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RSI iiiifte office 

What employers should 
know and do 


Page 16 


■xrym. 

Biodriers at work . 

-r • 

. -* ■ V 

From sewage sludge 


to supermarket shelf 


Enraronnent, Page is 



The Russian issue 

Europe must find 
a coherent policy 

Foreign Affairs, Page 18 




wesqggjtangia 
$&nes&' Financial Markets 


Section! 


FINANCIAL TIMES 


['^Europe’s Business. Newspac 


German rail group 
fined $12m over 
abuse of monopoly 

The German state rail company, Deutsche Balm, 
is to be fined Ecullm (S 12 ^m) by the European 
Commission for using cut-price tail tariffs to 
encourage freight traffic to use the German port 
of Hamburg. 

The Commission said the fine, the largest so 
far levied on a rail group, had been imposed 
because Deutsche H ahn had abused its monopoly 
position, distorting the market by diverting traffic 
away from Belgian and Dutch ports. Page 20 

KLM Royal Dutch Airlines has raised FI L19bn 
($625m) - nearly FI 200m higher than it originally 
expsted - through a global public offering of 
ordinary shares, which closed heavily oversub- 
scribed Page 21 

Ptreffi, the Italian tyres and cables group which 
has completed a two-year restructuring, announced 
plans for L1.000bn (S&LLm) of new binding atmpfl 
partly at a relaunch of its core products on interna- 
tional markets. Page 23 

Presidential candidate chosen: Ernesto 
Zedillo, a former budget and education minister, 
became presidential candidate of Mexico's ruling 
Institutional Revolutionary party after his chief 
rival took himself out of contention. Page 6 

British Aerospace disclosed that it has aircraft 
leasing obligations of S2J9bn ($L3bn), compared 
with income that it expects to receive on sub-leases 
to airlines of SlJJbn. Page 21 

UK aid roles attacked: Three leading British 
industrialists accused the government of undermin- 
ing their companies’ bids for contracts in develop- 
ing countries by introducing “crazy" aid and 
trade rules in the aftermath of the Pergau dam 
affair. Page 20 

Cafl for solution to N Korean nuclear raw 

South Korean president 
Kim Young-sam called 
for greater diplomatic 
efforts to solve the 
crisis over North Korea's 
refusal to open its 
nuclear sites to interna- 
tional inspection. Mr 
Kim, pictured here 
speaking at a Beijing 
press conference after 
talks with China’s 
Premier Li Peng, 
appeared to support BajingVcall for patience 
in dealing with North Korea. His call came as 
North Korea said it had been “driven into a corner" 
by international demands on the issue. Page 4 

Deutsche Bank, Germany's biggest commercial 
bank, said it would raise its dividend DML5 to 
DM1660 following a 24 per cent rise in 1993 net 
profits to DMl.403bn ($816m). Rage 21 

Optimism on US economy: A sharp rise 
in consumer confidence this month to the highest 
level in nearly four years indicated the US economy 
is again surging ahead after bad weather and 
other distortions temporarily slowed growth at 
the beginning of the year. Page 6 

Gains for Islamic patty: Turkey’s Islamio-basad 
Ref ah party delivered a decisive challenge to 
the country's mainstream secular parties, making 
widespread gains in municipal elections, including 
dramatic wins in Istanbul, the biggest city, and 
Ankara, the capital. Page 3 

New World Development, Hong Kong property, 
hotels and infrastructure group, reported a 37 
per cent rise in after-tax earnings to HK$1 J9bn 
(US$24 5m) from HK$169bn in the six months 
to the end of December. Page 24 

Transplant ‘breakthrough’: UK scientists 
at a Cambridge laboratory have produced litters 
of “transgenic” pigs which could provide organs 
to be used in transplants for humans. 

Ciba, Swiss drugs company, said it would soon 
sign alliances in the US in response to the c han ging 
healthcare environment there, in which govern- 
ment and employers want to cut spending by 
insisting on discounts and buying from groups 
of companies. Page 21; Lex, Page 20 

Banana row ends: The European Commission 
announced that its long-running dispute with 
Latin American countries over banana imports 
to the European Union was over. Page 20 


WEDNESDAY MARCH 30 1994 


=:-M. SBl DS523A 




US closing figures: US commodities, currencies 
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Berlusconi tries to forge Major attacked 
coalition government by ov ^} , part . y 

& over EU votes 


By Robert Graham in Rome 

Media magnate Silvio Berlusconi 
yesterday began attempting to 
pull together a coalition to gov- 
ern Italy in the wake of the land- 
slide general election victory 
achieved by the right-wing Free- 
dom Affiance 

The formation of Italy’s 53rd 
post-war government will be 
slowed by the differences among 
the three partners in the Alliance 
and by the the complex proce- 
dures for the new parliament 

A senior member of the outgo- 
ing government of prime minis- 
ter Carlo Azeglio Ciampi last 
night said a “dear majority hn« 
emerged from the polls”, and “it 
is now up to that majority to 
form a new government”. But 
observers said a new government 
is unlikely to be installed before 
the mid of April. 


■ Election details Page 2 

■ Winning the election was the 

easy port Page 19 

■ Editorial Comment Page 19 




V*-, Z 

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■ \ ■>- *V t- , 

•V 


British opposition to enlargement 
deal ends in bitter recrimination 








A victorious Silvio Berlusconi outside his Forza Italia party's headquarters in Rome 


Reuter 


The Freedom Alliance - com- 
posed of Mr Berlusconi's Forza 
Italia movement, the populist 
Northern League of Mr Umberto 
Bossi and the neo-fascist MSI/Na- 
H renal Alliance or Mr nianfranm 
Fini - won 366 of the 630 seats in 
the chamber of deputies. 

The victory, conceded early 
yesterday by all of Mr Berlus- 
coni’s rivals, marked a major 
break with Italy's post-war politi- 
cal system and offered the pros- 
pect of right-wing government 
pledged to implement radical 
free- market policiesr- 

Newspapers headlined the 
sheer scale of Mr Berlusconi’s 
victory over his rivals in the 
left-wing Progressive Alliance 


less than four mnntiw; after he 
entered politics. Forza Italia 
gained 21 per cent of the vote, the 
largest single party. 

But the press also hi g hli ghted 
the divisions wi thin the three 
parties and the veto an nmroefid 
by Mr Bossi on Mr Berlusconi 
becoming the w»rt premier. Even 
Mr BerlusconTs staunchest sup- 
porter, the daily H fli»n i»iB. ran 
a headline •‘Go vernme nt Difficult 
for the Freedom Alliance”. 

The difficulty of finding com- 
mon ground between the three 
parties which had formed the 
Alliance, for mutual convenience 
and without an agreed govern- 
ment programme, knocked the 
euphoria out of financial mar- 


kets. Shares on the Milan bourse 
foil almost 2 per cent, wiping oat 
half Monday's gains 

Mr Berlusconi had a three-hour 
meeting yesterday with Mr Fini 
to establish the broad lines of 
parliamentary alliances. The 
pindia magnate turned politician 
appeared to be keen to sound out 
first the MSI/NatLonal Alliance. 
Mr Fini’s position is reportedly 
easier to square with Forza Italia 
-even though the MSI does not 
endorse the free- market eco- 
nomic policies avowed by Mr Ber- 
lusconL 

Mr Berlusconi let it be known 
through his aides that he hoped 
the League might be persuaded 
to soften its aggressive opposi- 


tion to forming a government 
with the MSI. On election night 
Mr Bossi several times repeated 
his refusal to associate in govern- 
ment with “the reactionary 
right”. However, contacts are 
reported to be underway. 

Among the r anks of the 
defeated left, there was an atmo- 
sphere of profound gloom. The 
failure of the left to attract a big- 
ger vote raises doubts about the 
future of Mr Achille Occhetto, 
leader of Democratic Left (PDS). 
the former communist party. 
Although the PDS vote held up 
well at 21 per cent, just behind 
Forza Italia, the Progressive's 
electoral strategy was said to 
have been too defensive. 


By Philip Stephens in London 
and Lionel Barber in Brussels 

Mr John Major, the UK prime 
minister, (heed a fresh crisis of 
confidence in his leadership last 
night after a compromise deal 
with Britain’s European Union 
partners over voting rights was 
fiercely attacked by members of 
his own Conservative party in 
parliament 

The bitter end to the row 
which had threatened to hold np 
the entry of four new countries 
to the Union raised fresh doubts 
over whether the prune minister 
can survive the expected heavy 
defeats in this summer’s local 
and European elections. 

He strongly defended the new 
EU voting arrangements, which 
combine an Increase in the num- 
ber of votes required to block 
legislation with provision for 
delaying contentious directives. 

Mr Major insisted also that 
Britain had won assurances that 
the European Commission would 
not seek to use health and safety 
legislation to bypass the UK's 
opt-out from the social chapter 
of the Maastricht treaty. That 
claim was disputed by Mr Jac- 
ques Defers, the Commission 
president 

Amid deep gloom among the 
government's supporters, one 
Conservative MP, Mr Tony Mar- 
low, stunned the House of Com- 
mons by publicly charging that 
the deal bad stripped Mr Major 
of his authority and demanding 
be resign. 

As Mr Major set out the terms 
of the deal, traditionally hostile 
Eurosceptics wore joined by usu- 
ally loyal centrist MPs in attack- 


. - -tx- *i SflE Hiem a* a retreat from the 

South Africa council agrees in principle to impose special powers 

r , u gw j j gw denming Mr Major's handling of 


Natal faces state of emergency 


By Michael Holman and Patti 
Wakbnetrin Johannesburg 

South Africa's Transitional 
Executive Council. the 
multi-party body overseeing the 
transfer of power through all- 
race elections next month, yester- 
day agreed in principle to impose 
emergency measures to combat 
political violence in the troubled 
Natal province. 

The move followed a country- 
wide outcry over Monday’s may- 
hem in central Johannesburg 
which pitted the mainly Zulu 
Inkatha Freedom party against 
the African National Congress. 

“Natal is sliding into a bottom- 
less pit of death and destruction. 
Something must be done immedi- 
ately,” Mr Cyril Ramaphosa, 
ANC secretary-general, told the 
TEC, the de facto interim govern- 
ment 

The TEC said it would draft 
legislation to impose a state of 
emergency in Natal or to declare 


“unrest areas” where police 
would have special powers. The 
council agreed in principle to 
impose such powers but did not 
do so immediately. 

Any such actions would 
amo unt to a decision to impose 
the authority of central govern- 
ment against inkatha , headed by 
Chief Mangosuthu Buthelezi who 
is seeking to have the April elec- 
tions delayed. The TECs aim 
would be to ensure that cam- 
paigning could take place. 

Such a move could, however, 
provoke resistance from a group 
of armed Buthelezi supporters 
and call into question the loyalty 
of some members of the security 
forces, elements of which have 
shown sympathies with the feak- 
tha cause. 

Much may depend on the out 
come of a planned peace summit 
between South Africa’s four most 
powerful leaders, which was to 
have started today but was post- 
poned until next week. ANC offi- 


cials were angry at the postpone- 
ment, caused by Zulu King Good- 
will Zwelithini's refusal to attend 
a summit over Easter weekend. 
He said his people needed time to 
bury their dead. 

Police said yesterday the death 
toll from Monday’s violence had 
risen to 53, and there were spo- 
radic incidents of shooting in 
central Johannesburg wgp? n yes- 
terday. 

Hopes of progress at next 
week’s meeting seemed slim after 
a day in which the ANC and 
Inkatha traded blame for the 
deaths. Chief Buthelezi accused 
the ANC of planning to massacre 
Zuia marchers outside its 21- 
storey headquarters. “No reason- 
able person could possibly doubt 
what took place near the Shell 
House headquarters of the 
ANC . . . was a wilful slaughter 
of people who had every demo- 
cratic right in the world to be 
where they were and doing what 
they were doing," he said. 


But public reaction to Mon- 
day’s events has been to con- 
demn Inkatha for having pro- 
voked the attack, further 
isolating the group and raising 
fears of more violence to come. 

Editorial Comment, Page 19 


the row, Westminster was swept 
with a new wave of speculation 
about a challenge to his leader- 
ship later in the year. 

The compromise, which pro- 
vides Britain with limited voting 
safeguards when Austria, Fin- 
land, Sweden and Norway join 
the Union next year, won over- 
whelming endorsement in the 
cabinet If it bad been rejected, 
Mr Douglas Hurd, the foreign 


secretary, would have considered 
resigning from the cabinet 

But four right wing cabinet 
ministers - Mr Michael Howard. 
Mr Michael Portillo, Mr Peter 
Lilley and Mr John Redwood - 
privately backed the widespread 
view that Mr Major should have 
held out for a better deal. 

Mr Hurd countered by telling 
his colleagues that Britain's 
European partners would not 
give further ground. 

Mr David Hunt the employ- 
ment secretary, said later that 
the assurances from the commis- 
sion on social policy meant 
Britain would be excluded from 
the provisions of three new 
directives - on workplace dis- 
crimination, part-time working 
and parental leave for employ- 
ees. 

Bnt Commission officials 
rebuffed any suggestion that 
Britain had received guarantees 
that the new voting arrange- 
ments would not lead to social 
policy proposals unpalatable to 
the UK. 

The Commission made avail- 
able the content of a “verbal 
reminder” on the state of EU 
sodsl measures. This was given 
by Mr Defers and Mr Padraig 
Flynn, social affairs commis- 
sioner, to Sir John Kerr, UK 
ambassador to the EU. 

The Commission stated that 
this year's proposed social mea- 
sures under majority voting con- 
cern only health and -safety at 
work, bnt it avoided any commit- 
meot on future legislation once 
the four new member states 
miter the EU. 

The commission added that 
Britain’s opt-out was “territo- 
rial” meaning that British mul- 
tinationals outside the UK would 
be subject to social chapter legis- 
lation. 

By yesterday's deadline of 
6pm, Brussels time, for settling 
the voting dispute, eight coun- 
tries including Britain had 
signed up to the EU compromise. 
Spain, Greece, Portugal and Italy 
had failed to reply, though an EU 
official said such delays were 
common among southern mem- 
ber states. 

Background. Page 8 


Id like a couple of raincoats 
pressed in an hour . 77 


Japan trade package yields 
to US demands on imports 


By Emiko Terazono in Tokyo 

Japan yesterday unveiled a 
market-opening package intended 
to increase imports, reduce its 
record current account surplus 
and avert tension with the US. 

The announcement follows US 
threats to impose trade sanctions 
after Japan, during talks in 
Washington last month, rejected 
US calls to accept numerical tar- 
gets for imports. 

Japanese officials said that 
except for setting numerical tar- 
gets, they had conceded most 
demands made in previous trade 
negotiations. The programme 
aims to boost the domestic econ- 
omy and open Japan’s markets 
through deregulation and 


enhanced competition. It lays 
particular stress on four sectors 
- telecommunications, medical 
equipment, insurance and motor 
parts - which the US has made 
priorities in recent talks. 

Japan is to review past govern- 
ment procurement of medical 
and telecommunications equip- 
ment and the motor industry’s 
purchases of parts from foreign 
groups. US calls for deregulation 
of the Insurance industry, includ- 
ing easts 1 access to licences, free- 
ing of rates and lifting of restric- 
tions on broking, were also 
accommodated. 

Standards, certification and 
inspection procedures on 
imported products such as con- 
sumer electronics, foods, cars. 


pharmaceuticals and cosmetics 
will be streamlined. The Fair 
Trade Commission, the monopoly 
watchdog, will be strengthened 
with the addition of further staff. 

Analysts said policies such as 
deregulation and opening mar- 
kets were not new, hut some 
detailed measures improved on 
those so far presented to the US. 

Mr Bill Farrell executive direc- 
tor of the American Chamber of 
Commerce in Tokyo, said: “A lot 
of it was pretty much expected, 
but it looks Hke it has some posi- 
tive aspects." 

Continued on Page 20 
Package details. Page 4 
Honda, Mazda announce 
voluntary import plans, Page 4 


CONTENTS 


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Ai THE FINANCIAL TIMES LIMITED 1904 No 32,330 Week No 13 LONDON ■ PARIS - FRANKFURT ■ NEW YORK - TOKYO 


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NEWS; EUROPE — 

The Italian election: Berlusconi alliance wins the poll campaign but now must find a way to govern 


Markets get heartburn after poll party 


By Andrew Hill in Milan 

The Italian election appears to have 
delivered most of what a nervous 
financial and business community 
had hoped fon a clear victory in the 
lower chamber of parliament by a sin- 
gle allian ce of the right. Some horse- 
trading will be necessary for control 
of the upper house, but the fear of a 
parliament in which no single group- 
ing has a majority has gone. 

However, investors are notoriously 
fickle when it comes to politics. On 
Monday, the markets were inspired 
by secret and illegal exit polls show- 
ing Mr Silvio Berlusconi, the media 
magnate, as a clear winner at the 
head of bis Forza Italia party and its 
allies, the populist Northern League 
and the far-right National Alliance. 
Milan's main stock market index rose 


by 3.76 per cent; the lira strengthened. 

Yesterday, although those predic- 
tions were broadly confirmed, the 
hangover from Monday’s election 
night party took its toll. The Milan 
index began to lose ground as the 
markets digested the fact that the 
Berlusconi alliance, so adept at cam- 
paigning, would now have to turn its 
hand to the trickier task of governing 
the country. 

“International investors will focus 
on what any government has to do. 
and they wifi judge a government by 
how quickly it acts,” said Mr Vittorio 
Pignatti-Morano. general manager of 
Lehman Brothers in Italy. 

Confindustria. the Italian employ- 
ers' federation, yesterday echoed 
these sentiments, urging a new gov- 
ernment to act quickly and clearly to 
pursue the process of economic 


improvement begun by the techno- 
cratic government of the past two 
years. “The vote has given a clear 
indication of a choice which supports 
market forces and gives the state a 
fundamental role in direction and 
control [of the economy] rather than 
management, freeing the economy 
from the bonds which restrain it,” the 
federation said. 

The main reason for market con- 
cern is the potential for a row 
between Mr Berlusconi and his part- 
ners. Even as the first results were 
coming in on Monday night, Mr 
Umberto Bossi, head of the Northern 
League, made a special point of 
knocking the media magnate's aspira- 
tions to he prime minister and repeat- 
ing reservations about governing with 
the National Alliance. 

In its first phase, the new govern- 


ment will have to act quickly to 
reshape the public sector, implement 
fiscal reform and plug the gaps in the 
pensions budget. Only then is the new 
coalition likely to pursue its promises 
of stimulating economic recovery, 
including Forza Italia's ambitious 
promise to create lm jobs. 

In the meantime, many entrepre- 
neurs will be looking to the govern- 
ment to break the old incestuous 
links between business and politics. 
Critics believe Mr Berlusconi is not 
the man to champion a new relation- 
ship. 

On privatisation, which the victori- 
ous parties would like to speed up, 
the government will have to take a 
Rnai decision on how to sell 52 per 
cent of Stet, the national telecommu- 
nications utility, and who should 
advise on the sale, but the timetable 


for this and other outstanding privati- 
sations is already pencilled into inves- 
tors’ diaries. 

In any case, entrepreneurs who 
stood successfully for Forza Italia, the 
Northern League and the National 
Alliance across the country, should 
try to hold the new government to its 
promises to favour small and medi- 
um-sized enterprises as well as the 
industrial conglomerates which have 
traditionally been close to the govern- 
ment 

The new administration will not 
want to alienate this support. As Mr 
Alberto Rolla of securities bouse Miila 
put it yesterday. “The political strug- 
gle was very dirty, especially in the 
last days [of the campaign], and his 
[Mr Berlusconi's] problem now is 
presenting hims elf as someone who 
can make peace with everyone.” 


Winners and losers from 
Berlusconi partnership 


Northern League leaders put a 
brave face yesterday on evi- 
dence that more moderate sup- 
porters had deserted to their 
ally, Forza Italia, insisting they 
would not abandon their feder- 
alist principles, writes John 
Simians in Milan. 

Although Mr Umberto Bos- 
si's League approximately dou- 
bled its tally of senators and 
lower house deputies from the 
79 elected in 1992, its success in 
the first-past-the-post seats 
owes much to Forza Italia sup- 
port Their pact favoured the 
League in the division of seats, 
allowing it as the more estab- 
lished party, to nominate 70 
per cent of candidates. 

Respective support showed 
itself in the 25 per cent of 


The electoral impact of Forza 
Italia has tended to over- 
shadow the dramatic gains 
made by the neo-fascist MSI/ 
National Alliance of Mr Gian- 
franco Fini, writes Robert Gra- 
ham in Rome. 

The MSI/National Alliance is 
the third largest party in the 
new parliament and now 
acconnts for almost 14 per 
cent of the vote. Linked in 
with Forza Italia, it has 
become the biggest political 
grouping from Rome south. 

For the previous two 
decades, the MSI had never 
risen above 6 per cent of the 
vote. In less than 12 months 
Mr Fini has transformed the 
party from a marginal politi- 
cal role to become a key 
player. The general election 


NORTHERN LEAGUE 


lower house seats reserved for 
proportional representation, 
where parties stood under 
their individual banners. In 
these the League took 11 seats 
compared with Forza Italia's 16 
in northern seats. 

Mr Massimo Scaglione, one 
of 12 League senators elected 
in Piedmont compared with 
one for Forza Italia, said he 
was “very satisfied” with his 
party’s performance. 

He backed Mr Bossi in his 
campaign attacks on Forza 
Italia which, according to the 
League leader, emerged out of 
the old political system that 


MSI/NATIONAL ALLIANCE 


result in good measure reflects 
Mr Fini’s popularity as a vig- 
orous young leader, untainted 
by corruption scandals. 

The MSI has traditionally 
done weD at a local level in 
isolated areas of the south, 
thanks to monarchist tradi- 
tions, a strong connection 
with the masonic movement 
and a visceral identification 
with the achievements of Mus- 
solini. Bat the party has 
become a big beneficiary of 
the collapse of the two main 
governing parties, Christian 
Democrats and Socialists, 
which dispensed patronage in 
the south. 


the League was trying to dis- 
mantle. 

“It is much better to speak 
as he does. Bread is bread and 
wine is wine and this is the 
frank style of the League,” he 
said. 

However, Mr Marco Formen- 
tini, the League mayor of 
Milan, accepted that the “soft" 
face of Forza Italia had 
attracted League moderates. 
“The League has a rigorous 
programme which it is difficult 
to accept because it means 
changing the state and switch- 
ing from a central system to a 
federal one,” he said. Forza 
Italia would accept change was 
necessary once it had to con- 
front the country's problems in 
government. 


By changing the party's 
name from the National Social 
Movement - modelled on Mus- 
solini’s political movement - to 
the National Alliance, Air Fini 
has managed to modernise its 
image and confer a new 
respectability. The party also 
managed to retain its own 
identity separate from that of 
Forza Italia, standing sepa- 
rately in Trieste and parts of 
the Marche. In the south, 
Forza Italia was Mr Berlus- 
coni's equal partner and some- 
times the dominant one. 

Mr Fini is an enthusiastic 
proponent of Mr Berlusconi as 
prime minister. To enter gov- 
ernment, he will also need to 
remove some of the more 
overtly fascist elements that 
hover In the party wings. 



The right romps home 


Absolute majority In the Lower House assured... 

Chamber of Deputies: 630 seals. Electorate: 4lL3m [minimum voting age 1 8 years}. Turnout 66.1*6. 


Progressive Affiance 
213 seats 322% of vote 


Pact for Italy 
46 seats 15.7% 


Affiance for Freedom 
366 seats 422% 


Democratic Party of the Left — 

(PDS) 20.4% > 

Reconstructed Communism 
6 . 0 % 

Democratic Al&ance 
12 % 


La Rets 
12 % 


Popular Party (PPI) 1 t.i % 
Segni Pact 4.6% 



Forza Haft* 
21 . 0 % 

Northern League 
8.4% 

National Alliance 
• 13.5% 

NB 1 Kbit iiaitobe aocKted: 
voting paromugos da not 
ton* 100 » about 9% went 
to snuBer purtins 

Others 4 seats 


and a qualified majority in the Senate within grasp 

Senate: 315 seats. Electorate 42.7m {minimum voting age 25 years). Turnout 85.5%. 


Progressive 

Affiance 

122 seats 

33% of vote 


Source: Ntototy erf Interior, FT 


Pact for Italy 
31 seats 17% 


Affiance for 
Freedom 
156 seats 
42% 



Others 
6 seats 8% 


f Democratic 
Party of the 

Occhettoc * 

doubt that 
the right has won, but it is a 
rii#Tt that wffl not be capable of 
giving a government to the 
country.' 



PP1 Leader 
Mno 

MartinazzoU, 
criticising 
Occftetto; 
How can 
one capture 
the m oderate 


vote by proposing radicalism, as 
he did. Faced with the fear of a 
radical left, voters Hocked to the 
right.' 


Forza ftafia 
Leader SBvio 
Berlusconi: 
The affiance 
has secured 
its- .goal -to 
give this 
country a 
iture of democracy and liberty." 
Very sacrifice' would be made 
i form a government "Victory 
rings unity.* 



Voting system 
leaves small 


parties 

By Andrew Hffl 

Italy's victorious right was 
yesterday claiming that its 
electoral success was based on 
overwhelming nationwide sup- 
port lor the alliance of Mr Sil- 
vio Berlusconi's Forza Italia, 
the federalist Northern League 
and the far-right National Alli- 
ance. 

But the Progressive Alliance 
of seven left-wing parties said 
the result showed Italy had 
split into three clear parts - 
the north, centre and south - 
with parts of the centre of the 
country- 3 traditional strong- 
hold for communist and social- 
ist voters, seeing off the chal- 
lenge of the right. In Umbria, 
for example. Progressives were 
elected in all the first-past-the- 
post seats, while in Tuscany, 
the left won SO per cent of the 
seats. 

What was clear, however, 
was that Italy’s complex new 
voting laws had produced a 
parliament shorn of many of 
the smaller parties which used 
to win seats under the old elec- 
toral system. 

The reformed Socialist party, 
the Sicily-based clean govern- 
ment movement. La Rete, the 
Greens and the centre-left 
Democratic Alliance ail failed 
to attract more than -1 per cent 
of the votes. As a result they 
will not be entitled to any of 
the 155 seats in the 630-seat 
lower house which were 
“reserved” for smaller parties 
under the proportional system. 

Some candidates should 
enter parliament under the 
first-past-the-post system, how- 
ever. All four parties were part 
of the Progressive Atliance. 
which instead has had to rely 
on the stronger performance of 
its main components, the Dem- 
ocratic Party of the Left (PDS) 
and the hardline candidates of 
Reconstructed Communism. 

Mr Giuseppe Ayala, leader of 
the Democratic Alliance - 
which had attracted the sup- 
port of left-leaning figures from 
business and the arts - admit- 
ted yesterday that the small 
parties had made a serious 
tactical error in conducting 
separate campaigns for 
support under the proportional 
system. 

Mr Carlo Ripa di Meana, for- 
merly Italy's environment com- 
missioner in Brussels and 
spokesman for the Greens, 


in cold 


claimed that the small parties 
could not compete with the 
televisual power of their larger 
opponents. 

The most impressive victo- 
ries for the parties of the right 
came in the south, notably in 
Sicily. The leader of La Rate, 
Mr Leoluca Orlando, who 
became mayor of Palermo as 
recently as November with 75 
per cent of the vote, had to 
watch while National Alliance 
and Forza Italia candidates, 
including film director Franco 
Zeffirelli, captured an but a 
handful or the Sicilian seats. 

But Mr Giuseppe Chiaranta, 
PDS leader in the Senate, 
warned that the new voting 
system risked “leading Italian 
democracy up a dangerous 
blind alley” which would make 
it difficult for the right to gov- 
ern the country. 

The new rules also punished, 
as expected, the centre parties 
of the Pact for Italy. Most nota- 
bly, Mr Mario Segni. who left 
the Christian Democrats and 
successfully pushed for a refer- 
endum on voting reform lost 
year, has found himself in the 
embarrassing situation of hav- 
ing to take up one of the par- 
liamentary seats allocated 
under the proportional system 
which he sought to abolish 
after losing his first-past-the- 
post seat 

However, the defeat of the 
left was not a rout. The Pro- 
gressive Alliance may be able 
to make life difficult for the 
government in the Senate, 
where Forza Italia, the 
National Alliance and the 
League fell short of achieving 
an absolute majority. 

As the postmortem began 
among the Progressives, it was 
clear that the left would not 
simply allow itself to be 
pushed around in either house 
of parliamant. 

Mr Chiarante admitted that, 
particularly in the north, the 
left had suffered a heavy 
defeat But he added: “It's now 
essential to transform this 
electoral pact [between the 
parties of the (eft| info « firm 
democratic unity, using this 
grouping os the basis and the 
point of departure for a more 
markedly dynamic and Innova- 
tive political strategy, which 
will prevent the right from 
presenting itself as the newest 
and most modem force" 



He-iier 


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LES ECHOS 

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Echos le mardi et dans le Financial Times le mercredi ou le jeudi (le vendredl dans I'Edition Internationale du Financial Times). 
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CLARE PEASNELL 

0718734027 


Negotiators hold out hope of ceasefire in breakaway Serb territory 

Krajina talks make progress 


By Laura Sflber in Belgrade 

Croatian government officials 
and leaders of Krajina, the 
breakaway Serb territory in 
Croatia, yesterday made head- 
way in crucial talks on a cease- 
fire, which Serb leaders said 
could avert another war in the 
region. Negotiators held out 
the hope that the two sides 
might reach an agreement late 
yesterday night 

"I don't see why the agree- 
ment cannot be reached 

today We are in a perfect 

position. It is up to the two 
sides whether they want this 
agreement." said Mr Vitaly 
Churkin, the Russian special 
envoy to the region who hosted 
the talks. 

Mr Slobodan Jarcevic, for- 
eign minister of Krajina, the 


By J9 Barshay in Kiev 
and Leyta Boulton 
in Simferopol, Crimea 

Ukrainian voters were 
confronted with a fresh obsta- 
cle to the election of a new 
legislature yesterday, when the 
government announced a com- 
plicated procedure for the run- 
off elections which must take 
place by April 10. The proce- 
dural complication will make it 
more difficult lor voters to 
elect a viable legislature. 

Unexpectedly high voter 
turnout in the Sunday elec- 
tions threatened to thwart 
Ukrainian president Leonid 
Kravchuk's hopes to introduce 
direct presidential rule after 
what he forecast would be a 
turnout too low to legally elect 
a new parliament 

By confusing the procedure 
for the run-off votes, which 
must take place in 90 per cent 
oF the seats, Mr Kravchuk's 
government appears to be 
looking for another way to pre- 
vent the emergence of an effec- 
tive legislature. 

Mr Ivan Yemets, the chief 


self-styled state which covers 
nearly a third of Croatia, said: 
“If we get a ceasefire, which is 
backed by the international 
community, then we could 
avoid war.” 

Speaking by telephone from 
the Russian embassy In 
Zagreb, the Croatian capital, 
where the two sides met for 
the second time in a week, Mr 
Jarcevic said: “The chances are 
fifty-fifty that we reach an 
agreement The atmosphere is 
very tense, but so muidh is at 
stake." 

International mediators see 
resolution of the Serb-Croat 
conflict, which began in 1991, 
as the key to peace in Bosnia 
and stabilisation of former 
Yugoslavia. "They received a 
message that there Is a sense 
of urgency and even impa- 


e lection officer, announced yes- 
terday that the crucial run-off 
ballots need not, as previously 
believed, be held simulta- 
neously on April 10, but may 
be held as early as April 2, 
depending on the wishes of the 
regional a dminis tration. Hold- 
ing the vote at different times 
in different regions of the 
country could confuse voters. 

Mr Kravchuk, who toyed 
with plans to introduce direct 
presidential rule on the eve or 
the elections, has reason to 
fear last Sunday's vote. Unex- 
pectedly, 73 per cent of Ukrain- 
ians showed up at the polls 
and Initial results suggest they 
voted for a legislature more 
independent and reform- 
minded than its co mmunis t, 
dominated predecessor. Voters 
also gave a powerful mandate 
to two leading Ukrainian politi- 
cal figures, and possible con- 
tenders for the presidency. 

Mr Ivan Pliushcb, the out- 
going speaker of parliament, 
and Mr Leonid Kuchma, the 
former prime minister, both 
won seats with strong majori- 
ties and have insisted that the 


tience in the international 
community that this opportu- 
nity should not be allowed to 
pass by,” said Mr John Mills, 
spokesman for the United 
Nations conference on former 
Yugoslavia. 

Mr Charles Redman, the US 
special envoy, and Mr Peter 
Galbraith, the US ambassador 
to Croatia, also urged Croat 
and Serb representatives to 
reach an agreement, which 
was to include the withdrawal 
of infantry by 1km and heavy 
weaponry by 20km, said diplo- 
mats. 

Ceasefire talks collapsed last 
week amid disagreement over 
the front line. 

The two sides remain tax 
apart in their political 
demands. Serb leaders insist 
on independence for their 


presidential elections be held 
on schedule in June. 

Mr Bohdan Krawchenko, the 
Canadian director of Ukraine’s 
main school of public adminis- 
tration, predicts the new par- 
liament will be evenly divided 
between centrists, national- 
democrats, and co mmunis ts. 
He also believes economic 
reforms will now be forced to 
the top of Ukraine's political 
agenda. “The power vacuum at 
the heart of Ukraine is gone.” 
he said. Hie remaining power- 
struggle, regardless of how the 
conflict between the president 
and parliament is resolved, is 
that between Ukraine's dispa- 
rate regions. 

Crimea, which elected a sep- 
aratist president in January, 
voted strongly for closer ties 
with Moscow and voters In 
eastern Ukraine endorsed more 
economic integration with Rus- 
sia. However, the polls in these 
regions have no legal weight 
and both Crimeans and eastern 
Ukrainians appeared content 
to wait until a new parliament 
is convened before pressing 
their demands. 


breakaway state, carved out 
over a six-month war, backed 
by the Yugoslav army, while 
Croatian authorities are press- 
ing the international commu- 
nity to bring Krajina, which 
cuts Croatia In two. under 
Zagreb's control 

President Slobodan Milosevic 
of Serbia has reportedly 
suggested trading parts of 
Serb-held land in exchange for 
the phasing out of UN sanc- 
tions on what remains of Yugo- 
slavia. 

These areas include western 
Slavonlja, which straddles the 
main motorway, and Knin, the 
Serb stronghold in Krajina, 
which was once the key rail- 
way junction for Croatia and 
has ail but cut off access to the 
southern Dalmatian coast. 


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Kravchuk sets new hurdle 
in the path of parliament 



\ 

-iv 


FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


'ft 


: 0! 


NEWS: EUROPE 


EUROPEAN NEWS DIGEST 


Slovakia blocks 
privatisations 

The new Slovak government has blocked the privatisation of 
13 projects approved by its predecessor between February 15 
and March 13. the privatisation minister, Mr Milan Janldna, 
said yesterday. 

Mr Vladimir Meclaris government, ousted in a no- confidence 
vote on March 11. bad approved 45 direct sales of state-owned 
companies. Many were approved after Mr Meciar lost the vote 
and before the new administration took over, government 
officials said. 

On March 18. Mr Rudolf FUkus, the new finance minister, 
blocked the account of the National Property Fund, effectively 
stopping any transfers of shares held by the agency which 
ad m i n isters the privatisation of state-held enterprises. "The 
projects in question are legally and technically imperfect." he 
said. However, some of the 13 companies would be awarded to 
the original buyers approved by Mr Meciar's government 
"when purified of legal and technical imperfections", he said. 
Mr Janldna added that some projects lacked authorisation by 
the anti-monopoly bureau and other legal requirements. Oth- 
ers undervalued property. Reuter, Bratislava. 

Romania approves tax on land 

The Romanian parliament yesterday approved a law introdu- 
cing a tax on land ownership, which the Propact farmers’ 
union said would create social unrest. Although most agricul 
turai land is now worked by private farmers, only 15 per cent 
of the 5.1m private landowners have received full titles to 
property returned under a 1991 act. This has prevented them 
from using their land as collateral to raise capital for seeds 
and equipment Opposition MPs, who boycotted the vote on 
the law, said the tax was illegal and that they intended to 
appeal to the constitutional court They said tax could be 
levied on production but not on estimates of production from a 
piece of land, as provided in the law. The tax was a way of 
discriminating a gainst private individual landowners, they 
saRL Agriculture companies, such as state farms, will continue 
to pay tax on profits rather than the new tax. Passage of the 
law clears the way for presentation of the much-delayed 1994 
budget and for International Monetary Fund approval of a 
$700m loan package. Virginia Marsh, Bucharest. 

Ceausescu spies keep their jobs 

Mr Virgil Magureanu, head of the Romanian Intelligence Ser- 
vice, yesterday said 5,000. or one-third, of the former foil-time 
employees of the Securitate, the secret police of executed 
communist dictator Nlcolae Ceausescu, still worked for its 
successor agency, the RIS. At a rare press conference, Mr 
Magureanu said their previous allegiance did not matter. He 
also said a staff of 5,000 was insufficient and that he was in the 
process of doubling it However, he denied reports that the 
recent replacement of a quarter of RIS office staff was due to 
an internal power struggle. He added that the KGB was a 
"huge problem” for the RIS, which was investigating its for- 
mer activities in Romania. Virginia Marsh. 

De Benedetti telecoms reward 

Mr Carlo De Benedetti. chairman of Olivetti, yesterday said 
the winning of the Italian mobile telecommunications licence 
by a consortium led by his computer group had rewarded 
“three years of enthusiasm". Late on Monday the government 
announced that Omnitel-Pronto Italia had been awarded the 
licence for Italy's Europe-wide GSM network over a rival offer 
from the Uni tel consortium, which grouped Fiat, Fininvest, 
Vodafone and BellSouth. Olivetti's shares yesterday rose £5 
per cent, by mid-session, on the Milan stock market, against a 
static market The 15-year licence has been valued at up to 
WJ300bn ($2Jj4bn) and will pit Omnitel-Pronto Italia against 
the state-controlled Sip domestic network, which had held a 
monopoly in the mobile phones market John Simians, Milan. 

Slovene defence chief sacked 

The Slovene parliament yesterday voted by 49 to 39 to dismiss 
Mr Janez Jansa, the defence minister, on charges of abusing 
his powers. Mr Jansa, who was once the hero of Slovenia's 
UWay war of independence against the Serbdominated Yugo- 
slav army in 1991, has waged a bitter campaign of opposition 
against President Milan Kucan of Slovenia, a former com- 
munist who led the country's drive for independence. Mr 
Janez Dmovsek, the prime minister, yesterday proposed Mr 
Jelko Kadn, the former information minister, to fill the post 
Mr Dmovsek, who had also been at odds with Mr Jansa. said 
the sacking followed allegations made by a former military 
agent that Mr Jansa was involved in tapping journalists' 
phones. Laura Silber, Belgrade. 

Bahadur’s support plummets 

Public confidence in the French prime minister, Mr Edouard 
Bahadur, crashed by 12 percentage points in March to stand at 
just 40 per cent, according to an opinion poll published yester- 
day. his first anniversary in office. The poll by the CSA 
institute for the Roman Catholic weekly newspaper. La Vie, 
was the latest evidence of a sharp decline in public approval of 
the conservative GaulUst prime minister following a wave of 
youth unrest It showed Mr Bahadur’s confidence rating had 
fallen below that of the socialist president, Mr Franpois Mitter- 
rand, who rose by 6 points to 45 per cent in the same period. 
Reuter, Paris. 

Albanian appeal for investment 

Mr Sali Berisha, the Albanian president yesterday called for 
greater foreign investment In Albania’s infrastructure to sus- 
tain economic growth which reached 11 per cent last year. 
Addressing a Confederation of British Industry conference in 
Loudon, he said Albania expected investment in 1994 of nearly 
double the $290m recorded last year as foreign companies 
supplied the technology to develop Albania's oil, chrome, 
copper and nickel reserves and modernise its agriculture and 
tourist infrastructure. Anthony Robinson. 

ECONOMIC WATCH 


Swiss inflation falls to 1.3% 


SwritracUmd: inflation 

Annual % change tn OPT 



92 S3 94 


Tn na tion in Switzerland fell to 
an annual rate of 13 per cent 
in March, Its lowest level 
since June 1987. Many econo- 
mists believe the rate will 
sink below 1 per emit in the 
next couple of months, down 
from an annualised peak of 
6.6 per cent in June 1991. An 
excessively loose monetary 
policy in the late 1980s forced 
the central bank to push up 
short-term interest rates to 
over 9 per cent by early 1992, 
provoking indexed rent and 
public service price rises. The 
indexing Is now working in 
reverse- The consumer price 
index was unchanged in 


1990 91 

Source: Dataetrsam 

March from February. The Federal Statistics Office said 
domestically produced goods were 0.1 per cent demur and 
imported goods 0.2 per cent cheaper. Ian Rodger, amen. 

■ Denmark's current account surplus rose to DKr34.7bn 
($53bn) in 1993 from DKri&Sbn in 1992. 

■ New orders in Germany’s engineering and plant construc- 
tion sector were unchanged in February compared with a year 
earlier, with a 6 per cent decline in domestic orders offset by a 
6 per cent increase in foreign orders. 

■ French industrialists surveyed by the national statistics 

office, fusee, during March said activity had picked up^sharpty 
in recent months and they were “resolutely optimistic on tlw 
out l ook for p ro d uction i — 


Turkey shaken by Islamic party’s wins 


By John Murray Brown 
m Istanbul 

Turkey’s Islamic-based Ref ah 
party (RP) yesterday delivered 
a decisive challenge to the 
country's mainstream secular 
parties, with widespread gains 
in the weekend's municipal 
elections. Including dramatic 
wins In both Istanbul, the big- 
gest city, and Ankara, the 
capital 

The RP. campaigning on a 
anti-corruption platform, bad 
last night won 28 of the coun- 
try’s 76 municipalities, with 
almost all the votes counted. 
The party had taken 18 per 
cent of the national vote, twice 
the votes won in local elections 
in 1989. Mr Necmettin 
Erbakan, the RP leader, 
claimed yesterday the result 
meant that 68 per cent of Tur- 
key's 60m population was now 
ruled by RP local administra- 
tion. 

Westernised Turks have 
always maintained that RP's 
brand of radical Islamic poli- 
cies would never win broad 
appeal. The RP was helped in 
part by the continuing split in 
Turkey’s traditional conserva- 
tive parties. However, the 
result clearly shaton the 
secularist establishment. 

Mrs Tansy Oilier, the prime 
minister - whose True Path 
party narrowly won the 
national vote with 22 per cent 
- immediately called for a new 
alliance of the right, signalling 



Istanbul’s new Islamic-based Refah party mayor, Mr Tayyip Erdogan, worries secular Turks 


the growing alarm in Ankara 
at the Islamic vote. According 
to one expert, the support for 
the RP. if repeated in a general 
election, would give the party 
at least 100 seats in the 450-seat 
parliament The RP currently 
has 40 MPs in Ankara. 

In an Istanbul office lined 


with books on American gov- 
ernment, Mr Abdullah Gul, a 
senior adviser to Mr Erbakan, 
projected the RP leader yester- 
day as the model of reasonable- 
ness. “We are something like 
the Christian Democrats in 
Europe," he says. 

This week, for the first time. 


Turks win have a chance to 
test this c laim. 

As the map on the front page 
of the daily H uni yet newspa- 
per graphically illustrated yes- 
terday, the party controls a 
swathe of city halls all the way 
from Istanbul to Erzerum on 
the old Soviet border. 


For radical Moslems, Istan- 
bul is a particularly intoxicat- 
ing prize. The city is an Islamic 
holyplace. It is ingrained with 
Christian history - almost a 
byword for the western deca- 
dence and spiritual sterility 
which fanatics say was 
unleashed when Kemai Ata- 
turk created the secular Turk- 
ish republic tn the 1920s. 

Among Istanbul’s residents 
yesterday RP's victory was just 
sinking in. Would the mayor 
ban alcohol? Would the RP be 
able to close cinemas and clubs 
In the interest of public moral- 
ity? Would international fund- 
ing for the city’s badly needed 
infrastructure projects dry up? 

Mr Tayyip Erdogan. the vic- 
torious mayoral candidate, 
promised to build a mosque In 
Taksim Square, the city's main 
shopping district. He said he 
would close the city brothels, 
and create the world's biggest 
conference centre. 

Nationally, the RP's vote was 
distorted somewhat by the 
withdrawal of the radical 
Kurdish-based Democracy 
party, which allowed the RP a 
free run in the Kurdish-speak- 
ing south-east. However, the 
party has made sweeping 
advances in other areas. In 
Trabzon, for example, the RP is 
said to have won over local 
women by promising to send 
home the so-called “Natashas", 
the Russian and Georgian pros- 
titutes who have turned the 
ancient port city into the Bang- 


kok of the Black Sea. 

Deliberately courting the 
moderate Islamic constituency, 
the party was often fronted by 
attractive, unveiled women 
dentists and other profession- 
als on an anti-corruption plat- 
form. But while some RP lead- 
ers have been prominent in 
Turkish politics since the 
1960s, the party remains 
largely untested in govern- 
ment. It is anti-Zionist, anti- 
Nato and opposes Turkey's 
efforts to join the European 
Union. 

In many ways, Mr Erbakan 
hardly fits the ogre that most 
secular Turks conjure up when 
they think or Islamic extrem- 
ists. But the RP’s real advan- 
tage is that it is the only grass- 
roots party In the country. The 
other parties are all centred on 
figureheads. Mr Erbakan has 
tasted power before. In the late 
1970s. he was deputy prime 
minister in a number of disas- 
trous national governments 
which eventually led to tbe 
military's intervention in 1980. 

Everyone is waiting now to 
see how the RP grapples with 
tbe gargantuan problems of 
running Istanbul. As the for- 
mer social democrat adminis- 
tration discovered after a 
series of corruption scandals, 
the city is a graveyard for 
political reputations. Many sec- 
ular Turks, who still believe 
that they are Turkey's silent 
majority, are hoping the RP 
will also fail. 


ACES (Aerolineas 
Centrales de Colombia) 
Action Airlines 
ADA-Air 
Adria Airways 
Aer A rann Teo 
Aer Llngus 
Aero Asia 
Aero California 
Aerocaribe 
Aerocbago Airlines 
Aero Costa Rica Aeon 
Aeroflot - Russia n 
International Airlines 
Aeralineas Argentines 
Aeroltneas Dominica nas 
Aeromexico (Aerovias 
de Mexico) 

A cram on ten ey 

Acropelican Air Services 

AeropeHas 

Aeroperu 

Aeropostal 

Aerosur 

Aero transports Mas de 
Carga 

African West Air 
Aigte Azur 
Air Afrique 

Air Alger le (Compagnie 
Nationate de Transports) 
Air Alliance 
Air Alma 
Air Alpha 
Air Aruba 
Air Atlantic 
Air Atlantique 
Air Austral 
Air Baltin 
Air B.C. 

Air Betgiu 
Airborne of 
Air Botnia 
Air Botswana 
Air Burkina 
Air Burundi 
Air Calcdonic 
Air 

ti^Rnati 
Airftnad 
Air CShrftSes ( 

Air Caribbean 
Air C hatha ms 
Air China 
Air Comores 
Air Corbie re 
Air Crccbcc 
Air Dolomiti 
Air Engiadina 
AIRES 

Air Excel Netherlands 
Air Express 
Air Facilities 
Air France 
Air Gabon 
Air Gambia 
Air Guadeloupe 
Air-lndia 
Air Inter 
Air Ivoire 
Air Jamaica 
Air Kangaroo Island 
Airkenya Aviation 
Air Kilroc 
Air Koryo 
Air LA. 

Air Lanka 
Air Liberte 
Airline Lithuania 
Airlines of Carriacou 
Airlines of Tasmania 
Airllnk 
Air Littoral 
Air Madagascar 
Air Malawi 
Air Malta 
Air Manitoba 
Air Margarita 
Air Maroochy Airlines 
Air Marshall Islands 
Air Martinique 
Air Mauritanie 
Air Mauritius 
Air Midwest 
Air Moldova 
Air Molokai 
Air Moorca 
Air Namlba 
Air Nauru 
Air Nevada 


Air New Zealand 
Air Niagara 
Ait Nippon 
Air Niugini 
Air Nordic Sweden 
Air North 
Air Nova 
An Ontario 
Air Pacific 
Air Rarotonga 
Air Rwanda 
Air Saint-Martin 
Air Sask Aviation 
Air Satellite 
Air Senegal 
Air Seychelles 
Air Sinai 

Airspeed Aviation 

Air St. Barthetemy 

Air Stord 

Air St. Plcire 

Air St. Thomas 

Air Sunshine 

Air Tahiti 

Air Tanzania 

Air Transport Pyrenees 

Air Tungaru 

Air UK 

Air Ukraine 

Air Vanuatu 

Air Vegas 

Air Vitkovice 

Airways international 

Air Zaire 

Air Zimbabwe 

Air 2000 A 

Aklak Air W 




Air 

Alpine Aviation 
Alsair 

lyemda- Democratic 
ien Airlines 
can j 
icrican 
cal 

Ansett Australia 
Ansett New Zealand 
AOM French Airlines 
Aquatic Airways 
Arctic Circle Air Service 
A/Cus Air Logistic 
Ariana Afghan Airlines 
Arles Del Sur 
Arizona Airways 
Arizona Pacific Airlines 
Arkia Israeli Airlines 
Asiana Airlines 
Alhabaska Airways 
ATI-Aero Transport! 
Italian! 

Atlantic Air Transport 
Atlantic Airways, Faroe 
Islands 

Atlantic Coast Airlines 
Atlantic Southeast 
Airlines 
ATS Vulcan 
Augusta Airways 
Aungny Air Services 
Aus-Alr 
Austral 

Australia Asia Airline 

Austrian Airlines 

Austrian Air Services 

AVENSA 

AVIACO 

AVIACSA 

Avia Express 

AVIANCA 

Avianova 

AVtATECA 

Awood Air 

Azerbaijan Hava Yollari 
fiahamasair 
Baker Aviation 
Balkan -Bulgarian 
Airlines 


Baltic International 
Airlines 

Bangkok Airways 
B.A.S.E. Business 
Airlines 

Baxter Aviation 
Bearskin Lake Air 
Service 
Belavia 
Beilair 

Bemidji Airlines 
Bering Air 

Berliner Spezial Plug 
Big Sky Airlines 
Biman Bangladesh 
Airlines 

Blackhawk Airways 

8a pair 

Bouraq Indonesia 
Airlines 

Braathens S.A.F.E. 

Airtransport 
Branson Airlines 
Brasil Central Linha 
Aerea Regional 
8ht Air 

Britannia Airways 
British Airways 
British International 
Helicopters 
British Midland 
British World Airlines 
Business Air 
Business Express 
BWIA International 
Trinidad AJj^bago 
Airways <^nx>raiion 


International 
Cape Air 

Cape Smythe Air Service 
Care Airlines 
Carnival Air Lines 
S 

ific Ai 
pan 

ije" 

"irways 

CC Air 

Central American 
Airlines 
Central M 
Iks l 
irtln 
iau 

Chicago Express 
Airlines 
China Airlines 
China Eastern Airlines 
China General Aviation 
Corporation 

China Northern Airlines 
China Northwest 
Airlines 

China Southern Airlines 
China Southwest 
Airlines 

China Xinhua Airlines 
Cimber Air 
City Flyer Express 
Coast Air 

Coastal Air Transport 
Coast to Coast Airlines 
Gofgan Air 
Columbia Pacific 
Airlines 
Comair 

Commercial Airways 
Compagnie Aerienne 
Corse Med i terra nee 
Compagnie 
Aeronautique 
European rte 
Com pan la de Aviacion 
Faucett 

Condor Flugdiertst 
Connectair Charters 

Conquest Airlines 
Contact Air 
Conti-Flug 
Continental Airlines 
Continental 
Miooncsiainc. 

COPA (Compania 
Pa na menu de Aviacion) 
Corporate Airlines 
Canberra 


Country Connection 
Airlines 
Crane Air 
Croatia Airlines 
Crossair 
Crown Airways 
CUBAN A 
Cyprus Airways 
Cyprus Turkish Airlines 
Czechoslovak Airlines 
Daalio Airlines 
Danair 

Delta Air Lines 
Deutsche BA 
Luftfahrtgesellschaft 
Dominair 

Dominicans de Aviacion 
Dorado Air 
Dragonair 
Druk-Air 
Dynamic Air 
Eagle European Airways 
Eastair (Iceland) 
Eastland Air 
Eastwest Airlines (Aus.) 
East west Airlines (Ind.) 
Ecuato Guineana de 
Aviacion 
ECUATORIANA 
Egyptair 
Elf Air 
Emirates 
Empire Airlines 
Ensor Air 
Equator Ar. 

Equator^ 

Airli 
RA 
'Ester 
Ethl 
Eural 

Euroflight Sweden' 
Europe Aero Service 
Eu rowings NFD RFG 
rkehrs 

ys 

I Air 
Sneen H 
ka 

Airt 
Esso Ae 

r Eastern Air Transport 
iji Air Services 
Fin 





Heli Air Monaco 
Helicopter Shuttle 
Heli- Inter 
Hehjet Airways 
Helikopterservice 
Hemus Air 
Kex'Air 

Holmstroem Air 
Hong Kong Dragon 
A/rfrnes 
Horizon Air 
Horizon Airways 
IBERIA 
tcelandair 
lliamna Air Taxi 
Indian Airlines 
Intercontinental de 
Aviacion 

International Flying 
Services 
Interot Airways 
Intourtrans 
Iran Air 
Island Air 
Island Airlines 
Island Express 
Island Hoppers 
Islands Aviation 
Islena Airlines 
Isles Of Solly Sky bus 
Istanbul Airlines 
Japan Air Commuter 
Japan Airlines 
Japan Air System 
Japan Asia Aii 
Japan Trai 
Jersey Eu 
ays 

J^Airways 
ream 
"rimes 
mpuchea 
K arair oy 
Kcndell Airlines 
Kenmore Air 
Kerin Borek A 
rw. 
n Aii 
e Air 
Airli 
ationai 

Airlines 

KLM City Hopper 
KLM-Royal Dutch 
Airlines 


Lufthansa German 
Airlines 
Luxair 
Macrsk Air 
Makung Airlines 
Malaysia Airlines 
MALEV 

Mali Tinbouctou Air 
Service 

Malmo Aviation/city Air 
Scandanavia 
Mandate Airlines 
Mandarin Airlines 
Manx Airlines 
Markair Express 
Markair 

Martlnair Holland 
Maya Airways 
MBA 
Mcridi ana 
Merpati Nusantara 
Airlines 
Mesa Airlines 
Mesa be Airlines 
Metavia Airlines 
Metro Airlines 
MEXICANA 

Ml At- Mongolian Airlines 
Middle East Airlines 
Midway Airlines 
Midway Connection 
Midwest Express 
Airlines 

Missionary Aviation 
Fellowship 
Modiluft 

Monarch Airlines 

Mi 

mes 

yanma"A irways 
Nantucket Airlines 
Naske Air 

N^ffial Airlines (Chile) 
al Airlines (S.A.) 
At 



Prospair Air Charter 
Proteus 

Provincial Airways 
Ptarmigan Airways 
Qantas Airways 
Qwestair 
Redwing Airways 
Reeve Aleutian Airways 
Region Air 
Regional Airlines 
Reno Air 

Rheinland Air Services 
Rheintalflug Seewald 
GeseHschafr 
Riga Airlines 
Rio- Sul Services Aereos 
Regional 
Ross Aviation 
Rottnest Airbus 
Royal Air Maroc 
Royal Brunei Airlines 
Royal Jordanian 
Royal Nepal Airlines 
Royal Swazi National 
Airways 

Royal Tongan Airlines 
Ryanair 

Ryan Air (Alaska) 
Sabair Airlines 
Sabena Belgium World 
Airlines 

Sabourin Lake Airways 

SAETA 

SAHSA 

SAL Saxonia Airlines 
SAM 

Samoa Aviation 




•lew 

New York Helicopter 
Corporation 
Nujaraguenses de 


SAS (Scandinavian 
Airlines) 

SATA Air Acores 
SATENA 
Saudi a 
ic 

Airli f i 
view 
pati 

Service AErien wancais 
Servicio Aereo Leo 
Lopez 

Scrvicios Aereos Litoral 



Tainu Aiilmes 
Taiwan An lines 
Tajik Air 
Taman 
TAME 

Tanaiu Air Service 
TAP Air Portugal 
Taquan Air Seivicc 
TAROM 

T. AT. European Airlines 

Talonduk Flying Service 

Taira An 

Teddy Air 

Thai Airways 

Thoron Airways 

Time Air 

Tower Air 

Transaero 

Trans Air Cambodia 
Trans Asia Airways 
Transavia Airlines 
Transbrasll 

Trans Jamaica Airlines 
Transkei Airways 
Translift Airways 
Trans North Aviation 
Transport Air Centre 
Transporter Aereos 
Neuqucn del Estado 
Transposes Aereos da 
GuinO- Bissau 
Transporter Aereos de 
Cabo Verde 
Transporter Aereos 
Regipoais 

Tra nsporte»eroma r 
Trans Sta]V Airlines 
irways 
Airlines 
Id Express 

Tr imtTad & "Tobago Air 
Services 
Tropical Sea Air 
Tut, 

is < 

'rklsBtirlij 

~~ Airways 


Flcxalr 
Right Wfest Airlines 
Flitestar 
Florida Gult 
Flying Enterprise 
Forest Airline 
40- Mile Air 
Freedom Air 
Friasenflug 

Frontier Flying Service 
Gambia Airways 
Garuda Indonesia 
Gawne Airlines 

GB Airways 
Ghana Airways 
Gill Aviation 
Golden Air Flyg 
Goldfields Air Services 
Gonini Air Service 
Gotia Shuttle Express 
GP Express Airlines 
Grand Airways 
Great Barrier Airlines 
Great China Airlines 
Great Lakes Aviation 
Gronlandsfty 
Guinee Airlines 
Gulf Air Company 
Gultstream International 
Airlines 

Guyana Airways 
Hageland Aviation 
Services 
Hainan Airlines 
Haines Airways 
Haiti Trans Air 
Hamburg Airlines 

Hanna's Air 5altspnng 
Harbor Airlines 
Harbour Air 
Hawaiian Airlines 
Hazelton Airlines 



Kymair 

LAB 

L.A.B. Flymg Service 
Labrador Airways 
LA CSA 
LADE 

La deco Airlines 
Lad ecu 
Laker Airways 
LAM-LInhas Acreas de 
Mocamblquc 
Ian Chile 
Lao Aviation 
LAP (Lmeas Aereas 
Para quay as) 

LAPA (Lineas Aereas 
Privadas Argentines) 
Larrys Flying Service 
Las Vegas Airlines 
Latvian Airlines 
Lauda Air 
Lesotho Airways 
Letaba Airways 
LGW 

Luttfahrtgesellschatt 

Walter 

L1AT 

Liberty Airlines 
Lina Congo 
Lincoln Airlines 
Link Airways 
Lithuanian Airlines 
Loganair 
Loken Aviation 
Lone Star Airlines 
Long 7sJand Airlines 
LOT- Polish Airlines 
Love Air 

L.T.U. International 
Airways 

Luchvaart Maatschappii 
fwenre 


Nortandair 

Norontair 

North American Airlines 
North Coast Aviation 
Northeast Express 
Northwest Airlines 
Northwest Territorial 
Airways 

North Wright Air 
Nyge-Aero 
O'Connor Airlines 
Olson Air Service 
OLT -Ostfriesischc 
Lu I Ira ns port 
Olympic Airways 
Oman Air 
Ontario Express 
Orbi Georgian Airways 
Orient Air 
Oxley Airlines 
Fbcilic Airlines 
Pacific Coastal Airlines 
Pacific Express Airlines 
Pacific Island Aviation 
Pakistan International 
Airlines 

Panlanal Linhas Acreas 
Paplllon Airways 
Paradise Island Airlines 
Pero-Air 
Penair 

Perimeter Airlines 
Philippine Airlines 
Piedmont Airlines 
PLUNA 

Polynesian Airlines 
Portugal la 

Prairie Flying Service 
Precision Airlines 
Private Jet 
Promair Australia 
Promecn Air 


Shorouk Air 
Shuswap Flight Center 
Sichuan Airlines 
Sierra National Airlines 
Silk Air 
Simpson Air 
Singapore Airlines 
Skagway Air Service 
Skycratl Aii Transport 
Sky net Airways 
Sky port Ply 
Sky Service 
Skyways AB 
Skywesi Airlines (U.S.) 
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Skywings 
Solomon Airlines 
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Southeast Airlines 
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Airlines 
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Spirit Airlines 
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Stablechance 
Slateswest Airlines 
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Sun -Air of Scandinavia 
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SWISSAIR 
Syrian Arab Airlines 
TAAG -Angola Airlines 
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TAESA 


yroleait Airway 
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Ukraine International 
Airlln 
UnitairJ 
nilecWiriines 

SAir 

istan Airways 
Val^nciana dc Aviacion 
Vaiucjet Airlines 
VARIG -Brazilian An lines 
Vayudoot 

Viacao Atrca Sao Paulo 
VIASA 

Vieques Air Link 
Vietnam Airlines 
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VLM 

Voyageur Airways 
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Walkers International 
Warbo low's At/ Vcntmes 
Waterwmgs Airways 
Mfestair Commuter 
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West Air Sweden 
Western Airlines 
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Wilderness Airline 
Windward Islands 
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Company 
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Yemenia-Yemen Airways 
Yunnan Airlines 
Yulana Airlines 
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ZAS Airline ol Egypt 
Zhongyuan Airlines 
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THE FINEST IN THE SKY. 


a 


j 




NEWS: INTERNATIONAL 


South Korean president tries to cool row with North 


By Tony Walker In Beijing and 
Victor Mallet in Bangkok 

South Korea's President Kim 
Young-sam yesterday called for 
greater diplomatic efforts to 
solve the crisis over North 
Korea’s refusal to open Us 
nuclear sites to International 
inspection. 

His call came as North Korea 
said it had been ‘'driven into a 
corner” by US and interna- 
tional demands for full nuclear 
inspections, and reiterated it 
would withdraw from the 
nuclear non-proliferation 
treaty (NPT) if US pressure 
continued. 

Speaking after talks with 
China's Premier Li Peng, Mr 
Kim appeared to support Bei- 
jing’s call for patience in deal- 
ing with North Korea. 
“Through consultation and dia- 
logue I believe we can solve 
this problem smoothly without 
any difficulties," he 

Mr Kim has sent his foreign 
minister. Mr Han Sung-joo, to 


the US to press for heightened 
diplomatic efforts. Mr Han 
would also visit Russia early 
next month for consultations 
on the nuclear issue, he said. 

China opposes US efforts at 
the UN to set a deadline for 
Pyongyang to comply with 
international demands for 
access to its nuclear sites for 
International Atomic Energy 
Agency (IAEA) inspectors. 

Beijing has Indicated it 
might accept a statement by 
the Security Council president 
calling for North Korean 
cooperation, but only if it was 
couched in general terms and 
did not foreshadow economic 
sanctions. 

China's foreign ministry said 
on Monday that dialogue was 
“the only effective way” to set- 
tle the issue. China is appre- 
hensive of action that might 
place its unpredictable neigh- 
bour in a corner. 

Mr Kim used his visit to Bei- 
jing to urge China to play a 
more active role in seeking to 


wean North Korea from its 
self-imposed isolation. “We 
have never wanted the North 
to be isolated and will spare no 
effort to help Pyongyang join 
thp international community 
as a responsible member,” Mr 
Kim said at Beijing university 
yesterday. 

This approach mirrors one 
advocated by China. Chinese 
officials have said repeatedly 
that the west and especially 
the US should make gestures 
towards North Korea, such as 
steps towards diplomatic recog- 
nition. 

Mr Han said in Beijing 
before leaving for Washington 
that although China opposed 
sanctions against Pyongyang, 
it did not reject Seoul's view 
that pressure on North Korea 
could be increased later if 
required. 

Mr Haw denied ther e was a 
wide gap between China’s posi- 
tion that of the US and 
South Korea. “There's only a 
difference in the intensity of 


preference," he said. 

South Korean officials ha ve 
warned that sanctions against 
Pyongyang without China's 
cooperation would be ineffec- 
tive. China supplies the bulk of 
North Korea’s oh. It also ships 
foodstuffs. 

fThina t> ng criticised US aT> d 
South Korean plans to w». in iig 
the Team Spirit joint military 
exercises suspended last year 
in an effort to encourage North 
Korea to be more cooperative. 
Beijing has also counselled 
against the deployment of US 
Patriot missiles in South 
Korea. 

These criticisms are 
regarded by western officials 
in Bering as “pro-forma”. 
China is thought to want to 
continue giving the appearance 
of supporting North Korea on 
some issues in the hope that 
ultimately this may bolster its 
leverage in Pyongyang. 

Meanwhile in Bangkok, in a 
rare briefing by a North Kor- 
ean official, Mr Li Do Sop. 


Pyongyang's ambassador to 
Thailand, denied his govern- 
ment wanted to build nuclear 
weapons, saying it bad nwth^ - 
the capacity nor the money to 
do so. 

Explaining why North Korea 
has barred IAEA inspectors 
from fully examining all its 
nuclear sites, Mr Li said this 
was a response to outside pres- 
sure. 

“They forced us too much, 
they drove us into a corner so 
much that we reacted,” he 
said, «»ning North Koreans the 
“victims" of US hostility- “The 
US’s pressure-bound machina- 
tions will result in driving us 
completely out of the - NPT." 

Mr La avoided the bellicose 
language of some earlier North 
Korean statements and 
described his country’s mili- 
tary posture as completely 
defensive. Asked why Ids coun- 
try had developed long-range 
missil es, he replied: "We have 
to increase our defensive 
capacity to defend our sover- 


eignty *>wd our dignity." 

He insisted the unclear issue 
shmild be resolved as part of a 
package deal agreed by Wash- 
ington and Pyongyang last 
month that included an IAEA 
inspection, a proposal for the 
exchange of envoys between 
North and South Korea, and 

the suspension of the US-South 
Korean “Team Spirit" military 
exercise. Each side now 
accuses the other of breaking 
the agreement; the US and 
South Korea are plan n ing to go 
ahead with Team Spirit. 

“The US does not have real 
intentions to solve nuclear 
problems through nego tiations 
or talks.” Mr U said. “It is 
their intention to stifle our 
republic, destroy our republic.” 
He ruled out a military first 
strike by North Korea, but 
added: “If they kill one of ns, 
then one of thorn should also 
be killed” 

On the threat of economic 
sanctums against North Korea, 
Mr Li said his country was 



L£ Do Sop: defensive 


already under economic pres- 
sure from the US and Japan 
and was accustomed to self-suf- 
ficiency. 

“The people have no worries 
about their housing, clothes or 
their food, or any worries 
about medical care,” he said. 
“At this moment, our people 
are saying they are happy.” 


Patten pledges 
action on rising 
HK home prices 


PLO officials say they do not expect to announce any agreement before today 



By Simon Holberton 
In Hong Kong 

The Hong Kong government is 
to develop a comprehensive set 
of proposals to deal with the 
issue of rising house prices, Mr 
Chris Patten, the colony's gov- 
ernor. said yesterday. The gov- 
ernor said rising property 
prices were the top issue feeing 
Hong Kong. “It is an excep- 
tional problem and l think it 
will demand exceptional mea- 
sures," he said. 

Home ownership is one of 
the main aspirations of people 
in Hong Kong. But analysts 
say that due to a government 
policy which restricts the sup- 
ply of land for residential 
development, prices have been 
kept artificially high. 

In 1993, residential property 
prices rose by an average 23 
per cent compared with the 
previous year. At the luxury- 
end of the market, prices were 
up by more than 50 per cent. 
Mr Patten, who left for Europe 
last night, said he bad 
instructed senior civil servants 
to develop proposals For action 
by the early summer. There 
were no simple solutions to the 
problem, he declared. 

Property market analysts 
said the problem of high resi- 
dential property prices could 
be solved by an increase in the 
supply of land. Mr Peter Chur- 
chouse, managing director of 
Morgan Stanley, said: “The 
government is absolutely 
appalling in its land policy. It 


runs a high land-price policy 
which has meant land prices 
are twice what they should 
be" 

High residential property 
prices have caused a storm of 
protest in Hong Kong. Elected 
politicians have warned of 
unrest among frustrated home 
buyers who cannot afford the 
price of entry into the residen- 
tial market. A 600 sq ft flat 
costs around HK$2m (£173,460). 

Property developers have 
also been accused of rigging 
the property market by holding 
back from release completed 
homes. Prof Edward Chen, a 
member of Mr Patten's Execu- 
tive Council, and chairman of 
the Consumer Council, has 
alleged developers are holding 
back up to 50 per cent of Oats 
completed last year. Even Bei- 
jing has joined the debate, with 
officials criticising mainland 
companies for speculating in 
the colony's property market 
• Hong Kong's electoral 
watchdog launched a publicity 
campaign yesterday, to per- 
suade residents to register to 
vote in the last elections before 
the British colony returns to 
China in 1997, Reuter reports 
from Hong Kong. Mr Woo 
Kwok-hing. Election Commis- 
sion chairman, said he hoped a 
quarter of Hong Kong’s 154m 
eligible voters who have yet to 
register would do so by July 1. 
The final local council polls 
fell in September, with Legisla- 
tive Council elections next 
year. 


Hebron 
security 
talks held 
in secret 

By Mark Nicholson in Cairo 
and David Horovitz fen 
Jerusalem 

Palestinian and Israeli 
negotiators met secretly in 
Cairo last night, in a continu- 
ing effort to finalise security 
arrangements for Palestinians 
in Hebron, which the PLO has 
insisted are the precondition 
for returning to Dili peace 
talks. 

PLO nffirnnia gain before the 
talks they did not expect to 
announce any agreement 
before today. They refused to 
ml) the talks “negotiations", 
salting their delegates were 
simply “receiving answers 
from the Israeli government”. 

The PLO and Israel agreed 
last week in principle to the 
deployment of international 
observers and Palestinian 
police in Hebron but were at 
odds over the number to be 
deployed and rules of deploy- 
ment. Israel has said it will 
permit only 60 international 
observers and a few dozen Pal- 
estinian police; the PLO 
insisted on 150 observers and 
400 police. 

PLO negotiators kept their 
Israeli counterparts waiting for 
over an hour before the talks 
started. They were awaiting 
clea r an c e from Mr Yassir Ara- 
fat, the PLO chairman based in 
Tunis, who had convened 
senior officials to discuss 
whether to stall the talks in 
protest at the shooting of six 


members of his own Fatah fac- 
tion in Gaza on Tuesday. 

The two sides are likely to 
proceed as quickly as possible 
on resolving the Hebron issue 
before moving directly to a 
resumption of fall talks on 
Israeli withdrawal from Gaza 
and Jericho. These talks have 
been suspended since an Israeli 
settler killed over 30 Palestin- 
ians In Hebron on February 25. 

Mr Shimon Peres, Israeli for- 
eign minister, seemed down- 
hearted yesterday, speaking of 


the “many obstacles” to be 
overcome before talks could 
resume, and ruling out any 
prospect of an early summit 
between Prime Minister Yit- 
zhak Rabin and Mr Arafat. 

The Israeli team, last night 
briefing Mr Rabin on the Tunis 
talks, ruled out PLO calls for 
the removal of Jewish settlers 
from Hebron. Most Israeli min- 
isters favour evacuation of the 
settlers, but Mr Rabin has been 
adamant that, in accordance 
with the Declaration of Princi- 


ples signed by Israel and the 
FLO in Washington last Sep- 
tember, the issue of settle- 
ments remains off the ag enda 
for at least two years. 

• PLO leaders in Gaza 
emphatically denied yesterday 
that the six Fatah activists 
shot dead by Israeli undercover 
troops in the Jeblaya refugee 
camp on Monday night had 
opened fire first on the sol- 
diers, ami Israeli military offi- 
cials appeared to backtrack on 
their earlier claims that the 


soldiers bad come under fire. 

The militar y officials, having 
initially claimed their troops 
opened fire on the uniformed 
Fatah activists only after fewng 
shot at themselves, revised 
their account, saying only that 
since the Fatah men were 
aimed, the soldiers feared for 
their lives. 

The Gaza killings triggered a 
furious backlash in the occu- 
pied territories, with at least 
one Palestinian killed and 
more than 50 injured. 


Hosokawa takes a more 

Has Tokyo opened its markets enough to satisfy the US 
and stave off trade sanctions, asks Emiko Terazono 


F or Mr Morihiro Hoso- 
kawa. Japan's prime 
minister, who last 
month claimed that US-Japan 
relations had turned into a 
“mature relationship” follow- 
ing his rejection of American 
demands on trade, yesterday’s 
package represented a a return 
to more pragmatic approach in 
dealings with the US. 

Concerns that increased ten- 
sions will hurt the Japanese 
government and also the slug- 
gish economy have overcome 
initial euphoria among govern- 
ment officials and the media 
which applauded a Japan that 
can say No to the US. 

Foreign ministry officials are 
worried that increased ten- 
sions over trade could harm 
the overall US-Japan relation- 
ship at a time when Japan's 
importance as an ally to US 
seems to be declining with the 
end of the cold war. 

The economic consequences 
are also causing anxiety. The 
sharp rise in the yen following 
the breakdown of the talks in 
February is squeezing export- 
ers' profits and threatening an 
economic recovery expected 


later this year. Implementation 
of sanctions by the US would 
also deprive Japan’s export-de- 
pendent manufacturers of one 
of their largest markets. 

And the increasing trade 
friction between the two coun- 
tries is creating a political risk 
for Mr Hosokawa, whose popu- 
larity is waning awiil mount- 
ing pressure from the opposi- 
tion Liberal Democratic party 
to clarify his links with 
Sagawa Kyubin, a trucking 
company at the centre of sev- 
eral recent scandals and which 
provided the prime minister 
with a YlOOm (£636500) loan 10 
years ago. 

According to an opinion poll 
by the Nihon Keizai Shimbun, 
the business daily, Mr Hoso- 
kawa's approval rate this week 
fell to 47.6 per cent, dropping 
below 50 per cent for the first 
time since his appointment last 
August. He cannot afford to 
provide the LDP with extra 
ammunition by failing to 
resolve the stalemate with the 
US over trade and jeopardising 
the relationship. 

The leading question is 
whether the latest package is 


enough to persuade the US to 
reopen the socalled framework 
talks on trade. Some US offi- 
cials expressed dissatisfaction 
at the lack of specific figures 
for an income tax cut and for 
levels of government expendi- 
ture, which are scheduled to be 
announced in June in time for 
the Group of Seven summit of 
1 parting industrial nations. 

Although yesterday's pack- 
age included no radical new 
ideas, US government officials 
and businessmen agreed the 
easing of regulations and 
increased transparency indi- 
cate a move in the right direc- 
tion. 

The measures, in opening up 
the Japanese market to US 
manufacturers, will in theory 
aid economic efficiency, which 
would be of key assistance to a 
mature economy set for slow 
growth over the next decade. 

For Japanese government 
officials, the announcement of 
the package allowed them to 
prove that they can set volun- 
tary trade policies after last 
month’s bilateral framework 
tails foiled to go beyond nego- 
tiations over binding import 


pragmatic line 


Tokyo’s OS trade tussle v r . ' 




quotas. However, for the US, 
the programme only confirms 
old beliefs that foreign pres- 
sure is the only way to get 
results out of Japan. 

Analysts say it is thus 
unlikely that the the US will 


lift pressure over trade. The 
yen will remain volatile as it 
will be used as a policy fool 
aimed at Japan until the US 
sees actual results," said stock- 
broker J artline Fleming in 
Tokyo. 


Mixed signals on state of the economy 


By Paul Abrahams 

Further contradictory data 
about the state of the Japanese 
economy emerged yesterday. 
Although an index used to 
measure the economic outlook 
for the next six months was 
up, unemployment rose 
sharply and sales in large 
stores felL 

The latest report from the 
Economic Planning Agency 
showed the diffusion index of 
economic indicators had risen 
to 60 in January, moving 
solidly above the SO mark, the 

dividing line between growth 


and contraction. The index can 
be unreliable, since it indicated 
an economic recovery during 
the first four months of 1998 
which did not occur. 

Nevertheless, housing loans 
increased sharply during 
February, as home buyers took 
advantage of low interest rates. 
The number of loan 
applications for owner- 
occupied homes rose 655 per 
cent compared with last 
February, the Housing Loan 
Corporation said. 

The pick-up in housing loans 
fed through to a mwll increase 
in sales of furniture and 


household electrical goods at 
large retailers. But overall 
sales at such outlets dropped 
2.S per cent in February 
compared with the same period 
last year, according to the 
international trade ' and 
industry ministry. This was 
tiie 21 st month retail sales fell, 
and throws some doubt on the 
likelih ood of a consumer-fed 
recovery. 

Any upturn in the economy 
has yet to feed through to the 
jobs market The government 
yesterday said the 
unemployment rate last month 
had risen 05 percentage points 


to 2.9 per cent compared with 
January. The rate was the 
highest since June 1987, while 
unemployment among women 
rose steeply to reach an 
all-time high of 32 per cent 

Economists said employment 
normally lagged behind an 
economic recovery, but the 
sharp rise in unemployment 
was a disappointment after it 
had fallen in January for the 
first time in 22 months. 

The number of people 
without jobs reached L94m in 
February, an increase of 
370.000 (33.6 per cent), 

compared with the same 


month last year. Much of the 
fen was caused by a drop in 
manufacturing jobs, down 
480,000 since last year. A rise 
in the number employed in 
construction and services 
foiled to offset the decline. 

The continuing weakness of 
the jobs market was confirmed 
by a fall in the ratio of 
employment available to job 
seekers, which dropped 0.02 
percentage points to 055. The 
rate peaked in March 1991 at 
1.45. The number of jobs 
available foil 15 per cpnt; th e 
number of applicants rose 2 
per cent 


Japanese carmakers relent after 
sustained pressure from US 


Honda, Mazda 
to buy more US 
car parts 


By Paul Abrahams h Tokyo 

Honda and Mazda, the 
Japanese motor groups, yester- 
day followed the example of 
their three main competitors 
and announced plans to 
increase use of locally made 
components at their American 
factories. The companies also 
promised to increase imports 
into Japan. 

Separately, the ministry of 
international trade and indus- 
try announced it was ending 
its voluntary cap on car 
exports to the US because it 
hart been made redundant by 
local manufacture of Japanese 
cars in the US. 

The cap was introduced in 
1981 to protect the US motor 
industry. About 154m vehicles 
will be built by Japanese man- 
ufectnrers in the US in 1964, 
the first year they will exceed 
exports to the US of cars pro- 
duced in Japan. These are 
expected to reach nearly 1.4m 
units. Japanese exports have 
been under the ceilings set by 
the voluntary agreement since 
1987. 

The announcements come as 
the Japan Automobile Manu- 
facturers’ Association revealed 
that Japan's motor exports In 
February had fallen 235 per 
cent in nnit terms compared 
with the same month last year. 
The figure was down 2.6 per 
cent on the preceding month. 
In dollar terms, exports, 
including parts, dropped 75 
per cent to $658bn. Japanese 
car, bus and truck makers 
have been struggling with the 
high value of the yen which 


has made their products 
increasingly uncompetitive. 

The car makers' undertak- 
ings on parts follow sustained 
pressure from Washin g ton for 
Japan to increase use of US 
vehicle components to reduce 
Japan’s trade surplus. Only 2 
per cent of motor parts are 
imported. The Japanese gov- 
ernment insists it is unable to 
interfere in private business. 

Toyota, Nissan and Mitsubi- 
shi have already revealed simi- 
lar programmes. Combined, 
the five groups have commit- 
ted themselves to increasing 
US parts purchases by more 
than $5.3bn by the financial 
year enifing March 1 998. 

Honda said it planned to 
increase the use of US parts at 
its Marysville, Ohio plant from 
$3.21bn in the 1992 financial 
year to $455tm during the 1995 
financial year. It would also 
raise imports of vehicles and 
parts from $157bn to $L27bn 
between 1992 and 1995. 

However, the group said that 
while it would make every 
effort to achieve such goals, it 
was not an enforceable com- 
mitment. “Successful achieve- 
ment of the goal depends an 
wwintaininp stron g sales in the 
US and continued improve- 
ments In US suppliers’ compet- 
itiveness.’’ it said. 

Mayrta announced it would 
increase imports of compo- 
nents into Japan from 6568m 
last financial year to 6870m by 
the year ending March 1998. 
Over the same period Local pro- 
curement of parts aiits Ameri- 
can factory would Increase 
from SL65bn to ¥l-9bn. 


news IN BRIEF 


Singapore 

secrets 

trial 

nears end 


By KJeran Cooke 
in Kuaia Lumpur 

Prosecution and defence in the 
Singapore trial of five men 
charged with breaking the 
republic’s official secrets act 
by disclosing a government 
economic growth esrimate 
have finished presenting their 
cases. A verdict is expected 
lata: this week or early next 

Hie five, two financial jour- 
nalists and three economists, 
are accused of colluding in th® 
disclosure of the 4.6 per cent 
second-quarter growth figure 
for 1992, which was published 
in the Singapore Business 
Times, the republic’s leading 
flntmpfai dally. 

Among the accused are Mr 

Thannan Sbamnngaratnam, 
director of the economics 
department at the Monetary 
Authority of Singapore (MASK 
Singapore’s de facto central 
haiifr , and Mr Patrick Daniel 
editor of the Business Times. 

The prosecution has argued 
that Mr Shanmogaratnam dis- 
closed the growth estimate to 
two economists working with 
local securities houses who 
then passed on the figure to 
the Business Times. 


Thais ^forced 
refugees home 5 

A senior Thai officer admitted 
yester da y that the 25,000 refu- 
gees whom the Thai military 
repatriated to Cambodia last 
week were returned against 
their will, AP reports from 
Ghantaburi, Thailand. 

Thai officials previously had 
said the refugees returned vol- 
untarily. On Monday, the UN 
High Commissioner for Refu- 
gees lodged a protest with the 
Thai government, saying the 
repatriation put the lives of 
the Cambodians at risk and 
violated international stan- 
dards. 


Explosion rips 
Srinagar camp 

An explosion ripped through 
«i Tertian arm y camp in Kash- 
mir state yesterday, killing 13 
soldiers and Injuring seven, 
Reuter reports from Srinagar. 
Domestic news agencies 
quoted an army spokesman as 
saying the blast at Badami- 
bagh base, in Srinagar, 
occurred while officers were 
inspecting weapons captured 
from Moslem separatists. 

Two pro-Pakistan militant 
groups, the Janriat-nl-Mqjahi- 
deen and file Jkhwan-ul-MusU- 
meen, dam^ responsibility. 

NZ offer to 
repay Nauru 

New Zealand said yesterday it 
would pay compensation to 
the Pacific island state of 
Nauru for environmental dam- 
age caused by phosphate min- 
ing, Reuter reports from Wel- 
lington. New Zealand, 
Australia and Britain jointly 
mined for phosphate until 
Nauru won independence in 
1968. 

Mr Don McKinnon, foreign 
minister, said Wellington and 
London would each contribute 
A* 12m (685m) towards a total 
compensation package of 
A$107m. 


