15 

m 

250 

ton 

3pm 

Craaton Land 

3pm 


12 

w 

13/4 

12*2pm 

10pm 

FW (DM) 

12 pm 


120 

M 

21/3 

46pm 

33pm 

jrQreMnor tana 

41pm 

-2 


ptea, Pntmtne ahowi *ra 


pm Price *l a pnmlunL 

FINANCIAL TIMES EQUITY INDICES 

Mar 7 Mar 4 Mta -3 My 2 Mn 1 Yrapo *H)flh tow 

(MteySta* 2684^ 2563^ 25402 2S31.B 253&0 2293^ 2n3u6 2124.7 


Onldhr. yttd 

3.58 

3.82 

3.88 

3M 

3.87 

42B 

4JS2 

3.43 

Ean yid. tofl 

4.70 

431 

488 

Am 

+.90 

5.9S 

dm 

3.82 

P/E ratio net 

22JBB 

22.45 

2224 

22.10 

22.14 

20.99 

33,43 

19.40 

P/E ratio nB 

23.78 

2343 

23.18 

23J04 

23J0S 

19l34 

arum 

16.14 


FT GOLD MINES INDEX 


*ira (15) 

Arantab( 

NorttAatart 


tar 

4 

Kctig 

■eday 

Ntir tar raw 

3 2 av 

Crass Mr 

m* 

Sank 
a* Low 

190.11 

-48 

1660A 19B4JB 113683 

181 

230746 imO 

364334 

-48 

267140 tm/a 1242J9 

EL 13 

344060 124289 

2321-00 

+27 

yweiM 120352 

1J7 

301169 1164J2 

109273 

-0.1 

100381 1604.71 10B7J38 

056 

2039JS5 109530 


-For item OaSraay Shara Mm ilnea compStecm Mgh znajt 24094; low 4 BA 26AW0 
FT OnSnary 8ha« Mac baa* data 1/7/39. 

Ottibnry Sham ho u rly chanpaa 

opan 9JM 11X00 11-00 12J0 ISjOO 14JW 15JM 1BJO Wflh Law 
2S66.4 2S79.1 2579^ 25722 2674J5 2573A 25765 25807 2587.0 25865 2569.4 


Copyrib. Ite Hnandal llima Unbd 1994. 

Raura* h teachta Umw mirfc+r ci CCO^ite. Ba*U U8 Data. BtM ItataS ItBOOD SlhSM. 
Piadacsaaor QcU Mow Mu Mar 7 : 20U i d^a ohangt: 4X7 potas; Yta ago; 940 r Panflti 
Land prioaa awa BnautitaDta far tta adttoo. 



Mar 7 

Mar A 

Mar3 

Mar 2 

Mr 1 

Yr ego 

SEAQ hatpins 

31829 

25882 

27.428 

32867 

26.740 

42,784 

Equity turiorar {EnOt 

- 

1444.7 

14118 

1345.4 

1723.7 

1231.8 

Equity bergeinst 

- 

29347 

30823 

35897 

33842 

458S2 

Shares traded (rrtW 

- 

5218 

5718 


wag 

5388 

t Brdudhg taMHirarioK DuitMte and av+noei hsncxw. 










32 


FINANCIAL 


TIMES TUESDAY MARCH S 1*N4 


LONDON SHARE SERVICE 


BANKS 


BWLDMG HATS. & lERCHANTS • Coot 


ELECTRONIC & ELECTRICAL E&*T ■ Coirt. BK 5 INEERMG, VEMCLES - Cart. 


HEALTH CARE 


BIVESTMENT TRUSTS - Coot 


««Aa*jR_ 

WAS 


NCIttS 


Pita 

m H 
M5V 

487 


Abbey Hadort* 

AteaktaE__ T _ 

Anglo tab IE _J*C 

7034 -a*? SH 415 19026 

Banco MYb Pa — . CMS -ft OT\ 034 1448 

ftmcdSamPti 04^ £38 £2 4& 1847 


BO 


tv 

+fl\ 27BV 
+7 524 

*2 314 

TO 


I933/B4 Ud 

|H 

£184 M81 
130 3,217 
315 0S» 
in 1,7® 
CB 146 A 


YU 

Sr's P/E 
4.4 120 Ttort. 
3.7 190 Tr»fe 
3.6 ]&4 Tutor 


« 111 


<HpiW 



BrtUurt (UK) 

B4MME^.fuza ZS7 

■ww mo* 

eil* 

8SS5=: ■£$ 

FbdKSRn JCj 83 

SJpcOrPt 88 

7pcQrPT_ _ 181 

R 18=4 

HSBC UK Q 911 

KS8Cf75pShs) — □ 887 

uoi* rea 


:Sc 



WMWtou* .* 

07 - Wtta a XJ 

U 8.7 msha*- 
19 112 ftoetry- 
5 S * 

4.7 10.7 

I* a i CHEMICALS 

17 - 

ID 

04 67.7 UASKr EM& 

- Moon 

« AJWWWfiJ^tKQ 

- AnnrM HI 745 

- BASF DM Elisa 

- BOC too 722 

r btp — *hd 337 


tio 


1393791 MW 

hUi W Cxfin 

— 150 240 

168 304 
71 251 

M*i 159 
25 107 

M 400 
17 38B 
533 2400 


240 

370 

28 

75 

49 

*129 

S3 

820 


YU 

QTE HE HOMS 

24 1BJ Crar 4t*U 

ID 500 CrttHeyWo JO 

1.4 - Dale _« 

- - EJaMBosSBLtlO 

- - DUtS 41C 

U 204 Danattnm— 1 

1 4 309 DerfWdA___.XII 
15 JOB DooroPrtt— MO 

Drawing &m JC 

Ora* .t 

SedntaBSKr. 

Emu jC 


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FINANCIAL TIMES TUESDAY 
































































































































































































































38 


FINANCIAL TIMES TUESDAY MARCH 8 1994 


CURRENCIES AND MONEY 


MONEY MARKET FUNDS 


MARKETS REPORT 




D-Mark moves lower 


The weekend settlement of the 
wage dispute in the German 
engineering sector set the tone 
for foreign exchanges yester- 
day, writes Philip Gawith. 

The pay deal - effectively a 
wage freeze - was at the lower 
end of market expectations and 
renewed hopes that the Bund- 
esbank might quicken the pace 
of monetary easing. 

The central bank is expected 
today to announce a further 
easing in the repo rate - the 
indicator it uses to set the level 
of money market rates. 

The D-Mark finished lower in 
London against most European 
currencies, but was slightly 
firmer against the dollar and 
sterling. 

Analysts said President Clin- 
ton's political difficulties, aris- 
ing from the Whitewater scan- 
dal, still remained of only 
minor concern to markets. 

■ The engineering industry 
wage settlement was widely 
interpreted as improving the 
outlook for lower German 
interest rates. But this reaction 
was still tempered with cau- 
tion. 

The March Euromark 
futures contract was only four 
basis points higher at 94.19 yes- 
terday afternoon, indicating a 
fairly modest view of where 
rates are heading. 

Although the longer con- 
tracts reacted more positively - 
the December contract rose by 
13 basis points to 94.98 - Mr 
Tony Norfield. UK Treasury 
economist at ABN-AMRO. said 
even these levels revealed 
“continuing scepticism" about 
the prospect for lower rates. 

While most observers are 
anticipating an easing in Che 
repo rate today, nothing dra- 
matic is on the cards. Mr Jer- 
emy Hawkins, senior economic 
adviser at the Bank of Amer- 
ica. said he did not expect a 
cut of more than five basis 
points; but Mr Brian Martin, 
senior economist at Citibank, 
said the market seemed to be 
looking for a 10 basis point 
reduction. 

Mr Martin said the relative 
strength of the D-Mark and the 
fact that the bund market had 
recovered its poise - added to a 
fairly benign inflationary out- 
look - suggested the Bundes- 
bank had room for a cut of this 
order. 


Dollar 

Against the Yen (V per $) 
112 



14 Jan 1894 Feb 

Source: FT &eprila 


■ Pound la Mm York 


■ter 7 

— Latest — 

-PM*. dOM 

tm 

1.4905 

1.4600 

i nan 

14885 

1/4081 

3 mm 

1.4660 

1*854 

1 W 

14300 

1.4806 


The picture yesterday was of 
uneven D-Mark weakness; it 
finished lower against the Bel- 
gian and French francs, and 
the Spanish peseta, bat was 
firmer a gainst the Italian lira. 
The lira finished in London at 
L982.8 from L981.7 on Friday 
and a low yesterday of L984^0. 

Mr Hawkins said the weaker 
Italian currency appeared to be 
the product of recent opinion 
polls showing that a centre- 
right coalition government 
might now be more likely than 
a centre-left coalition. Italy 
faces a general election on 
March 27. 

International investors are 
said to favour the centre-left 
option because it improves the 
prospect of Mr Carlo Azegiio 
Ciampi, the prime minister, 
staying in government He was 
previously the highly respected 
governor of the Bank of Italy. 

■ The weaker D-Mark lent a 
firmer tone to the dollar which 
was also supported by the con- 
tinuation of its recent recovery 
against the yen. The dollar 
closed in London at a high for 
the day of Y105.850. from 
Y105.515 on Friday. 

Rumours that the Fed might 
tighten credit policy yesterday 
proved unfounded. Mr Norfield 
said the next move from the 
Fed would probably come after 
the meeting of the policy-mark- 
ing Federal Open Markets 
Committee on March 22. 

Mr Hawkins said the fact 
that the dollar had maria SO 


little headway, despite the 
heightened prospect of a move 
on German rales, “says some- 
thing about the political wari- 
ness now in the market about 
Whitewater." 

Having been very much on 
the periphery of the market's 
focus, he said the financial 
scandal dogging the Clinton 
administration was "starting 
to gravitate more Cowards the 
centre." 

Mr Martin from Citibank, 
however, said Whitewater had 
not yet been much of a factor 
in the market's thinking. 

Mr Hawkins said a closer 
look at last Friday's employ- 
ment report could also have 
contributed to uncertainty 
about the dollar. He said the 
important earnings growth and 
hours worked factors were, if 
anything, on the soft side and 
could have delayed the pros- 
pect of a further Fed tighten- 
ing. 

The appreciation of the dol- 
lar against the yen flows from 
the US administration's deci- 
sion to reactivate the Super 301 
measures allowing trade sanc- 
tions to be Implemented - in 
this case against Japan. The 
market appears to have taken 
the view that, with Super 301 
in its arsenal, the US will be 
less tempted to talk up the yen 
as a means of curbing its bilat- 
eral trade deficit with Japan. 

■ Liquidity conditions in the 
UK money markets were easy 
yesterday. The Bank of 
England put £L8bn of liquidity 
into the system, equal to its 
revised estimate of the short- 
age. 

Sterling traded in a fairly 
narrow range to close margin- 
ally weaker against the D-Mark 
and the dollar at DM22615 and 
$1.4906 respectively. Weaker 
than expected credit growth in 
January, a fall in housing 
starts and the German pay 
deal, all lent support to a far- 
ther fall in interest rates. 

The June short sterling con- 
tract rose by four basis points 
to 9424. 


Mo- 7 


Europe 

Austria 

(ScH) 

Batgksn 

fBFiJ 

Denmark 

PWr) 

Finland 

(FM) 

France 

(ffir) 

Germtaiy 

(DM) 

Graeco 

(T» 

Ireland 

<W 

Italy 

M 

Luxemtxiug 

(LFr) 

Netfwriancta 

(R) 

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(Eat 

Span 

Fta) 

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(SKi) 

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(SFi) 

UK 

« 

Ecu 

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- 

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(Peed) 

Brazfl 

(CD 

Canaria 

CCS) 

Mexico jNawReecf 

USA 

(S) 

Psdfloritiddte Beat// 

Australia 

(AS) 

Hong Kong 

(HK^ 

Inda 

(Fa) 

Japan 

W 

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(MS) 

New Zealand 

(NZS 

PWipptees 

ffteso) 

Sftid Arabia 

(SR) 

Stegapana 

(SSI 

SAMcafConv] 

n 

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n 

South Korea 

(Won) 

Taiwan 

(TS) 

Thailand 

m 


dosing Chwiga 
mi d-point on day 


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Ona month Dm snaths 
Rats %PA Rate MPA 


On# yam Btrtt 01 
Bate MPA Ena. Man 


(S3 1.0432 

(L) 2517.51 
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(R) 23744 


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M CM UB 









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4X570 -0X025 651 - 588 

2X806 -0X21 782 - 827 

(Paso) 41.1407 -0XB48 080 - 7S3 41X180 409060 

6X897 +0X016 860 - 914 6X968 5X738 - - - - 

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(BD 37.7589 +0X388 319 - 819 37.7900 37X180 - - - - - 

1S0R rata lor Ha * BWMtor apnada ki bm Round Spot able Shew only tie ta* tire* dednd riocaa. Panted mm are pot dtacOy quoted to a* 
but ore ImpBad by curara ntrast nut. 8mfeg Indnc cticUbted by Ida Bank at Enfend. Baa aMaga 1906 - lOOuBU. Otar «nd Md+tiee fa Mb I 
the Oofc» spot tfea darned Own TIC WMIREUTERS CU36MG SPOT RATES. 8cme «*m am raundad by the F.T. 


DOLLAR SPOT FORWARD A 






(UMIMBaOLK 

B7-H0 CfanaSt, UMfta EC* BM) _ on -BOOSTS 


l s 

15*456 - 15*891 103850 - 1(0.750 
250580 - 2B11X0 174880 - 1750X0 
04*44 - 04454 02932 - 029B7 

32J82S • 328005 219888 - 219968 
251110 - 253780 188000 - 170280 
04720 . 5.4750 38710 - 38730 


ten 

Kaaof 


UAL 


Mar 7 

Ooalng 

frtd-polnt 

Change 
on day 

Europe 

Austria 

(Sch) 

12X876 

-0X005 

Bris*tin 

(BFr) 

35X500 

-0X8 

Denmark 

(PK*> 

27025 

-0X18 

Finland 

(FM) 

25388 

Jiwa 

France 

(FFr) 

28386 

-2009 

Germany 

<D) 

1.7184 

-0X014 

Greece 

(Dr) 

242450 

-1.1* 

Ireland 

(» 

1*288 

-20011 

Italy 

<U 

186293 

+238 

Luxembourg 

(LFr) 

35X500 

-006 

Nafefttanda 

(F) 

1X284 

-20016 

Norway 

(NKO 

7.4312 

-0X203 

Portugal 

m 

175.750 

-21 

Spain 

(Pta) 

142780 

-2275 

Sweden 

(SKr) 

7X663 

-0X189 

Switzerland 

(SR) 

1*387 

-a0032 

UK 

ra 

1.4908 

+20003 

Ecu 


1.1271 

+20018 

SORT 

— 

1X9723 

- 

Americas 

Argentina 

(Peso) 

0X992 

-20006 

Bradl 

(C4 

ma 

+■10*85 

Canada 

<psi 

1X589 

-aaooi 

Mexico (New Peed) 

3X380 

-2002 

USA 


- 

- 

PtadflrfMdife East/ Africa 


Australia 

(AS) 

1X902 

-20089 

Hong Kong 

(HKS) 

7.7233 

+20008 

Indte 

(Rs) 

31X713 

-20262 

Japan 

m 

105X60 

+0X36 

Malaysia 

IMS) 

2.7217 

-0X023 

New Zeefend 

tNZS) 

1.7312 

-0X146 

PMttMMs 

(Peso) 

27X000 

-0X9 

Sauri Arable 

pm 

27500 

+20002 

Stegaptm 

(St) 

1X848 

+20003 

S Africa (ConvJ 

l (R) 

3*878 

+2012 

S Africa (Fkv) 

(R) 

+6400 

+20175 

South Korea 

(Won) 

802000 

+1X 

Taiwan 

(IS) 

28X860 

-0X4 

Thtfantj 

m 

25X300 

+202 



year JJ> Morgan 
WPA index 


Leopold Jaeepb & Sms Uratiad 
2Se£tiBaSte£m*»B2V7Eft 0TI-MB2SZ* 

wm^Suoo-^Tua *aooo [3 j7so j o a 
noSffiili2__ — I os aamoksbol » 

-•“—■on Ud 

hlmbnbiw 071-ay mm 
HUAfiZBUBti -I CIS aJWlAIBOlte* 

PiMBBHk 

aeatmtMMUaaMaaa 

1 6» BMP Taw Binawwtat . 

HJCAIEUXXM [+J7S ti» I +«l Mr 

U eyde Pik - tgBa oa ng* Accoont 

numtmida.UaamSaP3SS , 0Z77i33i}l 

a®— ig S SIS 

+79 B80 I +7»l iwr 


850 - 900 
300 - 700 
015 - 035 
338 - 438 
362 -377 
182 - 188 
300 - 800 
281 -296 
825 - 960 
300 - 700 
279 - 288 
302 - 322 
600 - 900 
720 - 600 
915 -990 
382 - 392 
902 - 910 
286 - 273 


1Z1062 

2x435 

6J187 

6X44 

5XS12 

1.7223 

262X6- 

1X256 

1808.18 

36*35 

1X315 

7X409 

176.87 

141X65 

1*384 

1X887 

1.1242 


1S0R iM to Mv4 BUbfla apraada Oi the Oder Soot tri*e W*wi orBy toe knl Vi 
but ora tripled by cunw* >+nat asm. IK. Mend A ECU we quoad In US Cifroncy, iP. Morgan fatieea Wwan 


12.1305 12X720 
36*9B0 35X250 
8.7389 8X830 
6X857 5.8332 
6X800 5.6320 
1.7285 1.7180 
2SQ.T5D 2*6X00 
1.4314 1X206 
186280 1687X8 
35.4880 35X260 
1X400 1X23$ 
7X829 7.4250 
176X00 175.720 
141X50 140X60 
8X460 7X910 
1-4480 1*385 
1*825 1.4863 
1.1278 1.122$ 


1.0000 0X980 
888*00 688X20 
1X695 1X560 

•» ?4+n 99*a n 


1.3968 1X882 1X913 -OS 

7.7290 7.7288 7.72S -ftl 

31*176 31X850 31.4383 -XX 
106X80 105X90 106.735 IX 
2.7325 2.7202 2.7157 2X 

1X470 1.7295 1.7328 -1.1 

27X500 27*000 
3.7505 3.7498 3.7824 -OX 
1X880 1X840 1X648 OO 

3*895 3.4840 3X021 -4X 

4X450 4X200 *871 -8X 

808X00 807X00 811 -4X 

28X900 28X300 26*875 -4.7 
25X400 25X100 25* -3X 

Pee 


-IX 12.1375 
-2 X 35X7 

-29 8.7452 
-1.1 5X52 

-3X 5X71 

-2 J 1.727 

■17* 258X6 

2X 1*198 
-8X 1707X3 
-2X 35X7 

-IX 1X357 
-IX 7*699 
-8X 178X4 

-5.1 142X85 
-3X 8X596 

-OX 1.4394 
IX 1*882 
3X 1.1197 


-1.7 12.165 -OX 

-2X 35X8 -1.7 

-XX 8X815 -27 
-IX 6X688 -OX 
-2* 6X135 -IX 
-20 1.7348 -IX 

-T6X 28845 -18.1 
26 1*022 IX 

-4X 1747*3 -3X 
-25 35X5 -1.7 

-IX 1X425 -0.7 
-IX 7*702 -OX 
-55 184X5 -4.7 

-*6 148X8 -27 

-22 a 1738 -22 
-02 1*312 OX 

12 1.481 OX 

28 1.109 1.8 


Ui 

Ur 

07*2 

3-75 

+50 

IX 

+9B 

5A0 

xn 

U» 

fijn 

+12 

uo 

us 

- 

+28 


mflOBidda BMn Soc-flurtiMBliinitnr 




Royal Bank of Mud pic Praadran fee 


1X941 

7.733 

31X713 

105*26 

28992 

1.7373 

3.7568 

1X648 

3X311 

4.735 

81*6 

28X35 

25X4 


-1.1 1*017 -OX 

-02 7.7518 -03 

-28 

IX 103X5 21 

23 27717 -IX 

-1* 1.7515 -12 

-0.7 27755 -a7 
OX 1.8083 -IX 
-6X 3X283 -4X 

-02 

-32 833 -21 

-28 

-23 25.68 -1* 

■ am pot dhecHy quotad to l 
tar Mv A Boa i 


CROSS-RATES AND DERIVATIVES 


EXCHANGE CROSS RATES 

Mar 7 8FY DKr HV DM 


NKr 


SKr 


Belgium 

Denmark 

France 

Oennany 

Ireland 

Italy 


Norway 

Portugal 

Spain 

Sweden 

'Switzerland 

UK 

Canada 

US 

Japan 

Ecu 

Yen per 1.00ft 


(BFr) 100 
(OKr> 5274 
(FFf) 80.58 
(DM) 20.57 
Oq 50.52 
(L) 2093 
(FI) 18X3 
(NKf) 47.55 
(Es| 2011 
(PB) 25.11 
(SKr} +*20 
(SFil 2*58 
(0 5269 
CCS) 28X1 
(5) 35X4 
(Y) 3329 
39X3 

Daresfi Knrw, Fmnoi 


18X6 

10 

11.48 
2900 
9-57B 
0X97 
2476 
2017 
3X13 
+782 
. 2382 
4X60 
9991 
*831 
2701 
6231 
7X52 
Fnwc. 


16X1 

2708 

10 

2388 

8X41 

0X48 

2027 

7.852 

2321 

+147 


4X82 

2X64 

2X45 

1 

2*66 

aim 

0.881 

2312 

0X78 

1X21 


7X99 2.149 

+058 1.195 


2700 

4X84 

5.835 

5213 

8X78 


2.582 
1X86 
1.718 
1224 
1X37 
Kroner aid 


1.980 

1.044 

1.199 

0-407 

1 

2041 

0383 

0X41 

0X98 

0.4B7 

0X75 

2486 

1.043 

0515 

0.700 

2610 

2788 


4779 

2520 

2804 

9828 

2414 

ioa 

8721 

2273 

961.1 

1200 

2112 

1174 

2518 

1243 

1689 

15957 

1903 


5*65 

2X77 

3X03 

1.122 

2.756 

0.114 

1 

2X94 
1X97 
1X70 
2 411 
1X40 
2X74 
1*19 
1X28 
1221 
2.172 


21.03 

11.08 

12.74 

4X25 

1263 

0*40 

3.666 

10 

4X29 

5X81 

6X95 

5.168 

11.08 

5*89 

7.431 

70X2 

8X75 


487X 

282X 

301.1 

102X 

261X 

1241 

91.16 

2325 

102 

12+9 

219X 

122X 

262.0 

129X 

175.7 

I860 

1920 


Swwbh Kimir per 1ft BStyen Pane, F i trurtn . Lt» 


3822 

2120 

241.1 

81X8 

201X 

2332 

73.00 

188* 

80.08 

ioa 

1720 
97X5 
209X 
103X 
140.7 
1330 
1526 
and Poena 


22 fO 
11X3 
1X70 
4X53 
11.43 
0*73 
4.148 
1278 
+550 
5X82 
TO 

5X60 
11X2 
5.884 
7X95 
75X4 
9.010 
per ioa 


+088 

2.146 

2*64 

0X37 

2X56 

0085 

2748 

1X35 

0X18 

1X22 

1.709 

1 

2.144 

1.058 

1.438 

13X9 

1X21 


1X98 

1X01 

1.148 

2380 

0X58 

0040 

0348 

0X03 

0X82 

0.477 

2838 

2488 

1 

2484 

0.871 

2337 

0.758 


3X45 

2X28 

2X2S 

2791 

1.942 

a 060 

2705 

1.829 

2773 

0X00 

1.700 

0X45 

2.028 

1 

1.359 

12X4 

1X31 


2X30 29BX 2X11 


EBflS EUROPEAN CURRENCY UNIT RATES 

Mar 7 Ecu can. Rate Change K+S-tum K spread Dfcr. 

rates against Ecu on day eery, rate 


1*92 

157 S 

1X24 

Intend 


2788264 

-200217 

-2X2 

5X2 

1.714 

181* 

1X21 

Netherlands 

2.19672 

2.17547 

+200112 

-0X7 

3X7 

0582 

61X9 

2618 

Belgium 

402123 

wi 8000 

+20089 

-281 

3.70 

1*30 

151X 

1X68 

On many 

1X4964 

1X3748 

+200104 

-282 

3X1 

0X56 

6367 

nrw 

ftwiot 

0X3883 

8X828S 

+200082 

0X7 

2.18 

0X19 

5+91 

0*60 

Danmark 

7*3579 

7X8118 

-200433 

1X7 

1.17 

1X48 

142* 

1.194 

Portugal 

192X54 

198X83 

+0X28 

2X0 

206 

2589 

00X3 

2505 

Spain 

15+X60 

158X89 

♦2174 

2X8 

200 

a711 

75X1 

2831 







1X51 

132.4 

1.110 

NON SIM MEMBERS 





am 

73X0 

0X17 

Greece 

264X13 

280X34 

-0.775 

6X8 

-2X4 

1.491 

197X 

1X23 

Italy 

1793.19 

1903.78 

-209 

217 

-211 

2738 

77X9 

0X63 

UK 

2788749 

27SG248 

-2001733 

-3X8 

7X1 







zn 



Z25 

ties 

2M 


zaz 

ISO 





ft PiMBBriBatat Hntag 

wii • n Tr i~ i rn~~~ tt~ oboo zstioi 

e Tub ut anl M 

lYeer - 4.123 tab 

Be I *8S -I A7SI Ml 




iXZTZ 


2719 

187S 

+750 

MIS 

OB03 

tiara 




1«0 

+JM 

+are 


4W 


Ob 

3S 

nr 

(kr 


width. an-3sa«m 
tn gab I iue|>-iMi 

7 JO 5.8a 7J«|B-Mn 

TJS 94* 1 -I Yeenr 

Trait lid 

MBerwtHaHBUOOY 


on-aBBoao 
3M I ul at 
241 J Sill MB 


WeatanTftat Ugb IrtanwtOamm Ace 
Ttne—jiaae wniiiatau rat amai' 
nym. - - . 4M 3J» 1 *8* 

ewo-cs+m I *jo ual «jb 

DMftM 1 *25 3.18 I *32 1 


+50 928 I +53 

XOB 230 SjOB 

I 275 206 I 277 

" 1 in J 22Sl 

WnOBl-BBBBB 


taK Di e tiartiW M d IMet |i ii | i m . « 

■naiati oakrim d aim ow «™ m. 
BtetaB»d*araWBiim»dta> te tww tar da te« B*i a i at 
Baft aw Bern enTbaea cm an aft awaft w ft 
tate ettaat ef ma eai er Meaa pew aaer taw 
eneta^wr. T ft paa ft il tat Bar. M Qb Rmawy 


1 

8*49 

1.127 


105X 

1002 

119A 


0X87 

8X84 

1 


■ D-MARK nmiRBS (MM) DM 125X00 PW DM 


■ JAPAH W TM WTTOHBS (PH Yen 12X per Yen 100 



0|W1 

Latest 

Change 

W0h 

Low 

EaL raf 

Open ML 


Open 

Ifeaat 

Change 

MOh 

LOW 

EW. yd 

Open ML 

Mar 

0X808 

05816 

+0.0002 

0X623 

0X793 

61X88 

102.156 

Mar 

0X478 

0X472 

-0.0017 

0X485 

0X448 

38,192 

86,157 

Jun 

25784 

25789 

♦0X004 

0X796 

0X760 

11X68 

38,750 

Jun 

0X490 

0X512 

-20017 

0X524 

0X473 

8X42 

13X66 

Sep 

0X768 

0X768 

+20002 

0.5768 

0X768 

74 

2*56 

Sap 

0X566 

0.9566 

-20014 

0X565 

0X565 

185 

1.158 

■ SWISS FRAMCPUTUWraOMMJSFr 125.000 per SFr 



m tlMMQNimi CMM) £82X00 perE 




Mar 

0X931 

0X952 

+20015 

0.8962 

28810 

30.854 

41X13 

Mar 

1.4878 

1*908 

+20014 

1*912 

1*858 

12X73 

29X48 

Jun 

0.6831 

0X952 

+0.0020 

26960 

26910 

3.440 

6X69 

Jun 

1.4848 

1*806 

+20014 

1.4872 

1*834 

10J»2 

10X10 

Sep 

26958 

28956 

+20020 

0X959 

08960 

4 

82 

Sep 

- 

1.4840 

- 

1.4840 

- 

1 

481 








Dec 

• 

1*820 


1.4820 


10 

18 


EcucaniidiaftBattbyBwEu a pm Cij ii OT tad un .C m Bn etaa wata >mcn>> i y i 

P acwrapedanpne — tar&TcapoeBlfclemgxftnft — ■»— kcnmnuLDberoBnci in owatha 

imo bBftmniao m aad r Bw pawenftp» *tewm b — na H heoam mnwftftBcu tartadim 
ja-gewieno y . id Vwmwftptan p a u Bft d P uw tepa rt afttaa n ct Bw cunwieylB mate! rata taam te 
Edi eanbftifte. 

(17/WBQ 8teB« ami Rtibn Urn amend* tam B0+ Arkotment eatadmd by dw Aandri Ttam 
■ — m OtinOW £81 xmfctenta per pound) ' 


WORLDS INTEREST RATES 


MONEY RATES 

March 7 Over 

right 

One 

month 

Time 

mths 

Sft 

mths 

One 

year 

Lomb. 

(new. 

Die. 

rate 

Rapo 

rate 

Belgium 

_ 

B% 

8% 

8% 

64 

7.40 

5.00 

- 

week ago 

- 

6% 

84 

854 

6» 

7*0 

5X0 

- 

France 

6% 

6 Vi 

654 

64 

58 

210 

- 

7.75 

week age 

6% 

614 

0V4 

6% 

5% 

210 

- 

7.75 

Germraiy 

6.05 

6X0 

5X5 

5.72 

248 

ora 

5X5 

5X7 

week ago 

6X5 

200 

5.92 

5.72 

5*2 

275 

5X5 

0.00 

Ireland 

Si 

6% 

8V. 

B% 

6% 

- 

- 

276 

week ag° 

«4 

614 

64 

84 

84 

- 

- 

275 

Italy 

ffti 

»4 

84 

84 

84 

- 

axo 

232 

week ago 

as 

84 

B% 

84 

814 

- 

200 

292 

Netherlands 

5X3 

5.43 

5X8 

5.18 

5.13 


5X5 

- 

week ago 

5.61 

243 

5X2 

5X2 

5X9 

W 

5X5 

- 

Switzerland 

4tt 

44 

4K 

4 


2625 

4.00 

- 

weak ago 

4 V t 

44 

44 

4% 

4 

2826 

4X0 

- 

US 

34 

34 

3g 

44 

tv. 


3X0 

- 

week ago 

3V, 

34 

Jfl 


44 

- 

3X0 

- 

Japan 

2 w 

ZV< 

24 

214 

24 

wa 

1.75 

- 

week ago 

24 

2V. 

214 

2’A 

2% 

- 

1.75 

- 


■ THRSE MOffTH EUROMARK PUTURCS (UFPQ* DMIm pblnta cl 10096 


straw 

Price 

Ms 

- CALLS - 
Apr 

Msy 

Mar 

— PUTS — 
Apr 

May 

1*00 

279 

8X8 

272 

0X2 

0X1 

020 

1*28 

234 

239 

8X0 

0X2 

216 

251 

1*60 

286 

4X5 

+66 

003 

2X1 

1.06 

1*75 

1X6 

2X4 

3X5 

213 

1X4 

1X2 

1X00 

ai8 

1X0 

1X9 

1X4 

2*9 

213 

1X25 

0X1 

0X7 

1X7 

243 

+X0 

+81 


LOW COST l " 1 ' ' Vl 1 

SHARE DEALING SERVICE 01 1 1 


IK'iM €10 '.ilMMI M It 
£W Mi M'.ii .ms \m ii'.xoi 


■ 6 UBOR FT London 

41 
4X4 
+16 
4 
4 

ECU Untad Da mid n «c ' mat Eta. 3 n«ha 01e. B mats; tew 1 ye 
tales am aflorod raws tar Siam quoted to tee mernt by taur ra ta l enca 
day. Hie baits are. SarMra Hum, Bask of ToKya, Bodays end Na 
KM raw ws ahomn fcr Bw don— ic Money Rare* US 9 CCksnd 


Mterbanfc Fixing 

3% 

3ft 

4ft 

week ago 

3% 

3% 

4 

US Dollar CDs 

- 3X1 

3.71 

237 

week ago 

- 3X1 

261 

3.80 

SDR Linked Da 

3ft 

3ft 

3ft 

week ago 

3ft 

3ft 

3ft 



Open 

Sett price 

Change 

Mgh 

Low 

ESL vd 

Open blL 

Mar 

9+20 

9+19 

0X4 

94X0 

94.18 

13636 

162685 

Jun 

9+67 

94X9 

♦209 

94.60 

94.56 

39762 

238563 

Sep 

94.79 

9+86 

+212 

94X7 

94.79 

22740 

175341 

Dbc 

9+92 

95X0 

+215 

95X0 

9+92 

24884 

160980 

■ TIBI 

m MONTH EUHQURA HTJIHI HJTURSS (UFFE) LI 000m potett of 100% 


Open 

SaR price 

Change 

«0b 

Law 

Eat vd 

Open InL 

Mar 

91.77 

91X0 

0X9 

91.85 

91.78 

3779 

30039 

Jun 

92X2 

92.12 

+aio 

20.29 

92.02 

9744 

556B3 

Sep 

98X4 

92X5 

+212 

92.38 

92X0 

2464 

22896 

Dec 

98.48 

92*6 

+0.13 

92.49 

92*1 

1708 

38911 

■ imn MONTH EURO SWIM FRAMC FUTURKS 0JFFE) SFrlm points CJ 10094 


Open 

Sett price 

Change 

High 

Low 

ESL vd 

Open InL 

Mar 

95X7 

SSX5 

-201 

95.99 

95XS 

1669 

34701 

Jun 

9217 

96X2 

+208 

92X4 

96.16 

8553 

30631 

Sep 

9622 

98X4 

+207 

96X5 

9219 

902 

7310 

Dec 

9214 

9215 

♦0.07 

9218 

9214 

125 

4180 

II THRU MONTH ECU FUTUTKS (UFFE) Eculm points of 100% 



Open 

Sett price 

Change 

HV> 

Low 

Ett. Yd 

Open ir+ 

Mar 

93.70 

9273 

008 

9273 

9270 

847 

11550 

Jun 

94.07 

9+13 

+0.13 

94.14 

9+07 

1311 

11783 

Sep 

9+27 

9+33 

+213 

9+33 

94X7 

652 

9499 

Dec 

9+37 

94.45 

+214 

9+45 

9+37 

499 

6706 


* LFFE ftp— a Traded m APT 


i B . 9 UBOR IntartBank tadne 
bwfti « item each wcrvsrq 


SD« LtWed Depcno 02 


EURO CURRENCY INTEREST RATES 

Mar 7 Short 7 days One Tine 


■ THWBB MOWTW BUROOOUAH (IkftX Sim poina ol 100% 

Low 
9211 


term 


notice 


months months 


One 

year 


Mar 

dun 


Open Latest 

9211 9213 

95X7 95X9 

95X1 95X4 


Ctanga 

+2X2 

+0.03 

+205 


«0h 

9213 

95.71 

95XS 


95X1 


EsL vcJ Open InL 
132,082 31+680 
212,051 456.438 

202X53 367,132 


Bedpan Franc 
Oartsti Krone 
D-Mark 
Dutch Guilder 
Frwich Franc 
Rjrtuuueaa Esc. 
Spartsti Peseta 
Staling 
Swiss Franc 
&tl Dolar 
US Defer 
KaHan Lira 
Yen 

Asian SSlng 
Sheet term mm a 


6,i - 

6^-5A» 
6ia-8 
5% - 5^ 

6te - 

10 -94i 
8A - «A 
BH-SU 
4* -41* 
3% -3*2 
3b -3*4 
9-7*2 
2«b -2A 
3h-2h 
icdbrdM 


9.5- 

9ft 

9ft- 

eft 

6*8- 

6*4 

«%- 

8ft 

6ft- 

eft 

6»! 

- 8 

6*2 

• 6 

6ft- 

6ft 

6ft - 

5i2 

5ft - 

5ft 

9*8 

-6 

eft - 

sa 

6^- 

5ft 

sa- 

sft 

5ft- 

Sft 

5ft - 

5ft 

5*2- 

5*8 

5ft - 

5ft 

5ft- 

■6ft 

5ft- 

5ft 

6ft - 

aft 

6b- 

81+ 

6>4 - 

9*8 

8ft- 

53 

sa- 

sa 

JO 1 !* 

• 8k 

10b ■ 

• !tfi 

9S- 

9% 

8%- 

9ft 

9ft- 

9ft 

8ft - 

aft 

Bb- 

8*1 

8*8 - 

8ft 

Bft - 

6ft 

8ft 

-8 

5b - 

Sb 

Sb- 

5ft 

5*8- 

5ft 

5ft- 

5ft 

5ft- 

5*8 

4*3 • 

4*9 

4ft- 

4ft 

4*8 

- 4 

4 - 

3% 

3fi ■ 

sa 

3b- 

3*8 

3»- 

3ii 

*h- 

313 

4ft- 

4ft 

4ft- 

4ft 

3ft - 

3ft 

3*8- 

3*2 

3b- 

3ft 

4ft 

- 4 

4,*,- 

4ft 

B*i - 

7b 

8*2 

- B 

8*2 

- 8 

8*B 

-8 

8ft - 

8ft 

2ft - 

2ft 

2K- 

2ft 

2ft- 

2ft 

2JS - 

2ft 

2ft- 

2ft 

3*2 - 

2*2 

3*2 - 

2*2 

4 - 

3 

4 - 

3 

4ft. 