Burundi seeks 
intervention 5 


Burundi's interior and public 
security minister, yesterday 
appealed for foreign troop 
intervention to end tribal war 
in the central African country, 
Reuter reports from Brussels. * 
Tens of thousands of people 
have been killed since last 
October when renegade sol- 
diers from the army, domi- 
nated by the minority Tutsi 
tribe, assassinated the coun- 
try's first Hutu president, Mr 
Melchior Ndadaye. 


IMF aid for 
Sierra Leone 


lending to the cou n t ry , 
reports from Washingtc 

The loans follow pay 
outstanding obligation 
lending agency fedlit 
bridge financing by 
Norway and the U& 

In a separate tram 
the IMF said it had apt 
credit of f23m to sopp 
nomic reform policies 
Central African Repub 
the next year. 





FINANCIAL TIMES WEDNESDAY MARCH 30 1994 



NEWS: INTERNATIONAL 


* s iii s^- 


1 1 


s 




Agriculture and industry begin to emerge from a thorny patch 

Malawi sets 
its sights 
on a rosier 
future 

Diversification pointing 
the economy forwards, 
writes Nicholas Young 


Ihree passenger flights 
per week connect 
Malawi with, mainland 
Europe, and each carries a 
hold full of roses. 

Grown in 6.5 hectares of 
greenhouses on Lingadzi 
Farms, a few kilometres from 
Lilongwe's international air- 
port, 16m cut flowers were 
exported last year, primarily to 
the Netherlands. Sales of 9m 
kwacha (62m before the kwa- 
cha was floated), hardly begins 
to rival Malawi's receipts from 
tobacco, which still accounts 
for two fluids of export earn- 
ings but it shows a potential 
way forward for the Malawian 
economy. 

Since independence in 1964. 
President Eamuzu Hastings 
Banda has concentrated on 
large-scale agriculture - 
tobacco, tea and sugar. This 
resulted in occasionally 
impressive growth figures 
which have been vulnerable to 
the vicissitudes of world 
prices, drdught and the war in 
neighbouring Mozambique 
which cut the rail link to the 
nearest Indian Ocean port Lit- 
tle of the export wealth, how- 
ever. trickled down to the 
mainl y rural population. 

Diversification has long been 
desirable but the question was 
mtn what and how? Macada- 
mia nuts have fractionally 
broadened the agro-export 
base, but the market for them 
is small and there are a grow- 
ing number of international 
competitors. 


Increasingly it is argued that 
attention should focus on a 
range of low-volume, high 
value horticultural crops. This 
win be one of the recommenda- 
tions of an African Develop- 
ment Bank miarinn which has 
been working with the trade 
Twi w i gf r y to identify industrial 
opportunities, markets and 
potential investors. 

Mr Ramesh Ardikart, head of 
the mission, sees a future for 
crops with modest land 
demand, such as asparagus, if 
the government helps to pro- 
vide air freight facilities. 

The first requirement of such 
a focus, according to Mr Ardi- 
kari, is the right policy envi- 
ronment to attract investment 
He sees February’s lifting of 
exchange controls and author- 
isation for exporters to hold 
har d currency bank accounts 
as a step in this direction. 

Ms Jenny Perepeckzco. gen- 
eral manager of Lingadzi 
Farms, says the move facili- 
tated expansion plans. These 
include a new irrigation 
scheme and another 2 hectares 
of greenhouse, producing a far- 
ther 4m roses per annum. 

The liberalisation package 
came at a time of acute foreign 
exchange shortage, before the 
April tobacco auctions, and 
when many foreign investors 
had a backlog of dividends 
they had been unable to obtain 
the foreign erchangp to remit, 
a rapid result was the effective 
devaluation of the kwacha by 
some 40 per cent 



New methods and crops are being introduced into Malawi’s traditional agriculture sector of tea and tobacco 


Mr Jerry Jana, director of 
the Malawian Chamber of 
Commerce, commented that 
“It's a large dose of medicine; 
some of us were not aware we 
were that sick.” 

The lifting of exchange con- 
trols was the latest stage in a 
process of economic liberalisa- 
tion which has been going on 
fora decade. 

F irst on the list of targets 
for structural adjust- 
ment was Admarc, the 
paragfratai agricultural market- 
ing board, which was divested 
in the 1980s of various subsid- 
iary operations. 

The softwood furniture man- 
ufacturer, Wood Industries, 
has been privatised while 
Malawi Railways is in the pro- 
cess of rationalisation before 
possible privatisation. The tele- 
communications network has 
been hived off from the Post 
Office and made to operate on 
commercial lines. It too may be 
sold. 


Import liberalisation has also 
allowed rival goods into a local 
market which has been pro- 
tected for local manufacturers 
and established foreign inves- 
tors who are now seeking 
export markets. 

Lonrho of the UK is the larg- 
est foreign Investor with sub- 
sidiaries in agriculture as well 
as transport and motor vehicle 
franchises, it has a key posi- 
tion in the economy, not least 
through its monopoly erf sugar 
production both for export and 
local sale. 

If Lonrho decides to reduce 
its stake in Malawi, a likely 
buyer would be the country’s 
own giant, the Press Group. 
With 20 subsidiaries and 12 
associated companies in distri- 
bution, manufacturing, agricul- 
ture and financial services, 
including major shareholdings 
in both hi gh street banks, the 
group's turnover last year of 
kwacha 1.5bn amounts to 
about a fifth the country’s 
gross domestic product 


Such a concentration of eco- 
nomic power concerns World 
Bank economists, even though 
one privately admits that Press 
Is “remarkably efficient.” 
Restructured in the 1980s. the 
company has repaid loans 
ahead of schedule and has 
started to pay dividends to its 
ultimate share holder, the Press 
Trust 

This shadowy body, intended 
to operate “for the benefit of 
the people of Malawi," has as 
its chairman President Banda 

hiinwlf 

T he only other declared 
trustees are Mr Louis 
Chimango, finance min- 
ister, and Mr John Tembo, the 
uncle of Dr Banda’s official 
consort who is in effect his 
prime minis ter and also chair- 
man of Air Malawi, Admarc. 
the main publishing house 
Blantyre Print, and the Press 
Group itself, as well as several 
of its subsidiaries. 

None of the six opposition 


parties contending for power in 
the May elections suggest seri- 
ous alternatives to the liberal- 
isation programme. 

There is no perceptible dif- 
ference in ideology, only a deep 
seated suspicion, or envy, of 
the power which has accumu- 
lated alnng the Ranrta .Tftmhn 
axis. 

Mr Watipaso Mkandawire, 
an economist in the Invest- 
ment Promotion Agency, 
recently set up as a “one-stop 
shop” to facilitate the setting 
up of new companies, believes 
that the predominance of Press 
Group cuts two ways. 

It can, he says, be very hard 
for Malawian entrepreneurs to 
break into areas where the 
group has dealings; but fore ign 
investors may be attracted by 
Press' record of partnerships 
with firms companies British 
Petroleum, Csrlsberg, and the 
Guardian insurance group, and 
by the possibility of using 
Malawi as a back door into 
South African markets. 


nn 



yon 


f...' v J • • A 


International Taxation 


mSWayMay 20* 


The survey will review the taxation 
system worldwide and examine the 
challenges it will face In 1994 and 
the implications for the international 
business community. The survey will 
reach an estimated international 
readership of 1 million. 


For an editorial si 

Infor ma tion on 

cont a ct 

SARA MASON 

on 

Tel: 071 873 4874 
Fax: 071 873 3064 


FT Surveys 


V, ; Yv]k \ ; Jy. •/ v- 

: - 1 ■ ^ 








of 

to 

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FINANCIAL ”Tlir* ; V*^r tncrxA v ™ ARCH 30 l9 ^ 


NEWS: THE AMERICAS 


Zedillo succeeds murdered Mexico presidential frontrunner 


By Damian Fraser In Mexico City 

Mr Ernesto Zedillo, a former 
budget and. education minister, yes- 
terday became presidential candi- 
date of Mexico’s ruling Institu- 
tional Revolutionary Party after 
his chief rival took himself oat of 
contention. 

Mr Zedillo, the campaign man- 
ager of murdered presidential front 
runner Mr Luis Donalds Colosio, is 
now the strong favourite to win the 
presidential election on August 21. 
Mexico’s governing party has been 


in power for the past 65 years, and 
(s well ahead of the opposition in 
opinion polls. 

Mr Fernando Ortiz Arana, presi- 
dent of the PRI, said yesterday that 
as the party head he should not 
favour one candidate over another, 
and therefore would not seek the 
nomination himself. Mr Ortiz 
Arana had been a favourite of the 
party rank -and-file, and in recent 
days bad been openly backed by 
members of the party's old guard. 

His decision paved the way for 
the nomination of Mr Zedillo, who 


was managing Mr Colosio' s cam- 
paign until his assassination at a 
Tijuana campaign rally last 
Wednesday. 

Mr Zedillo, 42, a OS-trained econ- 
omist, clearly represents the tech- 
nocratic, pro-economic reform wing 
of tiie party. He is a prot£g£ of 
President Carlos Salinas, and is 
likely to be supp o rt e d by allies of 
Mr Colosio in the party. B3s nomi- 
nation sends a clear signal of conti- 
nuity with the economic policies of 
Mr Salinas. 

Mr Zedillo became budget minis- 


ter at the age of 36, and Is widely 
admired for his intellect. After 
leaving budget ministry he became 
education minister, where he over- 
saw important reforms. He earned 
a PhD in economics from Tale Uni- 
versity and has worked at Mexico’s 
Central Bank. 

However, Mr ZedHlo has never 
held elective office, and does not 
inspire much confidence among the 
party traditionalists. He had been 
mentioned as a possible presiden- 
tial contender last year, but was 
passed over because of his lack of 


political experience and insuffi- 
cient support in the party. 

He had been widely criticised as 
education minister for putting out 
school textbooks that revised the 
nationalist interpretation of Mexi- 
can history. 

Mr Orta Arana emphasised the 
need for unity in the wake of Mr 
Colosio’s assassination and his 
willingness to take himself out of 
the list of contenders makes It 
more likely the PRI will rally 
around Mr Zedillo. 

Despite misgivings about Mr 


Zedillo’s political talents, there has 
been do obvious alternative to him. 
Other eligible rivals either lack 
government experience, or are not 
viewed as loyal followers of Hr 
Salinas. Candidates hi the govern- 
mart have been taken out of con- 
tention by Mexico's constitution, 
which prohibits ministers and gov- 
ernors from being nominated as 
presidential candidate six months 
before the election. 

According to tradition, Mexico’s 
president selects the candidate of 
the PRI after consultation with 


party leaders in a process lowwnes 
thededazo - orpohxt^^^^ 
ger. With Mexico mtonMO a»er 
Mr Colosio’s assassina^ M* sau 
nas has to ensure that toecbo«n 
candidate does not provoke dt 
sions in the party. 

Meanwhile the government 
acknowledged y«tentey that more 
than one person *WJ£Si!HE 
involved in the death of 1 

Mr Rene Gonzalez de to Jgg 

ija nfhia Venegas. 


US economy surges 
as confidence rises 


By Michael Prows© 
hi Washington 

A sharp rise in consumer 
confidence this month to the 
highest level in nearly Tour 
years yesterday indicated that 
the US economy is again surg- 
ing ahead after bad weather 
and other distortions temporar- 
ily slowed growth at the start 
of the year. 

The Conference Board, a 
New York business analysis 
group, said its consumer confi- 
dence index rose nearly 7 
points to 86.7 in March, the 
highest reading since July 
1990, at the peak of the previ- 
ous business cycle. 

Separately, the Commerce 
Department reported early 
signs of a rebound in housing 
after disruptions caused by 
severe winter storms and the 
Californian earthquake. New 
homes sales rose 1.9 per cent 
last month and by 8 per cent in 
the year to February. This fol- 
lowed an erratic 22.5 per cent 
decline in January. 

The confidence figures are 
the first clear sign that the 
economy may be back on the 
steep upward growth trend 
established in the second half 
of last year when real gross 
domestic product grew at an 
annual rate of more than 5 per 
cent 

Analysts are now keenly 


US consumer confidence 

Index. 1885 = 100 

90 



60 Vii 


Schick Dabaatream 


awaiting payroll employment 
figures for March, due oat this 
Friday, for confirmation of fos- 
ter growth. The consensus 
view is that about 250,000 new 
jobs were created this month, 
well above the average for last 
year. But some analysts are 
looking for an increase of 
300,000. 

If economic data for March 
do confirm rapid economic 
growth, the US Federal 
Reserve is likely to come under 
renewed pressure in financial 
markets to raise interest rates 
again. Last week the Fed sig- 
nalled a second quarter-point 
increase in short-term rates to 
3.5 per cent 

The consumer confidence 
index has risen 26 points in the 


past five months and is now at 
a level which, over the years, 
has foreshadowed an increas- 
ingly strong economy, accord- 
ing to Mr Fabian i-inden of the 
Conference Board. 

A sub-index measuring con- 
sumers' expectations of eco- 
nomic conditions over the next 
six months had risen particu- 
larly sharply - from 84.4 to 
93.0. 

The survey also revealed 
that most US consumers 
expect interest rates to rise fur- 
ther 70 per cent of respondents 
said rates would go up again 
against against less than half 
six months ago. 

The index is based on a sur- 
vey of 5,000 households. 

The rise in new home sales 
last month mainly reflected a 
sharp rebound on the west 
coast following disruption 
caused by the Los Angeles 
earthquake in January. Sales 
in the west rase 28 per cent 
after a 22 per cent decline in 
January. Sales in the nor- 
theast, midwest and south fell 
again last month, but by less 
in most regions than in Janu- 
ary. 

Most analysts expect a 
solid national increase in new 
home sales this month, 
reflecting more clement 
weather and mortgage rates 
that are still low by historical 
standards. 


Clinton 
climbs 
back in 
poll 
ratings 

By Jurek Martin in Washington 


President Bill Clinton's 
exposition of the Whitewater 
affair at last Thursday's press 
conference has produced an 
immediate rise in public sup- 
port, according to two polls 
released yesterday. 

The same surveys also 
showed a public increasingly 
believing tint the media is pay- 
ing too much attention to the 
first family's flnanrifll rtaalrng w 
in Arkansas when he was gov- 
ernor and to the allegations 
that senior aamintet r aHwi offi- 
cials have sought to frustrate 
investigations into than. 

The recent poll trend has 
seen Mr Clinton’s approval rat- 
ing slipping mir> tiie mid-4fls. 
However, the Washington Post 
ABC survey, conducted last 
weekend, had it back up to 57 
per cent, a 10 -point rise com- 
pared to last week. The CNN- 
Gallup-USA Today poll 
recorded a more modest two- 
point rise to 52 per cent 

The first poll found 54 per 
cent approving of the way the 
president was handling White- 
water, up from 32 per cent just 
three weeks before. Some 60 



RIDING WHITEWATER RAPIDS; (from left) Mrs HQlaty Clinton, George Stephanopoulos, Tom Foley and President Bill Clinton. 


per cent thought he was 
“ mainl y telling the truth” 
while 55 per cent thought he 
had done nothing illegal and 51 
per cent thought the same of 
Mrs Hillary Rodham Clinton. 

The second poll, with 
slightly different questions, 
still detected a high level of 
public concern. Only 36 per 
cent answered he had done 
“nothing wrong,” but this was 
up five points in three weeks. 

The Post-ABC poll found 71 
per cent believing the media 
was paying too much attention 
to Whitewater, while the sec- 
ond survey put that level at 55 
per cent It also found 54 per 


CONSISTENCY. 



cent persuaded that the Repub- 
licans were "overreacting” to 
Whitewater. 

Some news organisations 
have found, themselves in con- 
troversy over specific aspects 
of their coverage of the affoir. 
Newsweek magazine seemed 
yesterday close to an apology 
to Professor Marvin Chirelstein 
of Columbia University for pos- 
sibly misrepresenting his 
views on the Clintons’ tax 
returns, released last week. He 
said he was “simply outraged 
and humiliated" by a "biased” 
article in which he is quoted as 
saying Mrs Clinton must have 
benefited from a "sweetheart 

Menem 

sacks 

watchdog 

By John Barham bi Buenos 
Aires 

Argentina’s President Carlos 
Menem has sacked the presi- 
dent of the national securities 
commission (CNV), claiming 
he had breached the confiden- 
tiality of his post 

Mr Martin Redxado had 
vowed he would not resign, 
insisting he was legally enti- 
tled to tenure until 1996 to 
Insulate him from political 
interference. 

Mr Redrado’s dismissal was 
precipitated by his criticism of 
proposals by Merrill Lynch 
and CS First Boston of the US 
to handle the sale of 5720m- 
worth (£493m) of stock in the 
privatised oil company YPF 
held by Argentine pensioners. 
He had attacked the commis- 
sion rates for the sale. 


deal” hi her commodities trad- 
ing in the late 1970s. 

Mr Robert Fiske, the inde- 
pendent Whitewater counsel, 
said he was "very upset and 
disturbed” by a cover story in 
Time magazine, which quoted 
sources on his team In its 
article on the role of Mr George 
Stephanopoulos, senior presi- 
dential aide, in the Whitewater 
affair. Such contacts, he said, 
had not taken place, but Time 
■said it did not main * up any 
quotes. The ma gashw was also 
criticised for its cover picture 
on the grounds it was token in 
November, before Whitewater 
was a major story. 


Mr Stephanopoulos has 
admitted his anger on discover- 
ing that federal regulators had 
hired Mr Jay Stephens, a 
Republican former US attorney 
frequently critical of Mr Clin- 
ton, to investigate the failed 
Arkansas savings and loan 
institution implicated in 
White w ater. But his reaction 
has been defended by many in 
Washington. Mr Tom Foley, 
Speaker erf the House, sarcasti- 
cally suggested those who 
found anything wrong with it 
had invented a new standard 
of public behaviour - "the 
appearance of the appearance 
of i m p ro priety.” 


Cardoso set for 
presidential run 


By Angus Foster in SSo Paido 

Mr Fernando Henrique 
Cardoso, Brazil’s finance min- 
ister, is expected to resign 
today in order to run for the 
presidency later this year. His 
likely successor is Mr Rubens 
Ricupero, a respected diplomat 
and former ambassador in 
Washington. 

Mr Cardoso has been 
strongly pressured by Ms 
party, the Brazilian Social 
Democrats (PSDB), to run for 
the presidency, but he is leav- 
ing the finawra ministr y at a 
critical moment. An anti -Infla- 
tion plan he has negotiated 
through Congress is not yet 
fully in force and may be 
undermined once he leaves. 
According to Brazil's constitu- 
tion, he must resign by April 2 
to run in the October polla. 

Financial markets reacted 


-calmly to the expected transi- 
tion. Mr Ricupero was not Mr 
Cardoso's first choice as his 
replacement, but the former 
ambassador has said be sup- 
ports Mr Cardoso’s economic 
measures. He is also friendly 
with several of the leading 
economists in Mr Cardoso's 
team. 

Mr Ricupero Is well versed in 
economic affairs from his stint 
in Washington, where he was 
involved in Brazil's negotia- 
tions with the international 
f inanc ial i mmunity , and In 
trade matters. He was replaced 
as ambassador last year by 
President ftamar Franco who 
was annoyed at international 
reaction to a massacre of street 
children in Rio de Janeiro. 
Since then Mr Ricupero has 
worked as minister of the envi- 
ronment with responsibility for 
the Amazon. 


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Clinton 
may hit 
at China 
state 
business 


By George Graham In 
Washington 

The US is considering 
targeting trade sanctions at 
Chinese state-owned busi- 
nesses if C hina does not move 
far enough to meet US human 
rights concerns, a senior State 
Department official said yester- 
day. 

Mr Winston Lord, assistant 
secretary of state for Asia, said 
the US could leave private 
enterprises untouched and 
withdraw Most Favoured 
Nation trading privileges only 
from state-owned businesses if 
China did not make enough 
progress by the June 3 dead- 
line to justify an 
across-the-board renewal of its 
MFN status. 

Mr Lord said China had 
made progress in some areas, 
but would need to do more. “It 
is still possible to reach a cred- 
ible outcome between now and 
June 3," he said. 

A partial withdrawal of MFN 
could pose "definitional prob- 
lems”. But that solution could 
reduce the damage trade sanc- 
tions might cause to US busi- 
nesses involved in trade with 
China, as well as to Hong Kong 
and Taiwan. 

Mr Lord acknowledged the 
US had not spoken with one 
voice over C hina- “Mixed sig- 
nals had been coming out of 
Washington. I don’t think 
they've stopped.” This, he 
suggested, happened partly 
because the end of the cold war 
had removed the overriding 
importance given to security i 
issues in assessing foreign pol- 
icy priorities. 

In the past, top national 
security officials would tell the 
Commerce Department or the 
Treasury “to get lost” when 
they raised concerns about a 
trade or investment dispute. 

“You know, don’t bother us 
with these secondary issues. 
We're in a global struggle with 
the Soviet Union and we can’t 
jeopardise our alliance with 
Japan over some silly trade 
dispute. Well, those days are 
over and they should be over," 
Mr Lord said. In the short 
term, this , absence of a clear 
luerarchy of priorities often led 
to difficult trade-offs. 


US waves flag for workers’ rights in WTO 

Negotiators encounter some bumps along the road to Marrakesh, writes Frances Williams in Geneva 


T oday’s meeting of top trade 
negotiators was meant to tie 
up proceedings before the 
Mhrrakesh meeting on April X2-15 
when the Uruguay Round accords on 
global trade liberalisation will be 
signed. 

Since concluding the round last 
December, there have been three 
months of checking and polishing. 
Negotiators were due formally to 
nod through the 28 Uruguay Round 
texts (550 pages), 81 country tariff 
schedules (15,000 pages). 95 services 
schedules (2,500 pages), three (short) 
accompanying ministerial rfecigfoyig 
and a political declaration. 

It was, of course, too good to be 
true. Last week, the US set the stage 
for 111 tempers at Marrakesh by 
Insisting that worker rights are put 
on the agenda of the new World 
Trade Organisation, due to succeed 
Gatt next year. 

Washington says it will not 
approve the ministerial declaration 
unless it cont ains a reference to 
early consideration of the relation- 
ship of the trading system and 
"internationally recognised labour 
standards”. 

'this move, which flouts an under- 
standing among negotiators not to 
raise new issues before Marrakesh, 
has irritated even trading partners 
sympathetic to the idea, such as the 
European Union. Developing coun- 
tries, which are opposed to any dis- 
cussion of worker rights in Gatt or 
the WTO, are Incensed. 

Swiss win ■ 

Syria deal I 

By lan Rodger in Zurich H 

Saurer, the world’s largest jg| 

textile machinery group, has H 

won two turnkey cotton spin- H 

ning mill orders from GOTL H 

the Syrian government's tex- H 

tile holding company, worth H 

SFrl35m (£63 -5m). jJR 

The Swiss group said the H 
orders, among the largest It m| 
had ever received, was part of H 

a major Syrian programme to ffl 
modernise its textile industry. ■ 

One mill, to be built at Lat- ■ 
takia, will produce fine yarn H 

via the ring spinning process. H 

Two Saurer German subsld- H 

iaries, Schlafhorst and Zinser, H 

will supply 37 automatic pack- Efij 

age winding machines with ■ 

109 ring spinning machines H 

and 37 speed frames, with a Wj 

combined value of SFr55m. 

The other mill, to be built in ■ 

Idleb, will produce coarser ■ 

rotor-spun yams. Iw 



A protester is arrested in New Delhi yesterday during a demonstration against India signing the Gatt accord 


Hus was almost certainly foreseen 
by Washington. However, the Clin- 
ton administration is under pressure 
from US labour unions to take a 
muscular stance against “social 
dumping” - the loss of trade. Invest- 
ment and jobs to low-wage countries. 


Washington’s interest in the issue 
is also long-standing. The US tried 
unsuccessfully to put worker rights 
on the Uruguay Round agenda and 
later, equally unsuccessfully, pro- 
posed a Gatt working party "to 
explore the possible relationship 


between internationally recognised 
labour standards and trade”. 

More recently, international pres- 
sure has grown from trade unions 
and politicians for a Gatt "social 
clause” to give teeth to the labour 
standards set by the International 


Labour Organisation. Gatt rules 
already permit countries to prohibit 
goods made with prison labour, but 
otherwise are silent on the subject. 

The ILO’s director-general. Mr 
Michel Hansenne. notes that there is 
an important distinction, orten 
blurred, between the use of trade 
sanctions to enforce universal or 
“absolute” human rights - where the 
concern is or should be humanitari- 
an - and the use of sanctions against 
countries alleged to be competing 
unfairly through low wages or work- 
ing conditions. 

Almost all those arguing for a Gatt 
social clause say they are not trying 
to remove the comparative advan- 
tage of low cost nations. Sir Leon 
Brittan, EU trade commissioner, 
says the focus should be on the 
ILO’s core human rights conventions 
relating to child exploitation, slavery 
and other forced labour, and free- 
dom to form trade unions. 

Trade unions have pressed for a 
broader social clause covering mini- 
mum work safety standards and 
non-discrimination in the workplace. 

US officials, for their part, remain 
deliberately vague. “We don’t have a 
defined agenda or set views” said 
one Geneva-based US official this 
week. "But we do have a legitimate 
interest in discussing the issue with 
trading partners. ” 

Developing countries are suspi- 
cious that industrialised nations are 
using a professed concern over 
human rights to cloak straightfor- 


wardly protectionist aims. 

Their doubts ore shared by Mr 
Peter Sutherland, Gatt's director 
general. In a robust speech this 
month he argued that drastic trade 
remedies against so-called social 
dumping were the wrong approach. 

"Such politicisation of trade poli- 
cy-making turns it into the equiva- 
lent of breaking off diplomatic rela- 
tions or suspending aircraft landing 
rights. 1 ’ he said. Introducing it into 
the co-operative WTO framework 
“would place the system at immedi- 
ate risk of collapse." 

Behind these words lies the fear 
that the fragile North-South unity 
over trade forged in the Uruguay 
Round could be shattered, posing a 
threat to other issues on the WTO 
agenda. Developing countries were 
won over to talks on trade and the 
environment only after they were 
persuaded that they too had much to 
gain from coherent multilateral 
rules based on keeping the trading 
system open and non-discriminatory. 

Mr Sutherland is keen on working 
towards a future agreement on for- 
eign Investment rules, where he sees 
a common interest between rich and 
poor nations, and for the organisa- 
tion to become more involved iu 
questions of trade and development. 

The obstacles to putting trade and 
worker rights on the WTO agenda 
look formidable. Without an incen- 
tive to make discussing the subject 
worthwhile, developing countries 
have every reason to keep saying no. 


Aids drug price 
war in Portugal 


By Peter Wise in Lisbon 

Wellcome has cut the price of 
its Aids treatment AZT by 30 
per cent In Portugal because of 
competition from a Portuguese 
company marketing a cheaper 
versiou in a challenge to Well- 
come’s worldwide patents, 
according to Portuguese offi- 
cials. 

Mr Jose Fleming Torrinha, 
director of the Sao Joao Hospi- 
tal in Oporto, said Wellcome 
had made the cut in a bid for a 
contract to supply the hospital 
with 6,000 250mg capsules of 
Retrovir. Welcome's version of 
AZT and its second biggest 
selling drug. 

He said a small Portuguese 
company, Farma APS Produc- 
ts Farm aceuti cos, had lodged 
a rival bid to supply a Canadi- 
an-made version of AZT at 33 
per cent below Wellcome’s pre- 
vious price. The hospital has 
not yet decided between the 
two proposals. 

Wellcome said it was 
"amazed that Portugal as a 
member of the European Union 
is not prepared to respect our 
intellectual property rights in 
relation to Retrovir", it would 
take every action possible to 
protect those rights. 

The company said it believed 
failure to respect intellectual 
property rights would hinder 
development of medicines. 

Farm a APS is marketing 
Apo-Zidovudine, a form of ACT 
manufactured by Apotex of 
Canada, which is already sell- 


ing the drug in some Canadian 
provinces, Senegal, South 
Africa, Brazil and Venezuela. 
This is the company’s first ven- 
ture into a European market 

The Portuguese government 
has authorised sale of Apo- 
Zidovudine on the grounds 
that AZT is a drug in the pub- 
lic domain and that WeDcome's 
pioneering application of Ret- 
rovir to treat Aids did not give 
it the right to prohibit sale of 
other versions. 

Id addition. Portugal's patent 
law on drugs protects only 
manufacturing processes, not 
the chemical substance. This 
could make it more difficult for 
Wellcome to prove Its patents 
have been infringed. Wellcome 
has been in a series of patent 
disputes with companies, 
including Apotex, over the 
right to sell ACT. So for. Well- 
come has won a case in the US 
and has actions outstanding in 
Canada and France. 

A 30 per cent reduction in 
the price of AZT would save 
the Portuguese state more than 
Es 1.50m (£580.000) a year, based 
on total sales of about Es500m 
in 1993. Retrovir sales world- 
wide were worth £248m in 1993. 

Wellcome is proposing to sell 
Retrovir to the Oporto hospital 
at Es423.5 a 250 mg capsule 
compared with Es605 previ- 
ously. Parma APS proposes to 
sell Apo-Zidovudine at Es405 a 
capsule. Portuguese hospitals 
bought lm capsules of Retrovir 
in 1993. In Portugal, AZT is 
sold only to hospitals. 


Ban on new sales in 
UAE mobile phone row 


By Andrew Adonis 

Mobile phone dealers in the 
United Arab Emirates face 
losses running into millions of 
dollars because of a precipitate 
decision by the country’s state 
telecommunications monopoly 
to ban new customers from its 
mobile phone network. 

Would-bc subscribers in 
the UAE have been told to 
wait for the launch of a 
new, more expensive digital 
cellular network later this 
year, although the existing 
analogue network is believed 


to have spare capacity. 

According to Middle East 
Mobile magazine, the 
announcement has left mobile 
phone dealers with useless 
stock worth around $5.4m for 
the analogue network. 

Dealers ore threatening to 
sue Ettsalat for compensation. 

Two digital networks, built 
to the pan-European GSM stan- 
dard. are under construction in 
the UEA, one by AT&T, the US 
supplier, the other by a consor- 
tium of Motorola of the US and 
Siemens of Germany. Both will 
be operated by Etisalat. 





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Rank-and-file MPs’ anger erupts over Europe votes 


Ice-cream 
clash with 
EU looms 

By Robert Rice, 

Legal Correspondent 

Britain appeared to be heading 
for a dash with Europe over 
competition policy yesterday 
after the Monopolies and Merg- 
ers Commission cleared lead- 
ing ice cream manufacturers of 
anti-competitive distribution 
practices. 

A nine-month MMC inquiry 
found that the practice of 
“freezer exclusivity” - provid- 
ing free freezer cabinets to 
shops on condition they are 
not used to stock ice cream 
from other suppliers - did not 
operate against the public 
interest 

The commission found no 
evidence of excessive prices or 
profits being made in the sale 
of icecream for immediate con- 
sumption - so called ‘Impulse 
ice-cream”. It said recent 
trends in the market suggested 
competition had been effectiv e 
irrespective of any effects of 
exclusivity. 

But its conclusion that the 
tied offer of freezers to retail- 
ers did not constitute a barrier 
to market entry could bring 
the UK authorities into conflict 
with Brussels. 

The European Commission is 
also investigating the issue of 
freezer exclusivity following a 
complaint from Mars, the DS 
confectionery group, which 
entered the impulse ice-cream 
business in 1989. 

Brussels has yet to rule on 
the issue but an early indica- 
tion of its t hinking came 
recently when it vetted the 
takeover by Unilever, the UK- 
Dutch consumer goods group, 
of Ortiz-Miko, France's third 
biggest ice-cream producer. 
The EC said freezer exclusivity 
was a serious barrier to market 
entry. 

Disagreement between Lon- 
don and Brussels over the 
issue could force the UK 
authorities to back down 
throwing into doubt the practi- 
cality of Brussels' attempts to 
encourage greater subsidiarity 
in competition policy. 

The MMCs conclusions were 
that exclusivity posed less of a 
problem than it had in 1979 
when it last looked at the 
ice-cream market. Retailers 
now had more choice on the 
issue. 

Editorial comment, Pg 19 


By Kevin Brown, 

Pofitical Correspondent 

Backbench Conservative anger 
over Mr John Major’s haT^ifag 
of the European enlargement 
crisis exploded in the Com- 
mons yesterday as Mr Tony 
Marlow, a long- standing Euro- 
sceptic; publicly demanded the 
prime minister’s resignation. 

As glum Conservative MPs 
digested the compromise 
accepted by the cabinet, Mr 
Marlow told Mr Major “No 
objective observer believes this 
so-called compromise has 


By Ksvm Brown, Political 
Correspondent, in London, mid 
David Gardner in Brussels 

The government was facing a 
further outbreak of problems 
over European enlargement 
last night after the Commis- 
sion rejected Britain's interpre- 
tation of “assurances" on 
social policy. 

Mr John Major, the prime 
minister , said the assurances 
met Britain's concerns that the 
health and safety provisions of 
the Treaty of Rome were being 
used to circumvent Britain's 
opt out from the social chapter 
of the Maastricht treaty. 

But Mr Jacques Delors, presi- 
dent of the European Commis- 
sion. said he had “simply clari- 
fied" the programme of the 
Commission for the present 
year. Mr Padraig Flynn, the 
social affairs commissioner, 
said there had been no conces- 
sion on social policy. 

Mr Major said the assurances 
meant that the Commission's 
use of the health and safety 
provisions would be restricted 
to measures directly relevant 
to health and safety at work. 

He said this meant there 
would be no repetition of the 
Co mmis sion's attempt to use 
the health and safety provi- 
sions to impose a directive on 
working time, which Britain 
has challenged in the Euro- 
pean Court 

The Commission had also 


achieved anything of real 
value to the UK 

"As of now, you have no 
authority, credibility or identi- 
fiable policy in this vital area. 
Why don’t you stand aside and 
make way for somebody else 
who can provide the party a»d 
the country with direction and 
leadership?" 

The intervention galvanised 
the House of Commons, 
prompting roars of “resign, 
resign” from the opposition 
Labour hwwfag , and shouts of 
dissent from Conservative loy- 
alists. 


accepted that the UK would be 
excluded completely from pro- 
posals under the social chapter 
of the Maastricht treaty. This 
would mean that the proposals 
to set up works councils would 
not be imposed an the British 
operations of transnational 
companies. 

Mr David Hunt, the employ- 
ment secretary, told the cabi- 
net that the assurances would 
also block the imposition in 
Britain of three directives 
expected to be brought forward 
shortly by Mr Padraig Flynn, 
the social affairs commissioner 
covering 

discrimination in the work- 
place, part-time workers, and 
parental leave rights. 

However, The British inter- 
pretation was flatly rejected in 
Brussels. Officials Britain 
had asked for a written assur- 
ance from Mr Delors, but 
received only a tart “verbal 
reminder" that previously 
agreed procedures for social 
policy were written down in 
the EU treaty and in regula- 
tions - and remained so. 

The UK’s request was 
described privately by a Com- 
mission official as “simply 
intolerable." 

“We are not going to let 
them imply that there is a 
trade-off in social policy,” he 
said. “You cant negotiate con- 
cessions from the Commission 
on social policy; there are 11 
other member states.” 


Mr Major snapped back: 
“Anybody listening to what 
you have had to say, not just 
today but at any time over the 
last 2 % years, would in no 
sense suggest that you were an 
objective observer of any mat- 
ters relating to the Commu- 
nity. 

“I remind you that: it might 
be a useful novelty if from time 
to time you were prepared to 
support the government you 
were elected to support." 

Mr Marlow, the MP for 
Northampton North, followed 
up his attack by damning later 


By David Goodhart, 

Labour Editor 

Ninety-one per cent of foreign 
owned companies would not 
chang e their attitude to the UK 
if the government reduced its 
commitment to the European 
Union, according to a survey of 
800 executives of foreign 
owned companies. 

The survey, conducted for 
the accountants and manage- 
ment consultants KPMG, found 
that the size of the UK market 
is the main attraction for for- 


that Mr Major could be forced 
out of the party leadership 
before the summer. 

The exchanges reflected bit- 
terness among Euro-sceptic 
MPs, many of whom believe 
that the prime minister faUwi 
to deliver the strong defence of 
Britain’s interests that he 
promised last week in the 
House of Commons. 

Sir Teddy Taylor, MP for 
Southend East, said the agree- 
ment was “Sad and Immffiat. , 
mg”, and warned that it would 
be opposed by some Conserva- 
tive MPs when ft comes before 


eign investors. 

But Euro-sceptics win find 
less support for the arg u m ent 
that Britain's low labour costs 
are a major draw. 

Asked what reasons they 
would give for choosing the UK 
if they had to choose again, 
only 3 per cent cited cheap 
labour. In contrast 58 per cent 
said that it was a large and 
valued market 
Most of the executives 
praised Britain’s workforce, 
industrial relations, training, 
and productivity, for hp*ng bet* 


the Commons later this year. 

Same rightwingers endorsed 
Mr Marlow’s outburst, claim- 
ing that many MPs would like 
to see Mr Major replaced as 
leader. But others said that 
was likely to prove counter- 
productive. 

The enlargement compro- 
mise was welcomed by many 
Conservatives as the best 
available deal. Mr Cranley Ons- 
km, a former chairman of the 
1922 committee of backbench- 
ers, said the government would 

have the support of the vast 
majority of Conservative MPs. 


ter than they expected. Simi- 
larly, the UK’s Infrastructure 
and transport exceeded expec- 
tations. 

The UK is the most popular 
choice as European headquar- 
ters for non-European compa- 
nies; over half of the US (56 per 
cent) and a third of Japanese 
companies (32 per cent) use the 
UK as their European head- 
quarters. 

Foreign atoned companies in 
the UK. Available from Juhe 
Cook, KPMG. 8 Salisbury 
Square. London EC4Y 8BB. 


Social policy 
view rejected 
by Brussels 



John Major faces hostile questions in the House of Commons after his EU voting statement 


Investors say EU ties not vital 


Britain in brief 





UK beats 
Lisbon over 
Jaguar plant 

Ike UK government is to pay 
£9.4m in grant aid to Jaguar, 
the DK luxury car subsidiary 
of Ford, to deter the US car- 
maker from moving the assem- 
bly of the next generation Jag- 
uar XJS luxury sports car 
from the UK to Portugal. 

The European Commission, 
which approved the aid yester- 
day, said that 883 jobs would 
be safeguarded at Jaguar in 
the UK by 1998 through the 
grant of regional selective 

B Is understood that Ford, 
which took over Jaguar in late 
1989, had closely considered 
transferring the £187m sports 
car project to its plant at 
Azambnja. close to Lisbon, 
where tt also assembles the 
Ford Transit van. 

The Portuguese authorities 
had bid for the project with a 
vary attractive rival aid pack- 
age. 


PO seeks 
BP sell-off 

The management of the Post 
Office is pressing for a partial 
sell-off of the organisation, in 
an attempt to dissuade the gov- 
ernment from shelving privati- 
sation as politically unaccept- 
able. 

The suggested scheme is the 
so-called “BP option", whereby 
some 30-40 per cent of the Post 
Office would be privatised. 


City Airport 
misses link 

The Docklands Light R&Oway, 
which links the City of London 
to the down-river office devel- 
opments around Canary 
Wharf, baa been extended 
beyond London City Airport 
The newly opened line takes 
the DLR to within a few hun- 
dred yards of the airport In 
east London bat there is still 
no station at the terminal 
itself. It is understood that dis- 


cussions are under way about 
bridging the gap. 

Dne to signalling delays 
DLR trains will not run direct 
from the City or London's 
Bank station to Prince Regent 
- the airport's, nearest station. 
Passengers will have to 
change at Poplar. 

Until direct trains are run- 
ning, at the end of the year 
according to the DLR, a shut- 
tle bus will continue to take 
passengers beyond the Poplar 
interchange to Canary Wharf. 


Asian Age 
prints in UK 

The Asian Age. a new E n glish 
language broadsheet daily 
paper published simulta- 
neously in D elhi and Bombay, 
is now arriving every day in 
the UK by satellite. 

The move into the UK co mas 
just five weeks after the 
launch of the new daily in 
India. The quality newspaper 
aimed at the 2m people of 
Asian origin in the UK is being 
printed on the same Louden 
presses as the Loudon edition 
of the International Herald Tri 
bune and is being distributed 
by the 1TH. 


800 sales agents 
suspended 

Norwich Union, one of the 
UK’s leading life Insurers, has 
suspended 800 sales agent* far 
a mouth to undergo an inten- 
sive retraining programme, 
after some breakdowns In 
management control were 
identified by the industry’s 
regulator. 

The move means that from 
midnight last night no one In 
the Norwich Union direct safes 
force will be aide to give finan- 
cial advice to a customer until 
he or she has successfully co» 
pleted a retraining pro- 
gramme. 

Some 600 of those suspended 
with effect from midnight are 
Norwich Union's direct sate 
force, and the remaining 298 
sates agents work far compa- 
nies which act as appointed 
representatives for the Ufa 
insurer. 

Mr Philip Scott, general 
manager of Norwich Unfea fife - 
and pensions, said that ha did 
not believe any castonere had 
been disadvantaged, since the 
company operated a quality 
control programAr separate 
from the process ofjeffiag, hi 
order to ejrare that appropri- 
ate products ware as It. 


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FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


TELECOMS 

Regulator seeks 
more competition 


NEWS: UK 


By Anfrow Adonis 

Mr Dan Crmckshanfr. the UK 
tel ecommunications regulator, 
is dissatisfied with the weak- 
ness of competition in the UK 
industry and plans a raft of 
new measures to encourage 
. competitors to British Tele- 
communications. 

Mr Cfttickshask mfawiHa to 
make the UK's regulatory 
regime more accommodating 
to companies planning new 
services, and to take a more 
a ctive stance in policing the 
activities of existing operators. 

BT, which commands nearly 
90 per cent of the UK market, 
is likely to come under closest 
scrutiny by Oftel, the regula- 
tory office which Mr Cruick- 
ahanfc heads. But cable compa- 
nies building combined 
television and telephone net- 
works in urban areas can also 
aspect to have their activities 
examined. 

In a report cm future policy, 
included in Oftel’s 1393 annual 
report published yesterday, Mr 
Gnnckshank was sharply criti- 
cal of the status quo. . 

“New entrants are . not yet - 
delivering the range of choice I 

BBC to 
supply 
Arabic TV 

By Raymond Snoddy 

More than 200 new 
broadcasting jobs are to be 
created in London following 
the announcement that the 
BBC has signed a 10-year 
agreement to supply a new 24- 
hoars a day Arable language 
tv channel- 

The satellite channel aimed 
at the Middle East and North 
Africa will be launched within 
the next few months. Hie BBC 
World Service Television ser- 
vice is being financed by the 
Mawarld investment and 
industrial group of Saudi 
Arabia. The progr a mme sup- 
ply and distribution agree- 
ment; worth in the region of 
£200m, is with Orbit Commu- 
nications Company, a Rome- 

based subsidiary of Mawarid. 

The new channel was the 
subject of threatened litigation 
between the BBC and Mr 
Rupert Murdoch’s Star TV, 
Hong Kong over geographical 
overlap. It is likely however 
that Star had wanted to termi- 
nate its contract with the BBC 
for some time and last week a 
co m pr omi se deal was done. 

The BBC win vacate its slot 
on tiie northern beam of the 
Star system aimed at China in 
return for a extension on the 
south beam. This means the 
BBC will be able to continue 
broadcasting to India until 
1995. World Service Television 
has recently signed a deal for 
a joint venture in Japan. 


am looking for, 1 * he «Hrt. "We 
cannot relax merely because 
licences have been issued mid 
promises made ... we still have 
a long, long way to go.” 

Mr Crui ckshanfc is impressed 
by the greater range of ser- 
vices on offer in the US. Oftel 
will publish studies comparing 
the range and quality of ser- 
vices in the UK with those of 
the US and France. 

In a statement likely to 
cause concern at BT, Mr 
Craickshank “Oftel baa 
a central role to play in remov- 
ing barriers for new entrants. 
We may also consider setting 
entry terms to reduce such bar- 
riers to new operators where 
this will result in the building 
of sustainable and efficient 
competitive businesses.” 

Areas highlighted for Oftel 
scrutiny include BT*s competi- 
tive practices and observance 
of Its licence conditions, and 
the cable companies’ adher- 
ence to the timetables agreed 
with Oftel for their networks. _ 

The annual report shows a 
sharp fan in consumer com- 
plaints to Oftel, down from 
41,026 in 1992 to 23,413 last 
year. Only 4,232 complaints 


were lodged over disputed 
accounts arid 657 over stan- 
dards of service. 

Separably, BT and Mercury, 
its main competitor, have 
announced cuts of up to 25 per 
cent in the price of interna- 
tional ISDN services, used by 
businesses for data transfer 
and videocontekncmg. 

• The government signalled 
its concern yesterday at delays 
by US regulatory authorities in 
allowing British operators to 
compete in the U5. 

Lord Strathclyde, a junior 
ministar at the department cf 
trade and industry, told a tele- 
coms conference in London: 
“In the US scone interests seem 
to w an v to close off than- mar- 
ket to International competi- 
tion rather than see Interna- 
tional Simple Resale (ISR) 
bring down tariffs.”- .. 

ISR would allow new compet- 
itors to use leased Interna- 
tional lines to provide a service 
connected to the. public net- 
work in both the Us and the 
UK. The US authorities are 

hlnriring JgR pirating Iflngfhy 

studies of the “openness” of 
the UK telecoms market. 


Smith New Court 
turns bonuses into 
golden handcuffs 


By Andrew Jack 

Smith New Court, the 
securities house, is attacking 
the longstanding City of Lon- 
don tradition of “take the 
money and run” by transform- 
ing animal bonuses into golden 
handcuffs. 

The company yesterday 
announced a plan to encourage 
loyalty by paying staff part of 
their annual ' bonus in Smith 
New Court shares. 

Individuals will only receive 
these shares if they are still 
employed by the company 
three years later. 

One of the principal afrns of 
the scheme is to stem the exo- 
dus of leading staff from smith 
New Court Last year, depar- 
tures included Its hi g hl y rated 
oil and banking analysts to 
Nomura and its utilities team 
to Barclays de Zoete Wedd, 

Mr Michael Marks, chief 
executive, said last night: 
“Ibis is partly about retention 
of staff We are not ashamed 
about that People were taking 
a large bonus and then trotting 
off to the next franchise. 

“That can’t be in the inter- 
ests of shareholders,” he said. 

He stressed that the incen- 
tive scheme would also foster a 
greater sense of ownership by 
staff in the company. “It will 
hopefully give them a mean- 
ingful stake,” he said. 

Mr Maria said a email trial 


version of the scheme had run 
last year and only one bf the 20 
people involved had since left 
Smith New Court 

The shares will not be newly 
issued, as in many existing 
share option schemes. The 
cash that would otherwise 
have been paid out in bonuses 
will instead be used to buy 
shares from current sharehold- 
ers. 

In a circular sent to share- 
holders yesterday, the com- 
pany is seeking authority for 
up to 15 per cent of its equity 
to be held in trust for this pur- 
pose 

Smith New Court is still 
deciding bow much of rite 
bonus win be paid in shares, 
although some insiders suggest 

it is likely to run to a maxi- 
mum for more senior staff of 1 
up to about 25 per cent 

More than 90 per cent of staff 
at Smith New Court received 
bonuses last year. 

Shareholders wifi, vote on the- 
plan at an extraordinary gen- 
eral meeting on April 20. It is 
also subject to final approval 
by the Inland Revenue. 

The proposals come after a 
year of high bonuses paid by 
City of London Institutions to 
senior employees. 

Earlier this month, it 
emerged that BZW paid total 
remuneration including 
1 bonuses of more than £im to 
up to eight of its directors. 


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Emissary 

reassures 

Japanese 

investors 

Paul Abrahams 

in Tokyo with 
the Lord Mayor 
of London on 
a world tour 

M r Paul Newall, the 
59-year-old Lord 
Mayor of' London, 
spent mnch of Sunday - in his 
own words - “hjppo-Hke” with 
a wet towel over his head sit- 
ting in a traditional hot spring 
located deep in the mountains 
of central Japan. 

For the next few days, this 
former Tubman Brothers insti- 
tutional broker will be drier 
and rather more energetic. He 
is undertaking a punishing 
tour of Tokyo, Osaka and 
Kyoto in an effort to sell the 
City of London to the Japa- 
nese. 

Mr Newall is viewed as a 
heavy hitter in Japan, included 
cm his travels win be visits to 
Mr Morihiro Hosokawa, the 
Japanese prime minister, as 
well as the governor of the 
Bank of Japan and the chair- 
men of some of the country's 
most powerful securities 

hom sg S and wmmwiwiil hunlrw. 

This, the first visit by a Lord 
Mayor to Japan, since 1987, 
underlines the . continuing 
importance of Japanese invest- 
ment in the City, according to 
Mr NewalL “About 41 per cent 
of all Japanese investment in 
the EU has gone to the UK. We 
must continue to attract Jap- 
anese investment,” he 



Paul Newell talks to prime minister Morihiro Ho6okowa during the Lord Mayor’s current visit to Japan promoting British business 


"There are 48 Japanese 
banks and 37 securities houses 
in the square mile. In 1991, 21 
per cent of all investment in 
City property was Japanese, 
although the figure has 
declined' ' somewhat since 
then,'*' he concedes. . 

.Much of his time will be 
spent reassuring file Japanese 
about security, he says. “The 
IRA may be a prohlem of our 
own, but there ' isn't a single 
financial centre in the world 
that does not suffer from ter- 
rorism. Ike threat is not par- 
ticular to London, as the World 
Trade Center bombing in New 
York sadly showed,” he says. 

Mr Newall stresses the suc- 
cess of the controversial traffic 
scheme, which, he eTarm* t h«« 
achieved, astonishing results. 


Every vehicle and driver pass- 
ing through the eight remain- 
ing entries into the financial 
centre of London are photo- 
graphed. "This is all about 
deterrence and risk reduction. 
We cant guarantee zero risk, 
but *bt> measures do 
perceived risk to the terrorists 
unacceptably high," he argues. 

' An InHitontal iwwwpmfy of 

the traffic scheme was that 
there was an 18 per cent feR in 
crime in the City not a 
single armed robbery last year, 
he says. Traffic flow has also 
Improved. 

Mr Newall will also be empha- 
sising tVw» attractions of Lon- 
don. 1 will be pointing oat 
that London has become the 
financial capital of Europe. In 
every single aspect of financial 


act ivity London leads its conti- 
nental rivals by a substantial 
margin and that margin is 
fnerajHring The City leads the 
world In foreign exchange deal- 
ing, external igniting and inter- 
national trading of equities 
and bonds,” he said. 

The UK offers tremendous 
advantages for Investment, 
says Mr NewalL These include 
Europe’s lowest corporate tax- 
rate, no exchange controls, a 
flexible labour force, the most 
efficient telecommunications 
hub in Europe, the best postal 
system, and what he refers to 
as the UK’s sporting tradition 
- in other words lots of golf 
courses. 

The transport problems 
afflicting London are played 
down by Mr Newall, although 


f 

/ 

// 

u 


he agrees there have beer 
some hiccups such as the delaj 
of east-west crossrail link. **Wi 
cannot afford to have c 
second-class system in a first 
class city. But quietly then 
have been some significant 
improvements, such as thi 
Limehouse link, Waterlot 
international station and thi 
rebuilding of Liverpool Stree 
station,” he claims. 

“Lord Mayors have had U 
spend an Increasing amount o 
time abroad since the Cit^ 
found a new role as Europe': 
financial capital.” says M: 
NewalL Over the next fev 
months, he will be tourinj 
South Korea, Saudi Arabia, tiv 
United Arab Emirates, Bah 
rain, the Yemen, Oman 
Kuwait, Canada and the US. 



financial times information services 
N umber One, Southwark Bridge London SE1 9HL 


Something’s going on in Swissair’s Business 
Class for Europe. Either you’re getting smaller 
or the seats are getting larger. Anyway, 
you’ll be spending your time in the sky sitting 
pretty. swissair + 





KJBC asm 


10 


RECRUITMENT 


FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


Jobs: Renewed activity in the poaching of staff is leading to new ideas for linking loyalty to reward and ownership 


: S 


trong autumn bull runs In stocks 
and bonds have revived a recruiting 
instinct hitherto languishing in 
hibernation for much of the recession. 
Poaching has returned to the dealing 
rooms and the most successful lure, as 
always, is money. 

The pnarhing of individuals remained 
Sporadic in the recession and the defection 
of t eams was beginning to look quite his* 
tori cal, one of those quirks that character- 
ised the Lawson boom. Not so. Poaching in 
its rawest, most brutal form. Is back. 

Just how potentially d estruct ive the 
practice can be was demonstrated in the 
case of the so-called “Lop&s warriors” who 
followed Jose Ignacio Lopfc de Arriortua, 
the of global purchasing at General 
Motors, to Volkswagen. 

Unusually in such cases, GM and Opel, 
its German subsidiary, decided to fight the 
move, introducing allegations of indu strial 
espionage against Lop6z for good measure. 

While c rimin al investigations in Ger- 
many and the US relating to suspected 
industrial espionage, theft, perjury and 
wire fraud are still in progress, a Frank- 
furt civil court last month rejected claims 
that VW broke competition rules. 

Nowhere, however, has poaching been 
more pronounced recently than in the 
securities houses and Smith New Court 
yesterday decided to tackle the problem 
squarely by creating financial shackles for 
many employees and transforming an ele- 
ment of the bonus into shares. The shares 
will be payable only if the employees are 


Moveable feast for hungry dealers 


still with the company in three years time. 

Smith New Court has yet to announce 
its profits for last year but this kind of 
reward cannot be paid out of fresh air. It is 
an expensive proposition because the com- 
pany is going out to the market to buy 
shares. It Is seeking approval from share- 
holders to hold up to 15 per cent of its 
equity in trust for bonuses. The shares 
will be treated as cash for tax purposes. 
This mpwns that if, say. 10Q shares were 
awarded, the employee would get 60. since 
tax at 40 per cent would be paid by the 
company on behalf of the individual. 

Hie move demonstrates how sensitive 
investment hanks are becoming to their 
employees walking out of the door. 

Wbat has tended to happen when a com- 
pany loses a complete team of profession- 
als is that the poached turns poacher, 
often paying higher salaries to re-recruit 

In the hot-house atmosphere of the deal- 
ing room there is often little scope for 
loyalty, hence the payment of high sala- 
ries and the treatment of people like com- 
modities to be traded at the market price. 
The only difference Is that companies do 
the buying and the people sell themselves. 

Few have been more active than Nat- 
West Markets, which has been recruiting 
heavily from competitors as it extends the 
operation it established 18 months ago on 
the bones of County NatWesL 


Goldman Saehg bag been among the 

recent predators, luring the oils team from 
SG Warburg and taking two property ana- 
lysts from NatWest Securities. The latter 
made its own move on Smith New Court's 
German analyst team and NatWest Mar- 
kets recruited the sterling distribution 
team of six fro m Hoare Govett 
Trends influencing the activity are both 
and cyclical. Those in fiTwmrial 
market jobs tend to move at the hi>ginmng 
of the year after bonuses have been paid. 
People become too costly at otter times 
when prospective employers have to com- 
pensate them for their fost boons. 

This seasonal trend has been more pro- 
nounced this year, partly because the 
strong markets towards and at the begin- 
ning of the year led to renewed confidence 
among both employees and employers. 
The other reason is that, even though the 
markets have undergone a sizeable correc- 
tion, the big dealing roams are positioning 
themselves for increased activity to come. 

Another influence is the emerging mar 
kets of South Bast Asia and the Pacific 
Rim. Expanding dealing rooms are draw- 
ing specialist operators from the more 
established European and US teams. 

Changes in financial market jobs are 
also being influenced by the extent to 
which technology is advancing. Deryck 
Maughan, Salomon Brothers’ chairman, 


revealed recently that out of S&n dollars 
the company marked up in costs last year 
some $450m was spent cm technology. 

T e c hn o lo gical innovation has led to a 
market in backroom dealership staff as 
equally hectic although ranch less visible 
than that in the front it has 
led to the appearance of people termed 
mid-office st aff , often ^ m HnTH whose 
skill is to ensure the system works as 
e ffic iently and speedily as possible. 

An O ffi c ia l at one of the biggest firms 
said: -If volumes are exploding you can 
have any number of sales staff bedding the 
phones, but if you cant process the deals 
in time eventually one of has to say 
no to a client.” 

Joe dart at Day Associates, a co nsult- 
ing company that provides salary informa- 
tion for the city and investment hanking 
said that new systems for confirmation 
checking in banks ami wunfapt changes 
m information technology were msn m fr 
rec ruitm ent opportunities at a t™- 
many traditional hanking administration 
jobs were disappearing. 

The question t hgt recruiters must . 
address, particularly when poaching is an 
issue, is whether it is ftiw to bring back 
the restrictive cov enants preventing for- 
mer managers recruiting their old teams 
car from taking customers. 

Mark Watstra, a par t n er at Fox Williams, 


solicitors, which specialises in employ- 
ment law. says: "You can see poaching 
going on in nearly every part of the econ- 
omy." 

Courts, he says, are approaching such 
constraints as restrictive covenants, which 
companies have used to protect their inter- 
ests in the past, with little enthusiasm. 

If restrictions are imposed, he says, they 
must be applied selectively and sparingly. 
If courts are going to accept the argument 
fhat you are protecting a fogHj mg+e bust 
ness interest, it is necessary to show that 
only a timitad number of employees had 
access to what you may argue is confiden- 
tial information. 

The most effective covenants, he argues, 
are those cm the non-soHdtattan of cus- 
tomers. The effectiveness of covenants on 
employees is more questionable. "The time 
is corning when employers may have to 
enforce covenants more rigidly" says Wat- 
son. Legal shackles, however, as “Smith 
New Court has shown, are not necessarily 
the favoured answer. 

The Smith New Court scheme is some- 
thing of a departure from the deferred 
compensation deals that have become a 
growing feature of remunerati on packages 
at such firms. 

Salomon Brothers tries to keep Us best 
people by paying a percentage of bonus in 
shares, not options, so that they have a 


direct incentive to mamtata 
nance of the company- Tb* dg" 9 
held in trust for five yeare ^ 
cannot be traded, but they belong fo tte 
emp loyee and are redeemable at the enu « 
that period whether the employee has left 

tup fpMne of partnership and owner- 
ship that existed before 
public company. Share allocation ranges 
Eli percent of bonus at thefower end 
to more than 50 per cent for higher ' earn 
ers. The scheme's strength can be gauged 
by the feet that 19 per cent of the compa- 
ny’s equity is now held 5Lf“5!?2rtn» 
At Goldman Sachs, where the 
ship structure is maintained. the 161 part 
ners must plough bads their 
its into the company where SSPhJ! 
retained. When they rabreor Jm the 
company they receive a proportion of their 
capitaland the balance over a Bvejrear 
minimum period. Partners were reputed to 
have received individual profit share-outs 
of $5m each at the end of last year- 
The generous bonuses paid t° ?ther jaaff 
were not sufficient to maintain the loyalty 
of all. But one leaver. Michael Sherwood, 
the syndicate manager, returned to tne 
fold soon after leaving to work fora Pri- 
vate Swiss hank. Whether such retrospec- 
tive loyalty will be rewarded with a part- 
nership remains to be seen. 

Richard Donkin 


Head of 

Agricultural Services 
Department 

B&rcLiys Bank PLC invites applications for the past 
of Head of Agricultural Services Department to fill 
the vacancy chat will occur in September 1994. The 
main responsibilities are: 

1 . Advising the Bank on its agricultural lending 
policies and the management of its burning business. 

2 . Assisting the Bank to maintain and develop its 
share of agricultural and allied businesses in the UK 
and overseas. 

3. Promoting the Bankb image to the agricultural 
industry. 

The successful applicant must have wide experience 
of UK Agriculture, be well known within it, and be 
familiar with domestic and HU policy matters. A 
practical knowledge of farm business management is 
essential. The post is located in London and will 
be supported by a team of experienced agriculturalist* 
and bankers based both in London and eight regional 
centres. 

This is a challenging post for someone with 
energy initiative and a positive attitude to marketing. 
The person selected will be expected to meet with 
the media and travel extensively in the UK and to a 
lesser extent abroad. 

A salary and associated benefits which fully 
reflect the responsibility of the post will be offered 
to the right candida t e. 

Applications, which will be treated in strict 
confidence, should be made in the first ,*'**%, . 

■ - — - # 


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UK Markets Report is updated continuously throughout the day to 
give customers a fast, accurate and comprehensive service: 

We are expanding the UK Markets Report editorial team to increase 
the ruga and scope of market coverage and we are looking tor 
people who can act quickly as news breaks. 

Market Analyst 

ton will develop Industry contacts and work etosdy with a wide 
range of sources. You will be expected to bring an analytical 
approach and keen insight to real-time news coverage with specific 
emphasis on UK equities. 

Several years’ experience in the UK eqn&jrmarioet; either as an Anatyat 
or In a research role within an eqtriiy braking or find management 
organisation is the nriciimmi requirement for this poritlon. 

Joomalistic experience would be an advantage as would an 
understanding of PCs and BiceL 

Reporter 

Yon wlD assist the editorial team in proridmg in-depth coinage 
oTUK financial markets with an emphasis on UK equities. The 
position involves regularly updating market information as it 
becomes avaOaUe. 

kbu will have a broad based knowledge of UK financial markets 
generally and UK equities specifically and experience la r rehnant 
financial institution. 

A background in journalism would be an advantage as would an 
understanding of PCs and EaceL 

lb apply, please send a Ml ex together with current salary details 
tat S tpphgnte flarria, Hnman Resources Officer, Dow Jones TMarate, 
12-15 Fetter Lane, London EC4A IBS. 

"This company is committed to equal opportunities and 
applications are wdmmedfrxm anyone irrespective ^ colour, 
ttknic origin, disability sex or martial status.” 


Dow Jones. 


INVESTMENT ADVISOR 
PRIVATE BANKING 


The Citibank Private Bank is one of the leading global Private Banks and has a highly successful London based 
business. As a result, the Bank wishes to appoint an additional member to its West End office. 

The main responsibilities will be to offer investment advice direct to private clients and also to support 
the Bank's Relationship Managers by providing investment ideas and product information. The clients 
are located globally with substantial personal assets. 

The ideal candidate, aged early 30's, must have at least three years' experience in private client 
stockbroking and have developed sound knowledge of bond, equity, FX and derivative markets, as 
well as an appreciation of global macro-economics. Emphasis will be placed on the candidate's sales 
skills and, in particular, on the confidence to deal with well informed clients of varied cultural 
background and at very senior leveL 

A competitive salaiy and benefits package will be available 

Citibank is an equal opportunities employer. 

For further information about this opportunity, please contact Martin Symon at the address below. 

Jonathan Wren & Co. Limited, Financial Recruitment Consultants 
No. 1 New Street, London EC2M 4TP Telephone 071-323 1266 Facsimile 071-626 5259 


j O N AT H A i\ VV REN E X E C U T I V E 


DIRECTORS! 


SEEKING A NEW ROLE? 



3x3 


Europe's leading outplacement and career management consultancy, IntcrExec 
has over 15 years' experience of managing career change for senior executives and 
many of Britain's hugest companies. 

By accessing over 6,000 unadverxised vacancies a year, mostly at £40 -£150.000 pra. 

IntcrExec provides diems with vital market intelligence AND is subsidiary, 
buerMez, makes recommendations from Its candidate bank without charge. 


CjdllMdi UiKticfl hi London on 071 9304041 or 
iv Uartnc Cn» HrmJ. Umdon VC2H ORi 


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'HU: (. K\S LARGEST SOI'RCK ()j { \ \{ )\ |; R [ IS!:D VACANCIES' 


OPTIONS TRADER 

An interactional corporation is 
looking for an options trades to 
work a the LIFFB Exchange. Must 
have a minimum of four years' 
trading experience. Must have 
international experience. Most be 
familiar with risk analysis and 
theoretical pricing models. 

Please reply a writing HX 

Boa B 2322, Elnaneial Thnei 
One Southwark Bridge, 
LmdkmSElffiL 


RELATIONSHIP MANAGER 


cmr 


LEADING SWISS BANK 

COMPETITIVE REMUNERATION PACKAGE 


• An excellent opportunity to join a leading Swiss 
bank. Financially strong, with a blue chip customer 
base, offering a broad range of high quality 
banking, treasury and capital market products. 

• Key rok: with responsibility for marketing to 
existing customers as well as developing new 
business opportunities within a well defined target 
cheat list. 

• Member of a small team which covers a range of 
sectors within due top 250 UK quoted companies. 

• Probably in your fate twenties or early thirties, a 


graduate with excellent credit analysis skills, highly 
numerate and with a broad knowledge of banking 
products. 

• A successful trade record in developing 
marketing strategy and client relationships with 
corporate customers. Proven ability to identify, 
negotiate and dose transactions. 

• Mature and resilient, with a high level of self 
motivation, capable of influencing at a senior level 
both internally and externally. Prospects for 
promotion within the bank are excellent. 


nmc apply in writing quoting Rc£ 723 
with &>Q career and labry denb Hx 
San Ryder 

W. I * t n ntOlw wI nii Ilwtlwl 

4 ) VRdbodC Soccc. London W 1 M 7 HF 
Tct 071 637 8736 




Whitehead 

SELECTION 


ivtMMdNMMdmrnci 


London 


Excellent Remuneration & Benefits Package 


The global assets group of this financial services 
institution provides non credit and mm trading 
services to the bank’s cli e n ts. These frO into three 
product areas: co rr espondent b an k i n g , seem ides 
services and Kqnkfity and investment mana geme n t . 

As a result of rapid expansion in the bank’s 
activities in this area they are looking to recruit a 
JUgh quality originator, who will farther develop 
business in the CIS and Eastern Europe. 

The position will be based in Lo n do n , but there 
wffl be a significant am o unt of travel involved. 

Interested applicants, must be fluent in English, 
ITnmlan. Polish and German and must have: 

• E x pci tru c e of cBent origmathm in the OS and 


Eastern Europe, at the highest level, preferably 
within a financial services i iwrimtion based in 
the CIS. 

• RTfwufo t knowledge of and exposure to the 
banking and sodo-poBtical community within 
the region. 

• The ability to develop high level contacts and 
promote the services that the global assets 
group provides. 

• A Master level degree in Business. 

Aa well as developing business the successful 
candidate will become personally involved in 
transactions. It is Ekety drat he/she will be m their 
early to mid 30’s. 


Candidates should write to Qeorge Corbett at BBM Associates Ltd sending a detailed Curriculum 
Vitae, to die address below. AQ applications w3L be treated in the strictest confidence. 


76, Wading Street, 
London EC4M9BJ 




EQUITY DERIVATIVE ARBITRAGE 


International Investment Bank - London based 
Competitive salary & full benefits package 


An opportunity has <risen far a numerate investment 
professional to join the Wgily successfti proprietary tradhg 
team of a London based international tank. The department 
has a significant and long established presence in the fixed 

wane markets of both the US and Europe, with a 
particular emphasis on credit and arametydriven arbftrage 
trading. It wishes to expand the equity derivative arm of 
this business. 

The Position 

You wi join a young, enthusiastic and analytical talented 
team wth a wide ranging mandate, in which individual 
initiative s actively encouraged 

ResponsWHy w9 be for running a number of the hedged 
tracing books that comprise part of this team's equfty 
artrirage business. You wffl be investing in the range of 


eqidy derivative products aid in special sftuaBans, and wfl 
enjoy conskferabte scope to grow the activity. 


to your experience and preferences. 

QuaSScations 

You wihwe been educated to at least first degree levd, 
and have a minimum of three years’ rgerant experience 
ganednannuestment management a brokj^f fimL 
A demonstrable interest in equity derivatives foarhculariy 
convertibles and warrants] is essential; some experience of 
corporate credit analysis wodd be an advantage. 

pfease write, withfullcv, to AhnD. Spillrnan, Director, 

Ref: 5947, Versutus Advertising. 1 Hurst Cart, l^h Street 
Ripley, Surey, H123 BAY. h a covering tetter, please state 
any company to which you- appBcatten should not be sent 


VtRS HTS 


ADVER T 151 ^ 


Client origination in CIS 
and Eastern Europe 













- -V 






'» , 





*,*■1 ( s »\ 




■’ k.v» %Ji 
“ ; ^Ar% 



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FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


11 


' s:£l 


V.vj 




RECRUITMENT CONSULTANTS GROUP 

2 London W.tll Di.-Hciin-^.':,, London Wnll , London CCSrVl SPP 
Tel: O7'.50B 353B Qn071.58B 35TB 
F nx : OTI-SUS 3G01 



Opportunity for highly motivated indhriduats to^gain e aqpwfence of tfiese fast growing markets 

EQUITIES ANALYSTS 
- ASIA/PACIFIC REGION 

HONGKONG EXCELLENT EX-PATR1ATE PACKAGE 

LEADING INTERNATIONAL INVESTMENT BANK 

Our client has an active and growing involvement fn primaiy issues and brokerage in the Asia-PaeKe region outside Japan. 
As a result of continuing success and expansion, they have aiieed tor cafibne Indhriduais to augment the axfeffcg 
research team covering Asian markets from Htong Kong. The successful eafKfidateswffl work m a variety of challenging 
roles, initially geared towards analysing potential new issues andtalpmg to secure hey mandates for new issues. With 
Hong Kong as the regional base, there will be extensive travel to and liaison wfefetoejrwide network of offices throughout 
the region. We invite appTications from candidates (mid 2p^ with analytical AKpedence, probably as a junto member of* 
a team In a stockbroker or as support in a tund management house, beuncfideaes with the necessary technical skate but 
without this experience may also to toe considered. Experience withe Asfef region ttt not essenfiah.ttie, emphasis is oh a 
strong desire '.to succeed and the ability to workwefl underpressure ^(Nlowin^sleft period in tendonflie analysts- wS 
be relocated to Hong Kpng. AppflcatfwiiM^.ixiHfl^a^^ Directory 



Regional 

Stockbroker 

Requires 

Graduate 

with knowledge of 
financial markets and 
strong South African 
connections, including 
languages, to work in 
the North of England - 
We are offering full 
training, a salary of 
£12,500 pa. plus 
benefits. To apply 
please write to: 

Bax B2321, 
Financial Times, 

One Southwark Bridge, 
London SET 9HL 




Scotland 

Touche Ross Corporate Finance provide* s 

range of corporate finance services to public and 

private companies. , 

growing ' paw. ia£ 

Scotland, die dni3lBt®bSP 


and Aberdeen. - 
-Hue Advisory Gkm£* 



E*ceBek*t remtmeration package 
The Xnunactimt Support Group witfain the 
dnriafon seeks qualified ^acecMtBtttaUf vriA up t» 

5 years* post qualification exp^riepqe tp undertake 

and dott tfbgence' ’rieUewa for 
maiogema * t bay-oufs, flotations and 
transactions. You wffl, Igwe a first dan 

vrifli a widt 




accounting, or MBA qualification to advise in 
the following areas: 

■ I-^a d financial ArivMcr/Denl 

■ Mergers, Acquisitions and Disposals; 

■ MBOs/MBls; 

■ Valuations; 

> Capital Raking. 

Candidates with previous corporate Sftajee 
experience gained within a merchant bank in |p^api ,j 
or in Scotland, clearing b»ak, venture < n p^ i ^ gBape , 
or a professional practice wjfll be g$ 
interest. Industry experieateT^OiddaibefieAelpjWt T 


of ev en ts. -for the more -senior positions, 
f type of work wiB be an 


For boe^. these ^qo 

to a nia 

financial .skills. far addition, we require strong 
auakytbaL and intx^penoioal tidDs, weQ developed. 


w 


APPOINTMENTS 
ADVBRTIS1NQ 

kiQwllKwZ 

A Tlaradajr surf In lbs MNnattamratMon 

mmy Friday. portsflurlii fa n na*^, 
j*mm eta PMp 'mow an 

B71 8733351 


As * lending and wefl-cstahEshad i nvestment boose with funds under management 
in eater— of £10.0 bxBfon we era eqmiaadiig a period of sapid expansion. Our 
on-going m ean bar m e an t that we axe looking for a quality professional to assn 
onr Madceting Director to organise product (krofaptifcmsttategtes across the group. 

PRODUCT DEVELOPMENT MANAGER 

Respon siMUtin gffl mdnde: 

>■ Co-ordinating all product development activities. 

>■ Maintaining and updating die product development calendar. 

> Keeping up-to-date with any regulatory changes which may impact upon 
product development. 

> T-ijwmg with gnnp compliance to ensure that products adhere to 

regulatory guidelines. 

>» Ensuring Hw fximg products are consistent with current thinking. 

>■ Reviewing c omp et i t or products. 

Candidates should have an in-depth knowledge of both UK and off-shore financial 
products together with an nadentanding of the regulatory restrictions and strong technical 
skOk. You should also be computer Hectare, be able to understand complex issues and 
write dear and concise repo r t s for wider consideration. Additionally, you should be 
open-minded and be receptive to innovative and creative thinking. 

The sncccsrful camfidate will be well organised with a diplomatic disposition, have a 
degree and at least 5 yeas' relevant experience. 

Based in the City, the vacancy offers a competitive remuneration and benefits package. 
If you tirade you have the rxpcriewx and ambition to succeed in this challenging post, 
please apply in writing with an acc om pa n ying cv to: 

Lynne Bishop, Head of Personnel, 

Foreign & Colo n ial Management Limited* 

Exchan g e House, P rim rose Street, London EC2A 2NY 




CORPORATE 


oonaacraial aware ne ss and tire tiahty to handle 
compjeartnmsactiq^. 

..If ypu meet thg&above criteria, please write 
tp Crt ftg Bi Waj|?n, Ifawnc^ Touche Ross 
Mcjjtvzfle &cg o cnt,'Edmbttrgb 


Corporate Finance 





EXECUTIVES 




company, requires an i 
professional to join its i 
njost senior level. 


arrangements. T ravel will be an essSnSdd 
of toe Job. - 

The person we are seeking wffl probably be 
over 30 years of age, should have a chartered 
accountancy or equivalent post graduate 
qualification in business administration and 
finance. Seven years post qualification 

experience is desirable but not essential. 


An AMCX> Member 


' jph^gclnief^ eivtostratotreastnyaridfei^jn 
eogrigjrra functipng ap$J a record of fiaisohwiffi 

fi na nSa ffetitirtfons are^ es^ntial Knowledge 

dwroefer and oommuticGfflon sMte to present 
efc^ipfex bsues dearly acid command authority In 

ii « 

“ i anangenwHts wffl be to the highest 

ndards. 

i should sond^xvnptele educational 
ffls, 

.'at 




Price Woferttouse 

Eeacuthre Selection Consultants, 

6«dna r | Ho— , 

WHtonPfece,. 

DubHaA 

Jrstand. 


£ Competitive 



n 


■ ..S5r-?3»2SES r.-: ■ 

•" ' is- i- - 


One of the UK's most respected independent and 
innovative investment banking groups has 
, opportunities for professionals within its flourishing 
^corporate finance division. 

the bank's entrepreneurial culture dictates that under 
tire guidance of a first rate team, you will enjoy 
cbnsiderable client exposure and autonomy, therefore 
offering substantial challenges and faster career 
progression. 

Successful candidates, aged 24 upwards, wall be able 
to demonstrate a strong academic background anchor 
professional qualification together with outstanding 
personal presence. Other essential attributes include 
strong technical skills allied to the ability to build 
relationships both internally and externally as well as 
a highly ambitious and goal orientated outlook. 

You will be seeking an excellent entry point into 
corporate finance with a successful group committed 
to developing personnel to the highest possible levels. 
A competitive salary package including the 
opportunity for equity participation will be made 
available to the right individual. 

Interested candidates should contact John Axworthy 
or Michael Herst quoting JA 150 on 071-629 4463 
(day), 071-720 0613 (evenings) or send in a hill 
:cv promptly. 

HARRISON 0 WILLIS 

SEARCH AND SELECTION PARTNERSHIP 
: 39-40 Albemarle St, London W1X 3FD. Fax: 0rM91 4705 

UONDON ■ READING • GUtLDfORD * ST ALBANS * BRISTOL • BIRMINGHAM 


Capital Markets 
Origination 

For a major investment bank in London with an expanding Capital Markets 
Division and a proven track record in lead managing multi-currency European and 
International debt issues: 

• KESPONSiBHJCnr is directly to the Head of Origination, operating with a high 
degree of autonomy in a progressive transaction-oriented environment. 

• THE NEED is for. a highly motivated marketing officer with three to five years’ 
relevant experience to maintain and develop established relationships with 

• European frequent borrowers. 

Preferred age around 30. European languages an advantage. Attractive remuneration 
package. London based. 

Please write in confidence, enclosing a Curriculum Vitae, quoting ref: L7699 to 




■;< k - iii 



TK 


rpJVforw* btvestment Management Snc. 

& Co. lnr** r p nratt ’^- Wttit $45 bifHtm under rwatwa^ewcrilC ftSs^niufdflke 
in the world. 

Fixed Income Dealer 
The primary function is to execute 

orders to the fimd manage ami to conb*^ to _ . . . _ 

ttw investment process by advising on market . gagdr da ftfs wabe-^»diriftes|ft their xmd 20’s, 
trends and performance. The scale tod 

gtejagas^ 'g&'is 

with well developed cornmunications skills. .- — ' - 

Hie above positions offer opportunities to 

+ benefitspadcage vrill be avariabfc , ^ T .. 

Morgan! 

derated applicants should write 
Prtttejokn* (Equities) atjonatiian Wrro A 
071-6265259 


SELECTION 


\ i 


10 HbObb Sows, tendon. WIN fiDJ Bac 071 681 5317 
A DZVBZON Of TYZA^SC A PARTNERS 


YOU CAN ADVERTISE 
YOUR SKILLS IN THE 
FINANCIAL TIMES 
RECfilUTMEHT PAGES 
FROM AS LITTLE AS 
£§6+ VAT. 


I 




jpMorgan 


Looking for 
a Career 
Change? 


‘F* wraa Dcnu nawe 
comer 

Pmup WBMLBT M 
DeclbHnsSSI F«ci7h 
873 43S1 BR IT UMtlM n M 
B F a uMn uTms, 
to uanmMrtamimm . 
RnmOKSaamiMK • 
Brbge, LowaaSEi OHL 






.ev.aiLgfrrtr.. 


CSC 


SOND SALES 

Ceres Financial Concepts ^SA is a dynamic and successful financial firm established 
in Switzerland in 1992. Our mam activity is broking fixed income products. Owing 
to the high institutional demand for our services, we are currently looking to 

expand thu activity. . 

We are therefore seeking to employ several highly experienced, professional bond 
salespeople with a proven record of success and an established institutional clientele. 
The succeaafbl appficant nftntt be highly Motivated and a self-starter. He/she should 
have good communication and presentation skills. 

Our performance-based compensation package is very competitive. Please reply in 
confidence -with full personal and career information, to : 

Mr B. jfflagen or Mr. B. Merkenich 
Ceres Financial Concepts 5A Av. C--F. Ramuz 80 
CH - 1009 -FuHy-lansannc Switzerland 
\ Tel. 41 21 729 8736 Pax 41 21 729 89 17 




in of 
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loss, 
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12 


FINANCIAL TIMES 


WEDNESDAY MARCH 30 1994 



Investing in 

THE FUTURE_ 


As part of a blue chip financial services organisation with assets of around 
£60 billion Scottish Mutual Assurance pic is a highly successful and long- 
established life assurance, pensions and investment management company. 

We are. expanding rapidly, in 1993 our new business more than doubled to 
£390 million, which means that we now manage £3-6 billion for our clients. 
This year's move to new Glasgow city centre headquarters is among 
fundamental changes designed to improve the company's performance and 
efficiency in servicing both new and existing business. 

In order tomato tain superior investment performance while entering a growth 

phase, we now-need three high calibre investment professionals to join our 
Glasgow-based team. 1 Each of die following positions offers excellent career 
development prospects. 

Portfolio Manager - Japanese Equities 

This is an exceptional opportunity for. an experienced Japanese Portfolio 
Manager to fulfil a key role in managing our Japanese portfolios. With at least 3 
years of equity research experience, irrvofvtng Japanese equities, you will now 
be in a position to take responsibility few £200 million worth of funds. 

Fund Manager/Analyst - European Equities 

An internal promotion has created a vacancy for a Fund Manager/Analyst - 
preferably with 3 years' European equity investment expedience - to join our 
European team, dealing with £230 million worth <rf fends- The position offers 
exceptional scope for personal advancement. 

Fund Manager/Analyst - UK Equities 

The UK Equity portfolio normally accounts for over half of the investment 
Division's managed funds. We need an experienced Fund Manager/Analyst to 
join the team and take responsibility for analysing and' managing a number of 
UK equity sectors. In addition to your fundamental research work you will 
become actively involved in a series of special investment-related projects. It's 
an important role in a highly progressive group. 


To be a successful applicant you will need to be an Associate of the Institute of 
Investment Management & Research or have an equivalent qualification. You 
will also be ambitious, -decisive about making investments, self-motivated and 
performance orientated, with an excellent investment track record Needless to 
say, excellent communications skills and initiative are also prerequisites. 

We offer competitive salaries and benefits associated with a finance company 
including concessionary mortgage, non-contributory pension scheme and free 
fife assurance. 


To apply for any of- these positions and to assist in meeting selection process 
requirements, please send a curriculum vitae and apply In writing for an 


JicatioR form fo Sheila Hogg, Personnel Officer, Scottish Mutual Assurance 
109 St, Vincent Street, Glasgow G2 5HN or telephone 041-275 2738, 
9am to 5pm weekdays. 

To support a healthy work environment, Scottish Mutual has a 
no smoking policy. 

in pursuing our policy of equality of 
opportunity, Scottish Mutual 
positively welcomes applications 
from every section of the 
community. 


Scottish ^ 
Mutual 



T*^ptr,pJns»MmJ 
your Ml CVond a cov- 
ering letter hx 
ioCo Davenport, 
Human Besowta^ 
Citibank NA, 
336 Staid, 
London WC2R1HB 
or Bruno Arnold, 
Human Resources, 
CSwnkAG, 
Neue Manor Sir. 73, 
60311, Frorikbn 


Citibank is one of the world's leading financial institutions providing high qualify 
financial products and services to corporate, institutional and individual customers 
globally. 

We are looking for an experienced individual fo join our highly successful 
Frankfurt-based bond options market-making team. 

The role involves the trading of the lire book necessitating direct axtfod with other 
banks and brokers and, also, interfacing directly with the sales team in Milan. 

The successful candidate will ideally have 2-3 yeas experience of trading bond 
options although candidates with a capital markets background and experience d 
trading deb instruments or significant experience in options will also be consid- 
ered. Fluency in Italian would be preferred. 

A highly competitive remuneration package is offered, together with excellent 
career prospects. 


CITIBANKS 

W« aw mm mqmtd opportunist** ■■ g p hy r 


Analytical Proprietary Traders in Interest Rate and 


. ,rAMn; 

Proprietary AnalyticaTTrading Departilrpent of Credit Suisse in 
Zurich is seekinfl^enior and juniorljfoerest rate and FX 

r ^ ^ S'*'i >„i'' 


$ Derivative 

•As 

A 



fir 

r.’S 
**< • 

sS 

■ *.s* 


\ri* 

;^4 


: &:/ -s* 


Candidates for senior positions must have a 
broad practical knowledge of Interest rate 
and/or FX derivative products and proven 
trading track record with at least two to three 
year's experience in running sizeable 
derivatives books. Their principal duties will 
include the formulations of trading strategies 
and the day-to-day management of large 
trading books. All candidates must have a 
quantitatively oriented background and the 
ability to exploit latest arbitrage trading 
concepts and modem IT systems. 

Candidates must also be innovative and highly 
motivated team players with good 
Interpersonal skats. Familiarity with European 
markets and the ability to communicate in 
German, French or other major European 
languages, while not required, would be a 
definite plus- The working language of the 
trading unit is English. 


All proprietary traders wffl be supported by an 
existing International team of hlgh-calibre 
financial analytics and FT specialists, and the 
Bank's market making, OTC and sales 
forces. 

A competitive performance-based remuneration 
wfll be offered, reflecting the experience and 
high caEbre of the traders the Bank wishes to 
employ for these demarxfing posftions. 
Interested applicants should contact 

CREDIT SUISSE 
Mrs Caroline Rufer 
PeraonaWienst Antagen/Handol 
8070 Zurich 

Tel: 41-1-333 27 31 Fax: 41-1-333 30 22 
and forward comprehensive CV to her. 


r 

• u ' 


CS- THE BANK WITH THE RIGHT APPROACH. 



fjdiu eamtsiltei 






your lva 




rf.. . ... - : V* 


Way intothis* 


v ' - 


New Business Consultant 

Not everyone's good enough, aggressive enough or 
competitive enough to handle one of the biggest jobs in new 
business sales, but you're not just anyone. 

With S years in pensions, specifically Money Purchase, 
behind you, you've proved you know the UK market inside 
out. Now you're ready to take on a product which witt 
revolutionise that market; you want to buy into it, believe In it, 
and sell it. 

Fidelity Pensions Plus will transform pensions in the UK. It 
will have the same effect on the career of the energetic, 
creative, commercially aware indwiduai who Sis this po si t i o n . 
Your job wtH be to open the door of or ganisa tions aH over the 
UK which have around 500-3000 employees. You wffl identify 
interest in our product, understand their requirements and 
ensure that ou- product can be tailored to suit their n e ed s . At 
this point, you will involve our Pensions Plus experts. 

You’D already have your own Industry c on t ac ts, and know 
how to get more, although for the moment, we’re more 
interested m you. 

This is a brand new product with potentially huge 
market demand. If you're up to the task, the rewards wiP be 
exceptional. 

Pleese contact in strictest confidence, Fiona Law at FLA LftL, 
211 Piccadffly, London W1V 9LD. Telephone 071-738 9732. 



EURO BROKERS 
CAPITAL MARKETS LTD 

A (U.OBAI. COMMITMENT TO 1 AC Kl.U.M I. IN UEKI\ VI tU “KOiK CIS 


INTEREST RATE SWAPS 

We are seeking a highly motivated, ambitious 
Japanese national, or fluent Japanese speaker with 
experience in the interest Rate Swaps and Option 
markets to join a well established team based in 
London with an excellent worldwide reputation in 
the derivative markets. The ideal candidate should 
be well versed in both banking and broking. 

Salary is negotiable and prospects are excellent for 
the right candidate. 

Please send all CV s to: 

Julie Everett, 2nd Floor, 

133 Houndsditch, London EC3A 7AJ 
Tel: 071 204 3002 Fox: 071 929 1017 


A Career in International 
Money Broking 

Our dtent, one of the world's leading money broking companies, 
wishes to recruit trainee brokers. No experience a necessary, but 
ondidnes muse be fluent « Engfaft and french andlar Spanish. If 
you have die necessary dnve to succeed in the highly pressurised 
environment of money broking, please Send your curriculum vwae 
together with a covering letter explaining why you would make a 
successM money broker, to: Media System. Garden House. 

Cloisters Business Centre, 8 Battersea Park Road. London SW8 4BG, 
quoting ref: 2026/FT on the envelope. Your application will be 
forwarded efireedy ro our efiam, unless marked ‘security check" and 
noting separately any companies to which it should not be sent 


MEDIA SYSTEM 


Equity Investment Manager 

Lucas Pensions Investment Management 

Major io-house managed Pension Fund seeks a 
Manager to control defined UK Equity Market 
Sectors. 3 years relevant experience required. 
Write with full CV, qualifications and 
salary required to: 

J G KettlewelL , Manager 
46 Park Street, London W1Y 4DJ 


and 1 

'jn 


Junior Quantitative Analyst 

A Junior Quantitative Analyst is required by the 
Financial Analytics and Structured Transactions 
Department of Bear, Stearns in London to assist in 
covering the International Government and Eurobond 
markets. Work will include structuring of trades, 
analysis of portfolios for institutional investors, direct 
interaction with both trading and sales people and 
adhoc computer programming/spreadsheet analysis. 
The position requires an individual who thrives in a 
pressurised environment, and possesses excellent oral 
and written communication skills. 

This is a challenging position for a motivated 
individual in an expanding organisation. The 
successful candidate should have at least 1 years 
previous experience in a similar environment and will 
be educated at least to first degree level in either 
Maths/Finance/Statistics or Computer Science. 
Programming ability in C , Fortran, Database 
languages and knowledge of UNIX and VAX systems 
would be useful as would exposure to Option Theory. 

If you are interested please write, indicating your 
salary requirements, to: 

Mrs S Callaghan 

Bear, Steams International Ltd 

One Canada Square, London EI4 SAD 


MANAGING THE DEVELOPMENT OF 

STOCK LENDING 
OPERATIONS 


Attractive package • City-based 


Our client is firmly established as a major 
global force in Corporate and Investment 
Banking. Stock Lending is a profitable 
business with considerable growth 
potential: they are now looking for a 
dynamic professional to manage and 
develop this operation and help maximise 
the business opportunities. 

The brief will embrace every aspect of the 
support function and the service provided, 
from the quality of documentation and 
control systems to the excellence of client 
care and the effectiveness of support 
technology. 

This is a wide-ranging and highly- visible 
challenge which will appeal to a strong and 
proactive manager from either a Stock 


Asso 


Lending or Borrowing environment. 
Whether the right candidate emerges from 
a borrower, a lender or an intermediary, lie 
or she should have a broad appreciation «»! 
every process and an insight into Ihe rok* 
of technology. 

For such an individual the rewards and 

prospects will be commensurate. 

If you think your talents and ambitions 
match the challenge, please write with your 
CV and current salary details, dearly staling 
any company to which your application 
should not be sent, to: Alastair Lyon. 
Confidential Reply Handling Service. 
Refc856. Associates in Advertising. 

5 St John's Lane. London EC1M 4BH. 



RTISING 


CORPORATE FINANCE 


City 


Competitive Satan* 


O 


ur dient, a leading corporate stockbroker, is seeking to recruit Itighly 
motivated and capable individuals from major City firms, ro join its 
prestigious corporate finance department. The department has undergone 
substantial growrh and is a recognised leader in rhe UK corporate sector. This is 
an excellent career opportunity for the ambitious young professional ltxiking for 
his/her first move into the fidd of corporate finance. 

Reporting m n Director, candidates will assist with a variety of transaction wvrk, 
documentation, marketing issues, planning and client administration. As the 
deparrment operates on a non-hierarehtcal basis, candidates must be able to 
demon srrarc flexibility and ream spirit. Stamina and the ability ro work under 
pressure .ire essential requisites tor this interesting and clullcnging role. 

Candidates will be recently-qualified acctuintams, lawyers or MBAs with a good 
academic record. First-class presentation -and numeracy skills arc essential, and 
familiarity with City transactions -and the Yellow Book would be an advantage. 
The ability to assimilate information quickly and to become a proactive member 
of the department is of prime importance in this challempng and exciting position. 
Ideally, candidates will be aged 24-30. 

Interested candidates with the relevant experience should send a curriculum 
vitae, in strictest confidence, ro Carol Jurdine, Managing Director, YVbimey 
Selection, 17 Buckinghain Gate, London SW1E 6LB, quoting reference 
WS/119/1. 


W H I T N E Y 



ore 

WHITNEY 

ernur 


SELECTION 


FIXED INTEREST PRODUCTS 
SALES DISTRIBUTION AND MANAGEMENT 
c£50,000 plus Bonus and Banking Benefits 

Our client is a leading international investment bank, expanding further in the fixed 
income markets. They are currently leaking for a determined and motivated individual 
to develop the sales ofMTNsand priva teplacementprod uct to worldwide institutional 
investors. You will play a pivotal role within a specialist, dedicated and professional 
team that is looking to increase its market share. 

You should have 3 to 5 years experience with bond or money market institutional 
investors, with a dear understanding ofbonds. money markets, swaps and derivatives. 

If you have the ability to sell fixed income products, you should apply for further 
information to Ron Bradley. Head of Executive Recr u itme nt 

Jonathan Wren 4c Co. Limited. Financial Recruitment Consultants 
No. \ New Street, London EC2M 4TP TeL 071-623 1266 Fax. 071-626 5259 


JONATHAN WREN EXECUTIVE 

Out#*:- 


Corporate Treasurer - Tttrkfv 

A major international manufacturing group , headquartered in Paris, is 
seeking a Corporate Treasurer to join one of its business operations in 
Turkey. The group is a leader in its field with sales of approximately £3bn 
throughout Europe, USA, Far East and Africa. Major business development 
in Turkey now gives rise to this interesting opportunity. 

The Treasurer, who will be based in Istanbul, will report to the Business 
Finance Director locally, and functionally to the Group Treasurer. Working 
in an environment of high inflation the candidate will play a vital role in 
the profitability of the Turkish business. Career development opportunities 
with the Group longer term are excellent for internationally mobile 
candidates. 

Candidates, aged probably 30-35, should have expertise in foreign 
exchange and risk management Experience of a high inflation environment 
would be desirable. In addition, they should have a knowledge of strict 
cash control systems and the maturity of character to implement them and 
achieve results without close supervision. Whilst fluency in Turkish is not a 
pre-requisite, foreign language skills are a valued asset in this truly 
multinational group. 

Please write to executive search consultants: 

Nicholas Angell Limited, 

29 Percy Street, London WIP 9FF 





FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


• . *'7. 


• s *4p i 

inn,; 


MANAGING DIRECTOR 

A unique opportunity in private 
client investment management 

Our client Is a large, well known. Independently operating London 
based firm. Providing the full range of investment management and 
advisory services to mainly UK private, pension and charity clients 
they have achieved considerable growth and p rofi tability over 
recent years. In order to optimise their position in the market they 
seek a very high calibre individual to work with the Chief Executive. 

The key tasks will be to lead, coordinate and develop the private 
client and other teams whilst focusing on quality of service, 
efficiency of systems and effectiveness of marketing. This will 
necessitate playing a leading role In all management Issues. 

Candidates should be well educated, probably In their late thirties 
or forties, with a successful background in portfolio management 
This should demonstrate natural communication and leadership 
skills, a focused but creative mentality, proven management ability 
and strong business sense together with an understanding of the 
dynamics of the industry and the key Issues which will effect its 
development. 

it is envisaged that this challenging role will appeal to a highly 
motivated individual who seeks not only the opportunity to join a 
growing business with an excellent name but also the scope to 
make a notable contribution. In the first Instance please contact 
Anne Howard in confidence at 20 Cousin Lane, London, EC4R 3TE. 


STEPHENS 

SELECTION 


>A STEPHENS GROUP CONSULTANCY j 

| London New YaA Hung Kangf 


Plc Group Secretary 


\ 


West Midlands 


c £50,000+ benefits 


successor. 


This fully quoted group is a recognised market leader in its specialist service 
sector With a turnover in excess of £100 million. Following reorganisation and 
the impending retirement of the present Group Secretary, there is a need to 
recruit jus successor. 

Reporting to the Chief Executive, you will be responsible for all the statutory, 
legal and shareholder matters associated with a substantial group. The group 
operants in tightly regulated markets and the role will give you considerable 
involvement in a wide range of issues including complex pensions and insurance 
mattejs and commercial negotiations. 

You v\?U have had at least 5 years experience in a secretarial role in a substantial 
plc and be CIS, GA. or legally qualified. Numerate and a good communicator, 
you will have the drive and determination to play a full part in the further 
development of this dynamic group. 

In repim, you can expect an excellent financial package with a basic annual 
salary of around £50,000, executive car and a full range of benefits. 

To apply please write with full personal and career details, including an 
indication of salary, to Tony Potter, Rrbeck Associates, 5 Home Farm Court, 
Wo/tley, Sheffield S30 7DT 


FIRBECK 

associates 


G.UXNJMESS FLIGHT 

GLOBAL ASSET MANAGEMENT LIMITED 



GR^UPE Ip FINACOR 

ONE OF^THE LARGEST BROKERS IN EUROPE 


Guinness Flight is an innovative and expanding investment group which 
manages unit trusts, offshore funds and segregated portfolios. In recent years, 
the group has [won a number of industry awards for performance. 

We are currently seeking to 6B a role within our UK equity investment 
management/ team. The position would ideally suit a graduate with 2 years 
analytical experience and a good degree of computer literacy. 

The successful candidate will be expected to provide analytical support, 
participate m the decision, making processes and be involved with the 
monitoring ind implementation of investment policy. 

The role could provide the opportunity to move into UK fund management 
at a later stige. The position will appeal to an individual keen to develop their 
career in a challenging, smaller company environment. 

i 

Please reply in wrfiing with full CV to: Susan Durians, Fexsomxl Manager, 
Guinness Fight Global Asset Management Limited. 5 Gamsfbrd Street, London SE12NE. 


EDITORS WANTED 

! Fast growing, established, 
high-technology publisher 
seeks talented journalists to 
manage and contribute to 
several of our publications. 
We are rapidly expanding our 
publishing operations and 
are looking for the right 
individuals to help us build 
i our business. Please send 
your C.V. and covering letter 
to: 

Christopher Scotton, 
Managing Director 
Phillips Business Holdings LaL, 
Forum Chambers, The Forum, 
Stevenage, Herts SGI 1EL 
or adfc 0438742424 


DoriKher&Ot **> • weB esUMed 
firm of City-based rtodforokeo looking 
lo Remit in Aw following poc&Ioo: 
SPECIALIST SALESMAN (Middle 
Efcjton BHfcMaQ: The flan is wiwsly 
seeking a apccUot akswi to derefop 
business In derivatives and managed 
portfo li os for Midite SsaaadkOs. The 
ideal csndnfaio should be aged in his or 
ber early thirties, must have a good 
knowledge trfqxten and written Freodv 
English and Arabic as vdl sat rekvaat 
n a nmriri aicap n i encr Reply ax: 
foerDoriacbcc. lOTfamgnntan Avarne. 

London BC2N2DL «Ab foSCV. 


IS SEEKING A 


BROKER 

I FOR FRANKFURT 

In a trading (room environment, you will be Integrated Into a 
growing team. 

To succeed in this position, suitable candidates should have a 
good knowledge of Market Traded or O.T.C. options, or the 
Bonds Market. 

Please writs ki confidence, enclosing a Curriculum Vitae, to: 
Hughes LOCOGE - Human Resources Director 
FINACOR Group - 52 avenue des Champs Efystes 
I 75008 PARIS - FRANCE 

Tel: 19/33 (1) 40. 74.1935 

APPOINTMENTS WANTED 


European Editor 

Investment Research 

Senior uiolyet wilh wkto experience of UK and Cwrfaretal equities sad marten 
and mfo rwr-etas editing, writing and language skfl* seeks London-based pool as 

Managing Editor 

of a European imeareh pwd«L He Has been performing a similar Jobfor same time 
for a major European Imtitnikm with •*«**. ***** «P*dimac «*c 
niBlming and cdilng hams and creating a product of aetac^ledgrd excellence, 
but he now wbta to return to London for family naaom. Languages: Eugfaafa 
(mother league}, German, Kalian, French, Sparish- 

Witte to Bn B23K, EWcU 
One Soofonsdc Bridge. London SEt UHL 


A Trade Finance Officer is sooght 
by a leading international bank to 
assist in the development of now 
business and to provide support to 
an existing team. 

The individual most be folly 
conversant with traditional trade 
finance products. A minimum of 5 
years banking experience is 
required. Ideal age laic twenties - 
early thirties. 

The candidate should preferably 
be PC literate and must be self 
motivated. A business degree 
(preferably MBA) or AC1B 
qualification won Id be an 
advantage. Ability to work in u 
Mm Ls essential 

Personal qualities to include the 
ability to work under pressure 
without sacrificing quality, have 
excellent communicative and 
interpersonal skiDs and Bcxihilify. 

Salary 25-30K pins benefits. 

Write to Box B2320, 
Financial Times, 

One Southwark Bridge, 
London SE19HL 




‘For the French market” 




Credit & Risk Management 


Zurich, Switzerland 

Our client is a highly regarded, profitable European 
bunk with an excellent reputation for stability, 
strength and quality of -service. The bank's strong 
credit rating gives it a competitive advantage in 
building relationships with clients throughout the 
world, to whom it provides the full range of coqxxare 
banking and treasury services. 

Due to the continued expansion of business, our client 
now seeks an experienced bonking professional with 
highly developed credit skills. Working as part of a 
team covering Europe, you will be involved in the 
coordination and management of all credit and risk 
issues fu: the bank's corporate clients in France. This 
will email analysis of proposed transactions, preparing 
credit summaries highlighting key issues and making 
recommendations, as well as extensive contact with 
rhe region’s marketing officers. 

Applicants must have at least five years 


£ Excellent Package 

experience in credit and marketing, with an 
understanding of the French economy and its financial 
markets. An appreciation of other European markets 
would also be advantageous. Candidates, ideally aged 
28-35, must speak fluent English, have a good working 
knowledge of French and be willing to relocate to 
Switzerland. As a team player, you must also possess 
excellent communication and presentation skills. 

This is a superb opportunity to work in Zurich for u 
leader in international banking. An attractive package 
will entirely reflect experience. Initial interviews will 
be held in Fans or London with all subsequent 
expenses and relocation paid fur. 

Interested candidates should contact Tim Smith on 
Q7 1 831 2000 or write to him enduring full career 
details at Michael Page City, Page House, 
39-41 Parker Street, London WC2B 5LH. 
Fax: 071 405 9649. 


SENIOR PROJECT FINANCE 
£100,000 plus bonus 
This is an exceptional opportunity to join a 
leading bank's project finance team, operating 
in both a lending and an advisory capacity. 
The appointee will be aged mid to late 30's and 
possess an unrivalled track record of 
origins lingand successfully concluding major 
project financings. Proven expertise should 
include significant fee-income work and 
encompass both UK and international 
transactions. 

MANAGER-PROJECT FINANCE 
£40,000 plus bonus 

A major international bank specialising in UK 
project finance transactions, on a lending and 
participation basis, seeks to recruit a graduate, 
aged 27 to 35, with three years' relevant 
expertise Including computer modelling and 
foe ability to negotiate at senior level. The 
successful applicant will have full 
responsibility for completing specific projects, 
whilst assisting the team on other financings. 

If you are interested m the above or other positions 
within the project finance sector, and have relevant 
e xpertis e, please contact Keith Snow or Peter 
Haynes. No information will be disclosed without 
applicants' prior consent. 

Jonathan Wren & Co. Li m ite d , 

F inancial Recruitment Consultants 
No. 1 New Street, London EC2M 4TP 
Tel: 071-623 1266 Fax 071-626 5258 


JONATHAN WREN 


NEW 

YORK 


• ; -V/" . am • I 

Moscow 
Representative 


The Bank of New York has an outstanding marketing 
opportunity in its Moscow-based Representative Office. The 
individual will be expected to expand existing relationships 
and develop new business opportunities with Russian 
financial institutions. 

Our minirmsn requirements indude a degree and at least 5 
years of successful experience in a U.S. or Western 
European bank or in the finance department of a multinational 
corporation. The successful candidate must be a self- 
moth/ated, refationshipKxfented and possess excellent written 
and verbal communication skills. Fluency In both 
Russian and English Is required. 

We offer a comprehensive salary and benefit package. 
Please send your resume to: 

The Bank of New York, Personnei/LR, 

One Wall Street, 13th Root, Ny, NY 10286 

EQUAL OPPORTUNITY EMPLOYER 


OPTIONS TRADER 

Trading firm seeks Options Trader for 
LIFFE floor. Fifteen years experience 
required in all phases of trading operations 
including staff supervision, clearing and 
Back Office management. Must be detail 
orientated and computer literate. 

Please send CV to: 

Box B231 8. Financial Times, 

One Southwark Bridge, London SE1 9HL 




ME DERIVATIVES 


A major international securities house, 
headquartered in London, is looking for derivative 
specialists to fill Sales positions. We seek a specialist 
with a minimum of 2 years experience in the bond 
markets and a demonstrated record of success in 
European markets. The ideal candidates should have 
a thorough understanding of options theory and have 
strong communications skills. Fluency in at least one 
European language is highly preferred. 

Write to Box 52383, Financial Timas, 

One Southwark Bridge, London SE1 9HL 


Michael Page City 

Intcmariuftal Recruitment Consultants 

London Paris Amsterdam Dnsaeldorf Sydney 




MARKETING 

International Capital Markets 


Over the past S years IBJ International has established iiseir as one of the 
most successful capital markets operations in London. 

We are seeking an exceptional graduate with 2-3 years relevant experience to 
join a successful, well established origination team which has global coverage 
responsibility from London. The role will involve debt securities marketing 
support and transaction involvement with our professional team. 

Candidates will be in their mid 20's, with experience to date in the City 
having provided a general grounding in financial instruments and markets. 
Graduates currently working in other capital markets areas and keen to 
move into origination would be of interesL 

The ideal candidate will be articulate, numerate and self-confident with an 
ordered, innovative mind backed by obvious enthusiasm and natural 
presentation skills. Fluency in European languages would be an advantage 
but is not essential 

A competitive salary package and excellent career prospects will be offered to 
the successful candidate. Please write with a full CV including details of 
current remuneration to: 

Julia Stead. Personnel Department, 


IBJ International plc 

Bracken House, One Friday Street, Loudon EC4M 9J A 






PORTFOLIO 

MANAGER 

Scottish-based Institution 


My cSant is the te ve s t me nt Hmago o ieat arm of a highly respected 
Scottish Financial Institution. Its Private Ctlent business manages 
over £2 50m and specialises In the discreet management of the 
inve s t m ent affairs off Us customers, putting perWeOos of In v e stm e n t s 
together designed to meet their needs and old actives. 

Its team Is small and the role therefore carries considerable 
authority, not only in fund m a n a gement, bat in Che Inve stme nt policy 
of the honse and In key Internal and external relationships. 

With suitable professional qualifi ca t i on s and experience of managing 
c flont portfoBos Invested primarily in UK equities, hot perhaps also 
Internationally, candidates will be presentable, articulate and 
confident individuals and will reRsh a wide ranging role In a compa ny 
dw B cated to of f ering an excellent product to a dentamflng clientele. 

In return an attractive salary package, Indenting, If necessary, 
relocation Is available. 


Please writ* wtth CV to: 

WHBe Fhdaysoa, Rnlayson Wagner Black LtdL, 

19 Alva street, Edinburgh EH2 4PH. Telephone 031r539 7087. 


.71 N I.AY 


I-.R .O LAC K 


EXECUTIVE RECRUITMENT 


Charles Schwab Limited is the UK subsidiary of Charles pjj 

Schwab & Co. Inc., the USA's premier discount stockbroking business serving over 2 -A 
million customers nationwide. As part of an ambitious programme to expand its ol 
European operation and serve its growing international customer base it is seeking jt-j 
highly motivated individuals to join a newly formed trading and customer service -j 
team in its Mayfair office. The positions open report to the Head of Trading and ^ 
require exemplary skills in customer communications and order-taking and 
execution. 

Applicants should have a minimum of two years experience in a similar retail 
broking environment and ideally be qualified to UK Registered Representative level; 
however, they will be encouraged to achieve US recognised qualifications, minimally £3 
to Series 7 level, at an early stage of their employment with the company. A 5$ 
knowledge of US markets is an advantage but not essential, as training will be given. 7? 
Fluency in French or German will enhance a candidate's application. ^ 

Successful applications can anticipate a competitive compensation and benefits gl 
packag e. Individuals ready to commit to a new challenge through which they will O 
have an opportunity to develop their career paths as the company broadens its own Q 
European horizons should submit their CV in the first instance to: £4 

Julie Browning 
Office Manager 
Charles Schwab limited 

56 South Audley Street j|j 

Mayfair !£j 

London W1Y 5FA 

Charles Schwab Limited 


<an of 
led to 
roup's 

aching 
isincss 
■d yes- 
i 1993 

x loss. 

'CYtOUS 

m flat 
36.4m) 
intinu- 
:26.6m 

items, 
rating 
■d with 
it car- 

*u need 

rented 

mi urns 

reased 

*re tax 
ns of 

excop- 
.‘d an 
isos on 
Com- 
E 14.3m 
odwill 
ducted 



uines. 
is the 
g net 
to 6.7 
i there 
about 
ilers - 
2 count 
nt of 
profits 
on a 
3f 19. 
ap at 
roup's 
i p ros- 
arium 



(Sp). 

I. 






14 


BANKING 

IN GERMANY 

Experiences - Perspectives - Strategies 


CONFERENCE HIGHLIGHTS 


♦ Capital Markets Supervision 

♦ Banking Supervisory Standards 

♦ Tax Requirements 

♦ Legal Framework 

♦ Real Estate 

♦ Staff Recruitment 


SPECIAL EVENTS 


♦ Guided sightseeing tour of the City 
of Frankfurt with special focus on 
the banking district 

♦ Reception in the imperial chamber 
of the historical town hall "Romer" 

♦ Dinner with Guest Speaker Ernst 
Weiteke, Minister of Finance of 
the State of Hesse 


OUTSTANDING KEY 
CONTRIBUTIONS FROM 


♦ ABN AMRO Bank (Deutschland) AG, 
Koln 

♦ Association of Foreign Banks in 
Germany, Frankfurt/Main 

♦ Bank of Tokyo (Deutschland) AG, 
Frankfurt/Main 

♦ Cleary, Gottlieb, Steen & Hamilton, 
Frankfurt/Main 

♦ DTZ Zadelhoff & Partner, 
Frankfurt/Main 

♦ EC - Commission, Brussels, Belgium 

♦ Federal Banking Supervisory Office, 
Berlin 

♦ J.P. Morgan GmbH, Frankfurt/Main 

♦ KPMG Rheinische Treuhand Union 
GmbH, Wiesbaden 

t Stephan & Partner, Bad Homburg 
v.d.Hohe 

♦ University FH, Dortmund 


30th and 31st May 1994, Frankfurt/Main 


Institute for International Research 



Official Newspaper 

Financial Times 

EUROPE'S BUSINESS NEWSPAPER 


Cocktafls sponsored by 

Stephan & Partner 

Executive Search and Recruitment tor Financial Institutions 


»S- 


BANK1NG IN GERMANY 

Name Mr/Mrs/Ms 

Position 


Dept 


Company/Organisation. 

Type of Business 

Address 

Post Code 

Telephone 


City 

Fax 


□ Please send me conference details 
a I woidd like to be informed about 
various banking conferences 


Institute for International Research 
Lyaner Str. 15, 60528 Frankfurt/Main, Germany. 
Despina Tlwodorldou, Marketing Manager 
TeL +49-69-66443-123 Fax +49-69-66443-269 


F1NANCIAX, TIMES WEDNESDAY MARCH 30 1994 

PEOPLE - 


Non-executive 

directors 



Sir Wilfred Newton (above), 
who will step down as chair- 
man of London Transport 
when a successor is eventually 
found, has been appointed 
non-executive chairman of 
Raglan Property Trust 

The appointment follows a 
change of senior 
at Raglan a year ago, when 
Keith Holman and Alan Foster 
bought Into the company. 

Raglan, which is emerging 
from four years of losses, has a 
market capitalisation of about 
£42m. Us s t r a tegy is to build 
up its rental portfolio and 
trading activities and to 
develop a shopping mall in 
Banbury. 

Sir Wilfred was invited to 
join Raglan's board as a result 
of connections made in Hong 
Kong. Sir Wilfred, a former 
chairman of Hong Kong's 
Mass Transport Railway and a 
non- executive director of 
HSBC, met Fosler and Holmes 
when they were working in 
Hong Kong for the Ma ss 
Transport Railway and HSBC. 

Sir WHfied, who is also a 


non-executive director of 
HSBC Holdings, MkDand Bank 
and Sketchley, over from the 
Hon Charles Cecil, who has 
resigned from the board. 

■ London dubs International, 
the casino group, has stepped 
up its preparations for a flota- 
tion later this year by announ- 
cing the appointment of Robert 
Wood as a nonexecutive direc- 
tor. 

The appointment of Wood, 
deputy chairman of John 
Lalng, the construction com- 
pany, brings the number of 
London Clubs’ non-executives 
to five out of a board of nine. 

In 1992, the group secured 
new licences for its London 
casinos, putting behind it the 
troubles which arose from a 
raid on Its premises the previ- 
ous year. 

Since then, the iwwipmy hes 
acquired a new non-executive 
chairman in Sir Gordon Booth, 
a former senior diplomat and 
ex-director of Hanson. Alan 
Goodenougb. a veteran leisure 
operator, joined as chief execu- 
tive last year. 

Sir Gordon says the group 
particularly wants to tap 
Wood’s property expertise in 
the run-up to its listing. 

■ Sr Tflhi Vallance, nhaTrpian 
ofBT, as vice-dialrmanof The 
ROYAL BANK OF 
SCOTLAND. 

■ John Kemp-Welch, Joint 
senior partner of Cazenove 
who Is about to became 

rhnlrmgn nt thw J iQndflT Stock 
Tgyrfumg p-j as rh ^frmati nf Thr» 

SCOTTISH EASTERN 
INVESTMENT TRUST on the 
retirement of Peter Runczman. 

■ Jim Mamin. chief executive 
of Laura Ashley Holdings, at 


BAA. 

■ Sfr Antony PBhlngtan is 
retiring from NA TIONAL 
WESTMINSTER BANK. 

Sir Car dan J ones will retire 
fr om H ICKSON 

INTERNATIONAL when a new 

chairman la ap pointed 

■ Sr Christopher Harding is 
retiring from ENGLISH CHINA 
CLAYS. 

■ Frank Quinn, former md of. 
Fenwick, at ROPNER; David 
Ropner, a former president of 
the Gezuaal Council of British 
Shipping; has retired. 

■ Ian Curie, a director of 
Robertson & Baxter, and Derek 
Hafl, a director of CDV Europe, 
at the NORTH BRITISH 
DISTILLERY COMPANY. 

■ John Maxwell has resigned 
from USDC INVESTMENT 
TRUST. 

■ Paal ftfcWnUams. chairman 
oTACTBeecornand 

vice-chairman of Enterprise 

Ulster, as chairman of EWART. 

■ Neil Jowell, chairman of 
Trencor, Cecil Jowell, joint md 
of Trencor, and Hemtle van der 
Merwe, deputy chairman of 
W&A, and Raymond Hasson, 
chairman of W&A I n ves tm ent 
Corporation, as chairman at 
AAF INDUSTRIES' 

■ Brian Rowbotham has 
resigned from The ADSCENE 
GROUP. 

■ Peter Byrom as chairman of 
LEEDS LIFE ASSURANCE; he 
has resigned from ADWEST. 

■ Michael Hathorn at 
RATTJJR GIFFORD SHIN 
NIPPON. 

■ Charles uniamg, chief 
executive of Tumpyke Group, 
as chairman at ATREUS on the 
retirement of Rodney Harnett 

■ Martin Bell, formerly senior 
partner of Ashurst Morris 
Crisp, at The LAIRD GROUP. 


■ wam id Blmnenthalhas 

ASMS 

retired' 


iteration of 
Airworthiness, at Newali 
Aerospace, a subsidiary of a 

ELLIOTT. 

■ Michael Sheeby h 3 ® 
resigned from XTRA- VISION. 

■ Christopher Mi lls at 
BOLTON GROUP- 

■ Brian Marsh, former 
chairman and chief executive 
of Nelson Hurst & Marsh 
Group, at NXB. (UK). 

■ Ken Manley, chairman , ot 
Country Choice Foods and 
former chief execute* anti 
chairman of Campbell sin the 

UK, at GLOBAL GROUP- 

■ Derek Silverton has rearea 
from WIGGINS GROUP- 

■ Angus Crtchton-MiHer, md 
of Rank’s holidays and hotels 
division, at TRANSPORT 
DEVELOPMENT GROUP- 

■ Peter L ewin has resigned 

from PREMIER LAND. 

■ Richard Prickett has 

resigned from EXP LAURA 
HOLDINGS. . 

■ Shr John Caines, a director 
of the Investors Compensation 
Scheme and former permanent 
secretary at the Department of 
Education and Overseas 
Development Administration, 

at NORSK HYDRO (UK). 

■ Howard Kitduer has 
resigned from TADPOLE 
TECHNOLOGY. 

■ str Duncan Nicol, former 
ehfef executive of the NHS, at 
the PRISON SERVICE. 

■ Roger Wood, finance 
director of George Wimpey, as 
rhsrirmtm of GARTMORE 
Shared Equity Trust 

■ Betty MarQnitiy has retired 
from U1STER TELEVISION. 


Sir Tom Cowie joins rival EMH 


Sir Tom Cowie, 71, who 
stepped down at the end of 
1993 after 45 years as chairman 
of the company he founded, 
seems intent an getting back 
into the motor trade business. 
He’s been recruited as a non- 
executive director of European 
Motor Holdings where Roger 
Smith, 54, a past president of 
the Retail Motor Industry Fed- 
eration, has just been made 

rhflirmnn. 

Sir Tom has never been one 
to collect non-executive direc- 
torships and he says that he’s 
Limiting himself to EMH, 
where the chief executive is 
Richard Palmer, 47. Palmer 
made his mark in the City by 
selling Western Motor Hold- 
ings to Tozer Kansley at a sub- 


stantial profit in 1990 and he 
hopes EMH will be equally suc- 
cessfoL 

In terms of market capitalis- 
ation, T. Cowie is eight times 


Sir Tom, who owns just under 
5 per cent of Cowie and 
r emains life president, intends 

to buy a stake in EMH. He says 
that he's “one of those strange 
people who believe In putting 
their money where their 
mouth is”. 

Roger Smith, who has taken 
over from Jeff Bizley, goes 
back a long way with Sir Tam. 
He is a former chairman of Tri- 
moco, which was taken over by 
Hartwell, and an old grouse- 


shooting chum. Even so Sir 
Tom’s decision to join the EMH 
board has caused same purale- 
ment at his old firm. Sir Tom, 
for his part, will not comment 


he will say is that “it’s nice to 
Join a happy camp”. 

In the City, news of Sir 
Tom’s new job has had a wmrad 
reception. One analyst says 
that Sir Tam built a large and 
very successful business but 
towards the end he was 
“spending more and more time 
on the grouse mows”. And, he 
continues, it is “an absolute 
tra v a sty” to suggest that Sr 
Tom posed any threat to his 
old firm. 


■ David Cranston, chief 
executive of NORTHUMBRIAN 
WATER Group, mil become 
chairman of its water and 
sewage subsidiary, 
Northumbrian Water Ltd., 
with effect from Friday 
following the retirement from 
the post off Sir Michael Stinker. 

Sir Michael, group chairman 
rmtii last July, will sever his 
last link with the company 
in July when he retires as a 
non-executive director from 
the group board 

■ Bill Alexander, md of 
THAMES WATER Utilities, 
has been appointed to the main 
board. 

■ Steve Philpott, formerly 
marketing director of 
Whitbread Beer, Las been 
appointed strategic marketing 
director of WHITEREAD'S 

rest a urant and tenure division. 


the size of EMH but Sir Tom 
says that the board is “young 

and ambitiOOS and SO am f. 


on rumours that he was 
unhappy with the way he was 
gently edged out of power. All 




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All candidates please reply with CV and 
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133 tfou nd s dit ch , Condon EC3A TAJ 
Tel: 071 2043002 Fax: 071 929 1017 




MEDIA SYSTEM 







FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


MANAGEMENT 


15 


Steps to 
overseas 
experience 

M ost multinational 
companies want to 
give more of their 
managers international 
experience. But they are finding 
it harder, more expensive - and 
too slow - to do so by the 
conventional route: sending 
people to wort for several years 
as expatriates in distant 
subsidiaries. 

Companies can resolve the 
problem by becoming more 
catholic In the way they 
“internationalise" their 
executives, according to two 
business academics, Brooklyn 
Derr and Gary Oddou. One 
method they suggest is to 
increase the attractions of 
service abroad by moving more 
foreigners for limited periods 
to the prime seal of corporate 
power. 

Another method, which also 
speeds up the process, is to give 
middle or senior managers 
experience of a region by 
sending them on three- to 
six-month trips to several 
locations within it, especially 
any which have been designated 
as business unit or divisional 
head offices. 

A third more obvious 
approach, which is evidently 
growing, is to make membership 
of international task forces a 
part of managerial training and 
development Philips, the 
electronics group, has done ft is 
for 20 years, say the academics 
in an article in the latest issue 
of European Management 
Journal *, 

In spite of their awareness 
of the “internationalisation” 
problem, many multinationals 
- more than half according to 
one survey - have no strategy 
for internationalising their 
managers. 

Derr and Oddou in their own 
study of 105 European 
multinationals 

found that almost three-quarters 
believed importing more foreign 
nationals to corporate HQ was 
the key to their future 
internationalisation, while a 
quarter said the “import 
rate" would remain 
constant 

Christopher Lorenz 


opi 

im 


* EM J Dec 1953. Pergarmm Press. 
Fax (UK) 0865-60285. 


J ust in time, the Japanese man- 
agement tool so widely 
admired and imitate around 
the world, appears to be foiling 
in its country of origin. Compo- 
nents suppliers, straining under the 
worst recession since the second 
world war, can no longer afford to 
deliver small regular to cus- 

tomers. 

Just in time, it seems, has became 
jllfit tOO much. Com plaints from 
suppliers about just in. Hwm» have 
been voiced before in Japan a n d the 
US. But for the first thnA wnw Jap- 
anese groups are be ginning to take 
action to break down the sys te m. 

The sector where the suppliers' 
revolt has talcpp greatest bold is the 
plastics industry, ffiromasa Yonek- 
ura, director of basic Chemicals at 
Sumitomo Chemical, nryf - of Japan’s 
largest plastics manufacturers, 
explains: “Japanese customers 
became almost tyrannical in their 
dema nds. We Just had to move 
away from just in time. It was just 
too expensive.” 

The theory of just in Hma, devel- 
oped during the 1960s fay the now 
legendary Taiichi Ohnowas, was 
that suppliers would make regular 
deliveries of small batches so that 
the required parts were available at 
the required time In the required 
amou nts. This could cut invento- 
ries, reduce the need for storage 
areas and eliminate double or triple 
handling. At its best, inventory lev- 
els could fall by as much as 80 per 
cent in four months, according to 
Ejyoshi Suzaki, author of a best- 
selling work* an techniques for con- 
tinuous improvement 
An additional benefit of this 
apparently rational system was that 
it shifted the cost of work in prog- 
ress from the manufacturer to the 
supplier, allowing manufacturers to 
reduce the amount of eash t ied up 
in inventory and so improve their 
cash-flow. Conversely, suppliers had 
to. build up stocks to ensure they 
could provide the flexible deliveries 
required by customers. 

During the 1980s, suppliers in the 
plastics industry tolerated the sys- 
tem because it strengthened the 
relationship between them and the 
customer. Once customers became 
used to a steady, dependable flow of 
materials from one company they 
were unlikely to go elsewhere for 
their compo nents . The costs of addi- 
tional freight and stock required for 
frequent small deliveries was bear- 
able because during much of the 
last decade the Japanese plastics 
business was highly profitable. 
Demand outstripped supply, forcing 
up prices and profits. 

Those heady days have passed. 
Demand for ethylene, the basic 
building block of plastics, has 
dropped 8 per cent over the past 12 
months, while prices have fallen 
every year far the past four years. 
Styrene monomer, used to make 
polystyrene, has plunged from Y120 


S 3 ME SUPPLIERS HME OWPTED SETTER THAN OTHERS 
To THE mmjtJS CF JUST IH TBUE MWUFACRjPmG 



Just in time now 
just too much 

Japan's plastics suppliers are leading a revolt against the 
much praised management tool, reports Paul Abrahams 


(76p) a kilo 2% years ago to only 
Y60. Although raw mater ial costs 
have fallen, most plastics manufac- 
turers are losing money. The 12 
largest ethylene manufacturers are 
expected to report combined losses 
during the ffanTiriai year to March 
of Y51.6bn. 

Given the faffing demand in plas- 
tics over the past three years, the 
cost of small, frequent deliveries 
has become insupportable. How- 
ever, up until now suppliers have 
hpgn unabl e to end the practice. 

The market dearly became a buy- 
ers' one, with supply exceeding 
dumauti. Any attempt by on e plas- 
tics mator to end foe just in tin* 
deliveries oft en led to loss of busi- 
ness. 

The response of the plastics sup- 
pliers to this situation was typically 
Japanese. Orchestrated by the pet- 
rochemicals industry association, 
they recently decided to end just in 
time deliveries - all members were 
to stop the practice simultaneously. 
The first product area to be targeted 
was acrylics. 

“Acrylic sheet was infamous for 
small deliveries, even within the 
plastics industry,” says Yonekura. 
“We were sometimes having to 
make deliveries three times a day. 
The costs were exorbitant Not only 
did you have to cover the cost of 


freight, but you had to cany larger 
inventory too.” A farther problem 
was ensuring the materials arrived 
on time, given the traffic cong estion 
in Japan’s Mg dries. 

Manufacturers using acrylics 
were told deliveries would be lim- 
ited to once a day. Additional deliv- 
eries were available, but only if paid 
for by the customer. “If we’re com- 
pensated for the additional freight 
costs, we’re prepared to do it We’re 
also ch arging extra for »man deliv- 
eries, as well as supplies an Satur- 
day tmd Sundays,” er plairtg Y nneV - 
ura. 

T he acrylics buyers are also 
being encouraged to take 
larger quantities at each 
delivery. “For specialised materials 
we now require a minimum quan- 
tify.” says Yanekura. The reaction 
of the acrylics buyers has not been 
enthusiastic, but they have 
accepted it, he adds. 

•Tin sure the new syste m will be 
extended to other plastics prod- 
ucts.” says Yonekm-a. “The petro- 
chemicals industry association is 
working out some sort of agreement 

at the moment. " 

Meanwhile, the phrrfire industry 
is being forced by the recession to 
compromise another principle 
embedded during the. 1980s - sup- 


plying products that exactly meet 
customers’ specifications. 

Ycmekura explains: “It was ludi- 
crous. We used to offer 400 different 
grades of low density polyethylene 
and 400 diff erent kinds of polypro- 
pylene. It’s all very weD matching 
their customers’ specifications, but 
because we were producing such 
small batches, it raised our costs 
horribly. We’ve cut the number of 
grades to 300 each and we’re 
looking to reduce even for more.” 
Similarly Mitsubishi Petrochemical 
used to make GOO grades of polypro- 
pylene and polyethylene, but plans 
to reduce the number by 30 per 
cent 

Whether other sectors follow the 
example of the plastics industry 
remains wwwfaiin 

The petrochemicals com panies 
involved are part of extremely pow- 
erful or ganisations - kno wn as kefr- 

etsu. These include industrial 
groups such as Mitsubishi, Mitsui, 
Sumitomo «nri Kawasaki which 
have the clout to impose fundamen- 
tal chang e in logistical practices. 

More tradi tional suppliers, often 
small family-owned businesses 
delivering to large automotive or 
electronics groups, are less able to 
impose such changes. 

*The Nod Manufacturing Culture, 
by l&yoshi Sasaki, Macmillan, 1987. 


Prevention is key in 
tackling RSI 

Peter Buckle looks at a TUC 
report on strategies for employers 


A survey last year by 
Britain's Health and Safety 
Executive (HSE) revealed 
that there are almost 1m cases of 
musculoskeletal disorder In the 
UK, more than SO per cent of 
which were thought to have been 

caused by work. 

Treatment is difficult once the 
condition becomes established, so 
prevention Is vital. The Trades 
Union Congress, the trade nninn 
movement’s central body, 
acknowledged this by commission- 
ing the University of Surrey to 
prepare a publication* on the sub- 
ject, which will be launched in 
London today. 

The publica t ion says strategies 
should be aimed at those employ- 
ees who are experiencing minor 
aches and pains or muscle discom- 
fort and at those who are still 
trouble free. 

To prevent the spread of Work 
Related Upper Limb Disorders, or 
Rephitive Strain Injury (RSt) as it 
is popularly known, employers 
should be following recent Euro- 
pean directives and implementing 
UK regulations. Broadly speaking 
there is a requirement to carry out 
sufficient workplace assessments; 
act on the findings to reduce risks; 
involve employees throughout the 
process; follow up any changes 
made. 

The TUC publication identifies 
the three main areas in which 
employers can act through a con- 
sideration of the design of each 
job. assessment of the needs of the 
worker and rev iewin g of policies 
for dealing with disorders. 

The first implies a need to pro- 
vide suitable equipment that fits 
tiie multifarious shapes and size of 
a typical workforce. Without such 
an objective some workers will 
find themselves working for long 
periods in awkward postures. Not 
only might this increase the risk 
of a problem developing, it is 
almost invariably less efficient 
with regard to work output and 
qualify. One suggestion is to con- 
sult the end users of equipment 
before selecting new tools, furni- 
ture or technolog y, and pur chase 
them after trials with workers. 
Good workplace desig n allows the 
worker’s joints to be free from 
strain. 

It is crucial that work is organ- 
ised so that individuals are not at 


risk from factors such as too many 
tight deadlines or work that is too 
physically repetitive. To reduce 
this stress a culture of open com- 
munication between managers, 
supervisors and staff is important. 

Any individuals working on 
tasks judged to pose some risk 
should be rotated to reduce the 
exposure time. Tasks that involve 
forceful or awkward postures, 
high concentration and/or which 
are highly repetitive should have 
inbuilt rest breaks to allow the 
worker to recover - regular 
breaks often increase productivity 
and quality of work. 

Stress may contribute to the 
problem and can be caused by fac- 
tors including workload, dead- 
lines, control over work, and need 
to adapt to new technology. 

When workers suffer from 
stress, this can show in physical 
symptoms, such as tense postures. 
Low job satisfaction may also be 
the result of a job that has not 
been designed to suit a worker’s 
abilities. Consultation with 
experts may be required to 
improve the content of such jobs. 

If workers are required to work 
to a set rate, then this should be 
based on realistic consideration of 
the job demands and individual 
worker capabilities and not solely 
on the capacity of the machines. 
Bonus incentive schemes, 
machine pacing or monitoring 
devices should not be used to 
encourage workers to push them- 
selves beyond their capacities. 
Good design takes account of the 
fact that each individual has a dif- 
ferent capacity. 

The physical work environment 
can be a source of stress to work- 
ers. Standards and guidelines are 
set out in recent HSE regulations, 
particularly for display screen 
equipment users. Employees bear 
some responsibility for their own 
health and safety but it is up to 
the employer to ensure that they 
are not at risk from their work 
tasks or workplace environment. 

* The TUC Guide To Assessing 
WRULDs Risks, price £5, is avail- 
able from today from TUC Publica- 
tions, Congress House. Great Rus- 
sell Street, London WC1B SIS. 

Dr Peter Buckle is head of the 
Ergonomics Research Unit at the 
University of Surrey. 



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FINANCIAL. TIMES WEDNESDAY MARCH 30 IWi 


BUSINESS AND THE ENVIRONMENT 


U nlikely though it may 
seem, a combination of 
European Union regula- 
tions and. green consum- 
erism could result in freeze-dried 
sewage sludge for sale in supanmff- 
kets. 

This product idea, based on con- 
verting human waste into soil fertil- 
iser, is a result of the response of 
Wessex Water, one of Britain's pri- 
vatised water companies, to the 
Ell’s 1991 urban waste water direc- 
tive banning dumping of sewage 
sludge at sea by the end of 1998. 

A third of the Lim dry tonnes of 
sludge produced in Britain was 
dumped at sea in 1991; last year, 22 
per cent was disposed of in this 
way. 

The directive also demands an 
increased number of sewage treat- 
ment works to cover coastal towns 
by 2006. The amount of sludge pro- 
duced by the treatment process Is 
expected to double as a result. 

The water Industry has been 
forced to develop a number of pro- 
cesses - some more traditional than 
others - to deal with the sludge in a 
way which is environmentally 
acceptable and cost-effective. Clive 
Coo tubes, a process scientist with 
WS Atkins, the UK engineering con- 
sultants, wrote in Water Bulletin, a 
trade journal, last year “Sludge 
treatment to produce materials that 
can be marketed at a profit is some- 
thing of a Holy Grail for the water 
industry." 

Richard Lacey, Wessex Water's 
divisional manager for waste water, 
says: “This is a problem for the 
whole of the UK water industry. 
Millions of pounds are being spent 
doing something about it.* 

Almost half of the UK’s sewage 
sludge is now used bo fertilise agri- 
cultural land. Liquid sludge is rich 
in phosphates and nitrogen. But it 
has a number of inherent disadvan- 
tages; chief among these are smell, 
a content that includes heavy met- 
als and the ability to pollute water 
courses. It is also, in Its balky wet 
form, expensive to transport 
Wessex Water ended 25 years of 
dumping Bristol’s sludge into the 
sea when it built a £7.5m biodrier 18 
months ago. The Swiss-built equip- 
ment, four timas larger than any 

other in Europe and the only one on 
mainland Britain, dries, pasteurises 
and sieves the fermenting sludge 
into odourless, even-sized granules 
of one-twentieth the volume. 

The drying gases used in the pro- 
cess are recycled, as is 70 per cent 
of the heat used. Methane gas is 
produced by heating the fermenting 
sludge. The surplus energy created 
from this is sold to the national grid 
under the non-fossil fuel obligation, 
earning Wessex Water an estimated 
film a year. 

The biodrier now produces 
between 30 and 40 tonnes of gran- 
ules a day from 45 per cent of all 
Wessex Water's liquid sludge. The 




it'. 



■■ 


Golfers happily putt away as Wessex Water’s odourless Biogran grannies are spread on the coorse 

Jane Martinson looks at Wessex Water’s plans to 
market freeze-dried human waste as soil fertiliser 

Sewage in the 
supermarket 


process means the end product is 
easy to transport. The company has 
reduced its lorry loads of sludge per 
year from 150,000 pre-biodrier to 
100 ,000. 

Most of Biogran, the name of the 
granules, is sold for use on agricul- 
tural land, but purchasers also 
include the Forestry Commission. 
British Coal (for use on land recla- 
mation sites) and golf courses. In 
one of Wessex Water’s promotional 
pictures, a group of golfers happily 
putt away while sludge is spread on 
the course. 

At a cost of approximately £100 
per tonne of Biogran, Wessex Water 
intends to make a good return on 
its initial investment To help it do 
so, the company aims to branch out 
into the horticultural and domestic 
markets. It is holding talks with the 
Department of the Environment 
and the European Commission to 
redesignate the product as suitable 
for these markets. Biogran’s use is 
currently controlled, along with 
other sludge products, by the UK 
department's sewage to 


agricultural land regulations. 

According to Lacey, the biodrier 
process changes the nature of the 
sludge “beyond all recognition". 
Samples are currently being tested 
in Brussels, and Lacey says he 
hopes for a decision on the redesig- 
nation by the s umme r. 

The company even plans to apply 
for an. ecolabel, a badge of environ- 
mental approval for supermarket- 
type goods awarded by the UK ecol- 
abelling board and replicated 
throughout the EU. 

“We feel that we’ve entered the 
easier markets, so to speak, and 
have been successful- Now we want 
a chance to enter the harder horti- 
cultural and domestic markets,” 
says Lacey. 

So far, Wessex Water has built 
only one other biodrier for a water 
authority in Jersey, one of the 
Channel Islands. Other water com- 
panies have developed different 
methods to meet the EU directive. 

Environment department esti- 
mates suggest that incineration will 
increase by the largest percentage 


after the sea option is no longer 
available. Thames Water awarded 
contracts valued at £125m last 
month for two incinerators to deal 
with the 4m tonnes of sludge being 
disposed of in the North Sea. The 
company said that deployment of 
the sludge to agricultural land was 
limited because of the lack of avail- 
able land within the Thames region. 

At Anglian Water, trials involv- 
ing composting the sludge with 
other biodegradable materials such 
as vegetable or “green" waste are 
taking place. Peter Matthews, direc- 
tor of water services at Anglian, is 
an adviser to the Japanese sewage 
works association. He says that 
while technology there - able to 
convert sludge into material suit- 
able for jewellery - is impressive, it 
is suitable only for large conurba- 
tions such as Tokyo. The Japanese, 
he says, are envious of the British 
capacity far sludge recycling on to 
the land. “In this country', we have 
very good opportunities for doing 
other land-based things with 
sludge." 


WORLDWIDE WASTE 

An Indian tale of 
two extremes 

Big businesses are improving pollution control but 
small concerns remain far behind, says Stefan wagstyi 


The effluent 
from the Shriram 
chemical works 
on the outskirts 
of Delhi is so dean 
that samples are 
routinely passed 
through a fish 
tank, in seven 
years the plant has not killed a 
single goldfish awl officials boast 
the waste is so pure they could 
drink it 

A few miles from Shriram stand, 
the smoky workshops of about 
20 dyers, full of steaming vats 
of colours and bleaches. The 
untreated wastes are poured 
straight into a ditch. Sultan 
Ahmed, who inherited his 
workshop from his father, says 
he never checks his waste. Nor 
have his neighbours ever 
complained. 

The Shriram works and 
Ahmed’s workshop are the two 
extremes of the management of 
industrial waste in India. Shriram 
Foods and Fertiliser Industries, 
controlled by a Delhi-based 
diversified group, is a model plant 
producing vegetable oQs, caustic 
soda and chlorine. It was turned 
into a showpiece for the rest of 
Indian industry after a sulphuric 
acid leak in 1985 in which 500 
people were injured. Today, it 
even has its own nature reserve. 
Ahmed, meanwhile, is just one 
of millions of self-employed 
craftsmen in India who have not 
heard of pollution control, know 
nothing of the law on waste and 
have never seen an inspector. 

Nobody knows bow much 
industrial waste is poured into 
India’s rivers. Data at the 
government’s Pollution Control 
Board (PCB) is fragmentary and 
often out-of-date. The board's 
work mainly covers the country’s 
large and medium-sized factories 

- and barely tenches the small 
workshops which account for 
about one-third of India's 
manufacturing output Moreover, 
even large plants evade the taw 

- some publicly-owned enterprises 
secure protection from their 
ministries; some private 
companies pay bribes. 


A common trick is to install 
pollution control equipment, bnt 
leave it switched off because of 
power shortages, breakdowns 
or deliberate evasions of the law. 

As Kapil Narnia, a researcher 
at the Tata Energy Research 
Institute, a private think-tank, 
says: “With an average of only 
one inspector for 50 factories, it 
is easy for a company to get away 
with breaking the roles by paying 
money.” 

Public awareness of the danger 
posed by some industrial wastes 
and materials Is low. In some 
parts of India, powdered DDT is 
still used Instead of lime to mark 
white lines on roads - because 
the deadly pesticide, banned in 

Foreign companies 
which might think 
of locating ‘dirty* 
industries in India 
would be wrong to 
believe they could 
save money 

many countries, is cheaper. D K 
Biswas, the PCB chairman, says: 
“We have to create greater 
awareness among workers and 
in the community.” 

However, Indian pollution 
experts believe that standards 
of waste disposal - as of airborne 
emissions - are gradually getting 
higher, particularly in the large 
factories. In 1991, the PCB found 
that of 1,551 large plants with 
potential pollution problems, only 
112 had installed adequate control 
equipment By the end of last 
year. 1.119 of these factories had 
made the grade and 77 had closed. 

Newly-built plants are required 
to have international-standard 
pollution control equipment. 
Foreign companies which might 
think of locating “dirty" 
industries in India would be 
wrong to believe they could save 
money on waste and emisstoa 
control systems. Even foreign 
companies obtaining goods from 
Indian plants are oblljjwi to take 


care. Indian environmental 
pressure groups are quick to 
establish links between 
wrong-doings in India and a 
foreign hand, however remote. 

This awareness dates back to 
1984 and the catastrophic gas leak 
in Bhopal, central India. More 
than 3,000 people were killed ami 
mare than 50.000 seriously injured 
when deadly methyl Isocyanate 
gas escaped from a pesticide plant 
run by the Indian affiliate of 
Union Carbide, the US industrial 
group. The accident forced the 
government to pass an 
Environmental Protection Act 
in 1986 and make serious attempts 
at curbing pollution. 

Large companies in 
pollution-prone activities - such 
as pesticides, textiles and 
papermaking - have made 
progress in setting standards and 
installing modem equipment. 
According to Biswas, the biggest 
remaining problems among large 
companies are with distilleries, 
because of the organic waste 
flushed Into rivers, and with the 
smokestacks of fossil-fuel burning 
power stations. 

Biswas admits that smaller 
companies are far behind in 
pollution control. “Many small 
companies have no idea what to 
do." he says. “Their options are 
to install equipment or to dose. 
But very few have closed." 

In a celebrated case, the 
Supreme Court last year ended 
years of litigation when it upheld 
the board's decision to force the 
closure of small metal workshops 
surrounding the Taj Mahal to save 
the monument from airborne dirt. 
But Biswas says that about 60 
of the 212 workshops are still 
operating. 

However, the widespread 
closure of small workshops in 
India is politically almost 
impossible because it would make 
millions of people destitute. So. 
the government is encouraging 
shared treatment plants in which 
dusters of workshops can Invest 
jointly hi common equipment. 

Bat own these will prove too 
expensive for many workshops. 
Next week, Sweden. 



Saudia reaches out to the 


"77 






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SAVONLINNA FESTIVAL 

AN OPERA AND BALLET WEEKEND IN JULY 


, • ■.The Kq®dqm:hf S&wfi wu*j .-,t 
’ a the focus of 
.the entire region^ Bu^.H5r<iu 
Saudi^Saudi i 

tiiggest airiinemtheM^ 
only to ihe. region, ihfokagairv i 


'New York; Frankfurt, Uodi£icjiI;&jni^^^ * 
WashmgtonDC, 




Manila and Singapore.' • 

V” - 

• ’ -• 7 We also go to other major Islamic 
> V > . : c^als Eke Cairo, Damascus, Islamabad, • 
•7, " v Kuala Lumpur and Jakarta. 

':}i' . Awl, if you're coming to Saudi Arabia, 

V we can fly you on to 25 main towns 
and cities in the kingdom - without 
. having to change terminals. 

Ah lan Wasahlan. Welcome aboard. 

snuriic! Hr 

SAUDI ARABIAN ARUNES 

Proud to serve You 




East Finland in summer, when the sun is warm and 
the chains of lakes and forested islands glitter, is one 
of earth’s wonderful places and opera there, in the 
courtyard of OlaainUnna castle at Savonlinna, with 
its stony grandeur of facade and excellent accoustics, 
seems to become an entirely natural pursuit «... 

Savonlinna, 

described by Max Loppert in the FT some years ago. 
The Fi n ancial Times invites our readers to join us for 
a weekend of opera and ballet at Olavinliiuia Castle 
in July. The Castle, one of the best preserved fortress 
in the Nordic countries, is a magical setting for the 
Hungarian State Opera & Ballet productions of 
Spartacus and Salome. 

In the gripping Strauss opera, Salome, see the 
timeless themes of power, innocence and decline of 
morality run their bitter course. Watch the 
predominantly male ballet, Spartacus, with its 
dramatic battles scenes, solos and duets - the castle 
an apt setting. 

We have arranged flights with Finnair. You will be 
driven from the airport to the first class Hotel Thtt for 
a three night stay. Our suggested itinerary can be 
ajusted to fit in with your plans, and required 
departure airport 

RSVP by completing the coupon opposite. We hope 
you can join us in Savonlinna. 


SDGGfflIEDITINEBABf 
Thursday 28th July 

Fly LoodWHeathrow to Savonlinna via Helsinki on Fianair departing at 

10.30am, arriving 5.25pm. Transfer to the Hotel Tott 
Friday 29th July 

Morning qightsenng tour with a local guide. Afternoon at kianre. 
Evening opera performance of Sakxne. 

Saturday 30th July 

Day at leisure to explore the tom of Savonlinna Evening hnlkt 
performance of SpartKua 

Sunday 31st July 

TWwfcr to SnrnOBM Airport for Finnair flight via Helsinki departs* I .Hp*. 
m riwag London Heathrow 5.10pm. 

BtSder MU OSB Immoocptwahwi MB 

Prieea are per person dburinc a twin nxn with both and we, n abed and 

aebMHed «ir travel by Fbuudr, emcDent grade opera and 

on nmuenc. All 

dements of Uin nmtihnn an suited to atnilabity. 

TMm tour uorgnntNdoa bAUfpfilu Fuuu*ud Tima bjJUJB. 7W CWtam. 
ua, okoouw in opera conn. 

SAVONLINNA FESTIVAL 

Tta Lonm* Gordoo-Fo^n, FSnweW TW, Number (W Southwn* End*. 

London SE2 9HL Tab 090S425928 no: 07IJ73 3071 

Please oradw fan detnfc of tlw IT hnrfiatiou to the SowoaHwi* Festival 

I wish to fly from Heathrow or_ _ . .. _ ‘ . 

TWO toWab .Siinma* 


jPMtTnm___ 
! Foot Code. 


— Coanty, 

— - ■ — UpytimcTM, 




« 



FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


17 


ARTS 


Time to swat the 
fly on the wall 

Christopher Dunldey seeks a change of 
direction in TV documentaries 



The Living Soap: series now virtually abandoned 


I t is time the phrase “fly- 
on-the-wall documen- 
tary" was banished. You 
can live for weeks with a 
fly on the wall and not 
notice it, but having a film 
crew in the kitchen is like liv- 
ing with an elephant; you can- 
not ignore it Far from being 
inconspicuous, the camera 
crew, even with modem light- 
weight equipment, becomes 
the focus of activity wherever 
it goes. 

It is nearly 40 years since 
Lindsay Anderson, Karel Reisz 
and Tony Richardson started 
the documentary movement 
known as “free cinema", and 
more than 20 years since Roger 
Graef, in making The Space 
Between Words for BBG2, made 
cameraman Charles Stewart 
shoot countless empty maga- 
zines before loading film, in 
order to make the presence of 
the crew in home, factory and 
so cm seem so familiar as to be 
forgotten. 

Then came The Family , Paul 
Watson’s * elephant -on-t he- 
floor" series about the Wilkins 
of Reading and, more recently, 
Watson's reprise, this time in 
Australia, with the astounding 
Noelene in Syhxmia Waters. 

The latest example Is The 
Living Soap, a weekly BBC2 
series which started last Octo- 
ber and documents the lives of 
six students sharing a house in 
Manchester. There have been 
20 episodes, but now the series 
is being virtually abandoned. 
There are plans for Just two 
future documentaries in a 
more conventional style to 
round things off. The series 
was promoted as a “fly-on-the- 
wall soap-uxnentary** and it 
was the topical and continuing 
nature of the production which 
caused Where most 

series are shot in their 
entirety, edited and then 
screened. The Living Soap was 
shooting and screening as life 
continued, and the outside 
world began to intrude. 

Stones were thrown through 
the window of one cf the black 
students. A story about the sex 
life of one of the girls was sold 
to The Sun. Those living in the 
house found themselves sud- 
denly famous, unable to go to 
the pub or a lecture without 
being pestered by their view- 
ers. The strain began to tell 
and, unsurprisingly, half the 


students walked out 
It is hard to avoid the feeling 
that the hybrid techniques 
being used to film were hinder- 
ing rather than helping- Some- 
times the camer a behaved as a 
supposedly discreet onlooker, 


hut at other times the students 
directly addressed the camera 
crew. Even more riskily, one 
room had a robot camera 
which the students could use 
to go hahind one another’s 
backs to av plain or complain 


But that is incidental The 
Important point is that 
although the fly-on-the-wall 
technique is presented to us as 
a means of getting at the truth 
about the way the subjects of a 
programme live, its true signif- 
icance is as a means of getting 
the programme makers into 
the lives of the subjects. 

If your object is the most 
honest and accurate portrayal 

of life, you would almost cer- 
tainly get closest to this by 
moving In for six months with 
those concerned and then writ- 
ing a drama. But Paul 

Watson telling Noelene. *Td 
like to come and live with you 
for six months then write a 
play about you". It has none of 
the seductive power of “Can I 
bring in a camera crew to film 
everything you dor 

BBC1 recently screened Tor- 
vill end Dean: Facing the 
Music, a documentary presum- 
ably intended to capitalise on 
Olympic gold and set the scene 
for the World nhanipinnshipg 
As we know, T & D won bronze 
and decided to abandon their 
revived “amateur” career. Yet 
that scarcely weakened the 
appeal. Here was a programme 
which never pretended to be 
anything but a contrived arte- 
fact. which is as it should be 
since it was made by one of 
Britain's best documentary 
producers Edward Minoeff. 

The script was important, 
the music counted, the dis- 
tance of the camera from the 
subject was so metimes critical 
and, above all, the entire pack- 
age was edited with tremen- 
dous care. The Juxtaposition of 
sequences was often crudaL 

MirzoefTs own perceptions 
and sensibilities were clearly 
involved. The cutting between 
partner and spouse, the way in 


which the now celebrated 
training session was shot, with 
Bean's heavy handedness prod- 
ucing Torvill's tears, was care- 
fully thought out In the sense 
that it was so calculatedly 
crafted this was half way 
towards the condition of a 
drama: no one was pretending 
here that the footage was 
untouched by human mind. 

It is conceivable that further 
truths might have been 
brought out by going the 
whole hog and creating an 
actual drama (“Art is a lie that 
tells us the truth," said Pic- 
asso), but then you would have 
lost the authenticity and 
impact that come from the real 
people. It Is difficult to foresee 
a time when there will be a 
satisfactory substitute for rtita 
sort of classic documentary. 

That said, the improvement 
in picture and sound quality 
available from camcorders - 
and their shrinking cost - 
led to a new form of television 
exemplified excellently by 
Video Nation. Produced by the 
BBC's “access" outfit, the Com- 
munity Programme itnft . they 
have given camera s to 55 
widely assorted people in 
Britain who are recording 
aspects of their own lives. So 

far we have seen a rampilwHrin 
called Money Money Money in 
which the participants all cov- 
ered that subject, and a 
sequence of much briefer dips 
involving a variety of topics. 

It might be ttmug ht that by 
cutting out the professional 
camera crew you must get 
Closer to the truth, and t-alring 
these contributions individu- 
ally it seems almost certain 
that you do, though people are 
ca p abl e of lying even to them- 
selves of course. But Money 
Money Money vividly illus- 
trated the fact that editing can 
be far more important than 
any individual conti ibutiou. 

The general impression left 
by this programme was not of 
a country now preponderantly 
middia daws, with more people 
better off than ever before, bat 
of contrasting extremes, with 
the emphasis on the unem- 
ployed and the poor. Nothing 
much wrong with that, but it 
does hi g hli g ht an important 

tr uth: that the intontinw of the 
programme maker is 10 times 
more si gnificant the technique. 


Extra space will be 
boon to Edinburgh 


Towards the Mlllennium/Dai 

Fumbles in the 


T he new Festival Thea- 
tre in Edinburgh will 
make a welcome 
impact on the city's 
international arte festival this 
year, writes Martin Hoyle. 

The new space will make it 
possible to present two block- 
busters: the return of the Mark 
Morris Dance Group in L'Al le- 
gro. il Penseroso ed U Moderato, 
to Handel's music, and the 
British debut of theatre direc- 
tor Luc Bandy. His production 
of Peter Handke’s The Hour We 
Knew Nothing of Each Other 
Imports skateboarders, roller- 
skaters, Tarzan and Moses 
from Berlin. 

Mr Brian McMaster, director 
of the 1994 festival said yester- 
day that the new theatre will 
ensure that “there are better 
facilities in Edinburgh than at 
any other festival in the 
world.” This year’s festival is 
budgeted at £i8m, £600,000 up 
on last year. 

While the festival dance pro- 
gramme is “one of the biggest 
ever" there is evidence of more 
balance between rival art 
forms than in recent years. 
Theatre also includes a new 
Robert Lepage project at Mea- 
dowbank Sports Centre (last 


year's unexpectedly successful 
last-minute dance venue). The 
Seven Streams of the River Ota 
launches an enterprise sched- 
uled to take two to three years, 
dealing with the impact on the 
world of the bombing of Hiro- 
shima. Murrayfield Ice Rink is 
pressed into service for Aes- 
chylus* O resteia in a produc- 
tion from Moscow by Peter 
Stein. 

Of the opera performances, 
the most exciting may be The 
Australian Opera’s version of 
Britten’s Midsummer Night's 
Dream, produced by Baz Luhr- 
the young director of 
the film Strictly Ballroom, and 
already rapturously received 
on its home territory. But the 
Festival Theatre is baptised 
appropriately by Scottish 
Opera on 15 August with Fide- 
lia Beethoven provides one of 
the musical themes this year, 
together with Chabrier, whose 
Etoile is accompanied by a new 
production from Opera North 
of LeRoi Molgrt LuL 

Beethoven’s nine sympho- 
nies and five piano concertos 
will field such performers as 
Andr&s Schiff, Richard Goode, 
Frans Brilggen, Alfred Brendel 
and Bernard Haitink. 


P lunging on Towards 
the Millennium, the 
South Bank's hold sur- 
vey of our musical 
century, encapsulated decade 
by decade in annual series, 
until the year 2000, is now deep 
into the 1930s (Anxiety and 
Escapism X 

fn this kind of exercise, hind- 
sight is everything: the spring 
season in AD2000 will be 
guesswork, for somebody must 
identify the crucial works of 
the 1990s at rather short 
notice. Even the music of the 
1930s still resists confident, 
God's-ear assessment 
When Simon Rattle and the 
CBSO played Stravinsky's mil 
odrame Persephone (1933) and 
Walton’s Belshazzar’s Feast 
(1931) on Friday, were they 
presenting major works of the 
decade, or just Notable Mis- 
fires by Major Composers? The 
performances made a strong 
case for the latter reading. 

The composer of Persephone 
was never happy with it He 
had loathed Andrd Gide's woo- 
zfly elevated text - “vers de 
caramel”, he called it - and set 
it with a cool disregard for nat- 
ural accents and scansion. 
Having heard a single run- 


through, Gide fled. Later, Stra- 
vinsky maintained that the 
proportions of his score had 
been geared to precise stage 
requirements (originally real- 
ised by the great Jacques 
Copeau), and were simply 
inapt fra- concert performance. 
Stravinskians nevertheless 
detect a rare vein of vernal 
innocence in this music, lumi- 
nous enough to shine through 
its fusty format. In this perfor- 
mance we hardly felt it 

Rattle’s general conception 
rang true, with the heroine 
(Ida Rubinstein's role) spoken 
by Claude Mathien in faultless 
style. But the French diction of 
his multiple chorus - the 
CBSO’s own and the LSO’s, 
with junior choristers from 
Abbots Bromley, Tewkesbury 
and Lichfield Cathedral - was 
inarticulate and bland, too 
vague to enliven the rhythms 
and too smooth to let in much- 
needed fresh air. 

As the priest-narrator 
Eumotpus, Nigel Robson was 
admirably musical and sensi- 
tive, wlthont making us forget 
that he was replacing another 
tenor whose brighter, sweeter 
timbre might have been a deci- 
sive asset. 


id Murray 


Thirties 


The net result was beta- 
blocker plain and pallid. It 
sounded the more so in retro- 
spect, perhaps, slurp Walton's 
ner vy, flashfly “barbaric” can- 
tata followed hard on its heels. 
In fact. Belshazzar seemed long 
past Its sell-by date, though 
provincial choruses still aspire 
to meet its raucous demands. 

It was no help that Rattle, 
who hates conventional bom- 
bast, took it so swiftly and 
brittly. Professionally fervid 
bombast is what it needs ; he 
managed too tittle of that to 
conceal the holes between Wal- 
ton’s crafty effects. 

What we had instead was 
flatulent rhetoric without lyri- 
cal force, tiny modernisms 
stuck on to safe harmonies, 
and emptily florid baritone 
solos needing something more 
than Stephen Richardson's 
decently solid delivery. 

Can’t we just admit that this 
commission caught Walton an 
the wrong foot, and did him no 
favour beyond transient suc- 
cess? So far as British muse 
went in the 1930s - not very 
fieri — any firm influence fr om 
Belshazzar would have been 
reactionary, even downright 
pernicious. 



Carol Vaness as Desdemona and Pl&rido Domingo in Verdi's Otello 


Qpera/Paul Griffiths 

New York Met’s Otello 


T he new Met produc- 
tion of Otello will not 
aflgm so very new to 
anyone familiar with 
Covent Garden’s present stag- 
ing. Once the company had 
decided to abandon a projected 
version by John Schlesinger, 
on tiie grounds that William 
Dudley’s set would have been 
too complex for repertory expo- 
sure, it went to the Royal 
Opera team of Elijah Mosh- 
insky as director and Michael 
Yeargan as set designer. 

The result, while not quite a 
remake of the London produc- 
tion, has many of the same fea- 
tures, including especially the 
feel of Venetian painting: 
immense neoclassical columns 
that make the stage look like 
one of Carpaccio's spacious vis- 
tas, and a Titianesque sumptu- 
ousness of colour and texture 
in the costumes (by Peter J. 
Hall). When the Venetian 
ambassadors arrive, they do so 
as a strong forward wave of 
crimson brocade and fur, 
shamelessly spectacular. 

Shamelessness and spectacle 
carry the weight of the produc- 
tion elsewhere too. Mr Mash- 
insky’s handling of the crowd 
scenes is extravagantly busy 
and brilliantly managed: the 
slicing apart of the curtains at 
the beginning reveals a prosce- 
nium at once filled with activ- 
ity in an exhilarating chiar- 
oscuro. going up to a top level 
of soldiers and cannons. 

Quite what kind of structure 
Vs being represented here Is 
unclear, just as the architec- 
tural purpose of the grand col- 
umns is never fully explicit. 
The function of the sets is not 


to portray a city but to provide 
sufficient space and splendour 
for action, or contrariwise for 
the effective stillness, empti- 
ness and isolation of the more 
intimate scenes. Otello and 
Desdemona are often pinned 
against the base or one or 
other of the pillars; the light- 
ing examines them mercilessly. 
Only Iago has the freedom to 
wander anil lean. 

The reason for this produc- 
tion was to salute Placido 
Domingo on the silver anniver- 
sary of bis first Met appear- 
ance, and his performance in 
the title role is all the more 
fascinating for its edge of frus- 
tration. The ring of brightness 
which we hear, for instance, at 
his first appearance does not 
come easily to him now - it 
has to be striven for. 

In his solo after the eaves- 
dropping scene he gives up the 
striving, and the voice becomes 
bleak, grim, heavily baritonal: 
the raw grain of the wood, 
without the polish. At other 
points the sense of strain can 
be either intense or exquisitely 
uncomfortable, but always it is 
just to the expressive moment 

The command holds, magnif- 
icently. And if we begin to 
notice the cost, it is not as 
vocal deficiency but as the cost 
exacted by the score on the 
wretched victim it makes its 
chief character. 

it also suits the piece that 
the Iago, Sergei Leiferkus, 
should be effortlessly in con- 
trol of his vocal equipment. His 
gentlemanly correctness 
begins by seeming perhaps 
even too finely modulated: evil, 
one may feel, ought to spit 


more, be more scarred. But 
this Iago is not evil except in 
being the supreme manager. 
What delights him is regula- 
tion, efficiency, the ability to 
manipulate scenes and emo- 
tions. The “Credo’’, in which 
Mr Leiferkus does bare his 
tone and show us some vocal 
fangs, seems an act 

Carol Vaness's Desdemona is 
a less natural piece of casting. 
She is a mettlesome stage per- 
sonality, and here she gives 
the appearance of a precarious 
restraint: left to herself she 
would surely be clouting Otello 
back. Nor is it just a matter of 
physical behaviour, for there is 
an evident carefulness too in 
her singing. She can produce 
beautiful sequences of 
rounded, gleaming melody in 
the middle-high register, soft 
and yet carrying; but the notes 
have to he held in place and 
warily balanced. It is a near 
miracle that they almost 
always are so. but one cannot 
quite believe In the purity, and 
without purity Desdemona has 
little going for her. 

The other parts are paltry in 
this cruel opera, and they are 
adequately done. 

The conducting, on the other 
hand, is far more than ade- 
quate. Valery Gergiev, nor- 
mally associated with Russian 
repertory, proves he can be 
just as passionate about Verdi, 
and there are moments, nota- 
bly the close or the third act, 
when the passion be encour- 
ages in the orchestra threatens 
to drown out even a stage frill 
of voices. And so the orchestra, 
in its display, equals what we 
see on stage. 


1 International I 

1 -A . . 1 

AR 

TS 

GUI 

DDE 


■ COLOGNE 

Phaharmonie Tomorrow: James 
Conton conducts GOrzenich 
Orchestra and Cologne Opera 
Chorus In extracts from Parsifal, 
with Ben Heppner in title rote. Fri: 
Cologne Musicus Chorus In Bach’s 
St John Passion. Sat and Mon: 

BaBet Teatro Espanol de Rafael 
AguNar in a flamenco programme 
(0221-2801) 

Opemhaus Tonight tomorrow: 
Jochen Ulrich’s choreography of 
Peer Gynt Fri, next Mon: Peter 
Grimes, with Ben Heppner in title 
role. Sat: Rigoletto with Alexandra 
Agache and Leontina Vaduva Sun: 
Yevgeny Onegin with Galina 
Gorchakova (0221-221 8400) 
Schaus pWhaus A new production 
of Brecht’s The Good Person of 
Szechuan, directed by Gunter 
Krfimer, opens tomorrow. Repertory 
also indudes Camus' CaHgula and 
Kramer’s radical version of Fiddler 
on the Roof (0221-221 8400) 


■ COPENHAGEN 

Royal Theatre Tonight Boje 


Skovhus song recital. Next Tues 
and Fit II barbtere di SMglia. Next 
Wed. Sat Fkieiio (tel 3314 1002 
fax 3312 3692) 


■ DRESDEN 

Semperoper Tomorrow: Salome. 
Fri and Mon: ParsifaL Sat Ariadne 
auf Naxos. Sun: Don Giovanni 
(0351-484 2323) 

Kufturpatest Sat, Sun: Stefan 
Softesz conducts Dresden 
Philharmonic Orchestra in 
Tchaikovsky's Second Symphony 
and Dvorak's Eighth (0351-486 
6666 ) 


■ DUSSELDORF 

Deutsche Oper am Rhein Tonight 
Fiddler on the Roof. Tomorrow. Sun: 
Turandot Sat EntfQhrung. Mon: 
Swan Lake. Tues: Stravinsky ballet 
evening. Next Wed: Parsifal 

(0211-890 8211). Duisburg Theater 

has Le nozze dl Figaro tonight 
Heinz Spoertt’s ballet A Midsummer 
Night's Dream tomorrow, Die 
Zauberflfite on Fri, La Cenerentola 
on Sat and Gisefle on Sun 
(0203-800 9100) 

Schausptefoaus Repertory includes 
Eugene O'Neill’s Mourning Becomes 
Bectra, Lorca’s The House of 
Bamarda Alba. Shakespeare's 
Trollus and Cresslda, and Johann 
Strauss' Die Fledermaus (tickets 
0211-363911 information 
0211-162200) 


■ FRANKFURT 

OperSyivain Cambreiing conducts 
special Easter concerts on Fri and 
Sun pairing Beritaz's Les Nutts d’Ete 
( teab efle Vemet) with Act 2 of Tristan 


und Isolde (William Cochran and 
Jan is Martin). Cambreiing also 
conducts Herbert Wernicke's new 
staging of Bartok’s Duke 
Bluebeard’s Castle on Sat and Mon, 
with Henk Smit as Bluebeard and 
Katherine Ciesinskl as Judith. A 
new production of Peter Cometius* 
comic opera Der Barbier von 
Bagdad opens on April 10 
(069-236061) 

Alte Oper Budapest State Opera 
presents Johann Strauss' Der 
Zigeunerbaron daty tiB Mon 
(069-134 0400) 

English Theater Kaiserstrasse 
A new production of Arthur Miller's 
1991 play The Bide Down Mount 
Morgan has just opened, and runs 
dafly except Mon tffl May 21 
(069-2423 1620) 


■ GOTHENBURG 

Konserttiuset Tonight: Yevgeny 
Svetiancv conducts Gothenburg 
Symphony Orc h e s tra in Mozart’s 
Symphony No 40 and 
FHmsky-Koreatov’s Scheherazade 
(031-167000) 


■ HAMBURG 

Staatsoper Tonight. Sun: Latraviaia 
with Tiziana Fabbrictni as Violetta. 
Tomorrow: Fidel io. Fri: Siegfried 
with Gabriele Schnaut, Heinz Kruse 
and Robert Hale. Sat Le nozze dl 
Figaro. Next Mon: GiKterdammerong 
wfth Gabriele Schnaut; Georgs Gray 
and Maiti Salmkien. Tues: L’eC^r 
d’amore (040-351721) 


■ HELSINKI 

Finnish National Opera Next Mon 
and Wed: Nicolai's comic opera 


Die lust! gen Weiber von Windsor. 
April 10. 12, 13: guest performances 
by Deutsche Oper, Berlin (0-4030 
2211 ) 


■ LEIPZIG 
Gewandhaus Tonight Frieder 
Berra'us conducts Stuttgart Baroque 
Orchestra and Chamber Choir In 
Telemann's Brockas Passion 
Oratorio. Tomorrow, Fri 
(Thomaskirche): Georg Christoph 
BUler conducts Gewandhaus 
Orchestra and Thomanerchor in 
Bach's Matthew Passion, with 
soloists Including Emma Kkkby and 
Frieder Lang. Sat Krzysztof 
Penderecki conducts MDR 
Symphony Orchestra and Cracow 
Philharmonic Children’s Chorus in 
Pandereckfs Utrenia l and II. Sun: 
Baumann Quartet plays chamber 
music by Haydn, Cherubini and 
others. Mon: Neues Deutsches 
Cofieglum plays symphonies and 
concertos by the Bach famffy and 
Mozart (0341-713 2280) 

Opemhaus Tomorrow: first night 
of new production of Zar und 
Zimmermam (repeated April 3, 13, 
21). Sat Don Giovanni. Tues: 
choreographies by Uwe Schotz 
(0341-291036) 


■ LYON 

• Pina Bausch's Tanztheatar 
Wuppertal presents her latest 
choreographies at the Optra tonight 
tomorrow, Sat and Sim. Dawn 
Upshaw and Olaf B£r give a song 
redtal next Wed (tel 7200 4645 fax 
7200 4546) 

• Martha Argerich and Mischa 
Maisky give a recital for piano and 


ceflo next Tues at the Auditorium 
(7860 3713) 


■ MONTE CARLO 

PRINTEMPS DES ARTS 
The spring festival in Monaco opens 
on April 2 with the first of three 
performances of a Fokine triple bill 
by the Monte Carlo Ballet Fticcardo 
Mutf conducts the Orchestra of La 
Soda Mian on April 7, and Gustav 
Leonhardt conducts the world 
premiere of a long-forgotten 
Requiem by Bfoer on April 8. The 
Monte Carlo Phiharmoruc Orchestra 
gives concerts under Lawrence 
Foster on April 10 and 17, under 
Erich Bergel (with piano soloist Peter 
Frank!) on April 24 and under 
MaroeUo Panrt (with soprano Katia 
racciaraBi) on April 28. Other 
concerts feature the Debussy and 
AEban Berg Quartets, cellist Yo Yo 
May. pianists Alexis WeSssenberg 
and Paul Badura-Skoda, and the 
BigGsh Chamber Orchestra. The 
festival nxis till May 8 (tickets 9216 
2299 information 9315 8303) 


■ MUNICH 

Staatsoper Tonight, Sat, next Tues 
and Sat Ivor Bolton conducts 
Richard Jones' new production of 
Gfufio Cesare, with Ann Murray, 
K a thl ee n Kuhlmann, Trudefiese 
Schmidt, Pamela Cobum and 
Christopher Robson. Tomorrow: 
choreographies by Hans van Manen, 
Uwe Schoiz and Jiri Kylfan. Sun: 
Meistersingar Mon: John Cranko's 
ballet Onegin (089-221316) 


■ STOCKHOLM 

Royal Opera Tonight, Mon: La 


boheme. Tomorrow: Natalia 
Makarova's production of La 
Bayadere. Sat world premiere of 
Doctor Glass, new two-act opera 
by Arne Melinas, libretto by Bjdm 
Hakanson after a novel by Hjalmar 
S&derberg’s (tickets 08-248240 
information 08-203515) 

Rotundan Tomorrow: Royal Opera 
stages world premiere of Peter 
Bengtson's new chamber opera 
Jungfruma (The Maids), based on 
the play by Jean Genet Nine further 
performances in April (08-248240) 
Konserttiuset Tonight Royal 
Stockholm Philharmonic Orchestra 
presents an afl-Lutosiawski 
programme, with piano soloist 
Gerhard Oppitz (tickets 08-1021 10 
information 08-212520) 


■ STRASBOURG 

Palais de la Musique Tonight, 
tomorrow: Theodor Guschlbausr 
conducts Strasbourg Philharmonic 
Orchestra and Chorus in works by 
Schubert and Brahms, with vocal 
soloists including Hans Peter 
Biochwitz and Tom Krause (8852 
1845) 


■ STUTTGART 

Sfiaatstfteater Tonight, Frt Renata 
ZaneUa's ballet Mata Hari, music 
by Shostakovich. Tomorrow: Don 
Giovanni. Sat, Mon: Der 
Rosen kavalier with Sfen Shade and 
Helmut Berger-Tuna. Sun: ballet 
mixed bill (07i 1-221795) 


ARTS GUIDE 

Monday: Berlin, New York and 
Paris. 