3ft 


■ usTvaaunTBai wmaES (mm) simper iook 


dun 

Sap 

Dae 


9210 9213 

95.75 95X0 

85*4 


+0X6 

+2X6 


9213 

95X0 

85.44 


96X9 

9275 


2.464 27,745 

216 2711 

11 2X24 


M Open Intaraw 


flg* — tar pteoo Cey 
OPTWaB (L1FFE) DMIm pans ot 10096 


US Ddba and Yen. alien: ten dark’ node*, 


■ THREE MOffTH PSBOft HITURMS (MAUF) Parte Intartranfc rttared rate 


Strike 
Price 
8400 
9428 
•450 
Ek. ml 


Msr 

- CALLS - 
Jun 

Sep 

Mar 

— ■ PUTS 
Jun 

0X0 

0.60 

0X9 

0X1 

0X1 

0.02 

0X8 

0X7 

0X8 

0X4 

am 

219 

246 

232 

0.10 


2159 Pun 2*32. Pra+ous day's cpoi ML. Cab 30*097 Pub 1B0QS5 
FRAMC OPTIONS HJFFE) SFr 1m pelrtB of 100% 


Sep 

0X3 

206 

0.10 



Open 

Sen price 

Change 

tfigh 

Low 

EsL vd 

Open InL 

Strike 


- CALLS - 



— PUIS 

Mar 

93X6 

93X5 

+0X2 

93X3 

93.84 

7X88 

61.488 

Price 

Mar 

Jui 

Sep 

War 

Jui 


94X9 

94X0 

+0X7 

94X1 

94X7 

15X87 

72087 

957G 

021 

249 

254 

0X1 



94X5 

34XS 

+0.11 

94.55 

94X0 

7X08 

45.773 

9600 

0X3 

227 

034 

203 

0X5 

Dec 

94X9 

94.69 

+213 

9+89 

9+61 

10X14 

29.1S7 

9620 

0X1 

210 

0.19 

0X1 

213 










at -now MONTH mmODOLLAR OJFFET pnnts *«** 










Open 

Sett price 

Change 

Mgh 

Low 

Esc. vd 

Open M. 







Mar 

96.11 

98.12 

203 

9212 

9211 

341 

5332 








95.67 

95.70 

+208 

95.89 

95X7 

153 

4346 








35X1 

96.34 

+0.07 

95X4 

95X1 

75 

2331 







Dec 

9+88 

9+91 

+209 

94X0 

9+86 

50 

1491 








Sap 

0X8 

210 

0X0 


Prantaue dftTa k+, Cab t+9M feta 21X94 . Pn». dapta span lot. Ode BIO. 137 Pib 67UB2 


UK INTEREST RATES 


LONDON MONEY RATES 

Mar 7 Over- 7 days 


One 


Three 


One 


ntaht 


notice 


lntart»k Sterflng 5% - 3h 5A - 5 5A - 5 5ft - 5 84-5 5& - fi>« 
SteflngCDs - 5i * 5* Si - 5 Si-5 5A-5 6ft - 5 A 

Treasury Btif « A 

Bank BOs - - *3 - 4% 4% - 4« 4% - 45 

Local authority depB. 4£ . 4£ 5^ - 5A-43 5A--«a 5»*-5 SA - 5 A 

Oacoura ntariaet daps, 6 - 3* 5^-5 - 

UK clearing baft base lendng rate 5 1 * per cent from Fabnniy 2 1994 

Up to 1 1-3 3-6 29 9-12 


Cafe Of Tax dap. (ElOOJMq 1<2 

Cam a TM dep ondw EIOOJOO ta IhiK. Oe 


4 3b 

aitarcafti Vpo. 


3 b 


3h 


At* HndBrraftcrdtam>a+778ipa ECOOtaced awSap Expert F*uncu.Mdn up O&Fabnary 23, 
1BB+ Agreed oft far peri^ Mw 22 1994 ft Apt 22 199* Scheme* D A ■ SSOpc. Riftrenca rate tar 
period Feb 1, iM«taF«b2MS0*8aNmsSV&V2266pa.Rninc*Hg W iB— RnafibjKfeaai 
ktar 1.190* 

■ n— mowtw Btwmwwwi urg esooxoo pcmm of ioo% 



Opoi 

Sen price 

Change 

«9h 

LOW 

Est vd 

Open Jnt 

9+89 

9+87 

+0X1 

94X0 

9+S7 

6068 

0 

94X3 

9+93 

+0.03 

94X9 

9+92 

11586 

0 

9+82 

9+83 

+0X6 

9+88 

94X0 

8973 

0 

9+63 

9+65 

+0X6 

94X8 

94X1 

14136 

0 


:BB+ aw fcr pnitnm Cay. 

(LffFE) 2500,000 points <rf 100% 


Strike 

Price 

Mar 

- CALLS - 
An 

S«P 

Mar 

— PUTS - 
Jun 

Sap 

9475 

014 

224 

226 

202 

206 

218 

9600 

202 

209 

214 

216 

aie 

0X1 

9625 

0 

0X2 

206 

0X8 

0X4 

2*8 


EaL Yd. ton* Cab 4480 Putt 2875. Prwriom dBV*B open W. CM* 2D400B ftos W1B0B 


BASE LENDING RATES 


% 

Mam & Cbrrpany 525 

Mtad Him Bank SX5 

MS Barft 5XS 

•HerayAnfeadiar 225 

Barit of Bauds 225 

Banco Bftao Vbcay+- 826 

BankriCypu 5XS 

Bank of Mand 6xs 

Barit oflntSa 5X5 

Barit of Scxfend SX5 

SacfcyaBa* 5X5 

Brit SktfMd East — &X5 

•Brawn SMplay &2S 

CL Baric Nadftland-. 5X6 

CHbericNA AX 

OydoedstaSarft .525 

tha Cooperafea Barit. 625 

Cafe 5 Co 525 

CmaOyarrais 5X5 

CyprutFtapriar Barit _&2S 


Duxan Laarie BX 

Bft«r Bank Untied _ 6X5 
manctel&OaiBftik_ 6 
•Robert Ftarrtog & Cb - E25 

ORtwti. 5X5 

•SteHlMDl 5X5 

Htife Barit MS ZteUi . 5X5 

H ambraa Baric 5X5 

Hetfefato & Gan Imr Be. SX5 

•HiStalkM —.8X5 

C. Kara 4 CO 5X5 

Hcngtong&ShanghaL 5X5 
JJten Hodge ferit — 525 
•LaapdaJaaaph&SoneBXb 

UaydeBerie 5X5 

Megria) Baric Ltd 8X5 

Mriand Barit 8X9 

■McuraBatftteg 8 

K B Weabibe ter 825 


* BcnbunTw Guarantee 
OorataatenlMtedbno 
tangeraMArift 
tlafegl aMw . 8 
RoyriSkofScofend- 5X5 
•antii&VMmanSaca. 5X5 
Sh ai d ted a aate u d — 525 

TSB 525 

•UrtiadBkot UavM— 8X5 
Urtiy That 8ari( Pic _ 8X9 

IMsatonThM 529 

Write— w L ahte a .— 525 
VMarira Barit .......... 6X9 

• Members ol British 
Merchant Banking & 
Securities Houses 


•taaMtttin 


Forex or Futures prices from £49 per month 

■ PC Screen or 


For 30 Second updates on your WjfldOWS 

Pocket Financial Monitor call 0494 444415 

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CORPORATE IDENTITY 

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1 ; 
i; 
1 1 


c i 


j: 

• '-;i 


£ ) 


th 


<• 






FINANCIAL TIMES TUESDAY MARCH 8 1994 







E 



M 

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3* 


1* 


2* 

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64 


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1* 


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IIFx 841780 
25b 273400 


as 






3* 


67 


7* 

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CLB 

__ 

6S 

7* 

5* 

62 

4.1 

, ,, 

64 

— 


INDICES 


Gerart (2*12/77) 


M 21481J 2085+4 2847040 18/204 121*7.88 SOW 


Cr*w1te/1/l/K» 2)44.7 2116B 21514 234080 3/204 140600 13A0S 


M*flVI/KJ) 


981.2 9667 BBta 113610 3/204 BM78 13/103 CSSWSta&df^ 28+7 2764 2769 


jFC WylW B) U 2S0952 25B1S3 299L17 8/294 16B+15 25/2IB3 

msmfiK«ldn 4363 431,2 43M 4540 31/104 BUB 4/1)93 

CSSASreUn 2847 2764 2709 2BUB 3IA0* 19690 12/1/93 


mmnm 44222 44022 439*4 4B99B 2094 3900 14/103 C*40JU7«9 219S34 21810 221&09 «W4 3/204 2*90 22094 

Traded hdOKZnW) 1152*3 114625 11370 1*2235 1/204 Tt2J» 15/UJ3 Nm« 

■ QgtoSErapntg 117892 117+41 119)0 121110 ZSZ04 90929 2 7A03 

3020 p/Un) 150030 14803 T4TO.48 194296 9/204 112M.4/I03 MW« 

Unto Crap £2/1/85) 265428 290082 2B9&05 330637 4/10* 1Z7UB 4A03 

...ftorana (26/1293) M 111400 104590 1114890 4094 7L47 4A03 ftrfcgtf 

t> -_, ... SI* (1577? 31104 30901 30700 322090 18004 199020 14/103 

3mporiB+ (18751 


150030 14803 147048 194296 9/2M 11280 4/1/83 


M 111404) 104500 1114998 444M 


372030 397079 3BM93 1/204 271031 21/UB3 M p — 1 

» 438059 437030 490UB 1004 327699 21/103 SE5A6-$liM«M/79 5870 58924 58008 94191 4A04 


fWtWoS (4/1/83) M 203248 207096 219290 1/2/94 17099 21/MB 

149 

PGA Gen pi/t2/8» » 4367.1 43907 499790 4/294 2812*1 10503 

l^^mSE^AQ, 40285 39674 393*9 4078 2/204 2810 4/UB8 

QGbhOSBMOM 18293 18943 18763 197230 4/994 80.10 291/83 

non 

Wf 250 [31/12/90 150052 147048 1487.13 199529 2094 111419 28A03 

4001/12071 221839 217089 215441 2356*3 20/94 177221 29/1/83 


jEEaueewro ibimv ibsoo 19143 zmoa 4/1/94 7iud 5/103 

M 4367.1 43967 407X0 4/294 2B12JI 10503 JSE rtl (28078) SB42J# 57843 28760 9942X0 7/304 4B3L0B 19H03 

tan tan 

0 39074 aban 415.79 2/2/84 281X9 4/U83 btaOn£i(4/UBO^ 89532 99655 902.16 BM26 2/294 HM3 6/303 

99* 

93 19943 18763 197290 4/994 90.10 291/83 IMHt SE (30/1205) 341J0 3301* 329L81 SKSf 31/104 ZHXO 4/MO 


US INDICES 


tatt* 383230 382442 383174 307438 32410 387636 «UZ 

(31/1/M 00/1031 (31/1 /M (2/7/32) 

tan* Boon 103.10 10339 10114 10077 10136 19077 ' 5(99 

na/1(VS3| (3/3/94) (1BTUVS3) (1/1001) 

1/0*011 173693 172037 T7310 18SU9 1491X4 188279 1232 

0284) (4/103) 09M 07/39 

UMi 212.10 21026 21134 SMB 317.29 2E04B 1050 

01003) CM0M PMWS 04/53 

DJ kid. CO/I M(7i 386004 (388615 ) Low 380030 P784.74 ) (Trtorata+4) 

Oaf htf> 384732 (383239 ) Low 381438 *080 ) (Actu**) 

oSpoSTt" - *"34.74 46101 4M31 48290 4290 49239 440 

02M 01/93} 09M 

(OdUtfakV 54430 54Z73 54448 9109 49049 909 332 

0994) 00403} 0204) (210/93 

Horn* 4239 4230 4330 409 3939 4049 064 

gg/g 0i03) g*Mg wmm 

PtYSE Cun*. 257.70 25859 25737 28771 23921 29771 4.46 

0flM 01/95 02/M PSXW) 

Max MU V* 4609 4650 49032 4870 39084 4879 2031 

0204) <8/1/8$ 020$ (9/12/72) 

mmwcmp 7909 Tata 78147 M047 94537 99047 6437 

PI AM 0V403) (91AM (31A073 


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250 [31/12/90 150052 147048 1497.13 19959 2/2/94 H14.19 28A03 MmwMen (1037) 15370 1513.10 16070 lam* 31/104 8919 26/103 

K£aC 40(31/1287) 221&39 217069 2154 At 2355*3 2004 177221 29/103 saftztaral 

manure 9ta Bk hd 01A2S8) Of 13244* 129499 142U4 31/104 8040 11/103 

>Z*UHtnA2'50 9050 7900 78087 88537 4A04 SBK 14A03 SBC Start [W57) M <00055 9520 103*9 31/10* 57570 11A03 


Vz Adko(31A2M 600 7900 78837 88537 4A04 
drmmtnMl/12/53) 230-10 22610 22570 M5U0 4A04 
M 00/12/87)1 210091 206000 20370 2970 3AA4 


SBC Snmf (1*07) 


M <00055 9820 MBS 31/10* 57170 11/103 


•&mk earner S6470 5972*7 5*57.74 0*540 bam 


Dow Jones Ind. D*. YUd 

SO Rind. D(v. yWd 
S 0 P M P/E rado 


Mar 4 Fab 25 Feb 18 Yew ago 

2.62 2.62 ZS9 209 

Mar 2 Feb 23 Feb 16 Year ago 

209 2J6 2J4 233 

2434 2039 2018 2838 


.mens SE01A 2/a? 107473 108024 107018 119(0 18/1/94 0772 5/103 B*«Uc SET (3W/75) 13760 135025 13400 T753J3 4A04 9103*1003 

Smq taa Today 

Jong ScngpIffM 100910 991019 96020129139 4/104 94870 4/I/B3 jmm Cn*UJHi 1980 150807 155924 154000 289BS0 13A04 38550 1/103 

"* *> . HOIU 

3ESens4l97a 37443 3801* 3851.7 42970 2800* 20187 23003 MB 0*88 tt (IA/7Q3 83ir 5173 8103 8410 1S0* 


■ tMBWP 06P POOHS BOO — X WIWI $500 6me» Mac 

Open Lneet Chengs W£i Low EeLvoL OpeninL 
MW 464*0 46050 +200 486*0 464*0 73498 151*06 

Jun 467*0 467.70 +10 467.70 4670 1Z0S4 50*63 

Sap - 4S9L05 - 468D6 - OK 2,460 

Op«i HM bn> m tar pi w itom day. 


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data Canp(1Q0/B2| 52237 5210 53037 81*0 5004 *7S*t 5/1/83 BiDbadt 100P6Attl90» 148044 142041 14140 15019 31/104 1090 13003 

• HUB Bn tbp-100 (0fl0C| 125457 1232.19 1215*4 1311*1 2/204 99238 13003 

y' HJ OW04/108) 1812*4 190445 189547 2982.15 20004 TtBLIS 11/103 XBpeCHrt P1O208) M 325*1 32331 355.0 5004 


Bah* B55M7/HQ 18118 18135 182*7 VOJl 14/204 85*1 4/203 


ncaCCRBC III (1972) 5500 6520 6*80 9890 18004 44533 6009 mwtuui rawara nntwi nims i • 

K IB Start (4/104) 10560 10432 10360 16B0 18004 9MD0 10004 ■CA648«rOCK— B»gIW5B(MAm 

■p— Open SettfOtee Chengs Hgh Low EsL voC Open InL 

. yu 2Z5 (19/503 1981101996601980502114611 13/BB3 107671 290103 220BJ) 2227.0 +440 223+0 2204J) 21.4?) 50,113 

sM30(fAO62) 29647 28930 29532 305*4 )00109 *49*4 290103 Apr 22205 2237.0 +43* 22400 22205 1,260 1.620 

(*c(4/M® 160610 162229 1GQZ0 10617 SMS 12300 25/1/35 May 22+55 2242.0 +4+0 22435 222+0 10 1,075 

t) Start (VI ffiS 219322 219602 2187*2 *30*7 7«» 10132 2BA03 op-, taw tgaaa tar prartua <*w. 

dayria 

SE GD>n|L(4/4ti6} 104672 108434 1070*8 «MA8 SA04 51429 13009 


-moon B 40400 354 _ 

M Seme 80200 3ZM +3H 

Sttaaor ta 304300 49H +K 

ChyaHr 6136290 59% +1% 

Mask 30700 31 -H 

QtD HtR 3,(0 6 300 92 +1M 

nnorew 20800 3344 -H 

AmerT&T 2.674,400 51H +M 


DWW- • VttUW *0011) 

traded tart at tty . M4 Mr 3 Mr 2 

+291.10 67H +M Naw Me S 31100 206 361.1B 

Amec 16852 20*15 2+740 


Amat 16852 20*15 2+740 

+3s ssiafi on mm 

+K NYSE 

+1% lows Haded 2JS2 2.735 208 

-V4 Ffces 1570 943 771 

+1* Ms 807 1,171 1.4Z6 

-N Unduged 00 524 50 

+M Heir W0I 64 57 25 


Ore C»r 20300 22M . +3H New Lows 54 85 itb 

Btduftg bends, t MuMaL pka uiadw, Rnandal and Tnmponakn. 
nd taa wa tta ■rareptr of tfia Nghut and knwt pnosa machnd dtatafl tha dy by —a 
« rtpplad by Tatstort npraam ■» Nspwt and lews* vMn* thw tha Mat ftaa raachad 
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40 


FINANCIAL TIMES TUESDAY MARCH 8 199* 


>1- 

l, 

IS 


4 pm dose Man*? 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


HUM 

tt* ImM* 

16 s * 11 MR 
ffifa 12% ALLMBA 
67V 54$ AMP 

nv 55$ Ain 
5 IV MX 


m . w n* 
« e n 


OT9» 


ASA 

Atttt. 

AbttdPr 


16 16% *•$ 
15% 1S$ »% 
84% MV *% 

is "a - 


a 48 305*1 523 16V 

0.18 1.1 36 24S 15$ 

1.88 ZB 22 8328 B5% 

30 3454 62V 
IB 195 4% 

2®0 4J 29 687 45% 44*2 44V 

on ZB 16 7279 27V 26V 27V 

03 IB 8 72 13 12V 13 

21 212 11% 11V 11V 

0.40 15 4 3069 28% 26% 26V 

491 11% 11% 11% 


4f 



Ssis__ 

36 25% ACE Lid 

13% 10% ACM Get hx 1.09 95 

10 % sVaoimpox an a? 

10% 8%ADIGtiEp* 096101 
12% 10V MUM Sea 1.09101 

12% s% ACM Man a im afl 

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41 





FINANCIAL TIMES TUESDAY MARCH 8 J 994 


4 pm Gkm March 7 


NYSE COMPOSITE PRICES 


NASDAQ NATIONAL MARKET 


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SipK: 

ift «%«»»» 
■5 3is*w 


12 a 27% si. zrh + 1 % 

U 9 m 1i>a 1A| 14 ft 

2S31B2 28% 25* 2 2S% ' 

179 OH 0 B 

0432 47 SS% 53% 53% . . 
IDO Wl 15 3 M% 29% »% ft 

306 17 6 1MB SH( 794 80% A 

10 304 8% 0% 8% 

l.« ai 9 2*17 45 43% 44% +t% 

034 25 5*1 13H 13% 13% +H 

Qfit u ester si% si 5i%+r% 


*%«% 

31% 21 

a%«% 

2ft 17* 

40% 2ft BchmflP 
71 SlHSdrfl 
■8ft 54%Stttmb 
3ft if - 

r 



- . . L52 OS 12 600 23% 

1ft B%SMaFaEfe 016 1* S2B89 9% 

4ft 55% M8VK 200 12 10 36 9ft 

I* . 010 D 4 .TS 3 M 5 2ft _ . 
** ON 29 1411077 22% 21% 
WP*2J2 8.1 12 4Q9 4ft 45% 

X 142 IS 12 5D76 1ft 1ft 
30 380 4ft 

ISO 3.1 13 3752 " 

ISO 2.1 23 0321 
028 1.1 12 GIB 2ft 2ft 

24 23 ft ft 

ai2 04 63 9288 32% 31% 3 

0.10 0.7 14 IB 1ft 14% 1 

1-JK IP 11 2518 48 45% 

021 00 13B 2ft 23 

__ 7HScakMCif 0.18 10 233 11% n% 

SlHlftSaCM 070 40 8 3 17H 17H 

17 15S«CL4fflS 1.48 OB 31 lft ift 

31 24% Swam 058 10 35 4433 28 2ft 

“ ISSNOdEB 33 508 2ft 25H 

a BK#s2Sl| 

ISO 33 7 0711 40% 49 

084 05 81 13 UV 



32 21 ! 


Eft 4Z%5nnfix 
tft 12% Salon &* 
37% 20SOHcmt 
3ft iBSaquaA 
4ft l7%SaquS 
»i7%swcp 
31 ftSMr 
2ft 14% Shovhd 

5ft ift 



022 06 38 S33 
060 1.7 7 7 
OSD IS 19 7 3ft aft aft 
M2 ID 21 17B3 2ft 2ft 2 7 
092 3L5 13 215 28H 2ft 2ft 
022 1.1 23 3035 19% 1ft 1ft 
» 080 40 1820919 20% 19% 20 


A afl% +4 

2ft 2ft -% 

17% 19% +1% 

’ft 1ft +% 


g u$io%&wtoyMI 0282120 30 lft ift ift 
fift 48SMD- 207 07 20 T» Oft 02* 83% 
SfftSMrtfx 056 .L7 17 2H6 3" 
ift Straw IS 597 2 

ZVfc iftStonbiiN O10 05 21 2175 1 
22% iftSMmPao 1.12 57 11 273 1: 

0% 5%SteAfep 1 7 L _ 

35% 21% Stoat BUf UO 2811 581 3ft 
28 11% ENcanBr 3215S20 

1ft 10% Safer -IDS 70 36 48 

10% 7Sbzfer OIB 10 00 280 

Z3n5*|Stj4k* 048 20 19 105 

4% SSL Mr OlOS 10 13 129 

7% ASnHCVt 020 M 73 200 
11% 7% Santa ■ 78 1152 

3ft 27% SXBcMX 172 41 14 100 

34% 25% SfflEqUx 122 45 1888 

37% lOSmUaN 052 22 15 580 29% 

32%20%EMtar4 046 1019 61 2A r 

44% aftavOXT' u» 20 21 1382 45 . ... 

23 lOSwdfeCi 024 10 24 IBS 19% 18% 

34 ift Samoa 31 1341 30% 30% 

3ft 21% Send x 108 25 101333 31 30% 

61% 32S0fe „ 047 06133 220 58% 58% 

17% 10% SWNbVB 024 10 88 3375 017% lft 

4ft 42% Sana Dip 180 03 19 43% 43% 

Bl%3S%SauMta»x250 8L4 X108 38% 

27% 21% SKIfenM X 144 08 13 75 22% 

30 9% Stamm 
24% 17% SOAK 

2ft ift same 

23% 1ft SfnCO 
3ft 28% Sewn 
3ft 30% SHEW 
38 18% SUM 
1ft iftSntMVGU 



050 10 94 216 

170 M 10 121 _ 

D68 15 8 181 19% 

1.18 07 6 3465 21% 20% _ . 

1.08 55 12 83 29% 29% 29% 

UB 55 47 689 32 31% 32 

004 0.1 323132 34% 33% 34% 
078 45 20 1S4 17% 



5SpmmCp 
21% i5 SphaeS 
48 Spring x 
40% 2ftSptttx 
1ft 159V 
32% i3SUCuun 
28% 13% SU Motor 
12% 8% Staffed* 
38% 25%SMW 




21% 12S0WMGW 024 1.4 16 378 16% 18% ij* +% 

33% 27% SoiUfSi 220 75 11 1235 29 28% 20 +% 

12% 7%9pfeaRnS 0.48 45 132 10% 10% 10% 4% 

12 2 6 % ft 0 % 

012 06 214 1ft 15% 15% 

120 12 14 176 
1J10 26 28 4565 
040 25 20 347 
040 25 8 106 1i 
052 18 14 576 
012 1.1179 801 
064 17 17 B38 37% 

0J52 16 17 08 ' 

150 28 21 365 _ 

138 85 20 378 42% 41 

008 27 23 
088 82 

060 22 7 SSO 27% 27% 27% 

020 26 7 4 7% 7% 7% 

006 15 38501 6% 5% 6% 4% 

22 535 34 3ft 33% -% 

012 15 .4 10 0 0% 9 4% 

060 20W 030 30% 30 3ft -% 

071 45 3 1827 IB 15% 15% ft 

23 4741 27% 2S 27% 42% 

064 55 10 808 15% 1S% 15% ft 

139832 41% 38% 40% +1% 
» 631 27% 27% 27% - 

“ ft 
_ ... ft 

030 02 1 4 3% 3% 3% 

1M106 7 28 10% 18% Iftf 
0.11 24 4 107 4% ft 4% 

052 SO 42 344 
040 11 122956 
120 27 17 1400 
110116 208 _ 

. KHH ft 
128 22 12 «B 45% 

056 26 M 70 12% 

012 03 27 2B 41% 41% 41% ft 
06625 13 308235% .36 85% 4% 
0.16 09 20 637 17 ift ' 


8% ftSMgOvh 

S’ias" 

si% m 


StStSS 

3 vs 


23% 12% Strideffife 058 01 15 1448 18% 17% lift 
32 19% Stonsfloarx 728 45 15 850 2B% 27% 27% 

1 ST 


9% 1%GuneMnPt 
ft Ltrnm 
49%41%GUWX 
14 9%SspvFeeit 
«%l6%S«enr 
40% 20% sm«i 
USogCm 



i IftSMnHafe JUB -04 578 20% 20% 21^ ft 

18% 11%9|mbdTec 38 2588 190% Ift 19% 

11% ft^aaCom 12 15 8% . 6% ft ft 

aft tSftnwuiRj 046 26 15 148 17% 17% 17% ft 

23%1ftSym» 124 7.1 7 2743 1 5 14% 14% -ft 

31 22%Sy*en 036 15 242408 28% 27% Z7% -% 


ft 5%7tWEflW 020 3.4 23 137 6 5% 

40 Z7%Tlffn«K 120 32 10 354 31 30% 

10% SVTCWQmS 064 67 325 0% ft tf 


44 25% 1UX Coni* 047 1.1 43 

‘ 020114 0 _ . _ 

090 15 17 3042 2ft 26% 28% ft 


020110 0 232 2 1% 1% ft 



Dta « 


114% Tiff &tapx 163 62 T7 134 17% 


168 26 21 602 73% 
01D 15 7 21S? ft 
860 28% 
042 66 7 55 6% 
120 9.1 3 11 

120 35 22 BBS 4ft 
33801 14% 
060 1.4162075 41% 
10%TatnilkB 072 65 96 n% 

19%7eco&erQ 066 47 IS 1029 2ft 
020 £2 IS 213 27 
IS 38 ft 
060 32151057 20% 
126 05 64718 42% 
086 10 1433815 68% 
120 20 41 823 50% 
300 26% 
226 7% 
060 82 820 7% 

100 £6 22 8402 58 

258 77 11 31 nae 

28 93 28% 
006 07 1 929 0 

OJDB 12 25 540 8% 
Zf 1346 «T2 
350 42 14 3132 05% 
100 52 13 ‘ SI 

020 05 47 640030% 

. 072 09 16 7198098% 

21% IftS Toaaftau 040 00 2* 10 ift 

48% 3ft1M*x 320 72 231B1B 38% 

* 1.10303 2 85 ft 

100 25 13 1473 57% 
08 . 2 4 

055 20 128 17% 

028 12 332 28 

012 03 24 1570 42% 
068 £5 8 062 27% 
£24 3221 65 84% 

57 15% 

36 


EtjTBW 
% 6%T2Uedel 

% 17% Twain 

9 3%UqM 
14% ftTMBjrP! 

6S 30%ltoMix 
16% eHTaodem 
iTwBr 


28%2ftTttiK 
5 1% Taken 
Z7% iftTetoja 

^25?:2“ 

54%sr%1ww* 

30% M%T«00GnMkO17 06 
0% 7% T eapN aniix 060 7.7 

68%®£t£5!? W 

30 2l%TeppcaPfe 
31% isTenqm 

S 57%Taen> 

50%TaaeoCx 
21%. Too* M 
45%1*Bt 


“Iff 


17% 17% * 
73% 73% + 
8% ft -e 

11 n -% 
«ft <s% ‘ 
1«% Ift . 
41% 11% ft 
11 % 11 % 



-% 

41% 42. +% 

67% 86% *1% 
BO 00% -% 

d7% 7% 

56% J7% +1% 
aft 29% j, 
2ft 66% ft 
ft 8% ft 


8 3% Tod Ms 
60% 40%Tattnx 
4% 3%HacWv 
24% IftlMCv 
37% IftlMFlM 
44%31%-ftannfiK 
29 iftlMoWx 

72 571WSBX _ 

15% g%lftOBWMx 046 26 40 
17% Unman M MO 56 14 


27 16% UdMr 
36 24% mm 

46% 2ft UnWorn x 
37% 28%TaeWr 
37 1 * Sftltatao 
8% 21%mOp 
13% lft IteiPI 
6 4 TodaShp 

1ft 8%TcMeto)C0 056 42 12 

28 25% TahdE2Jil 221105 


040 15 33 2018 21 

058 02 25 550 31 » 
032 06 501470 
120 21 27 1591 34’ 
120 28 62 84 
7 3142 

120 00 10 11^ 

5 26 41 

13 
7 


3 


1ft 8%10IBa» IB 596 16% 

8ft 64%TMWnx 058 05 21 89 71% 


64V 41% Tctrafc 
80% ift Toro CMp 
35 18%Tte9 
saiftTWBym 

aar* 

^ 46% 

18 13U1NCD 
17% ftTkanacntR 
15% ftTimfectl 
43 34% W 
16 12% Trsdepir 

t 34%TMCort25 
IftTrtere 
48 Item 
23TrCM 
2ft TOft 
39% 21 Thwti 

2ft Won - 
l%TbeeoRB 


1.12 27 12 403 

040 17 20 100 28% 

060 15 T3 607 33% 

014 05 41 4 2ft 

23 0144 3ft 

X 192 75 IT 70 

200 35 9 
050 09 11 1097 
050 35 ID 431 

3 8 1ft' 

024 15 12 194 15% 

000 10 913197 38% 

024 17 14 79 14% 

ISO 05 3 37 

7 121 2(1% 

154 15 22 722 57% 

OJM 18 1685 23% 

028 15 24 815 42% 

058 1.7100 1394 o4G 

4ft 2ft Wen O10 03 21 998 20% 

4% l%TbeeoRB Z71813 4 

1ft 5% Tata Dp x 020 35 35 107B 5% 

14% ftTtadmin 0.12 1.1' 270-10% 

34 241MIDBR 054 26 11 71 25% 

21% 16% IfehOfee 076 30 19 208 20% 

55 37%iynL 000 07 31 1110 54% 

14 7% TJsoT O10 1.1 4 241 8% 

6% 4%Tyfer . 7B 82 5% 


2ft 


- u - 


ISftltftlML 
33% 2T%UJBRi 
ift 4% IMS 
S%45%USU4.1 
88 8%UE£ 

32% 34% UST 
32% SftUSCCUtfll 
10% 4%0DCHte 
25% 21%ua0xpx 
,11% S%UNCte 

36% 20UnM toe 

34%15%UMM 
74% 56ltator 
lift 9ft(MNtf 
S0% 38%UiCenpx 
26 16IMM 
18 ft um Carp 
50% 48UnB250 

72 60%UeS43D 
44%36%UfiKX 
57% 58% (JnPXC 
30 22%U*riPtMt 
27% 17%lMfeTaw 
lft 1%IMft 
15% 8%IMepe 
4% 1% Urtt Corp 
47% 20%UHMMNl 
15% UUMMnMr 
21% SUkSarM 
57% 40IMM»n 
SftUkWxpn 
4UM8M 
ft UUKflttnfnc) 
%UdMkCM 
. 10%USW 

Sg 11%U8nB 

iftUBHtor 
19%USHfefe 
35% UGUCp 
15% ftUSShoa 
7ft 16%uss«g 
50% 37%VBH0fe 
72 43%IMTW 

S 13% UHMtar 
8% UnM* 
37% 30% aw men 
18% 14%lMt«i 


( 120 % 12 



46 2081 12 
004 35 17 2328 25% 25% 25% 

38 24 7 0% 7 

4.10 8.1 31 51% 5D% 5ft 

ID 483 30% 29% 30 

1.12 42 IS 6126 27% 25% 26% 

276 70 11 5ft 50% 

158200 5 233 8% 8% ft 

15* 65 24 ST15 22% 22 22% 

16 201 11% 10% 11% 

050 24 14 584 23 22% 23 

OIO 05 18 5 16% 1ft 1ft 

OSO 10 0 2 6 ft " ' 

155 10 16 1248 lift 1 

156 82 67 866 49 

070 21 24 4466 24% 

U » 12 % 

150 65 zl 00 53 

450 75 4 M 

258 65 IS 1033 36% 

150 27 17 S23 60 50! 

064 26 9 341 

020 15 951013 
0 104 
277195 04463 
25 140 


2ft 23% -% 
18% -% 
2 1% 1% ft 
14 13% 14 +% 

3% ' 3% 3% 4% 
086 25 20 687 3ft 37% 37% 4% 
070 85 70 807 14 13$ 14 +% 
020 05 10 41 1121% 21% 21% ft 
053 00 336376 85 83% 84% *3% 

276 75 11 127 37% 37% 37% ft 

026 4.7 5 166 6% 6 8 

019 12- ZTt 12% 12% 12% 

14 20 A A & 

012 15 117417 ft dB% 9-1% 

020 10101130 14% 14% 14% 

■67 IDS » 2ft 20% ft 

4 340 25% 25% 25% ft 

154 62 9 833 38% 38% 3ft ft 

052 22 291100 14% 14 14% ft 

009 06 26 2731 17% 16% 17 ft 

214 S3 38447* 41% 40V 40% ft 

150 £6 193814 66% 67% 68% 

052 05 13 138 14% 14 14% 

25 66 15 14% 15 


+1 


14. _ 

14% ftlMhrDp 
33% IftUnMDp 
■■ (Uaul 

lUNUMCap 


092 28 14 176 32% 
156 M 11 36 T 
D 6 
030 25 35. 50 1 
006 4.9 11 3075 T 
050 20 212961 27.. 
030 15 1311772 56% 



27% Z7% ft 
M% ‘ 55 *8% 


35 25% Up* 

za isusuca 

11% lOIRJFEInc 
16% USX M 
40 27% USX US 
24% 15USXDBH 
32% 28%Ufcp1J7S 
34 27% Wm 


MH » 

nr M e mu mw (m 

108 55 122210 28% 27% _ 
024 10 6 143 17% 17% 17! 
034 75 9 13 10% 1®% 

080 4.14151400 17 16% 1 

LOO 24 13 26*7 41% 41 41 

020 12 IB 79 16% 16% 16% 
L7B 01 33 2ft 33% 2ft 

156 06 15 331 30% 30 30% 

- V- 



56%3S%VFQ» L28 25 131855 

28 19% WimE OEB 14 306 

12 7%WBKMe» 030 45 16 64 
7 3%lMHkK 020 35 9 165 
8% 7% lanKxmp M 059115 237 

10% 9 VWCBfetar 120115 180 

ift IftteUeplWOM 72 56 

6% 4%Vtot«)W 27 BIS 

71% 38VMOI 024 03 25 998 
25 VMr 32 1321 

15% IftVMn: 128 09 0 92 

' WESP550X550 8J nO 
VM HU 17 271 

HfeRn 10 40 

Vtnte 21 325 

L53 12 29 <35 

21 41 

VcoCtB TO 431 

200 55 42 125 


40%VWMI 


152 27 2D 126 



^ Jl 


3ft 17% NM5M 
30% 27% WLMHta 152 

ra% n%«Haahc 
40% 30% VMM 120 
1£% 11% WacWnM 036 
5% 3%VteWO 
4ft 2S%te^n 066 
36% 23teamlXx ON 

34 Z3WWU 013 

11% 4Wmerte 054 
76% 59%9btM 244 

2B% 1B% WtoEflOBf 150 
45% aftteebOL 218 

2S 21% WbMW 158 
284 Ztt Mutt’S 420 
26% 12 DUMB 048 

5% l%lh0MU 006 
ift iiHw*e*)(O04 029 
45% aft HMnortan 228 
10% 3%«Nft*St 084 
29% artefeMk 072' 
15% 8%«Mxn 052 

aft iftteteoi on 

140% 74% Warn 450 
iftlftMMpx 024 
25%lftWmC0 004 
57% 40%«xaffff 
16% 12% WMcOtE 058 
19% 5% 1MHM 

19% 3%waa 

46% MVMrGM 020 
23% KAWMnMng 037 
37% 2ft nontax 158 
17% ift IMgB 020 
11% 4% WriteCofe 032 
22% 8%ManMMe 
20% 9%«M(peO 030 
30 30% torn* 1.10 
»% 3G%W)Ktar 120 
23% U% IMtar 006 
73%43%Mt1X 122 

.18 12% WMBtaPl 
17 12% HMnxiX 030 
17% 11 _ 

take 158 
UKUM 010 
WMpxX 
OJOMWNb 
_ . 5% Wndnen 
79% 48% MnOx 
13% S%Mmoeao 
29% 24MKED 155 
3ft aWfecPWSrx 1J6 
18% I7%WtaO 000 

35 MWeoOnx 150 
40% 23% WMXT 050 
35% 13% nXmW OIB 
32% 20%«aoMi L18 

18% 11% WxUMde 120 

7 2% Wxldavp 
49% 29%M1gtay .040 
21 14W)toLt«v 028 
23% 18%WymkC 004 


240 


054 

005 


104 


-w- 

22 720 27% 26% 
05 13 214 29% 29% 

32 4109 19% 17% 
35 11 882 31% 30% 
26408 15 13% 13% 
51 SIB 5% .6% 
15 20 1084 41L 
1517 376 
05 Z7 14687 

09 11 X 
35 30 2288 
OI 28 SZB It 
32 IS 271 4li. 