Tuesday: Austria, Belgium, 
Netherlands, Switzerland, Chi- 
cago, Washington. 
Wednesday: France, Ger- 
many, Scandinavia. 

Thursday: Italy, Spain, Athens, 
London, Prague. 

Friday: Exhibitions Guide. 

European Cable and 
Satellite Business TV 

(Central European Time) 
MONDAY TO FRIDAY 
NBC/Super Channel: FT Busi- 
ness Today 1330: FT Business 
Tonight 1730, 2230 

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

EuranewK FT Reports 0745, 
1315, 1545, 1815, 2345 

WEDNESDAY 

NBC/Super Channel: FT 
Reports 1230 

FRIDAY 

NBC/Super Channel: FT 
Reports 1230 

Sky News: FT Reports 0230. 
2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 

Sky News: FT Reports 0430, 
1730; 



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13 


FINANCIAL TIMES WEDNESDAY MAR^ 30 1994 


Ian Davidson 


It is hard to 
imagine how 
the 12 govern- 
ments of the 
European 
Union could 
have wasted so 
much political 
energy over 
four miserable votes in the 
Council of Ministers. This is 
supposed to be a Union of 
like-minded Europ ean coun- 
tries with common Interests. 
Don't they realise the issue 
they should be worrying about 
is developing a coherent policy 
towards Russia and its former 
satellites? Apparently not 

Russia is the really big issue 
facing western Europe, and it 
demands a European strategy. 
But Europeans are doing what 
they have done for 50 years: 
hoping the Americans will take 
care of it 

Unfortunately, US policy 
towards Russia and its neigh- 
bours veers erratically from 
one simple-minded nostrum to 
another. Not long ago, US pol- 
icy was committed wholly to 
friendship with Russia, to the 
neglect of Its former satellites. 
The peace of the world would 
hang on the reform of Russia 
at home and its stability 
abroad - so that was where the 
US should invest its energies. 

Since the Russian elections 
last December, the wishful 
thinking behind thic policy Ha$ 
become apparent. Russian 
natio nalis ts are on the ram- 
page; leading economic reform- 
ers have been forced out of 
government; and Mr Andrei 
Kozyrev, the previously pro- 
western foreign minister, has 
started echoing the new rheto- 
ric of nationalism. In recent 
days there have been two 
rumours of coups threatening 
the Yeltsin regime. 

Now the balance of the argu- 
ment in Washington has 
swung right round: the ideal- 
ists and the advocates of 
friendship with Russia are 
under sharp attack from the 
realists and the advocates of 
containment. Mr Zbigniew 
Brzezinski, a former US 
national security adviser, has 
derided the pro-Russian policy 
as “romantic'’, and has called 
on Washington to support 
Ukraine's independence, so as 
to prevent a resurgence of Rus- 
sian imperialism. Under 
assault for his Russia-first pol- 
icy, President Clinton has 
started paying more attention 
to Russia's neighbours, begin- 
ning with invitations to the 
leaders of Ukraine, Georgia 

and Kazakhstan, 


Russia 
policy 
is vital 

EU entry alone 
can guarantee 
eastern 
Europeans' 
independence 

This US antithesis between 
friendship and containment is 
too one-dimensional to be 
much help in framing policy. 
In fact, it may not much mat- 
ter what America's policy is, 
because the US cannot really 
have much influence on events 
in the east. Containment is not 
a real option, because neither 
Congress nor the White House 
would be prepared to pay for it. 
American cold war geo-strate- 
gists may imagine they can 
again contain the Soviet 
threat, but they are playing 
anachronistic power games. 


The US will not 
extend its security 
guarantee beyond 
western Europe's 
existing borders 


It is absurd to ask whether 
Russia is a friend or an enemy; 
the Russians themselves may 
not know what they are 
because they are at the epicen- 
tre of a vortex, an earthquake, 
a field of force. But unless or 
until it breaks up into a collec- 
tion of tiny bits. Russia will be 
an enormous geopolitical mass 
exerting enormous gravita- 
tional force on its surround- 
ings. Any piffling Western 
attempt to deny, merely by 
force of moral indignation, this 
Russian sphere of influence is 
doomed pitifully to fail 
We do not like the way 
Moscow destabilised Indepen- 
dent" Georgia and Belarus 
back into the Russian orbit; 
but did we do anything about 
it? No. Will we do anything to 
protect the independence of 
Ukraine? No. Or the Baltic 
states? Be serious. It may 
prove Impossible to challenge 
Russia inside the borders of 
the former Soviet Union at an 


acceptable risk to our Inter- 
ests. 

The only place we can hope 
to counteract the gravitational 
pull of Russia Is In eastern 
Europe; and the only way we 
can do it Is to extend our own 
sphere of influence. In practice, 
the Russians may not want to 
take back their eastern Euro- 
pean empire piecemeal. But if 
we want to prevent the danger, 
we must extend our western 
empire Into the east The “we" 
in this context Is western 
Europe, it is not America, and 
it is not Nato. The US has 
already made clear it win not 
extend its security guarantee 
beyond the existing borders of 
western Europe. So if we want 
to guarantee the independence 
of the eastern Europeans, we 
can only do it only by bringing 
them into the European Union. 

Ah, you will say, but we are 
already committed to the prin- 
ciple of admitting them: the 12 
said so at their Copenhagen 
s ummi t Ust June. Any day 
now the Poles and the Hungar- 
ians will deliver formal 
requests for membership. And 
the German government has 
said it will be pressing hard to 
open up the Union to the east 
Europeans, starting during its 
presidency of the Co uncil in 
the swwnd half of this year. 

But this extension eastwards 
cannot be politically neutral. 
The arpaTurinn of the European 
Union may be less threatening 
to the Russians than the 
expansion of Nato. But it is 
Stm a fthallang a to the Russian 
sphere of influence through an 
expansion of the western 
sphere of influence; and it will 
require the mustering of a 
European foreign policy 
towards Russia and its neigh- 
bours, not as an episodic, 
optional, rhetorical extra, as in 
the Maastricht treaty, hut as 
an unavoidable, operational, 
federal necessity. 

The voting argument baa dis- 
tracted attention from the 
more important fact, that we 
are moving into a qualitatively 
new phase in the integration of 
Europe. Enlargement to the 
east means that we shall have 
come to the end of the step-by- 
step process launched by Jean 
Monnet Instead, the member 
states will have explicitly to 
commit themselves to the prin- 
ciple and the practice of a truly 
European foreign policy; they 
will, for the first time, have to 
define the final state of the 
European Union; and they will 
have to rethink Its constitu- 
tional arrangements from the 
ground up. 



I t has 19 car parks with 
space for 10,000 cars, 
shops covering the area of 
20 football pitches, and an 
annual turnover of gftflftm A 
high-tech monorail whisks peo- 
ple between the glass-vaulted 
shopping centre and the retail 
"sheds" surrounding it. 

Merry Hill in the West Mid- 
lands is typical of the large 
out-of-town shopping centres 
that sprang up in the 1980s. It 
has devastated the retail trade 
of nearby Dudley. A govern- 
ment-sponsored survey last 
year found Dudley town centre 
had lost 70 per cent of its trade 
since Merry Hill was completed 
in 1989, and 11 other town cen- 
tres had suffered at least lim- 
ited impact 

Merry FOB is not an isolated 
example of such a development 
in the UK. Five shopping cen- 
tres of a similar size, together 
with 28m sq ft of superstores 
and retail sheds, have been 
built since 1980, in a swing to 
edge-of-town and out-of-town 
retailing that has Ranged the 
UK landscape. In that time, 
out-of-town retafflng's share of 
retail sales has risen from 5 per 
cent to 25 per cent 
This trend ha s shown little 
sign of abating. For the first 
time, out-of-town shopping cen- 
tre space proposed by develop- 
ers - at 7m sq ft - now exceeds 
that proposed for town centres, 
according to chartered survey- 
ors unitor Parker. 

But much of that may not be 
built In two sets of p lanning 
guidelines for local authorities 
and a series of speeches, envi- 
ronment secretary Mr John 
Cummer hac signalled tougher 
restrictions on "sheds can the 
by-passes”. He says he wants 
to revive and rebuild the UK’s 
decaying town centres. 

That could have important 
implications for retailers, 
many of which have strategies 
concentrating on out-of-town 
expansion, and the construc- 
tion industry, for which con- 
tinuing retail development has 
been one of the few lifelines 
during the recession. 

Mr Glimmer's philosophy is 
simple: “I want to see us 
improve the quality of our 
towns so that we can reduce 
pressures of urban sprawl and 
the development of green-field 
sites," he told the Town and 
Country Planning Association 
in January. Out-of-town devel- 
opment “echoes the drive-in 
philosophy we see across the 
Atlantic, where people mourn 
the loss of Main Street”. 

Yet there remains wide- 
spread confusion among retail- 
ers, developers and local 
authorities about the Depart- 
ment of the Environment's real 
aims. The British Property 


UK guidelines on shopping centres are causing 
confusion, say Neil Buckley and Vanessa Houlder 

Out of town, 
out of favour 



Drive-in shopping: cars converge on the Lakeside centre in 


Federation, a body represent- 
ing landlords, says Mr Gam- 
mer's recent statements run 
counter to the government’s 
attempts to introduce greater 
certainty into the planning 
process. 

The reason for this confnsion 
Is the difference in tone 
between the government’s 
guidance notes, which are 
designed to direct local author- 
ities in TTiflkiFi g 1 planning deci- 
sions, and Mr Gammer’s 
speeches. 

Retail planning guidelines - 
PPG6 - published last July 
were relatively mild. They 
called for “a suitable balance 
in providing far retail develop- 
ment between town centre and 
out-of-centre retail facilities". 
Developments should be 
vetoed only if there was “dear 
evidence to suggest that the 
result would he to undermine 
the vitality and viability of 
[the] town centre”. 

The second set of guidelines, 

PPG IS, published Wttg mnnth 
dealt mainly with transport 
policy, and to need to reduce 
car journeys and encourage 
alternative of traveL 

Only tWO Of the 1 39, para g ra p hs 
specifically covered retailing, 
and they suggested the July 
note gave defin i tive guidance. 

Nevertheless, Mr Glimmer 
Vioq repeatedly «wwpTm«ic»H his 
determination to bring lasting 
changes to th*» UK’s retailing 
and urban landscape, often 
going beyond PPG6. He has 
promised a series of initiatives 
on Improving town centres, 
and told the Town and Coun- 
try Planning Association that 
he had asked the DoE to alert 
him personally to any develop- 
ments threatening urban cen- 
tres. If the July guidance was 
not effective, he suggested, *T 
will have to consider whether a 
revision to that guidance is 
necessary”. 

As if to demonstrate his 
resolve, Mr Gammer recently 
vetoed two out-of-town projects 
- a shopping centre at Dux- 
ford, and an edge-of-town 
supermarket at Ludlow, Shrop- 
shire - although several other 
developments have been 
approved without problems. 
HOW strong his COtnTnffaflgnt is 


to curtailing out-of-town devel- 
opment may become clearer 
through the outcome of forth- 
coming planning appeals. 

But retailers and developers 
believe they can deploy strong 
arguments to persuade him to 
soften his position. They may 
get. their Zhanna through the 
Commons environment select 
committee, which begins an 
inquiry next month tufa sho p- 
pin g centres and retail develop- 
ment 

One argument likely to be 
presented is that the swing to 
out-of-town shopping has not 
been a whim of shops and 
property companies, bat a 
response to customer demand 
- which will not evaporate. “A 
policy that does not recognise 
commercial realities is not sus- 
tainable," says Mr John Bul- 
lough of Grosvanor Estates, 
which spent five shears cm pro- 
posals for the Duxford scheme 
rejected by Mr Gumma 1 . 

Ending outof-town develop 


meat will not in itself stop the 
deterioration of town cen t res, 
say Mr Gammer’s critics: “We 
cannot turn the rfnric back," 
says Mr Clive Lewis, president 
of the Royal Institution of 
Chartered Surveyors. “If retail 
parks on the edge of particular 
towns are denied permission, 
thm the customer will simply 
drive to an adjoining town and 
take away business from the 
first under-supplied town." 

Retailers such as Boots and 
Marks and Spencer, moreover, 
argue that in addition to 
developing out-of-town sites, 
they have helped fund town 
centre manag ement schemes, 
in which the local authority 
appoints a manager to promote 
the centre. In Oxford and 
Liverpool, for instance. Marks 
and Spencer have seconded 
store managers to such posts, 
and is spending £14m a year on 
town-centre projects. 

■Revitalising town centres 
needs investment, but often it 


has taken the 

competing out^£™ 
centre to spur anthmttes™ 
taking action, says BtoGeosrey 
Smith, managing 
Panning consultants Nathan- 
iel Lichfield & Partners- 
Retailers may also argue 

that out-of-town 

be more environment*^ 
filendly than 
ping. One trip a week 
Itoan edge-of-town superstore 
may involve a customer driv- 
ing -fever miles tbanj*rveral 
trips to a local supermarket 

^Tsfeing account of the fiwoe 
of these argument s- and alto 
scrutinising the governmenrs 
guidelines, the consensus 
among planning expats is tot 
the impact of Mr Gummer’s 
initiative may be 

some observers have predicted. 

T hey say the Depart- 
meat of Environment 
is likely to mid farther 
development of large 
retail shopping centres such as 
Merry Hill, or Lakeside m 

Tjfoyy, as they can be shown to 

have a damaging effect on 
nearby town centres. But BU*e» 
water Park, a proposed £3Mm 
i y-frwng at Hartford, and Traf- 
ford Park, a £2QQm develop- 
ment near Manchester, may 
squeeze through. Bluewater is 
seeking a funding partner; 
Trafford Park's fight for pfen- 
ning permission goes to the 
Court of Appeal on May 16- 
Observers also suggest that 
getting permission may 
become more difficult for 
email ar shopping centres and 
groups of stores in retail parks: 
extending existing out-of-town 
developments is likely to he 
wniw than building new ones. 
Superstores and warehouses 
nailing groceries and bulky 
goods, however, are less likely 
to be affected, as good reasons 
can be given for siting these 
next to car parks, out of town. 

Another consequence could 
be that retailers and develop- 
ers are pushed towards 
reclaiming derelict land, where 
the potential benefits would 
male* it difficult for local 
lthorities to reflise planning 


f- 


But even if the pace of out-of- 
town retail development slows 
for a few years, planning 
experts believe the rise a f the 
retell tod and the green-field 
is not over for ever. 

“My view is that planning 
policy revolves rather than 
evolves,” Mr Smith, of Nathan- 
iel TirfrftoM . told a Retail Week 
conf erence last week. “The 
pgnrinhmi is clearly swinging 
towards town centres, but it 
will swing back towards out-of- 





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LETTERS TO THE EDITOR 


Number One Southwark Bridge, London SE1 9HL 

Fax 071 873 5938. Letters transmitted should be dearly typed ana not hand written. Please set fax for finest resolution 


Governance which 
displays apathy 
and inertia 


From Mr Trevor Harvey. 

Sir, One has to question 
whether the chairman of the 
Building Societies Association 
does his members a service by 
arguing for the status quo in 
relation to the corporate gover- 
nance of bun ding societies 
(Letters, March 22). 

He is, of course, correct in 
pointing to the need far mem- 
bers' approval for the adoption 
of new powers and the part 
played by members in the elec- 
tion of directors. The message 
your readers are meant to 
draw is that the current sys- 
tem of building society gover- 
nance is alive and wefl. 

One wonders, what propor- 
tion of members vote, rfthw 
for resolutions or directors? 
Since the current legislation 
was introduced in 1986, how 
many societies’ boards have 
been constrained from operat- 
ing any new powers through 
their resolutions being 
rejected? How many directors 
nominated by avisting boards 
have been initially appointed 
since 1986? Hlow many direc- 
tors nominated by members 
have been elected in that time? 

The answers to such ques- 
tions would provide perspec- 
tive and add some factual basis 
for the accountability debate. 
What they win point to Is a 
system of corporate gover- 
nance which exhibits apathy 
and inertia among the vast 
majority of. members, with 
boards almost without excep- 


tion getting their way. Effec- 
tively, it is a corporate gover- 
nance vacuum. And where a 
vacuum exists, something will 
fifl it 

The Building Societies Com- 
mission has already had one go 
at trying to apply Cadbury’s 
plohased recommendations to 
building societies and is now 
reconsidering the issue. The 
Treasury is currently consider- 
ing building society legislation 
as part of Its deregulation Ini- 
tiative. In this regard, some 
societies have welcomed pro- 
posals which would lead to 
even lower levels of member 
participation. 

Most members who have 
ever attended the typical bond- 
ing society AGM couldn't tell 
the difference between its 
orchestrated proceedings and 
those of a Tory Party Confer- 
ence. If that is what is to pass 
as evidence of effective 
accountability and good corpo- 
rate governance in practice, 
some people are easily pleased. 

Trying to perpetuate an 
unadulterated system based cm 
largely 19th century ideals of 
mutual self-help ia a deinsion 
Societies are running the risk 
that the vacuum might be 
filled with something they wOl 
not like and surely would not 
have designed for themselves. 
Trevor Harvey, 
director of resources. 

Ashridge Management College, 
Berkhamsted, 

Berts HP4 INS 


Dual voting system has 
harmful repercussions 


From Mr Stuart Bed. 

Sr, As demonstrated at last 
Friday's T^mrhn annual meet- 
ing, even the most tin-pot dic- 
tator would be hard-pressed to 
come up with a voting system 
as undemocratic as that used 
by most UK companies. Using 
to present system, the board 
can choose to accept the vote 
at the meeting (taken an the 
basis of one vote per member) 
or to Invoke the dead-weight of 
institutional proxies to win the 
vote an the basis of one vote 
per share. 

The dual voting system is a 
recipe for confusion and disil- 
lusion with the corporate gov- 
ernance process. -It both disen- 
franchises small shareholders 
who know that, institutional 
proxy votes can almost always 
outvote them on a poll, and 
dissuades institutions from 
exercising their votes in an . 
informed manner independent 
of the board, since they know 
their proxy votes will remain 
undisclosed and unused except 
in the rare instances when a 
poll Is called. 


needs to be rationalised so that 
one vote per tore Is the norm, 
bs in the US. While this would 
favour institutions, the count- 
ing and disclosure of proxy 
votes should encou r age them 
to develop — and publish - vot- 
ing policies, as the Cadbury 
committee recommended. With 
a clearer responsibility for vot- 
ing, institutional investors 
would devote greater efforts to 
scrutinising the board's pro- 
posals rather than acting as a 
rubber-stamp as is too often 
the case at present 
If voting on a show of han ds 
were abolished, small share- 
holders would lose some influ- 
ence, but in practice their votr 
ing rights are already minimal, 
given the spectre of polls 
which can be called at the 
chairman’s discretion. They 
could anyway still attend 
AGMs and question directors. 
Stuart Ben, 
research director. 

Pensions and Investment 
Research Consultants. 

Challoner House, 

19-21 Gerkemoel l dose, 

London EC1R QAA 


In our view, the system 


Well, not really so amazing 


From Mr Peter Breen. 

Sir, I cant help but reflect 
that some purveyors of new 
technology get a little lost in 
their own cleverness. A recent 
advertisement for a mobile 
phone suggests we should pre- 
pare to be amazed . . you can 
actually answer the phone 
with your voice". 

While not particularly 


amazed, perhaps your readers, 
like myself, can be comforted 
that our method of using the 
telephone, as established by 
Eddlson all those decades ago, 
can continue, despite the 
heady pace of the telecommu- 
nications revolution. 

Peter Keen, 

Christmas Place, 

Edenbridge, Kent TN8 5PR 


In-depth study would show a different picture of Jersey 


From Ms Imogen Nichalls 
and others. 

Sir, Your survey on Jersey 
(March 22) was far from being 
an in-depth study into the cur- 
rent State Of the island. 

Its principal weakness lies in 
its focus on the same old feces 
that have dominated the snana 
for much of the past 30 years. 
Their version of reality paints 
a glossy picture of financial 
probity, political stability and 
a general state of well-being 
that contrasts with the rest of 
the world. In this respect, the 
text mirrored the photographs, 
carefully contrived to avoid 
reference to the unpleasant 
side-effects of uninhibited 


growth such as over-popula- 
tion; pollution a im inning fmm 
rising volumes of domestic 
waste and an over-intensive 
agricultural system; ugly 
architecture which has greatly 
diminished our heritage; price 
inflation; the cnmpiata absence 
of consumer or labour protec- 
tion; and the subversion of the 

riwrinirratift irioal 

As newly elected politicians, 
we are greatly concerned that 
the Bailiff, an unelected Crown 
Officer, should use the FT sur- 
vey to criticise the recent mea- 
sure to provide politicians with 
a very modest allowance to 
cover their living costs. We 
have no doubt tot it suited 


the Bailiff and many lflta him 
to have in place a system 
which precluded the vast 
majority of islanders from 
standing for office. 

For decades the States of Jer- 
sey has been dominated by 
land owning and small busi- 
ness Interests. Old-boyism and 
Incompetence have been rife. 
At the 1993 elections, the vot- 
ers opted fear a new breed of 
radical politicians committed 
to an agenda of social, reform 
and environmental protection. 
These voices have, by and 
large, been ignored by an 
intentionally anti-democratic 
power structure 

Confronted by an electorate 


of government, an 
ging up the law-di 
cess with legislate 
to the needs of in 
fina nc e capital. The 
loud and clean we c 
thing we lifca as Ion 
not interfere with 
qua So much for cb 
Imogen Nlcholls, dej 
Stnart Syvret, senatt 
Alan Breckon, depw 
Gary Matthews, den 
States of Jersey, 

Beech Court 2. Wood 
Crouome, Jersey JR 











FINANCtAJL TIMES WgONfiSPAV MARCH 30 1994 


FINANCIAL TIMES 

Number One Southwark Bridge, Loudon SE1 9KL 
Tel: 071-873 3000 Telex: 922186 Fax: 071-407 5700 

Wednesday March 30 1994 


A chiaroscuro 
election 


Nothing in Italian politics is ever 
quite what it seems. On the face of 
it, yesterday’s election result rep- 
resents a decisive break with the 
past of muddled and corrupt coali- 
tion governments as well as a 
stunning victory for the right- 
wing Freedom Alliance spear- 
headed by media magnate Silvio 
Berlusconi In reality, ft is neither 
so novel nor so decisive. 

Although Mr Berlusconi posed 
as a harbinger of Italy’s renewal 
his business career - Involving 
close finks with politicians now on 
trial for corruption - reflected 
much that was wrong with the 
way the country was run in recent 
decades. WMle the electorate has 
clearly rfgnaiw its disgust with 
the old order by plumping for a 
man who has been In politics 
barely four months, it also con- 
firmed a fact common to other 
democracies: that voters choose 
politicians who tell them what 
they want to hear. 

Even the Freedom Alliance’s 
absolute majority in the lower 
house may turn out on closer 
Inspection to be fuzzier than It 
looks. The three parties of which 
it is composed make such implau- 
sible bedfellows that it is bard to 
see them forming a stable or dura- 
ble government. Moreover, the 
tensions among them - between 
the corporatist MSI/National Alli- 
ance and the economically liberal 
Forza Italia, or between the feder- 
alist Northern League and the 
centralist, southern-based MSI - 
do more to imd *wKnn Hip problems 
faring Italy than to identify com- 
mon ground fin* solving them. 

When a government is eventu- 


ally formed, those problems will 
be as acute as ever, and the 
options for aHHiwwing th pm every 
bit as constrained as th py» that 
have guided the technocratic 
coalitions of the last two years. 

A new prime minister win find 
no escape from the financi al real- 
ity of a budget deficit only just 
under control and a public sector 
debt stffl climbing. Any deviation 
from the arduous course of fiscal 
adjustment charted by the outgo- 
ing Ciampi government will be 
instantly punished in the bond 
markets,- with rapid effects on 
domestic interest rates and 
growth. The first test will come 
almost as soon as the new govern- 
ment takes office, when it consid- 
ers, as it must, how to deal with a 
worrying overshoot on the deficit 
revealed last week. 

If that government's leader is 
Mr Berlusconi, he will find Ms 
tank nn easier by Ms elec- 
tion trail slogans of lower taxes. 
This pledge is not compatible with 
Italy’s current fiscal predicament 


Now that power is almost within 
his grasp, he needs to swallow it 
and concentrate on the stark 
choice his country faces. On one 
side is the long, hard climb 
towards fiscal respectability and 
integration with Europe; on the 
other, a slide towards Latin Amer- 
ican-styis financial collapse. If a 
Prime Minister Berlusconi chooses 
the former, he will be well placed 
eventually to deliver the economic 
transformation he promised, 
«mrg hte victory romgq just as the 
European economy is turning If 
not, his political career will prove 
an ephemeral phenomenon. 


Ice cream wars 


The Monopolies and Mergers 
Commission seems largely oblivi- 
ous to the realities of Britain’s 
membership of the European 
Union, to judge by yesterday’s 
report on the use of exclusive 
freezer cabinets to sell ice cream. 
Hu repot skates over the feet 
that EU competition authorities 
are. currently investigating the- 
Identical issue in Ireland. 
Nowhere does It hint that the 
MMC considered conferring with 
Brussels before reaching its own 

This is no minor oversight The 
separate inquiries into ice cream 
distribution clearly create the 
potential for a Jurisdictional dash 
between EU and national competi- 
tion laws, and between the regula- 
tory authorities charged with 
administering them. There Is no 
certainty that Brussels’ eventual 
decision and that of the MMC win 
concur. If they do not, regulatory 
uncertainty will be in prospect If 
they do, it will be due to coinci- 
dence. That is no way to run a 
competition policy. 

The MMC's insistence that it 
must wwwitter the issues "solely in 
the cir cums ta nc es of the UK mar- 
ket and in the context of domestic 
legislation**, while technically cor- 
rect Is myopic. The feet is that 
whenEU and national law conflict 
the former prevails. Even if con- 
flict Is avoided this time, it is 
increasingly likely to arise in 
future restrictive practices cases. 

As markets grow more competi- 
tive and product lives Shorten in 
most industries, manufacturers 
everywhere are seeking advantage 


by ti ghtenin g control over market- 
ing and distribution. That increas- 
ingly requires competition author- 
ities to define the line between 
legitimate commercial strategy 
and anti-competitive behaviour. 
Simultaneously, the single market 
Is prompting more companies to 
supply all of Europe from fewer 
plants. Ae-the resulting 1 flow of 
products across borders grows, 
more competition cases wffi fall 
within EU law, which takes prece- 
dence when trade between mem- 
ber states is in question. 

Brussels is seeking to lighten its 
workload by encouraging national 
courts to judge more cases on the 
basis of EU law. That seems a 
sensible aim, in line with the 
broad principle of subsidiarity. 
But juristdictionai confusion will 
only increase unless the domestic 
laws applied by national competi- 
tion authorities are also aligned 
with those of the EU. The longer 
the British government delays 
doing so, the less seriously will be 
taken its protestations that it 
wants effective competition poli- 
cies and its complaints about 
interference from Brussels. 

The role of the MMC also needs 
to be re-thought It has already 
surrendered to the EU much erf its 
authority over mergers. Recent 
trends point to a similar decline in 
its monopolies workload The gov- 
ernment could usefully ask 
whether the MMC's current 
resources are justified, and 
whether it should not be coordi- 
nating more closely with Brussels, 
where power over competition pol- 
icy increasingly lies. 


The Zulu factor 


Smiling as long 
as he can 


After his election fillip, Silvio Berlusconi now faces a 
difficult job forming a government, says Robert Graham 



A s befits a man who 
brought popular enter- 
tainment to Italian tele- 
vision, Silvio Berlusconi 
has a well-rehearsed 

smile. 

Throughout a bitter, and at times 
venomous, election campai gn, Mr 
Berlusconi wore this smile like a 
badge of selfconfidence. But early 
yesterday morning as he stepped 
onto the podium of his Forza Italia 
headquarters to acknowledge the 
extraordinary victory of his Free- 
dom Alliance, he was tense and 
grim-faced. 

It was as though the 57-year-old 
media magnate sensed the real 
metamorphosis from businessman 
to politician. Forza Italia had wan 
the largest number of votes and 
become the largest single party in 
parliament after less than four 
month’s existence - a feat without 
parallel in the recent history of 
European democracy. 

"It's probably quite a shock to 
realise that winning the pteriirmg is 
the easy part. Trying to put a 
together a government is going to 
be much tougher." observed one of 
his aides. 

Having masterminded the three- 
party Freedom Alliance, which has 
won an absolute majority in Italy’s 
lows: parliamentary chamber, Mr 
Berlusconi wOl be the first to he 
asked by President Oscar Luigi 
Scalfero to form a government. But 
in his ambition to become prime 
minister. Mr Berlusconi has gath- 
ered some odd bedfellows who may 
find it impossible to cohabit in gov- 
ernment. 

Thus there is a curious paradox 
zn the election result The composi- 
tion of the winning coalition - 
Forza Italia, the populist Northern 
League of Mr Umberto Boesi and 
the neo-fascist MSI/National Alli- 
ance of Mr fliiniftan*^ Fini - may 
no t be that of the H«*t government 
The Freedom Alliance has no com- 
mon programme of government, 
even if its constituents represent a 
riaar swing towards the right of the 
political spectrum after the many 
years of centre and centre-left gov- 
ernments. 

The biggest problem is the differ- 
ence between the personalities and 
thinking of Mr Bossi and Mr FmL 
Mr Bossi is a federalist and a free- 
marketeer who in the last decade 
has made a political career by fmnt 
ding a grassroots movement in 
northern Italy to supplant the abuse 
of power by the traditional ruling 
parties. Mr Fhri, who describes him- 
self as a “post-fascist”, is heir to the 
centralised and corporatist tradi- 
tions of the Mussotini state. 

The election pact between the 
three parties was a marriage of con- 
venience, and in no constituency 
did all three support each others’ 
candidates. Mr Berlusconi forged a 
formal pact with Mr Bossi to pool 
resources in the north. Separately, 


Mr Berlusconi organised a deal with 
Mr Fini to join forces in the centre 
and south of the country. The 
League and the MSI/National Alli- 
ance were ltnkffH through the per- 
son of Mr Berlusconi and by their 
dependence upon Finin vest's moHia 
empire to h ack their campaigns. 

Repeatedly during the campaign 
Mr Fpgyt bad-mouthed Mr Fini and 
rejected the idea of governing with 
him Mr Bossi sa id again yesterday: 
“There's a reactionary right around: 
and I would never be party to a 
government with a reactionary 
right" 

Part of this is bluff to maximise 
his bargaining position, which baa 
been eroded by the loss of votes to 
Forza Italia in the north. But join- 
ing the mst in government would 
rnirierminft his cre dibili ty among 
supporters, and threaten the League 
with absorption by Forza Italia. 
Alternatively, the League could 
split with some deserting to the 
Berlusconi camp - there are 


already reports of overtures to sev- 
eral leading League members. 

In any event Mr Berlusconi will 
be hard pressed to find another 
grouping in parliament to form a 
coalition with the MSL One way out 
of this impasse would he a Forza 
Italia/League government which 
excluded the MSI but had 
its explicit backing in 
parliament. 

Another scenario would be for Mr 
Berlusconi and the League to seek 
allies with the centrist Italian pact, 
headed by Mr Mario SegnL This 
would have the attraction of help- 
ing to provide an absolute majority 
In the Senate, or upper chamber. 
Hie lack of such a majority is a 
serious handicap, since the 
upper house can block legislation. 

Mr Segni refused to make a pre- 
electoral alliance with Mr Berlus- 
coni’s Forza Italia - a factor which 
forced Mr Berlusconi into the aims 
of the League and the MSL But Mr 
Segni binyylf paid dearly for spurn- 


ing a deal with Mr Berlusconi He 
ended up being squeezed between 
the Freedom Alliance on the right 
and the Progressive Alliance on the 
left 

Bfr Segni may be more malleable 
after his disappointing performance 
in the polls. But If the centre joins 
Mr Berlusconi in government Mr 
Bossi will be none too happy. He 
riatmg Mr Sogni anH his friends are 
no more than recycled members of 
the discredited re gimes of the Chris- 
tian Democrats anH gocfaHifa imHi 
1992. 

None of these possible outcomes 
augurs well for the formation of a 
stable government capable of last- 
ing the frill five years of the next 
legislature. Indeed. President Scal- 
fero may find Mr Berlusconi cannot 
form a viable government and turn 
to an "institutional" figure such as 
outgoing premier Mr Carlo Azeglio 
Ciampi, the former governor of the 
Bank of Italy. 

The "institutional" solution how- 


19 

ever could be foisted on the country 
only m extremis. This is because the 
electorate has expressed through 
this week's elections a clear verdict 
in favour of political renewal and 
ag ain st the old political system. 

In this respect, there is one com- 
mon link between the parties of the 
Freedom Alliance: either they are 
untainted by previous government 
experience or they aspire to repre- 
sent the majority or Italians who 
want the country to turn a new 
page. In contrast, the Progressives, 
dominated by the former commu- 
nist Party of the Democratic Left 
(PDS), was weakened by being iden- 
tified with the old political 
system. 

T his Is the only political 
“glue" Mr Berlusconi’s 
has available to him. He 
has to demonstrate that 
victory can bring his 
partners closer, not push them 
apart. 

But even if an alliance can be 
forged, Mr Berlusconi has also to 
prove that he is not simply an 
invention of his own television net- 
work. Television launched him into 
an unbeatable lead. He and his 
advisers were smart enough to see 
the vacuum left by the traditional 
centre parties and sense that his 
audience, middle class Italy, was 
worried by a deep recession and 
wanted a simple reassuring mes- 
sage. His television exposure, cou- 
pled with the managerial talent of 
Finin vest, his debt-burdened media 
and stores group which set up the 
countrywide support network for 
Forza Italia , did the rest 
He now has to move from the soft 
sell of campaign promises to the 
harsh reality of operating with a 
new parliament and tackling the 
serious issues raised by Italy's sub- 
stantial budget deficit and the 
mounting state debt His pledge to 
cut taxes and relaunch the economy 
will be hard, if not impossible, to 
square with the need to introduce a 
mini-budget in the summer. A 
shortfall in revenues will have to be 
corrected if he is to bold the public 
deficit below 10 per cent of GDP. 
Equally his pledge to shake-up the 
public administration and liberalise 
the labour market risks a confronta- 
tion With the iminnR. 

Until now, Italy has been gov- 
erned, for better or worse, on a con- 
sensual basis with limitpH shifts in 
policy. If Mr Berlusconi forms a 
government by looking solely to the 
League and the MSI, this would 
mark a new departure, allowing the 
creation of a genuine opposition 
and a more confrontational style of 
politics. The obstacles in his path 
are immense, but Mr Berlusconi’s 
style is to win and the election has 
shown that, despite his political 
inexperience, his capacity to come 
out on top should not be underesti- 
mated. 


Faulty picture of multimedia world 


A remarkable 
conventional wis- 
dom has emerged 
among business 
executives and con- 
sultants in the tele- 
Dn „„„ WJ , vision, computer 
Personal telephony 

industries. It is that 



View 


they are inexorably converging. 
White soma blurring of boundaries 
is undoubtedly happening, the 
importance of Oils trend compared 
with same other changes under way 
has been exaggerated. 

The computer and telecommuni- 
cations industries have been eyeing 
each other longingly for many years 
without ever consummating their 
relationship. 

Now entertainment has entered 
the picture, with media conglomer- 
ates like Time Warner of the US 
courting telephone companies. 
Cable operators are nibbling at BTs 
local telephone monopoly. BT Is 
toying with movies-on-demand over 
telephone lines. 

To add to the confusion, everyone 
is babbling about multimedia, a 
term even, more elastic than back to 
basics. 


By 2000, according to the pundits, 
the distinctions between content 
anH carriage, medium anri massag e, 
will be so blurred that television, 
t ele phon e, publishing and computer 
companies will all he subsumed in 
one vast multimedia “infotainment’’ 
industry, worth more than $l, 000 bn. 
This is fanciful. 

AH of these industries are cer- 
tainly going through tumultuous 
times. Broadcast television has 
ceased to be a protected oligopoly, 
hi tiie US, the old networks’ share 
of total viewing has already 
dropped by half. In the UK, the BBC 
and rrv companies wOl inevitably 
lose market share to new cable and 
satellite channels, as will tradi- 
tional broadcasters in continental 
Europe. 

Competition in telecoms has, to 
date, been introduced by regulator 
fiat tn the US and UK, and largely 
confined to long-distance traffic. 
However, new technologies like cel- 
lular telephony, satellite and cable. 

Offering g enuine alternativ es to the 
old copper wires, wfil push prices 
down. 

The computer hardware industry 
has already become ferociously 


competitive. The leadership of IBM 
and Apple has been seriously under- 
mined, barriers to new entrants 
have dropped, and prices and mar- 
gins have tumbled. 

The economics and structure of 
the broadcasting, telecoms and com- 
puter industries are thus changing 
fundamentally, and generally to the 
disadvantage of carriers and broad- 
casters. In a much more competitive 

Everyone is babbling 
about multimedia, a 
term more elastic 
even than 
back to basics 


marketplace, created largely by 
technological change, the cost of 
delivery of programming anH infor- 
mation relative to content will fell 
dr amatically 

Some profess to have identified 
more opportunities than threats. 
The multimedia services of the 
fixture, according to the new con- 
ventional wisdom, will be on-line: 
movies-on-demand, home-shopping 


anH hanlring , video ganiaa distance 

learning, anH a galaxy of interactive 

farfUtipg 

There are two flaws in this virion. 
The first is that it exaggerates the 
value of on-line delivery - many 
interactive services are already 
bring satisfactorily implemented an 
off-line madia such as CD-Rom. 

Second, it confuses the question 
of competition between different 
distribution systems with that of 
possible markets for new services. 
Technology can change the basis of 
production, but it cannot by itself 
create new markets. That depends 
primarily on the appeal of the 
accompanying programming or soft- 
ware to a particular set of custom- 
ers. 

The main adv antag e of the intelli- 
gent TV for the average couch 
potato is initially likely to be that it 
will make rhnnctng from a bewil- 
dering array of programming much 
easier. It will not seriously reduce 
demand for passive viewing, nor 
will it endow network or cable oper- 
ators with skills in. programme 
making , interactive or otherwise. 

That is why it is fanciful to think 
of this as a single new industry. The 


players in the complex new set of 
overlapping markets will have dis- 
tinct roles, which will be deter- 
mined more by their capabilities 
than by their assets. Success will 
come from applying those capabili- 
ties imaginatively, and from com- 
peting and collaborating intelli- 
gently, not from acquiring 
companies in unfamiliar businesses. 

The beneficiaries of the new 
media order win be the publishers 
of programming and software, par- 
ticularly those that can redefine 
their businesses in the way that 
Reuters and Microsoft, for example, 
have dona The biggest challenges 
will face those that have been 
accustomed to regulated markets 
and outright monopoly. Telephone 
and cable companies, when the reg- 
ulators permit, will be challenging 
each other not so much for the new 
multimedia markets as for each oth- 
er’s core businesses. 

Kieran Levis 

The author is an independent man- 
agement consultant specialising in 
new media 


South Africa's ni ghtmare came a 
step closer on Monday. In the past, 
the country’s political leaders 
have stepped bade from the brink, 
but with an election barely a 
month, away ten^rm* are tiring. 

The country’s Transitional 
j Executive Council, effectively 
South Africa’s ruling coalition 
- between President F.W. de Klerk 
and Mr Nelson Mandela's African 
Nati onal Cong ress , is understand- 
ably tempted to take drastic 
action to ensure stability. One 
option Is to declare a state of 
emergency in Natal, send in the 
security forces and effectively 
depose the man they bold respon- 
sible for the crisis: flhltrf Mango- 
suthu Buthelezl, chief minister of 
KwaZulu hftnwlanH and lefldgr of 
.the predominantly Zulu inkatha 
Freedom party. 

Chief Buthelezl has derided to 
play tin ethnic card, and it is a 
dangerous one. Zulus are by no 
means a monolithic voting bloc 
and It is probable that the ANC 
commands the allegiance of the 
majority at the electorate in NataL 
But deeper passions are at play: a 
sense of nationhood, a wounded 
pride, a violent and belligerent 
past Chief Buthelezi can readily 
exploit these chara cteristics, creat- 
ing a situation in which political 
preference takes second place to 
Wood loyalties. 

It Is not ille gitima te to base a 
■political party on such an appeal. 
Ethnic loyalties remain a ftmda- 
nental facto r in African politics, 
rhe danger of such appeals come 
when they cannot be accommo- 
lated by the country's constitu- 


tion. Chief Buthelezi is admittedly 
an infuriating negotiating partner 
and, judging by his administration 
of KwaZulu as a de facto one-party 
state, is not a democrat by nature. 

Yet his power to damage South 
Africa is out of proportion to the 
number of votes he can command. 
He cannot be allowed to exercise a 
veto over South Africa’s search for 
a stable democracy. But the con- 
stitutional options which might 
lead to his participation in elec- 
tions have not bean exhausted. AH 
parties have already agreed to 
submit the problem to Interna- 
tional mediation. Little has been 
done, ho we ver, to put this agree- 
ment Into effect 

Until this is done, the TEC 
should stay its hand. There may 
come a time, If Chief Buthelezi 
refuses to co-operate, when gov- 
ernment needs to intervene in the 
interests of ensuring an orderly 
election in Natal as well as else- 
where. But premature action 
could lead to disaster. 

Such advice runs counter to the 
prevailing mood in a country 
where politics has become a blood- 
sport conducted with as much 
subtlety as bear-baiting. There are 
those in the ANC anticipating a 
once-and-for-aU victory over an 
adversary they loathe, taunting 
Chief Buthelezi with the threats of 
tanks in Uhmdi, the KwaZulu cap- 
ital. They should be restrained. 
Hasty use of force before all nego- 
tiating possibilities have been 
ffrhaiwteH could play into Chief 
Buthelezi 's hands and gfve him a 
cause around which to mobilise 
re sistance for decades to come. 


Chums in the 
cabinet 

■ Are the chancellor of the 
exchequer and the governor of the 
Bank of En gland, who hold their 
monthly mflnrfar y mariing today, 
on first name terms? 

And if they are, should the 
governor - Eddie George - refer 

to thw ohflngrfTor aw Xwinrfh, or 
Ken? Clarke has only limited 
control over what newspapers call 
hhn and doesn't appear to have 
Issued edicts on the matter. 

But precedents have already been 
set; lengthy investigation i ndicates 
that in the past year the UK’s 
□on- tabloid newspapers have 
increasingly referred to the 
beer-drinking rinfemeiinr as “Km". 
Admittedly, it's only one “Km" 
per 2? ''Kenneths”; but that's a 
remarkable shift on the previous 
year's tally of only one “Km" for 
every S3 “Kenneths”. John Major 
taken to caning him “Km”, 
as has the Treasury's Stephen - 
not “Steve”, note - DorrelL 

Where will all this vulgar 
cfaumminesg end? Are we headed 

for flip H wnnHcaHy frirttneri Mick 
Heseltlne, Bougie Hurd and Sir 
Norm Fowler? 


Major vs Marlow 

■ The House of Commons 
experienced a frisson of history 
when Tony Marlow became the 


first Tory MP since Leo Amery - 
54 years ago' - to call in the 
Commons for the resignation of 
Mg own lea d e r and jaime minister. 

Amery, a diminutive figure but 
much more of a political 
heavyweight than Marlow, told 
Neville Chamberlain to go after 
tiie failure of the Norwegian 
campaign in May 1940. 

Amery quoted Cromwell's 
tWlnratinm to the long parliament 
“You have sat here too long for 
any good you have been doing. 
Depart, I say, and let os have done 
with you. In the name of God, go.” 
Chamberlain went two days later, 
and Churchill took over. We spy 

no Q liiir chilk tn Hin alnp in 1994. 


Questionable probe 

■ John Gammer, Britain’s 
environment minister, thinks that 
two-thirds of those Londoners who 

HUpH hi a gnasHo nnain * nn thair 

wishes for the capital's future did 
not vote for a strategic authority 
along the Knpa of the old Greater 
London CoandL 
That seems a trifle disingenuous 
- after all, they were never asked 
that question. True, says the 
environment department "There 
was no direct question... but ' 
people were asked for their 
suggestions," an official suggested. 

In that case, it’s surely 
astonishing that one-third said 
there teas a need for a resurrected 
GLC or its equivalent Ask no 
questions and m tell you no lies; 


Observer 



become extinct* 


mind you, truth’s at a premium 
these days, it seems. 


Media games 

■ An inventive idea for tarting 
up an office reception area comes 
from the CIA group. CIA has 
nothing to do with poison-tipped 
umbrellas; It's one of die UK's more 
flourishing mediabuying outfits. 

The company has fitted three 
computer game screens in the 
waiting room so that it might look 
“more like a media company and 
less like a hotel”, says chairman 
Chris In gram. 

So instead of kicking their heels 


or thumbing through dog- ear ed 
magagfimfi , visitors may time play 
“Dragon’s Lair" or “Zombies Ate 
my Neighbour”. But Chris - if you 
really wanted it to look more like 
a media office - where are the 
stfletti^encnisted backs, the 
spite-filled memos, the vindictive 
award ceremonies, the . . .? 


Hack seeks flak 

■ Damned nuisance, these civil 
unrests. A colleague has just 
arrived in Johannesburg to cover 
the elections. Wisely, he ordered 
a standard flack jacket in advance. 
Now the supplier foils hire he can’t 
have it because . . . “the 
disturbances are disrupting 
supplies". 


Tunnel vision 

■ What now for Sir Christopher 
Bland, 55, former chairman of LWT? 
He hasn't had to hang aro und 
waiting for job offers after 
Granada's takeover of his rrv 
company. He's understood to have 
been approached for the London 
Transport job. He also politely 
HwilmpH Hie chance to be a 
candidate to take over from Sir 
George Russefi as chairman of the 
Independent Television 
Commission, when Bussell retires 
at the end of this year. 

It’s believed that Bland, the 
former deputy chairman of the old 
IBA. is holding out for a run at 


the chairmanship of the BBC, a 
post that Sir George Russell, 58, 
is unlikely to turn down. 

Standing in the way of the 
ambitions of both Is the determined 
figure of Marmaduke Hussey who 
has absolutely no Intention of 
giving up the chairmanship before 
the end of his term in November 
1996. In the meantime, Russell has 
a proper job as chairman of 31 
which he will be bringing to the 
stock market Perhaps Bland should 
think a gain about the Imrdfln 

Transport job. 


Glad to be Vlad 

■ He’s a card, that V ladimir 
Zhirinovsky. "I am often asked if 
I have any hobbies,” he told a 
Moscow hack the other day who 
was questioning the 
ultra-nationalist about his 
territorial ambitions. “Well, I don’t 
fish or collect stamps. But I have 
a special affiliation to border posts." 
Apparently that kind of thing goes 
down a storm in 
Ivantheterribleograd. 


Speak up 

■ Let’s hope the Union of 
Communication Workers gets its 
message through today when 
London post office workers, 
members of the UCW, stage a 
24-hour strike; it put the wrong 
telephone number on yesterday’s 
pressrelease. 


27 


$ 


nan of 
toed to 
.’roup’s 

caching 
ms i ness 
ed yes- 
’s 1993 

ox loss, 
irorions 
on flat 
236.4m) 
rontinu- 
226.6m 

1 items, 
crating 
ed with 
•ar ear- 

ounccd 

□efited 

mtltuns 

Teased 
H5. -Jm) 
ore tax 
ms of 

cscep- 
ed an 
sses on 
l Com- 
£14.3m 
•odwll] 
■ducted 



e price 
udging 
h were 
3tions. 
some 
of sev- 
some 
tnd the 
about 
tuiries. 
as the 
>g net 
to 6.7 
l there 
about 
tiers - 
ccount 
•nt of 
profits 
i on a 
of 19. 
?ap at 
roup’s 
i pros- 
-mium 


•m 


vision 
re dis- 
sales 
nt to 
»cted 
ire in 
os, he 
■t had 
gross 
d a 4 
sues, 
iture 
9m to 
o pro- 
mi 6.4 
This 
5Stan- 
uring 

d. 

of the 

divi- 
3 4£p 
■Earn- 
.4p. 


t 


clay 
. said 
been 
fight- 
l 

oup. 
ts of 
its 
is to 
been 
i an 
co, a 
co lu- 
cent 


Op-a- 
i tem- 
DO to 
; the 

! for 

esin 

saui- 

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: per 

ased 

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egin- 

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tion 

chal- 


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20 


| A FINANCIAL TIME ! 

( for change f 

| NeWjfort | 


FINANCIAL TIMES 

Wednesday March 30 1994 


UNTERSKIL 

The prafcna* tMtOt ULT.fwfaill— h. | 


German rail group fined Brasseis 

q,* /> r • i , ends row 

$12m over freight prices on banana 


By Gillian Tett In Brussels 

The German state rail company, 
Deutsche Balm, is to be fined 
Ecullm ($I2L3m> by the European 
Commission for charging cut- 
price rail tariffs to encourage 
height traffic to use the German 
port of Hamburg. 

The Commission said the fines, 
the largest so Car levied on a rail 
group, bad been imposed because 
Deutsche Bahn had abused its 
monopoly position, distorting the 
market by diverting traffic away 
from Belgian and Dutch ports. 

Deutsche Bahn refused to indi- 
cate yesterday whether it would 
accept the ruling, insisting it had 
not yet received the details. 

However, company officials 
indicated that the decision, taken 
by the Commission yesterday, 
was a surprise, and suggested 
that the company might appeal 

ag ains t it. 

“We were not expecting a fine 
this large. We were not expecting 
a fine at all," said Mr Ulrich 
Kurth, Deutsche Bahn’s represen- 
tative in Brussels. 


Commission officials said the 
size of the fine reflected the fact 
that the infringement had 
occurred over a “considerable 
period”, with the full knowledge 
of the m anjigpmpnt 

The decision follows an 
16-month investigation into the 
rail route, which concluded that 
the price charged by Deutsche 
Bahn for container freight from 
Rotterdam to Germany was often 
44 per per cent higher than the 
price charged on trains from 
Hamburg to other German desti- 
nations. 

In some cases, the Commission 
added, the price differential was 
as much as 77 per cent, even 
though the fiercer competition on 
these western routes should have 
made these prices lower. 

As a result, it concluded, ports 
such as Rotterdam and Antwerp 
had been significantly disadvan- 
taged compared to Hamburg, and 
freight had been encouraged to 
travel by road rather than rail. 

‘These practices have apprecia- 
bly restricted competition, firstly 
between the railway companies 


and the combined-transport oper- 
ators serving the various routes, 
and, secondly, between the Ger- 
man ports and other ports in the 
Community," the Commission 
said. 

Deutsche Bahn insists that the 
reason the rail tariffs are higher 
to Belgium and Dutch parts than 
German ports is that freight trav- 
elling across the border must be 
unloaded and reloaded, whereas 
freight carried by rail to Ham- 
burg or Bremen from German 
towns like Frankfurt could 
be carried directly in larger 
trains. 

Thus even though some Ger- 
man towns were closer to Rotter- 
dam or Antwerp than Hamburg, 
it was more economical to take 
the freight through German 
ports, it argues. 

According to Commission offi- 
cials, the large fine reflects the 
increasingly tough Hne the Com- 
mission is seeking to take against 
transport monopolies in the 
European Union, particularly in 
the area of combined-transport 
operators. 


UK industralists denounce 
‘crazy’ aid and trade rules 


By James Blitz In London 

Three leading British industri- 
alists yesterday accused the gov- 
ernment Of unde rmining their 
companies' bids for contracts in 
developing countries by introduc- 
ing “crazy” aid and trade rules in 
the aftermath of the Pergau dam 
affair. 

Sir Robin Biggam, BICC chair- 
man; Mr John Lippitt, a GEC 
director; and Mr Allan Gormly, 
chief executive of Trafalgar 
House said British aid and trade 
provision regulations made it 
extremely difficult to compete 
against European rivals. 

They claim the government’s 
use Of the annual £i00m ($l46m> 
aid and trade provision budget 
had been restricted by new rules 
limiting the number of countries 
and contracts for which funds 
could be used. This budget chan- 
nels UK development aid 
intended for the purchase of Brit- 
ish goods. 

“Our government’s policy is 
totally wrong," Mr Lippitt, told 
the Commons foreign affairs 
committee. “It’s crazy." 

He claimed that restrictive aid 


and trade rules were the main 
reason GEC did not win two con- 
tracts to help build Chinese 
underground systems worth hun- 
dreds of millions of pounds. 

The government came under 
fierce attack after £234m from the 
provision's budget was granted to 
the Malaysian government in 
1991 towards construction of the 
Pergau dam. 

After the Pergau deal, the 
Overseas Development Adminis- 
tration decided funds could only 
be given to countries with a per 
capita income under $700, a fig- 
ure that would now exclude Mal- 
aysia. & compares with a peak of 
S2.465 suggested by the Organisa- 
tion of Economic Co-operation 
and Development 

The ODA also set a £46m limit 
on the amount of government 
money that could go to any sin- 
gle project receiving aid and 
trade provision funds. 

However, Sir Robin, whose 
company is the parent of Balfour 
Beatty which is contributing to 
the Pergau project, said his com- 
pany could not take full advan- 
tage of the aid and trade provi- 
sion scheme. 


“We will be denied the use of 
ATP in any country above those 
limi ts of per capita income," he 
said. “We will simply not be able 
to compete." Mr Gormly said that 
such funding was essential for 
companies wanting to set up 
long-term business contacts in a 
region. 

Mr Lippitt cited two examples 
of how the Bonn government had 
helped German companies to 
beat GEC in the pursuit of lucra- 
tive contracts in China. 

He said GEC had bid for a con- 
tract to help build the Shanghai 
metro system, with the British 
government offering the Chinese 
31 per cent of the costs of the 
project in aid and trade provision 
grant However, the Bonn gov- 
ernment offered SI per cent grant 
in this category. 

He said GEC was again beaten 
in bidding for the Guangzhou 
metro, with the UK offering 35 
per cent of the costs of the grant 
in aid and trade provision and 
Germany 68 per cent 

Mr Lippitt claimed that the foil 
aid and trade provision budget 
has been used in only one year of 
the last six. 


Japan package yields to US demands 


Continued from Page 1 

The Japanese government 
wants to cut its current account 
surplus to 2J3 per cent of gross 
domestic product in the year to 
March 1995 from 3.1 per cent 

Details of the macroeconomic 
measures, which include the 
extension of income tax cuts and 
increases in public expenditure, 
will be announced in June before 
premier Morihiro Hosokawa 


meets President Bin Clinton in 
Naples at the Group of Seven 
summit 

In a related development 
Honda and Mazda, two leading 
carmakers, announced voluntary 
import plans following similar 
measures by Toyota Motor, Nis- 
san Motor and Mitsubishi Motor. 

The transport ministry 
announced a plan to double the 
annual number of Japanese tour- 
ists to the US to 88m by 2000 to 


reduce its current account 
surplus. 

In spite of enthusiasm among 
Japanese bureaucrats over the 
package. Tokyo's financial mar- 
kets reflected disappointment 
among investors. 

The yen jumped on fears that 
the US would not be satisfied, 
closing up Y0S4 at Y1Q38 against 
the dollar. The Tokyo stock mar- 
ket index fell 1.2 per cent to 
19,709.74. 


imports 

By ABson Maitland in London 

The long-running dispute 
between the European Commis- 
sion and Latin American coun- 
tries over banana imports to the 
European Union has been set- 
tled. 

The Commission said yester- 
day that the Union would 
increase its current 2m tonnes 
annual quota for Latin American 
bananas to 2.1m tonnes this year 
and 2Jhn tonnes next year. 

In return, Costa Rica has 
joined Colombia, Nicaragua and 
Venezuela in agreeing not to 
pursue its complaint to the Gen- 
eral Agreement on Tariffs and 
Trade about the Ell's preferen- 
tial banana trade with former 
colonies in Africa, the Caribbean 
and the Pacific. 

Guatemala Is pressing its com- 
plaint, which has been upheld by 
a Gatt panel, but the Commis- 
sion decided to go ahead with 
the deal anyway since Gua- 
temala accounts for only U> per 
cent of tiie market 
The deal still has to be 
approved by member states, 
some of which, led by Germany, 
want more open trading. 

Germany, which had special 
permission under the Treaty of 
Rome to allow free access for 
Latin American bananas to its 
market, has taken a case to the 
European Court against the new 
EU banana regime introduced 
last July. It disputes member 
states’ right to have approved 
the regime, which imposed EU 
wide import tariffs on Latin 
American bananas, by a quali- 
fied majority. 

Mr Rent Stricken, agriculture 
commissioner, warned agricul- 
ture ministers meeting in Brus- 
sels yesterday that failure to 
back the deal with the Latin 
Americans could endanger the 
Uruguay Round Gatt deal, due to 
be signed in Marrakesh next 
month. 

The Commission yesterday 
submitted its amended quota 
offer to Gatt in Geneva. But 
member states are not expected 
to be asked to approve the deal 
and update the new regime until 
after Marrakesh, either at the 
foreign affairs council on April 
18 or the agriculture council on 
April 25. 

Under yesterday’s deal, the 
commission agreed to reduce the 
tariff charged on Latin American 
bana n as within the quota to 
Ecu76 ($82.6) a tonne from 
EculOO. This was a concession to 
Costa Rica, one of the biggest 
suppliers to the EU. 

It Is granting specific quotas to 
the four countries based on their 
past share of the EU market: 23.4 
per emit to Costa Rica, 21 per 
emit to Colombia, 3 per cent to 
Nicaragua and 2 per cent to 
Venezuela. 

The governments of those 
countries will also be able to 
grant export licences, a move 
aimed at encouraging producer 
cooperatives to sell direct to the 
EU for a better price, rather than 
through the multinationals. 


WEATHER 


Europe today 

A vigorous low pressure system will 
produce strong winds over the western UK. 
Rain will spread into these areas and winds 
will increase to gale force during the 
afternoon. Over the sea, a storm force at 
10 is expected. The coasts of northern 
Ireland and western Scotland will 
experience gusts up to 120kpb. The 
Benelux, northern Germany and Poland will 
be mild, though with little sunshine. 

Western Russia and the northern Balkans 

wiH be cloudy with light rain. South-west 
Europe and the Alps will be fair with a lot of 
sun. North-west Spain will have afternoon 
showers and a few showers can also be 
expected in the eastern Mediterranean, 

Five-day forecast 

North-western Europe wiH remain showery 
and windy with the risk of another storm on 

Friday. Temperatures will be below the 
seasonal normal with hail and sleet on 
higher ground. The unsettled conditions will 
spread to central and south-eastern 
Europe. Spain and Portugal will remain 
rather sunny but showers will develop in 
the north-west on Thursday and Friday. 


TODAY’S TEMPERATURES 





[y\rj 

tfjL / 

-°>°A 

~870 C 

i-oao ^ 

1 g 


-890 

a 


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| 

BA 

/ 

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m .. 

1010 


Abu Dhabi 

Accra 

Algiers 

Amsterdam 

Athens 

B. Aires 

B.haim 

Bangkok 

Barcelona 

Bering 


Maximum Belfast 
CaWua Belgrade 
30 Berth 
Mr 34 Bermuda 
® Bogota 
J* 1? Bombay 
fair IS Brussels 
tar 22 Budapest 
shower 15 CJiagm 
far 35 Cairo 
fair 19 Capa Town 
Gun ig Cameos 



Latest technology in flying: the A340 

Lufthansa 

German Airlines 


I wane front JLA. CMInrt Wine spied In KPH 

Sftuattjnsf 12 GMT. femparafu/w majanum tor day. forecasts by A rfetoo Consult of the Hnnartinds 

CardW windy 13 Frankfurt (air 21 Malta sim 19 Rm 

Chicago cloudy 2 Geneva sun 21 Manchester show*- is n“l* 

Cologne fair 21 Gibraltar sui 21 Manta a? 

O' Salaam thund 31 Glasgow windy 12 MeRxxmie fair 27 sSLn 

Me* sun 25 HaXg d££y 16 £> 28 

Dallas nai 15 Helsinki fair 7 Miami fMr 27 SkvnnnM 

1 1 * 35 Hong Kong daudy 22 fufiai gun 21 

uutofin rain 13 kstantxd fair ID Moscow rati s 

Drtrovr* aun 20 Jersey ft* 15 JEST ft* 20 

on 5®"^" SU1 32 Nalrobi thund 28 TetAvtv 

Faro aun H> Kuwait sun 31 Naples sun 20 Tokyo 

L Angles sun 20 Nassau fair 31 Toronto 

Las Palmas cloudy 21 New York fair 9 Tunis 

Lira fair 27 Mce aun 16 Vancouver 

Usbon sun 20 Moos* shower 22 Verier* 

London fair 16 Oslo ft* 10 Vferra 

Lux.bourg fa* 20 Pads lair 23 Wmaw 

Lyon aun 25 Perth Mr 20 Wasttnton 

ESS? ■ ** ctoudy 20 Woffington 

22 Rangoon fair 35 Winnipeg 

Majorca fair 22 Reyfaavlk shower 4 Zrifefc 


19 

Rta 

Hr 

26 

15 

Ffiyacfi 

sun 

29 

32 

Roma 

an 

19 

27 

S. Frsoo 

lair 

19 

28 

Seoul 

Wr 

15 

27 

Singapore 

thund 

31 

21 

Stockholm 

sun 

11 

1 

Strasbourg 

SUl 

22 

S 

Sydney 

shower 

24 

20 

Tangier 

cloudy 

19 

28 

TdAutv 

tsu 

28 

20 

Tokyo 

fair 

13 

31 

Toronto 

fair 

5 

9 

Tunis 

sun 

24 

16 

VsKouver 

fair 

13 

22 

Varies 

3U1 

19 

10 

Vienna 

fair 

20 

23 

Warsaw 

cloudy 

17 

20 

Washington 

far 

13 

20 

35 

4 

Weffinglon 

Winnipeg 

Zivtgh 

■*■3 

sun 

IB 

5 

21 


THE LEX COLUMN 


Betting on Berlusconi 


Italy’s financial markets wanted a 
dear outcome to the general elections. 
They have not really got one. Forming 
a government promises to be a much 
harder task for the right-wing Free- 
dom Alliance Hum winning rtw elec- 
tion, and the markets have some 
grounds for anxiety about how its poli- 
cies will turn out. Hie stock market 
might relish the continuation of the 
privatisation programme: some juicy 
nf fiaring s are r-nming up in the insur- 
ance and energy sector. But it is hard 
to square the Alliance's commitment 
to lower taxes with continuing reduc- 
tion of the budget deficit If that 
approach did not work in Reagan’s 
America, it is unlikely to in Berlus- 
coni’s Italy. 

Arguably both equities and bonds 
I are cheap. With inflation heading 
below 4 per cent this year, long-term 
yields of over 9 per cent provide a 
substantial real return. A prospective 
cash flow multiple of around six times 
is not demanding for equities, espe- 
cially since Italy’s strong export per- 
formance since the lira's exit from the 
ERM is starting to generate healthy 
growth in industrial earnings. 

Yesterday's weakness in both mar- 
kets suggests that the political fog will 
have to clear before these factors come 
to the fore. There are risks along the 
way. Not least is the possibility that 
worries about fiscal policy might 
cause the Bank of Italy to go slow on 
interest rate cuts. With the domestic 
economy still weak, that would be par- 
ticularly worrying for equities. 

Ciba 

With around one-third of its shares 
now held outside Switzerland, Ciba's 
policy of openness has paid off. The 40 
per cent rise in the shares last year - 
keeping pace with the soaring Swiss 
market - might also owe something to 
improved disclosure and the adoption 
of international accounting standards. 
But while Ciba's plan to do away with 
non-voting shares is another welcome 
step, glasnost can only propel the 
shares so far. 

Further progress turns on the earn- 
ings outlook, which is far from clear. 
Looming US generic competition for 
two of Ciba’s biggest drugs is a reason 
for caution about the imm ediate pros- 
pects - although the combined sales 
affected of S500m are modest in the 
context of the wider group. By reduc- 
ing the frftftdcQuut in pharmaceuticals 
by more than L000 last year, Ciba has 
also shown willingness to adapt Such 
measures should limit the damage. 


Registered share price relative to the SMI 
110 — 



1992 S3 94 

SouTOK Datastrewn 

To push its rating higher, Ciba will 
have to prove that its research pipe- 
line is capable of producing blockbust- 
ing new products. Meanwhile, cost-cut- 
ting in agrochemicals and the first 
glimmers of industrial recovery in 
Europe look the best hopes for growth. 
That is more than many pure drugs 
companies have to offer. 

Hammerson 

There is a topsy-turvy feel to the 
property market at this stage in the 
recovery. Shares ore trading at premi- 
ums to asset values; capital values are 
rising sharply while rents are still fail- 
ing; and British Land and Hammerson 
are buying assets from institutional 
investors when most property compa- 
nies would normally expect to sell to 
them. 

Still, both Hammerson and PosTel 
have reason to be pleased with their 
deaL By swapping a bundle of proper- 
ties for Hammerson shares. PosTel is 
increasing its stake in a geared recov- 
ery stock from 1.2 per cent to 12.3 per 
cent PosTel will eventually be able 
liquidate those shares more easily 
than property. Hammerson is in effect 
buying short-term earnings, which is 
useful given the strain of maintaining 
its dividend. Thereafter, it should be 
able to lift the Initial yield of 7.6 per 
cent through more active nwnngpmwit 
and redevelopment 

But by marking Hammerson's 
shares down 2 per cent the market 
focused more on the puzzling move- 
ments in its asset values rather than 
the attractions of the deaL It is hard to 
understand how Hammerson’s US 
assets could have dropped 42 per cent 
over the year. The 5 per cent rise in 


l+l 


Hie strategic partnership between Dillon Bead 
and Baring Brothers was created to address 
the transatlantic advisory needs of our clients. 
In 1993, the success of our partnership gave us 
the number one ranking in advisory services 
for transatlantic mergers and acquisitions. 


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BARINGS + Dillon Read 


Hammer on’s UK retail assets also 
appears meagre given the significant 
shift in capital values elsewhere. Prop- 
erty investors must hope that reflects 
more on the ambitious valuations pre- 
viously attached to Hammerson’s port- 
folio rather than any cooling of the 
market overall. 

Next 

It has been a long and rocky road 
from the sprawl of Gardening Next 
and Next’s neighbourly newsagents to 
the focused clothing retailer with net 
cash of ££8m and profits of £74m. That 
transformation owes a great deal to 
the management team led by Lord 
Wo If son and Mr David Jones. StUL 
even they acknowledge their good for- 
tune in hitting trouhle early In races, 
sion, while there was still a market for 
surplus retail sites. 

There is also a sparkle of magic 
about Next’s survival The brand has 
remained strong, in contrast to 
would-be competitors like Principles 
and Richards, where the red ink stiH 
flows freely. Next is in the happy posi- 
tion where it can avoid the blight of 
serai-permanent discounting, main- 
taining high margins and high sates 
volumes from limited space. 

Its rapidly mounting cash idle sug- 
gests that the company is about to 
diversify. Yet if Its cautious US experi- 
ment is any guide, the money will not 
burn a hole in management’s pocket 
Cash gives flexibility and Nutt can 
still grow in the UK by moving stares 
to larger premises. The 12D per cent 
increase in the dividend also shows 
that there is still plenty for sharahold- 
ers to look forward to. 

Norwich Union 

Norwich Union’s move to retrain 
and prune Us sales force Is an espe- 
cially radical version of action befog 
taken elsewhere. Prudential's sates are 
suffering as its direct sales force is 
overhauled. Legal & General is 
engaged in a similar process. That a 
blue-chip company like Norwich 
Union has been compelled to take 
such draconian steps hints at tiie true 
extent of the problem. Shedding 300 
salesmen may have as much -to do 
with economics as compliance, bat tha 
two issues are closely linked. It win 
prove far more difficult to sell Ufa 
insurance contracts and personal pen- 
sions in great volume under a regula- 
tory regime which demands commis- 
sion disclosure and sound selling 
practice. 









21 


Overseas Moving 
byMichaelGerson 

“ ^ 081-4461300 , ■: : : " 



FINANCIAL TIMES 

COMPANIES & MARKETS 

©THE FINANCIAL TIMES LIMITED 1994 Wednesday March 30 1994 


•HE SAYS /T .EASES 77iE 
-^STRAIN OF KUNNlt/Q\ 
iJ? THE QAK. Fl£ET. m 



Ai'TOLHASl 


— alternatively; 
0*1-7063388 


it~u*«2 L«ri & %+jl* ***** c- cr-ri 


27 


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IN BRIEF 


BMW motor sales 
rise 2.7 per cent 

BMW car and motor cycle sales increased Z.7 
per cent in the first quarter of this year, and orders 
were clearly higher than 12 months ago. Mr Vclker 
Doppelfeld. chairman, said yesterday. Page 22 

Bertelsmann channel collapses 

Bertelsmann, the German media group, suffered 
a serious setback yesterday when the Vox private 
television channel collapsed. Page 22 

Pirelli plans refunding 

Pirelli, the Italian tyres and cables group which 
has completed a two-year restructuring, yesterday 
announced plans for Ll ,000bn ($6llm) of new 
funding aimed partly at a relaunch of its core 
products on international markets. Page 23 

Behind the scenes of the Trfacec bid 

Peter Mimic's faith in the North American property 
revival is examined after Horsham's C$600m 
(US$448m) investment in the Canadian group, 
Trizec, Page 23 

SEC seeks shorter settlements 

The Securities and Exchange Commission in 
New York lias proposed a rote that will shorten 
the period in which investors in the US have 
to settle their securities transactions. 

Page 25 

P ento s makes rescue cash call 

Pentos, the UK specialist retailing group, plans 
to raise £45m ($67m) through a 4 for 3 rights issue 
at 25p after announcing a £70.6m pre-tax loss 
for 1993. Page 27 

Taylor Woodrow bade In the Mack 

Taylor Woodrow, the UK housebuilding, property 
and construction group, bounced hack Into the 
black last year with pre-tax profits of £30-2m (S45m) 
following a record £94J5m loss in 1992. Page 27 

Croda shams sink 

Shares in Croda International fell 25p to 351 p 
yesterday after the UK speciality chemicals group 
reported pre-tax profits up 29 per cent to £38JSm 
l$57.6m) before a £10. 4m gain on the recent sale 
of its inks businesses. Page 29 

Waterford Wedgwood turnaround 

The sparkle has returned to Waterford Wedgwood, 
the luxury ceramics and crystal manufacturer, 
which after six years of losses has reported a 
KlO.lm ($14L6m) pre-tax profit. Page 29 

Deop sea Ashing dangers 

Odd-looking fish that live in total darkness in 
the deep waters of the North Atlantic are causing 
a stir among fishermen and marine scientists. 

But scientists are warning that controls on deep 
sea fishing must be introduced before commercial 
exploitation threatens to wipe out a vulnerable 
resource. Page 38 

Johannesburg SE shaken by battles 

A weaker gold price added to woes on the' Johan- 
nesburg Stock Exchange, stLD reeling from the 
impact of Monday's gun battles in the city centre 
which rocked market confidence. Back Page 


Companies In this issue 


Aarostructures 

28 KapK 

28 

Alex on 

27 Latin American Cos 

30 

BMW 

22 UtUawoods 

30 

Bated (WttUam) 

30 Lloyd Thompson 

29 

Barton Group 

26 London Clubs kit 

14 

Bertelsmann 

22 Macfaitane 

28 

Blenheim 

27 Miays 

28 

Brake Bros 

28 Monarch Resources 

30 

Brit Bo-technology 

26 Morgan Granted 

30 

British Aerospace 

30. 21 Moscow Narodny 

23 

CINVen 

27 Nestor-BNA 

X 

Capie and Wireless 

27 Next 

22 

Case 

22 Northrop 

23 

Casino 

24 Norwich Union 

29 

Ciba 

21 CMS Inti Inspection 

30 

Cod investments 

30 Pentos 

27 

Coore 

23 PlreUl 

23 

Credit Lyonnais 

23 Proudtoot 

28 

Croda 

29 Pskyj 

27 

Deutsche Bank 

21 Raglan Prop Trust 

14 

Edinburgh Fund Man 

30 Rlnascente 

24 

Estates 8 General 

30 Ropnar 

30 

European Motor Hdgs 

14 RotorV, 

28 

GNK 

22 ScottKrt Asian Inv 

30 

Gnmman 

23 Servotnex 

30 

Hammereon 

22 Taylor Woodrow 

27 

Hariandand WOW 

29 Thorpe (FW) 

30 

Henreon Highland 

30 Tfbbett & Britten 

27 

Heron 

29 Transfer Technology 

27 

Hickson 

28 Trizec 

23 

Hodder Headline 

27 Ulster Television 

30 

Horsham 

23 Wainhomes 

28 

IMG 

23 Watt Disney 

22 

Jeyes 

27 Waterford Wedgwood 

29 

Joutian (Thomas) 

30 Watts Blake Bourne 

27 

KLM 

21 Westland 

22 


Market Statistics 


$Ama! reports service 
Benchmark Govt bonds 
Bond bans and options 
Bood (vtess and jMtts 
CommorttiBs prices 

QtvWenfe announced. IK 
&*S currency rates 

fixed Interest Indices 
FT-Attridlnflces Ba 
FT Sold Mkrat index Bm 
FM5MA fed bond sve 


nUHKFURT (DM) 


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Bakrsdorf 090 + 

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beaker Eh 409 + 

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NEW YORK (8) 

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UAL 

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83 “4 - 
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B19 

Now York prtcoa at 11 -SQbrl 


38-39 

FT-SE Actuaries iraflees 


37 

28 

Foreign exchange 


44 

28 

Gflts prices 



28 

SB 

Lflte equity options 1 

Back Pane 

38 

London share eentce 


38-39 

Z7 

Managed funds senrice 


4tM4 

44 

Money markets 



44 

25 

New ltd bond Issues 


2E 

28 

Recent issues. UK 


ar 

i Page 

Short-term tat rates 


44 

e Pas* 

US Merest nees 



SB 

26 

World Stock Markets 


45 

hanges yesterday ] 


Bmn Franua 

835 


23 

50 

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14 

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632 

- 

55 

to 

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387 

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12.7 


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1S7.7 

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6.4 

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622 

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70 


LONDON (Pone*) 

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Auumted Sec 117 B 

BketniTop 750 - 20 

Bout 173-6 

EuDfMnMoBr 153 - B 

Jctwttn Gram 157 - S 

Jauwnfn 35 * 6 

Hwjdwn IU * B 

Uoftktn Res 282 - It 

Preodtaa 71-3 

B a ns o nwe 21-3 

Rope* A 158 - B 

Hour IBS * 8 


600 aw S2 + 8 

seel Burl 144 - 1$ 

Token 2« ♦ 11 

YWteBBkfl 545 -« 

Pjpl^p 

Ham 47 - 13 

CrtHfem 352 - 24 

QtaaaSfiso 33-4 

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Item TWnp»> 283 - H 

LmkRMH) 2V, - 1* 

NFC 226* - 


Ciba seeks 
alliances in 
US market 


Dutch airline’s successful share issue to fund capital spending 


KLM global offer raises 
$625m on strong demand 


KLM: recovery fuels demand for new shares 


proflt/lora (Guild**) 


500 
400 
aoo 
200 
1 00 
0 

-too 


m 


-200 


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•400 

-aoo 


-600 



1888-89 80-80 


80-91 


91-92 812-93 93-94* 

* New months to December 31 




«•/* . g m 

*• 

df# 


Setoctnd operating statistics 

Capacity 1993* 

Available ton-kitomotres (mtfltanl 6.871 

AvaflaUe seat-kflometres (milNon) 41,218 

Kilometres Sown (mlfikm) 1B2 

Traffic 

Passenger load factor (96) 71.8 

Number ot passengers (000a) 7,665 

Ytokl (In Dutch cents) 

Yield per revenue passenger ton-kDomitre 152 

Yield per revenue cargo/nuril ton-Wtometre 46 


Staff 


24,772 

1 Mne months to December 31 


long been listed. 


By Daniel Green in London 

Ciba, the largest of the big three 
Swiss drugs companies, said yes- 
terday it would soon sign alli- 
ances In the US in response to 
the chang in g healthcare environ- 
ment 

Mr Pierre Douaze, head of 
Czha’s pharmaceuticals division, 
said that deals could be done 
with other drugs companies or 
with organisations closer to the 
patient, such as drug distributors 
and heal th management organi- 
sations. 

The move would be partly in 
response to the $6bn acquisition 
last summer by Merck, the big- 
gest US drugs company, of 
Medco, a distributor. That deal 
was prompted by government 
and employers' efforts to cut 
healthcare spending by insisting' 
on discounts and by buying in 
bulk. 

Mr Douaze said Ciba was 
looking at several options and 
that a decision would be made 
soon. “We have to move before 
all the positions are taken." 

He was speaking at the compa- 
ny's annual results presentation, 
which revealed 1993 post-tax prof- 
its up 112 per cent to SFrl.78bn 
($L3bn). 

Sales rose to SFr22.65bn, a gain 
of 2 per cent in constant currency 
terms. Earning s per share rose to 
SFK&8 from SFr56 and the divi- 
dend is lifted by SFrl to SFT15 


per share. 

The company has three divi- 
sions: healthcare, industry and 
agriculture. Last year saw health- 
care overtake industry to become 
the company's biggest single divi- 
sion with sales of SFr922bn, a 
rise of 5 per cent. Much of the 
gain was the result of a 20 per 
cent sales increase at Ciba 
Vision, thanks to the popularity 
of contact lenses. 

Sales in the industry division, 
which includes textile dyes, 
chemicals and plastics, fell 1 per 
cent to SFrS.Blbn. The decline 
was mostly accounted for by a 21 
per cent Call in sales of composite 
materials to the aerospace indus- 
try, which was suffering from 
defence cuts. 

Agriculture sales rose l per 
cent to SFnLSbn. In spite of pres- 
sure on the business in Europe, 
where the Common Agricultural 
Policy has cut the acreage of land 
under cultivation. 

Ciba said the European agricul- 
tural products market was 
unlikely to grow for the next two 
to three years, but that growth 
would come from Asia and South 
America. 

Last year, Ciba switched to 
International Accounting Stan- 
dards (IASI, leading to a revision 
of the 1992 group net profit to 
SFrl.6bn from an original figure 
of SFrLSZbn. 

Lex, Page 20; Move from night to 
day. Page 22 


By Ronald van do Krol 
In Amsterdam 

KLM Royal Dutch Air lines has 
raised FlL19bn ($6Z5m) through 
a global public offering of ordi- 
nary shares, which closed heavily 
oversubscribed yesterday. 

The total amount, which also 
includes the sale of slightly more 
than FI ftwtm in preference shares 
to the Dutch state, was nearly 
FI 200m higher than kt.m origi- 
nally expected to raise. 

The Dutch national carrier said 
the success of the share offering 
made KLM one of the world's 
most strongly capitalised air- 
lines. It Is forecasting a “modest” 
profit for the year to March 31, a 
sharp improvement from the 
FI 562m net loss posted last year. 
The tumround is partly because 
it no longer consolidates the 
losses of Northwest Airlines, of 
the US, In which it has a 20 per 
cent stake. 

KLM has also cut costs and 
restructured its operations. The 
proceeds of the share offering 
will strengthen the balance 
sheet, helping to finance capital 
spending. 

kt.m had planned to issue at 
least Z&5m shares at FI 44 each, 
but the strong demand prompted 
the banking syndicate, led by 
ABN Amro and Merrill Lynch, to 
exercise its option to sell an addi- 
tional 2.ftm shares. 

The Dutch state will maintain 
its 3&2 per cent voting stake in 
KLM by purchasing 970,456 new 
ordinary shares, investing 
FI 235m in new convertible pref- 
erence shares and topping up its 
payments on shares that were 
previously partly paid, at a cost 
of FI 22m. 

The fliriinw mil) the flexibility 
of its biggest shareholder, which 
had said earlier that it wanted to 
spend no more than FI 300m. 


enabled it to generate mairimum 
proceeds. Of the state's total 
investment, only FI 43m will take 
the form of new ordinary shares, 
increasing the availability to 
other investors. 

The carrier's successful share 
issue took place against a diffi- 
cult c lima te for airline stocks in 


the US in particular. Northwest 
recently cut the price of its initial 
public offering in New York. But 
Mr Pieter Bouw, KLM president, 
said the market conditians gov- 
erning an IPO were different 
from those associated with a cap- 
ital raising exercise by a com- 
pany such as KLM. which has 


Mr Bouw said that KLM would 
not be able to rest on its laurels 
after its successful financing. The 
airline would need to continue 
with its three-pronged strategy of 
retaining customer loyalty, 
strengthening its market position 
and cutting costs. 


Deutsche Bank rises 24% 
and increases dividend 


BAe discloses £2.9bn 
leasing exposure 


By Mtoftaef Uncfemann 
fin Frankfurt 

Deutsche Bank, Germany’s® 
biggest commercial bank, yester- 
day said it would raise its divi- 
dend DMZ.5 to DM16.50 follow- 
ing a 24 per cent rise In 1993 net 
profits to DMl.4Q3ba ($836m). 

Comprehensive annual results 
would be announced an Thurs- 
day, the bank said. 

It added that yesterday's fig- 
ures were released after the 
bank's supervisory board 
approved the 1993 results. Mr 
ffilmar Hopper, chief executive, 
Is expected to grvehis views on 
current trading and on the econ- 
omy at Thursday’s presentation. 

The results at Deutsche Bank 


are In tine with expectations that 
German banks would report 
-Sharply improved figures, con- 
trasting with worse results 
throughout German industry. 

Net profit was up from 
DMl.]34bn, bolstered by record 
results from the bank’s Luxem- 
bourg operations where pre-tax 
profits jumped 44 per cent to 
DM636m from DM440m. 

Deutsche Bank, the largest 
operator in Luxembourg, 
increased Its number of custom- 
ers by 38 per cent last year, 
helped by fears about the effect 
of a 30 per cent withholding tax 
introduced in Germany early last 
year. 

A 194 per cent rise ta pre-tax 
profits at Morgan Grenfell, the 


wholly owned- UK-based Invest- 
ment bank, earned Deutsche 
Bank ElOOm (6150.3m). 

The bank said its annual divi- 
dend payments would cost 
DM 7 7 8m, leaving DM625m to 
credit to its reserves. 

Bayerische Hypotheken and 
Wecbsel-Bank, one of two big 
Bavarian banks, is the only one 
of the big five German commer- 
cial banks to have reported so 
for, announcing a 33 per cent 
rise in 1993 pre-tax profits to 
DMl.Mbn. 

Dresdner Bank and Commerz- 
bank, just behind Deutsche an 
the commercial banks league, 
will report their 1993 results In 
early April. 

• Frankfurter Hypothekenbank 



Hilmar Happen chief executive 


yesterday raised its dividend 
DM1.5 to DM16 after reporting 
net profits up 4 per cent to 
DM85.5m, followed by Berliner 
Handels unit Frankfurter Bank 
which also Increased its annual 
dividend DM1.5 to DM14.50. 


By Robert Peston in London 

British Aerospace disclosed 
yesterday that it has aircraft 
leasing obligations of £2.9bn 
(W-2bn), compared with income 
that it expects to receive on sub- 
leases to airlines of £L8bn- 

Mr Richard Lapthoroe, finance 
director, said that losses on these 
leases mid restructuring costs in 
the aviation business had 
brought BAe near to collapse. 
“We got very close." 

Only an undisclosed part of 
sub-lease income is contractually 
committed, though the group 
believes its estimate of what it 
will receive is prudent. At the 
end of last year, provisions for 
leasing losses stood at E653m. 

BAe sold aircraft to banks and 
leased them back under agree- 


ments lasting 15-20 years. Zt then 
rented them on sub-leases of 
three-five years to airlines. 

Losses are made by BAe if sub- 
leases are not renewed. Mr Lap- 
thome said that BAe used to 
book profits on the sales to banks 
and make only email provisions 
to cover the risk of losses. "We 
have over-reported profits in the 
past" 

Mr Terry Smith, analyst at Col- 
lins Stewart, said the liabilities 
were extraordinary. “We thought 
BAe was selling the planes to air- 
lines rather than renting them 
out on a short term basis". 

In the past three years, BAe's 
commercial aircraft division has 
lost £1.79bn, including reorgani- 
sation costs and provisions 
against losses on the leases. 
Counting the true cost Page 30 


Barry Riley 

How US pension plans 
are going international 


Forget for the 
moment about 
existing and dan- 
gerous hedge 

funds, but look 
instead at those 
dull and staid US 
pension funds. 
Worth some 

$2,50Qbn, they put Mr George 
Scots and his ilk Into perspec- 
tive. And there are important 
structural changes taking place, 
with global implications. 

A surrey of the US pensions 
industry from the Connecticut 
consultants Greenwich Associ- 
ates* spells out the massive shift 
Into international assets now pro- 
ceeding. 

At the end of last year the 
average fund had 8 per cent in 
non-US assets (6.4 per cent in 
equities, 1.6 per cent in bonds) 
compared with only 4.4 per cent 
in 1891. Moreover the interna- - 
tional exposure is expected by 
plan managers to hit 12 per cent 
by the end of 1996. Again, that 
would be very largely in stocks, 
at 9.6 per cent against 2.4 per 
cent for international bonds. 

The sleepiest plan sponsors, 
even in the public sector, appear 
to be waking up, and there is a 
frantic scramble on to find global 
managers. Half of the funds sur- 
veyed by Greenwich had interna- 
tional portfolios at the end of last 
year, and half of the remainder 
intend to start buying interna- 
tional assets within 12 months. 

public sector funds - half of 
the industry in terms of assets - 
have tended to lag behind, and 
still have only 5.6 per cent over- 
seas against 9 per cent for corpo- 
rate funds. However, on present 
plans the public funds will have 
almost caught up in three years' 
time. 

What does this mean for mar- 


kets around the world? Already 
we have seen 100 per cent surges 
in several Asian markets in 1993 
as US money, not all from pen- 
sion funds, has sloshed around. 
The pension funds and similarly 
run endowments and foundations 
now own global equities worth 
some SUObn, and they plan to 
raise this to $300bn over three 
years. So although there may be 
further Hong Kong-style set- 
backs, as we have seen In 1991 so 
for, the money will keep flowing, 
perhaps at $30hn-phis annually. 

The bond picture, incidentally, 
is not so dramatic. US tax-exempt 


The sleepiest plan 
sponsors appear to 
be waking up, and 
there is a frantic 
scramble to find 
global managers 

funds hold (42bn of global bonds 
according to this survey, and 
plan to raise the aggregate to 
$75bn over three years. Govern- 
ments around Europe alone will 
happily eat that rate of inflow for 

breakfast. 

So much for the expansionary 
features of US pension funds. 
Overall, though, they are far 
from buoyant, with the corporate 
pinna shrinking. This applies par- 
ticularly to corporate defined 
benefit (in UK parlance, final sal- 
ary-linked) plans which are esti- 
mated to have suffered a negative 
cash flow of $36bn in 1993. But 
tiie public sector plans and the 
corporate defined contribution 
(or money purchase) plans are 
still enjoying net inflows. 
Defined contribution plans 


accounted for 30 per cent of an 
corporate plan assets in 1990, but 
the proportion has risen to 37 per 
cent today and could be 60 per 
cent in 10 years’ time. They have 
a much lower international 
equity proportion - only OB per 
cent against 9.7 per cent for 
defined benefit corporate plans. 
Remarkably, the defined contri- 
bution plans have on average 31 
per cent of their assets in the 
sponsoring company’s own stock, 
representing a worrying concen- 
tration of risk for beneficiaries - 
although on the other band the 
current bid battle for .Grumman 
has boosted the value of the com- 
pany’s 401(k) plan by some 
3250m. 

It is worth asking, in view of 
the defined contribution growth, 
how permanent the US pension 
funds' voyage overseas may 
prove. The international shift 
appears to be motivated by a 
search for higher returns without 
undue increases in risks. Expec- 
ted returns on US assets have 
HprHnpri r pushing funds further 
into equities (with exposure to 
domestic bonds down 2J3 percent- 
age points to 32.7 per cent in two 
years). Both small capitalisation 
domestic stocks and foreign 
stocks have benefited from this 
search for extra return. Emerging 
markets, heavily marketed, have 
offered tempting returns. 

Last year the US was the 
worst-performing main stock 
market in dollar terms, but it 
may not look relatively nearly so 
bad in 1994. The pension plans' 
rush abroad is probably unstop- 
pable in the medium term, but a 
bad period for international 
returns could yet cause plan 
sponsors to put their more ambi- 
tious plans on ice for a while. 

* Greenwich Associates, TeL 
(203) 629 1200 



This announcement appears as a matte rof record only. 


r< 


KINGSTON 

COMMUNICATIONS 


Kingston Coinmiuiications (Hull) PLC 

£25,000,000 
7 Year Term Loan 

to finance its investment in Torch Communications Limited 
a joint venture with Yorkshire Electricity Croupp)c 
and to restructure existing borrenvings 


Agent 

Robert Fleming & Co. Limited 


Funds provided by 

National Westminster Bank Pic Robert Fleming & Co. Limited 

Nikko Bank (TJK) Pic The Royal Bank of Scotland pic 

Society Generale 

Manchester Branch 


Legal Advisers to the Banks 

Norton Rose 


Arranged by 

FLEMINGS 

INTERNATIONAL INVESTMENT BANKING 


LONDON . NEW YORK . HONG KONG .TOKYO . PARIS . FRANKFURT . MADRID . ZURICH 
GENEVA .MILAN. SYDNEY. BANGKOK. TAIPEI. MANILA. JAKARTA .SEOLIL. SHANGHAI 
BOMBAY . KUALA LUMPUR . SINGAPORE . LAHORE . COLOMBO . JOHANNESBURG . BAHRAIN 


2SCopth.in Avenue. London EC2R 7 OR 
Tel- OH-tfiB 5838 

February 19IH 

AppHUtdlx} Robert FtrnnngAllo limited (iiikttniwiY'ilK'SiTiirvwsiniilFliriin* Ainlwniij Lwntaf 
niutTUe LMidon Stock Exchaittx 


nan of 
rued to 
rroup's 

eaching 
ms i ness 
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’s 1993 

ax loss, 
■revious 
on fiat 
236.4m) 
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226.6m 

I items, 
vreting 
ed with 
■ar ear- 

ounevd 
fieri ted 
.'mi urns 

-reased 
£5. 4m) 
ore tax 
ms of 

excep- 
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sses on 
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£14.3m 
•odwill 
-ducted 



e price 
udging 
■h were 
ations. 
: some 
of sev- 
some 
ind the 
about 
luiries. 
as the 
ig net 
to 6.7 
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profits 
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of 19. 
sip at 
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gross 
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divi- 
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(8p), 





INTERNATIONAL COMPANIES AND FINANCE 



BMW cautious on profits 
despite 2.7% sales advance 


By Christopher Partes 
In Munich 

BMW car and motorcycle sales 
increased 2.7 per cent in the 
first quarter of this year, and 
orders are clearly higher t hfln 
12 months ago, Mr Volker Dop- 
pelfeld. finance director, said 
yesterday. 

However, the company only 
hoped these improvements 
would translate into better 
profits, he added. The 1993 
annual report, published yes- 
terday, predicted a satisfactory 
result 

Rover, the new UK subsid- 
iary, was likely to produce 
improved pre-tax earnings, 
although taxes and BMW’s 
conservative accounting meth- 
ods would turn this into a loss 


if the group decided to consoli- 
date the results this year, Mr 
Doppelfeld added. 

According to Mr Be rad Pis- 
chetsrieder, chairman, Rover's 
prospects were even more 
interesting than believed at the 
time of the recent £800m 
($1.2bn> takeover. He refused to 
elaborate, but maintained that 
the fact that Rover would 
remain an independent busi- 
ness spoke for itself. 

Mr Pischetsrieder appeared 
optimistic on the outcome of 
negotiations to maintain tech- 
nological links between Rover 
and Honda. Expectations were 
high on both sides, he said. 

Confirming that technical 
cooperation deals on Rover’s 
mid-range models were to be 
continued into the next model 


generation, he said he wanted 
to forge a long-term relation- 
ship with Honda. 

Group turnover rose to 
DM7.5bn in the first quarter, 
although car deliveries to cus- 
tomers were unchanged at 
137,000 units. Production fell 7 
per cent mainly because of dis- 
ruption caused by tooling up 
for two new models. 

The company, which plans a 
rights issue to raise about 
DMSOOm, is expected to con- 
tinue to outperform its domes- 
tic rivals. 

Sales in the US rose 19 per 
cent last year to 78,000. This 
made it the leading European 
supplier in the UiS for tbs first 
time, "although t his was never 
our aim", according to Mr Dop- 
pelfeld. 


Bertelsmann’s Vox TV unit fails 


By Michael Lmdemann 
in Frankfurt 

Bertelsmann, one of the 
world's largest media groups, 
suffered a serious setback yes- 
terday when the Vox private 
television c hannel collapsed. 

"Our intensive efforts to 
save the c hann el have not so 
far produced an acceptable 
result,” the company said. 

The group said on Monday 
that it was in last-minute nego- 
tiations with Walt Disney in 
the hope that the US group 
would take a 49 per cent stake. 
Bertelsmann held a 24.9 per 
cent stake as the only remain- 


Rapid recovery 
continues at 
UK retailer 

By Nell Buckley in London 

Next, the UK fashion chain, 
demonstrated its continuing 
rapid recovery yesterday with 
the announcement of a near 
doubling of full-year pre-tax 
profits, to £73.5m (S110.5m) 
from £3&9m. 

The group was one of the 
most successful retailers of the 
1980s but ran into difficulties 
when it over-expanded. Profits 
have recovered from £ 12.3m to 
£73. 5m In two years. 

Lex, Page 20 


ing shareholder needed to find 
investors. A purchase of 49 per 
cent by the US group would 
have left 26.1 per cent held on 
trust. 

Walt Disney refused to con- 
firm that it had been in talks 
with Bertelsmann and would 
not comment on why the talks 
had flailed. 

Liquidation proceedings will 
start on April l, hut Vox said 
the channel would continue in 
roughly the same format. An 
estimated 300 employees will 
be made redundant under a 
plan agreed with the workers' 
council. 

Bertelsmann suggested that 


new shareholders might be 
found once liquidation proceed- 
ings and the cost of baying a 
stake had dropped sharply. 

The channel's collapse is 
blamed on strategic miscalcu- 
lations at Berte lsmann, which 
masterminded the channel’s 
launch in January 1993 and Is 
otherwise regarded as one of 
the world's most successful 
media groups. 

A series of format changes 
and unexpectedly high start-up 
costs scared off several Ger- 
man shareholders, including 
Sfiddeutsche Verlag, which 
publishes the Sfiddeutsche 
Zeitung- 


Profit declines at Bobst 
for second year in a row 


By Ian Rodger in Zurich 

Bobst, the Swiss packaging 
machinery group, suffered a 
second successive profit 
decline last year, with consoli- 
dated net income down 31 per 
cent to SFr44£m ($31. 6m). 

However, the directors have 
decided to maintain the divi- 
dends, and are forecasting an 
improvement in both turnover 
and profit in the current year. 

The group, which specialises 
in machines for forming and 
decorating cardboard, has been 
hit by reduced business in 


Europe and Japan. But order 
inflow has improved since last 
autumn. Consolidated sales fell 
7.9 per cent last year to 
SFr932.7m and cash flow sank 
21.5 per cent to SFr90Am. 

• Lindt and Sprfingli, the 
Swiss fine chocolate group, 
said its 1993 net profit rose 42 
per cent to SFr39-8m on sales 
up 112 per cent to SFrl2hn. 
Dividends are to be raised 2 
percent 

Mr Rudolph Sprfingli, chair- 
man, said he was confident of 
further growth in the current 
year. 


Case closes 
French 
plant in 
shake-up 

By John Ridding in Paris 

J.L Case, the US manufacturer 
of farm machinery and con- 
struction equipment yester- 
day announced plans to 
restructure its French and UK 
operations to improve effi- 
ciency and respond to 
depressed market conditions. 

The measures will involve 
the closure of a plant In cen- 
tral France and job losses at 
other French and UK sites. 

Case, a unit of US-based Ten- 
neco, said that faced with the 
cmrcnt European environment 
“it cannot envisage a substan- 
tial natural improvement in 
activity”. It outlined a series 
of re str uc turi ng measures to 
cut costs, improve productiv- 
ity and ensure “long-term eco- 
nomic viability”. 

The proposed measures, 
which the company said were 
the next steps in a three-year 
restructuring programme, 
affect the group's French and 
UK operations. 

The Vlerzon plant in central 
France, which employs 270, 
will be closed and assembly of 
loader backhoes will be trans- 
ferred to the company’s plant 
In Crapy en Valois, north of 
Paris. Some jobs will be trans- 
ferred from Vision to Crepy. 

The company’s Doncaster 
plant in northern England, 
which win become Case’s sin- 
gle European tractor assembly 
plant following the closure of 
a plant in Germany, 
announced last year, will 
cease its component manufac- 
ture and machining activities. 

Jobs will be lost at the Don- 
caster plant, which currently 
employs about 1,400, although 
the number of positions 
affected is still unclear. 

Foundry activities at Don- 
caster and St Dizler in eastern 
France will be dosed if alter- 
native solutions, such as joint 
ventures, partnerships or sales 
cannot be arranged. These 
activities employ 160 and 250 
respectively. The manufacture 
of backhoe transmissions at St 
Dirier will be replaced by out- 
sourcing of these products. 

Mr Steve Lamb, managing 
director of Case Europe, said 
that the steps were necessary 
to assure the company's 
future. 


Swiss group moves from night to day 


Ciba has joined the international accounting club. Andrew Jack reports 

C witzeriand is fast coining Swiss Association of F ina n ci a l simply to national standards. There 

in from thn mM in imm. Annlvnte anti Aw»t Manncws Mr Merer ssrre the nrlmarv IsmS, including _ . __ 


S witzerland is fast coining 
in from the cold In corpo- 
rate reporting, with mul- 
tinationals in creasin g ly aban- 
doning isolation in favour of 
compliance with international 
accounting standards. 

The latest to join the trend 
was Ciba, the pharmaceuticals 
and chemicals group, which 
yesterday published its 1993 
accounts, for the first time 
using the guidelines of the 
London-based International 
Accounting Standards Commit- 
tee (Iasc). 

Ciba’s followers had a taste 
of what was to come last sum- 
mer, when it restated its 1992 
results according to interna- 
tional accounting standards. 
The effect was to increase post- 
tax profits by 18 per cent, 
while raising inventories and 
cash and marketable securi- 
ties. 

This year, the company 
reports in full under the new 
system for the first time. One 
short-term frustration for 
shareholders is that the com- 
pany has published no compar- 
ison with previous years, since 
1993 Is the first full set of fig- 
ures using the new standards. 

The contrast is stark. “Ifs 
like night and day,” says Mr 
Rolf Meyer, rihlaf financial offi- 
cer. "For the international user 
the old system was very 
unusual and aiffiwnif. to under- 
stand. It was more of a statisti- 
cal summary than an inte- 
grated accounting system." 

A report late last year by the 


Swiss Association of F ina n ci a l 
Analysts and Asset Managers 
suggested that the majority of 
leading industrial and commer- 
cial companies have now. 
brought their ary-rum ting into 
line with International stan- 
dards. 

It highlighted more than 15, 
including Oerlikon-Bfihrle. 
Sandoz, Roche and Nestle. 
"Shareholder information in 
the leading group is often hot- 
ter than that of comparable 
countries in Europe,” it con- 
cluded. 

This pattern has made Swiss 
companies among those with 
highest apparent compliance 
with international standards. 
However, Mr David Cairns, 
Iasc 's secretary general, 
stresses that many companies 
elsewhere use standards wh ich 
are compatible with interna- 
tional standards, including 
those in the UK, the US and 
Canada. 

"Switzerland doesn’t have a 
history of very detailed 
accounting rules," says Mr 
Cairns. “Fifteen years ago 
Swiss companies had some of 
the worst in the world. Interna- 
tional companies had to lift 
themselves substantially above 
eytetfng 1 levels.” 

He says that in the last few 
years the Swiss have Intro- 
duced new legislation and are 
developing more rigorous 
accounting standards. How- 
ever, these changes were not 
enough to persuade Ciba and 
its competitors to stick 


Hammerson buys 
PosTel portfolio 


By Vanessa Houkler, 

Property Correspondent 

Hammerson, the UK’s fifth 
largest property company, yes- 
terday unveiled the flcgiriaitinn 
of a £143-3m ($2JA5m) property 
portfolio from PosTel, in a deal 
that leaves the pension fend 
with a 12.3 per cent stake in 
Hammerson. 

The acquisition is Hammer- 
son’s first big deal since its 
£199m rights issue and change 
of management last year. Mr 
Ron Spinney, chief executive, 
said the purchase was in line 
with the company's new strat- 
egy of reb alancing its portfolio 


and adopting a more active 
investment policy. 

The portfolio, which includes 
the Queensmere Shopping Cen- 
tre In Slough and the HMY 
store in Oxford Street, is expec- 
ted to help Hammerson 
improve values by redevelop- 
ment and more active manage- 
ment PosTel’s sale of the port- 
folio is part of a long-term plan 
to liquidate the properties held 
in one of its funds. 

Payment for the six proper- 
ties, which generate rental 
income of Eui _9m a year, takes 
the form of E2S-3m each anti 
31.9m new shares at 370p each. 
Lex. Page 20 


simply to national standards. 

Mr Meyer says the primary 
reason for moving towards 
international standards was to 
reflect a desire to broaden the 
company’s shareholder base in 
line with its international 
operations. Foreign equity Is 
now about one-third of the 
total 

He adds that it "enhances 
the potential for a listing” in 
other equity markets, although 
he says there are no current 
plans to seek quotes outside 
Switzerland. 

I t was not an easy process, 
although the transition has 
all been achieved since 
mid-1990. "I thought this is 
somewhat risky and if some- 
thing slips I wfil have to look 
for another job,” says Mr 
Meyer. 

The company decided not 
simply to focus on external 
flnanriai reporting by interna- 
tional standards, but also to 
use the same system inter- 
nally. Its accounting systems 
have had to be overhauled as a 
result, to report in a way that 
corresponds closely to the fig- 
ures shown in the accounts. 

It set up a small interna- 
tional team with considerable 
power to introduce accounting 
changes. 

"We didn’t have any technol- 
ogy freaks,” he says. “We 
wanted to use proven tools 
that provided results quickly; 
reliably «tmi in a user-friendly 
way." 


lems. inducting “ 
thrown up by 

the insurance values of turn® 
Sets that was wrong by 
SFrlba (S690m>. However, a 
series of trial runs appems to 
have smoothed out the difficul- 

Mr Meyer says there have 
been large savings as a result 
of the change, including 
tighter cash management, 
more efficient capital invest- 
ment, a different approach to 
acquisitions, and more rigid 
asset management wmen ne 
estimates has reduced the 
value of inventories by 6 per 

rtxn t 

He says one principal advan- 
tage has been to allow the com - 
pany to benchmark its perfor- 
mance for the first time 
against Its competitors. "It has 
helped our internal manage- 
ment become tighter and more 
transparent" 

One of the largest differences 
has been to move from the 
arguably more informative cur- 
rent cost accounting approach 
that Qba had used over 25 
years - which regularly 
nprfatpg asset values — to his- 
torical cost accounting under 
international standards. 

“From a management 
piwiiintreg view we are still 
convinced we had a very good 
system, but we were c al l i ng 
out from the desert," he says. 
“We were by ourselves and 
eventually we had to listen to 
our customers.” 


GKN £497m bid for 
Westland is rejected 


By Thn Burt in London 

GEN’S £497m ($747m) hostile 
takeover bid for Westland, the 
helicopter manufacturer, 
moved towards a climax 
yesterday after a meeting 
between the chairmen of the 
two companies broke up with- 
out agreement 

This leaves the engineering 
group with two days to revise 
its 290p-a-sbare offer. 

Mr Alan Jones, Westland 
chairman, had a "friendly but 
frank" 35-minute discussion 
with Sir. David Lees - his GKN 
counterpart - but is under- 
stood to have firmly rejected 


the bid. After the meeting, the 
executives issued a joint state- 
ment “In all matters relating 
to Westland, there is an 
unbridgeable gap between us.” 

Throughout the bid, Mr 
Jones has criticised GKN, 
which controls 45 per cent of 
Westland, for undervaluing its 
order and profit prospects. 

McDonnell Douglas Helicop- 
ters, the US manufacturer, yes- 
terday announced it had 
reached agreement with EH 
Industries - a partnership 
between Westland and Agusta 
of Italy - to market the part- 
ners’ EH101 helicopter in 
North America. 


These securities hove not been registered under the Securities Act of 1933 and may not be offered or sold within the 
United Stales absent registration or applicable exemption from the registration requirements 
of the Securities Act of 1 933. These securities have been previously sold. 

This announcement appears as a matter of record only. 


BANPAIS 

INSTITUCION DE BANCA MULTIPLE 

MEXICO 


US$300,000,000 

GLOBAL MEDIUM TERM NOTE PROGRAM 
Due from twelve months to three years from the date of issue 

The Company has issued 

US$100,000,000 

7.25% Notes due 1997 

PRICE 99.7325% 


Lead Manager 

ING BANK 


Co-Managers 


BANKERS TRUST INTERNATIONAL PLC 
BEAR, STEARNS INTERNATIONAL LIMITED 
DEUTSCHE-SUDAMERIKANISCHE BANK AG 
STANDARD CHARTERED CAPITAL MARKETS 
VALORES FINAMEX 


ING Mi) BANK 


BANQUE INDOSUEZ 
CITIBANK INTERNATIONAL PLC 
J.P. MORGAN SECURITIES LTD. 
SWISS BANK CORPORATION 
S.G. WARBURG SECURITIES 


Internationale 

Nederlanden 

Bank 


January 1994 


The Nippon Credit Bank 
(Curasao) Finance, N.V. 

U.S. $500,000,000 

Subordinated Floating Rate 
Guaranteed Notes 2000 

In accordance with the terms and conditions of die Notes, notice is 
hereby given, chat the interest race for the Interest Period from 29th 
March, 1994 to Z9dv June, 1994 is 4.175% per annum. The Coupon 
Amount payable on the Z9ch June, 1994 in respect of each of U.S. 
$10,000 in principal amount of each note is U.S. $106.69. 


BankenlruR 
Company, London 


Agent Bank 


® Bank of Greece 

(locxapoauKl w|i& Umtod tfuHlkr in i<M JMIapfc ftapottk^ 

U.S. $100,000,000 

Floating Rata Notes due 1997 
For the period 30th March, 1994 to 30th September; 1994 
In acomdanca with the co n diti o nal at the Notes, notice is hereby 
given that the ram of interest has been fixed at 90376 par cant. 

par annum, and that the imarew payable on the relative 
payment date bates 30th September 1994 will be U-S-S6, 436-61 
per 08.5260,000 Note and UJ3.S12,873.B1 per O-S-SSOO.OOO Note. 

Industrial Bank of Japan, Limited 
(London Branch) 

V Agent Bank v 


cmcoRPO 

US. $160,000,000 

oa tint- Rate Notes Due I 


Subordinated Floating 


Notice Is hereby given jhal the Rate of littoral fer ihe period March 30, 1994. 
fo June 30, 1994 nos been fixed al S.S% and that the interest 
payable on the reWcntf IrtftraJ Poymert Data June 30. 1 994, ogoinst Coupon 
No. 3 m respect or US$5,000 nominal of the Notes will bs 
US$70£8 ond in respect of US$100,000 nomind of the Nates will be 
U5J 1 ,405.40. 


ton* 30, 199A. London 

f: Citibank. NA [hsuer Services). Agent Bank 


CmBANC © 


KFW International Inc. 
Nom. ITL 150,000,000.- 
Fkmting Rate Notes doe 1998 

Notice is hereby &rvcn Ibsr firm 29 
Mm* 1994 to 28 Juno 1994 U» notes 
wffleany an interest rate of &20% per 
umnm. Interest payable oa 29 June 1994 
will amoontta ITL 104,778 per ITL 
yjOO/OO Note sod ITL 1.047,778 per 
rrLSODOOjOOONote. 

Agent Bank: Sod/Ht Enoptane 
4a Ba gnSodWAmyni 


BANQUE NATIONALS 
DE PARIS SLA. & CO 
(DEUTSCHLAND) OHG 

USD 208,000,808 
Floating Rate SalonHnateil 
Loan dm 2008 to 
THE HOKUMICU MUCK LTB 

Notice is hereby given that the rale 
d interest tor the period from 
Mach 30th, 1994 to June 30th, 1994 
has been fixed at AJOS per cent. The 
coupon amount due far trite period 
ts USD 2,699.31 per USD 2SOOOO 
denomination and is payable on the 
interest payment date June 30th. 1994. 

The Rsca) Agent 

Banque National* <fe Parts 
(Luxembourg) SJL 


European mvEsmarr bank 

PTE 15,000^000,000 
Rooting Hate None Due 1399 
In accordance with the terms end 
oondhkma of the Notes, the Interest 
rate tor the period 30th March, 1894 m 
30th September, 1994 has been 
fixed at9.3E% per annum. The (merest 
payable on 30th September, 1994 wffl 
be PTE 46.73 per PTE 1.000 
nominal. 

AgeraBenksnd 
Principal Paying Agent 
ASS ROVALBAT* 

BgZB OF CANADA 


US £00,000,000 
Compagnie Baneaine 

Senior Coflarsd Floating Rate 
Notes due 2003 

Per tbs period from Match 30. 1994 bo 
September 30, 1994 the Nat*, wffl 
«any en interest rate of 84* per annum 
with sa interest amount of US 
S2&83 per USUjOOO Note, of US 3BC&33 
per US COjOOO Note and of US SfijSSLS 
par ITS 3100,000 Note. 

The relevant Interest payment date wffl 
be September 30. 1991. 


1 Products 


n 

Banque Paribas 


The Managed Convertible Fund 

SICAV 

II, rue Aldringen. L-l 1 18 Luxembourg 
R.C. Luxembourg N° B 34758 

Notice is hereby given ro the shareholder thai the Extraordinary 
General Meeting of Shareholders held on 25th March 1994 has 
taken the following resolutions. 

Jt is resolved to organise an additional subscription period from 
28th March 1994 till the date of 29th April 1994 at a fixed price 
of USD 10 per share according to die following modalities. 

At the end of the additional subscription period (on tbe date of 
29th April 1994 no later than 1 2 noon Luxembourg time) the new 
subscriptions of shares of the SICAV will be accepted at tbe price 
of USD 10 per share plus a commission of 3 percent payable to 
the Adviser who may share it with other agents procuring subscrip- 
tions to the SICAV. 

Until the date of 29th April 1 994 no later than 12 noou Luxembourg 
tune, redemptions will be accepted and treated on basis of the 
respective applicable net asset value on the respective day as de- 
scribed in the current prospectus. 

Shareholders are hereby invited to present their old share certificates 
for exchange against new share certificates on basis of the following 
formula: 

A=10/B whereby A = number of old shares necessary to obtain 
one new share 

B = the old NAV of shares as at the date of 
29th April 1994 

Any balance resulting from the conversion will be paid ro (he 
shareholders requesting the conversion. Shareholders are invited 
to present their existing share certificates for conversion into new 
certificates before the date of 29th April 1994 at the counters of 
Kredietbank SA. Luxemboiugeoise. Only the new share certifi- 
cates will be of good delivery at the Luxembourg Stock Exchange. 

However, old shares not presented for conversion imo new ones 
before the date of 29th April 1994 will remain in circulation and 
tbe exchange of old shares for new ones will always be possible 
on basis of the aforesaid formula. 

The Board of Directors 


Notice to tbe Shareholders of 

The Managed Convertible Fund 

5oci&6 d'lnvestissemeni h Capital Variable 
1 1, roe Aldringen, L-l 1 18 Luxembourg 
R.C. Luxembourg B 34758 

The Shareholders are hereby informed that the performance fee 
payable to the Investment Adviser iCresvale European Asset 
Advisers (Luxembourg) SA.. Luxembourg) has been increased. 
If the Fund's Net Asset Value per share appreciates during a given 
financial year of the fund more than 15 per cent but less than 20 
per cent the Adviser is entitled to receive 10 per cent of tire excess 
increa se over 15 percent. If the Fund's Net Asset Value per share 
appreciates during a given financial year of the fund more than 
20 percent but less than 25 percent tbe Adviser is entitled to re- 
ceive 15 per cent of the excess increase over 20 percent plus the 
fee referred to in the preceding sentence. Before this modification. 

a performance fee was only payable if the Fund’s Net Asset Value 
per share appreciated during a given financial year more than 25 
per cenL The performance fee has not been modified, in case the 
Hind's Net Asset Vihie per share appreciate during a given Brume ini 
year more than 25 percent. 

The investment policy has been slightly modified. It is anticipated 
that the Fund will invest in selected international convertible bond 
issues which in the opinion of directors will best provide for future 
growth. If at any time, no suitable international convertible bonds 
can. in the opinion of the Directors of tbe Investment Adviser be 
located, the Fund may invest in international equities (formerly 
only European equities) until more favourable circumstances exisL 

Shareholders are hereby informed that they can ask for redemption 
of their shares without redemption fee until 30 April 1994/ 

The Board of Directors 






FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


INTERNATIONAL COMPANIES AND FINANCE 


23 


Pirelli plans to 
raise Ll,000bn 
for expansion 


Munk puts his faith in a property revival at Trizec 

Bernard Simon reports on the background to Horsham’s C$600m investment in the Canadian group 


2096 


American Bwrtefc . j 
‘ Resources - •} 
town* ..*» 


• •• Eater M unk 

©1% voting stotort 
. Horsham Corporation • 


100% 


. T 

ClaKBatMng 
: anclMarkeitop . 
foe tefevno end ’ 

' t |. r'n 

asermvuan) 


100 % 


. Horeham Proparttea 
.{Gwwanpuoperty^ 


SUB io be fkaSsed 


43% 


Trizec Corporation 
(Norm American 
property 


By John Slmklns In MBan 

Pirelli, the Italian tyres and 
cables group which has com- 
pleted a two-year restructur- 
ing. yesterday announced 
plans for Ll,000bn ($81 lm) of 
new funding aimed partly at a 
relaunch of its core products 
on international markets. 

The holding company is to 
raise the money through a 
debenture loan for 1994 to 1998, 
convertible into ordinary 
shares, at a price between 
L2.000 and L3.000. It will 
use the proceeds to expand 
activities and finance new 
products. 

The funding will also allow it 
to participate in the recapital- 
isation of its Amsterdam-based 
offshoot, the quoted Pirelli 
Tyre Holding (PTH). 

PTH plans a share capital 
ir )p r fww> through the Issue of 
slightly over 3lm new shares 
valued at FI 10 each. Share- 
holders will be offered one new 
share for every three owned, at 
a discount to be determined at 


next month’s general meeting. 
The issue is expected to raise 
FI 500m, with a further FI 150m 
coming from warrants reserved 
for minority shareholders. 

The holding company’s 
hoard will also rec ommend, for 
the sake of operating flexibil- 
ity, that authorisation should 
be given for further capital 
increases up to LSOObn as nec- 
essary. 

Mr Marco Tronchetti Prov- 
era, managing director, said 
the group expected to return to 
net profit In 1994. 

The 1998 net loss, which 
springs from restructuring 
costs and will be revealed next 
month, will be below the 
L154bn deficit posted in 
1992. 

Consolidated sales rose 12 
per cent In 1993 to L9,210bn 
while the group’s net profits 
before extraordinary items is 
estimated at tens of b illions of 
lire, compared with a L93bn 
loss in 1992. Net debt dimin- 
ished by about 20 per cent to 
L2,228hn. 


M r Peter Munk makes 
a habit of doing busi- 
ness with panache. 
The Hungarian-born Canadian 
runs his companies from a styl- 
ish townhouse in a Toronto 
neighbourhood better known 
for expensive shops and restau- 
rants than corporate head 
offices. 

Each winter, however, he 
manages to mb r business with 
pleasure by setting up an office 
in the Swiss ski resort of Fos- 
ters. 

Munk’s eye for fire unortho- 
dox was again in evidence tins 
week with a conditional offer 
by Horsham, his main holding 
company, to invest C$600m 
(US$447.7m) in Trizec, one of 
North America’s biggest office 
and shopping-mall developers. 
Horsham would end up with a 
43 per cent controlling stake. 

Trizec is by no means an 
obvious takeover candidate. 
Crippled by the long slump in 
North American property, the 
Calgary-based company is con- 
ducting tough negotiations to 
restructure part of its C$18bn 
debt 

Even as the agreement with 
Horsham was announced on 
Monday, a group of unpaid 


senior debenture holders reaf- 
firmed their determination to 
seize their security. A court 
hearing is scheduled for tomor- 
row. 

The threat posed by the dis- 
gruntled creditors to Trizec’s 
survival appears to have moti- 
vated the developer’s approach 
to Horsham last January. 

According to Ms Leanne 
Baker, analyst at Salomon 
Brothers in New York, Hor- 
sham’s investment is “not sim- 
ply a positive call on a sector, 
but represents an opportunistic 
acquisition made possible by a 
singularly distressed com- 
pany". 

A similar description might 
apply to several of Mr Monk’s 
deals over the past two 
decades. A few have soared, 
but enough have succeeded to 
maiffi Peter Munk anf t his com- 
panies a force to be reckoned 
with. 

It was only a decade ago that 
prominent Canadian securities 
dealers shied away from help- 
ing Mr Munk raise money for 
an ailing gold and energy pro- 
ducer he had recently 
acquired. That company, 
American Barrick Resources, 
now has a market capitalisa- 


tion of C$10-2bn, making it the 
third most valuable company 
listed on the Toronto stock 
exchange. 

Horsham has a 20 per cent 
stake in Barrick, whose fast- 
rising earnings from the Gold- 
strike min e in Nevada have 
made it the jewel in Mr Munk’s 
crown. Barrick contributed 
US$41.5m to Horsham last 
year, which was more than the 
parent company's total earn- 
ings of $40.1m. 

Horsham’s other significant 
investment is a 100 per cent 
interest in Clark Refining and 
Marketing, an oil refiner and 
distributor based in St Louis, 
Missouri. 

Clark has had an 


up-and-down history since Hor- 
sham bought control in 1988. It 
posted a small profit last year, 
with slim refining margins off- 
set by a management shake-up 
and tight cost controls. 

C lark is cm the verge of 
an expansion. It is in 
talks to buy a 177,000 
barrels per day refinery in Port 
Arthur, Texas, from Chevron. 
The refinery, expected to cost 
US$l50m-$200m, will more than 
double Clark’s capacity and 
substantially extend its operat- 
ing area. 

Mr Todd Bergman, analyst at 
Goldman Sachs, said recently 
the refinery “will increase 
Clark’s refining exposure at a 


very low incremental cost." He 
predicts that Horsham’s earn- 
ings will jump to 70 cents a 
share this year from 42 cents 
in 1993, due partly to higher 
refining marg i ns and produc- 
tivity improvements at Clark. 

An attempt by Horsham to 
spin off part of its stake in 
Clark to the public was aborted 
last year when market condi- 
tions suddenly deteriorated. 
But a public offering is still in 
the whigs, and could be immi- 
nent. 

The planned investment in 
Trizec would not be Mr Munk’s 
first foray into property. Dur- 
ing the 1970s, he invested in a 
chain of South Pacific hotels. 
and came close to building a 


resort in the shadow of the 
Pyramids in Egypt. 

Horsham recently bought 500 
acres of farmland on the out- 
skirts of Berlin which it is 
developing into a business 
park. The project is now self- 
financing, but the downturn in 
the German economy has been 
a disappointment. 

Like many of his other deals, 
the proposed stake in Trizec is 
a long-term bet Property mar- 
kets in several North Ameri- 
can cities have shown signs of 
life recently. If Trizec can stave 
off its creditors, it would be an 
obvious beneficiary or any sus- 
tained improvement. 

Should the investment in 
Trizec prove to be a dud, Mr 
Munk will at least have the 
excuse that some high-powered 
names backed his instincts. 

Horsham has an unusually 
star-studded board of directors, 
including Mr Karl-Otto PShl. 
former president of the Ger- 
man Bundesbank, and Mr 
Brian Mulroney. the former 

PanaHian p rimp minis ter 

They appear to share Mr 
Munk’s confidence that a full 
recovery in North American 
real estate, and in Trizec’s for- 
tunes, is just a matter of time. 


Northrop criticises 
Grumman timetable 


By Martin Dickson 
In New York 

A timetable proposed by 
Grumman for a rapid auction 
of the company has been 
sharply criticised by Northrop, 
one of two companies which 
have launched offers for the 
defence manufacturer. 

Grumman, which became a 
bid target earlier this month, 
called on Monday for Northrop 
and rival bidder Martin 
Marietta to submit their best 
bids for the company by 5pm 
on Thursday - a remarkably 
short takeover timetable by 
normal US standards. Grum- 
man said this would prevent 
disruption to its business. 

However, Northrop, which 
has tiie higher of the two bids 
on the table, complained that 
Grumman was in essence pro- 
posing that Northrop bid 
against itself. 

Grumman agreed on March 7 
to a friendly $L9bn, or $55 a 
share, bid from Martin 
Marietta. However, Northrop, 
with which Grumman bad held 
secret takeover talks, which 


By Ronald van de Kroi 
In Amsterdam 

Strong performances in 
banking and life insurance 
helped Internationale Neder- 
i andan Group, the Dutch finan- 
cial services group, to hit 1993 
net profit by 10.9 per cent to 
FI 2JJ3bn ($L07bn) 

Pre-tax profits showed an 
even sharper rise of 18 pm 1 cent 
to Fl&82bn. But a 39 per cent 
increase in ING's tax bill - 
reflecting increased earnings 
in Japan and the US and the 
absence of the previous yaw’s 
tax windfalls in Canada and 
Australia - accounted for the 
slower rate of increase in net 
profit, 

ING is to raise Its dividend to 
FI 3.50 from FI 3.19 in 1992. 

ING also announced It was 
launching a FI lbn bond Issue. 


ended in January, then 
launched a hostile S60-a-shara 
bid, worth $2.04btL 

In a letter to Grumman, Mr 
Kent Kresa, Northrop chair- 
man, said the proposed time- 
table continued an “unlevel 
playing field". 

Northrop, he « n i d , still faced 
a $50m “lock-up” fee, which 
Grumman has agreed to pay 
Martin Marietta if another bid- 
der wins control of Grumman. 

Further, since Northrop had 
the higher bid an the table, it 
was “being asked to bid 
against a purely hypothetical 
price increase from Martin 
Marietta without any notice or 
knowledge of whether such an 
increase is in fact submitted. 11 

Mr Kresa said while Grum- 
man ’s board spoke of wanting 
“free and open competitive bid- 
ding,” the proposed process 
was not open: “It is sot in the 
best interests of Grumman’s 
stockholders to prematurely 
cut off potential bidding and 
potentially deprive stockhold- 
ers of the opportunity to i 
receive the maximum value for 
their shar es." 


FI 2.03bn 

Mr Aad Jacobs, chairman, said 
FI 700m of the proceeds would 
be used to strengthen the 
shareholders’ equity of its 
banking subsidiary, ING Bank, 
and fuel its growth. The bank 
has expanded rapidly in east- 
ern Europe and Aria Pacific. 

The rest of the proceeds 
would be held in reserve. 

Banking results showed a 
strong improvement virtually 
across the board last year, with 
pre-tax profits up 27.3 per emit 
at F11.34bn. ING cited the 
favourable development of 
interest rates and its continued 
successes in e m e r gin g markets. 

In insurance, ING profited 
from the deconsolidation Its 
Orion non-life subsidiary in the 
UK, which had been a drag on 
the sector. Overall, pre-tax 
results In insurance rose by 11 
per cent to ST l-63bn. 


Chairman of 
French bank 
sees sale by 
end of 1995 

By Alice Rawsthom in Paris 

Credit Lyonnais, the troubled 
French banking group, could 
be ready for privatisation by 
the end of next year, according 
to Mr Jean Peyrelevade, chair- 
man. 

"We should be able to think 
about privatisation towards 
the end of 1995, but first the 
bank needs to be put on a prof- 
itable footing,” said Mr Peyre- 
levade, who last week 
announced details of an emer- 
gency FFr44. 9bn ($7.8bn) 
financial rescue package for 
Credit Lyonnais and also dis- 
closed that the group last year 
made a FFr&9bn net loss. 

The French government’s 
rationale for backing the res- 
cue, which includes nFFrLSbn 
cash injection from the state : 
and other shareholders 
together with the transfer of 
FFrtObn of property loans to a 
new company, was to prepare 
Credit Lyonnais for privatisa- 
tion. But the scale of the 
restructuring has sparked a 
political row. 

A number of politicians have 
al ready called for an official 
inquiry into the management 
of credit Lyonnais, including 
Mr Francois d’Aube, a conser- 
vative who wrote a controver- 
sial book on the bank entitled 
Argent Sale, or Dirty Money. 

The French government last 
night declined to comment on 
speculation that Mr Jean-Yves 
Haberer, who chaired Credit 
Lyonnais from 1988 to last 
November, was to be dis- 
missed from Ids new post as 
chairman of Credit National, a 
smaller state-controlled bank- 
ing group. 

Mr Haberer, who orches- 
trated an aggressive policy of 
international expansion and 
lending at credit Lyonnais, j 
has been widely blamed for 
the bahts problems. 

He issued a statement yes- 
terday catting for an inquiry 
into the management of credit 
Lyonnais riafrpod that he 
had been subjected to “a real 
media lynching" over his role. 


Dutch financial group 
advances to 


Coors buys Spanish brewery 


By Tom Bums in Madrid 

Coors Brewing Company, the 
US beer producer, is acquiring 
a brewery In Zaragoza from El 
Aguila, Spain's second-ranked 
brewer, to serve as its Euro- 
pean export base. 

The purchase, part of an ini- 
tial Pta7bn ($5lm) investment 
in Spain, gives Memphis-based 
Coors its first manufacturing 
base in Europe. 


Under the agreement. Coors 
will continue to produce El 
Aguila brands at the Zaragoza 
plant over a four-year period 
and will gradually introduce 
its own product, Coors Extra 
Gold, for the Spanish and the 
European markets. 

The sale of the plant relieves 
El Aguila, 51 per cent owned 
by Holland’s Heineken group, 
of a considerable burden and 
represents the virtual comple- 


tion of a lengthy rationalisa- 
tion process. 

El Aguila, which is forecast 
to have lost Pta5.9bn last year, 
against PtaSJZbn in 1992, is to 
concentrate its brewing activi- 
ties in Madrid and in Valencia. 

Coors’ investment is the first 
significant move in the Span- 
ish brewing sector since Guin- 
ness, the UK group, bought La 
Cruz del Campo, the leading 
Spanish beer company in 1991. 


Turnround at Moscow Narodny 


By Alison Smith 

Moscow Narodny, the London- 
based trade and project finance 
bank, mode a pre-tax profit of 
£43.6nr (363.65m) in 1993 after 
two years of significant pre-tax 
losses, culminating in losses o£ 
£316, j m in 1992. 

The bank said the turnround 
came from two sources. Its 
operating income rose 11 per 
cent to £30. 9m from £27.9m, 
and it was also able to release 
some £26m in provisions, as a 
result of selling debt - mainly 
sovereign debt - at above net 
book value. It had not, 
however, altered its provision- 
ing for former Soviet Union 
debt. 


The hank still has an accu- 
mulated deficit of £347 .3m and 
is not proposing to pay a divi- 
dend. It last paid a dividend in 


1988. 

Moscow Narodny is owned 
by Russian institutions, princi- 
pally the Central Bank of Rus- 
sia. but is licensed and super- 
vised by the Bank of Bn g l an d. 
Its annual meeting is today. 

Mr Derek Farmer, general 


ter, said the results 
1 a return to stability, 
iat the hank was weH- 
to move forward after 
nsolidation of the last 
of years. 

year also saw the first 
cant growth in total 
- to £952. 4m from 


£884.9m - after a period in 
which MNB had had to be pru- 
dent and reduce its exposure to 
the former Soviet Union. 

Mr Farmer said the bank 
saw opportunities to take 
advantage of the market in 
Asia and the Pacific Rim from 
its branch in Singapore. 

Mr A. Semikoz, the bank's 

/-hairman , said IS the annual 
report the bank would make it 
a priority in 1994 to use its 
skills and experience to assist 
banks throughout the Russian 
federation to widen their inter- 
national banking ability. 

Moscow Narodny has corre- 
spondent relationships with 
173 banks in the former Soviet 
Union, most of them in Russia. 


March 1994 


AH of these securities having been sold, this announcement appears as a matter of record only. 

20,000,000 Shares 

0 NORTHWEST 

AIRLINES 

Northwest Airlines Corporation 


Class A Common Stock 


Lehman Brothers 

Clobal Coordinator 


2,500,000 Shares 

Lehman Brothers 

Bankers Trust International PLC 
CS First Boston 

Salomon Brothers International Limited 
Smith Barney Shearson Inc. 

ABN AMRO Bank N.V. UBS Limited NatWest Securities Limited Paribas Capital Markets 

This tranche was offered outside die United States, Canada and Asia. 


16,000,000 Shares 

Lehman Brothers 

BT Securities Corporation 

CS First Boston 

Salomon Brothers Inc 

Smith Barney Shearson Inc. 


Bear, Steams 6/ Co. Inc. 

Dillon, Read & Co. Inc. 

Kemper Securities, Inc. 
Montgomery Securities 
Prudential Securities Incorporated 


Dean Witter Reynolds Inc. 


Alex. Brown 6s 5 Sons 

Incorporated 

Donaldson, Lufkin 6/ Jenrette AG. Edwards 6s? Sons, Inc. Goldman, Sachs Ss’ Co. 

Sccurltra Corporation 

Kidder, Peabody 6s? Co. Lazard Freres & Co. 

IftCpiporetcd 

Morgan Stanley 6s? Co. 

Incorporated 

Wertheim Schroder & Co. 

Incorporated 

Doft 6s? Co., Inc. Fahnestock £?* Co. Inc. First of Michigan Corporation 


Merrill Lynch 6s* Co. 
PaineWfebber Incorporated 
Piper J affray Inc 


Crowell, Weed on 6/ Co. 

Gruntal 6s? Co., Incorporated Morgan Keegan 6s? Company, Luc The Robinson-Humphrey Company, Inc. 

Scott 6s? Stringfellow, Inc Stifel, Nicolaus 6s? Company Sutro 6s? Co. Incorporated Wesseis, Arnold 69* Henderson 

Incorporated 

Brean Murray, Foster Securities Inc D. A Davidson 6s? Co. Doley Securities, Inc. 

Incorporated 

Pennsylvania Merchant Group Ltd Pryor, McClendon, Counts 6s? Co., Inc 

Roney 6/ Co. Unterberg Harris 

Thij tranche u«u offered m the United States and Canada. 


John G. Kinnard and Company 

Incor po ra te d 

Ragen MacKenrie 

Incorporated 


1,500,000 Shares 

Lehman Brothers 

Bankers Trust International PLC 
CS First Boston 

Salomon Brothers Hong Kong Limited 

Smith Barney Shearson Inc. 

Nomura International 


Robert Fleming & Co. Limited 


This tranche was offered M Asia. 


27 


5 


nan of 
rued to 
,-roup's 

caching 
mslness 
ed yes- 
's 1993 

ax loss, 
ircvlous 
on flat 
236.4m) 
rontinn- 
226-Sra 


1 items, 
crating 
ed with 
■ar car- 

on need 
nefited 
aniiuns 

reused 
£5.4 m) 
ore tax 
ms of 

cxrep- 
cd an 
sses on 
i Com- 
£14. 3m 
•odwiil 
■darted 



e price 
udging 
h were 
ations. 
. some 
of sev- 
some 
tad the 
about 
.uiries. 
as the 
g net 
to 6.7 
i there 
about 
ilers - 
ccount 
nt of 
profits 
on a 
of 19. 
Jap at 
roup’s 
i pros- 
mium 


m 


vision 
/e dis- 
sales 
nt to 
>ecled 
ire in 
as. he 
■t had 
gross 
d a 4 
aues. 

iture 
9m to 
a pro- 
-m 6.4 
This 

JS ten- 
uring 

d. 

of the 

divi- 
3 4.8p 
Earn- 
.4p. 


t 


clay 

said 

been 

fight- 

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its 
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been 
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00 in 
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ased 

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24 


A'L 

Alusuisse-Lonza Holding Ltd 

1994 capital Increase 



By virtue of the authority under § 5, l 6 ** of its Articles of Association (Approved 
capital), the Board of Directors of Alusuisse-Lonza Holding Ltd resoived ina meet- 
ing held on Mart* 24. 15B4, to increase the share capital by SFr. 109,244,750 from 
SFr. 655.487.875 to SFr. 764,712,625 through the issue of 584,802 fully paid-up reg- 
istered shares and 289.156 fully paid-up bearer shares, with a par value of SFr. 125 
each, which are to be offered to the present shareholders for subscription: 

The undersigned banks have firmly underwritten 

5844M2 new registered shares at SFr. 125 par value each 
(couponless cert ifi c at es) 

289.156 new bearer shares at SFr. 125 par value each, 
with coupons No. 5 ff. 

with entitlement to dividends as from January 1, 1994 

and hereby offer die said shares to the present shareholders for subscription dur- 
ing the period from 

March 30 to April 14k 1994, noon 

at the following terms: 

1. Subscription ratio 

1 new registered share at SFr. 125 par value for 
6 existing registered shares at SFr. 125 par value each 
1 new bearer share at SFr. 125 par value for 
6 existing bearer shares at SFr. 125 par value each 

2. Subscription price 

SFr. 485.- net for each new registered share at SFr. 125 par value 
SFr. 485.- net for each new bearer share at SFr. 125 par value 
The Swiss Federal Stamp Duty of 3% will be borne by the Company. 

3. Exercise of subscription rights 

Subscription rights are exercised upon presentation of the appropriate' sub- 
scription right certificate for registered shares and of coupon No. 4 for bearer 
shares, using the appropriate subscription form. Subscription rights from 
the two categories of securities cannot be combined. 

The company will send the subscription right certificates directly to holders of 
registered shares who keep their shares at home, while the other certificates 
will be sent to the depository banks concerned. 

4L Entry in the share register 

Registered shareholders whose names have been entered in the Share Register 
will, without reservation, be entered in the Share Register in respect of any reg- 
istered shares acquired under the present subscription offer. This proviso 
applies, however, only to holdings of registered shares not exeeding 5% of the 
total registered share capital increase. 

5. Payment for the new securities must be made for value April 25. 1994. 

6. The new securities will be delivered as soon as possible. 

7. As from March 30, 1994 registered and bearer shares of Alusuisse-Lonza Hold- 
ing lid will be traded ex subscription rights. Subscriptions rights will be 
traded from March 30 to April 13, 1994. 

8 . The new registered end bearer shares are due to be listed on the Zurich, Basle 
and Geneva stock exchanges. 

9. Sales restrictions USA 

The offer is not being made directly or indirectly in the United States of Amer- 
ica, rts territories or possessions or any political subdivision thereof (“United 
States'), or to any resident of the United States, or to any other person who is 
a U.S. person as defined in Regulation S under the United States Securities Act 
of 1933, by use of mails or any means or instrumentality of interstate or foreign 
commerce of the United States or of any facility of a United States national 
securities exchange or otherwise. The rights described herein msy be exercised 
only outside the United States. 

For information regarding Alusuisse-Lonza Holding Ltd, its business and financial 
results please refer to the German full prospectus or to the Company's 1993 annual 
report which is also available in English. Please refer to the banks mentioned 
below. 


Zurich, March 29, 1994 

Union Baak of Svritzeffaud 
ABN AMRO Bank (Swritzartand) 


CmR Sanaa 
Cantaaal Bank of Zurich 


Swias Bank Corporation 
DtnttdM Bank (Switzerland) Ud 



Swiss Secwity bw 

riser: MIN number 

Registered shares of SFr. IS per value 

141.832 

CH000141B323 

Bearer shares of Sir. 125 par value 

141.897 

CHOOOUISSn 



JblosCopco 

Atlas Copco AB 

Nacka, Sweden 

NOTICE OF ANNUAL GENERAL MEETING 

77w SfcsrehoJctere rtAtissCtopoo AS era hereby tovftad to attend the ArnuaT General f 
new on Wettoesday, April 27, 1994 at 5.00 pm (Swedish time) in the BerwaMhaflen, 
69, Stockholm. 


7. 




AGENDA 

1. Section of Chairman to preside at the Meeting. 

2. Preparation and approval of a voting fat 

3. Section of one or two persons to approve the minutes. 

4. Examination of whether the Meeting has been preparly convened. 

5. Presentation of the Annual Report, the Auditors* Report on the Parent Company, the 
Consolidated Accounts and the Audftors 1 Report on the Group. 

a. Consideration of resolutions to respect at the ftjflowfrrg: 

(a) the adoption of the Parent Company Income Statement, the Parent Company Balance 
Sheet, fhe ConsoBdated Income Statement and the Consolidated Balance Sheet; 

94 the Directors' and the Ma nagin g Director's discharge from natality; and 
M ttw appropriation of the Company^ profit a ccordn g to the adopted Balance Sheet 
Decision on the Board's proposal to the Annual General Meeting of Shareholders to change 
the Articles of Association of the Company reflecting the Board's proposal for a 5:1 split. 
The faSowfng changes to the Articles of Association are proposed: that Series A Shares may 
be issued up to a number not exceeding 240,000,000 shares and Series B Shares may be 
issued up to a number not exceeding 180,000.000 shares; 
that the shares shall have a nominal value of five (5) Swedish KrOriaT each; 
that §§4 and 15 shad be changed to reflect that the Company only has book entry shares; 
and Ost the Articles of Association shad be dated 'Nacka In April 1994". The Board's 
rampteta proposal can be obtained from the Company from Aprfl 20, 1994. 

6. Detamination of the number of Directors and deputy members of the Board. 

9. Determination of the fees tor the Board of Olnjctore and the Audios. 

10 . Efection of fhe Board of Directors and the Auditors. 

11. Decision that Atlas Copco AB shall be a pubic limited company and that the name of the 
company shall be changed accordingly. 

12. Closing. 

Right to partidpate 

To be entitled to participate In the Annual General Meeting shareholders must 

be recorded to the Shareholders Register maintained by the Swedish Securities Register 
Centra (Vfiftiepapperscentraien VPC AB) not latar than Fritfay, April IS. i9B4, aid 
- notify the Company of their intent to particip a te in the Annual General Meeting not later than 
4.00 pm, Friday, April 22,1994, Notification of intent to participate to the Meeting may be 
made to writing to Atns Copco ab, S-105 23 Stockholm, or by telephone to Inh48-8?4380DOL 
Shareholders whose shares ere held to bust by a bank or private brokerage must tennararfly re- 
register their shares In their own name to be able to partidpata in the Annual General Meeting. 
Such re-registration must be completed not later than Friday, Aprfl 15, 1994. Sharehofda* should 
notify the trustee of their desfre to le-re^star to adequate time prior to this date. 

A shareholder may attend and vote at the Arena! General Meeting in person or by proxy but to 
accordance with Swedish practice the Company does not send forma of proxy to Ba shareholders. 

Shareholders wishing to vote by proxy should submit thefr own tame of proxy to the Company. 

The Board of Directors proposes that a dividend of SEK 9.00 per share be paid to the 
shareholders. The Board has also decided to propose that the Record Date tar the payment of 
a™*?™** fe .Mpy. 2 - IffM- ShouM the proposes be approved by the Annual General Meeting, it Is 
anticipated that the dividend will be dtstrftiutad by the Swedish Securities Register Centra on 
May 9. 1994. 

Stockholm. March. 1994 

The Bosd of Directors ASas Copco AB 


J 


FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


INTERNATIONAL COMPANIES AND FINANCE 


Sales surge 
at Indian 
carmaker 
over year 

By Stefan W&gstyl 
in New DeM 

Maruti Udyog, India's biggest 
fryipwnlror anri a flagshi p indus- 
trial enterprise, yesterday 
reported a 31.5 per cent 
increase in sales to Rs 2 Z 22 bn 
($708m) for the past 12 months, 
due to a sharp recovery in 
demand after two years of 
recession. 

- Maruti, a joint venture 
between the Indian govern- 
ment and Suzuki Motor of 
Japan, estimated pre-tax prof- 
its to have trebled to RsL36bn 
as fhe s n ln ft increase brought 
down unit production costs. 
The company has produced 
158.000 vehicles in the year, 
mainly 800cc compacts based 
on a Suzuki model of the early 
1980s. 

Manzti's performance high- 
lights a steady recovery in 
Indian industry since last sum- 
mer, particularly among mak- 
ers of consumer goods. 

Carmakers have benefited 

ft yn p in excise tartm and 
other government measures to 
boost industrial growth taken 
in the 1993-94 and 1994-95 
budgets. 

Mr R.C. Bhargava, Maruti’s 
chairman, said he was 
convinced that the company 
wasset for sustained growth 
tn sales “in view of what we 
have seen in the last two 


Maruti expects to produce at 
least 181,000 cars in the next 12 
months, including 13,900 
vehicles of a new model called 
7xm a modem compact, which 
will also be exported to west- 
ern Europe. 

The company says it will 
complete by September a 
Rs7bn expansion of its assem- 
bly plant near Delhi to 
increase capacity by 70,000 cars 
a year. 

Maruti exported 17.200 cars 
in the year just pndmg mainly 
to western Europe, up from 
14,600, and plans to export 
23^000 in 199485, including Zen 
vehicles. 


New World Development 
ahead 37% at HK$1.9bn 


By S&non Hofoerton 
In Hong Kong 

New World Development, the 
Hong Song property, hotels 
and infrastructure group, yes- 
terday reported a 37 per cent 
rise in after-tax earnings to 
HKSl.Sbn (USS245m) from 
ETKy i 30hn m the ahr months tn 
the end of December. 

Prdits were struck on a 41 
per cent growth in turnover to 
HK$8^7tm from HK$5-94bn, 
with most of the earnings 
growth coming from a strong 
performance by the h otels divi- 
sion. Bantings from rents and 
property sales were fiat, while 
Hmsp for cons truct ion and pil- 
ing were slightly down on the 
same period a year ago. 

Earnings per share advanced 
34 per cent to HK3L21. Direc- 
tors declared an interim divi- 
dend of 28 cents. 12 per cent up 
on a year ago. 

The company added its voice 


to the growing number of 
Hong Kong property develop- 
ers seeking to allay fears about 
the colony's property market. 
It said that it remained confi- 
dent that the property market 
in Hong Kong would continue 
to experience “healthy growth" 
over the coming years. 

New World directors sought 
to underline the Importance of 
its activities in China. They 
said that the company would 
maintain between 20 and 25 
per cent of its net assets in 
mainland investments, with 
infrastructure and property 
development constituting the 
main focus. 

Pre-tax profits from hotel 
interests rose 51 per cent to 
HK$40L2m. The company said 
thw* New World Hotels would 
open a hotel in Manila this 
summer and one in Saigon in 
later. In the past six months it 
hag signed management con- 
tracts for four hotels in China. 


The group's other hotel oper- 
ation, Raznada International 
Hotels and Resort, bas been 
undergoing a reorganisation 
aimed at improving efficiency. 
A new division has been cre- 
ated to manage Ramada's 
growing interests in the 
US. 

The company said that it had 
cut its stake in Asia Television 
from 47.5 per cent to 27.5 per 
cent It gave no details of the 
price. 

• S umitom o Realty & Devel- 
opment, Japan's third largest 
property developer, said it 
would post a Y48bn ($458m) 
extraordinary loss in the year 
to end-March after a wholly- 
owned subsidiary, Sumitomo 
Fudosan Finance, writes off 
Y56bn of bad loans, Renter 
reports from Tokyo. 

Sumitomo Realty will make 
up for some of the loss by sell- 
ing facilities in Kyoto for 
Y38.4bn it said. 


NEWS IN BRIEF 


Renong posts 
12% rise to 
MS 107m 

Renong, the Malaysian 
conglomerate which is closely 
connected to the governing 
United Malays National Organ- 
isation political party, has 
announced pre-tax profits of 
MJlOTm (DS$39m) for the six 
months months to December 
31 1993, writes Beran Cooke in 
Kuala Lumpur. 

The six-month profit was a 
12 per cent rise on a year 
ago, though overall group 
turnover fell 37 per cent to 

M$136m. 

Renong, once a diversified 
group with interests in many 
areas of the Malaysian econ- 
omy, has recently been focus- 
ing an ifi f r axtru ct mv develop- 
ments. 

United Engineers Malaysia, 
the Malaysian construction 
and engineering company in 


which Renong has a control- 
ling stake, has announced pre- 
tax profits for the year ending 
December 31 1993 of MS23Tm, 
an increase of 18 per cent over 
toe 1992 figure. 

Doubt over Swedish 
paper group buy 

Svenska Cellulose, the Swedish 
pulp and paper group, said it 
would not proceed with its pur- 
chase of an 898 per cent stoke 
in toe French parfraging com- 
pany Otor Holding unless it 
could also acquire the remain- 
ing 10.2 per cent held by Stora 
Bfllerud, a subsidiary of Stora 
AB, Europe's largest forest 
products group, AP-DJ reports 
from Stockholm. 

Tax credit helps 
Shell Australia 

Shell Australia, part of the 

Anglo-Dutch Ofi rewnpany and 

currently in the throes of spin- 
ning off the bulk of its raefais 
i nterpsto, yesterday anno unced 
after-tax profits of A$266m, 


(US$189m) up from A$18L2m in 
1992, writes Nikki Tait in 
Sydney. 

However, the improvement 
was due to a A$88-3m income 
tax credit, and pre-tax operat- 
ing profits slipped from 
A$296.7m to AS267.4m. 

Most sectors showed an 
improved performance, with 
toe core up str e a m oil and natu- 
ral gas division making 
A$l842m after tax but before 
allocation of financing costs, 
compared with A$14Qm a year 
ago. 

Star TV invests in 
Chinese films 

Mr Rupert Murdoch's Star TV 
said it had entered an agree- 
ment to invest in more than 50 
fThfopcp lan p i jigp films in the 
next three years for its new 
Chinese pay-television chan- 
nel, Renter reports from Hong 
Kong. 

Under the deal. Media Asia 
F ilms will supply the feature 
films exclusively to Star 
after their theatre and video 
release. 


Hopewell 
posts 83% 
rise after 
six months 

By Loute* Lucas In Hong Kong 

Hopewell Holdings, the Hong 
Kong property and construe* 
tion group controlled by Mr 
Gordon Wu. yesterday 
announced an S3 per cent leap 
in profits to HKSl.Sbn 
(US$l94m) for the six months 
to December 31. up from 
HKJ843-5m in the same period 
the previous year, due to an 
exceptional Item which yielded 
73 per cent of earnings. 

Earnings at the operating 
level slipped 8 per cent to 
HKS358 5m. reflecting the role 
played by November's 
HK$l-2bn spin-off of Consoli- 
dated Electric Power Asia 
(CEPA), a vehicle incorporat- 
ing Hopewell's power stations. 

The results put Mr Wu on 
track to reach toe doubling of 
full-year earnings that be fore- 
cast in November. This would 
require profits in the ftifl year 
to reach HKWbn. 

However, if achieved it will 
be on the back of certain rever- 
sals in strategy, including toe 
proposed sell-off of the remain- 
ing 51 per cent of a 44-storey 
residential tower block and car 
park in Happy Valley. This Is 
likely to yield profits around 
HK*850m, according to early 
estimates. 

CEPA Itself turned In net 
profits of HKJ20.5m, which 
according to Hopewell calcula- 
tions equates to HKSiOL7m on 
a pro-forma combi ned b asis, 
mid compares with HKSSQRm 
in 1992. The company did not 
undertake any business until 
November 1993. 

Hopewell also benefited from 
a sharply lower tax bill in 1993, 
at HKS63.2m compared with 
HK$85.6m In the previous 
interim. The Hong Kong profits 
tax levy was slashed to less 
than one third of the 1992 
Interim bill, partly due to the 1 
per cent cut in profits tax. 

Earnings per share rose to 80 
per cent to 36 cents from 20 
cents in 1992. Directors are pro- 
posing an 18 cent dividend, up 
from 16 cents. 


0 


Chemical compound that spells trouble 

Japan’s petrochemical groups face falling demand and rising costs, writes Paul Abrahams 


W hen Japan’s petro- 
chemicals companies 
close their books for 
the 1993 financial year tomor- 
row they will make sorry read- 
ing. The country's 12 largest 
makers of ethylene, toe basic 
building block for plastics, are 
expected to post combined 
losses of Y5L6bn ($493m) for 
the year to the end of 
March. 

Like much of Japanese 
heavy industry, the sector, one 
of Japan’s most important 
manufacturing industries with 
sales of more than Y6,000bn, is 
being plagued by poor domes- 
tic demand and high costs, as 
well as witting exports caused 
by to* high yen and increasing 
Asian competition. 

The question is whether Jap- 
anese petrochemicals manufac- 
turers’ problems have been 
caused merely by the longest 
and deepest recession since the 
second world war, or whether 
a secular change is occurring 
which threatens their 
long-term viability. 

Tn short t e rm. fj j/p indus- 
try's problems are severe 
enough. The sector Is haemor- 
rhaging red ink. “Almost every 
Japanese plastics manufac- 
turer is losing money at toe 
moment," says Mr Yukio 
Murakami, director of 
Systems Japan, toe specialist 
consultants. ■ 

The reason for the plunge in 
profitability is simple, explains 
Mr ffiromasa Yonekura, direc- 
tor Of ha sic chemical 4 at Sumi- 
tomo Chemical, one of Japan’s 
largest plastics makers. 
“Demand is falling at toe same 
tirmi that supply is increasing.” 

Demand for various grades 
of plastic was down between 5 
per cent and 10 per cent last 


year and is expected to foil 7 
per cent this year, according to 
Mr Yonekura. The sector’s 
largest customers - toe auto- 
motive, electronics and con- 
struction industries - are all 
suffering from the recession. 

The drop in demand Would 
be bad enough on its own, but 
the industry compounded its 
misery by increas i ng ca p ac ity . 

“During the late 1980s we 
were making record profits for 


tumbled. The price of styrene 
monomer, used to make poly- 
styrene, has faiton from a peak 
in 1992 of Y120 per kg to only 
Y60. Mitsubishi Petroc h emical 
says Japanese domestic prices 
are so low that the company is 
incapable of TnaMng money at 
toe moment 

Although domestic demand 
is dire, Japanese petrochemi- 
cals companies have been 
unable to export their way out 


have to follow,” says Mr 
Yonekura- nhpm Systems esti- 
mates plastics demand in east 
Asia, excluding Japan, will 
increase by 7.8 per cent a 
year until the end of the 

da-fliiP- 

The migration has already 
b^un. Sumitomo has set up a 
joint venture in Singapore with. 
Shell to manufacture polypro- 
pylene and low-density poly- 
ethylene. Mitsubishi Petro- 


Japanese ethylene suppiy/demand balance 
(thousand metric toes) 


1990 

1991 

1992 

1993 

1994 

1996 

1996 

2000 

Capacity 

S£75 

9.132 

6.432 

7,032 

7,032 

7X02 

7.032 

*8£32 

Supply 

5£10 

6,142 

6,103 

5.740 

5,809 

6.122 

8*474 

7,417 

Demand 

5,838 

6.Q52 

6,022 

5.752 

5£09 

6,122 

6/174 

7,417 

Inventory 

0 

-• 

3 

- 

- 

- 

- 

- 

Net trade 


90 

78 

(12) 

- 

- 

- 

- 

-ASMur for soman 

av fsqflB*o and dreoutanaette 





Sottca: Own SpnUmx Jlpsn 


about five years. Everybody 
expected that to continue. All 
the companies made the same 
mistake of adding capacity 
simultaneously," says Mr 
Yonekura. 

As a result, ethylene capac- 
ity increased from 4.7m tonnes 
a year in 1967 to 7m tonnes this 
year, when demand is expected 
to be only 5 An tonnes. 

The industry is stfll inflict- 
ing sMtimaj wounds, adding 
yet more capacity this year. 
Mitsubishi is commissioning a 
new plant, adding 300,000 
tonnes a year. A massive 
700,000 tonnes a year complex, 
built by Maruzen, Mitsui Petro* 
- flhpmirtai unri chem- 

ical, has just been completed 
and is scheduled to come on 
stream later this year. 

Not surprisingly, given the 
imbalance between supply and 
demand, plastics prices have 


of trouble. The groups are 
handicapped by high costs 
compared with International 
competitors. 

In any case, international 
prices are so low that Japanese 
manufacturers are exporting 
below fixed costs at the 
moment, says Mr MurakamL 
The appreciation of the yen 
has exacerbated the Japanese 
companies' problems. 

One bright spot is that the 
rise in the yen has not been 
followed by an increase in 
imports. 

Most Japanese petrochemi- 
cals ma nu facturers acknowl- 
edge the existence of a secular 
shift in demand from the 
domestic market to the rest of 
Aria. “Our customers, such as 
the Japanese automotive and 
electronics companies, are mig- 
rating to low-cost manufactur- 
ing sites overseas. We will 


c h e mic al is building a st yre n e 
monomer plant at toe same 
site. Idemitsu has a joint ven- 
ture with BP Chemicals and 
Petronas of Malaysia to manu- 
facture polyethylene in Malay- 
sia, and Shows Denko and 
Marubeni have combined to set 
up a polyethylene plant in 
Indonesia. 

"T he fu ture of the Japanese 
industry is outside Japan,” 
says Mr Yonekura. "We can 
take advantage of the high 
value of the yen to invest else- 
where. And, in spite of the red 
ink, we can always borrow 
whatever we need.” 

But although Japanese man- 
ufacturers believe their 
long-term future is outside 
Japan, they are unwilling to 
face up to the inevitable 
decline of their domestic mar- 
ket Faced by massive domestic 
losses, Japanese plastics mak- 


ers have been implementing 
stop-gap measures to reduce 
the damagp plants have been 
mothballed, maintenance peri- 
ods extended and plans for new 
plants shelved. Just-in-time 
delivery Is being abandoned. 
The number of grades being 
offered to clients has also been 
cut 

But such fiddling does not 
deal with fhe root cause of the 
sector's difficulties. Capacity is 
stfll not being cut Historically, 
the Ministry of International 
Trade and Industry intervened 
at such moments to encourage 
consolidation. In the early 
1980s, it coordinated a 36 per 
cent cut in capacity. However, 
this time Mitt is unwitting to 
adopt such a role, at least in 
part because of US complaints 
about its interference. 

Without the guiding hand of 
the Mitt, little rationalisation 
has occurred. “The industry 
understands the problem. It 
understands the solution. The 
problem is doing anything 
about it,” says Mr MurakamL 

A dmittedly, a few com- 
panies, such as Idem- 
itsu Petrochemical. 
Showa Denko and Asahi Chem- 
icals. are setting up joint ven- 
tures to pool their resources. 
Two large groups, Mitsubishi 
Petrochemical and Mitsubishi 
Kasei, have announced they 
mil merge, forming Japan’s 
biggest petrochemicals manu- 
facturer. 

However, industry observers 
question the benefits of the 
move. “Mergers are all very 
well, but they’re only really of 
use if you then cut staff. But 
Japanese companies are still 
reluctant to do that" says Mr 
MurakamL 


BANK OS QUEENSLAND UMTTED 
DSDUSlBNuOM 

MULTIPLE OmONPAjOUTY 


PAXED 9EFTEMBE8 22, 1992 
Is accordance arhk Ik pmaioat el Uw 
Trusfcnblc Leu CartiDcaio iuaed « 
3tpw nlwr 28, 1992, note ■» benty giro 
tfeu foMfe dx nooifa tomcat period boa 
Match 20. 1994 to Srp t ra b e* 29. 1994, the 
Certificate win cast* u latent Sate of 
4.7125* per anotan. 

Batchy* Bask HjC, Horn Koag 
***** 


THE ROYAL BANK OF CANADA 

U A 33501000000 Boating Data 
Debentures due 2006 
In accordance wttft the Tormj and 
CondMons of the Debentures, the 
Interest rate (or the period 31st 
Marti, 19B4 to 29th April 1594 hm 
been (bead at &% per annum. 
On 29di Aprfl. 1994 inures t of US. 
3X020633 par US. $1,000 nominal 
amount of the DebmuresaaM be due tar 
payment The rets of Interest for the 
period commaxing 23th April 1394 
wfl be determined on 77th Aprfl. 
1994. 

Agent Bank and 

Principal Paying Agent 
ROYAL 8ANKOFCANAXM 
EUROPE UMIYED 


t 



NATIONAL 

Abdij Nationaal First Capital B. V. 

Ih LII p nmn/m IbtMaMt J«»«m H Th lhN 

U.S. $75,000,000 

Subordinated Guaranteed 
Floating Rate Notes Due 2002 

For the Interest Period 30th March, 1994 to 30th September, 1994, the 
Notes will carry an Interest Rate of 5H9& per annum, die Coupon 
Atnounr payable per U.S. 61,000 Note will be U.S. $26.19, and for the 
U.S. $10,000 Note, U.S. $261.94. and for the U.S. $100,000 Note, 
U.S. $2,619.44, payable on 30tb September, 1994. 

LurtwduLwareStfcEuA — t 



The cmOal tool for [be xrlm In-wor 

M arket-Ey e 

London stock exchahok 




bawag 

BANK FUR ARBEIT UND 
WIRTSCHAFT A.G. 

Notes notice b hereby anon Art b^ILS^f W L lf,on ® on ^ 

of A25X per find 

In terest Pa yment Date September 30,^994 r" 

March 30, 1994, linden 


abbey national 

GB £120,000,000 SSSSfSHSl 

Nottob hereby flhren that for tire 

29th June, 1994. the Note ten ^ Mareh - 

The amouti of attarast payable on 29th June 

Apart Santo DaHcN Kanqyp a** lUa^nbour^Z^ ^ *.«SWSG. 


I 







financial times Wednesday march 30 1994 


25 


INTERNATIONAL COMPANIES AND FINANCE 

The costs of quicker settlement 

SEC share-trade reforms do not suit everyone, writes Patrick Harverson 


A lthough it was six and 
a half years ago, the 
repercussions of the 
stock market crash of October 
1987 are still being felt on Wall 
Street 

The latest seismic ripple 
from 1987 comes in the form of 
a rule proposed by the Securi- 
ties and Exchange Commission 
that will shorten the period in 
which investors in the US have 
to settle their securities trans- 
actions. 

Currently, after a trade has 
been executed on US financial 
markets, investors have five 
days to either pay for securi- 
ties they have bought or 
deliver securities they have 
sold. Under the new rule, the 
SEC wants to reduce the settle- 
ment period to three days. 

The rule - called T+3, for 
trade day plus three - comes 
into effect in June 1995, and is 
designed to reduce risk in the 
US securities markets by cut- 
ting the number of unsettled 
trades at any one time. It will 
also make it harder for inves- 
tors to renege on transactions 
during periods of market vola- 
tility, which is what happened 
too often during the 1967 crash. 

One of the key recommenda- 
tions made by the Brady Com- 
mission which investigated the 
1967 crash was that the settle- 
ment period should be reduced. 

Yet, the planned introduc- 
tion of T+3 has not been wel- 
comed by everyone in the secu- 
rities business. Although most 
firms agree that reducing set- 
tlement risk is a good thing, 
some are unhappy at the pros- 
pect of having to spend mil- 
lions of dollars to update their 
settlement systems to handle 
T+3. 

The smaller, regional bro- 
kers feel particularly exposed. 
The big firms, which are used 
to settling institutional trans- 
actions electronically, should 
find it relatively straightfor- 
ward. If not necessarily cheap, 
to adapt their systems to retail 
business. 

Smaller firms outside the 
main financial centres, how- 
ever, do most of their business 
with individual investors, and 


NYSE volume , 

Maht^ytedn,' shares traded (brit 
. 7j) 



.1080 • 

ScUx« D afraU aani ' '... 

many of their retail trades are 
settled only after cheques or 
securities have been delivered 
by the US mail, a notoriously 
stow and unreliable service. 

As one stockbroker at a 
retail firm explains: “In most 
cases, unless the client has 
funds in an account with us, 
there is no way we axe going to 
be able to send a confirm 
[trade confirmation slip] out to 
a client, and get a cheque back 
through the mail, and dear it, 
all within three days.” 

Also, when many individual 
investors buy shares they want 
the stock certificates delivered 
to than, a demand which only 
complicates and stows the pro- 
cess farther. 

The smaller brokerage 
houses know that if they are to 
meet the requirements of T+3, 
they have either to invest in an 
piectmrric trade <w*ttonBn t sys- 
tem that finks the retail cus- 
tomer with the broker, or set 
up ftiriHtiaK enabling custom- 
ers to keep funds per manently 
on account at the firm. 

The problem with the first 
choice is that there is tittle 
chance that such a s y s t em will 
be developed soon. For it to 
work, every retail customer 
would need access to a comput- 
erised network, through which 


they could t ransfe r funds and 
securities to their brokers. 

Brokerage houses, therefor, 
are more likely to take the sec- 
ond route. Many will do so 
reluctantly, because they 
would have to start acting tike 
hanks , keep in g chests’ funds 
and securities on deposit and 
offering bank-style services 
such as cheques, electronic 
funds transfer and cash man- 
agement accounts. 

S ome of the big brokers 
already offer bank-style 
services as part of their 
asset management business. 
However, for the smaller firms, 
setting up the systems to pro- 
vide such services would be 
prohibitively expensive. 

Even those firms which 
could , afford to offer clients 
bank-style services are not nec- 
essarily toyn on the idea of 
having to operate more like 

hanks 

Mr Peter Devine, vice-presi- 
dent Of npnf ratinng and admin- 

istration at the brokerage firm 
Oppenheimer, says: “The 
momentum is gathering for 
brokerage firms to offer more 
banking services. Yet, tradi- 
tionally, brokerage firms are 
good at execution services, 
investment advice and clear- 


ance. Banking services have 
not been our forte, although 
Tm not saying we don’t have 
the expertise to offer them.” 

The securities industry is 
also worried that T+3 will 
bring more h anks into the 
broking business. Although 
banking and stockbroking 
have been kept separate in the 
US by law, a few banks have 
been allowed to offer custom- 
ers brokerage services through 
separate subsidiaries. With 
their experience in deposit-tak- 
ing. assetgathering and foods 
transfer, they could prove pow- 
erful competitors for the brok- 
ing community. 

Any hank keen to develop 
this business, however, will be 
closely watched by industry 
regulators. While hank depos- 
its are federally Insured, 
money held in an account at a 
bank's brokerage subsidiary 
enjoys no such guarantee - 
regulators do not want custom- 
ers conftised about whether 
their funds are insured by the 
government or not 

The brokerage industry’s 
unhappiness was clear when 
the SEC last year asked firms 
to respond in writing to their 
T+3 proposal. Of the 349 
replies, a clear majority - 248 - 
was critical of T+3. The SEC, 
however, believed reducing set- 
tlement risk was worth the dis- 
ruption to the industry. 

Competition is increasing 
between international markets 
for stock listings and order 
flow, and the volume of cross- 
border securities transactions 
Is growing, in the of these 
developments, the agency is 
aa gpr to ensure the US does 
not fall behind markets in 
those countries which settle 
trades In less than five days. 