49 9 37 24% 

12 18 30 343 
25 16 181 23% 23% 
35 t 64 2% 2% 

10 16 179 14% 14% 

55 28 499 38% 38% 
60 5 200 10 9% 

27 15 69 26% 75% 

12 13 828 ft 9% 
05 17 1321 22 21% 

35 17 1398137% 138 

10 23 2132 17% 17% 
15 17 80 23 24% 

6 5 4ft 48 

45 121811 17% 17% 
11 5638 H% Ift 
203388 18% 17% 
07 22 130 28% 

16126 15 20% 

63 11 974 31% mh 
10 22 5343 14% 14% 
6.1 0 61 5% 5% 

a 43 10 16% 

£2 S 271 17% 17% 
32 44 864 34% 34% 
&5 18 2512 48 47% 

03 22 2450 20 19% 

15 21 1538 99% 86% 

23 5 13% 12% 

15 18 1345 18 18% 

20 109 16% 15% 
tin 79 31% 30% 
15 17 107 ft 6 
80 11 2190 2ft 24% 

07 14 a ft 6% 

13 339 8% 6 

27 17 713 54% 92% 
29 224 12% 12% 
55 M 1232 26% 25% 
0.1 11 184 29% 29 

23161 90 17% 17% 

29 73 938 34% 33% 

24 288438 25% 24% 

05 21 277695% 34% 
5.8 5 4386 21 3£% 

75 30 10% 1ft 

2 67 6 5% 

08 342038101% 48% 
10 22 171 20% 20% 

25 13 M 22% 21% 


29% +% 


20 


-X- Y-Z« 

183*4 09% Xbrhx 350 X1 39 3420 
58% S1%XfemA.l28x 4.12 75 2 

S3 31% X*a Ccrp 05B 13 19 870 
29% iftTMM&xLie 45 13 29 
‘ 71238 

3 2788 
150 45 B 302 
082107 161 

040 29 17 97 

068 XI 91 111 : 
154 80 


7% %ZapU 

13% 5%aMQ 

t ftzartxtae 
16% 12% Zero 
40% 25%amh0- 
13% i2%2MigFHid 


1ft 9%2ta0ToBx OB4 95 


96% 96% 
SS S3 

sa 

iS 

14 14% 

- 26 26% 
13% 13% 
ft 10% 


1 

£ 

£ 


M*4«mvM»nUm 


YW* feff* md tee tor HIRE Mot te pMM MB JH 1 1MS. 

Mn 1 n* a te Mbaf mWg to 25 iml or awe Me ban 
safe, in iter UtfHMr mm m wtao m mm fer w *m w* m 
DWWteaMWPMHnaMldHumfeMa 
tmtaMaantafemnanlUL 

wo W0M- tawd ofe d MM pk> wt Mteo 
olotag AIM tMata. WM Mr te. O0MM OM or fW 
' rata 12 H0I B44M to torn tato M ■ in 
HkM.teMdMtefenHfWVNWwfelMIMM.HM- 
M pW te W aWte MMk or n vta Ota it MM MM 
te Mted MOM or ptel Ml me ■ irnimri 1 tew tel 
HIiiih iMmlm ki te pH as ite. te Hpbtei on 
kegka wM « Art d mtop. nriwxt dfe Mhj. HE pdcMfetaH ten. 
1 d itei rl dmm or nod to pmfeg 12 nM. m te OMOte 
ite* ipto. DMHA IM M M or «* Mta VteM PW * 
Neck to incAg 12 ■»*«. i tei feO a* tea 
HteMtadte iHNfeiAtr Hrft wfeg Mkd. 
ncoAoMp or tap MfeM toWr «■ Btawte «. or 
ham fer am uh a M a a imai hah Ate. am 
nta. m o ta or wdpte Atata amteta 
I m dtoWAHA tea tote imte. Pterin te . 


AMEX COMPOSITE PRICES 


4pmdmmnh7 


nock 
AdrHagn 
MrBqr 
Attn toe 
Aptetad 
fen hr Pa 


W Sfe 

Ohr. E MU Ugh 
163 104 12! 
lUO 14 88 21 
2 5 1 

1 « 22 

154 11 4 

4WW»AX05410S 143 
AmMM OK 1 171 
AmBqn 1 396 

fenpiMBiA 59 451 1 
«Rtaw 0.72 0 208 
ta o tet i 30 11 
Mai 6 035 

AtoaCHB 1x100 
tettmA 13 308 1 


LmDaOw 

12 12 % ■% 

4 1 i 


BUiOGHA 

BfetaMr 

SSmta 

BfeiyRG 

BKTM 

M 

Bkteita 

Bto4tad0 

BtatatA 

BnrVtftv 

Sswrnsr 


055 1 
066 17 
054 32 
17. 
02913 
8 

000162 

36 

050 34 
291 
23 
030 11 
154 14 



6 % 6 % +% 
15% 15% -% 


10 43 4% 4% 

a "2%^ 

197 16% 16 16 

31* 7§ 7% 7% 

19 1% d1% 1% 

27 23 22% 22 

20 13 12% 12 
110 31% 31% 31 

£ ft 6% ' 

68 13% 13% 13 


17 1344 17% 1 
0 16 1% 
tekra 020 14 161124% 
CnMn 028 20X100 11% 1 
OUBtn A 001 71048 3 
Chanbon 7 42 I. - - 

Ctampton 36 173 24% 23% 

250 132 5 4% 


CttEflgy 

CWnp 


(Mu 



Stock 

Ocn 

QttlRM 

Cnmtnco 

Oompukac 

OonodRiA. 

CroraATA 

CnmiCA 

Crown CB 

Cuttcx 

Qatomadh 

Dltata 

OtnfeK 


n so 
DM E into 

054 36 293 
001 176 

030 14 12 
6 SB 
. 6 5 

054487 659 
000 46 175 
040 16 221 
053 93 28 
13 20 




13% 

5% 

1ft 1ft 1ft 

s a & 

w% 14% 14% 

28% 20 2D% +A, 

19% 1B% 1ft ft 


0*0 

■tadr 

Ufa. E Wta Mgh 

A 

rinDfe 

Haahro 

41 

028 15 

700 

456 

a 

A 

HaoHiCh 

6 

IB 

4 



3 

313 

sA 


Helen 

015 50 

46 

11% 

ft 

IBM 

12 

m 

tii 


Dqta 008 59 


» 212 l4 .1^ J! ^ 


+.% 


Banco 006 16 58if17% 17% T, 
EKtffov 1J2tW 51 20 19% 19fe +-l 

Echo Bay 057391 4£72 1Z 11% 11% 
BWBlA 058 12 B 14% 14% 14% 
EdhtDfk 7 248 9% ft ft . 

BA 172282 60 3ft 39 +% 

EngrSfer 433401 ft ft ft 


9 314 1 


Won 

Frikvk 05* 12 23 3ft 35% 3ft 4% 

ftfeA 326 15 39 69% 68% 66% +% 

RKUyfinc 02014 5 11% 11% 11% -% 

FUaU) 052 68 6B 26% 26% 3ft +% 

Forte Li 31 584 SI % ® 51% +% 

Frequgnqr 32100 ft ft ft 

6mn 050 9 £3 
GMFdA OJOIO 561 
Gtotttr 070 36 361 
GAHAS 11-35 

Doonran 35 82 _ _ . _ 

CUfOdB 034 11 139 3% 3% 



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004 26 641 28% 
020 3 10 4 

561 6% 
14 135 9% 
2 71 £ 

10 130 4% 
34 162 23% 
0583981768 28 

020 S 5 8% 
120 SS ft 
13 339 9% 


37% 37% -% 
2S% 25 

4 4 

6% ft 

4% ft ft 
25 25 . 

27% 27% +% 
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6 8 , 
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34 135 9% 9% 9% 


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PH ID 


• py 1 

Hr. E II 
054106 410 


32 31% 31% 


OLOIW 1737 16% 1ft 13% -% 
030 53 99 13% 12% 12% 

U8 41 ... “ 

023 IB 1127 67% 

050 IB 73 34% 

012 30 521 23% 2ft 




635,7 


(LID 1 


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PMdtaA 


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n&WCp 3 106 

RtadNew 3 34 3% 

SJWCap 21010 TJ 36% 3ft 3ft . 

amUofen 31 TO 55 34% 3ft -% 

SfedB D54 15 1759 14% 1ft 13% +% 

Sunt 1 144 010 8 10+2% 


II tod 
TriProda 


MW 

TtedCDCnf 

Triton 

Trial Hux 


22 T22 3% 3% 3% -% 

02052 21 9% 9% “ 

034 60 B15 45 44% 

55 B36 12% 12 

34 69 32% 32% 

020 23 637016*2 16 

0 832 
11 17 

21 81 


UWtefeA 4 9 

UtoFOxtaB 020 W 20 
UatoPMl 18 103 
USOMtt 61 51 
NriMlH 241099 
to feu nmr 050 23 76 
WHET 1.12 20 198 1 
rim 950 ID 63 2 



27% 27% 
14% 14% 
21 % 21 % 



Xytmlx 


7 276 6% ft ft +% 


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AfcmAOR 

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AMU 

Mori AW 

Men Dtp 

AkanFH 

MUCH 

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AfiSkxta 013)21 6015% 14% 15% +1 

acc Con* are on 23010% 19 ift -% 

AcctatnE 347653 26% 25% 2S% +% 

AemeUd* 2D 363 24% 23% 2ft ft 

Aodom GP at 3 22% £2% 22% 

fefeptoeb 2112758022% 22% 22% ft 
ADC Tlfe 31 4453 38% 36% 30% +1% 

fetrapn 108 328 18% 18 18*2 ft 

Mesa* ai6 15 80 28 24% 25 ft 

AftMSyt 020 2414809 30% 26% 2ft +1% 

MwncaC 10 634 14% 14 14% ft 

Mtlajr. 6 375 4% 4 4% ft 

AUrWjmi 0 52 6% ft ft ft 

AOvTkMLri 34 Z79 15%«n5% 15% ft 
MHriU 020 151050 30% 29% 30+05 
Aflymax 13 18 17% 16% 17% ft 

AQeayftS 23 905014% 13% 14% 

0.10120 468 11% 11% 11% ft 

260 19 383 55% 64% 54% ft 

. 33 U64 23% 23 23% ft 

0*17 801 29% 25% 2ft -1% 

14 50 0% 7% 7% 

052 12 11 30 SO 30 *1% 

62060 10% J9% 10% ft 
LOO 12 161 14% 14 14 

an 12 427 14% 13% 14 

032 65X100 5% 5% 5% 

008 2 205 1ft 1ft 1ft 

35 5277 36% 33% 56 

An Beater UL6a 6 407 22%d22% 22% 
AmCtyBn Z7 78 29% 20 29 

AmMufeB 192139 20% 19% 20% 

Am IMS 231057 17 16% 10% 

Am SMm UL321S7 641 9% 5% ft 

AfflFrtteB 33 157 ZD% 19% 20 ft 

AroGRA 050 19 9232 2B% 27% 28% ft 

ABtoP 21539 1% 1ft 1% 

Aimrtato a 192 % dft % 

AmHtaX £20 9 45 53% 51% 52 ft 

AHPWCOOI 627683 3 27 27% ft 

AnTrw ID 104 Ift 13 13 ft 

AaiBSoT 1 969 % ft ft 

Amgen me 1512072 41% 40% 40% ft 
AntachCp MB 42 681 30% 29% 29% ft 
Anrfti 4 12B 9% d0% 9% ft 

fnfegc 16 571 17% 16% 17% v1% 
Aafeyits 008 13 19 15% 14% 1ft +1 
AmagWri LOO 15 IBS 17% 17% 17% ft 
AndnwCp 191400 33% 31% 33+1% 

AmhsAo 9 916 19% 17% 17% ft 

ApngnBi 030 2B 202 15% 14% 14% 

APPBfa 9 131 5% 5% 5% 

AppU MU 32 8841 48 47% 47% +% 

AwfeC 00810634409 38% 35% 37% +1% 
004 571436 22% 21 22% +1% 

024 42 313 19% 19% 19% ft 

029 19 90 28 25% 26 ft 

IDO 9 132 31% 30% 30% 

Amor All ON 20 673 21% 20% 20% 

Amaldk 000 19 71 21% 20% 21% 

A5XGnp 113784 6% d7% 7% 

AgpacOM SO 298 34% 33% 33% 
AnocGmn. BOB 748 25 24% 24% 

141246* 24% 23% 2ft 
21 70 9 0% 9 

AlEEUrx 032 25 2733 34 33 3ft 

Attak 048241337 u61 60 80% 

AuUWk 13 453 4 3% 3% 

OK 11 13 7% 8% 7% 


-H 

-% 

ft 

ft 

-% 

-A 


fete Dr 

Ante 

Aiganut 


AST (torch 


ft 

ft 

ft 

-% 

ft 

+% 

+% 

ft 

ft 


BE1 B Q0B 20 22 
Batovs 111932 
BHbHIR 29 

Baker J 000 13 1442 
BManLB 020 3 440 
BMndac . 17 58 

taSttri 004 ID 3204 
ButaaCp 040 9 197 
ButavDi on 11 71 
BfeiMfaE* 020 20 50 
BantoGK 052 18 294 
BahIF 09016 31 
BferVtow am 11 57 
Baytote 100 121572 
BBSTHn* 150 9 139 
BE Am 27 222 
BhuKob 020 25 4 

BsnUnj 17 349 
BlrtdlyWl 04014 3 87 
BHADp 01216 4 

BHAGrp 36X100 
Bltac 100 190 

BfeB 012 19 200 
BtadeyW OOB 15 229 
Bkogon 436871 

M 20 5028 
BkxkDigx ID* 12 21 
BMCSaflv 223381 
BadIMBS L24 0 2319 
BabEum 027 19 817 
BoolalB 12 67 
Bofend 24 2921 
Boiton BkxiUD 6 215 
Bosun Tc 60 2320 
BradjWA OIB 17 25 
Bronco 02021 238 
BnnS 024 161624 
BSBBrip 078 7 54 
BTShipno 008 0 453 
BfeHs 361833 
BWdsXT 31 591 
Bump IS 71067 
Burton 24 98 
BoafesHfl 63 26 
BntelR 6 33 
Byte 7 4 


- B - 

6% 6% 

14% 13% 

A 6A 
20 % 
14% 14% 
23% 23 
16% 10% 
17% 17% 
19 1B% 
33% 33% 
37% 39% 
29% 23% 
20% 19% 
54 53% 
29% 20% 
11 % 11 
11 % 11 % 
19% 17% 
» 36% 
11 11 
19% 111% 
5% 5 

11 % 11 % 
13% 12% 
«%«% 
11 % 11 % 
34 33% 
70% 69% 
28% 2B 
21 % 21 % 
24% 23% 
13% 12% 
37% 35% 
13% 12!% 
45 43% 
9% 9 

0 7% 
23 22 
3% 3% 
24% 2ft 
18 1ft 
7% 7 

7% 6% 
33% 32% 
25% 25% 
8% «% 


6% 

13% 

A 
20 % 

14% 

2ft 
16% 

17% 

19 
33% 

37% 

29% 

20 ft 
54 +% 

29% ft 
11 % 

11 % 

19% 

37% +% 
11 -% 
18% 

5 ft 

11% ft 

13% ft 
40% -1% 
11% ft 

34 ft 
70 ft 

a ft 
21% ft 

23% ft 
13% ft 


35*4 

13% 

43% 

0% 

7% 

23 

3% 

» 

15 

7% 

7b 

33% 

25% 

6% 


-C - 

CTsc 89 336 30% 

Crirtlftd 9 141 7% 
CMSdmpS 053 IB 1428 29% 
CatanC0nO2D IB 159 01S 
CaeroCp 87 598 9% 
Qdgeoe 225 73572 10% 
CfeMm 21 1899 24% 

Cembflta 45629 3% 

GtaAfeL 1 290 3ft 

Ode* 0 338 2% 

Clan toe 059109 54 79% 
Cenanfe 1 13 4% 

Cudntl 012 25 144 46% 
CarikaCn 084 24 775 29% 
Cascade 060 17 33 20% 
CmrS 006 T81D49 12% 
Ceigm 9 1333 7% 

Cater 9 334 19% 

CB4CP T9 XIOO 12% 

CentaxTS 162 2410 5% 

Cantocor 3SO40 11% 
CritHd 1.12 11 645 30% 
CttriSpr 20 44 13% 
Chndtor 12 31 7 

Ompferl 000 01775 19% 
QimSft 009 191 USB 14 
Cteadian 30 309 6% 
Chendri 77 19 11% 
Ctenftc 1 200 % 

Ctenpomr 13 in 4% 
QIpaSTe B1912 5% 
CMraaCp 733802 77% 
Ckll Rn 129 13 79 55% 
CUsQpx 017 30 367 31 
Ckltegc 432806 41% 
CSTMl 437 081 3 

Chafip 4323117 U81 
ClzBaacpx LOB 19 22 29% 
Omrir 29 60 8% 
CHaSr « 164 12% 
CUharin 14 295 ft 
CDcaCohB IDO 2D 25 32% 
COWQW 98 677 5 

CDdeNem 27 90 10% 
COOoexCp 33 188 22 

Cogow 114 530 12% 
CBteto 15 239 12% 
Magsi 09 308 24% 
CfiUtexl.24 15 21 S 
Cotol Op 050 9 96 25% 
Cans* 024 172037 28% 
CneeM -S72S3860 21% 
COMASp aoe 251M2B 20% 
CBaMrindJO 11 75 32% 
Comma 070 95 451 19 

CamplUtB 44 627 13% 
OsmWan 49 48 11 

CteriWA 551241 BA 
Curitop 1DB 30 829 45% 
Cpnatom 126054 8% 
104 16 460 1ft 

n in i«% 

QtortData 13 692 9 

OpotoA 050241229 U 
OWrMa 95 306 11% 

CriliCh 21 930 49% 

Carp Of A 37 87u1ft 

CroetarBx QD2 33 5725 29% 
Cray Comp 1 075 2% 

Crown Rm 3 E 6% 

Crimea 32173 4% 


ft 

ft 

ft 

ft 

ft 

ft 

-1 

ft 


ft 

ft 

ft 

ft 


ft 

A 


29% 29% 

7% 7% 

29% 29% 

14% 14% 

8% 8% 

10%. 10% 

23% 23% 

2% 3% . 

3 3A +A 

d2 2% ft 
78% 78% ft 
4% 4% 

49% 49% 
a 29% 

16% 18% 

12 % 12 % 

6% 7% 

19% 19% 

12 % 12 % 

4% 4% ft 

10% n% ♦% 

29%, 30% ft 
19% 13% 

6% 9% 

19 18% 

13% 13% 

S% 9% ft 
n% n% 
ft % 

3% 3% ft 
5% 5% ft 
73% 75% -1% 
64% 54% ft 
30% 31 +.18 

40% 40% +% 

2% 2% ft 

78% 90% +1% 
28% 29% 

8% B% 

12 12 % 

8 8% 

31% 32% 

4% 4H 
10% 10% 

21% 21% _ 
11 % 12 % + 1 % 
11% 12% ft 

23% 24% 

22% 23 
24% £5% 

24% 25% 

20% 20% 

20 20 
32 32% 

19 18% 

13 13% 

10% 10% 

4% 5 

44% 45 

8 B 
9% 9% 
1918% 
d8% 9 

1B% 18% 

10% 10% 

48% 49% 

13% 13% . 

27% 25% +JJ0 
2 2ft 
5% 9% ft 
Oft ft 


ft 

ft 


ft 

ft 

-% 


ft 

H 

ft 

ft 

ft 

ft 

ft 

ft 

ft 

ft 

ft 

ft 


ft 

S 


- D- 

DSCCra 3411250 55% B2% 52% ft 
Dart tan x OWIOB 18 86 fi 86 +2 
DaMMdi 14 131 2% 2% 2% 

30 158 7% 7% 7% 

IS 356 16% 15% 16% ft 


DafflM* 

DriGteea 

DriatoBi 

DcsatoGa 

DaKtanpa 

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Oriaffibn 

DeoCtr 

Dacca 

DHTari 

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UgSaanB 


DtoriHqt 
DbdtVm 
UW Plant 
tour On 
Denhitti 
Draco&vr 


Drey CD 

DrugEmpo 

DSB8M0T 

Ooriron 

DtarFto 

□joteia 

Oyrafeefl 


n at 

Ok, E HA MBk 
Offi 11 2U 24% 
020 10 40 6% 
OS 21 91 14% 
030 60 88 33% 
04411 40 22 

251092 27% 
OU TB 340 15% 
IDO 7 B3 27% 
am 4 93 7% 

14 85 17% 

072 11 in a 

15 439 18% 

82S70 19% 
9 750 2 

4 50 3% 

IS 37 35% 
020 a 09 10 

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020 31 2928 32 

am 19 4 16% 

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14 682 13% 
024 20 332 24 

009 50 186 5% 
108 14 260 2S 
093Z11Z75 28% 
030 24 8033% 

0 8% 
14 722 21% 


23% 24% 
9% 6% 
13% 13% 
33% 33% 
21% 21% 
29% 28% 
15 15% 
Z7 27% 
ft 7% 
1ft 17% 

22 a 

1ft 19 
14% 15% 
ill 1% 


93% 3% 
35 99 


9% 

ft 


3ft 31% 
15 16% 
10 % 10 % 
13 13% 

a% 24 

5% 3% 
2ft 24% 
27% 28% 
32% 32% 
% % 
21 21 


ft 

9% ft 
5% ft 
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ft 

ft 

ft 

ft 


B&Fd 
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BPMO a 


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BbcmAw 
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BMW* 


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Fan- (ff 


10 210 6% 

3 505 4% 

4 40 1% 
018 32 4470 26% 

78 9M 9% 

2 268 ZS 

13 827 13% 
OS 50 10 50% 

2910670 29 

25 33 6% 
Z7 1442 ft 
S3 342 15% 
65 80 2% 

3 822 4% 
a» 22 539 4% 
0081273908 46% 

Z100 9% 
76 531 17% 
271608)021% 

14 43 12 

14 433 20% 

0.10 21 109 13% 
29 147 10 


6% ft ft 
ft ft ft 
i» IB 
24 25 -1% 
ft 9% +% 
2% ZH 
U% 13% 

50% 50% +1% 
23% 23+1% 

7% 8% +% 
0% 

IB 


B 

U% 


2A 2A 
04% 4% 


* ft 
4S% 45% 

9% 0% 

17% 17% ft 
1ft Z1 +1 
11% 11% ft 
IB 20% +1% 
17% 17% ft 
15% 19 ft 


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ROKTM 

HtyOfl 

Rg*A 


AHUM 
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FHB d&to 
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Fid Serif 
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FnodLA 

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FdHtA 
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Rtf EM 
FfeFU 

FteHawUx 

Frier ie 
FutonRn 
Fnw 


- F- 

11 40 5% 5% 
024 14 9 ft 6% 

004 57 422 36% 3S 
1910196 27 29 
1 251 4% 3% 
IDS 14 254 47% 47 

10 789 B ft 
024 23 INC 8% 6% 
351394 25% 25 
120 102969 30% 30% 
084 7 875 30% 29% 
094 10 Z7B 24% 23% 
056 17 127 19% 19% 
1D411 510 29 29% 

IDS 9 374 39% 39 

039 9 38 7% 7% 
052 11 2172 24% 24% 
LS1 11 290 49% 45% 

30 4 ft ft 

261590 21 19% 

20 1296 7% 6% 
009 155784 5% 5% 
0095871000 6% ft 
LOB 11 39 34% 33% 
14 10 15% 14% 
030 52 469 31% 80% 
41 75 ft 3A 
1D4 11 285 28 27% 

L12S20 47 29 25% 

040 7 286 IS 14% 
1.18 10 259 27% 26% 
059 a 1576 40% 37% 
020 12 241 24% 23% 
024 23 193 16% 17% 


5% 

ft , 

36 ft 
28% ft 
3% ft 
47% +% 
ft ft 
8% ft 

25% +% 

3ft ft 
29% ft 
24 
18% 

29 
39% 

7% 

24% 

4ft 
ft 
21 
7% 

5% 

ft 

33% 

15 
31% 
ft +& 
27% ft 
26 ft 

15 +% 
27% ft 
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23% 

16 ft 


ft 

ft 

ft 


ft 

ft 

ft 

ft 

ft 

ft 

ft 

ft 


BttApp 
GSKSbiv 
G rata 
Garnet Ri 
Beni Co 
Braden 
Go* and 
taijto 
Ganriam 

Cortex Cp 

Gnats 

Guqmw 

tfengfeM 

SboonQU 

GMOngiU 

abort A 

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taraAP 

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Gwrsvg 


HndhgA 

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10 050 6% 5% 

aura 174 15% is 

0 408 3% 3% 

21 3 4% 4% 

01B1E 81 6% 8% 
251101 37%d34% 
040 18 16 15% IS 
15 433 4% 3% 
8 930 21% 20% 
400 41 1030 24% » 
J 484 4% 4% 
1181653 » 29 

» 4 10% 10% 

040 14 579 22% M% 
012 202561 27 29% 

amis 63 17% 17 

11 43 5% 5 

Z1 1109 U18 16% 

am 23 474 25% 2$% 

43 47 2% 2% 
am 77 954 23% 22% 
ON 12 10 20% 19% 
1 1489 1% 1 

1 #17 4% 4% 
7B2 94 18% 14% 
14 OB 20% 1«% 

43229 l«% 7% 


5% ft 
15 ft 
3% ft 
4% ft 
B% ft 
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15% +% 
4% ft 

10% 

22% 

29% 

17 

5 

16% -1 
25% ft 
2% 

23% 

10% 

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15% ft 
10% -1 
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ft 

ft 


Herimny 

Herts 

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***** 
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Hon Mi 


-H- 

79 28 9% 9% 0% 

ON B 77 24% 23% 24 ft 
020 14 330 16% 15% 19% ft 
032 441390 i63 51% -52% +1% 
221125 24% 24% 24% ft 

amis bos 9% 9% 9% 

123512 8% B% B% 

10 183 B% 0% 6% 

010 21 578 12% 12% 12% 

8 851 14% 14 14% 

032 152106 22% 21% 22% 

015 311714 10% 9% 10% ft 
28 37 B% 6% 6% 

078 B 1377 21% 20% 20% ft 

11 1277 7% 7% 7% 

area 291 rei 
1 235 3A 
004 23 768 u32 


-% 

ft 

ft 

ft 

ft 

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3* 3% 

30 32*1% 


ftamhock 

' 16 2104 1ft 15 

15 

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HoraaMtas 

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5% 


Hit je 

020 281174 25 24% 

25 

A 

HuNarBw 

2 6* % A 

% 


HanfcoHi 

OH 8 496 22% 22% 22% 


ttacoOe 

OOB D 119 3% 2% 

2% 


riBMach 

4733883 40% 37% 38% 

-1% 

ItefeBki 

17 185 4% A 

4ft 

A 


-1- 




HG* 53 40 6% 6% 8% ft 

DO Dorans 57 3086 19% 18% 19% +% 

RHS 911000 12% dB% 8% -7% 

tanutr 36 130 B% 6% 6% 

tonwogra 5 429 6% 8% B% ft 

taped Be 040 28 178 19 14% 14% ft 

tad Damp LIB 17 633 38% 34% 34% ft 

kid ha 024223 40 18% 15% 15% 

HHu 27 75B1 23%d21% 22% -% 

fedormk 2910317 34% 23% 24% +% 

ktote am 17 sob 12% 11% 12% +% 

HegrDar 3512777U29% 29 29% +1 

25 015 12 11% 11% 

94 191 5% 5% 5% +% 

am 1324214 71% 09% 71% +1% 

101399 4% 4% 4% -A 

MgnB 032 44 2B01 26% 25% 25% ft 

Her TO 22 107 10% 10 10 

tatafceAx 024 m 857 15% 15 15 ft 

Mnh 3 902 9% 9% 9% 

124307 8% 7% 8% +% 

255 SB* 12% 12% 12% +% 
22 7735 13 11% 12% -% 

HDBtyQA 14 244 17% 17 17% ft 
Mta 009 21 20 3% 3% 3% ft 
tt Total 600 310 12 11% 12 ft 

am 18 435 27% 27% 27% 

tanegeCP 2 385 2A 2% 2% 

17 24 16% 17% 18% +1 
ttoTOCBdB IDO « 27 221219% 221 ft 


JUStefc 
Jam too 
.ID tad 
JoteamW 
Jomitt 
JooaaUed 
Juste Gpx 
JSBRn 
JunoUg 


- J- 

20 775 18% 

am a bo ns 

010 » 878101% 
S3 a 25% 
10 11B 13 (% 
0.10 a E7 15% 
L2D11 13 24% 
ON 142180 a 
024 IB SI 19% 
0.16 11 1840 14% 


17% 18 ft 
14% 15 ft 

a 29% +i 
24% 25% +1 
13% 13% 

14% 15% +% 
23% 24% 

22% 22% ft 
18% 18% ft 
14% 14% 


KShIh 

KraanQ) 

KsrivC 

ltetoaco 

NaMgOI 

KetySxx 
KnCted 
8a0U Off 


UAtaatr 

KnMgt 

IMA 

Kixragtoc 

KuBdmS 


N at 

m. s ha *ri 
' K - 

00812 712 a% 
044 5 232 9% 
OOB 37 838 13% 

040 is sea 25% 

7121537 7% 
064 a 70S Z7% 
044 11187 3% 
011 13 24 7% 
05410 154 30% 
14 a 7 

566849042% 
77561 14 

01471 A 

56i ran 27 

83690 13% 


22% 23% 

0% 9% ft 
13% 15% ft 
£4% 25% +% 
7 7% ft 
28% 27% 

3% 3% 

7% 7% ft 
29% 29% 

7 7 ft 

41% 41% +1% 
12% 13% +1% 

til % 

25% 25% -1 

12% 13% +1 


LjkU Fun 


- L - 

are 55 5B8 9% 


9% 9% ft 
44 21 B4 099% 37% 39% +1% 
Urctxsvx 090 IS IB 44% 43% 44% +% 
Uncatac 00621 322 21% 20% 21 ft 
UnMfeH 37 497 28% 28% 29% ft 
tanratts 18 97 I2d!l% 12 ft 
S3 390 8% 5% 5% ft 
141691 17 18% 15% ft 

04B 18 312 26% 25% 29% ft 
3984582 9% Z7% S ft 
015 9 55 6% 6% 6% 
181940 15% 14% 14% ft 
1812493 30% 26% 30% +1% 
07814 346 29 26% aft 

820 IB 256 IB 16% 16% <1% 
21 72 4% 4% 4% ft 
UBStadAx 000 24 428026% 25% 26 +J1 

Ltlfr 96 559114%113%Tf4>t+I% 
UrentaT 052 18 182 18% 18 10% 

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0 54 2 

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Itadtoso 01651 % 

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IMrire 024 20 6118 14% 
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MercnyG 070 8 140 30% 
Merkdra 128112047 29% 
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MSnrfeA QD5 19 399 16% 
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Hdtaahc too tl 3532 m% 
HdHtata aso 25 345 30% 
MtterH 05222 486 32 

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MMhTO 422310 16% 
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MUraad 132032 30% 

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17 291 10% 10% 

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100 232139 72% 71 

are 14 103 7% d6% 
058 3 584 15% 14% 
L2D 8 187 45% 43% 
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44 12 10% 10% 
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Tokyo Mar 037 38 10 81 91 

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TPIRfer 41173 9 7% 

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29 29% ft 
4U 5% A 
21% 21% A 

21% 22% A 

55% 57 +1 

30% 31% +J4 

43% 43% ft 

8% ft A 
25% 28% A 
17% 17% ft 
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88% 57% +1% 
32% 32% ft 
15% 15% ft 
10% 19% 

3A 3ft 
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372890 1159 5ft 57% +1 
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Tat TO* 51 Z1B ft ft ft ft 

ZkmaUri L12 B 269 38% 38% 39% +1% 


■:/r 



42 


Tuesday March 8 1994 


WORLD STOCK MARKETS 


FINANCIAL TIMES 


AMERICA 

Arms groups’ 
$1.9bn merger 
helps lift Dow 


Wall Street 

Rallying European stocks, 
firmer bond prices and news of 
a billion-dollar defence indus- 
try merger lifted US share 
prices across the board yester- 
day morning, writes Patrick 
Harverson in New York. 

By 1 pm, the Dow Jones 
Industrial Average was up 
19.42 at 3£51.72, slightly below 
its high for the day. The more 
broadly based Standard & 
Poor's 500 was also firmer, 
gaining 2.74 at 467.48, while the 
American Stock Exchange 
composite was 2.57 higher at 
469.05 and the Nasdaq compos- 
ite ahead 4.59 at 795.14. Tr ading 
volume on the NYSE was 173m 
shares by 1 pm. 

After recent wild fluctua- 
tions, share prices opened the 
new week in impressive fash- 
ion, moving into positive terri- 
tory right from the opening. 
Traders said several factors 
were behind the advance: a 
recovery in European stocks, 
hit last week by turmoil in 
local bond markets; early gain*; 
in US bond prices; and news of 
a big merger between defence 
companies. 

The latter was particularly 
welcome, given that the mar- 
ket had been rattled by the col- 
lapse two weeks ago of the bil- 
lion-doll ar union between Bell 
Atlantic and Tele-Communica- 
tions. Yesterday's news 
involved Grumman, the l+mg 
Island defence contractor, 
which has agreed to be taken 
over by Martin Marietta, 
another defence group, in a 
deal valued at $L9bn. 

The announcement of the 
agreement sent Grumman 's 
shares soaring in heavy trad- 
ing. By early afternoon they 
were tr ading at $54, up $14%, 
or 35 per cent Martin Marietta 
has offered to pay $55 each for 
every Grumman share. Wall 
Street clearly liked the deal, 
because Martin Marietta's 
shares also rose on the news, 
climbing $ 1 % to $46%. 

Salomon jumped $1% to $51% 
as investors reacted warmly to 
Friday's late announcement 


that Mr Warren Buffett, the 
billionaire investor and former 
interim chairman of the securi- 
ties house, had increased his 
stake in the company horn 14.7 
per cent to 19 per cent The 
move was seen as a vote of 
confidence in Salomon's 
long-term ability to generate 
profits. 

USAir dropped $1 to $9% in 
busy trading after warning 
that it would make a pre-tax 
loss of $200m In the first quar- 
ter of the year, compared to a 
loss of $61m a year earlier. 
USAir blamed bad weather and 
price competition for its poor 
earnings. 

Philip Morris, which has 
been hit recently by concern 
that the government might 
impose strict regulations on 
cigarettes, rose $2 to $56% amid 
speculation that the planned 
increase in excise may be 
smaller than ori ginally feared. 

Brazil 


Heavy trading took Brazil 6.1 
per cent higher by midday on 
expectations that the govern- 
ment would not raise taxes on 
foreign investment and amid 
optimism on constitutional 
reform. The Bo vespa index was 
688 points ahead at 11,828. 

Trading picked up amid 
reports of proposals to end all 
state monopolies. 


Canada 


Toronto was spurred higher by 
bargain hunting, a stronger 
bond market, and subsiding 
fears of a rise In US interest 
rates. 

By midday, the TSE 300 com- 
posite index was 27.66 higher 
at 4,426.22 in volume of 3363m 
shares. 


SOUTH AFRICA 

Growing optimism that real 
political progress is being 
made pushed Johannesburg up 
to a strong close. The overall 
Index jumped 61, or 1 3. per 
cent, to 5,071, led by industri- 
als, which ended 78 higher at 
5642. Golds rose 15 to 1,911. 


EUROPE 

Bourse recovery accelerates on IG Metall deal 


FT-SE Actuaries Share indices 


Mar 7 THE EUROPEAN SEMES 

Hasty qaagts Op«n TO30 II JQ 1Z0Q 1300 1*50 1SJ0 AM 

FT-SE EntaaAlM 14*801 144150 1*4772 MS037 145253 1455X7 MSBJl 148044 

FT-SE Sinara* 210 T50Q54 1507.59 150025 150738 150012 151135 1S1S2B 151019 

Ifa4 My 3 aar 2 Marl ftp a 

FT-SE Esctra* 100 1428.41 M14S5 >33060 1431.16 14S043 

FT-SE Eamtrat* an 1483.46 1475-40 146308 1488.07 151374 

Bae OKS tan canra*. Mpttr too ■ warn an - isi7c la** too - twrai an - isoisa 


The weekend settlement of the 
German metalworkers’ wage 
dispute lifted bond and equity 
markets around Europe in the 
morning, and healthy gains on 
Wall Street brought further 
strength to the afternoon, 
writes Our Markets Staff. 

FRANKFURT got an IG Met- 
all wage deal that it would 
have been happy with some 
weeks ago. The June bund 
future reacted, rising by a full 
percentage point to 97.42 by 
the evening; equities 
responded with file Dax index 
4862, or 2.4 per cent higher on 
the session at 2,108.91, and 
closing the post bourse at an 
Ibis-indicated 2,132.12. 