Reform of tfip settlement sys- 
tem is unlikely to stop at T+3. 
Regulators see it as only the 
first step in a process leading 
to securities transactions being 
executed and settled on the 
game day, as happens in the 
US government securities 
market 

If US brokers are finding it 
difficult adjusting to T+3, wait 
until they are faced with T+0. 


Casino defies sector 
weakness with rise 


By Alice Rawsthom 
to Paris 

Casino, the French food 
retailer, last year managed to 
shrug off the pressures on the 
French supermarket sector 
with a Z3 per cant increase in 
net profits, to FFr451m 
($78. 8m), against FFr441m in 
1992. 

The group, which expanded 
dramatically in 1992 with the 
acquisition of the Rallye 
hypermarket chain, has since 
been rationalising its interests 
by selling peripheral 
businesses and reorganising 
core food retailing busi- 
ness. 

Mr Antoine Gmchard, chair- 
man, said its French stores bad 
been affected by the recession, 
which had triggered a price- 
cutting battle in the supermar- 
ket sector. However, he said 


Casino was making progress 
with its ex pansio n p lana in the 
US and Mexico. 

Turnover rose 2.7 per cent to 
FFr72J2bn, with operating 
profits increasing by 12£ per 
cent to FFrL27hn. 

However, the increase in net 
profits was constrained by a 
sharp reduction in exceptional 
profits, which fell to FFt9m 
from FFr94m in 1992. Earnings 
per share rose 245 per cent to 
FFr6.61. 

Casino plans this year to 
limit capital spending' to 
FFrl-85bn, against FFr2. 19bn 
last time. 

The group's main initiative 
is an experiment with “AS des 
Prix”, a new discounting con- 
cept being tested in the Lyon 
area. If successful, it will be 
adopted over the next two 
years by all Super Rallye 
stores. 


La Rinascente seeks 
to increase capital 


By John SknMns 
in Man 

La Rinascente, Italy’s largest 
retailing group, plans a sub- 
stantial capital increase. 

The move has prompted 
speculation in Mian that La 
Rinascente, which is controlled 
by the Agnelli family’s Ifil 
hnMfng company, is planning 
to put in a bid for the Gs super- 
markets and Antogrill restau- 
rants, which are being sold as 
part of the government’s priva- 
tisation of. the remains of its 
SME foods .group. 

La Rinascente is to rales a 
total of L48.7bn ($29 .8m) in new . 
capital through the issue of 
ordinary shares. The company 
also plans a L390bn debenture 
loan to be co-ordinated by 
Mediobanca. 

La Rinascente, together with 
the Centromarca foods consor- 


tium and FlnComit, the 
ffwaraft aim Of HaTim fl nmmer - 

clale Italians, has expressed 
interest in the SME concerns. 

La Rinascente said group 
stares increased sales by 10.7 
per cent, to LS.579.4bn. in 1993. 
Net profits were up from 
L105L2bn to LUXLSbn. It is lift- 
ing its dividend from L190 to 
L20a 

• Belleli, the Mantua-based 
engineering group with a 
strong presence in the Middle 
East, increased group sales to 
Ll,380bn in 1998, compared 
with Ll,295bn the previous 
year. 

.• Snia nine, the fibres arm of 
tire Flat group, has won share- 
holder approval for a LISLSbn 
capital increase to tackle 
heavy restructuring costs. Snia 
Fibre incurred a net toes of 
L49.6bn in 1993, against a loss 
of L66bn in 1992. 


FEDERATIVE REPUBUC OF BRAZIL 
GOVERNMENT OF THE STATE OF PARANA 
SECRETARIAT OF STATE OF URBAN DEVELOPMENT 
SANITATION COMPANY OF PARANA - SONEPAR 
INVITATION FOR HDS 
INTERNATIONAL BIDDING N» 011/94 
PURCHASE PROCEDURE N* 1174/93 

1. SANEPAR - Sanitation Company of tfM Sana of Parana win roce/va 
•salad bids from ■BflJbte Bidders, from sBgfeto country mambers Of tfM 
World Bonk (IBRD), from Taiwan and China, tor the supply ol MOTOR 
PUMP ASSEMBLY OF HORIZONTAL SHAFT WITH SPEED CHANGER. 
BASE UPTAKE FUJE AND ACCESSORIES. 

2. The aouree of funds to purcltaaa the goods and/or aeratem resulting this 
International Bidding will ba provided by the Propwna Esmfcml da 
DasonvoMmomo Urbano — PEOU (State Program for Uitoan 
Development - SPUD). 

3. Interested Bidders may obtain further Informations, up to 6 I five) days 
baton the deadline for the submission of the Bids. at SANEPAR. located 
at ftia Almfraite Gonpatwea. 1385. CB> 80230060 - Curitiba. State 
of Parana, Brazil. Telephones (041) 222-4998 and 224-5141. Telex 
41-39062 and Facsimile (041) 232-7323. 

4. A complete set of the Bidding Documents may be purchased by any 
Interested Bidder, by payment of a nonretundaWa fee of CR* 20.000.00 
(TWENTY THOWSAND CRUZEIROS REALS), at SANEPAR. from the 
date or issue of this International Bidding. 

The Bidding Documents shall bo received at the address mentioned In 
the hern 3, after payment of the mentioned tea. 

5. AO tits bids must be sutomined in one single envelope. shaB be submitad 

« SANEPAR up to 09:00AM. JUNE 1 st, 1994, at the address stated on 
Hem 3. This envelope shall be opened at the begeming of tho sassion, m 
the p ms ene e of adder’s representatives whom choose to atten d. 

B. TWm International Invitation for Bids and the awards resulting tho refrain 
win be governe d by the “Guldelinas for the Procurement of Goods and 
Services ol the World Bank”, Issued by the IBRD In May 1986, 
according to the Loon Agreement N» 31 00-0 R. between IBRD and the 
State of Paranfi. 

Curitiba. March 30 th. 1994 

STENK) SALES JACOB 
PRESIDENT OF SANS 1 AH 


ccf! 


Credit Commercial de France 

Ure 1 50000000,000 Floating Rate Notes cfae 1998 

In accordance wftfi the Terms and Oorrf frorw of the Notes, no- 
tics is hereby given that far the Interest Period from March 30, 
1994 to June 30, 1994, the Notes will carry an Interest Rate of 
8.3125% per annum. 

The Coupon Amount payable on the relevwit Interest Payment 
" , June 30. 1994 will be Ure 10&21 5 

Tho Agent Bent: 

KnxBepxatk 


, Jill'S JU, IMNWiiuoug 

ire 5,000,000 nominal amoutt 
rto and Ure 1,062,153 par ( 
0,000.000 nominal 

mt of Note. 




Yukong Limited 

(Incorporated In the Republic of Korea with limited Babffity) 

Notice 

to toe hoktere of the outstanding 

U.S. $20,000,000 3 per cent. 
Convertible Bonds due 2001 
of 

Yukong Limited 

(toe ‘Bonds" and the “Company" respectively) 

NOTICE IS HEREBY GIVEN to the holders of the Bonds that the 
Company has authorised the granting to the holders of its shares 
and to employees of rttits to subscribe for up to 3,486,000 shares at 
common stock at the Company. The record date for such grant to the 
holder s of its shares wffl be 8th Apti, 1994 and such rights wEI be 
erardsable from 9th May to 10th May, 1994. Ary adjustment to 
co n ver si on price reflecting the porflqn aBotted to employee stock 
ownership association shaB become effective retroactively from 5th 
March, 1994 (the date of the second re sol u tion or the Board of 
Directors of the Company authorising the above granting to 
employees) and H shall be adjusted ogam from 9th April, 1S94 (the 
day after the record date In respect of tha above grant) to reflect the 
restdud portion aBotted to Rs s ha reho ld ers. 

A further Notice wffl be given to the holders of the Bonds at any 
resulting aeflusiment to the Coversion Price In reiafion to the Bonds. 

30th March, 1994 Yukong Limited 


BARCLAYS DIVERSIFIED PORTFOLIO, SICAV 
Registered Office: 14, roe Aldringen, Luxembourg 
SC Luxembourg Section B 31 681 

DIVIDEND ANNOUNCEMENT 

On 22nd March 1994 the Board of Dtrectara has announced the 
payment of {Svidend3 to shareholders of the to&wtng sub-funds: 

- a dvkfand ol XEU 0JS55 per share tor EUROPE SUfrFUND 
-a dvidend of USD 0.0406 per share tor JAPAN SUB-FUND 

- a dvkfcrt of USD 05286 per share lor PACIFIC 8U&FUND 
-aclvidendof QSP0i1119 per share far UNTIED KINGDOM SIB-FUND 

- a (Svtdsnd at USD 0.1287 per share for UNITED STATES SUB-FUND 

- 6 (Mcfcfid of ESP 46 per share tor ESPANA SUBFUND 

to shares subscribed and to d ratetton on 22nd March 1994, 
ax-dMdend date 23rd March 1994, payable on or after 28th March 
1994. 

The Board of Directors 


. <5- ■_ % 


( 3 D [°X 3 ] 


BMa, Switzerland. 29 March 1994 


To thejshsrahokters of Ciba-Geigy Limited 

Notice .of Annual General Meeting 

Notice fa hereby given to the shareholders that the Annual General Meeting of the Company will ba held at the 
St Jakbbahalle, Basie, on Wednesday, 20 April 1994, commencing at 10.30 a.m. (entrance Bruglingarstrasse/ 
St. JakobarStrasse; the doors of the assembly halt will open at 9-00 a.m.). 

J Items a# . Busina*? v—. T .'; : j\TV 

' T.'. A^jfawstof thftimititeljrepdrt, accounts, and consolidated accounts far 1993 

2. Formal approval of the activities of the Board of Directors 


.Appropri 4 tion.of balanca.sbeet profit and declaration of dividend 


fYoflt foc»9B»- ~ 

Proftrcarrted faniraref “ “* ; • \ 'f 

Balance sheet profit at the disposal Of the AGRA 
Dividend 

Cany to general statutory reserve y. ' 7 
Cany to new account .*« 


SFr 473,422^47 
SFr 6,006,207 
SFr 479.428,764 
SFr 433.020.52S 
SFr 40,41 5.249 : 
SFr 5.992,980 


A total dividend payment of SFrA33.020.525 is equivalent to a gross dividend of SFr 15 per share or participation 
certificate of SFr 20 par value. Payment will be made with effect from 25 April 1994. 


L-rf iy .‘r* ?-*. RE 


- 



^ _<L Amendments to Articles of Association 

■■ '' -fricrease of share capita I by SFr 84.t42.000 to SFr 587.040,700 excluding tha subscription rights of shareholders and 
~ ' participants through the issue of 1^07,100 registered shares at SFr 20 par value, to be paid up by converting 

1,707,100 participation certificates into tha same number of registered shares with entitlement to dividend for the 
1994 trading year. The new registered shares will be subject to the stipulations of the Articles of Association on 
ent7y in the share register. The Articles of Association will be adapted accordingly. Registered shareholders will 
. . , receive the proposed amendments with this notice. The proposed amendments will also be supplied to holders of 
c-r-.jpvv basteteheres arid participants oh Written request*. In addition, the proposed amendments will ba published in 

t i ' ik 4- of3ff March 1994, and may also be Inspected at the Registered Office of the 
Company*. 

5. Elections to the Board of Directors 

Pursuant to Article 22.1 of the Articles of Association, the term of office of Hana Bernhard Herzog will expire. He is 
eligible for re-election. It is proposed that Hans Bernhard Herzog be re-appointed. Tha Board of Directors also pro- 
poses the election of Birgit Braual, Chairwoman of the Trauhandanstaft, Berlin, resident in Hamburg/Germany, and 
Walter G. Frehner, Chairman of the Swiss Bank Corporation, resident in Rlehen/BS. as new members of the Board of 
Directors. 

Appointment of mudJtiS*'-^' *''7...,-' ' - . 

^■Tbe Board of Directors p r b posjag t h e i atqntioit of the current aucfitbre.lhe-SdhwobMtoesche TreuhanttgeseHschaft- 
& Lybrand AG, fdMa ife'rtheryear. ' ' " 

i 

rrt of auditors forthqiGrpup 

of Directors propoBpAthe retention of the current auditors, the Schweizarlsche Tmuhandgesellschaft- 
Lybrand AG. for a farthWyear. 

m -41 

.... i-.'-i' *r : 

The a tWhafc report (including the accounts and the consolidated accounts) and tha auditors* report for 1993 will be open 
to In^e^^n by shareholders at tha Registered Office of the Company* from Wednesday, 30 March 1994 onwards. 
ThjaBB/ritrni i wfll be sent to registered shareholders: they will also be supplied to holders of bearer shares and partid- 
aertfjgbrywrittBn request 9 . ."j'r*.’; x 

^$cl(8t of ed miaeiu w and v#tfiijfjpa()ers will ba sent-only to those who register, from 5 April 1994 
Obw-nfa. Jpg?’ 

Those shareholders entered in tftp5ha;e Register by 5 April 1994 as entitled to vote will be sent a registration card 
together with the notice of the^jpfcipf General Meeting. Alter this has been returned, the registered shareholder will be 
sent a ticket of admission a papers, it will greatly assist the Share Registry in its preparations far the meeting 
if the registration card is retpmW^o as to reach the Company by 11 April 1994. Holders of registered shares not yet 
entered in the Share Reghre^.pp S April 1994 may obtain a ticket of admission and voting papers from their bankers or 
direct from the Registeo^Hfics of the Company*, provided their application for registration as shareholders has been 
lodged with the this date and is not refused. 

Holders of t»Ws||4.may obtain a ticket of admission and voting papers from their bankers or direct from the 
Reg ista r od, Company* against temporary surrender of their share documents. 

o sell their shares before toe Annual General Meeting are no longer entitled to vote. In the case of sales 
me of the shares stated on the ticket of admission, the ticket must be presented for correction at the AGM 
'JtGro) before the Annual General Meeting begins. 




of the Articles of Association, no person is entitled to votes representing more than 5 per cent 
in respect of the aggregate of shares he or she owns plus any shares he or she represents by 

'X^ 

Appo intm ent of .... 

Pursuant to Article 13j£^.wM'McIbs of Association, a shareholder may appoint as proxy for a General Meeting only 
his or her lawful represertt^hri,.^. another shareholder present in person at the meeting. The instrument of proxy on tha 
reverse of the registration card packet of admission must be used for this purpose. A shareholder may also appoint 
tha Company, tha Ciba-GeJg/&rip%ee Shareholding Foundation, or the independent proxy named on the instrument 
of proxy. In which case votes wfllbacast according to the proposals of the Board ol Directors unless there are clear 
ons to the contrary. ‘ .i. 1 Thi- 



nks and professional securift^&edministrators are asked to notify the number, type, and par value of the shares 


to tha Company as eajrftr t 
the AGM Office (GV-8ur& j 

nMohitfoM taken 


; possible, and in any event not later than the day of the Annual General 



resolutions adopted $#1 be open to inspection by participants at the Registered Office of the Company* 


Office of tha Company Secretary; jd^ckstrassa 141, CH-4057 Basel 



C.P. POKPHAND CO. LTD. 


(Incorporated bt Bermuda with limited liability) 

US$150,000,000 
Floating Rate Notes 


due March 1999 
In accordance with the provisions of the Floating Rate 
Notes, notice is hereby given that for theperiod from 25/ 
3/94 to 26/9/94 the Notes will carry an Interest Rate of 
5.0875% per annum calculated on a principal amount of: 
US$13,072.G5 per Note of US$500,000 

Standard Chartered 

Standard Chartered Asia Limited 
as Reference Agmt 





United Kingdom 

U.S.$4,000,000,000 
Floating Rate Notes Due 1996 

In accords ace with die provisions of die Notes, notice is hereby given 
duq for the three month period 30th March, 1994 to 
30th June, 1994, the Notes will bear interest at the rate of 37* 
per cent, per annum- Coupon Nojl will therefore be payable on 
30th June, 1994, at the rate of US$4,631.94 from Notes of 
USSSOQ.OOO nominal and US$92.64 from Notes of 
USSl 0,000 nominal. 

S.G . Warburg 6c Co. Ltd. 

Agent Dank 

iimimmimmiimiiiiiiiimmimiimmiiii 


5 


nan of 
Tied to 
roup's 

eaching 

uisiness 
ed yes- 
's 1993 

IX loss, 
reiious 
on flat 
336.4 m) 
tmtinu- 
226.6m 

1 items, 
^rating 
ed with 
■ar ear- 

ounccd 

nefited 

Miliums 

reased 
£5. 4m) 
ire tax 
ms of 

excep- 
ed an 
sses on 
i Com- 
£14. 3 m 
odwill 
ducted 



e price 
jdging 
h were 
ttions. 
some 
of sev- 
some 
nd the 
about 
uiries. 
as the 
g net 
to 6.7 
i there 
about 
ilers - 

ireount 
nt of 
profits 
on a 
if 19. 
tap at 
•oup’s 
pros 
minm 



vision 
■e dis- 
sales 
□t to 
ected 
re in 
is, he 
t bad 
gross 
la 4 
lues, 
ture 
7m to 
l pro- 
m 6.4 
This 
istan- 
uring 

d. 

if the 
divi- 
i 4.8p 
Eam- 
4p. 


t 


clay 

said 

been 

Ight- 

oup, 
ts of 
its 
IS to 
been 
I an 
re, a 

com- 

cent 

)p-a- 
tem- 
)0 in 
the 

for 
3S in 
sani- 
rtur- 
per 
used 
n). 
?ing 
?gin- 
tive 
feets 
tion 
*al- 


nar- 
bnt 
-*-ex- 
r 20 


m. 




INTERNATIONAL CAPITAL MARKETS 


US long bond yield nudges 7% on consumer data 


Sy Fhmk McQurty in New York 
and Antonia Sharp in London 

The yield on the long-dated US 
Treasury bond yesterday morn- 
ing again crept up to wi thin a 
hair's breath of the 7.00 per 
cent barrier as traders reacted 
to news of an unexpected jump 
in consumer confidence. 

By 11am, the benchmark 30- 
year government bond was % 
lower at 90%. The yield 
climbed to 6.99 per cent, after 
dipping below the 7 XX) per cent 
level the previous session on a 
big decline in oil prices. 

At the short end, the two- 
year note was down £ to 993, 
to yield 5.158 per cent 

After Monday's half-hearted 
rally, yesterday’s session 
opened on a weak note, with 
many retail accounts staying 
on the sidelines before Friday's 
release of March employment 
data, a keenly watched mea- 
sure of economic strength. 

Forecasts centre on an 


increase of 250,000 in non-farm 
payrolls, a figure which would 
suggest a solid recovery from 
the weather-related slowdown 
experienced in the previous 
two months. 

Such a pattern was evident 

GOVERNMENT 

BONDS 

in the Conference Board's lat- 
est reading on consumer confi- 
dence. The board's March 
index came in at 86.7, well 
ahead of February's desultory 
794*. 

Against the backdrop of last 
week's interest rate boost and 
the approach of the employ- 
ment report, the news was 
enough to push prices across 
the yield curve moderately 
lower. 

Conversely, the market 
chose to ignore a weaker-than- 
expected Increase In new home 
sales in February. Severe 


weather may have undermined 
the significance of the setback 
in the housing sector. 

■ UK government bonds fluc- 
tuated in fairly light trading 
yesterday but the underlying 
trend remained weak as politi- 
cal concerns and a softer 
pound kept investors on the 
sidelines, traders said. 

Further liquidation of posi- 
tions at the short end of the 
market kept downward pres- 
sure on gilts, so much so that 
the market was now discount- 
ing base rates of 6 per cent 
by the end of this year and 
8 per cent by the end of 
1995. 

The June contract of the 
long gilt future on Liffe fell by 
1& point in the late afternoon 
to 10614, down from the day’s 
best level of 107%. 

However, there was some 
optimism that today's auction 
of the Bank of England's first 
offering of floating-rate notes 


for 15 years would proceed 
smoothly. Traders forecast that 
the £2J5bn offering of five-year 
notes would be covered by 
between 1% and 2% times. 
Some traders expected most of 
the bids to come in at 99%, 
above the Bank’s minimum bid 
price of 99%, which would 
imply a discounted marg in of 
it below LibkL 
Nevertheless, the market's 
overall weakness weighed on 
the when-issued price of 
the notes which fell from 
par to around 99.80, traders 
said. 

■ Italian government bonds 
failed to build on Monday's 
gains despite the accuracy of 
the election outcome rumours 
which had propelled the mar- 
ket higher. “It has been a clas- 
sic case of buying on the 
rumour and selling on the 
fact," said Mir Andrfi de Silva, a 
market strategist at Paine- 
Webber. 


The weaker tone of the mar- 
ket also reflected investor con- 
cerns about the ability of Mr 
Silvio Berlusconi's right-wing 
alliance to form a government. 
These doubts have been tanned 
by the tension between the 
Northern League of Mr 
Umberto Bossl and Mr Gian- 
franco Finl of the neo-fascist 
MSI/National Alliance, Mr de 
Silva said. 

Mr Julian Callow, European 
economist at Kleinwort Ben- 
son. said Mr Berlusconi’s pro- 
growth policies could be nega- 
tive for the long end of the 
Kalian government bond mar- 
ket A loose monetary policy 
and less restraint on fiscal 
tightening would make it diffi- 
cult to reduce Italy’s public 
sector deficit and would fan 
inflation, he said. 

The June contract on 10-year 
Italian government bonds on 
Liffe stood at 110.30 In late 
trading, down 1.28 point 
on the day and well below 


the day’s best level of 112.75. 

■ Ge rman government bonds 

outperformed other European 
bond markets-, supported by 
hopes that the Bundesbank 
would announce a further cut 
of up to five basis points in its 
repo rate today. The rate fell 
by eight basis points to 5.80 per 
cent last week. The June bund 
future on Liffe eased by 0.23 
point to 95.93 in the late after- 
noon. 

However, some analysts 
warned that the sharp rise in 
call money yesterday due to a 
month-end liquidity squeeze 
could make it difficult 
for the Bundesbank to engi- 
neer a further reduction fids 
week. 

Some German credit institu- 
tions were thought to have 
taken advantage of the Bund- 
esbank’s 6.75 per cent Lombard 
emer gency Lending facility in 
order to cover their miwfmmn 
reserve requirements. 


FINANCIAL TIMES WEDNESP A.V MAR™ 30 1994__ 

CBoT finds way to 

s - stay in Globex 


Steady demand for Deutsche Finance’s DMlbn offer 


By Sara Webb 

A handful of borrowers braved 
the International bond market 
yesterday as underlying gov- 
ernment bond markets 
remained volatile, keeping 
plenty of traditional 
institutional investors at 
bay. 

Deutsche Finance (Nether- 
lands) launched a DMlbn, five- 
year deal with a 5.75 per cent 
coupon. Deutsche Bank, the 
lead manager, reported good 
demand from retail investors 
in Switzerland, the Benelux 
countries and Germany, but 
admitted activity was slower 
than usual. 

Deutsche Bank said it held 
the yield spread steady at 25 
basis points over the 5 per cent 
Treuhand issue. However, the 
bonds traded outside fees 
at 99.15-99.20 by late after- 
noon os the underlying govern- 


ment bond market tumbled. 

Bank Austria, Austria's larg- 
est bank, tapped the Eurolira 
sector of the bond market with 
a LITObn deal, hoping to take 
advantage of favourable swap 
opportunities and investor 
enthusiasm for lira-denomi- 
nated paper in the wake of the 
general election. 

The trlple-A rated bonds 

INTERNATIONAL 

BONDS 

carry an attractively high cou- 
pon of 9.125 per cent and have 
a 10 -year maturity, 
although they are callable after 
two years. The proceeds were 
swapped into floating rate dol- 
lars to give sub-Libor funding. 

BCI, one of the Joint lead 
managers, noted that it could 
take some tinm for Mr Silvio 
Berlusconi, leader of the Forza 


Italia party, to form a new gov- 
ernment 

It added that prospects for 
lira-denominated paper were 
favourable, given that interest 
rates are expected to fell and 
there is scope for the lire to 
appreciate against other Euro- 
pean currencies. 

BCI quoted a redemption 
yield of 9.42 per cent based on 
a 10-year maturity, and of 10.19 
per cent if the bonds are called 
after two years. 

One syndicate official said 
the borrower was in the envi- 
able position of being able to 
call the bonds if interest rates 
decline rapidly, allowing Bank 
Austria to refinance at more 
attractive rates. 

“Whichever way you look at 
It, Investors are going to lose 
out - the chance of seeing cap- 
ital appreciation is better if 
they buy longer-dated paper,” 
said one official, adding that 


there is still plenty of Eurolira 
paper "sitting around" follow- 
ing the flood of new issues ear- 
lier this year, The bonds traded 
at 96.35 by late afternoon, 
within full fees. 

The Kingdom of Sweden 
took advantage of a favourable 
swap opportunity in the Dutch 
guilder sector of the bond mar- 


ket, launching a FI 400m four- 
year issue with a coupon of 
5.75 per cent The borrower 
obtained funding at about 20 
basis points below Ubor. by 
swapping into floating rate 
guilders. 

While guilder experts said 
the deal was sensibly priced, 
yielding 5.885 per cent at the 


re-offer price of 99^3, syndicate 
officials said It would take time 
to sell the issue given market 
co nditions 

Sweden’s foreign currency 
borrowing programme for 1994 
is about SlObn-IUbn, and in 
the first three months it has 
achieved more than 

half 


NEW INTERNATIONAL BOND ISSUES 


Deutsche Bank 


MtauMatH Fnm ML 


ABN Amro Bank 


By Tracy Corrigan 

The Chicago Board of Trade 
said yesterday it would put for- 
ward a counter-proposal 
designed to allow the exchange 
to remain a partner in Globex, 
the electronic futures trading 
system jointly developed by 
the CBoT, the Chicago Mercan- 
tile Exchange and Reuters. 

However, ■ agreement 
between the. various parties 
seems unlikely, unless the 
CBoT is willing to back down 
on several- key issues. 

The CBoT board of directors 
voted on Monday to continue 
participation in Globex, "sub- 
ject to certain conditions speci- 
fied by the board”. 

A CBoT spokesman declined 
to elaborate on the board's 
demands but said that "it 
means we are interested 
in continuing participation in 
Globex, if the CME and Reu- 
ters can agree to certain 
points". 

Barffar this month, the CBoT 

declined to join a new agree- 
ment between Reuters, the 
CME and the Matif, the French 
fixtures exchange whose prod- 
ucts have been most heavily 
traded on Globex. 

Under the new plan, Reuters 


releases Participating 
exchanges from some Snancuu 
obligations and creates * man- 
agement consortium 
any participating exchange an 

day-to-day 

running of the system. 

In return, the exchanges 
Tn airo a commitment to 
less” trading - starting Globex 
trading Immediately after the 
exchange's offtoial dose ■ and 
agree not to use any other dec- 
Sale trading systems to com- 
pete with Globex. 

Unless the CBoTs new pro- 
posal shows a willingness to 
budge on these key 
fresh agreement including the 
CBoT seems Impossible- 

Ms Ros Wilton, director ot 
Reuters transaction 
said yesterday that 
believed these two issues were 
-the main criteria for the fjj*®" 
cess of Globex". She added that 
she looks forward to hearing 
any proposals by the CBoT. 

Any fresh plan would have 
to be formulated before April 
18, as the CME has given 
notice of its intention to drop 
out of the existing agreement. 
If that lapses, the two-year fall- 
back plan agreed last month 
would come into force, without 
the CBtfPs participation. 


SocGen’s derivatives boost 


B orrower in. % % bp 

D-MARKS 

Deuteche RnanoafttathaJ ibn 5.76 101.32 May. 1999 230 - Deutsche Bank 

YEN 

MHnttrt Corp- Rnancote) 7.5bn (b) 100-20 Jti.1997 020 WWaUbfahl Feaw IrrtL 

GULDENS 

Kingdom cf Sweden 400 S.7S 9933H Apr. 1998 626R +15 ABN Amro By* 

ITALIAN LIRE 

Bank AuatrtaW 170bn 8.125 10025 Apr.2004 230 BGU BNL 

SWISS FRANCS 

US Wort Conumteaflunw 100 4.75 102.125 Apr. 3988 States BmkCtxp. 

Hnol terms and non-caftstota union stated. The yMd spread (over relevant government bond) at bunch ta suppbed by the toad 
manager. +Prtwta ptacamenL Ft fixed reoffer price; fees era shown at the re-offer tareL at Caflable on IB/MM at par. b}3.15M to 18/ 
7/SB and 3.8% thereafter. Short 1st axftxxv. c) Over httorpotattd yield. $ Capable on 201*193, and amuely ttenuAar, at par. 


Soci&fi GGnftale is preparing 
to launch a derivative product 
- known as Boosts - aimed at 
Investors who expect a period 
of stability in a particular mar- 
ket, writes Tracy Corrigan. 

Boosts is an acronym for 
“Banking on overall stability”. 
It is designed for long-term 
institutional investors, particu- 
larly those whose funds are 
limited to certain markets, 
who seek to enhance their 
returns during periods of stag- 
nation. 

The purchaser of a Boost 
anticipates that a certain 


instr ument, such as a govern- 
ment bond, will trade within a 
certain band for a specific 
period of time. Every day the 
underlying instrument remains 
in the band, the purchaser 
earns $1 (if the underlying 
instrument is denominated in 
dollars). Thus if a one-year 
Boost remains in this range 
throughout its life, the investor 
earns $365 (less the upfront 
cost of the product). Existing 
strategies such as "straddles”, 
"strangles” and "butterflies ”, 
all using options, express a 
similar view on the market. 


WORLD BOND PRICES 


BENCHMARK GOVERNMENT BONDS 



Coupon 

Red 

Dote 

Price 

Day's 

change 

Yield 

Week 

ago 

Month 

ago 

Australia 

9500 

08104 

113.5900 

-0.470 

750 

7.14 

694 

BetgiURi 

7.250 

04704 

1002000 

*0.400 

752 

750 

7.06 

Canada* 

6500 

06704 

915000 

-0.450 

7.75 

7.80 

703 

Danmark 

7.000 

12704 

1067200 

*6120 

690 

685 

686 

Franco BTAN 

600G 

05798 

106 8750 

-□.200 

676 

678 

642 

OAT 

5500 

04704 

92.1400 

-6420 

659 

645 

635 

loermany 

6000 

OWB 

97.9800 

*6290 

628 

634 

621 

Italy 

6500 

01X14 

85.7700 

-6100 

S.lBf 

957 

9.42 

Japan 'No 119 

4500 

06198 

1060750 

- 

643 

652 

642 

No 157 

4500 

06X0 

1062980 

*6760 

4.01 

429 

679 

NathMands 

5.750 

01/04 

94.8200 

♦6120 

651 

640 

618 

Spain 

10.500 

10X73 

109.0500 

-6150 

9.03 

681 

9.09 

UK Gilts 

6000 

08/99 

94-09 

-22/32 

7.31 

685 

6.47 


6750 

1 1/04 

92-12 

-23732 

7493 

755 

7.14 


9300 

10XJ8 

108-25 

-28/32 

767 

7.51 

7.31 

US Treasury * 

5575 

02AM 

94-10 

-8/32 

857 

655 

618 

8-250 

08/23 

90-21 

-6/32 

750 

655 

668 

ECU (French Govt) 

6.000 

04/04 

96 0500 

-6150 

698 

668 

671 


Italy 

■ NOTIONAL ITALIAN GOVT. BOND (BTP) FUTURES 

glFFE)- Lira 200m IQOttw of 100% 

Open Sett price Change High Law Eat voi Open M. 
Jun 112.75 110.18 -1.40 112.75 110.10 71787 101473 

Sep 11050 100.83 -1.35 11050 11050 147 S3 

■ riAUAN GOVT. BOND (BTP) FUTURES OPTIONS (LIFFE) Ura200m lOOtha of 100% 


Strike 

Price 

Jun 

• CALLS 

Sep 

Jun 

- purs 

Sep 

11000 

269 

630 

2471 

647 

11050 

2.13 

607 

2.46 

3.74 

moo 

1.89 

2.85 

2.71 

4.02 


London dong. 1 * m Vert mid-day 
t Gross annual yw*d (including vrtMalcfng me 
Pdcttv U3, UK *1 SSMs. OtMra In (teamal 

US INTEREST RATES 


IWta LocW mnrtiet standard. 
M 12.5 par cant payable by non m dama) 

SarecIMMmfaW 


Outer bn rate ... 

IMJunds 

FetLkmfc p Merw 


Onananai 

6k Two motel 

5 nmtsnfl — 

3% Sxranh 

- One ye* 


Treasuy BBS and Bond Yields 

160 Toe yew 

152 Three par 

158 nwiaer 

187 ID-yew 

4% 30-year 


Em. yet total. Cota 3122 Me «0M. /Various day'll opm lot, Crib 74430 Puts 08730 


Spain 

■ NOTIONAL SPANISH BOND FUTURES (MEFF) 

Open Sett price Change Ugh Low Eat wL Open M. 
Jun 89.75 99.00 -0.11 99.76 98.88 60.042 98322 

Sep - 99.98 ..... 


BOND FUTURES AND OPTIONS 
France 

■ NOTIONAL FRENCH BOW FUTURES (MATIF) 

Opm Sett price Change Ugh 
Jun 123.60 122.74 -030 12332 

Sep 122.86 122.04 -030 12203 

Dec 122.16 12134 -030 122.16 

■ LONG TERM FRENCH BOND OPTIONS (MATIF) 


■ NOTIONAL UK GILT FUTURES (LIFFE)* <50,000 32nda of 100% 

Open Sett price Change Ugh Low EsL wri Open InL 

I Mar 107-22 106-28 -0-19 107-22 106-21 192 9393 

Jun 106-26 105-22 -0-21 107-04 105-06 97232 172251 

Sep - 104-28 -0-21 0 107 

M LONG QBLT FUTURES OPTIONS (UFFE) E3OJM0 64ttM of 100% 


Low 

122JB 

EsL voL 
189.911 

Open InL 
13601B 

Seflte 

Price 

Ji*l 

' CALLS 

Sep 

Jun 

■ PUTS 

Sep 

12134 

1,041 

16725 

105 

2-28 

2-44 

1-49 

2-30 

12616 

2 

108 

1-59 

2-16 

2-15 

3-27 



107 

1-31 

1-64 

2-51 

4-02 


EML ML lot*. Cate son Putt 2847. Tsu oue day's i 


i M, Cati B47Z3 72802 


Strtae 



- CALLS ~ 



— 

— PUTS 

Price 

Apr 

Jut 

Sep 

Apr 

Jun 

123 

025 

159 

- 

0.47 

UK 

124 

0.05 

1.13 

- 

160 

2-41 

125 

- 

673 

- 

627 

600 

128 

- 

647 

0.87 

- 

670 

127 

- 

627 

046 

• 

4*47 


Est «jL m *. Cols S93M Puts 20907 . Pnniiua (fay's open faL CWta 394.543 Pt*a 272,114. 

Germ any 

■ NOTIONAL OEHIIAN BUND FUTURES (UFFQ~ DM250.000 IQOthe of 100% 

Open Sett price Change Ugh Low EsL vd Open W. 
Jun 96.46 9639 -0.07 96.72 9590 124206 203211 

Sep 98.16 95.81 -0.07 06.15 96.80 182 6379 

■ BUNO FUTURES OPTIONS (UFFEj DM260,000 point) of 100% 


Price 

*01 

Sep 

Jui 

Sep 

0600 

1.24 

1.49 

1.15 

1.68 

9650 

698 

1.20 

UK 

1.M 

9700 

678 

1.08 

167 

Z26 


Em. ml fatal. Cota 10048 Pita 1043a Ambus day's open fat. Calls 272171 Pun 232399 

■ NOTIONAL BEDHJM TERM GERMAN GOVT. BONO 

(BOBLXLFFE)' DM250.000 IQOths of 100% 

Open Sett price Change Ugh Low EeL vd Open tot 
Jun 10085 100.56 +031 10085 10063 66 2330 


UK GILTS PRICES 


_ tt* _ -. 1883794 _ 

Nates tea Had Wca£+sr- Mtt L*» 


Ecu 

■ ECU BONO FUTURES (MATf) 

Open Sett price Chang* rtflh Low EsL uoL Open faL 
Jun 8090 89.30 -012 89.96 99.24 1,744 6,143 


■ US TBEASUBY BOND FUTURES (CBT) 6100,000 SSncfa of 100% 

Open Latest Change High Low EsL woL Open fat 
Jun 107-25 107-12 -0-12 107-28 107-12 330387 383.168 

Sep 106-28 106-17 4-11 106-29 106-17 2302 43.403 

Dec . 105-14 ... i 1,234 


Japan 

■ NOTIONAL LONG TERM JAPANESE GOVT. BOND FUTURES 

(LIFFE) riOOm iQOiha of 100% 

Open Close Change High Low EsL vd Open W. 
Jun 111.60 - - 111 SO 11155 1445 0 

‘ UFFE u una ac M (reded on APT. M Open fatarea flgt. are tor prerim day. 


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ntaal3kpel097» — 112= 888 117k 

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Treat Skpc F995-(Btt_ 872 8*8 UMW 

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732 7.73 

737 735 

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807 7.98 

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831 831 

877 887 

817 
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11.71 

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1034 
1037 
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436 TM 

- 4.19 

- 421 
1132 


IQ ± 

124 

104 .1 

161 

111 +k 
148k 

28k 

120k 

70k 

138k — 

131k 

143k — 


FT-ACTUARIES FIXED INTEREST INDICES 

Prioa Inteces Tue Day's Mon Aocnnd 

UK QHta Mar 29 change % Mar 28 fattest 


— Low coupon yMd Med ta m coupon yteid — — Ktah coupon yield — 

Mw 28 Mar 28 Yr ego Mv 29 Mar 28 Yr. ego Mar 2fl Mar 28 VT. ago 


1 Up to 5 years (24) 12434 -038 12432 131 

3 5-15 yean (23) 14631 -033 14734 131 

8 Over IS yean (9) 163.78 -033 165.15 133 

4 Irredeemabtes (Q 18832 -138 19133 331 

6 AH Stocks (82) 14338 -360 14394 133 

todax-ttateed 

6 Up to 5 years (2) 18435 4631 184.64 -636 - 

7 Over S years (11) 17833 *8.17 178.74 372 

8 AS stocks (13) 178.75 *6.15 178.48 034 

Debentures tnd Loans 

9 Debs & Loans (73) 13334 -633 13436 2.19 

A iw a p* pus wdaip p ila i ytowb are S i am above. Coupon Banda: Lour OK-TItM; 


184.64 -636 

178.74 a 72 

178.48 034 


TA 5 

7.19 

671 

759 

7.43 

699 

7.68 

7 S3 

7.19 


7 XT 

7.77 

738 

737 

TM 

631 

625 

618 

655 

TM 

7.86 

613 

TM 

TM 

648 

616 

606 

8.64 



238 5 ya 735 7.19 6.71 7J 

3.75 15 ym 737 7.77 738 7J 

333 20 yn 736 736 &13 7J 

1.47 kred-T 837 .791 834 

334 

teiffHow Wfc 

Mar 29 Mar 28 Yr. ago 

233 Up to 5 yn 3.19 3.18 224 

129 Over a yrs 335 3.48 3M 

131 


irritation 10% 

Mar 28 My 28 Vr. ago 

225 224 13S 
326 127 326 


— — 6yaaryMd— — — 16 yeer ytatd — 25y**rjWd— - 

Mw 29 Mw 28 Yr. mo Mar 28 Mar 2B Yr. ago My 29 Mw28 Yr. ago 

334 699 896 832 935 894 9.42 938 838 933 

Natan M6-10WK: Hglt 11% and ovar. t Hat yh*L ytd Year fa data. 


FT FIXED INTEREST INDICES 

Mar 29 Mar 26 Mar 25 Mw24 Mar 23 Yr ago Hgtr LoW 


GILT EDGED Acnvmr INDICGS 

Mar 28 Mar 25 Mar 24 


QokL Secs. (UK) 95.97 9631 9636 97.63 9632 9638 10730 9328 C38t Edged bergataa 100.1 115.7 1621 963 973 

Find Interest 116.45 117.78 11733 11831 11994 11136 13337 11294 5-day average 1123 1103 107.0 943 953 

* lor 1S93/94. Oovwranant Secuinw Ndb ftnea corepMare 12740 (8TV351 low 4fl.tB pn^ R»ad IntBreot Ifah rince ewnpttfare 13147 pl/VM. tow 8033 071/7® ■ Ban 100: Goranmam Sactrttes 16/ 
<006 and Find fattest 1028. SE octMty fadeea rabaaad 1074 


FT/ISMA INTERN ATJONAJL BOND SERVICE 


Listed are On latest fntamofend bends tor which tan to on adequate seccrxtoy martceL Lateat pricea at TOO pm on Mradt 29 

fared EU Oltor Cfijj. YfaH 'toned ted OSar Cbg. Ytatd 


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130 lOSk 
iniA 139A 
149k 128 

44k 33k 

40k 20k 

138k 1 14 

78 83k 
ISOk 117k 
145k USk 
159k 13Zk 



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Bank cl Tokyo 8% 96 _ 
BrigtanSka 

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BraetaGasOZI 

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Cheung Kong Rn 6k 98 

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100 

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SB 9k 97 

Bee da Flaws 9 98 -j- 
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( 


s 


FINANCIAL TIMES WEDNESDAY MARCH 30 1994 




COMPANY NEWS: UK 




i ■ »-■- K&n 


Improvement results from lack of property and closure provisions 

Taylor Woodrow achieves £30m 


By An drew Taylor. 

Construction Correspondent 

Taylor Woodrow, the house- 
building, property end con- 
struction. group, bounced back 
into the black in 1993 with pre- 
tax profits of £30 .2m against 
losses of £9A5m, restated in 
accordance wzth FHS3. 

The improvement reflected 
the lack of large property and 
closure provisions which 
depressed the restated 1992 fig- 
ure by £86-&n. 

The final dividend is doubled 
to lp for a total of L5p (lp), 
payable from earnings per 
share of 4.1p (22.4p losses). The 
rise in the dividend was unex- 
pected but the shares were 
unchanged at 153p. 

Profits also benefited from 
the absence of large provisions 
on prestige contracts such as 
the Channel tunnel, Euro-Dis- 
ney and Storebaelt which, led 
to a restated £6L3m construc- 
tion. loss in 1992. 

Last year contracting made a 
£L3m pretax profit following 
the settlement of claims on 
Euro-Disney, Storebaelt and 
John Wayne aiiport in the US. 
Outstanding claims on 'the 
Channd tunnel have stffl to be 
resolved but were subject to an 
interim settlement last sum- 
mer preventing cash losses. 

Mr CnUrn Pars ons , chairman. 



per mrt owned Canadian and 
US housebuilding subsidiary 
through a public issue of 3m 
shares. Following the issue 
Taylor Woodrow's stake w£Q 
tall to 54J. per cent ' 

Commercial pr op er ty moved 
from a £L42m loss to a £l45m 
profit 

Some vspm Tww? been raised 
from property disposals includ- 
ing £3lm from the US and Aus- 
tralia where the company was 
withdrawing from the market 


Cobbs Raisons (left), with Tony Palmer, chief executive: 
determined to avoid potentially lossmaking, contracts 


said construction t u rnov er had 
fallen by 19 per cent to 2721m. 
reflecting the group’s determi- 
nation to avoid potentially 
lossmaking contracts. 

Housebuilding moved, from a 
£26 Jm loss to a £9m profit 
with completed sales in the 
UK, north America, Australia 
and continental Europe rising 


by 31 per cent to 2,789. 

Tn the UK brarefng comple- 
tions jumped by 60 percent to 
L887. There was a also a strong 
p erformance in Florida, offset 
by a JlQm write-down of hous- 
ing land in Cafifonria. 

The group announced plans 
to raise 19 to C$35m (£17 An ) 
to ftmdexpansian at its 5&8 


Management deserves full 
marks for the way in winch it 
ha s gnt overheads, brought the 
balance sheet under control 
and refocused a series of rather 
poorly run separate companies 
intn a coherent business strat- 
egy. The rise in the dividend, 
was a good move psychologi- 
cally. It was disconcarting, 
however, that more informa- 
tion. was not available on the 
status of contracting provi- 
sions. The shares have had a 
good run of late and most of 
the good news is already in the 
price. Re-tax profits of £45m 
would put the group an a pro- 
spective p/e of more than 24 
thnflfl which is high awm igh 
given that contracting may yet 
cast a shadow over better 
housebuilding and commercial 
pro p ert y results. 


Alexon warns of slower recovery 


By Peggv Holngar 

Alexon shares tumbled 22 pa cent to 47p 
as the struggling women’s wear group 
warned that recovery would take longer 
than expected. 

Mr John Osborn, the chief executive 
appointed last year following a sharehold- 
ers' rebellion and two profits warnings, 
said sales had been affected by the current 
economic climate and “the sheer volume 
of older stock that we have sold at As- 
counted levels". 

The group had also made fewer than 
expected savings on overheads, reducing 
costs by £2m against a target of £3m. Mr 
Osborn said Alexon aimed to make a far- 


ther £5m in overhead savings tins year. 

The chief executive was confident, how- 
ever, that the group was now on a “much 
sounder footing" after a year of reorgani- 
sation and the £16. 4m rights issue tax 
August 

Pre-tax fosses were cut by £200,000 to 
annij an sales 3 per cent bigher to ainwi 
for the year to January 29. The deficit 
included exceptional charges of £435m 
for rathmaUgatko and operating 
losses of £2.3Sm from the now closed 
North American business. • 

C ontinuin g businesses returned operat- 
ing fosses of against £9-59m last 

time. There was no dividend and losses 
per share fell from 53Rp to 3088^. 


Mr Osborn stressed the group’s progress 
an reducing the stock burden, which pre- 
cipitated last year’s profits warnings and 

numagwrwmt rpahnftle, Stocks had been 

cut through heavy discounting by ciim to 

gtttfim 

Net debt ba d also fallen from ssskm to 
£LQ.7m, representing 48 per cent of share- 
holders’ funds. 

Mr ffcdvwn said the laimrh of the Ami 
Earvey range of lft- dothes had been suc- 
cessful. The brand had been extended from 
20 to 38 shops as of last month. ’ 

The Alezan brand had increased sa tes 
modestly, «Hform (fo the outlook was mote 
dwnmit thaw had been envisaged. Eastex 
had performed satisfactorily. 


Blenheim 
knocked 
by French 
downturn 

By David Wlghton 

I Blenheim Group, the 
exhibitions organiser whose 
i shares have almost halved 
1 over the past year, reported 
pre-tax profits of £45-2m for 
1993 after a sharp d ownturn in 
its important French business. 
In the preceding 16 month 
period to December 1992 it 
reported profits of £49.7m. 

Mr Neville Buch, chairman, 
said: “Despite difficult condi- 
tions Blenheim baa delivered a 
creditable performance." 

Blenheim' 8 shares fell 
heavily last summer after a 
£76m convertible preference 
share issue in June was fol- 
lowed by downgraded fore- 
casts. 

The French recession hit 
Blenheim in the second half 
with space at its annual shows 
In France down by 10 per cent 
and another decline • expected 
this year. Across the group 
revenues from the existing 
annual shows rose 4.4 per cent 
with operating margin* rising 
to 25 per cent on turnover of 
£198.7m. However Mr Buch 
warned: “Exhlbitians are late 
cycle with space sales respond- 
ing some IS to 18 months later 
than the general economic 
cycle." 

The current year will also be 
affected by the absence of Bati- 
mat its large biennial exhibi- 
tion in France, which contrib- 
utes an estimated 15 per cent 
of group profit 

reaming* per share reached 
29.4p in 1993 against 32.4p In 
the preceding 16 months, 
including Batimat, or a pro 
forma 20.1p. without Batimat 

A final dividend of B.85p (3p) 
gives a total of 1025p up from 
pro forma 9p for 1992. 

Bl enheim ended the year 
with net debt of includ- 
ing the convertible loan stock 
and negative shareholders’ 
funds of The 19 93 inter- 

est tell of £5xn was covered ten 

times by operating profit 


Pentos incurs £71 m loss 
and makes £45m rights 


By Paul Taylor 

Pentos. the specialist retailing 
group which includes the Dil- 
lons bookshop, Hyman statio- 
ners and Athena cards and 
poster chains, plans to raise 
£45m through a 4-for-3 rights 
issue at Up. ' 

At the same time Pentos 
announced a £7 0.6m pre-tax 
loss for 1993 after taking sig- 
nificant write-downs and 
exceptional charges totalling 
£56.5m and passed the divi- 
dend. 

Losses per share of 50.1p 
compared with earnings of 
Ife a year earlier when divi- 
dends totalled USp. 

However, the rights issue 
and other restructuring moves 
-including new bank faculties 
of up to £66.7 m - were gener- 
ally welcomed in the market 
and the Pentos share price 
closed Kip lower yesterday at 
29p. 

The proceeds from the 
19L9m share issue, which has 
been folly und e rw ri tt e n by 
Schroden, wiQ mainly be used 
to reduce debt and shore up 
the group’s battered balance 
sheet, seriously weakened by 
the substantial trading l wy* 
and exceptional items last 
year. 


Shareholders* funds fell 
from £79 An at the end of 1992 
to £21 An at tiie end of last 
year while bank borrowings, 
which peaked at £87m during 
September, fell to a 
seasonal low of £69.3x0 at the 
end of December. A year ear- 
lier the figure stood at 
£44.lm. 

The group’s auditors have 
qualified the 1993 accounts cm 
a going concern basis, subject 
to the outcome of the rights 

Sir Kit McMahon, who 
replaced Mr Terry Maher as 
Pentos* chairman late last 
year, said yesterday that the 
rights issue "would strengthen 
the group’s balance sheet and 
place the group In a better 
position to Implement the 
changrs necessary to restore 
profitability." 

Mr BQl McGrath, chief exec- 
utive since January 1, said the 
rights issue would provide "a 
firm footing for re c ov e ry ** and 
unveiled details of a two-year 
business plan designed to 
restore profitability and *Tnlffl 
the potential” of the core 
retail bu sinesses . 

The sales4ed recovery plan 
follows a detailed strategic 
review of each business con- 
ducted by Mr McGrath, for- 


merly deputy chairman of 
Wlckes, and Is designed to 
emphasis the group's 

strengths. 

The need for a far-reaching 
rethink of the Pentos business 
strategy was underlined yes- 
terday by the group’s 1993 
results. 

The near-£71m pre-tax loss, 
which compares with previous 
profits of £4m, came on Oat 

turnover of £240.7m (£236.4m) 
including sales from continu- 
ing operations of £226. 6m 
(£217m.) 

Excluding exceptional items, 
Pentos incurred operating 
losses of £&£m, compared with 
profits of £12An a year ear- 
lier. 

As previously announced 

last year’s results benefited 
from gross reverse premiums 
of £3-4m (£&3m). 

Interest costs increased 
slightly to £5.9m (£5.4m) 
resulting in losses before tax 
and exceptional items of 
£14.1m (£7.5m profit). 

The £56-5m (£3 .5m) excep- 
tional items included an 
£l8.7m provision for losses on 
the disposal of Ryman Com- 
puter Stores, of which £14 An 
represented the goodwill 
write-off previously deducted 
from reserves. 


Tibbett & Britten tops £24m 


C&W Russian 
purchase 

By Andrew Adonis 

Cable and Wireless, the 
telecommunications group, 
has spent |89J9m (£27 Am) on a 
26.1 per emit stake in Peters- 
burg Long Distance, a private 
telecommunications concern, 
which is butidbig a network 
in Russia’s second city. 

PUD has a 59 per cent stake 
in a Joint venture with St 
Petersburg's state-owned tele- 
communications operator. 

The company is. building a 
network to http plug unmet 
demand for local, national and 
international telecoms ser- 
vices in tire city, the directors 
stated. 

PLD also has a 50 per cent 
stake tn a cellular mobile com- 
munications venture in Kaz- 
akhstan. 


Hodder Headline advances to 
£2.6m after reconstruction 


By R aymond Snoddy 

ffniMor ‘HpwHHn a, tlia p Hhfishgr 

which has now virtually fin- 
ished the reconstruction fol- 
lowing tiie merger of Headline 
and Hodder & Stoughton, yes- 
terday announced pre-tax prof- 
its for the year to end Decem- 
ber up 27 per cent to £2£m 
after exceptionals. 

Exceptional costs and provi- 
sions including redundancy 
payments associated with the 
reorganisation, totalled £6Am, 
only slightly greater than 
expected. 

Before the exceptional items 
operating and pre-tax profits 
were more than doubled at 
£4&n and £4£m respectively. 


Earnings per share before 
eaceptumals ware up 4 per cent 
to 12.4p but af te r exceptionals 
there was a drop of 48 per cent 

to 6u2p. 

Sales move than doubled to 
£5Llm, boosted by the second 
half revenues of Hodder & 
Stoughton following the 
merger. 

There is a recommended 
final up 12 per cent to SASp, 
making a total of 8p (45p). 

Mr Tim Hely Hutchinson, 
group rhfrf qnctttiv a said the 
benefits from the reorganisa- 
tion were now beginning to 
flow and annual foil-year 
savings of £4m net would 
beemne apparent from the mld- 
dlfi of this year. 


"This comprehensive over- 
haul, particularly of Hodder A 
Stoughton, will be largely com- 
pleted by tile end of May and is 
the main story behind the fig- 
ures tins year." he said. 

The group is planning a 
number of new ventures tiris 
year including the launch of an 
audio division. A new subsid- 
iary is also being set up to pub- 
lish low priced reprints - hard- 
backs at about £5. 

Hodder has already had two 
number one best-sellers this 
year - Thomas Keneally*s 
Schindler's List and Edwina 
Currie’s A Parliamentary 

Affair , 

The Kidder Headline share 
price closed down lp at 407p. 


Mr Staflkn Svenby, who moved 
up to managing director in 
November, has already started 
to bite into Blenheim's 1980s- 
style. cost base. The pro- 
gramme for new exhibition 
launches has been halved, 
some BTigting shows will be 
axed and the 800-strong work- 
force sKimnprf- But exhibition 
profits remain highly sensitive 
to economic cycles - UK prof- 
its are now half their peak - 
and there is nothing Mr 
Svenby can do about the 
French economy. Given the 
long lead time for Batimat, 
next year's profits will be 

by W rench h wirnewt 

confidence in the next few 
months and any sign of a dou- 
ble-dip recession will have ana- 
lysts scurrying to downgrade 
their forecasts. That explains 
why the shares, down 5p at 
343p, are trading an only 13 
times next year's predicted 
earomgs. 


By Andrew Bolger 

Tibbett & Britten Group, the 
distribution company, reported 
a sharp formp ao in waiop and 
profits, mflhfiy because of a 
fuB-year contribution from Sfl- 
rm»fc Express, fha iy distribu- 
tor it bought at the aid of 1992 
for an initial £8L2m. 

TTbbetfs pretax p ro fi t rose 
by 64 per cent to £242m in the 
year to December 31, while 
sales increased by 56 per cent 
to £380to. 

Mr John Harvey, hhaftman, 
said the group had also 
enjoyed significant underlying 
growth. Earning s per share 
rose by 37 per cent to 37^ 
(27.3p). Of that increase, two 
thirds was due to Silcock and 
one third to organic growth. 

The group an Monday fur- 
ther increased its iw mi wmHit 
in the motor industry by agree- 
ing to pay £2&4m fa cash for 


Sss ClNVen to Interest costs behind 
S; "“S? Royal decline at Jeyes to £5m 

nt the portfolio J 

at« ^ Dm n»f — ■ m m — ■— omwt onlnci nf fO (Svi 


T oleman. a lnagmairing uk car 
distribution company. 

Depending on Its perfor- 
mance, Tibbett may pay up to 
a farther Qm for Toleman, 
which fa 1992 made a pre-tax 
loss of £L4m on sales of 
£35 J&xl Silcock will i ntegra te 
its operations with Toleman to 
provide a more effective ser- 
vice for Ford UK. its largest 
UK customer, which has prom- 
ised to grant the combined 
operation a long-term rolling 
contract on a prime supplier 


Mr Harvey said that 
although fhft trading environ- 
ment was challenging, there 
was a high lewd of inquiry in 
all the group’s markets and 
1994 promised to be another 
lively year, offering substantial 
organic growth potential. 

A final dividend of 9.7p 
makes a total for the year of 
143pftL8p). 


• COMMENT 

A 12p drop fa the share price 
to 813p seemed a grudging 
response to figures which were 
fa line with expectations. 
There may have been some 
concern over the ending of sev- 
eral contracts, but some 
changes are inevitable and the 
group was very upbeat about 
the level of recent inquiries. 
Just as impressive was the 
achievement in lifting net 
profit margin from 6.4 to 6.7 
per cent at a time when there 
is widespread concern about 
pressure from food retailers - 
even, if they now only account 
for about 20 per cent of 
group activity. Forecast profits 
of £28m put the shares on a 
prospective multiple of 19. 
The shares axe not cheap at 
this level, but the group’s 
track record and growth pros- 
pects justify the premium 
rating. 


O 


TransTec advances to £llm 


By Paid C lw e — ri g ht . 


Correspondent 


BLUE CIRCLE INDUSTRIES CAPITAL LIMITED 

- (tftsTttUSf') 

£90.000.000 , 

Toy* percent Convertible Capita) Bonds due 2005 

(the "Bonds*) 

issued by the Issuer and guaranteed on a subordinated 
basis by 

BLUE CIRCLE INDUSTRIES PLC 

(the “<iuantnt&~) 

Notkafc hereby given that 0 * 1 28th March, 1994 a supplemental 
trust deed war entered into between the trustee (the Trustee*) 
under the Tiurt Deed dated 24th July 1990 constituting the Bonds 
(the Trust Deed*), the Issuer and the Guarantor pursuant to which 
condition S (e) (i) of the terms and condWons of the Bonds (the 
-GondWonS”) was amended by substituting In the tmt of ConcStion 
5 (e)( 1 ) far the date 21stJune 1994 the date 20th June 1994 The 
substituted text was inconsistent with the haadng of Condition 
5 (e)( 1 ) and the provtatons of Conditions (e)(5) and the Trustee is 
of the opinion that the amendment (the ‘Amendment*) corrects 1 
manifest cnw. The consequence of thlsemendment tf faat subject 
to certain exceptions, no Required Redemption Notice (as defined 
in the Commons) may be given by the Issuer where the Required 
Redemption Date (as defined In the CondMom) b or wordd be on 

or prior to 20th June 1994. The Amembnent has been made 

pusuant to dause 21 of the Trust Deed under whidl Inter eOa, 
amendments to the CondWons are permitted without the ^consent 
of holders of toe Bonds or of holders of coupons appertaining to 
the Bonds K in the opinion of the Trustee the amendment Is made 
to correct a manifest error. 


TransTec, formerly known as Transfer 
Technology, pushed up pre-tax profits by 19 per 
cent last year , helped by acquisitions but 
hindered by difficult trading fa the automot i ve 
sector. 

The specialist engineering group yesterday 
announced that pretax profits fa the 12 months 
to e&d-Deoember were £U,2m. compared with 
£3 .45m fa 1992. This produced earnings per 
share of 8Rp against 8£p, a figure adjusted 
for last October's 5-for-l subdivision of the 


Daring the am ent year, Mr Ge offrey Robin- 
son. chairman, expects “continuing prog re ss”. 
For a group which exports 75 per cent of 
its production, the main growth will be fa 
the US and, to a lesser extent, east Asia, but 
European markets seem likely to remain 
subdued. 

“We remain cautious about any significant 
improvement. over 1993," Mr Robinson said of 


DIVIDENDS ANNOUNCED 


fSaflvy (Ban) Sn 

Barton fin 

O t onf iahn —111 

Brake Bros — ftn 

erode Ml An 

Mammoraon .....rin 

Henderson High 

Hfefcaon Ml — to 

Hodder HaaiWna £n 

Jayw — .Mu. ' fa 

Jol ra twi Group fln 

Jourdan (Thoe) — .to 
Lloyd Thompson _Jnt 


the automotive market 

Last year TransTec suffered from the 
downturn of the European car market, and 
the contribution of the group’s automotive divi- 
sion to operating profits feEL from KUgm to 

Margins, both in thi« division and fa the 
inspection systems division, were under severe 
pressure. . 

- By contrast the control manufacturing 
technology division, enlarged by two newly-ac- 
quired companies, pushed up operating profits 
from £5-33m to £&28m. 

Total operating profits were £12Am, against 
£10.302 fa 1992. 

Turnover rose by £38.5m to £145m, with 
£32^m of the increase coming from new acquisi- 
tions - the two companies of the control and 
manufacturing division, and qtw fa the automo- 
tive division. 

The final dividend is 2p, making 33p (3-2p) for 
tiie year. This is covered 2.7 times by earnings 
of 89p, the same as last time. 


CLNVen, the OK’s second 
largest venture capital com- 
pany is to take over manage- 
ment of the private equity 
portfolio of Royal Insurance 
Asset Management, writes 
Richard Gouriay. 

Royal Insurance win invest 
Bkmsnlde the nenskm foods of 
Barclays Bank, British Rail 
and British Coal, all of which 
are already managed by 
CINVen. CXNVen takes over 
Royal's £40m private equity 
portfolio. 

Royal is the latest to hand 
management of private equity 
investments to other profes- 
sional managers. 

Royal will be investing as 
much as Barclays and the Brit- 
ish Rafi pension funds in any 
CINVen deals, all of which 
individually invest slightly 
less than the British Coal pen- 
sion fund. 

• Schroder Ventures, mean- 
while, has closed a £i40m 
buy-out fund, the group's third 
ftsaaii- Hr Peter SotttiBUf urd- 
aging partner, said Schraders’ 
success “gave the fie* to the 
view that it was almost 
impossible to raise funds far 
new venture capital invest- 
ment. 

Hie fund’s closing was 
delayed by the departure of Mr 
Jon Monition, who resigned 
after a disagreement over 
strategy. 


By Peggy HoBnger 

A strong second half and 
acquisitions helped to cushion 
the decline at Jeyes, the 
cleaning products group which 
saw 28 per cent of its market 
value wiped out after a profits 
warning in June. 

Mr Jimmy Moir, chief execu- 
tive, said the fadusian for a 
fall year (tf Globol, the German 
company acquired fa 1992, had 
helped Jeyes to report a 4 per 
cent increase fa operating prof- 
its to £&£m for the year to Jan- 
uary L 

The pre-tax return, which 
fen 11 per cent to £4Jfan, lad 
been depressed by a 77 per cent 
increase in net interest charges 
to pton 

Sales were 28 per cent ahead 
to £ll43ni. Globol represents 
about 38 per cent of sales and 
slightly more of operating 
profit 

The restructuring pro- 
gramme had been accelerated 
after poor results in the first 
half when profits fell by 82 per 
cent to E374JM0. Pre-tax profits 
fa the second half recovered to 
£A5m against £3.4m last time. 

By the middle of this year 
five cf Jeyes’s 10 factories will 
be closed and warehousing and 
distribution transferred to 
third parties. 

Restructuring costs of £2 9m 
to pay for these actions were 
largely affiset by profits from 


US $204000^)00 
Banes di Roma 


Receipts due 1999 
Pot the Mriod fen Iferdh SO, J9SW to 
SMtenAcr3Q,ffi9«tbe Ne*e»»0l«nyw 
interest rot* of S Vh per annum nto 
b& Interest smoont of US 3990S8 per 
UStHHUWONott. - 
The relevant interest. pttnNKC *ie will 
be September 3D. 1941.. 

Apart Bfffe 

A 

Bangue Paribas 

.Hki-Minc 


vsmvtmn 

Rothschilds Continuation 
Finance B.V. 

Primary Capital Undated 
Guaranteed Floating Rate Notes 
For tbs period than Hsreh » WH w 
September M.19K tfasNoUs will any an 
interest rsta of OM pa* nmon wfth 
so interest manat of OS SQSJB-per 
OSSIOJKQNoW. 

It* relevant Interest psymnt duo wiD 
be September 3d UM- 

fenBteh 

n 

Banque Paribas 


NBSmoRar — 

Nwtt 

013 Irapaeflon 


Current 

payment 

Data of 
payment 

Cotree - 
pooctog 
dividend 

Total 

for 

yew 

Total 

last 

year 

z.n 

May 27 

2 

- 

72. 

nfl 

- 

nfl 

nfl 

3 

OS 

July 8 

n« 

1.05* 

0-55 

lit 

July IS 

12 

2 

2 

a. 85 

JUne 24 

3 

1025 

12f 

482f 

July 1 • 

435 

082 

62 

5.45 

July 4 

5 

84 

7.75 

&st 

June 1 

65 

10 

10 

1 A 

May 18 

14 

54 

54 

5.15 

- 

5.15 

8 

8 

asst 

May 20 

3 

s 

45 

48 

- 

45 

8l1 

7.6 

1 

July 1. 

1 

2 

325 

0L5 

July 4 

025 

1 

075 

2At 

May 20 

2 

. - 

07 

24 

May 28 

1.93* 

3-84 

3.188” 

2.63 

Jura 27 

2-51 

zsr 

345 

4 

July 1 

2 

5£ 

25 

14 

July 29 

- 

2.1 

- 

nfl- 

- 

08 

id 

1 & 

15 

June 15 

6 

05 

12 

1.8 

- 

1A 

28 

25 


Psion’s £3m meets forecasts 


Pmwfloot fln 1.5 Juno 15 6 3^ 12 

Pston § *1 1.8 1-5 2.8 45 

ftopner fin 4.75 July 1 475 . &2S 325 

Rotoric —fln 2.5 May 27 2.17** 42S 3.72** 

Sonwiwx -Ai 45 May 20 4 BA 5.9 

Taylor Woodrow Sn 1 July 1 05 1A 1 

TlbbeU/Brittan -Bn 8.7t May 27 ai- 142 11A 

Thorp# (FW) mt 1 May 16 08 287 

Transtac fln 2 July 4 1A5* 38 3.2* 

UTV fln 8J5 - 5.75 15 10 

WamaBWw — lh 68 July 1 8 12 10.7 

'DMdsnds shown panoe par sham net except where otherwise stated fOn 
increased capHaL §USM stock *Acfustsd for scrip lasua. *A<6u8tad for 
subdivision. * For 48 months. fFor 16 morals. 


ByAfen Cane 

Psion, manufacturer of 
framj-hpM c o mp u ters and data 
cornmnakajiima products, saw 
pre-tax profits and sales match 
market expectations fa 1993 
helped by strong demand for 
the latest version (tf its palm- 
top computer and manufactur- 
ing eBhaaadas. 

Profits before tax more than 
doubled to £3-03m (£L42m) on 
turnover up 17 per cent to 
£4L2m (£35Jm). 

Earnings per share rose from 
4£3p to 9J.4p and a final divi- 
dend (tf L8p (l^>) is recom- 
mended, making a total for the 
year of £8p CL5p). 

Mr David Potter, founder and 
chairman, said he was opposed 
to paying larger dividends 
when the company was fa a 
growth phase and would be 
absorbing cash. 

He said there was no need 
for the company to raise fresh' 
money fa the immediate future 


but ft had every intention of 
growing with its marietta and 
would eventually need extra 
funding, “but only on the back 
of growth and success". 

The co m p an y's four distinct 
product lines - the Seales 3 
palmtop computers, HC indus- 
trial hand-held computers, data 
communications derices and 
the original Organiser elec- 
tronic notebook were all profit- 
able. 

Psion is tiie world’s leading 
supplier of palmtop computers 
by vohnnfi - ft is now produc- 
ing some 20,000 a month. 

Mr Potter said the company 
bad been surprised by demand 
for the new Series 3a: “Not- 
withstanding record produc- 
tion volumes, demand could 
not be fulfilled and the supply 
of product was on alloca- 
tion ... it was only during tiie 
first quarter of 1994 that higher 
vofameg of component supplies 
have allowed an increase in 
output" 


Net operating cash flow was 
£S.73m compared with £3JEm in 
1992 and working capital was 
reduced. 

The group has surplus cash 
and negligible net gear- 
ing 

• cowauvr 

Psion has had some harsh les- 
sens about markets and man. 
agent ent over the past three 
yearetrathasrecoveredweD.lt 
now has a portfolio of products 
each of which is a leader in a 
growth area, its datacommum- 
cations products, including 
credit card sized modems, look 
particularly exciting. More 
than 50 per cent of tiie group's 
ha r d wa re sales are now made 
outside the UK. Pre-tax profits 
of £5m look likely this year giv- 
ing earnings of 15.2p on an 
undemanding prospective p/e 
of 119. It is a market sector 
rich in quicksands but Psion 
seems to have found firm foot- 
holds at last 


asset sales of £2.Gm. 

Mr Moir said the UK division 
had been Mt by aggressive dis- 
counting, although sales 
increased by 6 per cent to 
£62fim. Margins were expected 
to remain under pressure in 
the new trading conditions, he 
said. The German market had 
remained stable, with gross 
margins maintaine d and a 4 
per cent increase to revenues. 

Capital expenditure 
increased from £&5m to £9m to 
support the reorganisation pro- 
gramme. Gearing rose from 6.4 
per cent to 58B per cent Ibis 
was expected to fall substan- 
tially when the restructuring 
programme was completed. 

As forecast at the time (tf the 
profits w a nting, the final divi- 
dend is being increased to 4Bp 
for an &lp (7-Bp) total. Earn- 
ings feR 24 per cent to 16.4p. 

Bid battle 
costs restrict 
Watts Blake 

ByTbn Burt 

Watts Blake Beame, the clay 
mining and supply group, said 
its profits last year bad been 
held back by the cost of fight- 
ing a hostile takeover bid. 

The Devon-based group, 
announcing pre-tax profits of 
£7.94m (£7. 25m), said its 
results for the 12 mouths to 
December 31 would have been 
better had it not faced an 
unwelcome offer by Sibelco, a 
privately owned Belgian com- 
pany which owns 46.7 per cent 
of tiie group’s shares. 

Although Sibelco's 420p-a- 
share offer lapsed last Septem- 
ber, WBB incurred £910,000 in 
exceptional costs fighting the 
bid. 

Pro-exceptional profits for 
tite group, which specialises fa 
ball clay extraction for sani- 
taryware and tile manufacture 

ers, however, rose by 22 per 
cent to £8. 85m on increased 
turnover of £76&n (£89 .8m). 

Mr John Pike, managing 
director, said: “We are begin- 
ning to see more positive 
signs, but in our wmfn markets 
intense price competition 
remains a vary difficult chal- 
lenge." 

Earnings per share rose mar- 
gin ally to 23 -3p (23.1p), but 
tiie group highlighted a pre-ex- 
ceptional earnings rise of 20 
per cent to 27.7p. 

A final dividend of 8J5p (8p), 
S^ves a total of 12p (I0.7p). 


-■1 


1 




28 


FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


COMPANY NEWS: UK 


Acquisitions help lift 
Brake Bros to £19m 


By Peggy Hoffingar 
Acquisitions and an insurance 

nlaim fa elted a shar p jump in 

pre-tax profits at Brake Bros, 
the frozen food distributor 
which yesterday announced a 
19 per cent increase to £i9.lm 
in 1993. 

bfr Frank Brake, managing 
director, was cautious in spite 
of the profits increase. “We do 
not foresee any dramatic 
change in the marketplace and 
are expecting it to remain flat 
this year - although we are 
hoping for better.” 

The main growth would 
come from acquisitions, includ- 
ing Country Choice Foods pur- 
chased in May for a shares con- 
sideration of £10m. 

Sales were 28 per cent higher 
at £354m, helped by the inclu- 
sion for seven months of CCF. 
Continuing businesses were 10 
per cent higher at £311m. 

At the operating level, prof- 
its of continuing businesses 
improved by 3 per cent to 

Acquisitions contributed a 
further E2 Mm to operating 
profits. 

The operating advance was 
held back by higher than 
expected losses of £24m (£lm) 
in the chilled foods business, 
and a nil contribution from 

France. 



Frank Brake: frozen foods had 
inrroiKfpd market share 

Operating profits also 
included a £l.8m insurance 
payment arising from the fire 
at a cold store in 1991. 

The core frozen foods divi- 
sion had increased market 
share; Mr Brake said, with a 9 
per cent increase in like-for- 
like sales. 

However, margins had 
slipped back from 6.7 per cent 
to 64 pa cent Mr Brake said 
the group expected margins 


to stabilise in the current 
year. 

The managing director said 
the chilled foods business 
would continue to make losses 
this year, although at a sub- 
stantially lower rate. France 
was not expected to make a 
substantial contribution in 
1991. 

The final ' dividend was 
Increased by 11 per cent to 
4-82p for a total of &S2p (6.2p). 
Earnings per share were 9 per 
cent higher at 27p. 

• COMMENT 
Brake Bros has done well to 
increase sales in a tough mar- 
ket. but the margins are show- 
ing the effects for the third 
successive year. While growth 
in the core frozen foods divi- 
sion appears to have slowed 
marginally in ymnrt half, 
further progress Is expected 
from Country Choice. Longer- 
term, France and chilled foods 
offer potential, assuming noth- 
ing goes wrong. Few expect 
Brake to race ahreiri in 1994 
with the real growth pegged 
for 199536. Forecasts are for 
£2im this year. This puts the 
shares, which dosed yesterday 
at 476p, on a multiple of about 
17 times. While this may look 
high, the premium is lower 
than it has been for some 
tune. 


COMPANY NOTICES 



RDBECON.V. 

(Investment company with a 
variable capital) 

ANNUAL GENERAL MEETING OF 
SHAREHOLDERS 

to be Md oo Thursday.- 21st Aprs. 1994. at 
Concert and Congress buikfing lie Doctor*, 
entrance Kniisplein 30, Rotterdam, at 9 JO 
8JIL 

ABEMDA 

1. Opening 

Z To reran* and adopt the Report of the 
Management Board tor the financial 
year 1933 

3. To receive and adopt the Annual 
Accounts tor Itw financial year 1933 
To determine the appropriation of the 
profit 

To compose the Board of Sapenrinsy 
Directors: 

Mr CJ. Oort is scheduled to retire. 

Mr Oort has agreed to stand for re- 
etection. A proposal w9 be submdted to 
re-elect him. 

it will be proposed to appoint Ur. 
H.H.F. Wallets a Sopenrtsory Director. 

6. Any other business 
Copies of ihe tufi agenda and of the Annual 
Report for 1993 can be obtained from 
National Westminster Bank PIC. Stock 
Office Sendees, Basemen. Juno Court, 24 
Prescot Street, London PI 888 or Robecn 
U.K. Limited, 4 Carlos Place, Mayfair, 
London W1Y SAL Telephone: 071-409 
3507. 

Holders of Share Warrants to Bearer 
desirous of attsmtng or bekig represented at 
the Meeting, should lodge their Share 
/tenants by hand (postal deOvanes wfl not 
be accepted tor voting purposes) with the 
National Westminster Bank PLC, Stock Office 
Services. Basement Juno Court 24 Prescot 
Street London El IBB (between the hours of 
10 a.m. and 2 pjn.) In exchange for a rsoelpt 
not tdsr (tEki Thwsby, 1«h AprL 1994. 
Bansfldal owms whose Share Wansds an 
presently deposited with a Bank most obtain 
a Cerfflcaaa ot Deposit signed by fat Bank 
as evidence that such Bank Is IwUiiq the 
Share Warrants. The Certificate of Deposit 
must be lodged agalrat receipt <V thm Bank, 
with the National Westminster Bank PLC. to 
accordance wtth the requirements stated 
above. 

The receipt for the Share Warrants or 
Certified of Oapasd wfll constaute evidence 
at a ShaiehoUers emtiement to attend and 
vote at the Muting and should be presented 
antis door of the Meeting Hal If a holder 
desires to appoint a proxy, who need not be 
8 member of the Company, to attend and 
von In Ms stead, a form of proxy may be 
obtained from the National Westminster 
Bank PLC as above and thte torn of proxy 

mist be presented at the door of the Meeting 

Hal together with the receipt tor the Stare 
Warrants or Connate of Deposa. 

Beneficial owners of Sufr«lBre Certificates 
regttBfBd In Via name ol National Provincial 
Bank (Nominees) Limited desirous of 
attending or being represented at the 
Meeting must obtain a recaipt or Certificate 
ol Deposit in the same way as hoMers ol 
Share Warrants to Basra r. If may desire to 
attend the Meeting In person or lo be 
represented they rrarsl obtain a farm of proxy 
signed by National Provincial Bank 
(Nominees) United, which form must be 
presented at the door of the Meeting Half 
together with the receipt exchanged for the 
Sub-share Certificates or Certificate of 
Deposit 

Benefldai omm of Suthsftares registered in 
any name other than that of National 
ftpvkiefail Bank (Nominees) Limited, holders 
of Registered Rtit Shares and Sharehoidors 
who maintain a Shareholder's Account with 
the Comparer wishing to attend and vote at 
the Ueedng or to appoint a proxy to attend 
and vote in their stead, must signify their 
intention In writing to the Seamy. Rotaco 
N.V. Coattngei 120, NL-aoi 1 AG Rcttenfem. 
Nemertmfc to antve not later hen Thursday, 
1«h Apr*. 1394. 

Savtea contracts are not entered Into wUh 
the Directors, who hold office In accordance 
van the Articles ot Association. 

BY ORDER Of 1W MANAGBENT 
Dated thfc 30ft day of March. 1394 
PA Bn 973 
Rotterdam 


ROUNCO N.V. 

Cmvestment company with a 


ANNUAL GENERAL MEETING OF 
SHAREHOLDERS 

to be held oo Thursday, 21st April, 1994. at 
Concert and Congress toiildfag *de Dorian*, 
entrance Krwsplein 30. Rotterdam, at 11.45 
am. 

AGENDA 

1. Opening 

2. To receive and adopt the Report of the 
Management Board for the financial 
year 1933 

3. To receive and adopt the Annual 
Accounts tortile financial year 1993 

4. To determine the appropriation of the 
profit 

5. To compose the Board of Supervisory 
Directors: 

Mr CJ. Oort is scheduled to retire and 
(ns agreed to sand tor re-etoction. 

A proposal win be submitted to reelect 
him. 

It will be proposed to appoint Mr. 
HJiP. Whites a Supervisory Director. 

6. Any other business 

Copies of the tufl agenda and of the Annual 
Report for 1993 can be obtained from 
National Westminster Bank PLC, Slock 
Office Services, Basement, Juno Court. 24 
Prescot Street, London El 888 orRobeco 
U.K. Limited, 4 Carlos Place, Mayfair, 
London W1Y 5AL Telephone: 071-409 
3507. 

Holders of Share Warrants to Bearer 
deateous of teiendtog or bdng represented at 
the Meeting, should lodge their Share 
Mferrams by land (postal ctefverire wfll not 
be accepted for voting purposes) with tire 
National WWmhs ter Bank PLC. Sack Office 
Services, Basement Juno Court, 24 Prescot 
tenet. London El 8B8 (between fin hours of 
10 am. and 2 pm.) In Acftange tor a receipt 
not laser than Thursday, 14th Apr*. 1894. 
Beneficial omhr whore fflare Wansras are 
presently deported wtth a Bark must ottrin 
a Cannon ot Deposfi signed by tlm Bank as 
evidence tat such Baft Is holding the Share 
Warrants. The Certificate of Depostt must be 
lodged against receipt, by that Bank, wtth the 
National Westminster Bank PLC, In 
accordance with the requirements stated 
above. 

The receipt for the Share Warrants or 
Certificate of Oeposk wfl constitute evidence 
of a Shareholders entitiement to attend and 
wrte at the Meeting and should be presented 
« Ihe door ofthe Meeting HaH If a holder 
desires to appoint a proxy, who need not be 
a member of the Company, to attend and 
vote In Ms stead, a form of proxy may be 
obtained from the National Westminster 
Bank PLC as above and this form of prmy 

must be presented at the door of lha Meeting 
Halt taoether M#i the receipt fortes Share 
Warrants or Certfficate of Deposit 
Sowfcaf owners of Sufr-stare G8r£ffical8S 
regbterad In the name of National Province 
Bank (Nominees) Limited desirous ot 
attending or being represented at the 
Uoettog must obtain a receipt or Certificate 
of Deposit hi tin same way as holders of 
Share Warrants to Bearer, if they desire to 
attend the Meeting in person or to be 
represented they mud obtain a tarn of proxy 
signed by National Provincial Bank 
(Nominees) Urnted. which form must be 
presented at Hie door of dig Masting HaB 
together wth the receipt whanged far the 
Sub-share Certificates or Certificate of 
Deposit. 

Beneficial owners of Sub-shares reglsteial In 
any name other than that of National 
Protocol Bank (Nontinees) Unified, holders 
of Registered FuS Shares and Slwretokfere 
who maintain a Staratahtaft Account wtth 
the Company wishing to attend and vote s 
the Meeting or to appoint a proxy to stand 
and vote In their stead, must signify titer 
mention In writing to the Secretary, Rafinco 
N.V. GoobinQd 12a NL-aOf 1 AG Rottedsn, 
Nsttwriands to silre not later than Thursday, 

lam Apa 1994. 

Sendee contracts ere not entered kin with 
die Directors, who hold office in accordance 
wtm ihe Artdes of Association. 

BY ORDER QFTIE MANAGEMENT 
Dated this 30th day of March. 1294 
P.D. Bite 973 
Rotterdam 


RORENTO N.V. 

(Investment company with a 
variable capital) 

INFORMATIVE MEETING FOR 
SHAREHOLDERS 

to be Ited on Thuraday. 21st Apr! 1994, at 
Concert and Congress bufidlng He Darien", 
entrance KruispWn 30. Rotterdam, at 14.30 
pjn. 

AGENDA 
1. Opening 
Z To discuss tin Report of the Board of 
Directors for the financial year 1993 

3. To ifiscuss the Anmai Accounts fertile 
financial year 1993 

4. To discuss the appropriation of the 
profit 

5. To discuss the composition of the 
Board of Supervisory Directors: 

Mr CJ. Oort is schedoJed to retire 
It will be proposed to the General 
Meeting of Shareholders to re-elect 
lam. 

It wfll be proposed to the Genera) 
Meeting ot SharehoMere to appoint Mr. 
H.HJ. WHfWs a Supervisor Director, 
ft. Any other business 


RORENTO N.V. 

ANNUAL GENBUL METING OF 
SHAREHOLDERS 

to bo held on Tuesday. 28Jh April 1994. at 
Zeetendia Business Centre, Poiariswag 28, 
WBemsted, Curasao (Netherlands Anfifies) 
at 10.30am. 


1. Opening 
Z To receive and adopt the Report of the 
Board of Obactors tor the financial year 
1993. 

3. To receive and adopt the Annual 
Accounts tor the financial year 1993 

4. To de termine the appropriation of the 
profit 

5. To compose the Board of Supervisory 
Directors: 

Mr CJ. Oort is scheduled to retire, 
ft win be propossd to re-etact Mm 
It wB be proposed to appoint Mr. RJLF. 
Wffifete a Supervisory Director. 

6. Arty other business 

Holders of Share Certificate to Bearer 
desirous of atterHfhg or being represented 
a tin above state Meetings, should lodge 
their Share Certificates by hand (postal 
deliveries will not be accepted) wtth the 
National Westminster Bank PLC, Stock 
Office Services, Basement Juno Court 24 
Present Street London El 888 (between 
the hours of 10 a.m. and 2 p.m.) as 
follows: INFORMATIVE MEETING - NOT 
LATER THAN THURSDAY, 14TH APRIL 
1994. ANNUAL 6WEHAL MEETING - NOT 
LATER THAN TUESDAY. 19TH APRIL 
1994, IN EXCHANGE FOR A RECEIPT. 

Benehdai owners whose Share Certificates 
are presently deposited with e Bank must 
obBn a Genfficas of Deport signed bv toe 
Bank as tefidenca that such Bank is ho* . 
the Share Cutiteates. This Certificate must 
be lodged against receipt, by that Baft, wtth 
tlla National Westminster Bank PLC, fn 
accordance wtth req te rements stated above. 

The receipt for tin Share Certificates or 
Cenfficate id Deposft wfl constitute nktence 
of a shareholder's ertttiement to attend aid 
vote at tire Meeting and shook! be presented 
at the door of the Meeting Hrt. if a holder 
desires to repaint a proxy, who need not be 
a member of the Company, to attend and 
wda to Ms stead, a form at proxy may be 
obtained from the National Westminster 
Bank PLC as Aon and this farm of praty 
must be presented to tin doer of too MMtog 
Hafl together wtti he receipt far the Shan 
Certificates a Certificate al Deposit. 

Shareholder who maintain a Shareholder's 
fiauart wtth toe Company, wishing to attend 
other or both Meetings or to appcM a proxy 
in their stead, must flgnty ttiafr kttttai In 
writing to tho Secretary, Roroito N.V. do 
Avbento av„ Coctstogal 12 a NL-3011 AG, 
Rotterdam. Nettwriands a arrive not later 
than the dotes fcxflcatad shore. 

Although proxies may attend, votes wtl not 
be cast at the totonndhe Masting. 

Copies of the ful aQgndss and of tin AratuaJ 
Report for 1993 can be obtained from 
National Westminster Bank PLC at the 
address shown above or Robeco U.K. 
Limited, 4 Carlos Plan. Mayfair. London 
W1Y5AE Tekphons 071-409 3507. 

Service contracts ve not entered torn with 
tin Directors, who hold office in accorda n ce 
wtth Ihe Aitides of Assocbiiim. 

BY ORDER QFIHETHEMANAGaBfr 

ST.MAARTBf 
Dated thtaSOth dqr of Mereti. 1994 


Misys cash 
call for 
software 
acquisition 

By Pad Taylor 

Misys, the computer services 
and application software 
group, yesterday announced 
plans to acquire Kapiti, a lead- 
ing packaged banking soft- 
ware supplier, through a rec- 
ommended cash and shares 
offer which values the 
unquoted group art £4Qm. 

The fygfftn rash element of 
the proposed acquisition is to 
be flmded by way of a 2-for-13 
rights issue at 425p a share 
which is fully underwritten by 
Baring Brot h ers. Misys shares 
dosed up 2p at 51 3p yesterday. 

Kapiti, which reported pre- 
tax profits of £3J2m (£lm) on 
sales of £29 .5m (£24-9m) last 
year, c laims to be the second 
largest luniMng software sup- 
plier in die world and has a 
well established customer 
base. 

The group, which has devel- 
oped following the merger of 
Kapiti and Aregon in Decem- 
ber 1989, has a strong and 
growing overseas business and 
a product development strat- 
egy which embraces the 
increasingly popular cli- 
ent/server computer network 

riwwigrv. 

Its products, which include 
Equation and Equinox bank- 
ing software, are installed in 
more thaw 600 locations in 70 
countries including a growing 
number of e m er g i ng markets. 
The market for licensed bank- 
ing software products is cur- 
rently estimated to be worth 
about £200m a year. 

Kapiti’s products should 
complement Misys’ existing 
portfolio of software products 
which are aimed mainly at 
specialist vertical markets 
fapinfling the insurance brok- 
ing, construction, hotels and 
hi gher education. 

In particular, the acquisi- 
tion, which is subject to share- 
holder approval at an extraor- 
dinary meeting on April 14, 
will broaden Misys' geo- 
graphic base. At present only 
3 per cent of Misys' £100m 
turnover is generated over- 
seas. About 25 per emit of the 
combined group’s sales will 
come from overseas. 

Mr Kevin Lomax, Misys 
chairman, said: “The Kapiti 
acquisition represents an 
excellent opportunity for 
Misys to expand its business 
in terms of product mix, cus- 
tomer base and the geographic 
markets it saves." 

Misys has received irrevoca- 
ble undertakings to accept the 
offer from holders of more 
than 90 per cart of Kapiti’s 
share capital. 


£3m provided for rationalisation at main site in West Yorkshire 

Hickson declines 9% to £22.1m 


By Davtd WJghtoo 

Hickson International, the 
speciality chemicals group, 
reported pre-tax profits down 
by £2.2m to £22.1m in 1993 after 
providing £3m for rationalisa- 
tion at its main site at Castle- 
ford. West Yorkshire. 

The company, which has 
seen a series of boardroom 
upheavals in recent years, also 
said that Sr Gordon Jones was 
planning to step down as non- 
executive Wmwrom. 

Sir Gordon, 67, who is chair- 
man of Yorkshire Water, was 
brought in three years ago as 
new management tried to sort 
out the group after a string of 

aff prigfHrvng rn tTrP ^ 

The restructuring at Castle- 


ford involves dropping a num- 
ber of “non-core” product lines 
which are suffering from 
Increasing competition from 
Indi a and chfoa The pro- 
vision covers the first year of a 
three year programme. 

Profits from the fine chemi- 
cals division, which includes 
Castieford awtf the Irish phar- 
maceuticals intermediates 
business bought in July 1992, 
fell £2.4m to £!2.6m after using 
£lm of pre-acquisition provi- 
sions. Both operations have 
suffered accidents in the last 18 
months which cost a net 
£400,000 after insurance claims. 
As a result the group’s insur- 
ance premiums are expected to 
rise from £A5m to mare than 
Pftm rtitq year. 


Thp protection and coatings 
division turned in operating 
profits of £11.9m (£9.9m) but 
performance products saw 
profits down £Llm to £7£m. 

Group sales rose to £36&3m 
(£342. 5m) with underlying 
growth of just 2 -per emit 

Ea rnings per share slipped to 
10p (105p) but dividends are 
held at Sp with a recommended 
final of 5J5p. 

After heavy capital invest- 
ment of C£34.4m) gear- 

ing- rase to 5L3 per cent at the 
period end (35J5 per cent) but 
capital expenditure will fall by 
£Kbn thte year. Hickson has a 
£40m convertible capital bond 
which is redeemable from the 
end of the year cutting the 
interest charge by £2Am. Hie 


group has sufficient facilities 
to redeem the bonds out of 
debt 

• COMMENT 

The new team at Hickson has 
had a very difficult time over 
the last 18 months, with two 
accidents, tough trading condi- 
tions and poor performances 
from recent acquisitions. Cash 
has continued to flow out of 
the business leaving the bal- 
ance sheet stretched. And the 
problems of the fine chemicals 
division have been aggravated 
by increased competition from 
India and China. Assuming 
profits of about £28m this year 
the shares are on a multiple of 
more than 17 which looks high 
enough for now. 


Aerostructures Hamble to 
join market with £90m tag 


By Tim Burt 

Aerostructures Hamble Hold- 
ings, the framer British Aero- 
space aircraft components sub- 
sidiary, yesterday announced 
plans for a stock market flota- 
tion valuing rh* company at up 
to £90m. 

NM Rothschild, which is 
advising the Hawpghir p. ly>a»ri 
group, said funds raised by the 
float would be used to finance 
future capital expenditure and 
repay borrowings incurred in 
its £47.6m management 
buy-out from BAe. 

Although the company has 
secured some lucrative orders 
ginra» the 1992 buy-out, its abil- 
ity to win further large con- 
tracts is understood to require 
a substantial capital injection. 


Mr Andy Barr, chief execu- 
tive, said resources had been 
drained by recent work on 
components for the Boeing 
737-700, the US aircraft maker's 
new short-haul model. “It has 
soaked op a fair bit of capital. 
The flotation would help us 
with other orders which we are 

ranfittent of winning ," he Said. 

Despite those prospects, the 
company still depends heavily 
on BAe, fra which it manufac- 
tures Hawk and Harrier fuse- 
lages as well as components for 
the Avro 246. That dependence, 
however, declined from 92 per 
cent of turnover in 1932 to less 
than 80 pa cent last year. 

Mr Barr, a former Rover 
Group managing director, said 
new customers - including 
Vought and Northrop - had 


been attracted by improved 
efficiency. 

Operating margins, mean- 
white, have increased following 
the introduction of Japanese- 
style manufacturing practices 
by managers recruited mainly 
from Rover. 

Those practices paid off last 
year with pre-tax profits of 
£4.7m, compared with £1.7m in 
the eight months following the 
April 1992 buy-out 

The improved profits were 
achieved on Iowa turnover of 
£70.44m against a pro-forma 
1992 total of £7L3m. 

Lord King. Aerostructures' 
chairman, admitted trading 
was difficult, but said profits 
had risen year on year, and 
“the group was determined to 
deliver further improvements’*. 


Wainhomes 
offer subscribed 
1.3 times 

The placing and offer for sale 
by Wainhomes, the Chester- 
based housebuilder, to raise 
£30.8m was subscribed 1.3 
times when the issue was com- 
pleted late on Monday, writes 
Andrew Taylor. 

The basis for allocation is 100 
pa cent for those applying up 
to 1,000 shares; 70 pa cent for 
1,001 to 4JJ00 shares; 60 per 
cent for 4JXJ1 to 10400 shares 
and 50 pa cent for 10,001 to 
200,000 shares. Those applying 
for more than 200400 shares 
are to receive approximately 48 
per cent of their applications. 

The issue was priced at 170p 
a share. Dealings are expected 
to start today. 


Macfarlane shows 25% 
improvement to £12.7m 


By Davtd Blackwell 

Macfarlane Group (Clansman), 
the Glasgow-based packaging 
company, boosted annual prof- 
its by 25 pa cart on the back 
of an 11 per cent rise in turn- 
ova. 

Pre-tax profits for the year to 
end-December rose from 
£10.2m to 412.7m on turnover 
Of £96.7m (£87m). 

Lord Macfarlane of Bears- 
den, chairman, said that all 
divisions of the company bad 
benefited from a gentle upturn 
in the UK economy. The group 
had increased the numbers 
employed from 1,500 to 1,600. 

Packaging accounts for 70 
pa cent of turnover and 75 pa 


Provisions leave Bardon 
with a deficit of £47.9m 


By Andrew Taylor, 

Construction Correspondent 

Bardon Group, the UK and US 
aggregates group, incurred a 
1983 pre-tax loss of £47 An after 
writing down the value of its 
marine dredging business by 
£60m. 

It is the second time in two 
years that the group has made 
large losses following substan- 
tial write-downs. In 1992 Bar- 
don ran up a pre-tax deficit of 
£40. 3m after provisions of 
VSRfim 

The latest writedown was 
made against Cml and Marine, 
which sells marine dredged 
aggregates in the UK and con- 
tinental Europe and which 
Bardon was attempting to sell 
to reduce further its large bor- 
rowings. 

Mr Peter Tom, chief execu- 
tive, said yesterday that nego- 
tiations bad been terminated, 
adding that it was not in share- 
holders’ interests to sen the 
business while continental 
European construction mar- 
kets - accounting for 40 pa 
cent of sales - were in reces- 


sion. 

Mr Tom was more optimistic 
about UK and US markets 
where volume sales and prices 
of aggregates had improved 
recently. As a result, he said: 
**1994 promises to be an appre- 
ciably better year." 

Group turnover for 1993 
increased from £336m to £351m. 
However, following disposals 
of profitable businesses and 
reflecting continued pressure 
on margins, operating profits 
before exceptional provisions 
fpTT from £32. 7m to CM An. 

Losses per share worked 
through at 12 Ap (I2.4p). 
Adjusted for the exceptional 
items, there woe earnings of 
l.lp (Z8p). A maintained final 
dividend of L2p makes a same- 
again 2p totaL 

Following disposals and a 
£72m rights issue net debt fell 
from £307m to £233m, repre- 
senting a redaction in gearing 
from 89 pa cent to 66 pa 
cent 

Operating profits in the UK, 
excluding discontinued 
operations, foil from £15. lm to 
El 1.5m with sales volume and 


prices remaining generally flat 
last year while costs had 
increased. 

On the same basis. US profits 
increased from £12.3m to 
£i6.5m reflecting increased 
construction activity in the 
north eastern states. 

• COMMENT 

Bardon would be a good busi- 
ness if it was not for the debts. 
The company is well placed to 
take advantage of the construc- 
tion recovery on both sides of 
the Atlantic with volumes and 
margins likely to move further 
flhpflrl this year. Th» housing 
recovery and an upsurge in 

road orders in the UK since the 
autumn should underpin 
domestic sales and earnings 
tills yea. The folk) wing yea 
may be more difficult with the 
government expected shortly 
to announce large cuts in the 
road programme. Pretax prof- 
its amid reach £22m this year 
putting the company on a pro- 
spective p/e of 22. Existing 
shareholders should hold but 
Bardon looks like it still needs 
a sale to get the debt down. 


cent of the workforce. The 
group runs two ofha divisions 
- plastic inmtirimg and devel- 
opment, which includes the 
group’s sticky label and furni- 
ture business. 

A&W FuUarton, the largest 
manufacturing company in the 
packaging division, is invest- 
ing in additional storage facili- 
ties in order to cope with 
increased demand. 

In plastic mouldings. ACW of 
Aberdeen increased its capac- 
ity and started to produce a 
new range of packaging for the 
nunjiwii sector. 

Earnings pa share anerged 
at lL25p (8_8p). and a final divi- 
dend 2.4p takes the total for 
the yea to 3£4p (3.186p). In the 
past four years the dividend 
has risen by some 57 pa cent 

The group ended the yea 
with net cash of £19m» up from 
£llxn. Lord Macfarlane said 
ftzrtfaer gmaT? acquisitions woe 
expected this yea, which 
together with planted organic 
growth would use up much of 
the cash. 


Rotork at 
£13m on 
back of 
new product 

By Davtd Blackwell 

Good sales of a new design of 
valve control helped Rotork 
lift 1993 pre-tax profits from 
£10Am to a record £l24m. 

The 23 per cent improve- 
ment was achieved on turn- 
over ahead from £57. lm to 
£70.70. 

Mr Tom Eassie, chief execu- 
tive, said the company had 
been encouraged by the speed 
wtth which the new IQ valve 
actuator had been accepted by 
customers aronnd tho world in 
a conservative market place. 

Rotork's main business is 
designing, assembling and 
selling electric mechanisms to 
open and close valves. The IQ 
control is operated through an 
infrared system, so It can 
remain sealed in hostile cli- 
mates. 

Customers Included every 
valve manufacturer in the 
world, Mr Bassie said. New 
orders last yea included con- 
trols for a large oil metering 
s ystem in central Siberia, and 
for one of the biggest water 
treatment plants in 

D tiring the yea Rotork 
spent £34m on strategic acqui- 
sitions, buying its Venezuelan 
agent and raising its stake in 
its Indian agent. It also 
acquired the 78 per cent it did 
not own of Rxeeco, winch 
makes gearboxes for electric 
valve controls. The acquisi- 
tions accounted for £248m of 
total turnover. 

The instruments division, 
with turnover of £6m, bene- 
fited from an increase In 
orders for emergency shut- 
down systems. The analysis 
division made an operating 
loss on sales of £3m to £4m. 

Net cash at the yea end was 
£ll.7m (£144m). 

Earnings per share rose 
from 7.56p to 948p. A final 
dividend of 24p is proposed, 
taking the total for the yea to 
445p (3.72p). 


Proudfoot runs up deficit 
of £llm and seeks £9.6m 


By David Btacfcwefl 

Proudfoot, the management 
consultancy chaired by Lord 
Stevens and which has haan 
extensively restructured, yes- 
terday announced pre-tax 
losses of £104m for 1993 and a 
rights issue to raise £94m. 

The pre-tax deficit compares 
with a previous profit of 
2244m. It was struck after tak- 
ing an exceptional charge of 
£20 -2m on the closure last 
April of Its operations in Swe- 
den and Norway. The charge is 
made up of £34m of provisions, 
£L5.7m of goodwill written off 
and trading losses of £L9m. 

Profit from continuing 
operations after interest and 
before tax was £9.3m, down 


from a previous 230.8m. This 
was struck on turnover from 
continuing operations of 
2140.7m, 11 pa cent down from 
£1584m. 

Mr John Prosser, chie f exec- 
utive, said yesterday that the 
restructuring ova the past 12 
months had reduced the staff 
from 1,400 to less than 900. The 
group was now better focused 
on its core markets, and had 
beat structured to fit in with 
the revenue levels achieved in 
the last half of the year. 

Operating profits for the sec- 
ond half woe £9-5m, compared 
with £6.3m in the first half, 
and wiarg iws improved from 8 
per cent in the first half to 15 
pa cent in the s eco n d . 

The rights issue would com- 


plete the restructuring and 
strengthen the capital base, Mr 
Prossa said. The balance sheet 
shows negative shareholders' 
funds of tMftn 

As at February 28 the group 
had net cash of £5.«n, com- 
pared with 2144m at the end of 
the year. 

. The rights issue, underwrit- 
ten by Samuel Montagu, is cm 
a 2-for-7 basis at 60p. Yesterday 
the shares closed 3p h igh er at 
71p. 

Losses per share emerged at 
25P (earnings l?4p). A final 
dividend of 14p is proposed, 
making a total fra the year of 
34p (12p), in line with the com- 
pany policy of paying out 40 
pa cent of earnings pa share 
from continuing operations. 


BUSINESS FOR SALE 


F OR SALE £S A GOING CONCERN 

DROGHEDA WEB OFFSET PRINTERS LIMITED 

UN RECEIVERSHIP) 

Martin V. Ferns Receiver and Manager 


Include; 

* Linotype ‘Newsmastor 1 Web Offint Newspaper Press 

* CretsoRoUa ’Standatir Web Offset Newspaper Press 

(Both capable of fid colour to a very Mghstandaiti) 

* Complete Plate Making Department 

* Mifltor Menkd Compensating Stackers and Loose iraeaus 

* Freehold end Leasehold Property 

* Customer bass 

* Highly skfled labour tome 
Fat farther Infonnaltan. p lue a contact: 

38 Hoed, Dublin 4. 
Ta: 353 1 B 788 ZSS Fax: 3 S 3 1 880 1831 

CoonbyIGmey I Ferre « rsm 


JOHANNESBURG CONSOLIDATED INVESTMENT 
COMPANY, LIMITED 

(Incorporated in th* FiepubBcot South Atrica) 

Hagfatratton number 01/D042SK06 

DIVIDEND NO. 136 ON SHARE WARRANTS TO BEARER 

^ hokto of share 

wwrants to baany are tnfom'ud thai payment of the above dMdend w« be 

tof ™ BqUBfi 19 ' 375714 P <» or aft* 18tb 

Apro 1894 upon surrender of coupon no. 137 to Banttays Bank Ptr cm, 
EWauiflg Setvtow DapaitmuiiL 1 68 Fenchurch Street London ECfl p at-y 

Amount 

pw 

share 

UK Currency 
8.9128 


Qnose amount t# dMdend Oedsrad 

Use South African Non-ReeWent 

Shareholders* Tax @ 1Z38* 

Amount payable where a UK Inland Revenue 
dedartibon la lodged wtth coupons 
Lara: United Kingdom bteome Tax @ 7,64% 

on the grora dvidand (See notas 1 & 2 bek»v) 

Amount payable where coupons are lodged 
without a UKfnteid Revenue declaration 


1-1016 

7.8112 


7-1303 


Bank pic ami 

««n deer days before peymamirC^ 


CortaolItJatod Investment 
Com P an y (Loudon), limited 
Lonto i Secfstertw 
PEC Denar 
Secretary 


8 St James's Place 
LONDON SW1A1NP 
30th March 1994 
NOTES: 

appHcabjeuttotMdefWtaafottablena 


and 

Tex- 


ts* payable In reepact of the tivkJwd tv. Untod Khfldom 

of credit at the rate of liae* tn imbm " o-^ES****. ■" Bfcwwee 
*»•- — *w»pe« or South African Nan-Realdem 


Shareholders' Tax. 








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> 


FINANCIAL TIMES WEDNESDAY. MARCH 30 1994 . 

~ COMPANY NEWS: UK AND IRELAND 


Lack of exceptionals and growth in crystal side behind tuxnround 

Waterford Wedgwood at I£lOm 


By Tim Coons in Dublin 

The sparkle has returned to 
Waterford Wedgwood, the lux- 
ury ceramics and crystal man- 
ufacturer, which after six years 
of losses has reported a iEKLim 
(£9.7m) pre-tax profit fix' 1993. 

Pre-tax losses of I£17m for 
1992 included an exceptional 
charge of I£1^.4m for restruct- 
uring costs and losses cm prop- 
erty disposals. 

Turnover rose by 17 p er cent 
to I£319m and operating profits 
improved by 80 per cent to 
I£16.5m. Year-end gearing 
dropped from 54 per cent to 41 
per cent 

The Tnfljn tm p ryiv M nan f 

from the crystal division, where 
operating profits grew from 
I£500,000 to £E7^m, on turnover 


UP 84 per cent to I£1Q2 ql 
A ccording to Ur Paddy Galvin, 
chief executive of the division, 
restructuring at its Irish 
plants, the introduction of 250 
new products in the past two 
years, better market conditions 
and improved marketing have 
all contributed to the turn- 
round. 

“We will not be satisfied 
though until we are achieving 
.margins. of at least is per ront- 
on sales,” he said. 

- • O utsour c e d products in its 
middle-market Marquis range 
of stemware,, introduced in 
199L now accounted for 12 per 
cent of turnover he said. 

. He. added that margins an 
p ro du cts tram the Irish plants 
continued to lag hoMnrf out- 
sourced products, but those 


were improving as a result of 
the rationalisation measures 
and more flexible working 
practices. 

Operating profits at the 
Wedgwood ceramics division 

edged up to TSMLlm (Ld05m) 
an turnover up lO.per cent to 
I£193m. Mr Kneale Ashwell, 
chief executive of Wedgwood, 
gaftf recession in file Japanese 
market had been the main 
cause of tighter margins. 

The company's currency 
hedging policy has meant that 
the full benefits of the devalua- 
tions of sterling ^ the punt 
in 1982 and 1983 respectively, 
will not be - felt until this 
year. 

Earnings per share were 
L27p (2.69p losses) and there is 
no dividend. 


• COMMIT 

The .prolonged and- painful 
restr u ctu ri ng appears to have 
finally paid off with the result 
that management and unions 
are now working together and 
are better attuned to what the 
luxury products market is 

riftmgriritng in tha JflBOS. A CUT- 

ry-over of tax losses fair the 
next three to five years and 
upturn in the group’s main 
overseas markets' point to a 
strong recovery in earnings. 
Pre-tax profits - of tkowi and an 
eps of 2^p look achievable this 
year giving a prospective 1994 
p/e of 2L No basement bar- 
gains here for the moment, but 
as earnings lock set to outpace 
other Irish industrials in the 
medium term, the current 
share price is not excessive.- 


Norwich Union recovers with £131m 


By Richard tapper - < ^but net claims fell to £L07bn (€t.2hn). 

With commiqs ton and expenses faffing to 
Norwich Union, one of the largest mutual £375m C£40Sm), the ccanpany reduced its 
insurers, yesterday reported a return to underwriting losses to £68.4zn (£167m). 
profitability in its general insurance : Overall investment iiwmw rose to £207m 
Operations, providing further evidence df - (£394m). 

recovery in the sector after three years of. Mr Allan Bridgewater, rftirf executive, 
poor results. said the reduction in claims had allowed 

the group also indicated that its rates ■ Norwich Union to reduce its premium rata 
for both motor and home tasurance had fix both home and motor insurance, 
fallen as claims experience in both sectors Claims following thefts from carsfefl by 
has improved. a third in 1993 to £54m. On average, rates 

General insurance profits fix the year to fix comprehensive motor insurance have 
end December 1993 amounted to £L31m taftm. by l2 per .cent, while rates for hoos& 
before tax (losses of £23Am). (ftoss pre- hold contents policies have dropped by ID 
mium income increased to £L72bn.<£L7hn) per ceftL Mr Bridgewater stressed that 


part of the r eflecte d tha greater 

use by policyholders of ’security devices 
and other safety and security measures. 

Premium income from life business 
increased to £2.75bn (£2.51bn), with new 
regular premium income amounting to 
giQgm (£238m). Sales of sfagia premiums 
over the year were £Ll9tm (£952m). 

The group has also made rapid progress 
in the health insurance Tnarirat, which it 
in. 1991. year m qnimn formm. 

Increased by GO per cent to £105m and 
profits wore recorded in the fourth quar- 
ter. Norwich Union sow has market share 

of about dps eunt and mrrr g thaw half a 

•mini op customer s 


Lloyd 
Thompson 
rises 17% 

By Richard Lapper 

Tough trading conditions in 
the London insurance market 
held back profits growth at 
Lloyd Thompson, the highly 
rated insurance broker. 

Pre-tax profits for the six 
months to December 81 
amounted to £9. 6m, an 
increase of 17 per cent over 
the corresponding period of 
1982: The Interim dividend 
was Increased by 20 per curt 
to 2Ap. 

Brokerage income rase by 3 
per cent to £20Jm. But all the 
Increase was due to the 
strength of the US dollar - 
Lloyd Ihompstm achieved an 
average exchange rate of |LS7 
against SL71 last year - and 
on an undertying basis broker- 
age volume was down by S per 
cart. - 

Reinsurance income fen by 
, 14 per cent to SSJSm, compand 
with £6 9m last year. The 
decline was partially offset by 
increases in marine (up by ZZ 
per cent) and non-marine busi- 
ness (up 12 per cent). 

Investment income 
increased by 10 per cent to 
£8Am. Expenses were reduced 
.by 4 per cent to £l4Jm “by 
means of a continuing review 
of costs and the search for 
more efficient methods of 
working.” 

Staff numbers were reduced 
by 4 per cent over the 
corresponding period last 
year. 


British Bio seeks £93.6m 
to fund drugs development 


ByDanMGkaan 

In the second cash call in two 
days from the bustling biotech- 
nology sector, British Bjo-tech- 
nology yesterday announced a 
rights issue of ordinary shares 
and warrants intended to raise 
293.8m over the next two years. 

The rights issue is equiva- 
lent to a i-for-3 issue at 400p a 
share and % of a warrant cm 
the haafa of ftna unit, compris- 
ing four ordinary shares and 
three warrants, for every 12 
shares held, ft should raise an 
initial £46m net df expenses. 

The warrants are exercisable 
at 52Sp at any time between 
December 11 1995 and January 
31 1996. If exercised in full, 
they will raise £479m. 

The shares rose % to 470p. 

The cash-raising exercise 
cornea 12 days after the first 
clinical trials of Batimastat, an 
anti-cancer drug. Indicating 


that it worked weQ. 

Mr James Noble, finance 
director, acknowledged that 
the cash call was opportunistic 
but added that this was a char- 
actertstic of the sector. Biotech 
companies spend many years 
in research and development 
before a drug comes to market 
and must generate cash hum 
markets rather than sales. 

Further clinical trial results 
from other drugs are due later 
this year. The snminer should 
see an Aids and pancr eas 
dfqffas e treatments. 

He said that the company 
needed the £93j6m to take it 
through the development 
phases to drag launches. 

Four of the directors intend, 
to *»ka up their rights and the 
others will sell some of the 
rights and buy the rest with 
the proceeds. 

The units will be dealt nil 
paid from April 15 to May 9 


when they will be split Into 
shares and warrants for fully 
paid trading. 

• COMMENT 

The rights issue from British 
Biotechnology is not like that 
on Monday from Proteus Inter- 
national. British Bio-tech 
moved more quickly after the 
publication of important clini- 
cal trial data, it has already 
signed deals with blue chip 
research-driven pharmaceuti- 
cals companies such as Glaxo, 
and it has a solid following 
among City analysts. Once 
Batimastat enters the next 
stage of clinical development 
later this year, a risk-adjusted 
net present valuation of the 
company comes out at about 
£7Q0m. That is the equivalent 
of more than £10 a share, and 
makes the rights issue look a 
bargain for the risk-minded 
investor. 


Threat to Heron interest meeting 


By Maggie Uny 

A Heron International bondholder is 
threatening a legal challenge to the meetings 
being held tomorrow to approve a delay in inter- 
est payments. Horan, which completed a £L4bn 
refinancing last September, has hit problems 
meeting interest payments. 

Mr Gary Klesch, a dealer in distressed debt 
has written to Law Debenture Corporation, the 
trustee fix the bonds, demanding a separate 
meeting for those holders of the 7% per cent 


bonds which are also lenders to Heron Corpora- 
tion. a subsidiary of Heron International He 
Hnhm their interests axe different from inves- 
tors who are only bondholders. 

Last night Law Debenture said it would be 
taking advice on the question today. 

However, an expert said that Mr Ktasch's 
demand for “separate class meetings” was ques- 
tionable since bondholders farm one. indivisible 
dess. As they ere bearer bonds, the trustee Is 
not entitled to know the beneficial owners 
behind the bands. 


Harland and Wolff cuts loss 
but disappointed with result 


By Our Belfast Correspondent . With the exception of the He added: "Furthermore sev- 

holding company, Harland and eral new processes were imple- 
Losses at Harland and Wolff Wolff Technical Services and merited, some of which need 
Holdings, the Betfart shipbmld- the wholly-owned Trass ey further refining in 1394 having 
mg company, were cut from Shipping, operations in all foiled as yet to meet expecta- 
£10.7m to £5.65m pre-tax for the companies resulted in looses. tions. 
year to end-December. Harland executives said they “As a result, total proddetiv- 

Mr Fred Olsen, (he Norwe- were scouring the world for , ity did not improve to the 
gian shipowner who is Har- hew business as the order book extent expected, which has 
land’s majn shareholder and. dwindled. increased pressure on the 

company rfinirman, described Mr Per Neflsen, chief execu- company to reduce costs 
the results as "disappointing”, tive, said that during 1998 more speedily in order to 
The company, which was more than 80 per cent of all counter-measure the fall in 
completely reorganised ; into operating time in, the mum ■ intervention aid and the 
self-contained business divi- shipbuilding company was declining prices for ships since 
sions after privatisation- in spent cua work an two ships ISBL" 

1989, said the 1993 deficit tetag *fr uflt"to a new Harland With short term d&hand; 
inducted a .<*arge £4jLm for and Wtittt design, and all devet weak and httte scope farttptir 
foreseeable losses on contracts' opment costs -were charged to mlsm this year Mr Nellsen 
which were inhand at the year the profit and loss- account as warned of the need -to improve 
end. incurred. : productivity rapidly- •" 


Croda advances strongly 

By David Wighton Exports rose by almost a fifth tain amount of restocking by 

helped by the fall in starling, customers bat it may indicate 
Shares in Croda International . with good sales into (he diffi-- the start of an underlying 
fell 24p to 352p yesterday- after edit personal care market in recovery.” 
the speciality chemicals group Germany- 

reported pretax profits up 29 Group turnover rose 14 per • coumtifi 
per cent to £3&5m in 1993 cent to £4L5m with growth of The .market reaction might 
before a £K>.4m gain on the about 6 per cent excluding appear harsh given the 
recent sale of its inks busi- exchange rate benefits and strength of Groda’s recovery, 
nesses. acquisitions. But the shares have had a very 

Mr Michael Valentine, chair- Profits from coatings rose by strong ran and the company 
m an, described It as a “very £im to £5m, helped by the threw current year forecasts 
good year” with record profits, restructuring of the UK paint into Ronfusinn by warning that 
Profits topped the £36.'4m " buaihesq, and cosmetics and there may not be a repeat of 
achieved in 1990 with earnings toiletries recovered to £L7m last year’s £29m pension credit 
per share also at a peak' of {£56&,Odo) having been hit by in the UK. Analysts were also 
2cup, up 31 per c ent , before the ‘ . weak European' consumer concerned about the continued 
exceptional. However, the cat demand- in J992. impact on margins of the rise 

in tto dividend in 1991 has not ‘ The 1 inks and graphics sup- in the soya bean oil price. But 
bean folly restored. It rises by plies business; which Croda these are minor issues fix a 
8.4 per cent to B.4p, with a final sold to Manders fix £26.7m in company which looks well- 
of 5,45p. In 1990 the pay-out January, made £2.5m (£2.lm), placed with its portfolio of nab 
was lip with the proceeds leavings oral products, reasonable expo- 

The chemicals busi- Croda with gearing of 25 per sure to the fast-growing east 
ness, whose products are amt ‘ ‘ Asian markets and a healthy 

chiefly based on natural oils, Mr Keith Hopkins, chief balance sheet On forecasts of 
continued to grow strongly executive, said the current about £40m for the current 
with operating profits up 19 . year had started well with year the shares are on a multi- 
percent to £36Bm cm turnover "very strong” sales hi Italy and pie of less than T7 which looks 
13 per cent higher at £271m. France. “There has been a car- well-deserved. 


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FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


COMPANY NEWS: UK 


Counting the true cost of aircraft leasing deals 

Robert Peston ^amine s the methods employed by British Aerospace to sustain its aviation business 


B uried deep in British 
Aerospace’s accounts, 
published yesterday, is 
a note which could be as signif- 
icant to the future prosperity 
of the UK's leading defence 
and aviation business as the 
£8Q0m it has raised recently 
from the sale of its Rover car- 
making subsidiary to BMW. 

BAe has disclosed for the 
first time that it has obliga- 
tions under leasing arrange- 
ments totalling £2.9bn, com- 
pared with income that it 
expects to receive on sub- 
leases of £L8bn - and only an 
undisclosed part of that sub- 
lease income is contractually 
committed. 

What this shows is the sub- 
stantial finflnriai risks which it 
Tiac been firing over the past 
two decades in order to sustain 
its civfl aircraft manufacturing 
operations. In large part 
because of this leasing expo- 
sure, the company came peril- 
ously near to collapse over the 
past two years. 

As Mr Richard Lapthome, its 
financ e director, said: "We got 
very dose. Writing oft a billion 
[as the company did in 1992, 
with a third of the losses stem- 
ming from aircraft leases] and 
not recognising the need for 
change would have bankrupted 
the company.” 

In the past three years, its 
commercial aircraft division 
has lost £1 /ratal in aggregate, 
including exceptional reorgani- 
sation costs and provisions 
against losses on the leases, 
but exduding tax and interest 
payments. 

Those losses are many times 
greater than the modest aggre- 
gated profits made by the divi- 
sion in the boom years of the 
1980s. Provisions made in the 
past two years to cover aircraft 
lease losses total some £600m. 


The company had imple- 
mented a text book recovery 
process, said Mr Lapthorne. 
The balance sheet was 
stre ngthened by the Rover dis- 
posal proceeds and last year’s 
sweeping reorganisation of 
banking arrangements. 

This has given BAe the con- 
fidence to change its account- 
ing procedures to give a more 
accurate picture of the leasing 
r isks . The new balance sheet 
presentation shows that the 
main buyers of BAe’s commer- 
cial aircraft have not been air- 
lines, despite what common 
sense would suggest, but have 
in fact been banks and other 
financial institutions. 

These banks purchased the 
aeroplanes and leased them 
back to British Aerospace 
under agreements lasting 
between 15 and 20 years, 
depending on the type of air- 
craft. BAe then rented them on 
sub-leases of between three 
and five years to airlines. It 
has therefore been exposed to 
the risk of substantial losses if 
these short-term leases were 
not renewed. 

According to Mr Lapthome, 
the appropriate analogy for 
BAe’s civil aircraft business is 
not a normal manufacturing 
operation but, rather, property 
development: "You don't sell 
airplanes ... to airlines,” he 
said. “You build an airplane 
speculatively and then sell it to 
the bank. You then find an air- 
line as a tenant” 

Mr Lapthome said that all 
aircraft manufacturers 
engaged in this kind of finan- 
cial pn ginporing In the early 
1980s. when air travel was a 
boom industry and there was 
widespread inflation, each time 
a sub-lease expired it was 
replaced with another at 
higher rates. 



The Avro 146 regional jet: more than half of some 200 sold are subject to lease agreements 


However just like property 
developers, when recession hit 
the airline industry after the 
1991 Gulf War, the aircraft les- 
sors were hit by huge losses as 
some airlines ran into serious 
difficulties and were unable to 
make lease payments, or oth- 
ers simply chose not to renew 
leasing arrangements as they 
fell due. 

The most prominent victim 
was GPA. the specialist leasing 
business, which had to be 
refinanced last year. However, 
it has emerged from BAe's 
accounts that its leasing expo- 
sure is enough to engender ver- 
tigo in the most phlegmatic 
finance director. Mr Lapthome 
said that containing the risks 
figured among his top priori- 
ties within days of joining the 
company in July 1992. 

BAe has sold more than 200 


series 146 regional jets since 
launch just over a decade ago. 
Of these, it is exposed to lease 
payments on half- In respect of 
350 turboprop aircraft sales it 
has continuing financial expo- 
sure to 75 per cent. 


I t is committed to make 
payments to banks and 
other financial institutions 
of £1.8bn in respect of head 
leases it has signed. More than 
£lbn of these payments are 
contracted to be made in more 
than five years, after most of 
the sub-leases have expired. 

There is a second category of 
exposure for BAe. Even when 
it sold aircraft directly to air- 
lines rather than banks, it 
often provided guarantees on 
leases which the airlines them- 
selves took out with financial 
institutions. 


Thus BAe has “third party 
head lease and other recourse 
costs” of Elbn. In total there- 
fore, its has gross head lease 
obligations of £2£5bn, or about 
three times the value of its 
shareholders' funds. 

Mr Lapthome said that its 
total lease obligations are 
greater still, taking account of 
its share of its exposure to the 
head lease obligations of its 
associated company. Airbus 
Industrie. 

Some of its lease obligations 
are covered by tomme on sub- 
leases to airlines. It said that it 
expects sub-lease income to 
total £1.76biL However, Mr 
Lapthome said that this 
income is not all contractually 
committed. It is a combination 
of both committed and expec- 
ted lease Income, estimated on 
the basis of precedent 


It’s calculated like an insur- 
ance company calculates risk,” 
he said, “It’s a judgment,' but 
our model and all the thinking 
it has been thoroughly 
audited.” 

Nonetheless, there is a short- 
fall of £lbn between this esti- 
mate of what it expects to 
receive and what it has to pay 
out on head leases, although 
some of the gap is covered by 
its £230m estimate of the dis- 
posal value of aircraft after 
they revert to it 

BAe thus calculates its net 
risk of uncovered payments on 
head leases at £866m. Those 
payments will be made over 
many years, and BAe estimates 
that their present value - tak- 
ing account of inflation - IS 
£653m in today’s money. It has 
therefore made provisions to 
cover losses of this magnitude, 
including an addition of £25Qm 
in respect of the turboprop air- 
craft made in the 1393 results. 

Its financial performance 
shoniri only suffer further dam- 
age from the tease exposure if 
its estimates of sub-lease 
renewals and of the residual 
sale value of aircraft are too 
optimistic. However, Mr Lap- 
thome is confident that BAe is 
now accounting for its leasing 
exposure more prudently than 
any aircraft company in the 
world. 

He also says that disclosing 
the implicit leasing costs of 
selling aircraft, which was 
done within the company last 
year, has already had an 
important effect on corporate 
culture: "In 1993, for the first 
time in the company’s history, 
BAe turned down aircraft 
sales.” 

If precedent is any guide, 
shareholders must hope that 
the company fails to make a 
few more sates. 


will 


By Nefl Buckley 


Iittlewoods, the retailing and football 
pools group that is one of the UK’s 
largest private companies, announced 
a 74 per cent increase in pre-tax prof- 
its yesterday, and insisted that it 
would remain private. 

Profits before tax for the year to 
December 31 increased to £ll7^m. 
The £67 J3m for 1992 has been restated 
in accordance with FRS 3 to take into 
account exceptional costs of £29 .7m 


for the group's withdrawal from the 
food hall business - which was taken 
over by Iceland - and from its retail 
finance businesses. 

There were net exceptional costs of 
£3-4m for 1993, with £10 Jm rationalis- 
ation costs offset by a £7.5m profit on 
the sale of Littlewoods' Christmas 
hampers business. 

Exclu din g exceptional, underlying 
profits grew by 24 per cent from £97m 
to £l20.6m. 

The death of Sir John Moores, the 


group's founder, last September had 
led to speculation that the group 
might be floated, with rumours that 
some of the 32 aiiax-rimMar members 
of the Moores family were keen to sell 
their stakes. 

However, Mr Leonard van Geest, 
chairman, insisted there were no 
plans for flotation. 

“We have no need to go public,” he 
said. “The family members are all 
very committed to the business, and 
maintain a strong interest tu it” 


He added that not having access to 
equity finance was not a problem as 
the group was able to borrow at good 
rates. Littlewoods moved from net 
borrowings of Bf-iw at the beginning 
of 1993 to net cash of £589m at the 
year-end. 

Sales increased by 2Jj per cent from 
£2.71bn to £2.78bn, of which the retail 
businesses contributed £1.96bn 
(£l9bn). 

Sales in Littlewoods chain stores 
declined from £696m to £666m, mainly 



NEWS DIGEST 


Estates & 
General 
cuts loss 


William Baird 


Estates & General, property 
developer and investor, cut its 
pre-tax loss for the year to 
December 31 from £26. 4m to 
£4J51m. The figure was struck 
after provisions of £2.21m 
against UK trading properties 
and a development in Majorca, 
and compares with provisions 
of £13 .3m last time. 

Group turnover was £9 .45m 
(£S.19m) and overheads were 
cut by 33 per cent to £1.68m. 

The company's banking facil- 
ities have been extended until 
the end of June 1995. 

“This has been a year in 
which we have made encourag- 
ing progress towards restoring 
the financial stability of the 
company,” said Mr Peter 
Prowting, chairman. He is hop- 
ing to achieve “a balance 
between rental income and 
funding costs” in 1995, helped 
by new lettings and interest 
rate changes. 

Losses per ordinary share 
were reduced to 2Llp against 
126.7p. 


William Baird, the textiles 
group, has sold the UK busi- 
nesses of Darchem’s building 
services division, a provider of 
relocatable accommodation 
units, to a consortium backed 
by Murray Johnston and Nat- 
West Ventures, for about £7 .5m 
tn flash. 

Some £6. 75m was paid on 
completion. A second payment 
will be made following a com- 
pletion balance sheet date with 
the final £l.lm payment 
deferred for one year. 

Baird is also selling certain 
assets of the Dalfratex and 
Scotswood businesses to Cape 
for about £700,000 cash. 


end-December rose from 
£3 .82m to £3-99m. Acquisitions 
added £3.65m to group turn- 
over of £22.04m (£15.5m) and 
£373,000 to operating profits. 

Investment income fell to 
£637,000 (£1.69m) while interest 
costs rose to £466,000 (£L52JXX>). 

Earnings were 11.6p (lip) 
and a final dividend of 4.75p 
makes a same-agaln 8J25p total 


reduction programme had 
released £7244)00 towards the 
cost of capital investment 


half year resulting in losses 
per share of 0.43p (0.52p). 


Servomex 


Ropner 

Ropner, the shipping, engineer- 
ing and property investment 
group, is proposing to give 
equal voting rights to its A 
non-voting ordinary sharehold- 
ers. As compensation existing 
ordinary holders trill receive 
additional shares on a l-for-10 
basis. 

Both classes of share rose 
yesterday, the ordinary by lOp 
to 162p and the As by 9p to 

15%. 

Pre-tax profits for the year to 


Restructuring costs of £568,000 
left Servomex, the maker of 
gas analysis and monitoring 
equipment with 1993 pre-tax 
profits of £1.52m, against 
£2.11m. 

Earnings per share came out 
at 9.4p (14.lp) but the final pro- 
posed dividend is raised to 4JJp 
for a total of 6.4p (5.9p) 
reflecting the company's confi- 
dence in the future following 
its cost cutting. 

Turnover improved by 15 per 
cent to £22.7m (£19.7 m). How- 
ever volume growth was only 3 
per cent with the rest being 
made up of price rises and 
exchange rate effects. 

Net debt rose slightly to 
£1.77m at the year end, against 
£L54m, for gearing of 25 per 
cent (23 per cent). The com- 
pany said that an inventory 


OIS Inti Inspection 

OIS International Inspection, 
which provides technical 
inspection services to the con- 
struction, petrochemical and 
power generation industries, 
reported pre-tax profits of 
£2.21m on turnover of £46.7m 
for 1993. 

The company came to the 
market at the end of 1992 and 
there are no directly compara- 
ble figures. However, the busi- 
nesses which became wholly 
owned subsidiaries at the tim** 
of flotation made pre-tax prof- 
its of £L74m on turnover of 
£4&8m in 1992. 

Earnings per share were 5-4p 
basic and 5J.p fully diluted. A 
final dividend of L4p is pro- 
posed for a total of Zip. 


FW Thorpe 

Pre-tax profits more than dou- 
bled, from £402,000 to £869,000, 
at FW Thorpe, the lighting 
equipment maker, in the half 
year to December 3L 

On turnover ahead from 
£7.54m to £9-5m operating prof- 
its on continuing operations 
were £786,000 (£279.000). Inter- 
est receivable fell to £83,000 
(023,000). 

Earnings per share rose to 
4.7p (2. Up) and the interim div- 
idend is lifted from OJJp to lp. 


Thomas Jonrdan 


Coal Investments 


Scottish Asian Inv 

The Scottish Asian Investment 
Company had a fully diluted 
net asset value of 354.9p at Jan- 
uary 31 1994 against l7G.6p a 
year earlier and 21 3p at Qi» 
July 31 year end. 

There was an attributable 
loss of £76,000 (£90,000) for the 


Thomas Jonrdan, the maker 
and marketer of consumer 
goods, returned pre-tax profits 
of £254,000 for 1993, a swing 
from restated losses of £1.12m 
the previous year. 

Turnover totalled £22 -91m 
(£22. 7m). All subsidiaries 
traded profitably, with the 
exception of Woodstock Furni- 
ture which is being closed 
along with Corby’s French dis- 
tribution company. 

A proposed final dividend of 
0J5p makes a lp (0.75p) total. 
Earnings emerged at l-29p 


FINANCIAL TIMES 


EAST EUROPEAN 
BUSINESS LAW 


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Ireland Limited (the ‘ London Stock Exchange*). It does not consnrm* an 
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Siam Selective Growth Trust pk. Application has been made no die 
London Stock Exchange for the securities mentioned below m be 
admitted 10 the Official List It Is expected that listing will become 
effective, and that dealing will commence at 8.30 aan. on 25 April 
1994. 


FT EAST EUROPEAN BUSINESS LAW is a monthly account - 
concise and empirical - of new laws affecting business in ihe countries 
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(harrmtal <n b^/pi mi Wdn mkr tk CtfmjartW Act 1985, amkr ZM2J2U 

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El 


Ulster TV plans ’ 
move into cable 


By Raymond Snoddy 


Shares in Coal Investments, 
formerly Geevor, rose 8P to 84p 
bn their re turn to the market 
yesterday following a seven 
week suspension. 

The shares have been one of 
the market’s most outstanding 
performers since Mr Malcolm 
Edwards, former British Coal 
commercial director, took over 
as chairman last September. 
They were relisted last October 
at 10p. Last month’s suspen- 
sion was to allow the company 
to undertake a programme to 
raise ELLSm, partly through a 
rights issue. 


Ulster Television. Is planning to 
apply for a licence to cable Bel- 
fast and Its surrounding area 
10 years after the ITV company 
first became interested in cable 
television. 

Then UTV was in a consor- 
tium that Included British 
Telecom and STC but nothing 
came of the venture. 

Mr Desmond Smyth, chief 
executive, said yesterday he 
believed the time was now 
right for cable and the com- 
pany was in pre l i mina ry talks 
with Mercury Communica- 
tions. 

The Independent Television 
Commission is expected to 
advertise a local delivery 
licence (cable) for Belfast later 
this year. 

Mr Smyth said he was con- 
vinced that investing in a cable 
and telephony consortium was 
a far better investment than 
fairing over ano ther s mall ITV 
company. 

He was speaking as the com- 
pany announced a record pre- 
tax profit of £5.07m for 1993, its 


first year of the new ITV 
licences. The figure compared 
with £4.1Sm last time. 

Mr John McGuckum, chair- 
man, described the result as 
outstanding although the fig. 
ure was made up of operating 
profit of £3- 47m (£LS5m) and 
investment income of £1.6 xd 
(£ lJ33m). 

Direct comparison Is diffi- 
cult, however, because or the 
changes, including the cash bid 
of £1.03xn a year for the licence 
and a new basis payment for 
network programmes. 

Turnover was lower at 
£27Jm (£28Sm). 

Earnings per share were 
3i.7Sp (34JJp) and a higher pro- 
posed final dividend of S.75p 
(5.75p> making an increased 
total for the year up from lOp 
to 15p. 

Mr McGuckian said that in 
the first quarter of this year 
the share of ITV advertising 
has continued to rise although 
it was too early to say whether 
this would be sustained 
throughout the year. 

The shares rose 6p on the 
day to close at 667p. 


as a result of disruption during the 
conversion of food hail* to the Iceland 
format Operating profits from the 
continuing business Increased from 
£33-2m to £37 An. 

In the home shopping division, 
sates rose from £978m to £L04bn, and 
profits from £56.3m to £68£m. 

The Index catalogue shops 
increased sales to £251m (£228m). 
Losses were reduced to £7.5m (£9JLm). 
Profits from the group's football pools 
side grew to £23 .6m (£2L6m). 


Henderson Highland 

Net asset value per share at 
Henderson Highland Trust 
improved from 108Jp to 13L89p 
over the 12 months to Febru- 
ary 28. 

Net revenue for the period 
came out at £L52m (£L38m) for 
earnings per share of 5Ji2p 
(5.3p). An unchanged final divi- 
dend of 1.4* is recommended 
for a maintained total of 5.6p. 


Monarch Resources 


plans to raise $30m 


By Kenneth Gooding, 
Mining Correspondent 


(losses 637p) or 3.45p (Losses 
0.13p)adjusted for the loss 
attributable to discontinued 
operations. 


Fed up with London investors’ 
lack of interest in smaller min- 
ing companies and the fall in 
research coverage of the sec- 
tor, Monarch Resources is to 
raise $30m (EM-Sm), principally 
from Canadian investors, so 
that it can apply to be 
listed on the Toronto Stock 
Exchange. 

Monarch's shares reacted 
favourably to this news yester- 
day and rose from 251p to 262p. 

The company, which has 
gold mining and exploration 
operations in Venezuela, 
intends to keep its London 
Stock Exchange quotation “for 
the foreseeable future”. 

Present shareholders, of 
which about 70 per cent of the 
550 holders are based in the 
UK, will be able to take part in 
the cash-raising exercise via, an 
open offer for up to 
£7m. 

Monarch also reported sub- 
stantially reduced losses before 
tax, down from $4.72m to 
S2iUm for the year to the end 
of December. There was an 
attributable loss of *2An for 
losses of 10 cents a share, com- 
pared with $4.72m or 32 cents. 
Turnover was 87.37m. against 
$6^7m. 

Mr Michael Beckett, chair- 
man, said he wanted Monarch 


listed on the Toronto exchange 
partly because price-earnings 
multiples for smaller gold min- 
ing companies were on average 
twice those in London, but also 
because London was becoming 
more restrictive. “Companies 
like ours need more flexibil- 
ity," be said 

Monarch's biggest share- 
holder, Mr August von Flnrk. a 
German businessman, will 
take up the shareholder offer 
and suffer a “modest” dilution 
from his present 22.9 per 
cent 

Most of the new funds raised 
will be used to finance Mon- 
arch’s exploration programmes 
this year and in 1995. These 
will be stepped up substan- 
tially, mainly at the Venezue- 
lan concessions but also in 
other parts of central and 
south America. 

Mr Beckett said the Revemin 
processing plant was now gen- 
erating cash - there was a net 
H90.000 gain last year com- 
pared with a net cash loss of 
$L08m - and the La Comorra 
was scheduled to start 
operating in June. 

The offer to North American 
investors will be at or near the 
prevailing price after a 
preliminary prospectus is 
issued on about May 10. Sco- 
tlaMcLeod is leading a syndi- 
cate of underwriters to the 
offer. 


Health care 
changes help 
Nestor-BNA 


Morgan Grenfell 
Latin trust 
raises £64m 


The changing climate of 
health care in the UK helped 
Nestor-BNA, the nursing 
agency, personnel and medical 
services group, to achieve pre- 
tax profits of £4 .52m for 
1993. 

The £1.7lm figure for 1992 
has been restated in accor- 
dance with FRS 3 to include an 
exceptional S2A3m write-off. 

Turnover was 15 per cent 
ahead at £Ulm (£96~$m). 

Operating profits rose to 
£5. 14m (£5JS4m), with 88 per 
cent rowing from hroith care, 
67 per emit tn the UK and 21 
per cent in the US. 

Earnings per share rose to 
4.46p (Oraip) and a same-agaln 
final of 2p maintains the total 
dividend at 3.15p. 


For more information 


THE EMERGING MARKETS STRATEGIC 

FUND 


Sod&e d’lnvestissement & Capital Variable 
Registered office : 2, boulevard Royal, L-2953 Luxembourg 
R.C. Luxembourg No. B 28252 


Notice is hereby given to the shareholders, (hat the 


ANNUAL GENERAL MEETING 


of shareholders of THE EMERGING MARKETS STRATEGIC 
FUND will be held at the head office of Banquc Internationale ft 
Luxembourg, Socifife Anonyme. 2. boulevard Royal. Luxem- 
bourg, on April 7, 1994 al 1 1.00 a.m. with the following agenda ; 


1. Submission of the Reports of the Board of Directors and of the 
Auditor, 


Z Approval of the Statement of Assets and Liabilities and of the 
Statement of Operations for the year ended as at December 3 1 
1993; Appropriation of rhe results; 


3. Discharge to the Director; 


4. Recap! .of and action on appointment of the Directors and of 
the Auditor; 


5. Miscellaneous. 


The shareholders are advised that no quorum is required for site 
items oo the agenda of the Annual General Meeting and that 
decisions will be fakta on a simple majority or the shares present 
or represented at the Meeting F 


In order to attend the meeting the Owners of bearer shares will 
have to dt:poai then- shares five clear days before the meeting 
jrifato^lnlernauonale ft Luxembourg. 2. boulevard Royal, 

the board of directors 




Morgan Grenfell has raised 
£64J2m with the launch of its 
Latin American Companies 
investment trust, £53m of 
which came from an institu- 
tional placing. 

A similar fund, the Inca trust 
from Edinburgh Fund Manag- 
ers, raised about £30m during 
its placing. The result of its 
public offer is not yet known. 

Both trusts had initially set 
higher targets, but Morgan 
Grenfell said that given market 
conditions during the offer 
period, it was very satisfied 
with the amount raised. The 
placing for a third Latin Amer- 
ican fund, from Templeton, is 
still under way. 

Dealings in the Morgan 
trust's shares and warrants are 
due to start tomorrow. 


jure* 
is f° r ‘ 











FINANCIAL TIMES WEDNESDAY:MARCH 30 1994 


. *Uj-' 




‘ V 

• ^ . ■ t* ; 


-• : .:v iU-i-- 


Reso 


% 




■ • w o 


33 


FINANCIAL TIMES SURVEY 


JAPANESE FINANCIAL MARKETS 

- • . Wednesday March 30 1994 


Four years of collapsing Share and 
property prices have/foieed the . 
administration to concentrate on more 
open and competitive financial : . 
markets. But officiate, baffles, their 
affiliates arid customershre closing 
ranks. William Dawkins qepbrts ~~~ 



is forced to 
switch focus 


The Japanese bureaucracy’s 
griding hand has returned to 
the financial markets, m an 
attempt to steer -them through 
the worst recession since the 
second world war without hit- . 
ting a crisis. 

Four , years of collapsing 
share and property prices have 
forced the administration to 
switch focus away from its pre- 
vious gradual progress towards 
more open and competitive 

famrial TWjTfcafai. 

Now officials, banks, their 
affiliates and cus tomer s are 
closing ranks, despite pressure 
for more deregula ti on from Mr 
Morihlro Hosokawa, prime ■ 
minister, who Is eager to 
deflect US frustration at : 
Japan's remaining market 'bar- 
ders. - 

The return to old ways is 
illustrated by a revealing meet- 
ing one morning last Novem- 
ber, in one of the typically 
shabby, grey-painted rooms of 
Japan's ministry. 

Officials huH raPpri in senior 
executivasof Japan’s Ufa insur- 
ance companies, among the 
biggest investors in the Tokyo 
stock market, to explain, the 
ministry’s attitude to the previ- 
ous day's ftB in share prices to 
nearly 16,000, a new low for the 
year. 

>• Both' sides- knew that'flt that 

. 1VL.J '• *■ ' IWii." x 


level, Japan’s banks start to 
become-vrarned that their capi- 
tal. part of which is in equities, 
wfH^begin to snffer, posing a 
danger of a credit squeeze for 
the hard-pressed economy. 
That afternoon, Nippon life 
Insurance, -Japan's largest 
insurer, bought YiObn of 
shares. A day later, the market 
picked up'sHghtiy. Nippon 
insists that S acted purely an 
its own JbcMoo. 

’■ 1 The anecdote shows that the 
ministry 's ^ "administrative 
guidance” is as effective as 
ever. It tf 1 encouraging finan- 
cial institutions to co nfr o nt the 
p robtems caused by the flnan- 
dal ’ exoesses of the late 1960 b, 
-yet the mhilstry is also doing 
all it can behind the' scenes to 
pp mmt markets AHdtwg pot of 
control /’ - 

The administration 1 8 scope 

- to i ntwwwmp lina been nwute all 

tile stronger by the erosion of 
political authority,' with the 
cnffapsa of the Liberal Demo- 
cratic Party in last summer’s 
wlarH/mn Anri fhe wwiing polit- 
ical upheavaL For this reason. 
JapanrB Hmneiai nwriwifci can 
expect 'a longer and gentler 
adjustment than did Wati 
Sfrtef 'afte r its ditabfyam. in 
late 1967.' '■ 

Batiks are accelerating the 
pace at which they deal-wlfh : 

trTiuQai tyiifj ujV..- r 



IN THIS SURVEY 

□. The banking system; 
Bad debts pose the most 
urgent immediate problem 
for small and large banks 
alike .. 


□ Hie broken: A chronic 

dearth of equity business b 
compounded by overcapa- 
city p^e.11 

□ Non-banks: Despite their 
bad-debt problems, non- 
bank stocks performed wen 
fast year- Page fV 


□ CoBaterefc Hie need for 

banks to warehouse bad 
loans lad to creation of the 
CCPC Page IV 

□ Foreign fa sH t ud owi e : 

Tokyo b losing its status as 
a base for the entire Asia 
Pacific region Page V 

□ Editorial production: 

Phi Sanders 


thrfr most, pressing problem: ■ 
the need to write off a moun- 
tain of bad debt Increased 
write-offs wtH. befhemain fea- 
ture in an darKiia hi 

net profits Of* the 11 laaritng 
city banks to Y356bn in the 
year ending to m orrow, from 
Y4ZLlhn in 1983, -forecasts SG 
Warburg Securities in Tokyo. 

Yet hanks are feeing up to 
non-performing loans only 
slowly by western standards. 
Use real extent of tits problem, 
and hence its future i mpart on 
toe supply of credit, is hard to 
measure.; 

Officially, tiie . 21 leading 
banka calculated timfr'nou-per- ;; 
forming loans at Yi3,7pKm, at 
tfie. - last Count set tite 'of ' 

Yet 


inan J rmp rm which, no repay- 
ments have N*** 0 niarin for she 
• nzonths, is lax by. the US stan- 
dard, under ‘width, si debt must 
be declared had 'the’ moment 
-toe terms of toe loan are 
breached. Under tM* tougher 
US regulation, Japan’s bad 
debt mountain would grow to 
at least Y3O,OO0bn. The differ- 
ence highlights Japanese, 
banks' traditional concern with 
hel p in g big corporate custom- 
ers through bad tunes. 

To mflirp wifl tte n i worse, the 
lingering recession and the 
yen’s relentless rise are adding 
dud Industrial loans to the 
„ debts of property developers, 
nr comparifls aiinggym Y ahiefl 
property as collateral, which 
^jj f t r ^y at the origin pf toa^proh- 


Worryingiy, corporate bank- 
ruptcies caused by the reces- 
sion rose to a record 6(18 per 
cent of total collapses last year, 
according to Telkoku Data- 
bank, a private credit bank. In 
J anuar y, the overall mmi hpr of 

company poHapSeS rfimhwd fo 

a seven-year high. - 
All this cyclical turmoil coin- 
cides with an underlying 
change In Japanese hunks * 
basic role. ’There, is great 
rhang n going on in the finan- 
cial sys tem . . ." says Mr Yasuo 
Noda, managing director of 
Dai-Idri Eangyo Bank, Japan’s 

largest 

. "The economy of Japan was 
built up over the past 40 years . 
by & financial system dedicated, 
to. providing ^haap capital .for ; 
mdtiBtry . Btit'^'caanot cob- 


ttnnp jn exactly thB game way. 
There has to be a more diversi- 
fied formula, to cope with eco- 
nomic change and a more 
diversified client base," he 
pvpfainR 

The main change cited by Mr 
Noda hiS mVcfigruH: |s tm 

acceleration in corporate bar- 
rowers' tendency to turn away 
ftm hanks to the band mar- 
kets for funds. Bunk loans 
have dropped over the past 
decade from just under 85 per 
cant of corporate borrowing to 
about. 70 per cent, according to 
Salomon Brothers Asia. The 
drop will get foster as compa- 
nies, under pressure to curb 
costs*, chase cheaper fluids and 
as . Japan’s fledgling corporate 
bond market develops in 
response-, predicts Salomon. 


Banks would dearly love to 
capture this business. Their 
appetite is made all the 
sharper by a decline in the 
underlying demand for capital, 
with corporate investment set 
to foil thin year for the third 
year running, pmmifnp to toe 
Industrial Bank of Japan. 

Yet the government has 
allowed banks to step into the 
protected securities business 
only gradually, under, resis- 
tance from Japan's powerful 
stockbrokers, still suffering 
from, the plunge in stock mar- 
ket prices. 

The 10 trust and long-term 
credit banks were allowed last 
April to establish securities 
subsidiaries to issue, but not. 
market, convertible and war- 
rant bonds, and to deal in 


straight bonds. City banks' 
subsidiaries will be allowed to 
follow next year in what .the 
finance ministry says wffl be 
an "orderly ™™ar to avoid 
confusion.’' 

Another change in old val- 
ues, accelerated by the reces- 
sion, is tire partial dismantling 
of the outer fringes of Japan’s 
keiretsu of relationships 
between diversified groupings, 
bound together by cross-dhare- 
holdings. 

In the past, these were seen 
to be an important strength of 
Japanese industry's competi- 
tiveness, helping to bind 
blether banker and corporate 
client, «t>d manufacturer and 
supplier. 

They continue to be critic- 
ised by the US as a way of 
keeping foreign companies out 
Yet a growing number of Japa- 
nese businesses have come to 
see part of their keiretsu links 
as disposable. That is why Nip- 
pon Steel announced recently 
that it will sell Y66bn of securi- 
ties, to help reduce its operat- 
ing losses, while Kobe Steel 
will sell Y31bn. 

Yet keiretsu are only weak- 
ening at their outer bound- 
aries. The core 3s stronger than 
ever. The big banks which are 
often at to e heart of these rela- 
Conthmed on Page 2 


^r ) i’ - i ».l.i .';e , g iflSi:* ■ . " tv - r • » -i.i . 


Minimi'. 

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u 



• awy. - T m j L - 





FINANCIAL TIMES WEDNESDAY MARCH 30 W 


JAPANESE FINANCIAL MARKETS II 


THE BANKING SYSTEM 


Costly surprises possible 


A big worry overhanging the 
Japanese economy’s capacity 
to recover is the convalescent 
state of its banking system. 

The finance minis try a nd the 

banks themselves have only 
recently admitted the serious- 
ness of the damage inherited 
from the late 2980s boom in 
lending, much of which was to 
property developers or compa- 
nies using overvalued land as 
collateraL 

Now they have stepped up 
efforts to tackle banks' two 
main problems - bad debts 
caused by the collapse in land 
prices, and a fragmented, 
hence costly, industry struc- 
ture. 

Bad debts pose the most 
urgent Immediate problem for 
cmaTi and large alike. 

Even on Japan’s official 
relaxed definition of a dud 
loan, banks’ declared bad debts 
are a bigger drag on the econ- 
omy than were US banks' non 
performing assets at the depth 
of the US banking crisis, points 
out a Bank of Japan official. 

Japan's top 21 banks admit- 
ted to yi3,7D0bn of bad debts, 
at the latest count although 
most analysts believe the fig- 
ure would be at least double If 
tougher western criteria were 
used. Disclosed bad debts cur- 
rently total 2.9 per cent of 
gross national product, as 
against the L8 per cent of US 
GNP represented by their US 
counterparts' non-performing 
loans in mid-199L 

“In the end, the only way to 
finam’g this loss on the finan- 


cial system is through 
growth," says the central bank 

Official. 

The problem is distributed 
unevenly through the system, 
challeng in g the finance minis- 
try’s traditional strategy of 
encoura g in g hanks to perform 
at the same rate, the so^alled 
“convoy system.” designed to 
buttress public confidence. 

Not surprisingly, most of the 
12 large city banks, represent- 
ing 30 per cent of total lending, 
are relatively strong, except for 
Hokkaido Taknshoku and Sak- 
ura Bank. Breaches are also 
appearing in the balance 
sheets of the smaller trust and 
long-term credit banks -an- 
other 14 per cent of lending 
- and the sometimes weakly 
capitalised regional and agri- 
cultural co-operative institu- 
tions, which make up the rest 

In an attempt to clean up 
their balance sheets before the 
upturn comes, Japan's hanks 
have broken with their previ- 
ous strategy of delaying loan 
loss write-offs in the hope of 
better times. 

Writeoffs by the top 21 dou- 
bled to an unprecedented 
Yi,400bn in the six months to 
last September and the finance 
ministry's banking bureau is 
thinking of Y3,00Qbn or more 
for the full-year ending tomor- 
row. That represents just over 
80 per cent of gyomu-juneki, or 
core profits and is as much as 
the hanks can afford, believes 
IBCA, a credit rating agency 
which specialises fn banks. 

However, banks' new eager- 


CHy banks 1 profits 

Yen 1,000 bHton 



1981 82 
antra kUnwot Bow 

P liw t e bank loans 

As a 96 of all corporate borrowing 

90 



65 


J L 




1970 75 80 85 90 93 
Ssuck SotomoR BmAM Marsfclpn* 

ness to write off unperf arming 
assets is being blunted by the 
continued growth in bad loans, 
up by 55 per cent in the fist 
half of the fiscal year, accord- 
ing to Salomon Brothers Asia. 

At this rate, finawro ministry 
officials believe tbe hanking 


89 90 91 92 93 


system needs between three 
and seven years, depending on 
individual institutions, to write 
off the Y6,000bn to Y7,000bn 
which it estimates is needed to 
bring the problem under con- 
trol. 

This indicates that banks’ 
profitability and capacity to 
lend could continue to be ham- 
pered well into the recovery. 
So far, demand has been 
weaker than the supply of 
credit. 

Tbe public sector has also 
helped, by doing some of the 
banks' job on their behalf New 
i w yfing by public sector insti- 
tutions, mainl y for housing 
and small businesses, overtook 
new private sector landing for 
the first time in 1992, according 
to the Bank of Japan, and prob- 
ably did so again the following 
year. 

Yet bank lenders are coming 
under growing criticism for 



Downtown Tokyo: Bad debts pose the most urgent immediate problem for small and large banks alike 


continuing to be addicted to 
collateral-backed lending at a 
Hmp when assets are failing in 
value, rather than taking a cue 
from US practice and lending 
on cash flow forecasts. 

The decision to get tougher 
on bad debts was partly helped 
by the finance minis try, which 
has to approve even’ write-off. 
from a small loan to a corner 
store to a giant property devel- 
oper. It has processed applica- 
tions faster and been less 
miserly than In the past in per- 
mitting banks to write off 
losses against tax. 

The ministry also allowed 
banks last year to establish a 
mechanis m to help them liqui- 
date and realise tax deductible 


Bureaucracy is forced to switch focus 


Continued from Page 1 
tionships report that they are 
being asked to offer increasing 
help for their leading corporate 
customers. 

Financially unsound compa- 
nies unfortunate enough not to 
be linked to a friendly keiretsu 
bank soon join the queue of 
bankruptcies. 

That was a lesson of last 
autumn's collapse of Mura- 
moto Construction, the largest 
post-war financial failure, 
which had failed to cultivate 
sufficiently close links with 
Daiwa Bank, its leading lender. 

Japan’s biggest stockbrokers, 


by contrast, appear to be fur- 
ther into their restructuring 
than is the banking industry. 

The big four brokers, 
Nomura Securities, Daiwa 
Securities. Nikko Securities 
and Yamaichi Securities, are 
just starting to see the benefits 
of the staff reductions and clo- 
sures of retail outlets they 
made in the 1980s. 

Reduced costs will be one of 
the two main features of an 
expected tumround by the big 
four, from a combined loss of 
Y60.1bn in the year to last 
March to a net profit of YiOObn 
this year, forecasts Mr Mark 


Faulkner, financial analyst at 
SG Warburg Securities. 

The other feature is a 
pick-up in average stock mar- 
ket turnover, from Y250bn per 
day to about Y400bn over the 
samp period: comfortably over 
the Y350bn at which tbe big 
four break even, he says. 

However, the legions of sec- 
ond-tier brokers clearly need to 
cut costs or reduce their depen- 
dence on commission income if 
they are to be profitable at the 
market's present level 

They still need average mar- 
ket turnover of about Y450bn 
to break even, estimates War- 


burg's Mr Faulkner. 

One of the few bright spots 
in Japan's otherwise unsettled 
financial mar kets is the pen- 
sion fund industry. Fund man- 
agement is set for strong 
growth for the next few 
decades, thanks to the fact that 
Japan has the world's fastest 
ageing population, in which 
the proportion of people over 
65 will roughly double to 26 per 
cent by 2020. 

Pension assets, will grow by 
50 per cent from their present 
Sl,600bn by the end of this 
decade, forecasts Morgan Stan- 
ley Investment Advisory. 


About 94 per cent of pension 
fund assets are managed by 
tbe 15 main Japanese life 
insurance and trust companies, 
estimates Morgan Stanley. 

Not surprisingly, foreign 
fund managers, as well as Jap- 
anese ones, are fighting hard 
to get into this tightly pro- 
tected market, one of the hot- 
test areas in the US-Japan 
trade dispute. 

But the government has so 
far proved resistant to pressure 
to open the market to newcom- 
ers. The outcome of this dis- 
pute will be closely watched as 
a test of whether the govern- 
ment is confident enough to 
switch the focus back to mak- 
ing the financial markets more 
competitive. 


losses on property loans, winch 
account for an estimated 60 per 
cent of the total bad debt bur- 
den. The bank-owned Co-opera- 
tive Credit Purchasing Com- 
pany. launched last March, 
buys bad loans at a discount 
and then tries to sell the collat- 
eral . usually Tokyo office 
space, in the open market. 

The C CPC’s main problem is 
that the banks are so unwilling 
to sell property at its real mar- 
ket value - down at least 50 
per cent over the past three 
years - that it has found 
hardly any buyers. By the end 
of last month, the CCPC had 
raised a trifling 1.1 per cent of 
the Yi,522bn it had paid for 
loans with a face value of 
Y2J357bn. 

In an attempt to help banks 
better tackle bad debts, the 
finance ministry now says it 
will allow them to sell land col- 
lateral at auction, so as to 
define a real sales price on 
which they can declare a tax 
write-off. Failing a buyer, 
banks will be allowed to sell 
the collateral to an affiliate 
established for the purpose. 

Further ahead, the banks are 
impatiently awaiting the 
results of a finance ministry 
panel on the possibility of 
packaging bad loans into mar- 
ketable securities, a technique 
used by US banks to help them 
liquidate poorly performing 
assets. A decision is expected 
by mid-summer, say officials. 

The finance ministry and 
i Bank of Japan are meanwhile 


continuing to do their best to 
avoid letting a crisis develop in 
the system itself. 

An estimated 80-100 officials 
from both institutions are on 
secondment or transfer to 
mainly small banks, where 
they are engineering rescues 
and ensuring that the long 
overdue streamlining of 
Japan's fragmented banking 
industry gets under way in an 
orderly manner. 

Money market funds 

Yen billion 

12.000 



A string of mergers between 
smaller banks and credit asso- 
ciations has occurred. 

On the whole, the most trou- 
bled institutions are assured of 
rescue by the government, a 
parent or bigger associate, if 
only to prevent a rush on simi- 
lar banks. Toyo Shinkin. Osaka 
Fumin Shinkin. Taiheiyo Bank 
and Hyogo Bank are among 
the small institutions to have 


panne MM 8 m 


been bailed out during the 
recession. 

Bank collapses are almost 
unheard of. There is one excep- 
tion - the government's deci- 
sion last May to stage an 
orderly liquidation of Kamaishl 
Shinkin Bank, a small credit 
association in rural northern 
Japan, and to distribute its 
assets among three other insti- 
tutions in the area. 

In another break with the 
tradition of containing, rather 
than facing crises, banks them- 
selves are taking a tougher line 
on customers they used to 
think were too big to abandon. 

One indicator or this new 
toughness is the Long Term 
Credit Bank of Japan’s deci- 
sion Inst July to leave E1E 
International, a large property 
developer, to fend for itself. 
Another came in November 
when Daiwa Bank allowed 
Murnmoto Construction, a con- 
struction group with debts of 
Y590bn. to file for protection 
from Its creditors, the largest 
post-war financial collapse. 

It is a worrying sign that a 
year previously. Muramoto 
was not even listed as a bad 
debt In its creditor banks' 
accounts - also true of several 
other large collapses and bail- 
outs. This means that despite 
the finance ministry’s assur- 
ances that the banking sys- 
tem’s problems are well under 
control other coaly surprises 
might be waiting to burst out 


wafiam Dawkins 


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FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


JAPANESE FINANCIAL MARKETS III 


* 


■* -r. - 

• -T- 





Trading ham satHed back Mb its diffident pattern 


THE BROKERS 


Small firms face 
the abyss 


In a smaU restaurant In flu 
maze of busy streets Twbrnd 
the Tokyo stock exchange, Mr 
Yoshihiro Bmn tn has been sell- 
ing eels' for 45 years. Hie slip- 
pery fish are a rare delicacy for 
most Japanese -a taste to be 
fnirtulg ari only when fcnrinis -are 
good. 

After four years of unparal- 
leled austerity, in the first half 
of last year the restaurateur 
detected the first signs of 
renewed interest. But the 
recovery was short-lived and 
business has slowed again in 
the past' six months 

Mr Enmto .says the current 
m^rVot 1 is like a high-flying air- 
craft that hqa land ad with a 
bump, but is now taxi-tag 
down the -runway. He expects 
it to stop for repairs later this 
year, then- take off again. “It 
will probably take two to three 
years before tan recovery. Peo- 
ple just have to he patient” 

Mr Emoto's an gtirfaH are con- 
firmed by more orthodox indi- 
cators of market sentiment 
None of them offers much com- 
fort to the nervous occupants 
of Japan's overcrowded securi- 
ties market - ' 

' Average dally trading vol- 
umes" oh. the Tokyo stock 
exchange were up by 84 per 
cent in the first half of the 
current financial year, averag- 
ing more than 400m shares a 
day -a far cry from the billion 
shares a day fren^ of the bub- 
ble years, but 

enough to __ . 

prompt wide- Most sma * 


historic dependence oh bank 
loans for In the six 

months to September, new 
bond issues were 61 par cart 
hi gher than a year earlier. 

Unfortunately far the bro- 
kers, the lucrative fees for 
bond underwriting and distri- 
bution are the business in 
which they now face direct 
competition from the broking 
subsidiaries of banks estab- 
lished in the past year in the 
latest wave of financial deregu- 
lation. Although the inroads 
wwdft by banks, are so for 
small, they will grow. 

If the Big Pour can rlnirn to 
be past the worst, the rest of 
the broking sector expect the 
ordeal to continue. Despite 1 
aggressive cost-cutting, the 
selling, general and adminis- 
tration. costs are still above 
operating revenues. Many of 
the brokers are saddled .with 
huge investments from the 
years of plenty. 

Kankaku Securities is a clas- 
sic middle-tier company. In the 
late 80s it had grandiose aims 
of challenging the Big Four. 
Huge capital projects were 
commissioned, includ- 
ing- most ambitiously - a vast 
computer centre SO miles from 
‘Tokyo; Last year, the com pute 
centre was sold, unused, a 
monument to the hubris of the 
bubble years. 

As the president, Mr Akihiro 
leda. says: "Most of the smaller 

firms have 

- relied too 

•r tains Sul! heavily on 


prompt wide- Most smaller firms stiH heavily on 
spread opti- have more than half their equities. The 
mism that the business tied op bi - key to survival 


long dark night 
of Tokyo's 
stock market 


is to diversify." 

The rare suc- 
cess stories 


was over. But the rally dissi- jfiave been those firms with a 
pated and trading has settled t more balanced portfolio. Koku- 
back into its diffident Batten* Securities consciously emu- 
in the second halt \ : y —abated theBig Four - only 31 
The threat to the trojkihg v^er cent of its revenues now 
sector is transparent the Big*', derive, from stock commis- 
Four firms - Nomura, Daiwa> sions. The other two thirds 
Yamaichi and Nikko-are qpg- .^same chiefly from bond cam- 
ficiently capitalised to witfa-^ Tnfosions and trading income, 
stand all tort the most apoct^j -“We are the perfect tripod”. 


Iyptic of trading conditions. 
But it is the more than 280 
small and medium-sized firms 
-many of whom need sus- 
tained trading volumes of 40Gm 
shares a day or more simply to 
stay afloat - who now stare 
directly into the abyss. 

And the chronic dearth of 
equity business is compounded 
by two other factors: the over- 
capacity brought about by, 
huge investment programmes 
during the bubble years; and 
the financial, deregulation that 
threatens brokers’ very exis- 
tence. 

For the Big Four, last year 
marked a turning point. Hav- 
ing posted historic losses 
(Daiwa and Yamaichi) or mini- 
mal profits .(Nikko and 
Nomura) in 1992-3. they all 
returned to healthy profits in 
the first half of 19934, buoyed 
by higher trading levels. 

Al thou gh the slump In the 
second half will cut earnings, 
Alicia Ogawa, securities ana- 
lyst at Salomon Brothers in 
Tokyo estimates that the four 
will all report profits for the 
full year. 

Investors' continuing reluc- 
tance to revisit the scene of 
tjieir losses in the past few 
years is .forcing brokers to 
piawa more wnphssls on qual- 
ity. Last year, Nomura, broke 
with Japan’s tradition of coy- 
ness and became the first large 
broker to introduce a “buy, 
sell, hold” formula for equities. 

But while more attention has 
been paid to the product, the 
Big Four have been slow to cut 
costs. Although employee num- 
bers did fall by 9 per cent last 
year, most of that declin e was 
the result of natural wastage. 
They may need to dig much 
deeper. 

The Big Four have one over- 
whelming advantage over their 
smaller rivals -a diversified 
business. In the past few years, 
Japan's tiny corporate bond 
market has been opened up 
and the country’s corporations 
have turned away from their 


says Mr Yoshitaka Matsntani, 
the company’s president “A 
tripod cannot ftmctkm unless 
all three legs are the same 
length.” 

Most Anns were not so pre- 
scient White stock commis- 
sions account feu about one 
third iaf the Big Four's busi- 
ness, most wmftlkrt- and mecti- 
um-size firms' still have more 
than half their badness tied up 
in equities. 

Time is running but Last 
year's recurring loss at Kan- 
kaku was -equfrHlrirt. to -nearly 
4 per cent of its capital^typlcal 
of the Josses companies face. 
And tte competition from the 
subsidiaries of hanks is slowly 
eroding the extra ground avalL 
able. 

The constant threat of the 
failure of smaller brokers con- 
tinues to exercise the minds of 
the regulators at the Ministry 
of Finance. Mpst of the threat- 
ened companies are linked 
financially to their larger com- 
petitors or to banks. The 
demise of Cosmo Securities 
last year may provide the 
model for any future failures. 
The finance ministry, fearing 
systemic collapse, prevailed 
upon Daiwa Bank, which 
owned 5 per cent of Cosmos, to 
rescue the broker. 

But with liabilities of -their 
own, would-be rescuers are 
expressing their alarm to the 
finance ministry. As a senior 
executive of Nomura put it: 
“We understand the ministry’s 
position, but in these difficult 
circumstances, we cannot do 
any thing that is against the 
interests of Nomura’s share- 
holders’*. 

Brave words in the comfort- 
able land of the hypothetical 
They may niot be repeated with 
such confidence, however, 
should the crisis come and the 
Big Four find themselves star- 
ing down the barrel of the 
finance ministry's celebrated 
administrative guidance. 

Gerard Baker 


O n a sultry July raarnfog last 
year, Mr Atsuyoshi Yatsunami 
took the short walk from his 
office at the Industrial Bank of Japan 
to the offices of the brand new IBJ 
Securities, and opened a chapter in 
Japanese financial history. 

Mr Yatsunami is the president of 
the fledgling broker, one of the three 
subsidiaries of banks to open that day 
and file first to conduct securities 
business in Japan's domestic market 
Although he believes that the 
reform will in time represent a rathcal 
change in foe way finanrf^ i Hwrt^j) 
work, he regrets the foot that it is for 
From complete. 

The opening up of the. securities 
market had been legislated in April 
1992, despite heated opposition from 
the existing 200 or so brokers, for 
whom, life was tough enough already. 
It was fha.latast breach in the don of 
tight financial regulation that has 
beoi eroded since the early 1980s. . 

Bat in. typical Japanese style, the 
revolution has so for been orderly and 
cautious. The Ministry of Finance per- 
mitted three companies to start last 
July; IBJ Securities, and LTCB Secu- 
titles, both subsidiaries of long-term 
credit and Mrwinrhtiirfn Securi- 
ties, a subsidiary of the agricultur al 
bank. They were joined late hi the 
year by subsidiaries of two trust 
banks - Sumitomo Trust and Mitsubi- 
shi Trust. TUs month tha Xfinlu lry of 
Finance gave permission for the pow- 
erful city banks to enter the market 
late this year. 

The business of the new securities 
erenpawifts is severely circumscribed. 
They may nwHur wrii a bonds equi- 
ties, tort may only trade in straight 
bond mn rfcftts They are not permitted 
to trade in equity-related secondary 
markets - equities, convertible bonds 
or warrant bonds. Since the second- 


THE BANKS AS BROKERS 


Revolution has been 
orderly and cautious 


ary bond market is still - despite 

recent deregulation there too-tn the 
words of Mr Shlgeakl.-Kataglrl, presi- 
dent of LTCB Securities, “miserably 
small”, the new broken rely heavily 
an bond underwriting, business. 