Turnover rose from DM6£bn 
to DM9.4bn. There was specula- 
tion about interest rate pros- 
pects; Allianz produced a 4 per 
cent gain during hours and a 
farther DM22 rise to DM2695 
in the afternoon. 

Carmakers were more stri- 
king, their gains led by Volks- 
wagen which rose DM1660 to 
DM45460 on hopes of a modest 
1993 dividend, and another 
DM8 to DM462.50 afterwards. 
There was interest in chemi- 
cals in their results week: 


Hoechst, tipped by Goldman 
Sachs ahead of today’s figures, 
put on DM6.60 to DM308.60, 
and another DM6.40 to DM315 
in the post bourse. 

PARIS, too, majored on a 
surging bond market end gains 
in mid-morning trading in New 
York. The CAC 40 Index ended 
4L2, or 1-9 per cent higher at 
2619-89, in turnover of FFrtbn. 

Among the winners. Club 
Med rose FFr2120 to FFr40720 
on news that it would be sell- 
ing some of its holiday villages 
to raise cash , rather than mak- 
ing another rights issug; and 
Eurotunnel's rights issue 
terms left it FFr2.70 higher at 
FFr52.10 on the feeling that 
one uncertainty was now out 
of the way. 

The losers included Peugeot, 
down FFr12 to FFr881 before 
announcing a convertible issue 
after the dose; Mr John For- 
dyce of Ferri International 
reckoned that the shares would 
rise on relid today. 

Remy fell FFr1360 to FFr234 
an Hang Kong's tax increases 
on spirits and champagne. 
Here, Mr Fordyce conceded 
that Remy was very strong in 
the colony, much more so that 


LVMH, and at file top of the 
range where the tax imposts 
would hurt most; but it was 
not so strong, he said, as to 
deserve a near 4 per cent drop 
in share price. 

MILAN'S foreign investors 
returned and the Comit index 
rose 8.44, or 1.3 per cent to 
66029. Stet rose 1236 or 5 per 
cent to L4675 after Mr Paolo 
Savona, the industry minister, 
said that a plan for its privati- 
sation, timetabled from late 
1994, should be ready soon. Sip 
put on Ll83 or 46 per cent to 
L4J94. 

Fiat added L128 or 2.7 per 
cent to L4699. Mr Nicholas 
Potter at Credito Italiano said 
that while sales were down in 
Italy, the group's ability to 
recover strongly over the 


medium term was strength- 
ened by its recent impressive 
performance elsewhere in 
Europe, where it was helped by 
the combination of the new. 
successful Punto model and 
the undervalued lira. 

Benetton advanced 1279 to 
125629 after a high of 126.600: 
the chairman revealed that the 
group hoped to pick up around 
1 per of BCI in the institu- 
tional offering of shares. Ciga, 
the hotel group, added L130 or 
15.9 per cent to L950: the 
shares were readmitted to the 
exchange last week after a deal 
was struck for its sale by credi- 
tor banks to ITT Sheraton. 

ZURICH rose 1.9 per cent 
although trading volume 
dipped, indicating con tinuing 
nerves among investors after 


the market's recent volatility. 
The SMI index added 536 to 
2218.7. 

CS Holding rose SFrl3 to 
SFriJSO ahead of preliminary 
figures today and UBS put on 
SFrl9 to SFrl294. 

Among firm cyclicals, 
Holderbank, planning a Joint 
venture to build a plant in 
Vietnam, put on SFr45 to 
SFr975 and Sulzer, finding 
favour with analysts, added 
SFi35 to SFr955. Brown Boverl, 
due to report tomorrow, added 
SFi36 to S Fr 1,110- 
AMSTERDAM was in opti- 
mistic spirits with many deal- 
ers forecasting a move soon 
into record territory. Most 
shares closed near their day’s 
high and the AEX index rose 
1061, or 26 per cent to 424.76. 

the Dutch house was riding 
the generally positive mood 
sweeping European markets, 
with dealers buoyed by firmer 
bond markets ami hopes of a 
cut in German interest rates. 

Fi nancials were a strong fear 
ture with an average rise in 
the sector of 3 per cent 
Philips, the electronics com- 
pany, stirred up investor inter- 
est after presentations in the 


UK following well-received 
results. It edged up FI 1 at 
FI 52.60 with a strong volume 
of 3.14m shores traded. 

Hunter Douglas, the blind- 
maker and aluminium trader, 
set a new 12-month high at 
519360 before easing back to 
dose at FI 9080, a rise of FI 160 
on the day. 

Grolsch bounced on news or 
a distribution deal in Germany 
and put on FI 160 to end at 

Fi 50.50. 

KLM traded actively and 
added FI 2.60 to reach FI 5060. 

MADRID rose 16 per cent as 
strong bonds and the per ft*- 
mance of other European mar- 
kets encouraged buyers. The 
general index added 5.94 to 
341.10. 

Telefonica, the most active 
stock, rose Pta25 to Ptal.975 
while Banco Central Hispano 
put on Ptal05 at Pta3,015. Con- 
struction stocks continued to 
forge ahead on government 
approval of an infrastructure 
plan: Asland added PtallS or 
4.4 per cent to Pta2,735. 


Written and edited by WITHam 
Cochran*. Michael Morgan and 
Christine Buckley 


ASIA PACIFIC 

Nikkei fails to sustain early rally as Manila rebounds 


Tokyo 

A fall in government bond 
prices eroded early equity 
gains to leave the market 
lower, although foreign inves- 
tors continued to provide sup- 
port, writes Entiko Terazono in 
Tokyo. 

The Nikkei 225 average relin- 
quished 154.12 at 1931168 on 
arbitrage linked selling and 
profit-taking by institutional 
investors. The index hit a high 
for the day of 20279.13 and fell 
to a low of 19,768.68 in the 
afternoon. 

Active demand from foreign 
investors and arbitrage buying 
supported shares in the morn- 
ing session, but most domestic 
investors remained inactive 
ahead of the March stock 
futures and options settle- 
ments on Friday. A fall in the 
bond market triggered heavy 
arbitrage selling based an the 
Topix index in the afternoon. 
Traders said that while inves- 


tors have been rolling over 
their positions in the Nikkei 
225 futures, much of the Topix 
positions had been liquidated. 

Volume totalled 340m shares, 
down from 414m. The Topix 
index of all first section stocks 
slipped 1419 to 1,608.10 and the 
Nikkei 300 shed 233 to 296.47. 
Declines led rises by 678 to 366. 
with 141 issues unchanged. But 
in London the ISE/Nikkei 50 
index firmed 3.44 to 1336.16. 

Profit-taking hit Nippon 
Telegraph and Telephone, 
pushing the issue down 
Y10.000 to Y948.000. Financials, 
heavily weighted in the Topix 
index, lost ground. Industrial 
Bank of Japan fell Y60 to 
Y3250, Dai-lchi Kangyo Bank 
Y40 to Y1.930 and Nomura 
Securities Y30 to Y2360. 

Real estate companies were 
lower on profit-taking. Mitsui 
Fudosan retreated Y60 to 
Y1.190 and Mitsubishi Estate 
Y30 to Y1.02D. 

Growing concern over the 
current rice shortage sup- 


ported rice traders. Although 
foreign rice has been imported 
to fill the gap, reports of shop- 
pers fighting for bags of rice 
prompted buying of Yamatane, 
which gained Y60 at Y1340. 

Bakeries and flour millers 
drew buying cm expectations of 
a rise in demand for bread due 
to the lack of rice on the shop 
shelves. Yamazaki Raking rose 
Y50 to Y2J40 and Nitto Flour 
Mining Y65 to Y54Q. 

Motor shares were firm on 
foreign buying. Toyota Motor 
climbed Y40 to Y2.0B0 and Nis- 
san Motor YL1 to Y884. 

In Osaka, the OSE average 
dipped 11635 to 2135221 in vol- 
ume of 61.1m shares. Aoki 
International, the men's suit 
retailer, put an Y140 at Y3640 
on bargain bunting 


Roundup 


The region saw mixed perfor- 
mances, while trading volume 
was thin in many centres. 
MANILA rebounded after 


more than a week of steep 
Heflin p« although low turn- 
over suggested that the market 
was still testing a new base. 
The composite index moved 
forward 47.46, or 13 per cent, 
to 2.65428 as PLOT added 45 ■ 
pesos at 1,910 pesos. 

HONG KONG strengthened, 
the Hang Seng index adding 
143.36. or 1.5 per cent, at 
1036165, although thin volume 
of HK$4.48bn indicated that 
there were still nagging doubts 
about the market's direction. 

AUSTRALIA mustered a 
firm performance, moving the 
All Industrials index up 42.1 to 
32996. 

Futures helped the underly- 
ing market benefit from consol- 
idation. and the majority of 
the leading stocks were able to 
enjoy the upward journey. 
BHP rose 20 cents to AS17.42, 
News Corp put on 23 cents at 
A $9.97 and CRA gained 34 
cents at A$1730. 

SINGAPORE failed to sus- 
tain an early rebound as inves- 


tors remained cautious pend- 
ing clearer directions in US 
interest rates. The Straits 
Times Industrial index lost a 
net 439 at 2243.74 after an 
intraday peak of 227539. 

SEOUL saw widespread sell- 
ing in the year's lowest volume 
on a full trading day and the 
composite index declined 7.15 
to 89532. Volume amounted to 
17.15m shares, against 1320m 
in Saturday's half-day session. 

KUALA LUMPUR fell 1.7 per 
cent as investors liquidated 
positions amid worries about 
the direction of overseas mar- 
kets and US interest rates. 
Fears of trade retaliation by 
Britain also discouraged buy- 
ing interest and the composite 
index shed 18.62 to 1,045.72. 

NEW ZEALAND ended with 
moderate buoyancy after a ses- 
sion beset by confusion over 
how the readjustment of Tele- 
com's shares affected the 
NZSE-40 index. The index was 
quoted 1 3A higher at 2,19534 
following an upward adjust- 


ment of 24 points, after the 
market closed. 

THAILAND saw a retreat of 
the bears as concern over ris- 
ing interest rates and political 
uncertainty began to ebb. The 
SET Index finished 17.43, or 13 
per cent, better at 1376.68 in 
moderate turnover of Btt.Sbn. 

TAIWAN’S weighted index 
receded 2337 to 5.64769, with 
Saturday's confirmation that 
the authorities were raising 
the ceiling on foreign invest- 
ment already discounted. 

JAKARTA encountered for- 
eign selling, although domestic 
investors gave some support, 
making for a mixed day's trad- 
ing. The official index edged up 
0.99 to 52237. 

BOMBAY weakened in ner- 
vous trade in a continuation 
of the downward movement 
which left the market with a 
drop of 11.3 per cent last 
week in the wake of the budget 
statement. The BSE 30-share 
index closed 56.99 lower at 
3,74431. 


Malaysia and Singapore tumble 


By William Cochrane 

Among the biggest global 
equity markets, early weak- 
ness based on suspect or poor 
economic data in the US and 
Germany was evened out later 
last week by nervous recov- 
eries in America and Europe, 
and an extension of this year’s 
relative strength in Japan. The 
FT-Actuaries World Index fin- 
ished just 0.1 per cent down 
on the week in local currency 
terms. 

Asian shares were another 
matter entirely, Malaysia 
weakening 6.1 per cent after a 
5.2 per cent advance in the 
week before, and Singapore 
taking a 4.5 per cent tumble. 
This left them 14.1 and 11.1 
per cent lower respectively 
on the year so for, compared 
with gains of more than 120 
per cent and nearly 70 per cent 
in 1993. 

Mr David Bates of Asia 
Eqnity in London says that 
Singapore, having fallen ear- 
lier this year along with other 
markets in south east Asia, 
had seen some feverish specu- 
lation in advance of the 
national budget on February 
23 - which turned out to be 
conservative, although posi- 


tive, rather than a giveaway 
budget when corporate and 
personal taxes were con- 
cerned. 

“The market was certainly 
discounting a 2 percentage- 
point cat in corporation tax," 
says Mr Bates, "and it did not 
get it." 

Malaysia, comments Mr 
Bates, was run np after the 
elections in Sabah which the 
ruling party lost, but only by a 
very narrow margin. However, 
there was no follow-through: 
"The retail investor has 
become very cautions," says 
Mr Bates, "and it was the 
retail investor who was driv- 
ing this market-" 

He adds that the Kwl n Lum- 
pur market is highly priced on 
fundamentals compared to its 
neighbours, but he also tends 
to link recent volatility in 
equities with the reduction in 
activity seen during the Mos- 
lem holy month of Ramadan, 
currently in progress. 

Last week’s ootperformer 
was South Africa, whose stock 
price gains, in foe end, owed 
nothing to a weak gold bull- 
ion price. Above all, indust- 
rials were moved by initial 
confidence in talks between 
foe African National Congress 
and the Zulu Inkatha Freedom 


MARKETS IN PERSPECTIVE 







* drew 

hlissV 





1 WMk 

4 KMkl 


■K 

snr or 

arid 

1M 

Austria — 

■1.18 

-408 

+29.15 

+4093 

+34.35 

+3253 

Belgium 

-0.51 

-3.16 

421-73 

+31.44 

+2559 

+23.43 

Denmark 

-1.40 

-2-90 

+38.31 

+51.75 

+4354 

+41.69 

FWand ._ .. 

+2JX2 

-4.30 

+85.44 

+127.69 

+117.44 

+114.05 

France 

-0.76 

-6.08 

+15.28 

+2451 

+1954 

+18.05 

Germany 

-0.89 

-4S5 

+19-82 

+32.17 

+26.45 

+24.46 

Ireland 

-0.74 

-6.65 

+37 SO 

+5757 

+4087 

+3855 

Italy -- 

-0.93 

-3.88 

+22.81 

+52.73 

+35.40 

+33.28 

Netherlands 

-0.19 

-5.14 

+27.18 

+38.17 

+3250 

+3022 

Norway 

-2.45 

-2L20 

+5130 

+54.88 

+46.05 

+43.76 

Spain 

-053 

-081 

+38.11 

+51.82 

+2558 

+2352 

Sweden — 

-157 

-4.18 

+37.12 

+47,69 

+32.40 

+30.32 

Switzerland 

-1-55 

-8.50 

+38.09 

+41.02 

+45.61 

+4352 

UK - 

+003 

-5.31 

+14.90 

+1851 

+1851 

+1655 

EUROPE 

-053 

-5X0 

+2102 

+2954 

+2554 

+2357 

Australia 

-1.25 

-0-27 

+25.51 

+31.48 

+38.71 

+36.52 

Hong Kong 

-OB7 

-18.10 

+54-36 

+8154 

+85.07 

+82.16 

Japan 

4071 

+051 

+28.23 

+24.06 

+49.13 

+46.79 

Malaysia 

-6.11 

-5.52 

+88.18 

+9955 

+84.86 

+91.61 

New Zealand 

-1.01 

-1039 

+40.22 

+43.76 

+62.79 

+60-22 

Singapore 

-4.52 

-7.81 

+43.00 

+5023 

+58.01 

+5554 

Canada 

+1.14 

-078 

+2080 

+24.42 

+1856 

+16.41 

USA 

-034 

-1.09 

+3-50 

+8.14 

+7.84 

+6.14 

Mexico 

-0.76 

-9.20 

+5555 

+4250 

+39.41 

+3752 

South Africa 

+5.17 

-0.18 

+59.08 

+83.47 

+7443 

+71 SB 

WORLD INDEX 

-010 

-2-50 

+1659 

+1955 

> +2555 

+2358 


t Baaod on March *0\ 18M. Copyritf*. Tha RnancM TUrna LMM, Oakknmo, Sactm A Co, mvi 

NHWWMcoMHttaM. 


Party; then disillusioned; and hopes rose at the end of the 
finally encouraged again as week. 


FT-ACTUARIES WORLD INDICES 


Jointly compiled by The Financial Timas Ltd., Goldman, Sachs & Co. and NatWdst Securities Ltd. in conjunction win the institute at Actuaries and the Faculty of Actuaries 
NATIONAL AND 

REGIONAL MARKETS BODAY MARCH 4 199* - THURSDAY MARCH 3 1994 DOLLAR MOEX 


Figures In parentheses 

US 

Day’s 

Pound 



Local 

Local 

Gross 

US 

Pound 



Local 



Year 

show number of lines 

DoSar 

Change 

Starting 

Yen 

DM 

Currency 

* chg 

Ohr. 

Dofer 

Storing 

Yen 

DM Currency 1993/94 

1993/94 

■00 

of stock 

Index 

W 

index 

hide* 

md«K 

Index 

an day 

Yield 

Index 

index 

index 

Index 

Max 

»9h 

Low 


Australia (69) 

— ..17052 

-0.4 

16955 

11354 

15273 

199.07 

-15 

355 

171.46 

170.05 

112.79 

152.33 

181.45 

189.15 

13019 

135.00 

Austria (17} .._ ... 

IBS. 34 

-0.4 

16459 

123.62 

185.71 

166.44 

05 

0.96 

186.01 

104-47 

12256 

1 65.24 

166.16 

195.41 

139.63 

150.75 

Betgfcm (43 

->..184.44 

0.1 

16359 

10958 

14702 

14359 

0.7 

4. DO 

16454 

16258 

108.04 

14550 

142.65 

168.08 

14158 

14154 

Canada (107) .. 

134.82 

05 

133S2 

88.79 

12056 

132.47 

0.6 

2.54 

134.17 

13350 

8658 

11850 

13153 

14451 

121.40 

12153 

Danmark (32) 

263.71 

08 

26255 

17659 

235.78 

241.04 

1.4 

085 

26159 

25953 

172.14 

232-48 

237.77 

275.79 

19556 

20355 

Finland (22) 

149.00 

05 

14853 

9958 

13351 

17358 

1.1 

a. 88 

14856 

146S3 

9759 

13153 

172.11 

159.72 

7002 

7550 

Franca (99) 

173.75 

0.4 

172.86 

11559 

1S555 

18952 

1.0 

252 

173.10 

17157 

11356 

153.78 

157.78 

19557 

14850 

158.53 

Germany (S3) 

129.49 

05 

12853 

8657 

116.78 

115.78 

05 

153 

12955 

12019 

85.02 

11453 

114.83 

14258 

107.59 

11353 

Hong Kong (56) ... 

403.60 

15 

401.53 

269-20 

36056 

400.42 

15 

252 

397.47 

394.19 

281.46 

353.12 

30450 

60856 

233.64 

26058 

Ireland (14) 

— 188.28 

05 

18750 

12557 

16853 

18551 

a7 

350 

18758 

186.73 

12020 

10038 

18453 

20953 

13751 

141.93 

Italy (69) 

73.13 

0.1 

72.73 

48.78 

0658 

ck> n 

as 

1S3 

73.08 

72.48 

4857 

8452 

91 JO 

78S3 

5551 

64,28 

Japan (40) 

—.-164.17 

-0.1 

15358 

10253 

13754 

10253 

15 

079 

15455 

1S357 

101.53 

137.13 

10153 

16551 

10758 

loaes 

Malaysia (69) — — 

500.58 

-0.7 

498.40 

334.14 

447.82 

52658 

-0.7 

1.40 

604.70 

50053 

33250 

44858 

52954 

621 S3 

274.40 

277.06 

Me»co (IB) 

— 2261.31 

0.1 

2240.67 

150853 

2021.78 

801058 

0.1 

0.63 

2256.44 

2239.76 

148552 

200656 

0000-41 

2847.08 

1431.17 

151852 

Nettxrtand ( 26 ) — . . 

197.18 

-as 

19818 

13150 

17028 

173.87 

0.7 

3.07 

19606 

19042 

13029 

17526 

173.48 

207.43 

181.44 

182.71 

NewZeateid (14) 

. — „aa.?3 

-1.0 

6857 

45.83 

61.44 

63.70 

-1.6 

355 

69.45 

0857 

4558 

61.70 

84.72 

77.69 

4552 

4552 

Norway (23) 

19757 

-15 

198.95 

132.04 

177.00 

20053 

-1.0 

157 

201.12 

199.45 

13250 

178.87 

202.31 

206.42 

1+0.16 

140.16 

Singapore (45) 

331.88 

-ai 

330.15 

221-34 

296.71 

24252 

0.1 

1.00 

33250 

32956 

21859 

29552 

242.16 

37082 

21057 

223.78 

Soutn Africa (60) 

— 254.26 

2.1 

25296 

16959 

227.33 

236.89 

1.9 

2.16 

24083 

24857 

16075 

221.15 

2S2.19 

26056 

160.78 

160.78 

Spain (42) 

143.80 

09 

14358 

95.0T 

12857 

153.64 

1.7 

3.81 

142.43 

14152 

93.73 

12859 

151.08 

155.79 

11653 

126.87 


— 215.78 

OS 

214,65 

143.91 

182.91 

256.01 

1.0 

1.48 

21459 

21253 

14083 

10020 

2S3.41 

23002 

154.79 

164.87 

Switzerland (49) 

— 18157 

1.7 

161.13 

108.03 

144.81 

144.79 

2 A 

155 

169.23 

157S1 

104.74 

1*1.46 

141.41 

17656 

111.01 

11359 

United Kingdom (215) 

— 20054 

05 

19951 

133.76 

17950 

198.51 

05 

354 

19928 

18754 

13159 

17756 

197.84 

21456 

16046 

17058 

USA £18) .. 

— 18954 

05 

18207 

126.06 

163.01 

189.04 

05 

2.79 

18859 

18653 

12352 

16756 

18858 

198 04 

17651 

162.85 

EUROPE (743) - 

— 187 JO 

05 

16654 

111.92 

isa 03 

161.36 

1.0 

2S3 

168.33 

16555 

10951 

14859 

159.78 

T7B58 

13858 

141.00 

Nordic (113) 

— 2095* 

05 

206.48 

139.78 

16755 

21656 

15 

154 

20851 

20659 

13753 

1BS56 

214.49 

SSflRtl 

14555 

16258 

F’actflc Basin (722) 

163.63 

0.0 

16278 

108.14 

14650 

113.59 

1.1 

156 

163.70 

16255 

107.68 

146.43 

11257 

168 JO 

113.99 

11451 

Ereo-Padfle (1487) 

18551 

05 

164.36 

111119 

147.71 

13254 

l.i 

151 

10459 

16353 

106.47 

148.46 

130.96 

17078 

124.48 

12558 

North America (625) 

... — 185.66 

05 

184.70 

12353 

16559 

135.13 

0.4 

2.78 

18552 

18S.49 

121.71 

16457 

184.47 

192.73 

173.70 

17B59 

Evtipe Ex. UK (530) 

147.02 

05 

14856 

9806 

131.44 

138.91 

15 

252 

14855 

145.14 

8027 

13001 

137.48 

155.73 

12002 

12256 

Padtc Be. Japan (353) _ 

2555? 

03 

25451 

17063 

288.73 

234.70 

05 

257 

25*54 

262.83 

187.70 

220*9 

234.SS 

29651 

16454 

T72.7T 

WdrW Ex. US PB5Z) 

166.04 

05 

165.78 

111.14 

14859 

13553 

1.0 

152 

16656 

104.66 

10858 

147.70 

13450 

17251 

125.68 

12859 

World Ex UK (1056) 

17043 

05 

18955 

113.87 

15258 

147.78 

as 

251 

17004 

168.63 

11156 

16156 

146.64 

17558 

14151 

14151 

World Ex. So. AL (2110) . 

172.60 

05 

171.71 

115.12 

1S452 

161.49 

05 

2.17 

172.17 

170.74 

11355 

16256 

16033 

17850 

143.71 

14459 

World Ex Japan (1701) 185.05 

0.4 

184.10 

123.43 

166.45 

18153 

OS 

2.75 

18455 

182.73 

121.20 

163.68 

18018 

19550 

163,82 

16451 

The World index (2170) _ 

173-07 

03 

17218 

116.44 

154-74 

15253 

OS 

2.17 

172.60 

171.18 

1135* 

1535* 

161.13 

17857 

143.74 

1*459 


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SmuMm tUXI [id. la I nearer af *a SPA 









I 


FINANCIAL, TIMES TUESDAY MARCH 8 1994 - 

FINANCIAL TIMES SURVEY 

CREDIT MANAGEMENT 


Tuesday March 8 1994 


As the UK economy recovers from 
recession, the need for good credit 
management is greater than ever. 
Increasingly, companies are hiring 
specialists - and an explosion of IT 
applications is making their task 
easier. Richard Gourlay reports 

Debt control 
takes cash 
flow strain 


Not so long ago, a bank’s 
guarded sta tement “considered 
good" and two trade references 
would have given suppliers 
sufficient comfort to start ship- 
ping goods to new customers. 

Credit management was fre- 
quently divorced from the 
salea process. The credit con- 
troller was viewed as someone 
who impeded rather than the 
supported the sales force. But 
the economic downturn has 
put paid to such quaint - and 
arguably misguided - prac- 
tices, ushering in a marked 
change in the way companies 
manage their credit controls. 

“The recession has seen com- 
pany margins narrow so they 
cannot afford either bad debts 
or very slow repayment,” says 
Trevor Phillips, chairman of 
the Institute of Credit Manage- 
ment “There has been apukh 
to bring in more specialist 
employees to manage risk." 

Five years ago the position 
of credit manager might have 
been filled by a company secre- 
tary, the finance director or 
even a clerk in the accounts 
department But in the last few 
years there has been a sharp 
increase in the number of UK 
companies appointing very 
senior credit managers, many 
rep o r tin g directly to th^hpard. 


Credit managers, both within 
companies and those who col- 
late and supply reports in the 
credit information industry, 
are also increasingly well 
served by new information 
technology. “A decade ago the 
operation was a manual one,” 
says Philip Mallor, senior ana- 
lyst at Dun & Bradstreet, the 
leading credit information sup- 
plier. “Reports were being 
typed out and that baited a lot 
of companies from entering the 
b uatnesa to-b usinem market.'* 

Now companies such as 
tJAPT-Infolink and CNN are 
using technology to present 

farfhmwHnn in a manna 1 which 
is breaking down the barriers 
to better knowledge about cus- 
tomers. The explosion of tech- 
nology coincides with a wither- 
ing assault on prices. Dun & 
Bradstreet -and the ICM agree 
that prices in the last 10 years 
have halved. Selective services 
- for example,; a search to see 
if potential customers have 
any county court judgments 
against them - can cost as lit- 
tle as £4, says Phillips. 

While Dun & Bradstreet 
remains the dominant supplier, 
with about 45 per cent of the 
business-to-business credit 
fn f rwmflfa'nn market in the UK, 
Jt^focheck 4as..; leapt from-. 



nowhere in Utile more than a 
decade to control nearly a fifth 
of the market 

Others to enter the market 
include Graydon (owned by 
leading credit insurance 
groups NCM, Hermes and 
Coface), CCN and ICC Informa- 
tion Group. 

One way in which companies 
have tried to combat these 
price pressures has been to 
take the expensive keying-in of 
information to countries which 
have lower labour costs. A 


nmTihw of credit information 
companies have set up 
operations in the Philippines 
or Sri Ijmkfl, UAPT-Tnfofink, a 
company better known in the 
consumer credit market, but 
rapidly growing in the busi- 
ness- to-business market, has 
recently set up in Harare, Zim- 
babwe. 

However, cutting costs may 
not he enough. As technology 
has tyfcgn over many of the 
most repetitive mannai func- 
tions it is becomhig increas- 


ingly obvious that there is 
huge duplication of the indus- 
try’s raw material: informa- 
tion. Some form of consolida- 
tion within the industry would 
not only make sense, but is 
likely. 

“It is a recognised foot that 
there are too many players in 
the market and there will prob- 
ably be mergers within the 
next year,” says one senior 
executive of newer audit infor- 
mation company. Many observ- 
ers the industry share , this 


view. Inevitably, attention has 
focused on what Dun & Brad- 
street might do to retake some 
of the market share it has lost 

But what is the size of the 
market pool In which the six 
largest credit providers are 
fishing? 

In spite of. the marked 
increase in demand for profes- 
sional credit managers mid the 
increase in sales of the leading 
external credit information 
providers, there still appears to 
be a sizeable market to go for. 
Philip Mellor, of Dun & Brad- 
street, says that suppliers only 
seek credit information fear one 
in IS transactions -before they 
start to trade. 

It is another mark of credit 
management ’s lack of penetra- 
tion that of the 955,000 or so 

companies which file balance 
sheets (most of which offer 
credit terms), considerably less 
than 10 per cent actually use 
the services of an independent 
credit information service. 

Trevor Phillips of the ICM 
says these figures are too low. 
Many gmaiipr companies take 
up credit references using their 
trade organisations or the local 
chamber of commerce, he says. 
He estimates that any business 
with a credit controller will be 
using external credit refer- 
ences for 60 per cent of 
accounts where there is expo- 
sure of over £500. 

Nevertheless, the ICM and 
the government have recog- 
nised the need for better infor- 
mation. A brochure on credit 
management called “Making 
the Cash Flow.” published with 
the UK Department of Trade 
and Industry last year, sold 
like hot cakes and is being 
rushed into a second edition. 

But if technology is rapidly 
bringing down, the price of 
credit information - and turn- 
ing luto something of a com- 
modity product - how are the 
providers attempting to differ- 
entiate their products? 

One way is more user- 
friendly presentation and 
on-line credit referencing. 
Some groups are developing 
specialist knowledge; others 
are focusing on packaging the 
information in a more user- 
friendly manner. And at least 
one group is making software 
packages that allow a compa- 
ny’s own xxedii policies to he 


mixed with raw credit data on 
customers to produce credit 

r wnmraonriarirwig 

One of the most exciting 
developments in the area is 
CD-ROM technology. Accord- 
ing to Dun & Bradstreet’s 
Philip Meli on “It has really 
been able to provide the deliv- 
ery systems and format data in 
a way people can understand 
and at a price they can afford.” 
. While falling prices, static 
profits and overcapacity might 
suggest an industry with its 
tall between its legs, the real- 
ity Is different. One group, 
Infolink, could well be seeking 
a stock exchange listing in the 
near future. The group, which 
has a number of venture capi- 
tal companies on its sharehold- 
ers* list, had hoped to float 
before 1991 but was thwarted 
by the recessi o n. 

The industry as a whole has 
also benefited from the debate 
about whether there should be 
a statutory right to interest on 
debts paid late. While remain- 
ing agnostic about whether leg- 
islation is necessary, credit 
information suppliers have 
jumped - rightly - at the 
opportunity to point out that 
their services can identify per- 
sistent late payers. By arming 
suppliers with this information 
before the shipment of goods 
or provision of services, com- 
panies can decide if they really 
want the business or whether 
they want to renegotiate pay- 
ment terms. 

Furthermore, the industry 
might be about to receive a 
boost from the clearing banks. 
In a little-publicised move, this 
month the clearers will change 
the way In which they give the 
traditional credit references. 

Until now, suppliers have 
been, able to approach their 
own banks for credit refer- 
ences on potential customers. 
Sometimes the service has 
been supplied fine, sometimes 
the cost is included in bank 
charges. From March 28, the 
same supplier will have to 
approach the customer’s bank 
for a reference which will cost 
over £8. Some may find 
requesting permission of poten- 
tial clients to seek references 
the equivalent of commercial 
suicide; others may examine 
what will still be a relatively 
perfunctory report, and realise 


IN THIS SURVEY 

□ The factoring and dis- 
counting business is enjoy- 
ing good times - and 

support from the Governor of 
the Bank of England Is help- 
ing it to throw off its Image 
problem..,. .... 

□ Ben Allen: profile of the 

enthusiastic chairman of the 
Association of British Factors 
and Dtecounrers.. ............... 

□ Credit Insurance mar- 

kets: rates vary, but compe- 
tition Is dampening any 
upward movement and there 
is a lot of value for money 
out there 

□ New guidelines on pol- 

icy: Increasing numbers of 
corporate failures have 
prompted business organisa- 
tions to unite in condemning 
late payments 

□ UK export credit Insur- 

ance: for want of a govern- 
ment-led co-ordinated 
approach, UK exporters we 
losing out ........................ 

□ Training has Improved, 
but credit managers can stfll 
feel like poor relations when 
sales colleagues go off on 
course after course ....... — .. 

□ Technology: the use of 

IT has permeated almost 
every stage of the credit 
management cycle — 

□ County court Judgme n ts 

are on a non-profit-making 
database - and search costs 
have come down ..... 

□ Lata payments debate: 

the UK minister for small 
firms and consumer affairs 
enjoys the thought of embar- 
rassing companies which fail 
to pay on time 


that credit information suppli- 
ers provide a more detailed ser- 
vice for a similar price. 

But probably the industry Is 
going to expand its market 
best by talking more loudly 
about what credit management 
can offer a modem manager. 
“We have a big educational 
process ahead of us” says Mar- 
tin Williams, Graydon's com- 
mercial director. “People out 
there do not understand or 
know what they can get with a 
credit reference." 





From 28th Match, banks are introducing a charge for Bank References 
a service that was previously free of charge. From that dale, you*fl also 
be expected to gain written approval from your subject company, before 
their bank wHl release any information to you. 

You can however, minimise additional costs, and eliminate the extra 
paperwork these changes will bring, by using MB’s In for ma tion 
Service*. 

DAB can help you enter negotiations aimed with more information than 
ever before, without the usual bank qualifications or ambiguities - 
instead, you can have the facts on over 1 mflBon UK Businesses. And 
because you need to make decisions fast, weU provide all the 
information you require instantly - online, over the phone or by fax - your 
choice. 

We offer 3 key reports, designed to provide cBlferent tevBte of information 
tor different levels of risk - from the D&B Compact Report, with concise 
information on your trading partners, to the D&B Comprehensive Report 
which is packed with essential data and analyses for your most important 
business decisions. You can choose predsety the level of service 
appropriate for your needs. 

) The MB Compact Report, recommended for low risk decisions, 
gives you critical overview information for making decisions - fast 

t The DBB Report, for your more significant business decisions, 
provides additional more detailed information to enable you to control 
cash flaw and manage risk more effectively. 

} The MlB Comprehensive Report, recommended for your most 
important decisions, extends the contents of The D&B Report to 
Indude In depth financial analyses, relating to the company and the 
market in which it operates, and an insight Into its directors and their 
linkages with other companies. 

DAB’S Information Services are just one part of the MB Mali 
Management Portfolio which can help your business to trade more 
efficiently and profitably. 

For more Information on how D&B can help you to reduce risk and 
maximise opportunities, please call us on 04B4 423330, or complete 
and return the coupon below. 


INSTANTLY 


with 

Dun & 
Bradstreet’s 

Information 

Services. 



Please send to Dawn Martin at 

Dun & Bradstreet Lid, FREEPOST, Holmers Farm Way, 
High Wycombe, BUCKS. HP1 2 3BR. 

Please tick as appropriate. 

Q Please send me further Information 

□ Please caH me to cfiscuss further 

□ Please contact me to arrange an appointment 


Title (Ur/Mrs/Mss/Ms) Initials 

Company — 

Job Title 

Address _ 


.Surname. 


Postcode 


No of Employees. 


TeiNo 

Jne of Business. 


Dun & Bradstreet 
international 



Committed to your success 




Sine 

Si I'}/) 1 J j 

•e we know a lot 

t \imjv In j C7 ii p k ^ 

l A U(J Hi 

we tl 

1 ike 

\ ( / L l i ( / L I kJ / / / v i.7 LJ • • • 

mS 

? ought you might 
to know a little 


about ours. 


CCN is one of the world’s leading 
information services companies. The CCN 
Credit Database is the largest source of 
credit information on limited companies, 
small businesses and consumers in the UK. 

We can provide you with full financial 
data on the companies you do business 
with, as well as detailed track records of 
the people who run them. We can give you 
an instant score of their financial stability, 
assess their credit worthiness, compare their 
performance with competitor companies. 


reveal their previous payment performance, 
and summarise it all in straightforward, 
easy-to-read reports. 

If you would like to know how you could 
receive all this information on-line direct to 
your office, call us today on: 0800 622789. 


CCN 


CCN BUSINESS IN FORMATION LIMITED, ABBEY HOUSE. ABBEYFIELD ROAD. NOTTINGHAM NG7 25 W. 

CCN Information is i id totter of the CCN Group, specialising in the supply and smtysit of infcnmtioa for credit management and target marketing 

through offices in Africa, Australia, Canada, France, Gennady, Italy. The Netherlands, Spain, Halted Kingdom and United Stales. 








FINANCIAL TIMES TUESDAY MARCH 8 1994 


II 

CREDIT MANAGEMENT II 


R arely can the factoring and invoice 
discounting industry have enjoyed 
more propitious times. While the 
hanks have been suffering in the recession 
from criticism that they are not doing 
enough to support smaller growing busi- 
nesses. factoring has won an increasingly 
good hearing. 

Most encouraging for an Industry that 
still suffers from an image problem has 
been support from the Governor of the 
Bank of En glan d. Factoring, the Governor 
said in a report earlier this year on the 
relationship between banks and their cus- 
tomers, was a method of financing that 
companies should seriously consider as an 
alternative to the traditional overdraft 
Howard Davies, director-general of the 
Confederation of British Industry, has 
added his weight, suggesting that factor- 
ing is a method smaller companies should 
consider to help enhance their perfor- 
mance. 

The industry’s growth rate, has also 
been impressive, albeit from a still modest 
base. According to the Association of Brit- 
ish Factors and and Discounters, which 
represents the largest companies in the 
industry, total sales factored by its mem- 
bers jumped in 1993 by over 23 per cent to 
m&bn. 

This followed growth of 12.7 per cent the 
previous year and a less exciting 2J> per 
cent during 1991. 

Given the flexibility that factoring and 


Factoring and discounting are enjoying good times, writes Richard Gouriay 


Image problem begins to improve 


invoice discounting can offer small and 
growing companies, it is surprising that at 
any one time the industry extends only 
£l.6bn while the banks extend £45bn in 
overdrafts. 

Factoring’s share of this financing pie is 
growing, however. And Ben Allen, chair- 
man of the Association of British Factors 
and Discounters, thinks the industry is on 
the verge of takeoff. “There is always a 
great demand for our products as we come 
out of recession," he says. “People have 
order books and week balance sheets and 
consequently need cash flow.” 

But demand is also growing because of 
the attitude of the banks. “It appears the 
banks are finding it more difficult to lend 
on traditional overdraft terms particularly 
to small businesses." Mr Allen adds. 

Some bankers say this reluctance to sup- 
ply working capital required to fund 
growth will persist for some time. They 
appear to have taken a look at lending and 
decided they are being asked to provide 
what is. in effect, equity to undercapital- 
ised companies, in return for which they 
only receive a loan mar gin as reward. 


Factoring therefore becomes a flexible 
alternative. For a start factoring facilities 
automatically grow as a company's sales 
grow, unlike an overdraft facility which is 
usually a fixed amount that can only be 
increased after lengthy negotiations with 
the bank- 

Ben Allen also believes the industry has 
“come of age” recently. His view is sup- 


ported by Michael Bickers, publisher of an 
independent annual report on the factor- 
ing industry*. 

“If bodies film the Bank of Rn gianri are 
supportive it is bound to help the industry 
get over the image problem it has had for 
several years." he says. 

Yet the misgivings persist. In some eyes, 
turning to factoring still suggests an act of 
desperation from a supplier who cannot 
find finance elsewhere. Some companies 


still refuse to have their invoices dis- 
counted or factored for this reason. 

Others say the service is expensive. This 
is more questionable and often based on 
unfair comparisons. The finance cost of 
simple factoring at Keliock. where Alien is 
managing director, is deliberately set at a 
rate less than banks charge on overdrafts, 
he says. 


It is the cost of running the debtor led- 
ger for a company - between 0.5 per cent 
and 2J5 per cent of turnover - that puts up 
the price and may make it appear more 
expensive. 

“Most companies that factor do not have 
credit controllers so the cost of administer- 
ing the debtor book that the factor levies 
is an additional charge.” says Bickers. But 
the company is able to save some of the 
cost • or, more likely, Tnanagpmpnf time — 


Some companies say factoring can cost more than an overdraft 
as the facility fee has to be paid on toe full debtor book, even 
if less than that amount is required for part of the time 


needed to run the debtor book. 

Invoice discounting, which is used by 
larger companies, is marginally more 
expensive than overdraft, however. This is 

because the company has to pay for an 
audit by the invoice discounter who wants 
to know the company is running an 
acceptable standard of credit controls. 

Some companies also say factoring can 
cost more t han an overdraft as the facility 
fee has to be paid on the full debtor book, 
even if less than that amount is required 
for part of the time. Factors say that if the 
facility is frequently underused fees can 
be renegotiated. 

In fact it is invoice discounting which is 
growing quickest This is partly because it 
is not necessary’ to disclose the services 
are being used and partly because more 
large companies are turning to it. 

“Invoice discounting has become the fla- 
vour of the decade,” says Allen. The mar- 
ket is therefore split between those ABFD 
members, like UCB and T5B. that do 
almost nothing but invoice discounting 
and the rest that offer both factoring and 
invoice discounting. 


Where the industry's potential is least 
developed is export factoring. Last year 
this sector grew 36 per cent albeit from a 
very low level. This trend is particularly 
welcome to smaller exporters because 
banks generally do not lend against export 
receivables. Until recently many factors 
were also cautious. 

One reason demand is increasing is that 
more continental European companies 
have been tut by recession and are learn- 
ing to pay their debts considerably later. 
But the factoring companies are also 
improving the way they handle foreign 
receivables. "In recent years they have 
managed to construct an effective network 
of factoring companies around the world,” 
says Bickers. 

Most of the factoring companies use a 
network called Factors Chain interna- 
tional. based in Amsterdam: an associa- 
tion of correspondent factoring companies 
in the main export markets. Of the ABFD 
members only International Factors, 
which is owned by Lloyds Banks and is 
the largest UK factor, is not a member. 

Whether export factoring really becomes 
an option for the smaller exporter depends 
on whether the banks, which control 
many of the factoring companies, are pre- 
pared to see a bigger challenge to their 
existing export finance business. 


* Factoring in the UK: available from BCR 
Publishing. 0S1 466 69S7 


Tim Burt looks at efforts to adopt careful procedures 

Prompt payment is lifeblood 



A rthur Shaw, the builders’ 
hardware manufacturer, 
paid the penalty for fail- 
ing to keep a tight rein on 
credit management 
The Midlands company, like 
many others in the construc- 
tion industry, was forced into 
losses by “exceptionally high 
levels" of bad debt which 
transformed a £267,000 profit 
into a pre-tax deficit of alm ost 
£300.000 in the early 1990s. 

C laims of weak management 
control c ulmina ted in a board- 
room coup by rebel sharehold- 
ers, who brought in new execu- 
tives and strengthened credit 
controls. The company has 
since returned to profit, and 
Mr Lindsay Melvin, finance 
director, claims its has made 
great strides in balancing debt- 
ors against creditors. 

The difficulties of such com- 
panies and an increasing num- 
ber of corporate failures has 
prompted business organisa- 
tions to draw up new guide- 
lines on credit management 
policy. 

These organisations, led by 
the Confederation of British 
Industry (CBI) representing 
large groups and the Forum of 
Private Business acting for 
smaller companies, are united 
in condemning late payments. 
Dr Ian Peters, head of small 
business at the CBI, says: 
“Late payments take the 
lifeblood out of companies - 
we have to change that” 


But the two groups are 
divided on how best to tackle 
the problem. 

The Forum of Private Busi- 
ness wants the government to 
introduce legislation to outlaw 
late payments. Mr Stan Men- 
dham, chief executive, says its 
21,000 members want a statu- 
tory right to claim interest on 
overdue invoices. Such puni- 
tive additions to late pay- 
ments, he claims, would offset 
the costs of extending credit to 
debtors. 

The CBI is opposed to legisla- 
tion. Instead, it wants more 
companies to embrace its 
Prompt Payers Code, which 
seeks to ensure that payment 
terms are agreed at the outset 
of a deal and that they are not 


The problem is 
dominant customers 
holding up payments’ 


extended or altered. 

Although more than 500 of 
Britain’s largest companies 
have signed the code - includ- 
ing giants such as British Air- 
ways. Marks and Spencer and 
ID - Mr Mendham says it is 
not enough. Concerned that 
many small businesses are 
kept waiting by dominant sup- 
pliers. the forum has drawn up 
a “profit builder" check sheet 
for members frying to reduce 
late payment costs. 


It urges businesses to track 
late payment trends and calcu- 
late the number of days during 
which it extended credit to late 
paying customers. Companies 
are also advised to consider 
building the cost of credit into 
their prices or, alternatively, 
offering discounts to customers 
able to pay on time. 

The check list also includes 
straightforward recommenda- 
tions to ensure business sur- 
vival. These include: 

• Having one person responsi- 
ble for debt collections; 

• Establishing a credit worthi- 
ness procedure for new cus- 
tomers; 

• Implementing a follow-up 
practice to chase overdue bills. 

Mr Mendham says such mea- 
sures are vital. “More than 80 
per cent of our members say 
this is a critical issue. The 
problem is do minan t custom- 
ers holding up payments. 
Nobody dares challenge them 
- because if they do. they don't 
get the next order.” 

Meanwhile, the CBI has 
established a working party to 
draw up a new policy on credit 
management and respond to 
the Department of Trade and 


Industry's consultative docu- 
ment on the problems of com- 
mercial debt. The working 
party will expand the CBI’s 
existing two-pronged strategy 
of encouraging good payment 
practice and awareness of 
credit management techniques. 

It is also expected to demand 
a British Standard for payment 
practice, but stop short of 
backing legislation. “You can’t 
have a law just to stop late 
payments." says Dr Peters. “It 


could be seen as interfering in 
commercial affair s." 

He points out that the courts 
can penalise late payers with 
additional interest charges, 
and c laims that any statutory 
rate would have to be fixed at 
a very high level to dissuade 
companies from regarding 
their suppliers as alternative 
sources of credit 

Faced with differing recom- 
mendations and conflicting 
advice from business organisa- 


tions, many companies have 
tamed to credit management 
training services and factors - 
usually hanks - which under- 
take to collect debts on the 
company’s behalf and also 
make an advance to the com- 
pany of a percentage or the 
money it is owed. 

Such help does not come 
cheap. For example, one day’s 
tr aining by specialists from 
Dun & Bradstreet Interna- 
tional, the business informa- 
tion group, can cost £1,200. Por 
that, companies have their 
debt collection techniques 
minutely scrutinised and new 
programmes introduced. 

Ms Judith de Jong, manager 
of Dun & Bradstreet’s business 
education services, says a 
growing number of clients now 
want their salesforce trained in 
debt collection. “We are train- 
ing them to act as collectors as 
well as sellers. They need to 
understand the importance of 
late payments on the balance 
sheet” 

That initiative has been 
taken up by Griffin Factors, 
the Midland Bank subsidiary. 
It has produced a guide to 
financial management which 


warns sales executives that “a 
business with the finest prod- 
uct an excellent sales record 
and the most efficient work- 
force will perish if it doesn’t 
get paid”. It urges companies 
to build credit management 
policies around cash flow fore- 
casts. 

Griffin identifies the “debt 
turn" as one of the most impor- 
tant components of such fore- 
casts. This figure - the number 
of debtor days outstanding - is 
calculated by dividing the 
value of outstanding invoices 
by total annual sales, and then 
multiplying by 365. “It can pro- 
vide early warning of any dete- 
rioration in customer payment 
performance and your cash 
flow," says Griffin. 


Guides to company 
credit worthiness come 
in ail shapes and sizes 


The factor also warns suppli- 
ers to agree payment terms in 
advance and check customers 
credit with their bankers. They 
offer a guide to banking jargon 
- this ranges from good refer- 
ences to the awful, usually sig- 
nalled by the phrase 
"resources fully committed". 

Guides to company credit 
worthiness come in all shapes 
and sizes. One of the most 
up-totiate services is offered by 
CCN Business Information. 


which lays claim to the UK's 
largest credit and financial 
information database. 

Mr Peter Brooker, director of 
CCN, say that unlike bank ref- 
erences. it can offer informa- 
tion on a particular executive's 
track record - a useful 
resource when there are few 
other details on a potential 
customer's probity. 

The Leeds-based group also 
offers on-line derails about 
trading and credit activity of 
UK companies and a risk 
index, which calculates a 
credit score of businesses 
based on shareholder funds, 
liquidity and profitability. 
Such services are “part of the 
armoury used by credit manag- 
ers to minimise the risk to 
their companies", says Mr 
Brooker. 

All the business organisa- 
tions, however, agree on the 
point of no return: if all else 
tails, go to court. Legal action, 
however, is usually expensive 
and, frilly pursued, may only 
result in a winding up order 
against the customer and still 
no guarantee of payment. 

At the CBI. Dr Ian Peters 
admits: “It’s a long costly pro- 
cess and despite assurances 
from the Lord Chancellor's 
department, there is no evi- 
dence that it's getting better. 

"The best way to avoid it is 
to plan ahead. That’s the 
essence of good credit manage- 
ment.” 


T he last three years have 
seen unprecedented 
movement in the British 
credit insurance market 
Despite a string of recession- 
related claims, capital has been 
attracted to the sector by liber- 
alisation. Competition is damp- 
ening any increase in rates, 
and improved Information 
technology is helping increased 
product diversity and sophisti- 
cation. 

According to the The Credit 
Insurance Association, a bro- 
ker which is part of the Hogg 
Group, 23 insurers - including 
Lloyd's syndicates - are active 
in the market 

Trade Indemnity (TI), which 
is owned by nine European 
insurance companies, is still 
the market leader with 75 to 80 
per cent of domestic credit 
insurance, but as Ms Barbara 
Bennett, the company's corpo- 
rate affairs manager concedes: 
“There is an awful lot more 
competition in the UK than we 
have ever seen before." 

Changes in European insur- 
ance regulations, especially the 
approval of the second non-life 
directive in 1990, allowed Euro- 
pean companies such as Coface 


of France and Hermes of Ger- 
many to underwrite UK -risks 
from their offices on the conti- 
nent. 

But it was the purchase by 
the Dutch group, NCM Insur- 
ance, of the privatised 
short-term export credit insur- 
ance arm of the Export Credits 
Guarantee Department 
towards the end of 1991, which 
paved the way for the most 
significant EU incursion. NCM 
has already amassed a market 
share of between 8 and 10 per 
cent of the UK market, comple- 
menting its established posi- 
tion in the export credit insur- 
ance market. 

Other new entrants include 
AMA Underwriting Agents, 
which accepts business on 
behalf or the Dutch insurance 
company, Aegon, and works 
closely with the Inf oc heck, a 
credit rating agency. AMA has 
been focusing on smaller com- 
panies for whom the cost of 
traditional covers can be pro- 
hibitive. Mr Alistair Malcolm 
of AMA says his company’s 
premium income has risen 
from about £2m in 1990 to £12m 
last year. 

At a time of increasing 


Richard Lapper investigates the UK credit insurance market 

Capacity holds rates down 


claims - insolvencies rose from 
28,935 in 1990 to 62,767 in 1992 - 
the influx of new capacity has 
offset pressures for rates to 
increase and helped maintain 
stability. Trade Indemnity 
increased its rates by about 40 
per cent in February 1991. 

But rates have barely risen 
since then. The traditional 
“whole turnover” policies - in 
which buyers obtain insurance 
for specified credit limits for 
each of their customers - are 
typically priced at between 0.1 
per cent of turnover to I per 
cent of turnover, with the bulk 
foiling between the 02 and 0.6 
range, depending on the sector 
in which the buyer operates 
and the adequacy of their 
credit management 

At the low risk end of the 
market are companies in sec- 
tors such as advertising, whose 
customers tend to be dispersed 
across a wide range of sectors 


The 
key to 
liquidity 


Good credit management can play a vital role in improving marketing, profitability and cash flow. 
The Institute ot Credit Management is the centre of credit management expertise in the UK. Our 
services include: 


ftfi 


Education 



Coasukaitey 



i 


to rtunw 


CM 



1 

Bookshop 



Conferences and Soman 

la-Compatf Trainutf; 

These are just some of the ways we can help you and your business. 

To And out more about the Institute contact: 

Institute of Credit Management 

The Water Mill, Station Road, South Luffenham, Oakham, Leicestershire LEI 5 8NB 
Tel: 0780 721888 Fax: 0780 721333 


and who therefore have little 
concentrated exposure. On the 
other hand businesses such as 
timber, construction and furni- 
ture tend to be notoriously sus- 
ceptible to cyclical pressures 
and there businesses can pay 
more. 

Rates also vary according to 
other factors such as the 
dependence of a company on a 
relatively small number of cus- 
tomers, while insurers have 
become much more likely to 
offer lower premiums for cus- 
tomers taking a more active 
approach to their credit man- 
agement 

“Rates would have been 
expected to harden (increase in 


insurance jargon) with the sub- 
stantial claims of 1991, 1992 
and 1993, but with NCM and 
the other companies we have 
seen the balance change." says 
Mr Bryan Squibb, marketing 
director with CIA. “There is a 
lot of value for money in 
there.” 

Johnson & Higgins, the 
insurance broker, go further in 
its annual insurance market 
overview, arguing that “there 
is evidence that a ‘price war 1 
may be beginning in credit 
insurance.” 

Moreover, the extra competi- 
tion, combined with the 
greater sophistication of infor- 
mation, has also stimulated 


underwriters to offer a wider 
range of covers and number of 
relatively new and more 
sophisticated products. 

“The philosophy has 
ch a ng e d." explains Mr Squibb. 
“Over tire last three to four 
years the buyer has become 
much more aware of what is 
possible.” 

Both the traditional and 
newer markets are also selling 
more catastrophe insurance 
policies - which covers all 
losses above an excess point or 
limit higher than those avail- 
able in traditional policies. 
These policies are centred 
around the policy holder’s 
existing in-house credit con- 


trols and depend on a complete 
integration of credit manage- 
ment and credit insurance. 

The newer catastrophe type 
policy is particularly appropri- 
ate for larger companies - with 
turnovers in excess of £100 m. 
Innovations such as the self 
explanatory “predelivery risk” 
policies and the “multi-mar- 
ket” policies - which provide a 
combination of export credit 
and domestic trade credit 
insurance to companies trad- 
ing in the UK and most OECD 
markets - are also becoming 
more common. 

Yet despite this proliferation 
of policies, the market remains 
a limited one. In manufactur- 
ing a sales ledger can amount 
to 40 per cent of current assets; 
while in service industries it 
can easily be as high as 90 per 
cent, yet - according to some 
estimates - only about 15 per 
cent of eligible turnover is 
insured. 


There are some signs that 
the market for credit insurance 
is beginning to increase. Mar- 
ket research by one recent 
entrant into the UK market 
indicates that the take-up by 
British business has increased 
sharply over the past 18 
months, with the numbers of 
companies buying credit insur- 
ance increasing from about 10 
per cent in June 1992 to 24 per 
cent in December 1993. How- 
ever, other insurers disagree, 
suggesting that this assess- 
ment is over bullish. Ms Ben- 
nett says: “It is starting to 
creep up marginally, possibly 
as a result of the extra compe- 
tition." 

Mr Squibb says that interest 
is increasing but that the rise 
has been offeet by the increase 
in the number of com panies 
who are buying more financial 
information rather than renew- 
ing their credit insurance poli- 
cies. 


Ben Allen, of the Association of British Factors and Discounters 

‘All you had to do was go 
and shoot the breeze’ 


If Cilia Black, the pop singer and TV 
personality, had been in the dating 
game back in 1966 she might well have 
met Ben Allen. Britain’s first man to 
wed the woman he met through a dat- 
ing agency. The event was front page 
news throughout the UK for days. 

Ben Allen, now 53, has achieved 
prominence almost 28 years later for an 
entirely different reason- He is the 
enthusiastic voice of factoring; the 
industry spokesman and new chairman 
of the Association of British Factors 
and Discounters (ABFD). Allen is also a 
founder and manaptnp director of the 
ABFD’s fourth largest factoring firm, 
Keliock. 

Factoring has been in his blood for 
almost 25 yearn, ever since he applied 
for a job under the misconception that 
he would be working for tea merchants. 
“I thought factors were people who 
bought and sold things he admits. 
“My father called himself a leather fac- 
tor and he bought and sold leather " 

Instead, Allen found himself short- 
listed for a job as financial controller 
with a small factoring firm, then owned 
by a tea company. In spite of being 
unmasked at the final interview, when 
he quizzed his interviewer on condi- 
tions of the tea trade in India, Allen got 
the jab and discovered a new passion. 

“Suddenly I was making a big contri- 
bution to a company, which is exactly 
what I had always wanted.” 

After a couple of years, the restless 
Allen was appointed commercial direc- 
tor to look after new business, at a time 


when factoring was not understood. “I 
thought It was the most wonderful job. 
All you had to do was go and shoot the 
breeze with people and tell them about 
something about which they knew 
nothing. You could see the scales foil 
off their eyes, and it worked. I have 
been doing it ever since.” 

Alien also learned one of his most 
valuable lessons at the firm during the 
recession of the mid 1970s: too much 
business and too little funding spell 
disaster for many smaller companies. “I 
had to get rid of some of the largest 
clients,” he says. “It was a very sad 
time for a company, that was doing 
well, to cut back. And, of course, that is 
the very thing all of our clients find 
themselves doing when they cannot get 
the money to go forward." In the end. 
the business which he bad helped to 
build was sold to Lloyds Bank. 

Allen soon struck out on his own. 
With Nick Oppenheim, the entrepre- 
neur, he set up Ke docks. Oppenheim 
provided the finance and Allen the 
“people skills”. He is convinced that the 
reason for the success of Keiiocks. 
which is now owned by the Bank of 
Scotland, has been in establishing per- 
sonal relationships with those who 
have need of his servlets. In faff he 
regards himself as the reincarnation of 
a now largely extinct breed. "We are 
the old-fashioned h ank manager - 
someone the client can go and folk to." 

Such thoughts form the basis of his 
philosophy on factoring, which to his 
constant annoyance is still often 



Aten; enthusastic voice of factoring 

referred to as the “finance of last 
recourse”. 

“It is disappointing to me that over 
the past 25 years in the business factor- 
ing has not been accepted more." He 
lays some of the blame for this at the 
door of the factoring Industry itself; it 
may have made mistakes In the early 
days. “Maybe they took on the wrong 
clients, or the wrong types of busi- 
nesses. for example. Factors were learn- 
ing their own business at that time." 

However, there has also been a 
machismo problem. Business executives 
In the UK "just don't want to give up 
control of the ledger”, he says. 

Finally, factoring has suffered simply 


because often it can help those whom 
everyone else has turned away - “those 
with weak balance sheets, very weak 
balance sheets," Allen says. "The waifs 
and strays end up with factors." This 
does not mean, that factoring is an easy 
answer for a company up against the 
walL On the contrary, Allen says: fac- 
toring is there to help small companies 
which may have outgrown the hank 
overdraft, but are unable to take advan- 
tage of other types of finance - compa- 
n ies which may have nothing but a 
spread of customers. 

Yet - like those old-fashioned hank 
managers on whom Allen is proud to 
model hi m s e l f - the factoring industry 
has been hit by the 21st century. In the 
last few years invoice discounting 
(where creditors sell debts at a dis- 
count) has rapidly outpaced Factoring 
as the preferred route for companies 
seeking sales related financing. 

Somewhat reluctantly. Allen admits 
that this is where the future lies. "If 
anybody wants to be a player today, 
they must offer invoice discounting. ” 
But this sort of financing is not a '‘peo- 
ple" business, he says disparagingly. “It 
is much closer to (modern) banking. 
There is very little service in if 

Allen is old-fasliioned in other ways, 
such as enforcing strict standards of 
areas from his employees (women must 
wear frocks, for example). But he is not 
one to pine after the past Instead he Is 
anxiously looking forward to the future, 
counting on dizzying growth In the fac- 
toring Industry before his retirement in 
f" 1, He ates figures which show that 
ABP P members tent a total of 
£l.6bn to small and medium sized com- 
pames. while collective turnover rose 
by 23 per cent to £I9.6bn. 

"Our year is now,” he says. “As you 
come out of recession - when balance 

when the banks have burnt their fin- 
gS they have lost money - 

UIat is when factoring does well.” 

Peggy HoIIinger 




FINANCIAL TIMES TUESDAY MARCH 8 1994 


CREDIT MANAGEMENT III 


Late payers - watch out, says Peggy Hollinger 

‘I’m keen on the 
embarrassment factor’ 


Lord Strathclyde, the yonthftd 
minister of state for small 
firms and consumer affairs, 
enjoys the thought of embar- 
rassing companies which Ml 
to pay their UHs on time. 

He is waging his own per- 
sonal battle against late pay- 
ers, who have been accused of 
depriving British companies of 
more than. £50hu in cash 
through unpaid invoices. If be 
receives a complaint from a 
disgruntled supplier, “I will 
send a tetter to the chairman 
(of the debtor company),” he 

says. Of course, he adds, the 
debtor Is given a fair hearing. 
But nevert h e less* . *Tm keen on 
the embarrassment factor. " 

Debate over the solution to 
late payment is reaching fever 
pitch, with responses to a con- 
sultative document on the sub- 
ject issued by the Department 
of Trade and Industry expec- 
ted by the mid of the month. 
The document followed com- 

Failure to settle invoices 
on time could mean the 
difference between 
survival and failure for 
many UK companies 

merits by the OK Chancellor, 
Kenneth Clarice, in his Novem- 
ber budget, that failure to set- 
tle invoices on time could 
mean "the difference between 
survival and failure" for many 
UK companies. 

Mr Philip Mellor, senior ana- 
lyst with Dun & Bradstreet, 
says that in annual surveys by 
the credit information pro- 
vider, late payment has consis- 
tently ranked in the top three 
concerns of companies ques- 
tioned. The Confederation of 
British Industry also found, in 
1991, that- one in five of its 
smaller members thought 
their survival was threatened 
by late payment. 

But the solution is less than 
clear. The proposal which 
sparked the most controversy 
has been legislation to impose 
a statutory right to interest on 
late payments. A survey of 
almost 500 smaller companies 
by SG Warburg, the UK bro- 
kers, last month, showed that 
58 per cent of those questioned 
favoured legislation. But a 
substantial m in o r ity - 29 per 
cent - opposed legislation. 

The campaign to Introduce 
statutory interest has been 
backed by prominent names 
including Lord Alexander. 


chairman of National West- 
minster Ranfer, and Mr Richar d 
Greenbury, chairman of 
Marks & Spencer. They have 
all backed proposals put for- 
ward by the Forum of Private 
Businesses, a vociferous lobby 
group which has campaigned 
for legislation for about 10 
years. The forum suggests 
that, among other measures, 
companies be allowed to claim 
interest on overdue invoices 
for up to six years, even if the 
main debt had been separately 
collected. 

Legislation, say its support- 
ers, would end the uncertainty 
surrounding payment, which, 
plagues smaller businesses. 
This is particularly impo rtan t; 
as the economy begins to 
recover, to companies strapped 
for cash. “We should not allow 
those smaller companies, with- 
out assete to ten back upon, to 
be penalised by late payment," 
Mr Mellor says. 

The Forum is unperturbed 
by sceptics who say (hat com- 
panies are unlikely to pursue 
interest. Legislation with a 
six-year option would force 
late payers to make provision 
for contingent - liabilities in 
their accounts, says Mr David 
Harrop, of the Forum. This 
would encourage late payers 
to improve their performance. 

While Lord Strathclyde him- 
self admits that there appears 
to be a considerable head of 
steam building up behind tth 
option, fiie issue must present 
a difficult dilemma for the 
Government. How can it 
increase regulation while 
preaching deregulation?; 
When should interest charges 
begin if the standard payment 
times Vary, industry by indus- 
try? And how would the 
already overloaded courts cope 
with an increase in cases? 
"Legislation only sounds sim- 
ple tf you say it quickly," says 
Lord Strathclyde. . 

Opponents of legislation cite 
a variety of arguments against 
the proposal. "Small compa- 
nies owe money as well as are 
owed money," says Mr Tim' 
Corbett, business development 
director of Barclays Commer- 
cial Services,, the factoring 
firm.- .*• If .they owe money to 
their suppliers they will he 
targeted too, and could find 
themselves on the losing side." 

Opponents argue that charg- 
ing interest may well encour- 
age late payment Some com- 
panies may decide interest 
provides a legitimate excuse 


for not paying and “nse the 
supplier as an alternative 
source of finance," says Mr 
Ben Allen, chairman of the 
Association of British Factors 
and Discounters (see profile. 

Page IB- 

Then there are those who 
dte the experience of those 
European countries such as 
France and Germany, which 
have legislation, but where 
payment times actually appear 
to be lengthening. 

"I do not ftfafc legislation 
wfil make a blind bit ofdttffer- 
ence," says Mr John Butter- 
worth, managing director of 
Royal Bank Invoice finance, 
whose parent the Royal Bank 
of Scotland, actually s up po rt s 
legislation. 

Mr Batterworth suggests 
that the best option would be 
to use the existing system, 
which allows collection of 
interest through the courts if 
it has been specified in the 


The UK legislation now 
being proposed would 
apply the right to interest 
universally, irrespective of 
tiie contract 


contract This is a cumber- 
some and lengthy process, 
which few companies use. The 
legislation being proposed 
would apply the right to fa ter- 
est imrrersally, irrespective of 
file contract "We would like 
to avoid legislation if possi- 
ble," says Mr Mellor of Dun & 
Bradstreet, "but looking at all 
the voluntary measures that 
have been put forward to date, 
none has worked.” 

Opponents would argue that 
peer pressure has been effec- 
tive with some of the UK's 
largest companies. “GEC was 
one of the worst offenders and 
they have been whamwd into 
chang in g their policies," says 
Mr Alton of the ABFD. 

He favours (he DTTs second 
option - a British Standard on 
prompt payment, as well as 
measures to force companies 
to publish their payment times 
in the annual accounts. 

Need for change is is about 
the only issue on which all 
parties agree. Yet Lord Strath- 
clyde is wary of even that 
seemingly simple goaL “How- 
ever you change the climate of 
late payment, yon must tackle 
file problem of financial man- 
agement within companies — 
in the UK it’s appalling." 


Countycourt case registrations 


Credit 
comes to 
judgment 


RENDER 

TRACK. 


One of the most effective ways 
of preventing bad debts from 
arising is to carry out a thor- 
ough check on credit status 
before granting credit 

Information on the credit 
status of another company is 
readily available from the 
main credit reference agencies 

anffh as CCN, Tnfnltnlf Dim A 
Bradstreet ami Equifax. 

The service provided by 
these agencies has become 
increasingly sophisticated in 
recent years, as the informa- 
tion required by businesses 
trying to assess the risk of 
lending money, or supplying 
goods and services, has 
changed in response to the 
changing e conomi c environ- 
ment 

Clients are much, more spe- 
cific about the information 
they want and what they are 
prepared to pay for, says David 
Coates, sales and marketing 
director of CCN Business Infor- 
mation. 

Five years ago most users 
bought foil status reports on 
companies. These days, Mr 
Coates adds, the agencies have 
to break down reports and sell 
the information in different 
forms. 

The problem of judging the 
credit status of the 3m-4m busi- 
nesses in the UK - mainly 
partnerships and sole traders - 
on which no audited financial 
information is available, has 
proved particularly acute dur- 
ing the recession. It prompted 
CCN to develop a database for 
unlimited companies «nti to 
begin adap tin g am p t riral scor- 
ing techniques long used in the 
consumer credit field, to help 
evaluate the credit worthiness 
of businesses. 

In addition to looking at an 
industry sector as a whole, the 
payment record of a company 
and any available finannial 
data, an element in 

b uilding up a picture of the 
creditworthiness of small busi- 
nesses has been the develop- 
ment of a directors’ database. 

CCN’s directors' database 
contains information on 6m 
directors and company secre- 
taries in the UK. With so many 
business failures during the 
recession, this information baa 
proved invaluable in helping 
banks and other companies 
decide whether to lend or 
extend credit to start up busi- 


nesses where often the only 
information available on which 
to mate an assessment of the 
credit risk relates to Its direc- 
tors. 

Most agencies now offer 
their services through on line 
Computer links This bfla made 

checking credit information 
quick and simple. Further- 
more, it has helped to reduce 
the cost to the end user. CCN 
charges £25 for a traditional 
fun status report, but for users 
such as banka (which purchase 
the information in hulk) the 
cost of a full status report is 
discounted to under £10. A 
directors* database search 
costs £6 and a search of CON'S 
unlimited database costs £10. 
Prices charged by other agen- 
cies are comparable. 

The credit reference agen- 
cies’ sources of Information are 
Companies House, newspapers 
and, quite oftbn with small 
companies, the company itself 
But probably their most impor- 
tant source of information is 
county court judgments. 

Since 1990 most county court 
judgments are immediately 
entered on the County Court 
Register as soon as made by a 
court- 

Entries can be cancelled 
when a judgment is set aside 
or reversed or paid in full 
within onp mnwib Judgments 
paid in foil after one mon th 
can be noted on the register as 
“satisfied”. Ail entries are 
automatically removed after 
six years. 

Since 1966 the register has 
been run by Registry Trust 
Ltd, a non-profit-making com- 
pany limited by guarantee. The 
Register is divided into con- 
sumer judgments and commer- 
cial judgments against busi- 
nesses. 

According to Malcolm Hurls- 
ton, chairman of Registry 
Trust, users of the register fall 
into one of four categories: 

• Purchasers of the consumer 
file; 

• Purchasers of (he commer- 
cial ffln; 

• Purchasers of the file by 
county or by court; 

• Individual inquiries from 
the public, either by post or in 
person. 

When the Trust took over 
the running of the register 
from the Lord Chancellor's 
Department, it had a database 



of 6m pieces of papa- and the 
cost of searching a judgment 
was 4Qp each. Through com- 
puterisation and the establish- 
ment of a dual system for key- 
ing-in the data, which has 
ensured the accuracy of the 
Information stored, the cost of 
accessing the register has 
come down substantially. Pur- 
chasers of the whole file now 
pay the equivalent of 16p for 
each judgment 

Purchasers of the file of com- 
mercial judgments - which 
make up 18.4 per cent of the 
whole file - pay £64,000 per 
annum. The mmmnrrifll file is 

currently purchased by eight 
agencies. Purchasers of all the 
consumer judgments pay 
£250,000 per annum. There are 
currently four purchasers of 

the nnn gnraar fl!f» 

The number purchasing the 
information by locality or by 
court has fallen from a low 
base of 30 in 1986 to just 8 in 
1994. They pay 40p per judg- 
ment 

Public inquiries cost £4£0 by 
post and £4 in person. There 
were 54,155 public inquiries in 
1993, a tell of 11 per cent on the 
1992 figure and some way 
below the peak of almost 70,000 
in 1990. 


In 1993 there were just over 
2m judgments registered or 
noted as satisfied on the regis- 
ter. a fall of 12 per cent on the 
1992 figure - which in turn 
was a tell on the peak figure of 
2.4m in 1991. 

The number of commercial 
judgments registered but unsa- 
tisfied on the register in 1933 
was 332£G5, 16 per cent down 
on the peak 1992 figure of 
almost 400,000. 

Information on High Court 
judgments is not available at 
present but would be usefol if 
it could be accurately collated, 
says Aldan Breen, operations 
director of CCN Business Infor- 
mation, 

Gathering accurate informa- 
tion on High Court judgments 
is difficult, says Malcolm 
Huriston. partly because of the 
large number of cases which 
settle out of court with the 
terms of settlement remaining 
secret 

At best, any body (such as 
the Trust) which now under- 
took to record High Court judg- 
ments could only offer an 
incomplete picture. This would 
be of doubtful value to the 
main users of such informa- 
tion: the credit reference agen- 
cies. 


Irrespective of whether or 
not accurate information on 
High Court judgments becomes 
available in the short term, the 
scope of the information avail- 
able to credit reference agen- 
cies, and to others who need 
assistance in deciding whether 
or not to lend or supply goods 
and services, is increasing all 
the time. The register, for 
example, has been extended in 
recent years to cover courts in 
Scotland, Northern Wand, the 
Isle of Man and Jersey. 

The agencies have begun to 
collect information on individ- 
ual and company schemes of 
voluntary arrangement (CCN 
will offer an information ser- 
vice on company voluntary 
arrangements from March 17). 

And through organisations 
such as Internet, a network of 
the main credit bureaux in 
Europe, information on the 
credit status of European com- 
panies can now be easily 
accessed by exporters any- 
where within the EU. 

All these developments help 
to make pre-credit checking an 
increasingly attractive and 
effective way of preventing 
the problem of bad debts. 

Robert Rice 



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GRIFFIN FACTORS 

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. Our guide “A Credit to the Company”, 
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FINANCIAL TIMES 


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• ** i 






FINANCIAL TIMES TUESDAY MARCH S 


rv 

CREDIT MANAGEMENT IV 


For the exporter, winning an 
order is often just a first step 
towards making the sale. In 
addition it is often necessary to 
arrange financing and. in an 
uncertain world, export credit 
insurance. 

Export credit insurance pro- 
vides the means for companies 
to reduce and manage the risk 
inherent in exporting - a vital 
service in a nation such as 
Britain. As Mr Keith Johnson, 
export finance manager at Sie- 
mens Plessey Systems and 
c hairman of the British Export- 
ers Association, points out. 
M We are still one of the biggest 
exporters per capita in the 
world." 

Nevertheless, many of the 
UK's regular exporters - they 
number about 40,000, complain 
that while there have been 
some improvements, insurance 
cover is still too expensive or 
unavailable for some markets. 

More pointedly, Mr Johnson 
claims that British exporters 
often lose out against their 
continental counterparts 
because the UK lacks a coher- 
ent government-backed export 
policy. 

As a result, he says. British 
support for exports is haphaz- 
ard. It often compares unfa- 
vourably with that available to 
the competition, where the 
export financing as well as the 
credit insurance is often pro- 
vided by state- controlled enti- 
ties. 

“We need a full political 
commitment to support and 
sustain exports, and that is the 
fundamental problem," says 


The UK’s approach to export credit insurance seems pretty incoherent, writes Paul Taylor 


Cover can be expensive or not available 


Mr Campbell Dunford. chair- 
man of the London Chamber of 
Commerce’s export committee 

This deficiency is particu- 
larly critical in the market for 
medium and long term credit 
insurance which, throughout 
the European Union, is pro- 
vided by government agencies. 

In the UK, the Export Credit 
Guarantee Department (ECGD) 
provided insurance to cover 
about £4bn of "long and large" 
exports last year - usually for 
big sales such as shipping or 
aerospace contracts, or large 
projects when payment is 
expected over a two-year 
period or longer. 

ECGD premium rates have 
been reduced several times 
over the past two years, while 
cover has been increased. In 
December the UK chancellor 
announced a reduction in 
ECGD premium rates in a lim- 
ited number of markets, 
including Argentina, India, 
Mexico. Poland, Slovakia and 
Turkey, and a £200m increase 
in export credit insurance 
cover for capital exports in 
1996-97. 

But while Mr Dunford says 
these moves were a step In the 
right direction and reflect “a 
gathering awareness" of the 
importance of exports, he also 
points out that premium rates 


for many mar- 
kets are still 
uncompetitive. 

“We are not 
asking for any- 
thing special," 
adds Mr John- 
son. “just a 
sense of real- 
ism." 

Meanwhile 
UK exporters 
have discov- 
ered common 
ground with 
their continen- 
tal counter- 
parts when it 
comes to EU 
proposals for 
the harmonisa- 
tion of export 
credit insur- 
ance regimes 
contained in 
the so-called 
Tuffrau report 

In January a delegation led 
by Mr Johnson, representing 
exporters from Germany, Hol- 
land, Spain. France and the 
UK, met Commission officials 
to express their concern over 
harmonisation plans. These, 
Mr Johnson said, reflected, 
“introspective activity by EU 
officials," largely for the conve- 
nience of treasuries across 
Europe which are trying to 





NCM Credft Insurance, Dutch-owned, is buikfing new headquarters in Cardiff Bay 


reduce their support for export- 
ers. 

Following the meeting, EU 
exporters are optimistic about 
their chances of forcing 
ampnfimpn ta to the harmonisa- 
tion plans - although Commis- 
sion officials have warned that 
it will be difficult to change 
the minds of national govern- 
ments at this late stage. 

One of the main issues is 


over the level of cover avail- 
able from member country 
export credit agencies. Under 
the EU proposals, the level of 
cover provided by the agencies 
to h anks for buyer and sup- 
plier credits would be harmon- 
ised at 65 per cent of the con- 
tract value. However, the EU 
exporters argue that this 
would place them at a serious 
disadvantage against the US 


and other com- 
peting OECD 
countries 
which provide 
100 per cent 
cover. 

Instead, the 
exporters argue 
that the EU 
should harmon- 
ise upwards to 
100 per cent, 
thereby match- 
ing interna- 
tional competi- 
t i o n 
“Harmonisa- 
tion must 
occur at the 
highest com- 
mon denomina- 
tor to ensure 
that Europe Is 
competitive 
against the 
Americans, 
Japanese. 
Canadians and, in the future, 
countries such as Taiwan, 
South Korea, China and Malay- 
sia," says Mr Johnson. 

The British Exporters Asso- 
ciation has prepared a matrix 
listing exporters’ concerns over 
harmonisation issues, includ- 
ing divergence of premium 
rates, quality of cover and 
unequal treatment of risk anal- 
ysis by credit agencies. 


Aetwo: tin Lxmwnaa 


British exporters are also 
worried about the cost and pro- 
vision of short term cover - 
which represents about S5 per 
cent of all export credit insur- 
ance. In the UK the E CCD’s 
short term insurance services 
were privatised in December 
1991, as a result of which two 
main competing private sector 
insurance providers have 
emerged. 

The UK market is now 
mainly divided between the 
Dutch-owned NCM Credit 
Insurance, which bought the 
ECGD’s Cardiff-based 
short-term business and has 
about SO per cent or the UK 
export credit insurance market 
providing about £l5bn of cover 
annually, and Trade Indemnity 
(TI). a relative newcomer to 
the export market. 

TI is the largest UK domestic 
credit insurance supplier, but 
it has also moved into the 
export market where it pro- 
vides about £4bn of cover a 
year. There is "healthy compe- 
tition" between the two organi- 
sations, says Mr James Ball of 
Dewe Rogerson Europe, who 
represents NCM. 

Generally, the insurers cover 
exporters against losses up to 
90 per cent of the value of 
invoices where a customer 
defaults, and up to 95 per cent 


if the custumur is willing to 
pay but the comitry defaults 
(as Nigeria (lid in ISS3). 

Exporters agree that the 
quality of service since privati- 
sation has improved eonsUiera- 
My, Nevertheless, privatisation 
has meant that the UK. aluue 
in the EU. docs not supply- 
state reinsurance support for 
short term export credit The 
government has extended 
“transitional" cover until the 
end of 1997. but the Lack of 
permanence has caused uncer- 
tainty. 

Exporters also argue that the 
transitional reinsurance 
arrangements are not flexible 
enough - which means that, in 
some notable instances, cover 
has been unavailable for 
export orders won in the wake 
of ministerial export boosting 
trips overseas. "There needs to 
be a much faster mechanism 
for responding to the needs of 
the marketplace." says Mr 
Dunford. 

“The Treasury expects a l 
per cent increase in exports 
year on year, but bas made no 
provision For achieving this." 
complains the outspoken Mr 
Johnson. “They think it will 
come from the tooth Fairy " 

Indeed, although NCM and 
TI do provide substantial short 
term export credit insurance, 
many exporters believe tliat 
UK exports to emerging mar- 
kets such as China would be 
substantially higher if the sup- 
ply and cost or credit Insurance 
became easier, and if a mure 
co-ordinated approach was 
adopted by Government. 


Training is a good investment, reports Peter Carty 


Collect it by phone 


Credit managers often 
complain of limited resources 
allocated to them for tr aining . 
They feel like poor relations as 
they see sales colleagues sent 
off on course after course. 
However, there are signs that 
the situation is improving. 

“People are starting to real- 
ise that it is worth investing in 
training." says Ms Jill Wey- 
mouth, a Bristol-based freel- 
ance trainer. But progress is 
not fast enough for some. "It’s 
changing very, very slowly." 
says Mr Denis Trough t, direc- 
tor of Credit Management 
Training Ltd, looking back 
over 16 years in the industry. 

At least the recession and its 
aftermath have increased 
momentum. Mr Trought has 
seen steady demand for his 
courses over the past few 
years. "There wasn't any slack- 
ening off,” he says. 

At the Institute of Credit 
Management (ICM). training 
manager Ms Lesley Haigh has 
seen a strong rise in underly- 


ing demand over the long 
term. 

In the recession she saw 
bookings drop, but thinks that 
this was because of large num- 
bers of new trainers entering 
the market “There are a lot 
more players in the field than 
there were three or four years 
ago." Newcomers include size- 
able organisations such as 
Inf oc heck, as well as redun- 
dant credit managers who have 
set up as trainers. Shaws Lin- 
ton Business Training Ltd pro- 
vides over 250 courses right 
across the business spectrum. 
The six in the credit manage- 
ment field are much in 
demand. “They are our stron- 
gest performers,” says Ms 
Amanda Kemp, the marketing 
manager. 

Most trainers report that the 
most popular courses are in 
telephone collection tech- 
niques. Ms Weymouth sees this 
area as fundamental “The tele- 
phone is the most practical and 
effective way of collecting 


cash,” she says. “Telephone 
collection techniques do tend 
to point people in the right 
direction." agrees Mr Paul 
Stevenson, credit manager for 
BASF. 

“95 per cent are not doing it 
right," says Mr Trought, of 
staff that he has observed 
before training. Coaching can 
help employees to prepare 
properly before making rails 
and to be polite but assertive. 

Asking the right mixture of 
“closed" questions (answerable 
with a yes or no) and “open” 
questions (which require more 
explanation) is Important. 
“You can probe and question 
and gain a co mmit ment," says 
Ms Weymouth. When dealing 
with consumers, debt counsel- 
ling - as opposed to debt recov- 
ery - is increasingly needed. 
Training is being refocused 
accordingly. 

Mr Stevenson accepts that 
some staff have natural gifts in 
this area, but he is sure that 
tr aining does make a differ- 



ence. His confidence stems 
from the fact that, if collection 
is monitored, the results of a 
course are easy to quantify: 
“You get a virtually instant 
indication of how well it's gone 
by the effect on cash flow." 
The benefits of other kinds of 
collection courses are similarly 
easy to evaluate. 

As well as collection tech- 
niques. risk assessment 
courses are hi demand. Inter- 
pretation of financial state- 
ments is central here. Main- 
land Europe is a growing area 
of interest to companies and 
bookings for relevant courses 
are growing. Dun & Bradstreet 



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Lisa Wood looks at recruitment into the profession 

Demand has recently 
risen sharply 


has recently launched a new 
coarse to help staff analyse the 
accounts of European busi- 
nesses. 

There is growing enthusiasm 
among trainers and companies 
for in-house courses. Experts 
train company staff on-site. 
“In-company tr aining has dis- 
tinct advantages,” explains 
BASF’s Paul Stevenson. "It’s a 
method of operation tailored to 
a company. If you go to an 
outside course it might not be 
adapted to your needs." Mr 
Stevenson says that it becomes 
viable where the credit man- 
agement function has more 
than half a dozen staff. 

Mr David Ancliffe. credit 
manager at Scottish & Newcas- 
tle Sales, which supplies bever- 
ages to supermarkets and 
other retail outlets, brings in 
an external trainer once a year 
to run a one-day seminar for 
his 16-member department. 
This costs about £40 per 
employee. He says that travel 
and accommodation costs for 
external courses would be 
about £200 a head, with course 
fees on top. 

There are other advantages. 
Trainers can come into the 
company in pre-course consul- 
tancy to see how employees go 
about their work, in order to 
focus later training sessions 
properly. “We can look at 
systems, talk to staff confiden- 
tially and look at a company's 
customers," says Denis 
Trought of Credit Management 
Training. “We can make the 
whole thing very personal" 

He says that external 
courses with participants from 
a range of industries can be 
problematic: "A couple of peo- 
ple. because of the peculiarities 
of their business, will have dif- 
ficulty relating." 

Simply sending staff on a 
course is not the end of the 
story. Credit managers stress 
the importance of structured 
training tailored to employees' 
individual requirements. “Each 
person has different needs and 
proceeds at different speeds." 
says Ms Ann Stanislawski. 
credit manager at Hitachi 
Europe. Her five staff all have 
personal training programmes. 

Two of Ms Stanislawski 's 
team are studying for the ICM 
professional exams and receive 
support from the company. She 
thinks this is important 
because their present roles are 
limited and the ICM syllabus 
will give them wider exposure. 
“They learn about areas other 
than trade credit and get a 
broader education.” she says. 

Ms Jill Weymouth points to 
the importance of regular 
training update courses. In 
some areas, such as dealing 
with county courts, rules 
change quickly. With practical 
skills such as collection tech- 
niques, booster courses can 
pay dividends. 

Employees in companies 
which are particularly budget 
conscious might find distance 
learning a solution. Inf oc heck 
launched a correspondence 
course for a diploma in credit 
management last year. “We 
were surprised by the immedi- 
ate interest," says Mr Ian 
Sanderson, director of Info- 
check's training services. More 
than 150 students have already 
enrolled. Mr Sanderson thinks 
the course material might be 
particularly useful for staff in 
small credit departments who 
may not have other reference 
materiaL 

Dun & Bradstreet has run a 
distance learning programme 
in credit and financial analysis , 
for some time. “Ours has done i 
very well." says Judith de i 
Jong, manager of business edu- j 
cation services. Successful | 
completion exempts students 
from part of the ICM’s intense- I 
diate syllabus. I 


“Communication skills are 
probably the greatest asset a 
credit manager can have,” 
says Mrs Ann Stutz, recruit- 
ment service manager at the 
Institute of Credit Manage- 
ment 

The ICM is the professional 
body concerned with the credit 
management function, with 
membership of the institute 
recognised by employers as 
I proof of professional know- 
ledge and competence in credit 
work. 

The institute's recruitment 
bureau, which has been run- 
ning for 25 years, is one of the 
institute’s commercial arms 
and offers a complete recruit- 
ment package covering all lev- 
els of personnel, from credit 
clerk to board appointments. 

Hie service offers standard 
or executive search facilities. 
In the first instance fees are 
only charged on soccessful 
placement In the second, a fee 
structure is devised to meet 
the specific needs of the 
assignment 

“Employers use the service 
because of our specialised 
knowledge of the credit func- 
tion,” says Mrs Stutz. "In addi- 
tion we are often required to 
act as a reference point to both 
employers and employees on 
salary and benefit related que- 
ries." 

Mrs Stutz declines to dis- 
close the numbers of people on 
the bureau's recruitment 
books, or annual placement 
rates, but says that demand 
for credit managers fell during 
the recession but has risen 
sharply in recent months, with 
a 50 per rent increase on the 
lowest point 

Most of her clients are the 
bigger companies, but she says 
many smaller companies are 
now hiring in-house credit 
managers because of the need 
for improved cash-flow. 

Traditionally, smaller com- 
panies have used defat collec- 
tion agencies, which may ask 
for a percentage of the recov- 
ered debts. However, if a small 
company’s business is complex 
and specialist or has substan- 
tial sides abroad, an in-house 
credit controller is probably 
the preferred option. 

Mrs Stutz says: “It is clear 
that more enlightened employ- 
ers have come to realise that 
efficient credit management 
can hold the key to greater 
liquidity. In fact, for the 
smaller company, it can often 
make the difference between 
weathering the recession or 
financial failure." 

So what constitutes the ideal 
credit controller? Mrs Stutz 
says that there are three main 
types of people who are needed 
in what can be a very demand- 
ing job, 

• Analytical people who can 
gather data on customers, 
make recommendations or 
take decisions and explain 
them to others. 

• Outgoing people who can 
establish friendly relation- 
ships with customers and sales 
staff to improve the flow of 
payments. 

• Methodical people who 
can process payments and han- 
dle information rapidly and 
accurately. 

It is useful, she says, for a 
trained credit manager to have 
specialist knowledge of finan- 
cial and strategic planning, 
legal procedures and insol- 
vency law. 


So where do credit control- 
lers work? “Almost any- 
where.”says Mrs Stutz. She 
adds that every form of trad- 
ing company needs a credit 
department, making sure that 
the companies it sold to, pay 
within die agreed time limit. 
This was “trade” or commer- 
cial credit. If credit was 
granted overseas, it was 
described as "export" credit 
Companies enabling individu- 
als to purchase goods by 
installments were in the world 
of consumer credit 
Moreover, there were compa- 
nies whose main business was 
credit - they included finance 


The days are gone when 
the credit function is solely 
about getting paid 


and hire purchase companies, 
credit card companies, banks, 
credit insurance companies 
and credit reference bureaux. 
Then there were jobs in com- 
panies such as collection agen- 
cies, which recovered overdue 
accounts, and with accoun- 
tants specialising in insol- 
vency matters. 

Mrs Stutz says that the days 
are gone when the credit func- 
tion is solely about getting 
paid. The modern credit con- 
troller is involved in assessing 
the risk of doing business with 
a customer. It is no longer 
acceptable for sales or market- 
ing personnel, keen for orders 
and commissions, to pay lip 
service to a customer’s credit 
worthiness and ability to pay 
on time. 

She says that, in the past, 
too many companies set inap- 
propriate credit terms, or 
allowed customers to take 
unofficial extended credit. 

Too often, a company would 
nse the credit function as a 
mopping np exercise when 
things went wrong. The neces- 


sity for legal action was often 
the result of failure on the 
part of the company to support 
efficient credit procedure and 
allocate adequate human 
resources. “Wiser companies.” 
she says, have learnt that it 
should only be used as a useful 
adjunct to credit management 
skills, not instead of them. 

Mr Ted Brown, vice chair- 
man of the IPM. is head of 
credit control at Britvic. the 
soft drinks division of Bass, 
the brewing and hotel group. 

His department works in 
tandem with the company's 
sales team, checking out all 
new customers and beeping in 
regular contact with existing 
ones. “We want to supply our 
products to any customer who 
wants them, bat we have to 
check on their ability to pay 
and their willingness to pay 
within agreed terms," says Mr 
Brown. Every account is given 
a credit vetting and a credit 
line, which can be adjusted 
depending on circumstances. 

The task is large and com- 
plex. Britvic has more than 
10,000 accounts owing 
between £4 0 m and £60m at 
any one time, depending on 
the time of the year. Custom- 
ers range from tiny corner 
shops to the big supermarket 

chains- 

The department employs 70 
people. Proof of its increased 
efficiency shows in the fact 
that daring the past four years 
it has reduced the average 
time customers take to pay 
from 60 days to 40 days. In 
this It has been assisted by a 
new computer system that ran 
provide on-line information of 
customers' debts. 

Sometimes all attempts to 
collect debts fail and there are 
customers against whom legal 
action has to he taken. “If we 
have to do that, I feel we have 
failed,” says Mr Brown. “It 
means communication has 
broken down." 



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V 


CREDIT MANAGEMENT V 



information Technology 


Powerhouse 
capability to 
deliver 


The use of information 
technology has now permeated 
almost every stage of the credit 
management cycle, from appli- 
cation vetting through to liti- 
gation. 

At the start of the cycle a 
large number of companies 
provide on-line assessments of 
credit worthiness in the trade 
finance and consumer sectors. 
Clients are demanding infor- 
mation in more user friendly 
forms. 

For example, UAPT-fnfolink 
has just launched Prophet, a 
Windows-based package. Data 
is downloaded on to a chent pc 
from Infolink’s mainframes 
and can then be fully manipu- 
lated using the full range of 
Windows' facilities, including 
graphical interfaces. “We're 
giving them full remote pro- 
cessing capability." says Mr 
Kevin Still, Infofink's head of 
marketing. 


‘For our very large 
customers we can build 
direct (inks into our 
database and give them 
unlimited access* 


From the mid-1980s the UK’s 
credit information providers 
started to tie their computer 
systems Into those of impor- 
tant clients. News about a par- 
ticular customer, can be fed 
straight into a client’s database^ 
on demand- "For our very 
large customers we can build 
direct liuics into our database 
and give them unlimited 
access,” says Mr Chris 
Brooker, distribution and mar- 
keting director at Dun & Brad- 
street 

Alternatively, rather than 
providing information on 
request, credit information on 
customer files in client data- 
bases can be continuously 
updated. “It’s really a question 
of giving them a seamless sys- 
tem,” says Mr David Pearce, 
director of computer service 
development at Graydon Ltd, a 
trade finance information pro- 
vider. 

Scoring systems are one of 
the most high-profile uses of IT 
within the credit management 
function. They are mainly used 
to vet consumer credit applica- 
tions - though use in trade 
finance is growing - with 
points awarded for key factors 
such as how long applicants 
have been in residence at their 
current addresses, whether 
spouses are in employment 
and so on. Fair Isaac developed 
the technique in the US back 
in 1958. Other suppliers of 
score cards are CCN, MDS and 
Mathtec, with bureau services 
available from Eqtrffix. Scores 
and UAPT-infolink. 

Building credit score cards is 
no longer the preserve of exter- 
nal experts. Paragon Business 
Solutions has been marketing 
DSS, a po-baied package for 
in-house score card building, 
for over two years. 

Ms Caroline Hendra, head of 
personal credit at the Co-op 
bank, has used DSS to build an 
application scorecard for a 
Visa gold card and to predict 
response for a personal loan 
product She also uses external 
consultants, but is dear on the 
need for in-house building: “As 
fife becomes more complicated 
you need to react more 
quickly." Scores can also sup- 
ply building software and SAS 
Institute Ltd will assist with 
development tools. 

About 10 years after develop- 
ing credit score carding. Fair 
Isaac began to aggregate data 
drawn off customers' files after 
credit had been granted. The 
resulting behaviour score 
cards enable companies to 
decide, for example, whether to 
increase a client's credit limit 

or to renew a facility. 

It is only in recent years that 
behaviour scoring has really 
taken off, on the back of com- 
puters' advances in power and 
agflity. “It has big IT applica- 
tions," says Mr OD Nelson, 
senior vice president at Fair 
Isaac. “There can be 150 char- 
acteristics on a rich customs 
file to bring into a decision 
making algorithm.” About two 
thuds of bank credit cards now 

have account details analysed 
by behaviour scoring. 


Mr Ian Arthur, an associate 
partner with Andersen Con- 
sulting, points to the way in 
which sophisticated relational 
databases are increasingly 
built into operational systems, 
•ranking and exploiting informa- 
tion across customer files for 
different credit products. "You 
can be more focused in the 
marketing you do," he says. 

Behaviour scores are combined 
with other data to assess a cus- 
tomer's Hkefihood of buying a 
new product 

Dse of expert systems is 
growing. A scorecard predicts 
customers' future actions on 
the basis of past behaviour. 
Expert systems are built by 
avtnurting tho i nto; underlying 
credit professionals' decisions 
and. building systems that 
apply them automatically. Use 
has expanded beyond applica- 
tion vetting, to decide, for 
example, whether to authorise 
unusually large transactions. 

Neural networks are the next 
stage. Rules built into expert 
systems can only be changed 
externally, but neural net- 
works alter them on the basis 
of experience. According to Mr 
Darren Whobery, new technol- 
ogy consultant at UAPT-Infdl- 
ink, neural networks have a 
slight edge in many applica- 
tions. The gap widens if there 
is more data av ailable, particu- 
larly if it con tains variables 
with irnn-Hnear relationships. . 

Neural networks are already 
in use in the US. They are 
often coupled with more con- 
ventional technology in hybrid 
systems, and are creeping into 
the UK. It’s only a question of 
time," says Mr Arthur. UAPT- 
Twtollnk is being sponsored by 
a chib of big UK financial insti- 
tutions, to evaluate neural net- 
works against score cards and 
expert systems. 

The final stage of the credit 
process is, of coarse, collection. 
Systems have been available 
for this end of the cycle for 
over 10 years and have been 
particularly useful in the reces- 
sion and its aftermath. Cases 
can be put on a priority list for 
pursuit, according to rules laid 
down by users. As part of pre- 
litigation processes, packages 
can now help users decide 
whether to pursue a debt 
in-house, use an external col- 
lection agent or go to the 
courts. They can issue letters 
of reminder and warnings 
before initiating County Court 
and High Court proceedings. 

Sanderson CFL markets two 
packages in this area. Tally- 


Packages are suitable 
for clients handling at 
toast 10,000 debtors, 
such as banks, budding 
societies and utilities 


man deals with arrears and 
collections, while the wander- 
folly named Minder (Monitored 
Integrated Debt Recovery) 
assists recovery and litiga ticm . 
“We’ve done very well out of 
it." says Sanderson's Ms Sha- 
ron McBean, of the latter. 

The packages are suitable for 
clients H«rnnmg at least 10,000 
debtors. Current users include 
banks, building societies and 
utilities. Other suppliers of 
software in this area include 
Target Computer Group, AST 
TransAct (part of SHL System- 
house Europe Group), AIM 
Law Data and Law Data 
Systems. 

Credit Collection Systems 
Ltd offers a bureau-type ser- 
vice to companies wanting an 
in-house collection system 
without a large capital outlay. 
“We take care of an the hard- 
ware and software,” says sales 
manag er Mr Richard Brooks. 
Users access a central process- 
ing installation through termi- 
nals, and payment is on the 
hflgfo of each account put on 
the system. 

Computers can deal with 
a dminis tration of undefended 
cases, but with defended 
actions the role of IT in the 
credit management cycle ends. 
As Mr Brooks points out, com- 
puters cannot yet wait into 
court and argue a case: 
“There’s no way you can 
take it . that far.'; 

Peter Carty 


Christine Tighe profiles Nicholas Wilson, the first professor of credit management 

Companies recognise the connection 


Professor Nicholas Wilson, the 
first bidder of the. Institute of 
Credit Management’s (ICM) 
newly created chair at 
Bradford university, has clear 
objectives. 

He seeks to raise the profile 
of credit management as an 
academic discipline and as a 
vital function within compa- 
nies. BBs task is to launch an 
extensive programme of 
research in credit manage- 
ment, developing Its profile in 
the academic curricnhnn 
professional training and 
attracting talented young peo- 
ple to work in the area. 

To some extort, his appoint- 
ment last summer was in itself 
a significant step forward; he 
believes he is the first profes- 
sor of credit management not 
just in the UK but in the 
world. 

The subject draws from vari- 
ous discip lines, indndxog eco- 
nomics, finance an d in fonna- 
tion technology (IT). “My 
function is to bring them 
together into a credit manage- 
ment disdpUneT he says. “It 
is an exciting area, fairly new, 
with a lot of developments. It 
is coming to be seen as a criti- 
cal function, whether you are 
talking about a business 
or a multinational body.” 

His own background 
includes an undergraduate 
degree in industrial econom- 
ics, followed by a PhD thesis 
on participation and profit 
sharing in British engineering; 
research fellowships in West 
Berlin’s WiBseuschaftsentrnm 


and at Warwick University; 
and a nine year stint as a lec- 
turer at Bradford Management 
Centra in managerial econom- 
ics. He is now 87. 

It may seem a long way 
from smal l companies' ungia- 

morons but persistent worries 
about recalcitrant late payers 
to Nicholas Wilson’s high fly- 
tug academic career ppd bis 
ambitious use of powerful 
c o mpu te r neural netw o rk s to 
produce predictive modelling 
tools for credit risk. But com- 
panies’ Initial response to his 
work suggests that they see 
the connectian. 


He seeks to raise the 
profile of credit 
management as an 
academic discipline and 
a vital company function 


There has been an excellent 
response to a research project 
he rerentiy set up, funded by 
the Economic and Social 
Research Council (BSRO, to 
collect new empirical evidence 
on small companies’ working 
capital management policy 
and practices. Of the 100- 
strong pflot group approached, 
35 per cent responded with full 
information. Astonishingly — 
or perhaps not, if you are 
familiar with the preoccupa- 
tions of small businesses - 
some respondents said they 
spend 85 pa* cent of their time 
ntannpmy cash flow Mid chas- 
ing debts. 


“If yon look at figures an 
failure, it’s largely became of 
cash flow problems in the 
small business sector,” says 
Prof . Wilson. “A number of 
things could help - more 
prompt payments by larger 
businesses, bettor understand- 
ing by. the banking sector of 
the difficulties small busi- 
nesses face, and more training 
In cash flow management" 

Further research launched 
since Ms ap poin tment has also 
found companies willing to 
co-operate. But he believes 
there is still a long way to go 
to achieve his broad aim of 
raising credit management’s 
status. 

“There’s an image that the 
credit manager Is somebody 
who . chases debts and that's it 
— an internal process in the 
organisation,” he says. “But 
that’s far from the truth. 
Credit managers are business 
analysts; they’re closer to the 
business than anybody else." 

Credit management, be says, 
should now be part of the 
structure of an organisation, 
and should begin before an 
account Is opened. “That is 
why credit risk modelling has 
to be more sophisticated, to 
try to profile risks and under- 
stand them." This does not 
necessarily mean that credit 
will ultimately be withheld; 
rattier that it is given cm a 
better informed basis. 

In some companies the 
credit manage ment arm is jok- 
fly known as the sales preven- 
tion team - and yet this 


should be for from the case. 
“It facilitates business rather 
-than preventing it" 

In order to produce the more 
sophisticated predictive tools 
he has in mind, Prof Wilson is 
leading research on the model- 
ling of corporat e distress and 
tenure, both by devising sta- 
tistical models and by using 
neural network computer 
systems which can predict out- 
comes, such as credit risk cate- 
gories, an tiie basis of recog- 
nising patterns in the 
information fed ta. PhD stu- 
dents with backgrounds in 
mathematics, finance and 


There are plans to build 
up a sample of 1,000 
companies wiling to 
co-operate in an annual 
monitoring exercise 


accountancy are co-operating 
on this neural network 
r esea r ch , funded by the ESRC. 

He has also instigated 
research into trade credit, 
both as a form of short torn 
financing and a source of com- 
petittve advantage - an area 
of academic study he considers 
relatively neglected. 

The research will examine 
why and when non-finandal 
sector companies use trade 
credit, how they establish 
terms and how they manage 
these activities. 

Initial data is available from 
companies’ own accounting 
information and from Compa- 


nies House, but Prof Wilson 
plans to begin building up 
from nest month a sample of 
1,000 companies willing to 
co-operate In an annual moni- 
toring exercise which will be 
sustained over a number of 
years. 

Other research projects 
include study of tbe survival 
and performance of new start- 
ups in West Yorkshire, and the 
Working Capital Management 
study (which unearthed the 
would-be entrepreneurs who 
spend 85 per cent of their time 

on cash flow management). 

Research, however, is only 
one part of Nicholas Wilson’s 
brief. After Easter, the current 
year’s MBA intake at Bradford 
Management Centre will be 
aide to opt for a module in 
credit risk management Out 
of about 100 students on this 

year’s MBA, at least 15 have 
-so far signed up for the sub- 
ject 

And from next academic 
year, undergraduates will be 
able to include a module in 
credit management in their 
courses. Because Bradford’s 
de g rees are modular in struc- 
ture, students from a wide 
range of disciplines will be 
able to take this option. 

Prof Wflstm will also be lay- 
ing on, at the Bradford Man- 
agement Centre, short execu- 
tive courses on techniques and 
new developments in credit 

wannpmwn t 

The first of these seminars, 
aimed at those already work- 
ing in the field, wfil be held 



Wltoon: ’Crndt nunaoara are 
closer to a b usin e ss than anybody 1 


for two days in November. 
Bradford, he says, was an 
appropriate choice for the ICM 
chair because the management 
centre has an excellent repu- 
tation both for the quality of 
its research and for its practi- 
cal orientation. 

The centre’s clients include 
tJnilever, Allied Lyons, 
Rolls-Royce, Ford and tbe BBC 
- and Bradford was tbe first 
university to establish a chair 
In Total Quality Management 

The Institute of Credit Man- 
agement chair has been cre- 
ated initially for five years, at 
an annual cost of £50,000. A 
number of sponsors, including 
3M, Cork Gully, Dun & Brad- 
street and Infolink, are each 
contributing £5,000 for the 
first five years. The ICM hopes 
that, thereafter, tbe post will 
have become so well estab- 
lished that Bradford Univer- 
sity will absorb it within its 
own structure. 


Before you sign 
any deals abroad, 
make sure you’ve 


got all the facts . 



When you’re doing export business, it's 
not enough to know bow someone’s behaved 
in the past. You’ve got to be able to judge how 
they’ll behave in the future. Nobody does 
more to uncover the intelligence you need than 
Trade Indemnity. 

When we evaluate your potential 
customer, we never rely on hearsay alone. 
We're not even prepared to depend entirely on 
published data. Instead, your own personal 
underwriter will, when necessary, travel round 
the world at the shortest notice to make on-site 
investigations on your behalf. Searching for 


any spanner in the works that could bring you 
nightmares in the future. 

i 

All the time and trouble we take pays 
off in the quality of the decisions we give you. 
Decisions which don’t simply protect you 
against bad debt, but which play a vital role in 
your overall development strategies. For 
instance, we can check out the strength of the 
links in your distribution chain. Something 
which could easily make or break your 
export success. 

Trade Indemnity is the leading British 
credit insurer, and is able to provide both 


political and commercial risk cover in virtually 
every country in the world. And at a highly 
competitive price. 

At Trade Indemnity, we’ll make sure 
the deal you bring home is worth the paper it’s 
written on. 


For more detailed information about 
how Trade Indemnity can help your export 
business, contact Trevor Byrne on 071-860 2577 
or talk to your broker. 



TRADE INDEMNITY 


Before you export anything, 
import us. 









At NCM we don’t believe 


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At NCM, we insure £50bn. of business 
worldwide each year. So we can’t afford to swallow 
everything your clients tell you without asking a 
few questions first. 

Neither can you. Which is why the NCM 
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at home and abroad. 

Appearances can be deceptive. But with the ^ 

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FINANCIAL TIMES SURVEY 


US COMMUNICATIONS 


Tuesday March 8 1994 


I 


The US is leading the world into the 
age of interactive, multi-media 
communications. Yet some big 
questions - technological, legal and 
commercial - need to be resolved 
before this revolution becomes 
reality, says Martin Dickson 

A bumpy ride 
to America’s 
superhighway 


Tbe US is in the early stages of 
a period of profound industrial 
change as it leads the world 
into the long-heralded “infor- 
mation age" - where sophisti- 
cated new methods of commu- 
nication will transform the 
way people live and work. 

Behind the upheaval hes a 
vision: that in the not too dis- 
tant fixture offices and homes 
will he equipped with multi- 
media terminals which will be 
able to receive video telephone 
calls, movies and hundreds of 
television programmes on 
demand. They will allow the 
user to bank or shop while sit- 
ting in an armchair, play chess 
with someone thousands of 
miles away, or call up informa- 
tion easily from international 
data bases.- 

When people are away from 
their homes and offices, they 
wfll be able to stay in touch by 
carrying lightweight, wireless, 
pocket-sized video telephones 
or personal communicators, 
which combine the functions 
of telephones, computers and 
messaging systems. 

This vision is hardly new. 
For more than a decade com- 
munications industry analysts 
have boldly forecast the immi- 
nent arrival of the interactive, 
multi-media information age, 
only to find that technology 
could not deliver sufficiently 
exciting services at sufficiently 
low cost to attract consumers. . 

Suddenly, however, this 
brave new world seems a great 


closer, largely to 

technological innovation. 
Audio, visual and ( fate infor- 
mation can now be trans- 
formed into frhg aawift 
form and transported in vast 
quantities around high-capac- 
ity fibre optic "trunk roads". 

Compression technology per- 
mits the large amounts of 
information to he squeezed 
down feeder roads into the 

Tinwia. 

The US is leafing this revo- 
lution partly because it Is the 
>mmp of many of these techno- 
logical breakthroughs, partly 
because of its fiercely aggres- 
sive form of capitalism, and 
the fact it has allowed Ear mare 

w m ip » lififii\ rntn its ramrtirmi - 

cations industries than most 
developed countries, and partly 
because of its insatiable appe- 
tite for filmed entertainment, 
which is expected to play a 
crucial part in making multi- 
media services economic. 

But where the OS leads, the 
rest of the developed world is 
certain to follow - with Ameri- 
can mnitin atifln a i companies 
playing an important rote. 

For example, large US local 
telephone groups are already 
the most important partici- 
pants in Britain's fastgrowing 
q hh » television/telephony busi- 
ness, while American Tele- 
phone & Telegraph, the largest 
US long-distance telephone ser- 
vice company and a leading 
manufacturer of network 
equipment, aims eventually to 



Countrywide conmcflonc AT&T's network operations centra h New Jersey 


generate half its revenues from 
outside the US. 

However, some huge ques- 
tions need to he resolved 
before the multi-media vision 
becomes reality in the US, and 
many fortunes will be won and 
lost over the next few years 
placing bets on the correct 
answers. 

The pitfalls were graphically 
underiinafl last m«nth when 
the largest US multi-media alli- 
ance yet announced suddenly 
fell apart 

Bell Atlantic, one of the most 
innovative local telephone 
companies, had agreed last 

aiitnmn to pay UP to $22bn tO 

take over the biggest US cable 
television company, Tele-Com- 
munications Tnr, but the 
collapsed because of difficulties 
in pricing TCI, compounded by 
cultural differences between 
the free-wheeling cable com- 
pany and staid telephone 
group. 

The break-up of the deal 
underlines that no one is sure 
what shape the new multi-' 
r nedi* industry will takei The 
digitisation of information 
means that at least seven 
industries which were previ- 
ously separate - same for tech- 


nical reasons, others because 
of regulatory concerns - are 
converging on the same 
ground, jostling for position in 
a world where legal and other 
barriers to competition are fall- 
ing test 

They are: long-distance tele- 
phony, local telephone ser- 
vices, television, broad- 
casting, personal computing, 
wireless cammnmcatians, and 
publishing. 

The industries best placed to 
figtr jb g te the new multi-media 
services are two traditionally 
monopolistic sectors with 
existing information service 
wires going into houses and 
office blocks: the ’local tele- 
phone companies, notably the 
seven so-called Baby Bell 
regional operators which were 
spun off from AT&T in 1984, 
and the cahlp television busi- 
nesses which cover some 60 
per emit of US homes. 

The electrical supply indus- 
try, which has a power line 
running into every building, is . 
also debating how to take 
advantage of the revolution. 

The local phone and cable 
companies, after spending 
years eyeing each other as 
potential enemies, have now 


started joining forces - and 
invading the territory of rival 
local phone companies. 

Competition is also being 
created by the entry of new 
participants to the local tele- 
phone market: AT&T, the larg- 
est long-distance carrier, is 
buying McCaw Cellular, the 
largest non-Bell cellular tele- 
phone company. MCI Commu- 
nications, the second largest 
longdistance carrier, recently 
announced plans to break tatn 
the local market, in conjunc- 
tion with various unnamed 
partners. 

Sprint, the third largest 
long-distance carrier, already 
owns local monopoly phone 
businesses and cellular 
operations. And the Baby 
Bells, for their part, want to be 
allowed to enter the 
long-distance telephone mar- 
ket, from which they are 
barred. Legislation on both 
this, and the opening up of the 
local market, is before Con- 
gress. * 

- The proposed new order 
would increase the powers and 
responsibilities of the Federal 
Conmumications Commission, 
the national government 
agency which oversees the sec- 


tor, to arbitrate between these 
riaifliing interests. 

The Bell Atlantic-TCI deal 
was the most dramatic engage- 
ment between local telephony 
and cable and its collapse 
means the two industries could 
now move much more cau- 
tiously in forming alliances. 

Deals that may prove more 
typical are a 25 per cent invest- 
ment by Baby Bell US West in 
the cable and entertainment 
business of Time Warner, oar 
the takeover by telephone com- 
panies of relatively cable 
operators. 

Alongside this horizontal 
integration be tw ee n local dis- 
tributors, a degree of vertical 
integration is also under way 
as triephnue and cable service 
companies forge links with 
programme packagers, such as 
cable television networks, and 
with programme originators, 
such as Hollywood film stu- 
dios. 

These forces have been seen 
most dearly in the flObn take- 
over battle for Paramount 
r ViTnmiiTrinartnnH the film pro- 
duction and book publishing 
group. 

On one side stood the 
ultimate victor, Viacom, 


primarily an originator and 
packager of cable television 
entertainment, with financial 
backing from Nynex, the 
Baby Bell serving the 
north-east US, and Blockbuster 
Entertainment, the video retail 
chain. On the other side was 
QVC Network, a cable home 
shopping channel, backed by 
BellSouth, the largest Baby 
Bell, as well as Comcast, a 
cable distributor, and 
publishing groups Cox 
Enterprises and Advance 
Publications. 

There are some sharp 
differences of opinion within 
the converging industries as to 
how much vertical integration 
is necessary. Some protag- 
onists argue that the 
distributors do not need to 
have a stake in high-priced 
pro gra mming assets. 

Others wwfafain that vinca 
no one knows how the 
industry win shake down. It is 
a sensible precaution for them 
to have an interest in the 
sector. At the very least, it 
gives them access to a core of 
entertainment to fill their 
channels, and possibly a better 
bargaining position when 
bunting programming from 
outside. 

An even more important 
question is how quickly cus- 
tomer demand will develop for 
multi- media, that ffo paprig 
partly tea how cheaply the ser- 
vices are priced and partly on 
weiring them easily accessible. 
The many milHnne of people 
who have difficulty program- 
ming a video cassette recorder 
will need a great deal of help 
navigating the information 
highway. 

Demand for multi-media is 
likely to develop at different 
timix) jn itif fe r a it markets. Mr 
Robert Ranalh, head of multi- 
media at AT&T, thinks there 
are “tremendous opportunities 
over the next three to five 
years" in the market for large 
to medium-sized businesses, 
where networking will allow 

desktop raTlaharaHnn - that iS, 

staff in different locations 
working together to manipu- 
late date, while sinrahaneonsly 
holding video telephone con- 
versations. 

Interactive multi-media in 
tbe ~h«ww» and gmpTi businesses 
may take rather longer to take 
off as a mass market service - 
some analysts suggest it may 
be a decade or more away - 
but various popular forms of 
mtprtainment, notably movles- 


MTMS SURVEY 



US West worker receives 
training in the field 

□ Three aspects concerning 
the future position of the 
seven regional Bell operating 
companies are analysed: 

□ Regulation 

□ Technology 

O Overseas expansion 

Page 2 

□ Long-distance calls: com- 
petition for connections gets 
fiercer 

□ PC competitors are on 
their marks for a tough tech- 
nology contest 

□ The cotapee of the Belt 
Atlantic-TCI merger is seen 
as good news for the little 

guy* 

Page 4 

□ Although personal digital 
assistants have not yet 
caught on, tee next genera- 
tion of these hand-held 
devices may capture the 
imagination of the public 

□ The buzzword of tee US 
high-technology Industry is 
convergence 

□ Driving a superhighway 
Into tee home will turn couch 
potatoes Into couch com- 
mandos 

Page 5 

EtMtorU production Roy Tarry 


on-demand, are expected to 
win converts much more 
quickly. 

“Cost is a problem,” says Mr 
RanaUi. "The home market 
win evolve more slowly 
because of that. It still take 
five to 10 years for the price/ 
performance of the technology 
to reach the TV set” 

But after many false starts, 
the information age is finally 
dawning in America. 


CREATIVE MEDIA 


Where content will be king 


in the world of inter-active, multi-media 
entertainment content will be king. 

That, at least, is the current conven- 
tional wisdom, which argues that in an 
age when households will have access to a 
vast array of information on demand, 
some of the most profitable businesses 
will be those creating popular, original 
entert ainmen t and information services. 

In other words, tbe hardware binding 
together the information superhighway 
will be nothing without the software 
which encourages consumers to take a 
trip on the highway. 

Certainly, the coming of the multi- 
media age presents big opportunities and 
huge challenges for the creative indus- 
tries of ffhn mid television production, 
publishing, video and advertising. 

The important role film and television 
programmes are expected to play in the 
new era been underlined by the recent 
$I0bn takeover battle for Paramount 
Communications, owner of the Hollywood 
studio paramount Pictures. 

Tbe battle was won by cable television 
company Viacom, cre ato r of the MTV pop 
video music channel, which defeated QVC, 
the television shopping network headed 
by Mr Barry Differ, a leading Holly wood 
executive who wanted to use Paramount 
to build a multi-media empire. 

Pa ramount was sold for more than most 
Waff Street analysts thought it was worth 
because both bidders were g am blin g that 
the price of scarce Hollywood assets will 
rise in a multi-media age as the demand 
for good film and television content out- 
strips supply. 

At the same time, the increasingly 
global nature of tbe entertainment Indus- 
try - with satellites beaming sho ws to 
homes across Europe and Asia — offers 
new profit opportunities to film produc- 
ers, According to Veronis, Sutler, a New 
York investment bank, Hollywood's inter- 
national sales wfll make up just over 50 
per cent of the total by 1997, compared to 
% per cent in 1987. 

But while tbe film and television indus- 
try's multi-media future looks rea sona bly 
bright, there are large question mMta. 

First, some analysts suggest that the 
inter-actrve era may simply shift con- 
sumption patterns - for example, from 
renting videos to pay-per-view TV films - 
rather than increase the number of hours 
people spend watching movies and films.. 

Second, the creation of the information 
superhighway could remove some of the 
power of the large Hollywood studios. In 
a world of potentially Itarittess television 
channels, low budget programmers, mak- 
ing me of cheap digital production ami 
editing tools, could take precise aim at 
market niches, fragmenting the general 

TV audience. , . 

A forerunner of this move from broad- 
casting to “narrow-casting" already exists 
today in the US. Cable television, which 
has mushroomed over the past decade and 


a half, -and now reaches 60 per cent of 
American homes, offers viewers several 
dozen channels, indudmg niche networks 
devoted to country mode and sports. 

Gable has cut the audience tor conven- 
tional, broadcast television channels - 
NBC, ABC and CBS, together with the 
more recent Fox system - from around 90 
per cent of viewmhip at the start of tbe 
1970s to a little over 60 per emit now. 

The conventional broadcast networks 
are likely to suffer a further erosion of 
their audience as fibre-optics allo w man y 
more na r rowca s t channels to be pumped 
into the home, and as programme s are 
stored on servers which allow the viewer 
to fnw«nn up programmes when they 
want them, rather than being bound to a 
broadcaster's “prime-time' 1 schedule. 

But while the future may be tough for 
tbe networks, they seem unlikely to disap- 
pear altogether. Mr Michael Eisner, chair- 
man of Walt Disney, argues that “net- 
works will continue to bean integral part 
of television because consumers want 
quality, stru ct ur e, familiarity . . . many 
consumers will stiff want the networks to 
make their viewing choices for them.” 

Despite industry talk of a 500-channel 
future, Mr Eisner argues that there will 
be only 10 or so “great channels*' 
(whether their origins are in cable or 
broadcasting) which earn nationwide or 
local recognition and affection . 

However, the economics of the networks 



ComnufficatianssatBlitBMts oTTMo 


may have to change dr am a t i ca lly, since 
most of them rely far their profitability 
on advertising revenues. Bat in an inter- 
active world viewers may be even less 
prepared than now to sit through 
repeated showings of advertisements, 
breaking up their TV shows. ' 

Adver tise rs, for their part, are already 
shifting thetr campaigns from broadcast- 
tag to narrowcast in g, focusing much more 
precisely on the target audience they 
want to reach. 

For example, a newly-launched cable 
television channel, ESPN2, which covers 
sports popular among the young, such as 
snow-boarding, allows advertisers to tar- 
get sporty young nudes. But the multi- 
media age will also mean huge changes 
for the advertising industry. Some of the 
largest consumer advertisers say the 
growth of n a rr o we as ting means an end to 
the conventional strategy of running a 
few mass-market, lag budget commercials 
a year. They now need to create many, 
cheaper advertise m ents in different styles 
and moods far d iff ere nt audiences. 

Many new advertising o pp ortuniti es are 
also opening up. There is expected to be 
strong growth in “infomercials" - pro- 
grammes which a viewer can summon up 
to get informatio n abou t a product 

As inter ac tiv i t y develops, these could 
allow a potential car buyer to interrogate 
his TV screen about options an a vehicle 
and even book a test drive, with a sales- 
man delivering the car to his home. 

At this point advertising blends into 
television home shopping, an Industry 
which is stiff in tts infancy. At present, 
home shopping viewers have to pick up a 
telephone to order an item they want, 
rather than simply pressing a combina- 
tion of buttons on a television remote 
control. - 

They are also bound to the shopping 
channels’ programming schedules, rather 
than being free to b r o wse through tele- 
vised catalogues when they want But as 
interactivity develops, television home 
shopping could displace much of the con- 
ventional printed catalogue shopping 
industry and some conventional retailing. 

Traditional advertising agamies could 
lose oat if ' they do not react quickly 
enough to this rapidly changing world. 
For example, new rivals, some drawn 
from the world of television program- 
ming, are already experimenting with 
inter-active advertisements. 

But whatever the delivery method, the 
multi-media era will ca-todnly not mean 
the end of the- advertising industry; 
merely its rebirth in a new and poten- 
tially even more potent form, targeted 
closely at the individual viewer. 

As Mr Michael Schrage, an authority on 
the fatnre of US media, points out “There 
will be billboards along the information 


Martin Dickson 


Martin Dickson looks at the complicated regulatory maze on the US highway 

Roadblocks hinder free flow 


A great number of road blocks need to be 
removed before the information superhigh- 
way stretches unhindered across the US. 

At present, an immensely com p lica te d 
regulatory and legal maze restricts compe- 
tition between the various industries try- 
ing to secure a place on the highway. And 
the federal go ver nm ent has to establish 
public policy goals to ensure reasonable 
access to tbe network for all Americans. 

The central difficulty is that the frame- 
work governing America’s communica- 
tions industries reflects a world which in 
many respects is becoming anachronistic 
- where telephone lines were scarce 
resources and the industry was viewed as 
a “natural monopoly”. 

For much of the past century that 
monopoly was embodied in American Tele- 
phone & Telegraph, which provided local 
telephone services across much of the US 
(though other phone companies, notably 
GTE, proride services in a patchwork of 

other regions) and 

linked the nation 
together with its 
monopoly 
long-distance service. 

This settled, frame- 
work began to 
change in the late 
1960s and early 1970s 
when a small, 
upstart phone com- 
pany (railed MCI i 

Communications began to challenge 
AT&T’s hold on the long-distance market 
The conflict that developed between them 
played a large part far prompting an anti- 
trust investigation of AT&T which in 1984 
led to the court-ordered break-up of tbe 
group. AT&T was required to spin off its 
local operations into seven separate “Baby 
Bell” companies. Fearing that these would 
use their monopoly profits to compete 
unfairly in other markets, the court ban- 
ned tham from the long-distance market, 
the manufacture of equipment and infor- 
mation services. 

This left AT&T with: its long distance 
business, which had to compete against 
rivals such as MCI an a much more level 
playing field; its Bell Laboratories 
research arm: and its equipment manufac- 
turing operations. 

In 1991, the Baby Bells managed to get 
the courts to lift the bail on them provid- 
ing fa formati on services. However, they - 
and every other telephone company - 
remain barred under 1984 l egi sla t i on from 
owning mid delivering a cable television 
service in the area where they operate a 
conventional telephone service. 

The cable companies, which are regu- 
lated by soma state agencies and many 
municipal franchising authorities, have 
thug been able to remain de facto monopo- 
lies until now. 

Over the past few years market forces 
and te chno logical change have begun. bat- 
tering at this 1984 framework. State and 


federal regulators have allowed small, 
nimble rivals to cream off a fittle of the 
Baby Bells' business traffic, and MCI is 
now threatening to enter this area and 
bring to the local market the same compe- 
tition it introduced into long distance. 
Cable television companies are also threat- 
ening to provide alternative telephone ser- 
vices to domestic customers. 

The Baby Bells, for their part are get- 
ting into the cable business. In a landmark 
court case, Bell Atlantic last year won the 
right, to compete against cable companies 
in its own operating area, after success- 
fully arguing that the 1984 cable act 
infringed its right to free speech. Several 
other Baby Bells now have similar cases 
pending before the courts. 

The Bell companies are also redoubling 
their long-time campaign to be allowed 
into the long-distance market Ameritech, 
the Chicago-based local operator, is mak- 
ing this a quid pro quo for it opening up 


One important issue is how to fulfil a commitment 
. to “universal service” - allowing anyone to have 
a telephone service in their home at reasonable cost, 
no matter how remote their location - which has 
been embodied in US legislation since the landmark 
Communications Act of 1934 


its entire network in tbe state of ffhoois to 
competition. 

BellSouth Is arguing before the courts 
that AT&T should not be allowed to com- 
plete its $l2bn takeover of McCaw Cellular 
- the largest cellular phone operator in 
tbe US, and a wireless competitor to many 
Baby Bells - until the Ben companies are 
allowed to compete in long-distance and 
equipment manufacturing. 

However, this sniping on multiple fronts 
may be subsumed this year by comprehen- 
sive legislation now before Congress, 
which has the broad harirfng of the din- 
ton White House, though it may propose 
some modification to the two bills. 

Vice-President Al Gore, a long-time 
expert on telecommunications matters, 
has made the creation of the “information 
superhighway* an important plank of gov- 
ernment policy. 

The administration does not intend to 
finance tins itself, but It wants to dear 
away the road blocks to private sector 

One bill tbe so-called Markey/Fields leg- 
islation, would give new competitors, 
including the cable operators, the right to 
compete with local telephone companies 
and use their facilities on a non-discrimi- 
natory basis to interconnect with consum- 
es. 

The bill would also allow the federal 
authorities to over-ride the myriad state 
laws and regulations which govern the 
teiflpTirmg industry PM might im pede this 


goal. In return, the phone companies 
would be free to set up video services ta 
competition with cable, though they would 
stiff be barred firm buying local cable 
operators. The aim here would be to pre- 
serve two suppliers of multi-media ser- 
vices, rather than creating one new and 
yet more powerful local monopoly in each 
area. 

The second bill, tbe socalled Brooks/ 
Dingell legislation, would allow the Baby 
Bells to escape their chains and enter the 
manufacturing industry after a one-year 
wait and the long-distance market after 
five years. 

But while most interested parties are 
agreed that this is a sensible, broad frame- 
work for legislation, there are going to be 
many fierce battles over the fine print, as 
the protagonists fight for advantage. 

One important issue is how to fulfil a 
commitment to “universal service" - 
allowing anyone to have a phone service 
in their home at rea- 
sonable cost, no mat- 
ter how remote their 
location - which h^ n 
been embodied in US 
legislation since tbe 
landmark Communi- 
cations Act of 1934. 

The local tele- 
phone companies 
have achieved this 
■HMMi by subsiding their 
residential rates by overcharging business 
and long-distance customers. But they can 
no longer do this when they have lost 
their monopoly power to impose higher 
prices on business customers. 

At the same time, new local competitors 
will not be keen to pick up the universal 
service mantle, since their natural Instinct 
wfll be to focus on the most profitable 
customers. 

There is general agreement that a mech- 
anism to be found which ensures that 
all providers of basic services share pro- 
portionately in the cost of subsidies. 

MCI, for example, has suggested that 
each carrier should contribute a percent- 
age of its total telecommunications trans- 
mission and switching revenue. The 
money would be pooled and administered 
by an independent third party, which 
would allow customers to "spend” their 
u niv e rsal service benefit with tbe local 
service provider of their choice. 

But even defining what should consti- 
tute universal service in an interactive 
multi-media age could prove troublesome. 
Simply limiting it to a basic phone service 
would risk turning densely populated 
urban areas into information “haves” and 
rural areas into “have nets”. 

Yet until it becomes clearer what con- 
sumer demand really exists for the new 
services, it will be bard to deride what 
should be universally available. And these 
ideas are bound to change as services yet 
undreamt-of are added to the system. 




FINANCIAL TIMESTUESPAV MARCH 8 1994 


US COMMUNICATIONS 2 


Andrew Adonis looks at the seven regional Bell operating companies whose monopolies are under threat 


Baby Bells take action after storm warning 


The US Baby Bell operators are 
like the man who has just beard 
a hurricane warning. It could 
destroy his house and life, but, on 
the other hand, it might go off in 
a completely different direction. 
Either way, he is stunned, dreads 
the worst, and takes frenzied 
defensive action. 

For the seven local Bell operators, 
the hurricane warning is the 
effective abolition of their local 
monopolies, which is advancing 
much faster than almost anyone 
believed possible barely a year ago. 
At one extreme, the upshot could 


be the end of the Baby Bell system, 
as it currently exists, with two or 
three vast multi-media companies 
dominating local telecoms delivery 
across the US. 

At the other, a modified, 
somewhat more competitive, 
version of the status quo could last 
for years yet. 

Because of this, the Baby Bells 
are in a hyper-active state, dashing 


about in all directions in a bid to 
secure their valuable goods and 
chattels from destruction. Some 
are sending a large part of their 
possessions abroad. Almost all are 
seeking to lash themselves to cable 
or entertainment companies, the 
better to master the storm. 
Everyone is hoping to compete in 
the telecoms business in new 
regions of the US. 


To gauge the industry's state 
of mind you need only compare 
the extreme reactions. “The 
changes coming wiQ dwarf the 
break up of the Bell system a 
decade ago. We’re going to have 
a few large companies, probably 
in the form of consortia." said Mr 
Richard Notebaert, vicfrchairman 
of Ameritech, which covens I2m 
subscribers in the Midwest Mr 


Jeff Subin. chief finance officer 
of Nynex, which covers the 
north-east, is gazing at a different 
crystal ball: “The world will be 
much less different in ten years 
time than many think - it’ll be 
like the airline industry, where 
everyone has gone down different 
highways and byways but still 
ended up in roughly the same 
business.” 


The collapse last month or the 
$21.4bn merger between Bell 
Atlantic, the largest Regional Bell 
Operating Company (RBGO by 
access lines, and TCI, the largest 
cable television operator, gives 
succour to Mr Rubin. But even he 
went on to predict that ID years 
hence Nynex could be drawing 
“between a quarter and a half" 
of its revenues from overseas 


operations. At the very least, the 
Baby Bells are going to be doing 
"same business” on a far broader 
canvas than now. 

The RBOCs face a threefold 
challenge: regulatory reform at 

home: technological advance, 
bringing new media (such ns 
cellular and broadband! on stream 
and promoting convergent* 
between the existing media of 
telecoms, computing amt 
entertainment: and international 
liberalisation, opening up the world 
to US telecoms operators of all 
kinds as never before. 


■ REGULATION 

Legislation may end easy life 


T he Regional Bell Operat- 
ing Companies (RBOCs) 
have lived a fairly shel- 
tered first decade. Hived off 
from AT&T upon the divesti- 
ture of “Ma Bell" in 1984, they 
retained their local monopolies 
while AT&T slogged it out in 
the long-distance market with 
MCI. Sprint and others. Bene- 
fiting from generous access 
payments from the long- 
distance carriers on the one 
hand, and guaranteed mini- 
mum rates of return by state 
regulators on the other, they 
have had an easy and affluent 
decade. 

Some have had it better than 
others, depending largely on 
the relationship with their 
local state regulators. But none 
has faced competitive chal- 
lenges on a par with AT&T in 
the long-distance market 
That looks set to change. 
Legislation now before Con- 
gress. which appears likely to 
pass into law, would repeal the 
cable-telephone cross-owner- 
ship rules, allow the RBOCs to 
compete in the long-distance 
market, pre-empt state laws 
that prohibit e nt ry into local 
telephone networks (so that 
local phone competition 
becomes federal policy), and 
compel the RBOCs and other 
local operators - of which 
there are more than 1,000, most 


of them tiny - to provide new- 
comers with equal access to, 
and inter-connection with, 
their networks. 

For the RBOCs the key legis- 
lation is the Markey-Fields Bill 
covering local access, which 
would enforce local competi- 
tion, allow RBOCs to buy cable 
cable systems outside their 
areas and upgrade them for 
telephony, while banning them 
from buying cable systems 
within their service areas. 
They would, however, be 
allowed to upgrade their esost- 


ln the past few months 
virtually all the Baby 
Bells have announced 
large investment 
programmes 


ing networks to offer broad- 
band services - very likely in 
competition with another 
broadband local operator. 

Assuming that the legisla- 
tion passes, the RBOCs are 
more or less obliged to pursue 
three policies. First to upgrade 
their existing networks to offer 
broadband services. Second, to 
enter into partnerships with 
cable companies to offer broad- 
band services elsewhere. And 
third, to cut costs as fast as 
possible, since however 


friendly their existing state 
regulators may be, they will 
need to be lean and fit for the 
competition around the comer. 

Accordingly, in the past Dew 
months virtually all the 
RBOCs have announced large 
investment programmes, 
swingeing job cuts (70,000 jobs 
have gone in the last year), 
and deals - accomplished or 
prospective - with cable and/or 
entertainment companies to 
develop broadband. Even as it 
announced the breakdown of 
its TCI venture. Bell Atlantic 
stressed its continued commit- 
ment to cable alliances work- 
ing to the same end. 

It is not enough to build alli- 
ances. A complex process of 
cable franchise dealing will 
also be necessary because of 
the patchwork nature of exist- 
ing cable operations. Los 
Angeles alone has 40 cable 
companies while Chicago has 
115 franchises. Says Mr Tim 
Brian, a planning director at 
Jones Cable, a cable operator 
covering 2m homes: “Almost 
our entire strategy is to 


expand, to exchange franchises 
and to achieve rationality and 
critical mass by clustering our 
networks.” 

Take US West, the Denver- 
based RBOC covering 14 west- 
ern states. Last month the 
company announced plans to 
build a fibre and coaxial net- 
work at the rate of 500,000 cus- 
tomers a year from next year. 
Company strategists insist the 
investment is not just about 
broadband. It would be needed 
in any case to increase net- 
work flexibility and the ser- 
vices offered to traditional 
phone customers. 

Last year US West bought 25 
per cent of Time Warner Enter- 
tainment for $2J3m in a com- 
plex deal that will enable Time 
Warner, the second largest 
cable operator after TCI, to 
upgrade its existing systems 
and give US West the opening 
to export its telecoms know- 
how to sizeable networks in 15 
cities (against the six in which 
US West currently operates). 

Significantly, it is Time 
Warner's cable networks, not 


its ontprtflinmpn t wares, that 
US West wanted most 
urgently. The RBOCs' first pri- 
ority is to go fbr each other’s 
core business and that of the 
cable companies not allied to 
them, although in the process 
they will be building networks 
able to cany a new range of 
services. Says Mr Chuck Lillis, 
US West’s chief planning offi- 
cer: “The Time Warner deal is 
essentially about giving us 
more networks. Of course, 
they've also got the best stu- 
dios in the country, and the 
longer you go out in time, the 
more it is about having access 
to their programming and 
products.” 

However, the regulatory 
changes are as much evolu- 
tionary as revolutionary. For 
all the RBOCs, competition is 
already a fact of life in the 
business market because of the 
activities, permitted in most 
states, of “competitive access 
providers” (Caps) who offer 
direct fibre links to the 
long-distance carriers for 
larger businesses in cities. 


Ameritech, for one, insists that 
nearly half of its revenue is 
already subject to competition. 

MFS, the most aggressive 
and successful of the Caps, pro- 
vides a local fibre service to 
businesses in 14 cities and has 
plans to move into another 
nine soon. Its ambitions do not 
stop there. It has just started a 
switched local exchange ser- 
vice In New York, which it 
expects to extend it to all of its 
US networks later this year. 

“We're not content with 
being a Cap,” says Mr Royce 
Holland. MFS president. “We 
want to be co-carriers with the 
RBOCs, serving all businesses 
- and we intend to be in 60 to 
65 cities in the US within three 
years.” MFS competes on price 
and quality, with the second 
often the more important “In 
our most successful markets - 
New York, Chicago and Wash- 
ington - high capacity private 
circuits are often being sold 
below cast at the moment,” 
claims Mr Holland. “But our 
reliability makes us attractive 
to businesses that can’t afford 


delays and failures.” 

The RBOCs have not been 
slow to take up the Cap chal- 
lenge. Mr Richard Jalkut, chief 
executive of Nynex's New York 
operations, estimates that the 
Caps have taken about 60 per 
cent of his New York private- 
line business. “They have 
turned us upside down." he 
concedes. “We are doing things 
now which we had convinced 
ourselves three or four years 
ago were impossible.” These 
include the provision of 1-5 
MBit circuits within 24 hours. 


In 1973, New York 
Telephone had 125,000 
employees. Now it has 
39,000 and there will be 
30,000 in live years 


which a few years ago used to 
take Nynex six months. “It has 
cost us a lot of revenue, 
because we have had to bypass 
ourselves in the dial-tone [pub- 
lic switched service] business, 
but the market is growing at 
an incredible rate and we are 
holding our own with new 
products.” 

Nynex has been a notably 
innovative operator in terms of 
products. In 1992, the New 
York business launched a pro- 
prietary software product - 


Enterprise - giving businesses 
direct control over their own 
network construction. Mr 
Jalkut claims it has started to 
reverse the loss of market 
share to the CAPs. It is taking 
the same approach to the resi- 
dential market, ahead of com- 
petition. Last year it was the 
first RBOC to launch a vo'tee- 
dialling service, and has a host 
of new services up its sleeve. 

As for costs, back in 1973 
New York Telephone had 

125.000 employees. Now it has 

39.000 and there will be 30,000 
in five years. “It's no longer a 
question of what the regulator 
will let you get away with on 
your cost base,” says Mr 
Jalkut “It's what your compet- 
itors' costs are. Unless you can 
beat them, you're sunk.” 

Another element must be 
added to the equation - the 
entry of the long-distance car- 
riers to the local business, 
from which they were excluded 
a decade ago. MCI. the second 
largest has already jumped in 
with an announcement of a 
$20bn investment over six 
years to build local networks. 
AT&T is also there already, 
through its purchase last year 
of McCaw Cellular, one of toe 
largest mobile operators, 
which it is rapidly integrating 
into its mainstream service 
offerings. 


* 1 


i 



TECHNOLOGY 


The stuff of science fiction 


Al Gore: against haves and have-nots in the superhighway world 


“It's the stuff you read about 
in science fiction,” runs the 
voice-over in Bell Atlantic's 
latest television ads. All the 
RBOCs are talking excitedly 
about convergence, broadband 
and multi-media, and rubbish- 
ing the plain old telephones 
(pots) as relics about to hit the 
scrapheap. 

It is important to distinguish 
two different processes at 
work: regulatory changes 
allowing companies to offer 
services over their systems 
that other people were offering 
before; and the construction of 
broadband networks bringing 
new inter-active services on 
stream. The two get blurred, 
since the first process inevita- 
bly requires some network 
upgrading. But allowing tele- 
phone companies to start sup- 
plying cable TV, and vice 
versa, provides only a small 
number of consumers with ser- 


The seven regional Bell companies 



Access 

fines' 

Operating 
revenues pSbnJ* 

Bel AtatatiJc 

Philadelphia. Pennsylvania 

18 . 181 m 

10.943 

BeffSouth 

Atlanta. Georgia 

18.109m 

12.412 

Amerttech 

Chicago. (Knots 

17.001m 

9.799 

Nynex 

New York NY 

15.899m 

11.540 

Pacific Telesis 

San Francisco 

14.551m 

8.910 

US West Communications 
Englewood, Colorado 

11345m 

8J24 

Southwestern BeS 

San Antonio, Texas 

12.803m 

7.759 


1 As at Oaomftor 3V i Wfc 2 1082 

vices they could not procure 
before. 

In reality, however, the 
upgrading planned by the 
RBOCs will take them far 
beyond the stage necessary to 
offer cable TV. Indeed, only 
one of the RBOCs - Bell Allan- 


OVERSEAS EXPANSION 


Eyes on investments abroad 


Privatisation and liberalisation 
are advancing across the 
world. They are moving fastest 
in cellular mobile services, 
which are ready provided on a 
competitive basis in most of 
Europe and much of Asia but 
they are extending rapidly to 
fixed-wire services. The RBOCs 
are exploiting opportunities in 
both fields. 

Again, there is no uniform 
picture. "Our overseas strategy 
is a privatisation strategy,” 
says Mr Andres Bande, presi- 
dent of Ameritech's interna- 
tional division. By contrast, Mr 
Dick Callahan, president of US 
West International, who is 
actually based in London, 
stresses: “We emphatically do 
not have a privatisation strat- 


egy. Ours is based above all on 
wireless and cable local net- 
works." Nynex’s Mr Rubin 
splits the difference: "We are 
looking at all opportunities, 
and certainly don’t want to get 
typecast as providers of only 
one or two types of service." 

The Baby Bells' existing 
operations underline the diver- 
sity. While Southwestern Bell. 
Nynex and US West have 
invested, heavily in UK cable 
TV and telephone networks. 
Ameritech and Bell Atlantic 
have kept clear and been on 
the privatisation trail. (They 
are Joint partners in New Zea- 
land and are active elsewhere). 
Pacific Telesis has been con- 
centrating on wireless. As Bell 
Atlantic's Mr Smith puts it: 


Arrowlink Corporation 

Corporate Mission 

To be a premier supplier of 
Mobile/Portable 
Voice and Data Products 

Products include; 

Intelligent Communications Controllers 
Automatic Vehicle Location Systems 
Touch Screen Terminals 
Wireless LANS 
Ruggedised Mobile Terminals 


UK Office: 

Tel: 0628 478605 Fax: 0628 478606 


“Our strategy abroad is simple 
- to export what we do well 
here.” 

BellSouth, the largest of the 
RBOC's by revenue, is one oE 
the broadest ranging in its 
international portfolio. Its 
activities include a stake in 
Optus (the main challenger to 
the state fixed-wire operator in 
Australia), an $80ra mobile 
data transmission network in 
France (being built with 
France Telecom, the state oper- 
ator), and a stake in a cellular 
network in Germany. 

Overseas cellular licences 
are a field of marked conten- 
tion between the RBOCs. At 
least three RBOCs were 
looking for partners with 
whom to bid for the new GSM 
digital licence in Italy. 

In terms of variety, US West 
is not far behind BellSouth. It 


has cellular operations In Rus- 
sia and eastern Europe, and Is 
pitching for a basic line-con- 
struction contract in India. In 
the UK it is operating com- 
bined cable TV/telephone net- 
works and has a 50 per cent 
stake in Mercury One-2-One, 
the UK's new PCN cellular net- 
work. It intends to take home 
the experience gained on both 
fronts. Lessons learned with 
PCN will be particularly valu- 
able fbr its ambitions with PCS 
- the US equivalent of PCN. 

“There’s room for us all," 
says Bell Atlantic’s Mr S mith. 
And not just abroad. As one 
RBOC executive noted with a 
smile, in the US long-distance 
business AT&T has been cut 
down to about 70 per cent mar- 
ket share since 1984, yet Its 
revenues have grown every 
year. 


. sf; tv \ T-r-.r"/- 

V&-i ?■>>': v**., i ; . '1.'... 

<n. i‘ v-.« ’ 




Sounc US Tekrphone AaodnOon 

tic - appears to be seriously 
experimenting with technology 
that would simply upgrade 
existing copper wire to carry 
video and even that company’s 
executives privately concede 
that it is no more than a tran- 
sitional technology. The vogue 
is for full broadband networks, 
which appears in most cases to 
mean fibre to the kerb and 
coaxial cable into the home. 

The sums about to be spent 
on network upgrading are 
eolossaL By one estimate. US 
telecoms operators are plan- 
ning to spend around $20 bn a 
year between them. But when 
it comes to identifying the new 
services, the picture becomes 
more fuzzy, once you get past 
video-on-demand and still more 
cable channels. 

Shopping and travel services 
are the most popular candi- 
dates for the first explosion of 
new inter-active services. Says 
Mr Raymond Smith, chair man 


of Bell Atlantic: “1994 and 1995 
will see the first transactional 
shopping services - there's 
already a $55bn catalogue 
shopping business, and the 
market could grow like wild.” 

Health and educational uses 
also feature prominently in the 
rhetoric, though estimates of 
how fast the market will 
develop vary wildly. State by 
state a plethora of on-line edu- 
cational services have sprung 
up, and in the bid to present 
themselves as friends or uni- 
versal service without the need 
for unwieldy regulation, most 
of the RBOCs are promising 
Congress they will provide free 
or reduced-rate broadband con- 
nections for educational insti- 
tutions. 

Mr Bob Fuher, head of US 
West’s multimedia group, high- 
lighted four sources of revenue 
as critical for the new broad- 
band operators: entertainment, 
communications, shopping and 
games. “It's on the information 
services side that there's a 
weak link,” he said. “We are 
stiff searching for the anchor 
information services that will 
attract the market” 

All of the RBOCs have broad- 
band experiments past present 
or future. Accounts conflict 
but all agree that the more 
starry-eyed projections of an 
explosion in demand for new 
services are off-beam: every- 
thing will depend upon getting 
the services to market at prices 
much lower than those gener- 
ally envisaged. 

The RBOCs are also grap- 
pling with the issue of univer- 



ram 

SpScing the cable: a Nynex techni cia n at work in New York Pkan jw* emm 


sal service for broadband - 
Vice-President Al Gore's insis- 
tence that there should not be 
information haves and have- 
nots in the superhighway 
world. Every operator has its 
own solution, and it is becom- 
ing one of the most conten- 
tious issue! In Congressional 
deliberations about broadband 
and regulatory reform. 

More immediate than broad- 
band, however, is a further 
competitive Hurry in the cellu- 
lar mobile business. The Fed- 
eral Communications Commis- 
sion is set to auction more 
than 400 licences for Personal 
Communications Services 
(PCS) next year, and competi- 


Face to face: AT&T's Videophone 2500 which sends moving pictures of 
eaOers as wall as their voices 





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71*8 convergence of office systems, information technology and telecommunication has 
been driven by deregulation and global competition. Cheap microelectronics and networidna 
have made these changes possible. Publication of this survey will be timed to colnchteurfth 
CeBIT in Hannover, Germany and UnKorum In San Francisco U.S.A. 

For more Information on FT technology surveys contact: 

AUCIA ANDREWS on 

Tel: 444 (O) 71 873 3565 Fax: +44 (O) 71 873 3062 


tion for the licences will be 
intense. RBOCs will be limited 
in their capacity to bid for 
licences in areas where they 
already have cellular 
operations, but there are no 
such limits on licences cover 
ing new areas. 

A rush is on to form bidding 
and operating consortia. One 
RBOC - San Francisco-based 
Pacific Telesis - has even split w 
itself into two, moving its cel- 
lular activities into a separate 
operator which is about to be 
spun off into an entirely sepa- 
rate company. That way it 
hopes to maximise its value 
and increase its bidding poten- 
tial 


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S12S, 000,000 
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T r v " 






US COMMUNICATIONS 4 


The break-up of the old AT&T 
company in 1984 was largely 
intended to stimulate competi- 
tion in the US long-distance 
teleco mmunica tions market. 

That now appears a conser- 
vative goal In the US - as in 
the UK, which licensed its first 
long-distance competitor to its 
former monopoly in the same 
year as divestiture - the policy 
emphasis is now on creating 
the conditions for competition 
in the local network, which 
was almost universally 
regarded as a natural monop- 
oly in the mid-1980s. At that 
time, however, even the idea of 
a battle in the long-distance 
market was near revolution- 
ary. with loud cries of “waste" 
and "needless duplication". 

Few raise them today. Spend- 
ing by the long-distance earn- 
ers on advertising is colossal: 
AT&T alone spends about 10 
times as much as BT on adver- 
tising, as a proportion of turn- 
over. There is also public scep- 
ticism about the savings to be 
gained from switching opera- 
tors for short-term savings; so 
much so that the theme of 
much AT&T advertising is -the 
futility of switching from one 
carrier to another carrier to 
save a pittance. 

But the effect of competition 
in increasing the range and 
quality of services is undenia- 
ble. So is its impact on prices, 
however little they may vary 
between operators at any one 
time. The beneficiaries have 
not just been customers using 
the public networks, but also 


Andrew Adonis discusses the intense rivalry between the long-distance carriers 

Competition for connections gets fiercer 


businesses using leased lines. 
According to a report by the 
UK trade and industry depart- 
ment last month, the prioe of 
long-distance leased lines is 
barely a fraction of that 
charged by European opera- 
tors. 

Three companies operate 
national long-distance net- 
works - AT&T, MCI and 
Sprint. There is also a host of 
re-sellers. At one stage New 
York boasted around 100 
long-distance operators, includ- 
ing re-sellers. The ranks of re- 
sellers have thinned as mar- 
gins in the long-distance busi- 
ness have fallen, but they can 
be expected to spring to life 
again as high- mar gin interna- 
tional traffic is fully opened to 
the re-sale market 

AT&T. MCI and Sprint divide 
the market roughly 70:20:10 
between them. Since a rapid 
loss of market share in the 
late-1980s, AT&T has been 
holding its own. “The market 
structure is remarkably similar 
to other businesses with a for- 
mer dominant supplier,” says 
Mr Alex Mandl, chief executive 
of AT&T's communications 
systems division. "As soon as 
you have competition of any 
seriousness, a fifth of the mar- 
ket will go in its direction”. 



When the fleet’s In town the fines are hum mi n g . Three co m pa nie s operate national long-distance networks - AT&T, MCI and Sprint 


MCI and Sprint are highly 
serious competitors. Says Mr 
Gerald Taylor, MCI vice-presi- 
dent responsible for marketing: 
“The industry has moved from 
a commodity business to a 
branded products and services 
business. Ten years ago we had 
just three products, now we 
have 300 - it’s just like packag- 
ing and selling soap powder, 
only our ingredients happen to 
be technology.” 

The key is to get to the mar- 
ket first. MCTs triumph in the 


late- 1980s was its "Friends and 
Family” calling plan, giving 
residential customers reduced 
rates for frequently-dialled 
numbers. It was similarly 
adroit with its "1800 Collect” 
service. “We got there 12 weeks 
before AT&T, and that 12 
weeks was utterly critical.” 
says Mr Taylor. 

Mr Mandl does not dissent, 
claiming that "competition is 
at least as important as tech- 
nology in getting services to 
consumers". The opportunity 


to re-sell capacity is not 
enough. “There have to be 
rival networks if the operators 
are going to be able to craft 
their own services and break 
the monopoly mentality”. 

Aside from the battle for 
existing long-distance busi- 
ness. two trends are evident 
First, like the soap powder 
manufacturers, the 
long-distance carriers believe 
their products and branding 
are for export. AT&T is the 
most ambitious, with its 


“world partners” venture aim- 
ing to provide global services 

to multinationals through an 
upgraded "backbone” network 
and K pprial r elationships with 

carriers worldwide. 

Although its rhetoric is of 
competition with existing 
monopolists in Europe and 
elsewhere, probe gently and 
there is a readiness to work 
with almost anyone prepared 
to market AT&T services. “In 
some countries we will partner 
with existing state monopo- 


lies,” Mr Mandl concedes. "On 
balance we would prefer to 
work with them if we can pro- 
vide an attractive offering.” 

MCI hopes to accomplish the 
same object in partnership 
with British Telecommunica- 
tions, the UK operator with 
whom it si gne d a $f).3bn alli- 
ance last year. Under the 
arrangement. MCI is to take 
the lead in America, and BT 
beyond. But BT is learning 
marketing at MCTs feet: it has 
recently introduced a version 
of “Friends and Family” in the 
UK, and that is expected to be 
only the first of the exports. 

The second trend is the entry 
of the long-distance carriers 
into the US local market. Argu- 
ably AT&T is already there, 
through its purchase last year 
of McCaw Cellular Communi- 
cations, among the largest US 
cellular operators. Both AT&T 
and MCI have declared their 
intention to take part In the 
bidding for PCS licences due to 
be auctioned later this year. 
"The objective is a national 
seamless service, as a replace- 
ment for the ‘plain old tele- 
phone service* of today.” says 
Mr Laurence Harris, head of 
MCl’s wireless communica- 
tions group. “There are plenty 
of partners coming to us seek- 


A pple Computer's intro- 
duction this month of 
the first PowerPC Mac- 
intosh personal computers will 
blow tfae starting whistle ou 
what promises to be one of the 
toughest technology competi- 
tions in the history of the per- 
sonal computer industry. 

On the PowerPC team, 
together with Apple, will be 
Motorola and International 
Business Machines. Together 
the three companies have co- 
developed a microprocessor 
architecture which they aim to 
establish as a new industry 
standard for PCs. 

They face the reigning 
champions of the PC micropro- 
cessor market, Intel and its 
league of PC-manufac taring 
technology partners, led by 
IBM. 

One of the most carious 
aspects of this contest is that 
IBM is playing on both sides. 
Long a close ally of Intel, IBM 
is the largest manufacturer of 
Intel microprocessor-based 


PCs and says it intends to 
remain so. However, the com- 
puter company is also a co-de- 
veloper and manufacturer of 
PowerPC and has stated that 
the new technology is central 
to its future strategy. 

This ambiguity aside, the 
contest is a straightforward 
shoot out between PowerPC 
and Intel’s Pentium, the latest 
version of its long-established 
“x86” microprocessor lineage. 

PowerPC has a Reduced 
Instruction Set Computing 
(RISC) architecture. Theoreti- 
cally this suggests that it may 
be faster than Intel's Pentium. 
However, PowerPC lacks the 
critical software base of Intel’s 
microprocessors and its perfor- 
mance in commercial systems 
is relatively unproven. 

In contrast, Intel’s Pentium 
has a huge head start in tfae 
marketplace as the successor 
of the widely used Intel 388 
and 486 microprocessors, the 
“brains” of most PCs in use 
today. 


Louise Kehoe previews the start of a tough technology contest 

PC competitors on their marks 


The Intel chips run Micro- 
soft’s popular MS-DOS and 
Windows operating system 
software and the thousands of 
application programs designed 
to work with them. 

Apple’s debut of PowerPC- 
based Macintosh computers 
will be a critical test of the 
new technology. Apple is 
expected to launch three 
“PowerMac” co m p ute rs rang- 
ing in price from about 22,400 
to about $4,000 to replace its 
“Quadra” models aimed at 
business users. Apple says 
that it intends to convert 40 
per cent of its Macintosh ship- 
ments to PowerPC by year’s 
end, with the complete change- 
over occurring within three to 
four years. 

For Apple, the PowerPC rep- 


resents an important transi- 
tion from Motorola's 68000 
line of microprocessors, which 
it has used since the introduc- 
tion of the Macintosh com- 
puter 12 years ago. 

Apple needed a new micro- 
processor to keep pace with 
competitors using Intel’s 
chips, bnt its decision to join 
with IBM and Motorola in 
developing a brand new archi- 
tecture makes the transition 
more risky. 

PowerPC’s may have a speed 
advantage over Pentium. How- 
ever. among existing Apple 
customers tfae PowerMac may 
be judged as much for its com- 
patibility with existing Macin- 
tosh software as for its raw 
performance. 

This could give the PowerPC 



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Analyst 

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a rough start in the personal 
computer market According 
to industry reports, about 90 
per cent of existing Macintosh 
software will run on the new 
Apple computers, but only via 
emulation software which wiD 
significantly slow down per- 
formance. 

Thus, although PowerPC 
may be theoretically capable 
of outpacing the Intel Pen- 
tium. that may not be the 
practical experience of the 
first users of personal comput- 
ers based on the new micro- 
processor. 

Apple says that aboat 75 
application programs designed 
specifically for the PowerMac 
will be available when the 
computers are introduced, and 
that hundreds more are in 
development. 

However, software compa- 
nies are unlikely to make 
development of applications 
programs for the PowerMac a 
high priority. Apple says that 
it expects to sell up to lm 
PowerMac computers in the 


first 12 months. While this 
would be a significant achieve- 
ment for Apple, it presents a 
relatively limited market for 
software designed solely for 
the P o werMac. 

In contrast. Intel expects 
about 15 per cent of all PCs 
sold this year, or approxi- 
mately 7m units, to be based 
on Its Pentium chips. Most of 
the remaining 40m PCs will 
contain Intel 486 microproces- 
sors. Thus Intel-based PCs rep- 
resent a far larger potential 
market for software applica- 
tions than the PowerMac. 

Therefore even if the Power- 
Mac exceeds Apple's expecta- 
tions. it will hardly make a 
dent in Intel's dominance of 
the personal computer micro- 
processor market. Intel and its 
backers, meanwhile, are tar- 
geting Apple's existing market 
share, aiming to take advan- 
tage of the uncertainties cre- 
ated by the transition to Pow- 
erPC. 

However, Apple is not alone 
in its plans to offer PowerPC- 


based personal computers. 
IBM already offers a computer 
work station based on the 
PowerPC microprocessor. The 
company is expected to intro- 
duce a broad range of “Power” 
machines for more general 
use. including portable PCs. 
However, ft is not yet clear 
how IBM will position these 
prod nets relative to its strong 
Intel-based PC product line. 

IBM is also actively seeking 
PowerPC endorsements from 
other computer makers. The 
first. Canon of Japan, said 
recently that it will use Pow- 
erPC in a new range of office 
computers and work with IBM 
and Motorola to develop ver- 
sions of PowerPC for use in 
hand-held and notebook-shed 
computers. 

In Taiwan. PowerPC has 
attracted great interest among 
PC circuit-board manufactur- 
ers. However, these sub-sys- 
tem manufacturers are 
unlikely to take a leadership 
role in developing the Pow- 
erPC market. Instead, they 
tend to wait for demand to 
develop in the US market. 

IBM says it has sold more 
than 800 PowerPC “reference 
specifications” to PC manufac- 
turers and software developers 
interested in developing prod- 


i ag the MCI brand name, and 
we are far ahead as anyone 
in the industry in terms of 

capacity- - , 

If regulatory reform uikws 
them into the fixed-wire local 
market, the low-distance carri- 
ers can be expected to exploit 
opportunities rapidly. They are 
particularly interested in the 
business customers su success- 
fully exploited by competitive 
access providers iCapsl in 
recent years. “Wo need a duvet 
relationship with the end 
user.” says Mr Mandl. 

He talks equally enthusiasti- 
cally of AT&T's future involve- 
ment in multi-media. “We are 
not in the 'content' business.” 
he is careful to stipulate, "but 
we will have the ■broadband’ 
networks, plus storage and dis- 
tribution facilities, essential to 
anyone who wants to reach the 
mass market” 

However, in all fields, boat- 
tng the opposition is only one 
task. Growing the market is at 
least as important. "Since 1984 
our revenues have risen every 
year, because we are after 
growth above nil." says Mr 
Mandl. As Mr Taylor of MCI 
notes, in the past decade aver- 
age prices have fallen by 50 per 
cent but the average telecoms 
bill has risen from $32 to $26.50 
in real terms. "Above all. com- 
petition has been about chang- 
ing peoples' attitude to the 
telephone and the cost of using 
it. Every advert ramming 
home the point that it's cheap 
to call helps to do it. whoever 
is paying for the ad.” 

nets around the new technol- 
ogy. Computers that adhere to 
these specifications will even- 
tually be able to run a smor- 
gasbord of operating systems 
and applications software, 
IBM says. Microsoft has 
announced plans to port Win- 
dows NT to the PowerPC, and 
IBM's nevr Workplace OS will 
run DOS. Windows, and OS/2 
applications ou tfae PowerPC. 
PowerOpen. another “multi- 
personality" operating envi- 
ronment, is being developed 
specifically for PowerPC 
systems by Apple and IBM. 

Together IBM and Apple atm 
to establish a 30 per cent share 
of the PC market for PowerPC 
by the end of the decade, leav- 
ing Intel with perhaps 60 per 
cent (the rest being clones of 
Intel microprocessors), down 
from about 80 per cent today. 

Thus while PowerPC may 
somewhat diminish Intel's 
market share, not even its 
most optimistic backers expect 
to overtake Intel's leadership 
in the microprocessor market 
in the short term. In the lon- 
ger term, the outcome of the 
PowerPC v Intel battle is 
likely to depend as much on 
software developers as on the 
relative merits of each type of 
microprocessor. 


Louise Kehoe on reasons for the collapse of the Bell Atlantic-TCI merger 

Better ride for the ‘little guy’ 

he unexpected collapse of the John Malone. TCI president, vous reaction to the deal. This up with Southwestern Bell in 


The unexpected collapse of the 
planned merger of Bell Atlan- 
tic and Tele-ffoinmunicatians. 
two of the largest and most 
aggressive companies in the 
US telephone and cable TV 
industries, has poured cold 
water on the frenzy of industry 
excitement surrounding the 
development of “information 
superhighways". 

The merger, announced last 
October and initially valued at 
between S20bn and $30bn, bad 
been touted as forming the 
“model communications com- 
pany for the information age”. 
Bell Atlantic, one of the most 
innovative of the US regional 
telephone companies, planned 
to acquire TCL the largest US 
cable television company serv- 
ing about 20 per cent of US 
homes. 

Bell Atlantic had planned to 
establish interactive cable tele- 
vision services within its 
region of operations, while 
adding telephony services to 
TCI’s cable operations in other 
parts of the country. The result 
would eventually have been a 
massive interactive multi- 
media communications net- 
work spanning more than 40 
states. 

By calling off their merger. 
Bell Atlantic and TCI have at 
least postponed the emergence 
of the first multi-media com- 
munications company with 
nati onal reach. What is not yet 
clear, however, is how much 
influence the “regulatory and 
market uncertainties" which 
Bell Atlantic and TCI say 
forced them to abandon their 
plans, will have on deployment 
of the much-touted “informa- 
tion superhighways". 

On the regulatory side, both 
Bell Atlantic and TCI blamed 
the Federal Communications 
Commission's recent decision 
to mandate a 7 per cent reduc- 
tion in cable television service 
prices for the collapse of their 
deaL 

TCI strongly criticised the 
FCC’s action as “unwarranted, 
excessively severe, and harm- 
ful both to the national tele- 
communications objectives 
promoted by the Clinton 
administration and, ultimately, 
to the interests of consumers”. 

The price rollback will 
reduce TCI's cash flow by 
about 2144m annually, said 


John Malone. TCI president. 
This significantly reduced the 
valuation put on the cable TV 
company in the merger talks, 
which had been calculated as a 
multiple of cash flow, he 
explained. 

“The FCC does not seem to 
appreciate the impact that its 
action will have on the ability 
of the cable industry to raise 
capital,” Mr Malone charged. 
The industry will be hampered 
in its ability to upgrading net- 
works to carry interactive mul- 


vous reaction to the 
significantly reduced the value 
of the shares that Bell was 
offering for TCI, putting the 
deal in jeopardy. 

Wall Street’s concerns about 
the huge investments required 
to create information super- 
highways and the potential 
returns on those Investments, 
together with uncertainties 
about the regulatory environ- 
ment, have also driven down 
the share prices of other US 
telephone companies. US West, 



Vabi hand sha ke: Bel Atlantic and TCI chiefs Raymond Smith and John Malone 


timedia signals, he said. “Z 
hope that the FCC will come 
back with some very strong 
inducements for upgrades and 
expansions.” 

Analysts noted, however, 
that the FCC’s action will 
effectively reduce the price 
that cable companies com- 
mand, encouraging acquisi- 
tions of the numerous smaller 
companies in the cable TV 
business. For the many towns 
and cities throughout the US 
served by these smaller cable 
companies, this could hasten 
rather than retard the arrival 
of interactive multimedia ser- 
vices. 

Moreover, the FCC cannot be 
given all the blame for the 
wreckage of the Bell-TCI plans. 
It appears that the companies 
faced a series of difficulties in 
consumatlng their merger. 
While TCI's value may have 
been diminis hed by the FCC 
action. Bell Atlantic's share 
price had already been driven 
down over the past four 
months, by Wall Street's ner- 


for example, has seen its share 
price decline by almost 20 per 
cent since mid-October, while 
BellSouth, another big investor 
in "information superhigh- 
ways” has fallen 10 per cent. 

Nonetheless, the lure of huge 
new markets for network traf- 
fic and services together with 
the unrelenting pace of tech- 
nology development are driv- 
ing rapid changes in the US 
communications industry. 
Other US telephone and cable 
television companies have 
vowed to push ahead with 
their plans to build interactive 
multi-media networks. 

US West, which last year 
acquired a 23 per cent stake in 
Time Warner’s cable business 
for S2.5bn, said that it still 
plans to invest $ltra to convert 
Time Warner cable systems 
into advanced communications 
networks. The companies are 
about to begin a field trial 
offering about 4,000 homes in 

Orlando. Florida, video-on-de- 
mand services. 

Cox Cable, which has teamed 


up wnn soumwestern aeu in a 
$4.9bn venture to build 
advanced networks, will also 
continue to push forward, the 
company said. 

"The decision of regulators 
or corporations may change 
the participants, but not the 
deployment of superhighway 
technology or the timing very 
much,” said a spokesman for 
BellSouth, which is involved in 
a joint venture with Prime 
Cable Management to upgrade 
cable systems in Las Vegas. 
Tfae telephone company, 
“remains committed to becom- 
ing a key participant". 

Ameritech is spending $4.4bn 
to convert its telephone net- 
work to carry video services 
over tfae next 15 years. “We 
intend to stay the course we 
have set,” said Richard Note- 
baert, Ameritech president. 
“Customers, not the industry 
or other forces, will set the 
pace for development or inter- 
active programming.” 

Even Bell Atlantic is deter- 
mined to press on, in spite of 
the merger collapse. The com- 
pany will seek mergers or alli- 
ances with other companies. 
“This would have been the alli- 
ance on a grand scale," said 
James CuUen, Bell Atlantic 
president “We’re going to have 
to look for opportunities on a 
smaller scale.” 

Bell Atlantic still expects to 
have a broadband, fibre-optic 
network in place to reach more 
than lm homes by the end of 
1995. and 8.75m homes by 2000. 
In iti ally, the network is expec- 
ted to carry basic cable ser- 
vices and vidco-on -demand. 
Later, other services such as 
home shopping, home banking 
remote education and video 
games may bo added. 

Some even see the collapse 
of the Bell Atlantic-TCI deal as 
a positive development because 
it might have deterred compe- 
tition in the emerging market 
for advanced multi media com- 
munications. 

"The end of this meiger Is 
not the end of the information 
superhighway, but the begin- 
ning of a superhighway wc can 

S ride ' M Senator 

Howard Metzenbauni, who Jud 
opposed the merger. "Without 

ffie Uttle guy is le^ likelv to 
get squeezed." 


* 


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FINANCIAL, TIMES TUESDAY MARCH 8 1994 . 


US COMMUNICATIONS S 


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and atectronioinal fortetkws: 


‘Personal digital assistants* have not yet caught on, says Louise Kehoe 

Tide may turn on smart devices 


Tbs goal of the mobile 

industry js to 

keep you in touch “any time, 
anywhere”. Whether or not 
this la an attractive proposi- 
tion, it seems to be the inevita- 
ble fate of many professionals 
In the not-too-distant ftcture. 

Already, many are toting a 
bag toll of communications 
gadgets: a cellular telephone, a 
pager and a notebook com- 
puter complete with telephone 
modem Combine the functions 
of these products, into a stogie 
device and. you have a “per- 
sonal oommunlcator ". 

It seemed a sure-fire winner, 
bat so far personal communi- 
cator products, also known as 
“p ers onal digital assistants”, 
have created more publicity 
than profits, to fact, they have 
been a dismal failure. 

Apple Computer's Newton 
was the biggest letdown. Her- 
alded as a product that would 
“change the way people live, 
and work", it turned out to be 
a product that changed little 
except the names of the top 


management executives at 
Apple. Tandy's Zoamer and 
AT&T’s Eo Communicator 
have also been slow sellers. 

Yet it may be too soon to 
write off the personal commu- 
nicator.. Advances in wireless 
data communications and soft- 
ware tor personal communica- 
tors promise to malm the next 

pmypitifi^ Of 

devices far more a t tra ctiv e 
than the first . 


Personal digital 
assistants have created 
more pubRctty than profits 

Apple Computer Is set to 
introduce a new version of 
Newton with improved com- 
munications capabilities and 
better T wmtwri tteg reco gnition 
software. AT&T, stung .by.ihe 
dis app oi ntin g sales of . the Eo 
Communicator, is redesigning 
the system, lowering foe price 
and transforming ~Jt/3nto 3 
mobile telephone wfctfrcom- 



XBM is said to be planning a 
family of per s onal c cnnmnnaca - 
tor products, designed, tor 
specific tasks. One model, far 
example, is. equipped with, 
voice recognition far dictating 
notes. Another is designed iter 
sending and receiving elec- 

fc mmift yngfl 

Motorola is about to enter 
the market with a personal 
communicator called Envoy 
that bas a bnfltto "Hf 1 " to 
send data both over telephone 
Ifngg ftnri over the Artfis net- 
work. Jointly owned by Moto- 
rola and International Busi- 
ness Machines, A ri l s provides 
wireless data messaging ser- 
vice in all large US metropoli- 
tan areas. Sony is also plan- 
ning to launch a personal 
/ywmuqnrifl afr fl - in Hw» OS this 

summer. ■ 

link Resources, a US market 
research group, predicts a 45.7 
per cent compound annual 
growth rate to sales of all types 
of "smart devices” 

over toe next five years, with 


C o n vergence has become 
toe b ug wor d of the US 
high-technology indus- 
tries as telephone, cable tried- 
don, computer and software 
companies all work toward 
creating high-speed, broad- 
band “information hig hw ay s” 
Ming homes, offices and 
schools. 

The notion that these for- 
merly distinct industries are 
maiding Into a ghat Iton m 
tion indnstry” has been 
buoyed by a plethora of part- 
nerships and alliances that 
crisscross Indnstry segments. 

Yet it Is fierce co anpetitinn , 
rather than a meeting of 
I minds, that is driving rapid- 
I A«nfn in toe US coannuinica- 
ttons sector and the results, at 
least to the short tans, maybe 
man chaotic than cohesive. • 

■■ 'EStetephane ■ companies tere- 


more 5m units being 

shipped to hrTgtnpq; users and 
consumers to the US to 1998. 
The second genoathm of per- 
- sonal connmmlcatocs will sdl 
well to wnhiip aagtl v es »ryi 
in the tq«aT l office tmd 
office markets. Link research- 
ers predict They anticipate 
several developments that 
could turn the tide far this new 
category at mobile oo mna n nca - 
tions devices. Most impor- 
tantly, the market researchers 
expect wireless data communi- 
cations services to proliferate 
and become less expensive. 

At present, Ardis, a joint 
venture of Motorola and IBM, 
and Ram Mobile Data, owned 
by BellSouth and RAM Broad- 
casting, offe r wireless data neb- 
works to large cities through- 
out the US. 

This year new Cellular Digi- 
tal Packet Data (CDPD) and 
wiMwmii “specialised mobile 
radio” (SMB) services - based 
an the. networks being imple- 
mented by McCsw Cellular and 
NexTel - wfll drive down user 


costs for -wireless voice and 
data ce mmmkations, T.ink 
Resources predicts. 

CDPD sends data to packets 
over cellular networks, “to the 
amplest sense, this technology 
sends blo c ks of information 
over the networks by utilising 
those milliseconds when chan- 
nels are idle between calls,” 
s ai d Brian Montgomery, of Cel- 
lular a CMMontfi i»ihit«r 
telephone service company 
that is a joint venture of 
McCaiw Cellular and Pacific 
Thesis. “It provides the capa- 
bility for a cost-effective data 
service because it doesn't 
require expanded system 
capacity.” 

An important advantage of 
CDPD is that it is an “open" 
standard, developed by a con- 
sortium of communication 
companies including McCaw 
Cellular Communications and 
PacTel Cellular, based on non- 
proprietary technology. This 
means that unlike existing 
wireless networks, it will be 
accessible to anyone with a 


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computer or personal cmnmu- 
nicator equipped with a CDPD 
modes, and that it can be Inte- 
grated easily with existing soft- 
ware for applications such as 
electronic maH Lotus Develop- 
ment, the personal computer 
software company, is develop- 
ing software to take advantage 
of CDPD networks. 

- NexTel, a little-known six- 
year-old New Jersey radio dis- 
patch service company, burst 
an to the scene as a potential 
new competitor to the emerg- 
ing market for wireless date 

(-nmmnrnmHfYng last year With 
its acquisition of mobile radio 
spectrum rights from Motorola. 
Using digital technology from 
Motorola. NexTel aims to cre- 
ate a nationwide network offer- 
ing voice, data and paging as 
well as its established dispatch, 
services . 

When low cost wireless date 
communications services are 

to place, mmifiipiiff*. 

tors wilt become really useful 
devices, enabling people to 
send or receive written (or 
typed) messages, access infor- 
mation services or simply use 
the device as a portable tele- 
phone. 

Another important impetus 
for personal communicators 
may be “intelligent net w o rk s” 
such as AT&T’s “PersonaL- 





Ka e p frig in touch at mB t fc w : new v r ai o n of th> Nowton Is on Hat way 


Ink”. Using software developed 
by General Magic, a California 
so ft ware company to which it 
holds a stake, AT&T plana to 
introduce TersonaLink" this 
summer. 

Among the features of Per- 
sonaLtok is tire ability to prior- 
itise messages. Perhaps more 
than anything els e ihi« may 
prove to be the “must have” 
attraction of personal commu- 


Louise Kehoe discusses convergence of computers with television 

Life in tomorrow’s fast lane 


engaged to a huge bottle with 
the cable television in dnstry. 
Similarly, the personal com- 
puter- industry is pitted 
against the makers of TV sets, 
broadcasters and aO who place 
their bets on TV as the pri- 
mary vehicle for dettverlnf 
multimedia services to the 
home. 

As author George Gilder 
puts ifc “The computer indus- 
try Is eanviergteg^ wfih the tele- 
vision industry in the same 
sense ftm* the automobile con- 
verged with the horse.” He 
predicts a period of “creative* 


Loui 


oe on ^c^ +o turn coupft^tatoes into couch commandos 


Superhighway into the home 


• -a-- -■ ’ i 

The computer, telecommunications 
and entertainment industries. are-OGOSpiP 
tog to turn “couch potatoes” Bffi “couch 
commandos"; to^ rouse- t^eviskavriawenb 
from their passive stupor told to get them 
“interacting" with the tube. 

Interactive television will bethe founda- 
tion of a JS^OObn digital consumer elec- 
tronics indus try by the turn of the bear 
tury, John Sculley, the former chairman of 
Apple Computer, has predicted. The pros- 
pect is sparking a frenzy of activity among 
US telephone, cable television, entertain- 
ment, computer, software and semiconduc- 
tor companies. 

Hollywood and High Tech are joining 
forces to promote I-TV. It “will usher to 
the multimedia age, inaugurating the elec- 
tronic superhighway Into the home,” 
enthuses Gerald "Levin, chairman, and 
chief executive of Time Warner, the enter- 
tainment group. 

“This is the “information infrastructure' 
that president Clinton has talked about,” 
says Richard McCormick, chairman and 
chief executive of U5. West, one of. ft® 
largest US regional telephone companies, 
which plans to expand its services, to. 
include I-TV. 

The multl-bfilhm dollar question, how- 
ever, is whether consumers will share the 
industry’s excitement about technology 
that transforms the firing room TV set 
into a “digital interactive multimedia ter- 
minal”. 

Today, fled g Kn g I-TV services offer view- 
ers the chance to participate in television 
game shows, to call fo otball plays before 
the quarterback wiatwa his move, order 
movies for instant viewing and register 
their opinions on issues cf the day. But is 
Biis pn o n g h to “change the use of televi- 
sion” as industry proponents maintain? 

Future plans include interactive shop- 
ping /»hflnng]s_ Picking fashions from 
Nordstrom, or home furnishings from 
Maoris could soon become as simple as 
pressing a few b utt ons on the remote con- 
trol. 

There are also grand plans for multi- 
media information services ranging from 
restaurant guides complete with video 
footage cf toe dining-room and a nutri- 
tional analy sis of the menu, to maps tha t 
can display the most scenic route or loca- 
tions of mns along the way. 

Perhaps the most intriguing aspect of 
I-TV, however, is the prospect of being 
able to design your own TV chan n e l , 
selecting all your favourite shows and pro- 
grammes reflecting your interests. Yon 
mi g ht , for example, want to watch only a 
re-run of Cheers, or all news broa dc a s t s 
concerning the war in Bosnia. 

But with so many different potential 
uses for I-TV, there is little consensus on 
what are the “killer applications" that will 
lure consumers to pay for this new tech- 


tovest the money.. -for any application 
hut games and 'edutainment*” they say. 

However, extensive consumer research 
conducted by HewIettJ*ackard suggests 
that educational applications, of interac- 
tive television, aimed at cbD^en, may be 
the initial a t t r a c ti on . -V . •• • 

• “Consumers are very drrewd.They real- 
ise that although games may have some 
novelty value they are not going to hold 
their Interest for long ” says Gasey Damns, 
HP’s interactive television market develop- 
ment manager. She wonders, however, 
whether toe <000 participants to HP's sur- 
veys, Interviews and focus groups may 
have been giving a “moral]; correct” 
answer by putting education at the top of 
their list of most i ntere sting applications. 

There is a widespread suspicion among 
market researchers that I-TV could take 
off aa a different note. They point out that 
pornographic films established the gubn 
- video rentals business and that on-line 
romance is a key attraction of computer 
information services. The same may be 
true of I-TV. 

While identifying the services that will 
persuade consumers to pay for 5-TV is 
difficult, market researchers have a 

• The most intriguing aspect of I-TV 
Is the prospect of being able to 
_. design, your own TV cha nnel 

dearer picture of what consumers do not 
.want Of moire than 8,000 people inter- 
viewed by H&M Consulting, a California 
market research firm, 91 per cent said they 
-wanted no solicitation on I-TV and 73 per 
dad said no to advertising; ~ 

■ -Consumers are afraid of the “Big 
Brother” factor. “They fear that their 
interaction habits - what they purchase, 
which p r ogra m mes they watch and which 
information services they access - will be 
monitored by service providers to target 
advertising at than,” explains Mark Mao- 

glllivra; of H&M. 

This poses a huge problem, because 
advertising is the primary source of reve- 
nue for the TV industry. Although adver- 
tisers relish the idea of being able to target 
consumers who are likely to buy their 
products, it seems that they win have to 
create new forms of advertising such as 
“tofomerdals” to catch their attenti o n. 

HP’s researchers also found that con- 
sumers are concerned that I-TV will mate 
TV shopping too easy, leading to Impulse 
buying. “A surprisingly high number of 
consumers said that they already ‘couldn't 
trust' family ‘members with home shop- 
ping TV channels which require a phone 
call to order goods,” notes Ms Lmnus. 
“What would happen if they could spend 
money just by punching a button on a 
remote control?” HP’s research subjects 


Games will be the “Trojan Horse” that 
bring I-TV into the home, providing an 
entrfie for information services, movies-cm- 
riwrmtiri TV shopping and 00x0* services, 
analysts at Salomon. Brothers predict. 
“Consumers simply are not willing to 


The biggest question hanging aver LTV, 
however, is whether people wfil find the 
time to use it initial response from view- 
ers offered “movtemHtemand” service has 
been mixed, with most consumers making 
little use of-it 


hi Mitiftm to the -uncertainties of con- 
sumer response, severaLeccncmic, regula- 
tory and technical obstacles stand in the 
way at widespread ayaflahfljty of interac- 
tive telerisian serrices. ; 

■ Defivertog interactive TV to the home 
will require huge tavestmejits to optical 
fibre mHwi ea p a fr ta of ca riyto g hundreds 
cf different TV signals as well as ccanput- 
ers to control the i nter ac tive network and 
store massive quantities of tfatafor multi- 
metfia’fnformatkm services. Viacom, one 
of the Jmgest US cable TV operators, esti- 
mates the total industry's costs at more 
than $30bn. 

■ Cable TV and telephone companies are 
vying for the role of I-TV providers, yet 
neither industry has networks that are 
well sotted to the task. While telephone 
networks have the two-way conunn&icar 
tion capab i lity and sophisticated switching 
systems needed for LTV, they lack the 
broad band width needed for hundreds of 
video signals. Cable TV networks have 
higher capacity, although most will need 
to be upgraded for LTV, and they are not 
designed -for two-way communications. 

■ Regulatory barriers fentt the activities 
of US telephone companies. While the 
fTWrrfan gdirt m frd ration is halting legisla- 
tion that will enable “open competition" to 
t elephone and television services, many 
details have yet to be worked out 

■ Thera are, as yet, no technical stan- 
dards for interactive television. Early pur- 
chasers could get stock with the I-TV 
equivalent of a Betamax; the losing con- 
tender in the video tape recording stan- 
dards battle. Similarly, cable TV opera to rs 
risk choosing the wrong method c£ video 
co m pression, which squeezes hundreds of 
<figitised“TV signals down a single cable. 

■ I-TV feces competition from alternative 
"interactive multimedia” products. 3DO. a 
Sflican Valley start-up company backed by 
AT&T, Matspshtta and Thne Wanaa’, has 
bumched a 3700 “multimedia player” and 
CD-RQif interactive pro g ra mm es for PCs 
have multiplied the sales & PCs to home 
users. . 

None of this has dimmed the enthusi- 
asm of toe hiph technology and entertain- 
ment industries, which are banding 
together in a multitude of cross-industry 
partnerships and alliances to position 
themselves for the -brave new world of 
1-TV. . 

Among the key players, TefoCounnnmi- 
cation and Time Warner, the two largest 
US cable TV operator with a total of over 
17m subscribers, are “both committed to 
transforming our cable systems into pow- 
erfol networks that wifi, deliver a broad 
area; of services,” says John Male , presi- 
dent and chief ex e c utive of TCL The com- 
panies have formed a joint venture to 
develop standard hardware and software 
far interactive TVnetwoiis. 

Time Warner Entertainment and TCI 
are also partnering Sega America,^ the US 
subsidiary of the Jananese video gvwMw 
manufacturer, to launch “The Sega Chan- 
nel", offering Sega video game owners 
access to a large Hbiary of games via cable 
television. 


destruction" as industry seg- 
ments coflUe anil battle over 
establishing their new roles. 

- There w31 be “winnowing 
out” of many of the early par- 
ticipants to the rush to create 
interactive multimedia com- 
munications services, predicts 
BUI Gates, chairman »m«i dtiff 
executive of Microsoft, the 
werid’g largest c o mpu ter soft- 
ware -company, which this 
year is investing 9100m - a 
quarter of Its research and 
development budget - to soft- 
ware for mn Mme dia camnnud- 
catioats -services. 

Just HpfiiHng tiie infrastruc- 
ture for 'tide high-speed infor- 
mation transport system could 
rost as much as flOObn, Mr 
Gates estimates. Yet no one, 
farinfling the companies mak- 
ing them in vestments, really 
knows-how the market will 
develop,, be .trams. . 

This .ia -especially evident to 
the ’transmission segment 
where tgqhmw and cable TV 
companiafe*- hre spending 
heavijy- &= upgrade netw o r k s. 
Due to progress to technology 
and differing assumptions 
about, customer demand, a 
variety of approaches to mod- 
ernisation have evolved. 

To increase the capacity at 
networks, telephone compa- 
nies are investing in optical 
fibre cables. Debate continues, ■ 
however, on whether the opti- 
cal fibre needs to run all the 
way to the kerb, serving per- 
haps a dozen homes, or to 
neighbourhood "huhsT. serving 
hundreds of homes. 


While Bell Atlantic, for 
example, femu r s fibre to the 
kerb, Pacific BeU has adopted 
a “hybrid fibre coaxial cable" 
a ppro a ch to which fibreuptic 
loops link to coaxial cables 
that feed telephone and TV 
signals to groups of homes. US 
West plans to employ a comto- 
natkm of the two. 

Cable TV companies already 


a small area - one town or 
city - and are not intercon- 
nected. How this problem will 
be resolved remains undear. 

Even as the ifiiniTni m traHnng 
“pipe layers” continue their 
pre pa r ati on for the advent of 
interactive multimedia com- 
munications services, the per- 
sonal co mp uter and televirion 
industries are involved in a 


The computer industry is converging with the television 
industry in the same^ense that the automobile 
converged with the horse' 


have coaxial cable netw orks to 
place to serve more than 60 
pis’ cent of households. Over 
short distances, with digital 
compression, coaxial cables 
rival the capacity of optical 
fibre, but like the telephone 
co m pa n ies, cab le industry 
must upgrade to fibre for lon- 
ger. hauls. Many of the larger 
cable TV companies me now 
upgrading to hybrid networks 
with optical fibre links to 
neighbourhoods, then 
cable to individual homes. 

The limitation of the cable 
TV net w o rk s , however, is that 
they were designed for 
one-way, point-to-mult^polnt 
communications, whereas true 
interactive television will 
require switching systems, 
more like the telephone net- 
work. Thus the cable TV 
industry also feces huge costs. 

Another drawback of the 
cable television networks is 
that they generally cover only 


parallel batfle. 

infol, the fending manufac- 
turer of microprocessor chips 
used to personal computers, 
ma i ntain s that personal com- 
puters will be the primary 
“conduit” an to the informa- 
tion superhighway. “PC tech- 
nology is advancing far more 
rapidly than television tech- 
nology,’ says Avram Mfller of 
InteL “ Already, 30 per cent of 
US homes have personal com- 
puters. How long wffl it take 
for interactive television to 
reach that level?" 

Wh ile m ost di scussi ons of 
the infor m at ion highway focus 
on the notion of 500 channels 
of interactive cable TV being 
piped into living rooms, Intel 
believes that business use of 
video conference and multime- 
dia information services, deliv- 
ered via the PC screen, will 
take off first, with applica- 
tions for the home trading by 
at least two years. 


nicators for people who are 
overwhelmed with telephone, 
facsimile and electronic mall 
messages. 

Instead of exacerbating this 
all-too-common problem by 
creating “anywhere, anytime" 
communications, personal 
communicators may actually 
therefore help individuals to 
regain control of their personal 

r^Ymm^inlr-fl t a ring 


While competition between 
industry sectors expands, It is 
already intense within estab- 
lished industry segments. As 
many as a dozen companies, 
for example, are vying for 
position to foe market for TV 
set top terminals - electronic 
boxes that will sit on top of 
the television decoding and 
transnrittinc two-way signals- 

Computer companies are 
already elbowing each other in 
the emerging market for 
“video servers"; electronic 
jukeboxes that will store and 
ret rie ve films, television pro- 
grammes or video clips for “on 
demand” services. Oracle, the 
leading database software 
company, has paired with 
» manafe ctur er nf mas- 
sively parallel super- 
computers, in a bid to lead the 
video server market. But 
International Bnsiness 
UnrirfwAg and Hewlett-Packard 
also have their eyes on this 
prise market Sales of video 
sowers are expected to surge 
to 95.1bn by 1997, from just 
916 m last year, according to 
Dataquest 

Meanwhile, Microsoft has 
developed video server soft- 
ware that will ran an net- 
worked personal computers 
that sell fra- a fraction of the 
cost of a ma i nfr ame computer 
or s upercomputer. The intense 
c omp et it ion surrounding the 
implementation of “informa- 
tion superhighways” is proba- 
bly the surest sign that this 
technology vision will soon 
become reality. Rather than a 
“convergence” of industries, 
however, it seems likely to 
involve foe invasion of estab- 
lished indnstry sectors by 
ambitious newcomers. For all 
industry participants, keeping 
pace with rapid change will be 
essential to success. 



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My Bank Credit Card i or American Esprcw* ^nli Number 

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Cimy and PonaJ Code 


lb make international calling easy, 
keep these in your pocket. 

To caD around the world, follow these easy steps: 

I . Find the counirv you're culling from. 

2. Dial the cunespondlng ABST Access Number. 
3- An I 


wfll ask far the phone number you wish to call or connect 
you to a customer service representative. 




Rime pftm fuD name 

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