They might hrito^^rded. that as a 
blessing. £quttteffhpv$;not been pro- 
viding the established brokers with a 
high life of late and Aeltenks’ stfosid- 
iaries would have/ had a hard time 
eking out a living 0ti : the stock mar- 
ket. '. i..i? ' 

But the tiny ptot.t^ey have been 
allowed to cultivate has been a fertile 
one. to. their first; six' months, IBJ 
SEctzrities were involved in 26 domes- 
tic bond issues, 20 as a manager. They 
lead-managed two. samara! bond 
issues and managed nine others. 
LTCB Securities were involved to 16 
domestic issues and several samurai 
hnmrf ift fftiwa Although these are «™n 
beer in comparison with the near-oli- 
gopolistic shares of tiie Big Four, they 
re present a gradnal 'encrcttriunent on 
the territory of the existing brokers. 

The limits on the activities of the 

hanka may flpgm more. Stifling 1 £ 8 S 

some suspect, the .current buoyancy 
to the fixed income market proves 
transitory. The last year has been an 
exceptionally strong .one for bond 
issues. Having increased by 60 per 
cent to 19923, the total value of new 


; *’ "\'Y~ • ' ' ;- 

/ ' ' . 

. ,• 


• • • 

. 




. ...... : .... 

.... • . . : 

: • • • 

; ‘ ‘ ‘ 

-'J: ... :. 

■ " * ■ • - 

• • • ' .7 s ■ 

■ - . 


v". ;~ ^ - 

. Yr-V* - J 


-. .. ■ : 
r 

- /- ' : .. ■ 



-X - 


bond -issues looks set to double in the 
financial year 1993-4, to nearly 
Y7,000bn. Some brokers, however, put 
that down to weakness in equity mar- 
kets and see the pace of corporate 

hrynri lanmnfw tafftng nfP if equities 

recover. r 

But such a setback would probably 
be short-lived. Thera is a growing 
trend In Japanese markets towards 

Strict fire waifs are 
enforced by the regulators 
- at LTCB and IBJ Securities, 
the staff even wear 
different-coloured uniforms 
from theta* parent's 
employees 

direct borrowing by corporations. 
LTCB’s Mr Katagbl says: “Currently 
only 20 per cent of Japanese corporate 
borrowing is through the bond mar 
ket, compared with nearly 80 per cent 
in the US. We only need that propor- 
tion to rise slightly to the next few 
years to bring about an enormous 
increase to our business.” 

Strict fire walls are enforced by the 
regulators - at LTCB and IBJ Securi- 
ties, the staff even wear different-col- 
oured uniforms from their parent’s 


employees. Under pressure from the 
established bro ker s, the Ministry of 
Finance ruled that broking subsid- 
iaries ware forbidden from lead-man- 
aging issues for companies whose 
main bank was the subsidiary’s par- 
art. 

Despite this, the banks’ primary 
advantage over the competition is 
their Mt*mt relationships. At IBJ, the 
entire staff of the subsidiary was sec- 
onded from the parent bank. Last 
month the fruits of the links with 
bank customers were realised when 
IBJ revealed that it was, for the first 
time, lead-managing a bond issue by 
N issan; the most fii gniffcanf feather to 
Its cap so for. 

The arrival of the banks has stung 
the brokers into action. On the day 
the subsidiaries opened, Nomura 
announced a cut in its commissions, 
and fees are expected to foil further. 
Senior Nomura officials, although 
troubled by the competition, believe 
the real threat is stiQ to come. 

Nomura says that the current par- 
ticipants - the long-term and trust 
hank subsidiaries - are not a signifi- 
cant fhgnitmg p Their clients tg nd to 
be very large wwnpnwift« who already 
exercise considerable choice to their 
select io n of brokers. The city banks, 
who arrive later this year, have cli- 
ents who are grnnUor and ra nch mn ro 


likely to cling to the bank's skirts 
when venturing into the stockbroking 
business. 

The established . companies' 
response has been two-pronged: hold 
on to their existing market domina- 
tion by developing ever-more-sophisti- 
cated products for their and 

retaliate by encroaching on enemy 
territory. To this end the Ministry of 
Finance has relaxed the rules on the 
type of products they may offer. Some 
funds they sell look increasingly Hke 
bank deposits: more and mace liquid 
and an important source of competi- 
tion for bank deposits. 

The new firms have little more than 
the narrowest of niches in the over- 
crowded securities, business. If dere- 
gulation is pursued further, there is 
little doubt that they pose a severe 
threat to many of the middle-tier bro- 
kers, already stricken by the 
of the bubble years. Their capital 
strength and strong client base will 
mean they can survive all but the 
worst vicissitudes of the market 

But the finance ministry is clearly 
in no hurry to complete the revolu- 
tion. The new players, although 
pleased with their performance so for, 
feel that the strait-jackets they 
occupy are too tight Their current 
business amounts to a small fraction 
of that of the Big Four brokers. 

When the city banks join the fray, 
their pleas for more deregulation wfU 
become harder to resist. But until 
then, the banks must continue to 
compete on a playing field that, as 
(me analyst says, is tilted at an angle 
of about 45 degrees against them. 

Or, as Mr Yatsunami puts it “We 
are like an aircraft with ana wing. We 
cant really be said to be functioning 
properly until we acquire a second.’* 

Gerard Baker 


JETRO, a Japanese 
government related non-profit 
organisation established in 
1958, is actively promoting 
direct investment into Japan 
as well as encouraging British 
exports to the Japanese 
market. Japan is the world’s 
second laigest economy and a 
growing market of major 
; strategic importance to 
- forei^t companies. Japan 
offers not just a promising 
export market, but also an 
important investment location 
for foreign companies seeking 
to extend their presence in the 
market and move closer to 
their customers. "The Japanese 
government has recently 
introduced favourable 
measures to help and 
encourage direct foreign 
investment into Japan. These 
are in the form of tax 
incentives and low-interest 
loans as offered by the Japan 
Development Bank (JDB), a 
government owned financial 
institution. In accordance with 
Japanese government projects 
and programmes, JETRO 
offers various complementary 
services to support foreign 
investment in Japan as 
follows: 

Publications service 
Information and data on the 
Japanese investment . 


environment are available in 
practical guide books which 
also outline investment- 
related law and options for 
entering the Japanese market 

CD Rom Database 
Regional investment 
information throughout Japan 
including economy, industry, 
infrastructure, labour, wages 
-and social conditions. 

Consultation 

Two leading consulting firms 
in the JJK can answer queries 
raised by potential investors 
on legal and taxation matters. 

Study Programme 
in Japan 

JETRO annually invites some 
30 guests to Japan, including 
executives from private 
companies; representatives of 
chambers of commerce and 
industry and the media from 
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Jetro London, General Affairs Department, 
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1 am interested m (Tick appropriate box): 

□ Investment PuMcations .** 

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A SS* casualties of t he deterio- 

{Jr 00 asset prices in Japan are 
group of j^^hy’s non- banks - the 

igc*£ Z ?***<& I companies which 

demand JJJJe 1970s to meet market 

n^^sptte thetr l bfd b debt problems. 
ffiSS £*** Performed weU last year, 
gamfcbank “other financial" sector nse 

nT IS cent last year, compared with 10 

S S?, for toe broad Top* index, accord- 

Noanira InternationaL 

w David Snoddy an analyst at Jardine 
flaming Mys tb '- thrt * f aet ors which 
wove share prices higher were fal l ing 
™®rest rates a perception that the risk 
Woffle of the sector had improved and the 
‘totalisation of commercial paper issu- 
roles for non-banks, allowing some of 
w*® to raise funds more cheaply. 

However, he believes that these factors 
have provided a relatively short-term 
boost and that non-banks will only con- 
tinue to out-perform other sectors of the 
stock market if “the basic businesses of 
the turn-banks are growth businesses." 

So what are these basic businesses? In 
foci; the non-bank sector covers a wide 
range of areas: credit cards, consumer 

Those active in consumer rather 
than corporate lending tend to 
be viewed more positively 


lending, loan guarantees, corporate loans 
and leasing - and different companies 
focus on different businesses, often exclu- 
sively. 

Broadly, those active in consumer rather 
than corporate lending tend to be viewed 
more positively, partly because any 
pick-up in the economy is expected to 
show first in greater consumer spending, 
rather than in corporate borrowing for 
capital investment 

In particular, Japan's credit card busi- 


JAPANESE FINANCIAL MARKETS IV 

■ THE NON-BANKS 


FINANCIAL TIMES WEDNESDAY MARCH -30 199j 


A good year despite bad debts 


ness is expected to expand rapidly in the 
1990s, given the relatively low base for 
credit card use in Japan. In 1991, the last 
year for which figures are available, the 
ratio of credit card transactions to total 
consumption was 7.1 per cent in Japan, 
compared with 17.6 per cent In the US. 

“For Japan to go to only 10 per cent 
means an almost 50 per cent growth in the 
credit card business, even assuming that 
consumption stays fiat," Mr Snoddy points 
out 

Among the large non-bank companies 
set to benefit from the expected growth of 
the credit card market are Daiei Finance 
and Credit Saison, which have extensive 
retail affiliations, and Nippon Shin pan, 
which already has a large mar ket shar e 
and a relationship with Citibank, one of 
the largest US issuers. 

Credit Saison, which is linked to Seibu, 
the country's largest retail sales group, 
has had an annual increase of 1 m cards for 
the past ll years, with an estimated U^m 
cards In circulation as of March 1994. 

However, there are a number of black 
clouds on the horizon for the credit card 
companies. One threat is the rise of dis- 
count stores, most of which only accept 
cash. Another is competition from banks. 
According to Mr Snoddy, of the 203m cards 
in issue In 1992, 76m were issued by bank- 
related companies, of which the largest is 
JCB. In the past 10 years, the banks' share 
of the card market has risen from 27.6 per 
cent to 37.5 per cent 

Others question whether the credit card 
business in Japan will reach the same 
relative size as in the US. Some analysts 
argue that in a country where it is still 



A pick-up fan the economy ts expected to show first in greater consumer spenc&ng hcmt***? Abroad 


safe to carry large sums of money in cash, 
and savings rates are high, there is less 
need for consumers to carry credit cards. 

Other consumer lending businesses are 
less attractive. Instalment loans, for exam- 
ple, are widely seen as a declining busi- 
ness. They are being replaced in part by 
greater use of credit cards for financing all 
but the largest consumer durables. In part, 
this stems from the relative foil in prices 
of consumer durables such as televisions. 
Instead, lenders are concentrating on 


Instalment loans for cars. However, the 
finance arms of car companies are becom- 
ing increasingly aggressive competitors in 
this market. 

Some ti o n - hanks are retaining the guaran- 
tee part of the loan business. For example, 
Aplus, which used to have a monopoly on 
financing BMWs sold in Japan, lost its 
monopoly to BMW Japan Finance but con- 
tinues to handle guarantees for the 
finance company's instalment lending. 

Straightforward consumer lending is 


still the mainstay of the group of compa- 
nies known as the sarakin - or loan 
sharks. They too are under pressure from 
tiie banks, and tend to lend cm an uncolla- 
teratised basis. However, because their 
interest rates are higher -the maximum 
allowed is 29.2 per cent - they can tolerate 
greater losses. Mr Kyosnke Klnoshita, 
president of ACOM, predicts 10 per cent 
growth for his company. 

However, the prospects of many non- 
banks are blighted by bad debt problems, 
largely stemming from property invest- 
ments which went awry. For many compa- 
nies, the loans were not just straightfor- 
ward commercial property loans for office 
blocks in Tokyo, bat ambitious resort 
developments, such as «iuiinmininra» on 
the Australian Gold Coast 

“Many of these investments are so for 
under water” that the low interest rate 
environment in Japan mil do little to help, 
according to Ms Alicia Ogawa, vicepresi- 
dent, equity research at Salomon Brothers 
in Tokyo. “More important is support from 
t heir lending banks." 

Worse, the extent of individual compa- 
nies' problems can be hard to trace. “The 
problem with non-banks is that e ach has 
flnmns of imitated iinranapnriated compa- 
nies involved in real estate development 
Many of these companies are in serious 
trouble,” says Ms Ogawa. For example the 
exposure of Nippon Shinpan to affiliates in 
real estate is at least three times the size 
of its own capital, she said. 

However, same companies believe that 
they are n waring the and of the tunnel. 

Mr Yoshiinko Miyauchi. president and 
chief executive officer of Orix Corporation, 


believes that “we arenow very close 1 
bottom”, having marked 
pany-s Property «^aswe to mggj 8n 
While Ora Corporation, whoMm^“ 

business is leasing, has alreadyannoun«o 

a 5 per cent decline in net mam ȣ 
previous year, there are some bnghtsp^ 

^We are depreciating questionaWe 

accounts more than we had -.q. 

Mr Miyauchi- “We are taking a more coo 

servative approach.” it 

While leasing is Orix s core business, 
also has some property exposure. H 
ever, Mr Miyauchi believes tbs 
has benefited from its geopaphiod ® ^ 
sification. “International transactions 
o/fpnnt for one third of our income, 
points out. _ 

The prospects for the tajhUtry a* * 
whole depend largely on the impart « the 
government's economic pacitag 
announced earlier this year. JaP®®*** 
Hanw loot heavily to non-banks in tne 
ig»Q s and are now faced with a heavy 
burden of bad debt 

The p a c k a g e allows banks to shift deter- 
iorating assets off their balance sheets oy 
securitising the loans. . j 

However, according to David Marshall, 

It seems likely that the bad debt 
problem will continue to hang 
over the sector for some years 

an analyst at IBCA, “The measures could 
be viewed as another round of s huffling 
problem, assets and not a real solution to 
the banks' asset quality problems." 

It likely that the bad debt prob- 
lem wifi hwi H wwp to bang over the sector 
for some years to come. “The general pat- 
tern here in Japan Is that writing off loans 
takes a long time,” says Mr Ky os uke 
Krnnahite of ACOM. 

Tracy Corrigan 


U ntil the collapse of the 
asset boom of tbe late 
1980s, Japan had been 
gripped by the “land legend" 
- that property prices never 
/efl and that a piece of real 
estate would be the solution to 
any financial problem. 

Among the many believers 
were the country’s banks, 
which lent Umitlessly during 
the ISSOs as long as the loans 
were backed by land collat- 
eral. However they have 
become casualties of the 
plunge in land prices and are 
burdened by mounting bad 
loans and the inability to sell 
the real estate collateral due 
to the property* market's pro- 
longed slump. 

The banks have recently 
started to tackle their bad loan 
problems due to the realisa- 
tion among bureaucrats that 
tiie amount of bad loans are 
far larger than initially expec- 
ted - widely believed to be 


about Y30.000bn at tbe top 21 
banks. 

Although this approach 
deviates from the Ministry of 
Finance’s traditional attitude 
to bad loans - where banks 
would sit on their bad and 
risky loans until the economy 
recovered rather than writing 
the loans off or making provi- 
sions - financial authorities 
fear that the financial system 
will face a credit crunch if the 
hanks are unable to make new 
loans due to their deteriorat- 
ing balance sheets. 

The need for banks to ware- 
house their bad loans until the 
real estate market and the 
economy recover led to the 
creation of the Co-operative 
Credit Purchasing Company 
(CCPC) established by the 
banks themselves a year ago. 

The CCPC was created after 
strong public opposition to tiie 
government’s suggestions of 
using state funds to bail out 


COLLATERAL 


More bad loans than expected 


the hanks. The hanks sell their 
bad debt backed by real estate 
collateral to the CCPC at a dis- 
count, subsequently writing 
tbe difference off as an income 
loss. The CCPC, which boys a 
loan with funds Injected by 
the bank selling the loan, then 
tries to recover it. In some 
cases selling the property col- 
lateral to the real estate mar- 
ket 

However, the efforts of tiie 
CCPC so far have raised 
doubts over how much of the 
banks' problems it can solve. 
Banks have sold Y2£57.11m of 
their bad debt to the CCPC. 
but by the end of February, it 
has only been able to collect 


0.6 per cent of the total loans 
purchased and has only man- 
aged to sell 0.5 per cent tn 
land collateral. 

Since a bank’s lending to 
one entity is limited to 20 per 
cent of the bank’s capital, 
commercial bankers fear *hnt 
unless the CCPC can dispose of 
the loans, a second and third 
CCPC would need to be cre- 
ated. 

The finance ministry is also 
considering plans to allow 
banks to set up subsidiaries 
which will buy tend collateral 
from the banks at a court auc- 
tion price. In short, the banks 
will sell tbe land to them- 
selves, while booking the loss 


on the sale as a tax deduction. 

Mr James Florillo, financial 
analyst at brokers Baring 
Securities, reckons that the 
plan. If implemented, would 
speed up the disposal of bad 
debts since the possession of 
the land collateral will dianp » 
from the original owner to the 
banks. 

Meanwhile, tiie Ministry of 
Finance has recently 
announced plans to allow 
banks to set up special pur- 
pose companies to which they 
can shift “restructured loans” 
- loans on which bank* have 
waived all or most of tiie inter- 
est to help restructuring -to 
non-bank financial institu- 


tions. According to IBCA, the 
UK bank credit rating agency, 
resolving the bad loan prob- 
lem oould cost the leading 21 
banks more than YlO.OOQbn, 
awnming that a third of total 
problem loans needed to be 
written off. 

The hanks are Hkely to write 
off or set provisions for some 
Y4,000bn this business year. 
They will be left with 
Y6,000bn pins further 
increases in bad loans which 
the agency expects will take at 
least three to five years for the 
stronger banks to resolve. 

However, plans where banks 
fund separate entities to buy 
and warehouse the bad or 


restructured loans and land 
collateral until the economy or 
real estate market picks up, 
leave the financial in stituti ons 
vulnerable to a rise In interest 
rates. 

And while the schemes will 
speed up the process of bad 
loan write-offs - thus allowing 
banks to remove problem 
assets from their books -it 
will pose problems for inves- 
tors because tbe complex 
structure and the lack of 
transparency make virtually 
impossible tiie assessment of 
the real risks which the banks 
face. 

When selling a bad loan to 
the CCPC, a bank wffl need to 
supply tbe funds in order for 
tiie purchasing company to 
buy it_ In effect, the hank is 
changing a non-performing 
loan to a company into a per- 
forming loan extended to tiie 
CCPC. 

Since tiie banks only reveal 


non-performing loans on their 
balance sheets and not those 
transferred to the CCPC, the 
am iT i m t of disclosed bad loans 
will be significantly distorted. 

IBCA warns that such 
accounting practices deviate 
from western standards and 
are far from prudent. How- 
ever, on the other hand, it 
niaiwMi timt credit risks associ- 
ated with Japanese banks 
remain low since the measures 
reflect a strong commitment of 
the financial authorities to 
maintain the integrity of the 
country's financial system, 
gather than helping individ- 
ual banks, the Ministry of 
Finance is providing support 
to the “ s ystem" by establish- 
ing a framework in which 
banka can tackle their bad 
loan problems at their own 
pace with limited public scru- 
tiny. 

Emiko Terazono 



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FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


35 


JAPANESE FINANCIAL MARKETS V 







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FOREIGN INSTITUTIONS 


Firms switch staff to Hong Kong 


For the foreign financial Institutions 
which flock to Tokyo, the city is still a key 
financial centre, at the heart of the world's 
second-largest economy- But Tokyo is los- 
ing its status as a base far the entire Ada 
Pacific region. 

Evan five, years ago, it would have been 
unheard of far a luge foreign Institution 
to set up its Asian headquarters anywhere 
but Tokyo. The standard split was to 
divide the world into three main regions: 
North America, Europe (including the 
Middle Bant aod s o m etim es Africa)- -and 
Asia. The development of business in 
emerging markets in the past few years 
has changed that view of the world. , 

At the same time that business in gate's 
emerging markets was becoming increas- 
ingly profitable, the Japanese market 
turned. The collapse of tife stock market, 
the slide Into economic recession, and the 
relative isolation of Japan from the rest of 
Asia began to make Tokyo seem a less 
obvious choice as Asian headquarters. 

Hong Kang was the most obvious rival, 
for the title. At the time, rents were 
cheaper and salaries and taxes lows-; arid 
many banks »nii securities houses started 
to shift staff from Japan to Hong Kang 
- or at least to build up staff hr Hong Kong 
rather than Tokyo. 

This process has accelerated in the past-, 
year, even though Hong Kong's costs have 
now caught up with Tokyo. Salomon 
Brothers, for example, has just created.ai 
Asia Pacific group which excludes Japan. 

One banker estimates that the number, 
of staff in Hong Kong employed by US 
firms has doubled in the past year or two, 
while numbers in Tokyo are static or fell- 
ing. 


Salomon currently employs 500 staff in. market, thee has beet a noticeable shift 


Tokyo; 60 fewer than a year ago. Merrill 
Lynch also has a. staff of 500; down 100 
after running down its private client busi- 
ness, Jifflinugh its institutional business is 
growing. But Merrill's Hong Kong staff 
base has trebled in the last year. 

There has also been a bufld-up of staff in 
Singapore, which many banks view as a 
back-up, in case things go wrong in Hong 
Kong when the Chine» take over in 1907. 
Some bankers feel that the greatest threat 
to Tokyo could ultimately come from 

Shanghai, where they think the fThhww . 
may try to set up a new financial centra 

for Asia. 

’ Back in Tokyo, dif- 
ferent groups of for- 
eign institutions 
have tended to focus 
on different areas of 
business. While ‘the 
UK houses entered 
the brokerage side of the market, the larg- 
est players in the Japanesemarket are the 
US houses, which came in on the bond 
- side of the business buthave tried to buM 
ftp a broad capital markets base, focorpo- 
rating foreign ftrahawy*, corporate ffrwmra 
and derivatives. 

v The US firms which at first concentrated 
on' proprietary or programme trading, 
such as Salomon Brothers and Morgan 
.. Stanley, have now. moved into -broader 

capital marketa h mrfnPRR - 

In the past few years, there has been a 
shift from equities to bond business, 
reflecting the depressed stale of the Japa- 
nese stock markat, mft the. bull-market for 
bonds in 1992 and 1993. : 

“Given what happened' in the equity 


NatWest is so far the only foreign 
stockbroker to give tip its 
membership oh the Tokyo Stock 
Exchange 


in investor demand from equities to 
bonds,'’ said Mr T^wi* Faust, branch man- 
ager of Salomon which has made "some 
selective additions in fixed income,” wbfle 
introducing a voluntary retirement pro- 
gramme in the equity support group. 

. Some areas of business - particularly 
underwriting -have proved, not surpris- 
ingly, AifffenH to b reak into. Most foreign 
institutions say they ara : not trying &>: 
compete for domestic underwriting hazi- 
ness, but that, for example^ ;* US house 
should be able to win mandates to: bring 
Japanese companies to the US market' . 

' “We ars riot trying 

to . compete with 
domestic institutions 

on their : Q!*n. tart" 
but wherc there Is a 
cross-border advan- 
tage or smart tech- 
nology," said Mr 
Richard Dunn, managing iHrwrtnr of Mer- 
rill Lynch in Japan.” 

The big Swiss banks, while lagging 
behind the largest US bouses, have also 
built up fffewahto operations, and are also 
active in the trust business. 

Other. 'Anns have built up businesses in 
niftba areas, for »«n"pb S ocU W Gdnfirale 
in derivatives. 

Meanwhile, conventional stockbroking 
has proved an extremely difficult area, for 
Amw«Hr as well as foreign institutions. 

NatWest is so fer tile only foreign stock- 
broker to give up its membership an the 
Tokyo Stock Tfatehangg (in 1993); which it 
obtained in 1988 after pressure bad been 
put on the Japanese authorities by the UK 
government NatWest Is now. trying, to 


rebuild Its position, concentrating on the 
fixed Income side of the business. 

Other UK hanir« mainly the merchant 
banks, continue to concentrate on main- 
stream stockbroking business, but many 
have been forced to cut staff. Baring Secu- 
rities cut back in 1992 because of the 
reduction in share volume from about 
$2bn a day In 1989 to about $200m, and has 
been building up its emerging market 
business. *Tbere has been a net transfer of 
staff out of Japan to elsewhere in Asia 
- about 30-40 people In the past two 
years,” said Mr Diarmaid Kelly, deputy 
chairman of Baring Securities. Tokyo staff 
has dropped from 245 to 190. However, ha 
believes that in time the Japanese opera- 
tion will hanaflt f mm the growth in Bar- 
ing's emprgfog market e xp ertise. 

“The Japanese haveri’tinvested a great 
deal hi emerging markets or foreign equi- 
ties yet, but that is coming, as night fol- 
lows day.” He argues that Japanese com- 
panics have Invested huge amounts in 
businesses In Asia in the past few years 
and that is bound to be followed by invest- 
ment by investors. 

For the moment, although the basic 
b usiness of the foreig n brokerage firms in 
Japan is selling Japanese shares to Euro- 
pean clients, or less frequently European 
shares to Japanese 

If predictions of an upturn in the Japa- 
nese equity market are realised, Japanese 
equity volume could also be set to 
increase. Some analysts are already pre- 
dicting that Japanese investors wDl shift 
from bonds to equities at the start of their 
new fiwanrfai year in April. 



Tracy Corrigan Tokyo bma«iwyi 


I cwitro, at the heart of tho world's socond-torpMt ooonorey 


-a 

*■ 


t": Cl? 


T he Japanese domestic 
bend market, lbrijf Mnf 
derad by archaic prac- 
tices, has at last started to 
modernise. - 
Until now, foie high level of 
fees charged, limits on the 
wwim m * of issuance allowed hy 
individual companies and the 
lack of secondary market trad^ 
ing have effectively eapped-fhe 
domestic market’s develop- 
ment ~ although some borrow- 
ers have continued to use the 
wnn4n4 l partiy.as a means of 
gaining aeeom to Japanese 
retail investors. 

In tile past year, the Unfit on 
the maximum -amount at new 
Issues has been lifted. 

“Shelf registration has been 
very much simplified byrthe 
Ministry of Finance,” said Mr 

Kotinhj Yoshida, manager of 
the treasury division at NEC 
Corporation. “Before, yon had 



BOND MARKET 


ister a maximum ’amount for 
two years.* 

The finance ministry' 
aim lowered the' minimum 
erafil rating for iseiring for- 
eign arid yen 'bonds 

by Japane&e tompanles to tri- 
ple# frtihr singlfr-A, opening 

Most fundamentally, the 
market suffers from the 
lack ofan efficient 
ctearinp system _ 

the market to a broader range 
of borrower s. Restrictions on 
the issuance •'of' fldattng&rte 
notes have' also^bem fitted. 

- ‘ to uddttiari; high fee levels. 
Which" used 1 to retfk** the mar- 
ket very uncompetitive rela- 
tive to tie EteuyearTkmd sec- 





tor, have- been substantially 
reduced— 'by as modi as 50 per 
cent, according to market 
practitioners. 

The granting of securities 
licenses to a handful of Japa- 
nese banks has helped- gener- 
ate more competition in the 
sector. ' - 

In addition, efforts have 
been made to modernise mar- 
ket practices, eradicating the 
traditional stru ct u re iff fee- 
earning securities' houses and 
chief commissioned banks. 

- In December 1991, Nippon 
Telegraph 'and 'Telephone 
Unridied. the ' first domestic 


are in place 


bond using a fixed price reof- 
fer mechanism, which is 
«tori gtied to set the price of an 
Issue according to market sen- 
timent and create a more 
transparent price for Inves- 
tors. 

In addition, rather than 
dividing; say, a YSObo issue 
into three trendies of YlObn, 
dividing business between dif- 
ferent securities houses in 
order , to keep them sweet, 
companies have started to 
issue bonds in large a m oun ts , 
wtifeh helps im p r ove their 
liquidity. ' 

• “So far os issue volume is 


concerned, we are trying to 
issue bonds as big as possi- 
ble,* said Mr Hiroshi Tsu- 
dfiya, deputy general man- 
ager, finance and treasury 
dtvtafon, at NTT. 

However, the market is not 
without its problems. Most 
fundamentally, It su f fers from 
the lack of an »wiHwnt clear- 
ing system. 

The market could also be 
held back by a general lack of 
Issuance, since many compa- 
nies do not need to borrow 
fresh money in the recession. 

“We need the economy to 
Imp rove to that there is bor- 


rowing for capita] expendi- 
ture, said Mr Hiroshi Hayak- 
awa, general manager, capital 
markets at Nomura Securities. 
“Companies are «wi stemming 
down their balance sheets 
rather than borrowing.” 

The domestic market has 
also been affected by changes 
to the rules governing issues 
in the Eur oy en bond market. 

Last year, the selling restric- 
tions for Euroyen bonds issued 
by sovereign and suprana- 
tional b or r ow er s were lifted. 
Previously, there was a 90-day 
lock-up period before such 
paper could be sold in Japan. 


This easing b expected to be 
extended in time to E uroyen 
bonds issued by companies. In 
the langerfann, the result is 
likely to be a convergence, in 
pricing, between tire domestic 
and Euroyen bond markets. 
However, one casualty of the 

hit Wn fhp fian^ nral 

bond market -the domestic 

The market is now 
frequented by 
lower-rated sovereign 
borrowers 

bond market for foreign bor- 
rowers, once widely used by 
sovereign and supranational 
borrowers. Tim ability to place 
Euroyen paper directly into 
Japan has removed the incen- 
tive for top bor ro wers to tap 
the Samurai market. Instead, 


the market is now frequented 
by lower-rated sovereign bor- 
rowers, such as Turkey and 
Hungary, who are taking 
advantage of the fact that the 
domestic market is less credit- 
sensitive. 

Although a number of key 
changes to the domestic mar- 
ket are now in place, the 
development of an actively 
traded corporate bond market 
is likely to take some time 
-some market participants 
put It at five or 10 years. 

However, the concentration 
of issuance by Japanese com- 
panies in the Euroyen market 
is likely to shift 

“As a long-term trend we 
think that borrowers will 
return to the domestic bond 
market,” said Mr Hayakawa of 
Nomura. 

Tracy Corrigan 


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^lixed ft 

Adam* fa 

tra ^ ers 

thp oJ? *?®eria are greet- 

^ wS 3 of i tte l39S - 94 sea ‘ 

deO^f^ nilxed feelings: 

S?*w *5® ®P ^ elds and 

rjL^ 4 foreign exchange 
2*)rfcHons will drive the 
Z® 01 * of cocoa beans under- 
g ^?? d or out <tf business. 

«ns season's crop matched 
S® year's but the world price 
yr Nigerian cocoa is much 
falser - averaging S1.2W 3 
“nne. The igg3-94 crop pro- 
duced I3S ooo tonnes of which 
120.000 has been harvested. 
The remaining 15,000 tonnes 
will be harvested in the mid. 
crop starting April till August, 


COMMODITIES AND AGRICULTURE 


FINANCIAL TIMire WEDNESDAY MARCH 30 199±_ 


when weight and butter fat 
content of the beans are low. 

“It has been an excellent sea- 
son for Nigerian farmers and 
traders. Everyone has mad* 
money, said a spokesman for 
one of the leading cocoa 
exporters. 

The 1994 budget in J anuar y 
put a stop to the optimism. The 
Pegged the official rate 
of the naira at 22 to the US 
dollar, outlawed' the parallel 
market and decreed that all 
exporters must repatriate and 
sell their dollars at N22 to the 
central bank of Nigeria. 

Exporters who paid farmers 
N47.000 a tonne and sold for 
81,200 a tonne would have to 
re-sell the same dollars to the 


government for only N26.400, 
making a loss of 56 per cent on 
the currency transaction alone. 

Traders predict that farm 
prices for Nigerian cocoa for 
the mid-season crop wil l be 
down to N35.000 a tonne ($730 
at the parallel rate). 

Some traders were able to 
carry on exporting cocoa legiti- 
mately after the budget 
because they had sold dollars 
far enough forward to see them 
through the season. All but 
15.000 tonnes of the harvest 
had been shipped by mid- 
March. Exporters without for- 
ward dollar contracts had two 
choices: either stop buying 
tram the fanners or smuggle 
the cocoa so that the dollars 


did not have to be repatriated. 

Cocoa remains Nigeria's big- 
gest export earner after oil, 
despite inconsistent govern- 
ment policies affecting trade 
and investment. It is one of the 
successes of deregulation in 
the 1980s, which abolished the 
state marketing board, brought 
international traders into the 
market 

As farmers' prices improved 
the crop almost doubled in less 
than a decade. Although the 
currency has depreciated by 
about 90 per cent on the legal 
parallel market to about N4S in 
the past year, the farm gate 
prices have risen sharply in 
real terms. 

“It is fortunate that the bud- 


get came at the end of the har- 
vest - most of the cocoa had 
been exported,” says an inter- 
national trader. "We are just 
hoping some sanity will be 
restored before the main 
1994-95 harvest” 

Fears over the outlook for 
the 1394-95 season could under- 
mine the hard work and invest- 
ment that goes into cocoa 
farming between April and 
October. The investment in fer- 
tilisers and flhgmlng la to Stop 
black pod disease has been 
essential to the improved out- 
put in recent years. With the 
export market so uncertain the - 
farmers’ (ymmitmflnt ppri the 
necessary credits may be in 
short supply. 


Plumbing the depths in search of food 

Fishermen are showing increased interest in unfamiliar, deep-sea varieties, writes 
Alison Maitland, but scientists warn that this is a particularly vulnerable resource 


O dd-iooking fish that 
live in total darkness 
in the deep waters of 
the North Atlantic are causing 
something of a stir among 
fishermen and marine scien- 
tists. 

The fishing industry is 
increasingly interested in these 
deep sea species, which include 
orange rougfay, blue ling and 
round nose grenadier, as 
stocks of better-known fish 
such as cod dwindle and inter- 
national quotas are tightened. 

But scientists are warning 
that controls on deep sea fish- 
ing must be introduced before 
commercial exploitation 
becomes too widespread, 
threatening to wipe out a par- 
ticularly vulnerable resource. 

Deep water fish grow and 
reproduce more slowly than 
common species and the dan- 
ger is that they may be caught 
before breeding and replenish- 
ing the stock. The orange 
rough)', for example, lives to 
100 years, maturing at around 
20 or 30. Cod. by comparison, 
lives to about 15 years if it 
escapes the nets, and matures 
at about three. 

**If you have a lot of fishing 
effort on one stock you could 


Plenty more fish 
In the sea? 


J*V 



clean it out very quickly and it 
would take a hell of a long 
time to recover." says Mr John 
Tumilty. technical director of 
the UK’s Sea Fish Industry 
Authority. 

Spurred by French success 
in the last five years in catch- 
ing deep water fish off western 
Scotland and creating a domes- 
tic market for them, the 
authority convened a meeting 
of international scientists this 


month to pool the limited 
knowledge about these species. 

The aim is to prevent over- 
exploitation of the kind that 
has led to a collapse in fish 
stocks off Newfoundland and 
the north-east coast of the US 
and a serious depletion in 
stocks of cod and most other 
common species in the North 
Sea. 

“We see this as an opportu- 
nity to take early management 
decisions on these species to 
try to avoid the mistakes there 
have been in the past," says Mr 
Tumilty. 

There are at least 120 differ- 
ent species living at depths of 
between 500m and 3,000 metres 
off western Scotland, and 
about 25 of these could be of 
commercial importance, 
according to Dr John Gordon 
of the Scottish Association for 
Marine Science. Dr Gordon is 
conducting a one-year study to 
ascertain whether fishing these 
species is sustainable commer- 
cially and ecologically. 

Some are already well-known 
and appreciated in other parts 
of the world. The orange 
roughy, for «amp Tp_ has been 
caught in New Zealand waters 
since the 1970s and its thick. 


white, boneless fillets find a 
ready market in the US. 

Russian fishermen have been 
catching North At l antic deep 
water fish for ten to 15 years 
and there has been activity in 
the past few years by Faroese 

and Spanish fish erman in the 

waters off Scotland. 

French trawlers began fish- 
ing there in 1989. But it is their 
recent success in exploiting 
orange roughy. which skulk off 
steep slopes in depths of about 
1,200 metres and are among the 
most valuable fish caught off 
Scotland, that has created the 
new flurry of interest. 

The French, understandably 
secretive about where they 
fish, land their catches in Scot- 
land and transport them over- 
land to be shipped to markets 
in France. They are believed to 
be catching some 5,000 tonnes 
a year. 

According to Dr Gordon, the 
orange rou ghy rontainq a high 
proportion of valuable oil with 
similar properties to sperm 
whale and jojoba oil, but only a 
small amount is currently 
recovered by the New Zealand 
fishing industry. 

Some UK fishermen are now 
also keen to venture beyond 


the continental shelf, where 
they catch fish at depths of 
100m to 250m. But there is 
uncertainty about whether 
Britons will accept the strange 
appearance of some of the deep 
water fish. 

“It’s market driven,” 
py piatna Mr T umil ty “Grena- 
dier is found in most super- 
markets in France and there’s 
no problem of acceptability. 
But the French tend to be less 
conservative in their eating 
habits.” 

Following this month’s meet- 
ing of experts, detailed recom- 
mendations on controls such 
as quotas will be sent to the 
European Commission and to 
governments fii/iimting the UK, 
France, Canada, Russia, Ice- 
land, Norway and Spain- The 
International Council for the 
Exploration of the Sea, which 
groups marine scientists foam 
many countries, will meet in 
Copenhagen in August to 
study the problem. 

"Our message to fisheries 
managers is clear,” says Mr 
Tumilty. "This resource is frag- 
ile and needs to be managed 
sensibly and sensitively. If this 
is done, it lias the potential to 
provide us with valuable food.” 


Papua New Guinea plans 
to phase out log exports 


Papua New Guinea plans to 
phase out all log exports by the 
year 2000 in order to achieve 
sustainable Forestry, Mr Tizn 
Neville, the forests minister, 
said yesterday, reports Renter 
from Sydney. 

From 1995. log exports would 
be reduced by 10 per cent a 
year until 2000 when there 
would be no more export of 
round logs. Mr Neville told the 
1994 Australian Forest and 
Timber Conference. “This gov- 
ernment is committed to a 
phased reduction of log exports 
and would like to see an end to 
this by the year 2000.” 

He said all logging compa- 
nies had until the end of July 


to conduce leasjLonrey studies 
for processing their timber 
within Papua New Guinea. 


“Those that respond positively 
will be given priority for nego- 
tiation of new or revised tim- 
ber concessions. Those who do 
not comply. . . may be denied 
further permission to export 
logs,” he said. 

Mr Neville estimated that 
the country's forests were 
worth US$5Dhn at present and 
t ho ught the figure could go as 
high as $190bn_ Recent studies 
indicated that the country had 
a sustainable harvest volume 
of more than 3m cubic metres 
a year, he said, but the govern- 
ment-permitted cut was 8.5n cu 
m The actual cut was only 
around 3m cu m in 1993 but 
this was an increase from less 


i in UKMJ alDU iicai au 

timber was exported as nnpro- 


-Tbe reality is we 

allowed a gross unbalan« 

whereby permitted hJJJJf* 
greatly exceeds the fore^s 
capacity to replace itself, sam 
Mr Neville. “This is a forestry 
sector which has not been con- 
trolled.” . . 

The phasing out o£ 
exports was one of a number of 
initiatives to develop 
New Guinea’s forest resources 
as a renewable asset. 

Others included measures to 
encourage the development to 
a domestic processing industry 
involving foreign investment, a 
new forest revenue system to 
provide greater benefits to 
landowners and the luring of 

■ Inn 0TTUUt 


moni toring and border surveil- 
lance service. 


Malaysian earnings up 16 per 
cent in 1993 despite sales curb 


Malaysia’s timber export 
earnings are estimated to have 
risen by 16 per cent to 
M$12-2bn (£3bn)tn 1993, Mr Lim 
Eeng Yaik, the primary indus- 
tries minister, said yesterday. 

However, he said the coun- 
try’s log exports were thought 
to have plunged by 50 per cent 
to 9.4m cubic metres, valued at 
M$2-9bn because of Malaysia’s 


MARKET REPORT 


policy of sustainable manage- 
ment “Total log exports are 
expected to be lower this year 
In view of export ban an logs 
by Sabah, state,” be told a news 
conference. Sabah basoned the 
export of logs in January 1993. 

The higher revenue from 
timber exports was due largely 
to the strong performance of 
sawn timber, estimated to have 


generated about MS4.4b in 1993 
against MS3.4bn in 1992, Mr 
Lim said. Sawn timber prices 
rose to an average MS 1.323 a 
cubic metre in 1993 from 
MSI .149 in 1992. 

“However, in terms of export 
volume, sawn timber experi- 
enced only a slight increase of 
0B per cent to around 5.44m cu 
m in 1 993 ." the minister said- 


Silver prices recoil after bull run 


SILVER prices recoiled at the 
London bunion market yester- 
day after tiie recent bull run as 
traders came to the conclusion 
that hopes of breaching the $6 
a troy ounce resistance level 
for spot metal were premature. 

The spot price closed at 567.5 
cents, down 9.5, and other pre- 
cious metals moved lower in 
sympathy. 

At the London Metal 
Exchange COPPER prices 
retreated in sluggish condi- 
tions and dealers suggested 


(As at Mondays dose) 

tames 

AhsrtWum +SO 10 2,596,700 

eSoy -100 to 45400 

Copper -4.100 toSHJtTS 

LSKl +2.700 toSMaOO 

ns dtri -54 10130284 

Sac *0600 lb 1.108J2S 

Tki -30 to 23585 

further losses were possible. 
The three mouths price closed 
at $L936£0 a tonne, down $22. 

ALUMINIUM prices were 
more resilient as the market’s 


fundamental’s were seen to be 
improving. 

London Commodity 
Exchange COCOA market, 
although the May position 
dropped back below £900 a 
tonne, was at least comforted 
by the fact that further aggres- 
sive selling did not emerge in 
New York in the afternoon. 
May seemed content to hover 
around the £890, last trading 
£13 down at £892. 

Compiled from Renter 


COMMODITIES PRICES 


BASE METALS 

LONDON METAL EXCHANGE 

(Prices hem Amalgamated Metal Trading! 

■ ALUMINIUM, 89-7 PURITY (S per Tonne* 


Precious Metals continued 

■ GOLD COM EX (100 Tray ot; $/troy oz.) 


GRAINS AND OIL SEEDS 

■ WHEAT LCE (E par tonne) 


SOFTS 

■ COCOA LCE tE/tame) 


MEAT AND LIVESTOCK 

■ LIVE CATTLE C ME fKUXXSbs; CCOta/Ibs) 



Cash 

3 rathe 

Ooso 

1309.5-10.5 

1333.5-4.5 

Previous 

1.315-8 

1339-92 

Higfr/Vjw 

1321/1319 

1342.5/1331 

AM Official 

1320-0.5 

1341-12 

Kerb dose 


1331-2 

Open Int. 

269.350 


Toud dagy turnover 

48.661 


M ALUMINIUM ALLOY (3 per tonne) 


Close 

1880-5 

1295-300 

Previous 

1290-300 

1310-4 

High/low 


1320/1305 

AM Official 

1303-8 

1320-3 

Kerb ctasa 


1296-300 

Open ire. 

4.554 


Total datty turnover 

770 


■ LEAD (S per tonne) 



Close 

457-8 

472-3 

Previous 

458-9 

4732-4 

Hlgh/tow 


474/470 

AM Official 

4552-62 

4705-1.0 

Kerb dose 


4732-4.0 

Open Int. 

38.008 


Total (tatty turnover 

M NICKEL (S per ton 

5.460 


Close 

5810-20 

5680-5 

Previous 

5870-80 

5740-50 

Hjflh flow 

5820 

5720/5860 

AM Official 

5015-20 

5690-6 

Kerb dose 


5890-700 

Open int. 

49226 


Total dafty turnover 

9.985 


M TIN (S per tame) 





Latest 

price 

Day’s 

drags 

wan 

taw 

tam 

tat 

VOL 


Sat! 

pries 

04 ft 

drags 

MB* 

Low 

Open 

1st 

Vat 


Si 

Dsyta 

drags 

«sb 

Opra 

Utsr tat VM 


Lrissi Day** Open 

price drags HgM Urn tot 

m 

Ifar 

367 5 

-as 

3872 

3872 

. 


Msy 

11115 

+120 

now 

10820 

1279 

271 

Mar 

B64 

-27 

075 

870 53 0 

tar 

7B225 +0025 77JJ25 76200 20,701 

5.664 

Apr 

385.7 

-2.4 

388.1 

3S52 

33.000 

K 388 

Jan 

111.15 

+2.05 

11120 10920 

568 

128 

Msy 

OSZ 

-13 

893 

889 20213 2255 

J» 

74.400 -OIQO 74575 74225 25.105 

3048 

May 

3892 


. 

- 

20 

4 

Sip 

9320 

+035 

. 

- 

358 

- 

M 

911 

-11 

917 

907 18443 1202 

tag 

72.725 +0125 7X825 72. KO 13,034 

txs 

Jen 

3682 

-2.4 

3802 

3872 61211 

15.774 

Ha* 

9425 

+025 

9420 

9430 

1215 

12 

Sap 

S27 

-12 

335 

824 11274 789 

Oct 

73.725 +0075 73250 73.725 10220 

570 

tag 

390.5 

-22 

3922 

3900 

8.438 

IBS 

Jsn 

98.40 

+020 

8820 

9620 

703 

25 

Doc 

946 

-13 

953 

945 16.734 1228 

Dec 

74200 +0025 74225 71978 2282 

84 

Oct 

Total 

3930 

-28 

395.6 

3930 

4228 

14.004 

189 

12H 

M m 

Total 

9720 

+040 

97.75 

97 JB 

167 

4278 

20 

4EB 

Mar 

Trial 

968 

-10 

972 

96S 24254 924 

1102BB 6/883 

fab 

Trial 

7X77S • 71775 73.775 1238 68 

82233 10756 


PLATINUM NYMEX (50 Troy oz.: S/troy oz.) 


WHEAT CHT (SCOObu mfrr; cents/BOb bushel) 


COCOA CSCE (10 tonne* Srtormas) 


4082 

■ao 

4182 

407.1 

1809 

1.772 

MW 

333$ 

- 

335 a 

3330 83205 

17.725 

mar 

1157 

*4 

1185 

1147 3082214879 

tar 

4112 

-12 

4139 

4092 

17.143 

3118 

Jd 

330/4 

+1/0 

331/4 

329/2111,480 

40275 

Jd 

1186 

+3 

1195 

1178 22.953 5.205 

Jos 

4122 

-17 

4132 

4122 

1.685 

295 

Sep 

382/6 

+1/B 

333/4 

331/4 19,198 

5.795 

Mg 

1212 

+7 

1213 

1205 9JH4 1JS3J 

JM 

4142 

-02 

4140 

4112 

565 

33 

Me 

341/2 

-0/2 

342/0 

3400 24415 

2275 

Dsc 

1249 

+5 

1254 

1240 8.430 374 

tag 

4152 

-05 

*152 

4145 

825 

34 

Mar 

341/4 

- 

• 

- 780 

700 

Hr 

1285 

+5 

1288 

1274 9,414 208 

Oct 





242<7 

3252 

■tar 

343/4 

- 

- 

5 

- 

May 

1295 


- 

- 5£04 78 

Use 

ADtUM NYMEX (100 Troy o 2.; S/troy ozj 

Total 




242,230 74770 

Trim 




8453723,110 

Total 


135.40 -0.85 14100 14100 1 1 

JM 13150 -1.65 13525 13125 4$86 105 

Sep 134.75 -0.40 134.75 134.75 420 4 

Doe 134.90 -095 - - 281 2 

Total 4JW in 


MAIZE C8T (5,000 Ui mtn; cer*a/5e*> buaftaQ 

IT 285/4 - 1/0 288/2 285 / 0554.460 91,670 

1 288/4 -on 299/2 288 / 2583.415 84,105 

9 274/2 - 1/2 275/2 274 / 0131,550 7,580 


■ COCOA OGGO) ISOB-atowe) 


Mar 28 

My 

Mar 29 

10 day average . 


Price 
— 9i zm 


M SILVER COMEX (100 Troy ozj CrataAroy ozj 

Hv 

287/4 

■0/4 

288/4 

207/2 22.700 

855 

■ COFFEE LCE (Monne) 


tar 

tar 

5900 

567$ 

+01 

.77 

571$ 

ng c 

585$ 257 151 

5 

ccqA 74 un mi ten 

■nay a lit Cl uv 

Iriri 

■ BARLEY LCE (E per unna) 

cj 14-r 

m 

85 

mm 

Mar 

May 

U 

1335 

1344 

■4 

■4 

1342 

1351 

1338 125 38 

1340 13$25 1$Z0 

4 04*1 1C740 I SfjV 

May 

Jri 

tap 

Use 

Trial 

582.0 

5805 

5600 

577J0 

‘7.1 

-7J 

-102 

-7.7 

578$ 

Mnn 

590$ 

*»U Z0.VSB 

583$ 10613 1$SS 
SHOD 5/29 113 

575$ 10159 401 

1TS$42 23,173 

M»y 

tap 

Bar 

Jsn 

107 J5 
9425 
9075 
97 $0 


107.75 

107.75 

157 

139 

104 

16 

15 

•M 

tap 

taw 

Jan 

Total 

1348 

1347 

1341 

1341 

-6 

-2 

-4 

•2 

1353 

1348 

1348 

1342 

14+J 13,r40 1,11 + 

1342 B$28 290 

1340 3$82 48 

1340 5,128 170 

4B$BI 2jm 






Mar 

Total 

9040 



“ 

7 

410 

a 

■ COFFEE ’C* CSCE P7$00tos? cmta/Oa) 


Ckna 
Previous 
HgMow 
AM Official 
Kerb dose 
Open InL 


5445-55 5600-10 

5485-75 5520-30 

5545/5510 
5485-90 5535-40 

5525-30 

19,393 


Total dotty turnover 3538 

■ ZINC, epeefatt high grade ff per tome) 

Ctosa 9533-4.5 97! 

Previous 9585-9.5 979. 

Hlgh/taw 949 975 

AM Official 948-9 971 

Kerb dose 97i 

Open UiL 103.235 

Total daiy turnover 33,458 


953$-4$ 

950.5-9$ 

949 

948-9 

103 $35 
33.458 
{$ per totmri 

975-6 
979 $-80 
975/072 
970-1 
970-2 

1925-8 

1938-7 

1949 $-50$ 

1958-9 

184377942 

1952/1936 

1944-5 

1951-1$ 

207383 

53.568 

1937-8 


ENERGY 

■ CRUDE OE, NYMEX (43L0Q0 US gaPa. S/barel) 

Leant Day's Open 

pries drag* Mgb lew M Md 

Hay 14.12 +004 14.22 1405110^83100,178 
jsa 1423 +0.05 1*32 14.15 75,112 48,445 

Jri 1414 +0.03 14.42 1430 37,190 1122E 

tag 1454 +008 1458 14.45 11778 2587 

Sep 14.68 +0.07 15.53 1453 21508 3A9* 

Oct 1453 +057 1455 1453 12.402 851 

Total 48553817*442 

■ CRUDE OIL IPE (S/banel) 


■ SOYABEANS CUT ROdObn rata; centawai tatttt) 


8120 -0.45 8250 8050 32,322 4,804 
82.75 -0.4a 8150 8255 11519 1530 


May 

6004) 

-1/4 

6934) 

688/2283.515 78.735 

tap 

83$5 

-048 

84.85 

83.30 

0288 307 

Jri 

BOMB 

-1/4 

695/0 

680/2250955 302B5 

Ok 


-015 

85-30 

84.70 

3JH8 94 

tag 

8854) 

-1/2 

687/4 

883/6 42$20 3.765 

tar 

8690 

-025 

8020 

85.75 

1,429 141 

Sap 

taw 

668/0 

65243 

-0/4 

■Ofi 

869/0 

CCCM 

ujjh 

BB5/4 23$B5 2$15 
85Z4H65$GD 17$95 

May 

iriri 

8085 

-1$0 

8050 

BB$0 

218 87 

57438 7,154 

Jm 

Trial 

657/4 

-on 

660/4 

857/0 14$80 605 

N/A N/A 

■ GOFFS PCO) (US crata/pound) 



■ SOYABEAN 09- C8T (60.00®*: carta/lta) 


Close 1925-8 1V3B-7 

Previous 19495-50$ 1958-0 

High/low 184377942 195271936 

AM Official 1944-5 1951-1.5 

Kerb dose 1937-8 

Open InL 207.883 

Told dafly Turnover 53,560 
■ LME AM Official E/S rata 1.4951 

LME C todnfl E/S rate: 1.4880 

Spot 1.4890 3 sabs 1.4833 6 mttal .4807 B(dtiS1.47BZ 


■ HIG 

IH GRAD 

ECOFI 

Day-a 

PER (C 

OMEX) 

Open 



UMt drape 

«B0 

lew 

M 

Vol 


8945 

•1$0 

9190 

89$0 

755 

813 


8980 

-080 

9060 

89.80 

1.119 

1 

May 

89$0 

■079 

9080 

89 AO 

40932 

5,751 


8975 

-085 

0020 

89.75 

887 

39 


89.80 

-075 

9055 

8950 

14220 

697 

ABB 

9020 

-030 

9020 

9010 

488 

5 


price draga Hgb Lot* W Vd 

Hay 1103 +0.03 1113 1298 04.483 30.182 

Jun 1110 +009 1117 1105 38555 15.189 

Jri 1122 +0.14 1129 1118 >55 7? 2,132 

Aug 1133 +0.08 1139 1130 10,363 302 

Sep 1146 +057 1153 1144 4528 488 

Oct 1161 +058 1165 1160 2.047 283 

Trial 148588 41968 

■ I^TINOOIL>frME<(425miISgri^cmSgate.) 

triad Day's Open 

price drags Mgft Low H Yri 

Apr 44.10 +034 4455 4185 20502 19.758 

May 4150 +039 41.75 4150 57.231 25,194 

Jun 4150 +052 41.78 4155 40578 11591 

Jtd 4115 +OS2 4220 4105 24,665 6518 

Dog 4195 +057 4105 4190 10164 509 

S* 4450 +072 4450 4190 8570 461 

Total 199527 88500 

■ QA3 OIL PE Stonal 

Sett 0*7*1 Open 

price cfeenga Ugb Low hd vu 


PRECIOUS METALS 

■ LONDON BULLION MARKET 
tPHcea auppBad by N M RothsctSd) 


Odd (Troy ozj 
Close 
Opening 
Morning fix 
Afternoon fix 
0*7*6 High 
Day's Low 
Previous dose 


S price 
38550-38040 
388.60-388.00 
387.90 
36080 

38050-388.80 

385150-39650 

3895039000 


AW 

13550 

-150 

138.75 

13550 

23500 

5.161 

May 

134.25 

-175 

1K5G 

13175 

18502 

■;»c 

Joa 

13440 

-240 138 $0 

13450 20761 

1.744 

Jri 

135.75 

-1.75 

13650 

135.25 

13222 

648 

tag 

13750 

-1.75 

13025 

1374S 

5557 

169 

Sap 

13075 

-1.75 

14050 

13950 

3522 

328 

Total 




110771 

13463 

■ NATURAL GAS IWtCX (10.000 nanBDr; SAmaBajJ 


Uteri 

tay*a 



apw 



prtca 

draga 

mbo 

Low 

w 

Vol 

May 

2052 

-0411 

z$re 

2545 

18577 

8,164 

Jbb 

2$70 

-0008 

2490 

2585 

10516 

1555 

Jd 

Z.D89 

-OOOI 

2.090 

2580 

10145 

I486 

Aug 

2.115 +0004 

2.115 

2.105 

10123 

619 

Bap 

2.150 +0004 

Z145 

2.140 

10742 

319 

Od 

2.185 

-0001 

2.185 

2.180 

6.336 

340 


My 

2850 

-053 

2856 

2081 

32.429 

4547 

Jri 

2645 

•043 

2845 

2078 29,775 

2582 

ABB 

2846 

•052 

2851 

2038 

9,144 

973 

S«P 

2759 

-005 

puno 

2750 

8515 

389 

Oct 

27.20 

-013 

2730 

Z7.13 

7,102 

290 

Dsc 

2058 

-ato 

28.72 

2855 

133830 

384 

Total 

■ SOT 

YABEAN 

MEAL 

CBT (11 

X) tons 

N/A 
; Srtord 

WA 

Hay 

1055 

■05 

1965 

195J 26.488 

5558 

JW 

1903 

-07 

197.3 

196.1 

20417 

3523 

Aril 

195.1 

-05 

1902 

1945 

7514 

348 

Sop 

193.4 

■05 

1943 

183.4 

W65 

148 

Oct 

1915 

-02 

1925 

1915 

3370 

164 

DOC 

1807 

-03 

1015 

1905 

9.01 B 

787 

Total 





N/A 

N/A 

■ POTATOES LCE (E/tomd 




Apr 

1955 

+3.0 

185$ 

189$ 

611 

30 

May 

2015 

+44 

200$ 

1915 

S4S 

59 

Jon 

130$ 

- 

- 

- 

2 

- 

Nov 

70$ 

-10$ 


- 

- 


Mar 

103$ 

- 

- 

- 

- 


Apr 

1255 

-3$ 

1200 

126$ 

- 

27 

Total 





1583 

116 

■ FREIGHT (BJFFEX) LCE (SlCWnde* point) 


Ha 

1205 

+1 

- 

- 

294 

- 

Apr 

12B8 

+2 

1268 

1282 

1503 

10 

May 

1202 

+2 

1290 

1282 

847 

18 

Jri 

1150 

-7 

1160 

1150 

965 

4 

Oct 

1289 

+4 

1285 

1295 

215 

18 

Jao 

1318 

- 

- 

• 

139 

- 

Total 

Oaaa 

Pffiv 



2443 

66 

on 

1206 

1198 






Loco Ldn Mean QoM Lencttng Rates (Vs USS) 


1 month 

2 months 

3 months 

Slhrer Ffat 

Spot 

3 months 
8 months 
1 year 
Geld Coins 
Krugerrand 
Maple Leaf 
New S o vereign 


3.39 

I 354 

3 AO 


0 months .—5.54 

12 months 557 


Total 

■ UNLEADED GASOUNE 

NYMEX (42500 uSgdtLjc/USgaia.) 


114519 13573 


latest Day's Open 

pries change Mgta Low IR W 


pAroy e a. 

US cts equlv. 

•pr . 

4160 

+029 

4355 

4142 19,407 

13550 

37550 

582.00 

May 

4*J2S 

+029 

4450 

44.06 50)7$ 22246 

300.45 

68845 

Jun 

4440 

+033 

4540 

4445 27589 

6,118 

385 AO 

57aao 

Jut 

4453 

+033 

45.15 

4450 9$90 

1,972 

395.90 

58850 

tag 

44J0 

+028 

4000 

44.70 8,472 

882 

S price 

Eaquhr. 

Sap 

4445 

+023 

4450 

4452 5331 

330 

390-393 

280-263 

Tetri 




125,113 46,444 

mi 0-40060 

- 







92-45 

61-84 








Mnor Metals 

European free market, from Metal Bui lean. S 
par fc In worriiouse. unless otherwise stated 
(last week's In brackets, where changed). Antt- 
nKJnjr. 99-0%. £ per tonne, 1 ,850-1,900 (1,800- 
1560). Bfainuth: min. S9.99K. tonne lots 125- 
2. 40. Cadmium met. 815%, 60-70 cents a 
pound. Cobalt: MB free market. 99.8W. 26.00- 
27.50 (24.00-25.00); 99.3%, 20-50-22.00 
{18.50-1950). Mercury: mm. 9959%. $ per 78 
ib flask. 90-100. Molybde n um: drummed 
motybdk: oxide. 2.80-2.90. Selenium: min 
99.5%. 3.60-455. Tungsten ore: Mancfced min. 
85%. S per tonne raft (TQkg) WO,, ctf. 30-41 
Vanadium: min. 98%. df. 155-1.45. Uranium: 
Nubxbo exchange vidua. 7.00. 


Mara Price PM. day 

Comp. daiy 7757 7143 

15 day average 7168 7165 

■ No7 FBEMHffil RAW SUOAH LCE (Penta/ttrsl 
u^r .... 1,112 

M 1254 -CL 17 1254 1149 1728 80 

Del 1155 052 1158 1155 190 100 


Total - 

■ WHITE SUOAH LCE (S/tanne) 


- 4529 180 


May 04030 -15 0 34100 33850 7JSS 987 

m 338.10 -1.60 33820 334.50 8,630 1.600 

Od 31100 -1.40 31550 31100 5,244 748 

Dec 30850 -050 30850 30850 131 20 

Mar 30afl0 +020 30950 30850 538 70 

May - - - 202 

Total 24286 1435 

M SUGAR H 1 CSCE (1 llOPObs: cantata/ 

May 1155 -052 1114 1150 59.444 4.148 

Jri 1110 -027 1132 1104 36,512 1599 

Oct 1151 -026 1151 1159 31/08 871 

Mar 1120 -0.18 11.48 1120 14,116 519 

May 1128 - - 1519 1 

Jd 1127 - - - 1585 10 

TOW (44518 8588 

M COTTON NVCE pOJXXMai centa/Bae) 


May 

7755 

+061 

77.47 

7650 31,188 3A3B 

Jri 

7756 

+021 

7B50 

7755 15504 

954 

Oct 

7450 

+005 

7*50 

7415 

2.B2B 

56 

Dec 

7150 

+012 

72.10 

7150 14584 

506 

Kar 

7350 

+038 

7100 

72.90 

731 

20 

May 

7140 

+005 

7050 

7140 

233 

7 

Trial 





54«14 4563 

M ORANGE JUICE NYCE (IS.DQObs; centaribe) 

MW 

11060 

-080 

1115S 

11050 

8522 

1571 

Jri 

11350 

-095 

114.10 

11110 

5548 

506 

Sap 

11050 

-045 

11850 

11550 

2508 

378 

taw 

11455 

-060 

11450 

71450 

1,164 

304 

Jan 

11550 

-090 

11550 

11550 

2$ee 

207 

mm 

117.40 

-060 

11750 

11750 

291 

146 

Tetri 





19510 2509 


VOLUME DATA 

Open interest rad Vohans data shown tar 
contracts traded on COMEX. NYMEX. CHT, 
NYCE. CME. CSCE rad IPE Crude CM are one 
day In arreara. 


INDICES 

M REUTERS gage: 1B/ar3in10ffi 

Mar 29 Mar 28 m o n th ego year ego 
1836.1 18485 17817 17245 

■ CRB Futures (Baae; 4/9756=100) 

Msr28 Mar 25 month ago yurago 
22758 230.75 22755 N/A 


M LIVE HOGS CME (4OJ00BW canta/tos) 

Apr 47.725 - 47.175 46500 6,494 1534 

JU 51225 -0.100 51400 53200 13580 3288 

JH S1E75 +0.100 51700 51450 4277 1.178 

Aag 50.450 -0250 50.700 5IL400 1787 SS3 

0«t 4&450 -0.150 48.600 46250 1287 508 

DCC 47.100 -0200 47200 47200 1270 222 

ToW 31,481 8 A2J 

M POfPt BELLIES CME (4QJOOIter canta/tn) 

Mpy 57230 +0500 57200 58550 4501 1291 

JM 57200 +0280 57.400 68500 1448 658 

tag 33.050 +0500 53050 54200 598 42 

FUi 57200 -0180 57550 57250 101 22 

Mir 50950 -0580 - 98450 10 9 

mar soon a i 

Total *087 2,124 


LONDON TRADED OPTIONS 

Strike price S tonne — Coda — — Puts — 
M AUJMMUM 


(W.7%) LME 

Mqy 

Aug 

May 

Aug 

1300 . — 

45 

78 

21 

38 

1325- 

32- 

84 

32 

48 

1350 

21 

53 

47 

62 

■ COPPER 
(Grade A) LME 

May 

Aug 

M*y 

Aug 

1800 - 

66 

89 

22 

49 

1850 

30 

04 

4B 

73 

2000.- 

14 

44 

78 

102 

■ COFFEE LCE 

May 

Jli 

May 

Jri 

1300 

58 

.90 

14 

42 

1350- - 

20 

S3 

34 

as 

1400 

12 

44 

68 

88 

■ COCOA LCE 

May 

Ji 

May 

Jri 


e 

35 

38 

48 

060 

2 

20 

M 

65 

878 - 

1 

20 

84 

84 

■ BREHT CRUDE IPE 

Mqy 

Jot 

May 

Jun 

1360. 

10 

37 

57 

72 


2 


18 SS 
11 


LONDON SPOT MARKETS 

M CRUDE OIL FOB &aar barral/May) +or- 

Oubal S1 1.77-1 J7W -0.15 

Brant Bend (doted) SI 32 1-3 23 426 

Brant Blend {May) SI 101 -103 -0,10 

W.TJ. (1pm 88Q S14.11-4.12w -0035 

M OIL PRODUCTS N WE prompt deiveiy OF (tanna) 

Premium Gascflne $182-154 -2 

Ges 08 SI 38- 139 -1 

Heavy Fud OB S87-69 -1 

Naphtha SI 28-1 30 -2 

JM Pud SI 55-lfiS -1 

Arttfaum Ague EDtnUn 

■ OTHER 

Gold (per trey 04* S38S.16 -166 

S»ver (par troy ob }4 56720c -&00 

Platinum (per tray oz.) $40820 -520 

Ptatasttum (per tray ozj $15175 -CL 85 
Copper (US prod.) 95.00a 

Lead (US pnxL) - 36.00c 

Tin (Kuria Lunpu) 14A4r -005 

Tin (New York) 25420c 

Zinc (US Prime W.) Unq. 

Cette pie w o lghOf U823p -128* 

Sheep dive 13528p S2T 

Pigs Dive wdgM 75.1 Op -229* 

Lon. day auger (raw) $2945 

Lna day sugar (wta) 5347.00 -02 

Tate & Lyle export £308.00 

Barley (Eng. feed) Unq 

Maize (US Na3 YetaW) Unq 

Wheat (US Dark North) Cl 85. Ox +2 

Rubber (May)V 71.00p -020 

Rubber (Jun)f 7125p -0.50 

Rubber(KL RSS Nol Apr) 25620m +2.00 

Coconut 08 (PW)§ S55O0t +10 

Palm 08 (MolayjS S4072w +2 

Copra (PhD§ $34ELOv 

Soyabeans (US) Cl982w -1 

Cotton Outlook A Index 8225a -025 

Wooitaps (B4e Super) 392p 

E pr tame untaM aOwralM mm. p pgnowkft. a caraflb. 
r Itnogr/kg. m Mdeysttn cenufl>e - 1 Mampr. v Apr w May. 
t MWUWI. * SpUMay. V London PtiyakHL 9 OF Ronn^ 
tait^BUBonrakst dose. * Sheep (Live weight ptceri " 
Chengs on week, prisoid pnoes. 


No.8,417 Set by QUARK 



ACROSS 

1 R. Cam - and keel capsized, 
providing the 11 (8) 

5 Diminutive girl's half day 
would be 11 

9 No North/South interchang- 
ing seen.? Rubbish! (8) 

10 Society put me in difficulties. 
There’s a partition (G) 

12 Duck with empty space (egg- 
shaped) (5) 

13 Four small volumes I ordered. 
Not sensible? (9) 

14 Unruly rabble for the 11 (6) 

18 Possessed the weed for the 11 
(?) 

19 Rfe essential to contemplate 
rally of the side (7) 

21 Welcome with Salvation 
Army instrument <6) 

23 Pessimistic prophet is about 
fool and artist (9) 

25 The 11 on ice? (5) 

26 The refrain about the sea-god 

27 Box with heather for the 11 
» . 

28 Voting ban not introduced for 
the 11 (6) 

29 The 11 left in a stupid person 
<8) 

DOWN 

1 Cut grass around the pub for 
the 11 (6) 

2 Study issue over worker. Suit- 
able? (9) 

3 People going in to editor to 
change the text (5) 

4 Supporter embraces endless 
fun suitable for relaxation (7) 


6 Port, old and A 1, could be 
affecting the speech? (9) 

7 Car test? “Book up" is the 

mairim (5) 

8 Smith has more than one! (8) 

11 Angle? (4) 

15 Cockney’s cart, lined up we 
hear with a 11 (9) 

17 Exclude from' society Scot and 
nose worries (9) 

18 Judge’s former wear gets the 
bird (8) 

20 A board game is rarely loud 
(4) 

21 Producer of cute in the thea- 
tre (7) 

22 A garden could be protected 
against loss (6) 

24 Acrobatic air manoeuvres 
turning up in the reel? (5) 

25 The u to catch a 1 across (5) 


Solution 8,416 


SDEIQEB EaQQBDHE] 
ana o □ a b 
□□□QQ0 0Q0HQE3QB 
q n a a a a a q 
□□□ dranciQ QciOQQQ 

□ □GIBClEQQ 
□000 □DHaBBCl 

□ □ □ a □ □ s n 
„ □□aaaaQ QBan 

□ dOIHIIQno 

adQQQQ Q0Q00QQQ 

□ Q □ 0 0 Q B 0 

aaaaa0Bsa HnstanB 
lj Q □ □ 0 n m 

PPIRmnn 


Of broking and jobbing the Pelikan's fond. 

See how sweetly he puts your word onto bond. 

StaUian© 


JOTTER PAD 


4 '. . , 


^ U 






iS' 

X N 


FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


LONDON STOCK EXCHANGE 


MARKET REPORT 


PMMMMbmtadn 


Share prices close easier in uncertain trading 


"P 16 

sales 


By Terry Bytand, 

■ UK Stock Market Editor 

’* Share prices moved shandy in an 
erratic trading session in London 
■ yesterday, as equally uncertain 
\ trends in bonds kept investors con- 
fused over the near term outlook for 
’ domestic securities markets. The 
/ blue chip trading houses continued 
• j to wind down their positions ahead 
‘■'Of the Easter weekend, and 
. gilt-edged specialists were focusing 
: « on today’s auction of £2J3m short- 
dated bonds In London's first float- 
ing rate offering of government 
- securities. 

The day’s peak of 3.14L9 on the 
FT-SE 100 Index, 15.4 above the 
overnight level, came very early in 
the session. Once again buying 

^ interest was thin and shares faira m 
off sharply when the government 


bond market began to fan away. An 
raster trend in sterling helped 
shares in the export leaders 
towards the close but this was 
counter-balanced by a fall of 33 
points on the Dow Jones irHtnatrial 
Average early in the New York 
trading sessioiL. 

The closing reading put the FT-SE 
100 at 3,123.4 with a decline on the 
day of 6.1 podhts. Mach of the move- 
ment in the Footsie stocks origi- 
nated from the stock index futures 
sector. Lacking this distraction, the 
FT-SE Mid 250 gained 3.1 at 
3,788 a although trading in second- 
Hne Issues was modest 

Although oil prices steadied, 
shares in the major producer com- 
panies weakened on overnight sell- 
ing hi ITS markets. PhwrmarentlraTc 

drifted lower in nervous trading 
towards the close, when Wall Street 


ACCOM* DW. 
AprS 


was reacting sharply to data on con- 
sumer confidence and housing 
starts. Glaxo eased following confir- 
mation that Losec, Astra's rival to 
Glaxo’s highly successful Zantac 
drug, had been licensed for sale in 
the OK. 

Gyrations in the UK bond market, 
while not affecting share prices as 
directly as in some recent sessions, 
unsettled maria* n vtfitimrp yester- 
day. There are constant rumours 


that at least one London based secu- 
rities house has suffered heavy 
losses in gilts and that the erratic 
trend in the bond market reflects its 
attempts to restruct u re its trading 
position. 

Bonds are also perturbed by the 
interest rate pressures from outside 
the UK. The rest of the week, 
mdndtog Friday when most Euro- 
pean markets are do sed, will fea- 
ture a How of important economic 
statistics an the US economy, which 
will refocus investment attention 
on the BksHhood of a further tight- 
ening in credit policy by the Federal 
Reserve. 

Both fond managers «nd mark ** 
traders have already begun to con- 
centrate on keeping positions 
tightly trimmed over the Easter hol- 
iday weekend. Seaq volume, at 
673 .9m shares, was higher than on 


Friday but at the low end of daily 
averages; Friday's Seaq volume was 
worth only EL2hn in retail worth. 

Underlying confidence remains 
firm, however, with several leading 
investment banks continuing to 
urge clients that UK equities pres- 
ent a buying opportunity at present 
levels. 

BZW said that the stock market 
“has now moved into overshoot”; in 
focusing almost exclusively on 
interest rate prospects, it has over- 
looked the “post tree indications for 
earnings recovery” appearing in the 
company results fist 

Last week’s “poor” retail price* 
index has not changed the outlook 
for inflation, believes Mr Chris Dil- 
low at Nomura Research. He sus- 
pects that the underlying rate will 
end this year at 3.2 per cent and 
next year at around 44 per cent 



1,650 ■ - 


t ’ 550 ‘~ 

Sru&K FT Qiepbae 


Equity Shares Traded 

Turnover by voMn# {mWon}. Eartuttap; 

intra-nwdiat btainm ww ovesttas utww 

ISM 


BRRI 


■ Key Indicators 


Indtcaa and ratios 

FT-SE 100 

FT-SE Mid 250 
FT-SBA3S0 

FT-SE-A AB-Shora 
FT-S&AAI-Shm yWd 

3123.4 

3788.8 

1S83J3 

157099 

338 

-6.1 

+3.1 

-2.1 

-2.01 

(3.67) 

FT OnSnasy indtix 
FT-SE-A Non Fins p/a 
FT-SE lOOFut JUn 

10 yr oat yield 

Long afit/eepify ykt ratio; 

2470.1 

21.04 

3116.0 

7.87 

299 

-05 

(21.06) 

-14.0 

7A5 

(ZPO) 

Boat performfnu —ctora 

+1.4 

Worst porformlnq socters 


2 Household Goode 


— +1-0 
. +1.0 

2 BtritUna Mats 

— ...-1.4 

4 Bsctridty 


+03 




5 Tetocommurricaaions , 


— . +0.6 

5 Property 




L ' r hull 


[Property 

valuations 

concern 


* Concern over stock market 
> valuations of property stocks 
;■ was underlined yesterday by a 

• disappointing announcement 
‘vfiom Hammerson. The board 

statement showed Hammer- 
- son's net asset value (nav) as 
x 343p a share, which was well to 
the lower end of market fore- 
casts. This highlighted ner- 
vousness ahead of a batch of 
ft impending property share flo- 
tations. 


With the sector undergoing a 
correction following a powerful 
performance in the past ZB 
months, analysts fear these flo- 
tations may prove disappoint- 
ing. First of the batch is Capi- 
tal Shopping Centres, which 
begins trading today. 

Some brokers suggest the 
shares could open at about 
Slop, a 20p discount to the 
issue price of 230p. The issue 
price was calculated at a 13 per 
cent premium to net asset 
value at a time when the prop- 
erty sector was trading at an 
average premium to asset 
value of about 20 per cent 
However, this has now feTlm 
to around 5 per cent Last week 
it was revealed that only 14.4 


per cent of the public offer Had 
been taken up. 

Hammerson’s sharps which 
fen back on the results, later 
rallied on consideration of a 
£143m deal with PosteL the 
investment group. After drop- 
ping to 348p at one stage, they 
finished 8 down on balance at 
8S4p. - 

Mr Graham Stanley at Gold- 
man Sachs said: “This sensible 
deal bolsters short term 
income mid provides some 
interesting medium term rede- 
velopment opportunities.” 

BAe worries 

British Aerospace was forced 
yesterday into its second 


announcement over the level 
of foreign Investment, and 
revealed a breach of the 29.5 
per cent ownership ceiling. 
BAe said it would now take 
steps to sell the 0.03 per emit of 
shares over the government- 
imposed limit at “tiie best price 
reasonably obtained'. The 
rm t i mrattnmpnt ramp after the 
market had closed and BAe 
shares had fallen 5 to 501p on 
turnover of about 700,000. 

BAe finds itself in a similar 
situation to Rolls-Royce, which 
has also had to force the sale of 
foreign-held shares breaching 
its 29.5 per rant limit. Both 
companies are believed to be 
lobbying to have the rating* - 
which were foipncwd to prevent 


EQUITY FUTURES AND OPTIONS TRADING 


A somewhat featureless 
trading session in derivatives 
left the June contract on the 
FT -SE 100 Index showing 
a discount of severed points 


to the underlying cash market 
yesterday, writes Terry 
Bykind. 

However, trading volume 
was moderate, with some 


■ FT-SE 100 MDEX FUTURES JJ-F^ £25 par MI tads* point 


- 5 SW 0 RD 


A . 

I 


' Jun 
' Sap • 

. Dec 
■ ft-m 

Open 

31400 

31383 

EMC 250 91 

Sett price 
31150 
3136.0 
3145P 

DEXFVM 

Chtnga 
-14.0 
-1<0 
-1<0 
EES (LUTE 

HW 

31660 

3144.0 

1 £10 peril 

Low 

3104.0 

31360 

AhdKpat 

Eat 
14094 
: 4 

0 

a 

Open felt 
50934 
.705 

0 

Jun 

38000 

37800 

-S.0 

38000' 

37700 

' 190 

2300 • 

' “■FT-GE MD2S0 MDEX FUTURES (OMLX) CIO per ful bidex point 


Jun 

3780J) 

3780. a 


97800 

97000 

1 

772 


AI open htrtnet figure ere lor pnwlQua day, f Exact wfcane taewn. 

"■ FT-SE 100 DOMEX OPTION (LFFE) (*3125) CIO par fti index point 


r°P c”°p c”°p e"V c"“, c-V c”"p c*”p 

m 8 UCPj 14 Mb TK RP2 42V 32 Hffz IS HKh 7 TSBb 3 204 ' TT fr la 'r* 

195 30 158*2 43 izPaSPiSPa 19 M^io&boh 133 m 1 87 20b 204 By the dose of Official 

»V» ASSESS S, S S ? S 'SF? S 


14,000 contracts transacted 
by the dose of after-hours’ 
deaBng. 

The session opened wefl, - 
with the Footsie contract 
supporting- a Arm start by the 
underlying stock market and 
then moving to a good 
premfun even against the 
day's peek In the cash 
market But there was no 
follow-through and by 
mid- morning both cash and 
futures had begun to sQde. 

It became dear that the 
initial firmness reflected Tithe 
more than the backwash of 
a setting programme in the 
stock market and there was 
little further st reng th in the 
markets. 

By the dose of offlett 


A3CA 


Aete& Ml Porta 
BAAt 

as 1 -* 


Btnt 

Bnkar&aaMt 


bEc*M 


L* 1 ' 

r" 


f Qta250Ms« . 

I ■ BIRO STYIE FT-SE 100 MOEXOraONAlFFQeiO par WlbKtax poini ' 

■I I mas »rs seas sots 312s 317s ^ 322s ^as 

■ | «r 192k 0 WT^IOfelflVg 10 <9>z 33b ® 55b 22 BPa 10^123^ 0 
U*r zrpt&linh. 30 M3 53 110 78 81 BO^ STj 117 38^ 148 a 
JOI 23412 34b - . IBS Bib. ' W 104ij 57 163h 

I gMSop Z70h 06 2B3h 97 W 1371? 

■feet 3081a 9712. 2*2h\77h 137 21412 

tocw <?<7 ftft 4.747 * tote «*«. tankas Awe « Petal os eatCnae* pries, 

t Lam Mod mrofit. . 

■ EURO STYLE FT-SE MP 200 sfoEX OPTION (OMUQ CIO par fi9 tttoc peter 

■ I 3600 MOD 3000 4000 4OS0 4100 4100 43 

■ '*r 30 100 77 135 0 100 3 22S1 275 325 h. 

OB 0 PUi 0 GHKinat p«H aif nkw* n Wn e 430m 


££ had slid back to 3,117 from 
its momfng’ftlgffpofrtf of ' ’' ,r 
3,156: There was no ; 

~~~ reappearance of the US 
l67 fe houses which had made the 
184 running on the previous day. 

Activity In traded options 
was similaity subdued, with 
the number of contracts dealt 
dipping to 23,741, from just 

over 28.000 on Monday. The 

» FT-SE 100 option, however, 
recorded 9,446 tots, 
compared with 8,470. 


BuantfiCMralf 
ftirton . 



vot Ctafe« DW» 
OOOi prto> Cfnoi 

ws ^ 

1.700 470 

*10 00 
2A00 567 41 

9*1 »*» 

»i 4iia 

•<300 290 4 

014 292 -3 

1A00 632 -4 

646 sea -9 

923 1003 «4 

5JJOO 441 • Ml 

518 12ft 
272 438 -3 

12DO 720 -6 

14,000 3561., -01. 

I . 100 330 -10 

1700 401 it 

4,400 2S3h 34 - 

<500 *00 -ft 

1*» 183 12 

1200 538 -3 

1600 533 * 

OT 321 4 

708 -J33 4* 

1300 an -4 

J. DCO 450 m 

087 501 ■O 

•09 41$ -4 

* 

1300 141 *1 

2300 17* <4 

<s. § - * 

149. •. *17 •• 42 


1 - SE Actuaries Share Indices 


I FT-SE 100 *123.1 

FT-SE IM 260 37884 

FT-SE Md 250 M taw Tnwta 3607.- 

1 FT-SE-A 360 158a: 

FT-SE SmrfCftP 1S3S ff, 

FT-SE SnwilCap ax few Tr«tt» 191031 

FT-8E-A ALL-SHARE 157191 

■ FT-SE Actuaries ASStwre- 


, Day's Yoar Dfe. Earn. 

MarES tfipaK Mar2B Mar 25 Mar8< ago yMOH yteld% 

3123.4 -02 31295 312941 3131.7 2861.0 349 806 

37800 -Hll 3785.7 37752 37B5.7. 30903 023 031 

38074 +0.1 3804.6 37S23. 38118 *117.7 306 072 

15803 -0.1 1590L4. 15801 15803 141745 073 008 

1S3SJ07 ... -ai 1837411 1943^9 196044 154RB8 091 4.07 

191005 .-0.1 1813417 191076193028166509 3U7 <50 

15794)9 . —Cl*) 168000 158124 158L44 140057 068 075 


'he UK Senes 


am. P/E Xd ad). Total 
tkm wtfo ytd Rftftsn 

006 1097 2702 116029 
031 2017 2<87 138<53 
072 21.70 2018 138090 
088 -2004 1032 120042 
4417 3040 1064 147080 
<50 2730 1021 148043 

075 21.12 1293 1217.90 


10 IWNBtAL EJCTRACnONfl® 

12 Extreottva InduntoafO 

15 Ol, Wag raudCS) - 

16 01 Exploration 0 PnxKll) 

20 OEM MANUFiACn>RERS(2M) 

21 BiddfeiQ A CowtructioncaiJ 

22 BuMng Mate 8 MorchfttM* 

23 Churt Qft lftgni 

24 DMnffled IndusWaUflQ 

25 Elactrenk: « Pact EquWM) 

26 Eng<no«flnof72) 

27 Enamoring, VaMdastlZI 

28 Printing. PapwA Pcfeg{27) 

29 TaxtMftft 3 AcoanriC221 

30 CONSUMER GOOOS04) 

31 Brew«lB9(17) 

32 Sprits. Wines 0 CWmsflOJ 

33 Food Marufoctunrap^ 

34 HouMhold QoodsflZ) 

36 HaeWiCaraCSO) 

37 Ph*mwcaAJoate<11) 

38 TobaccofO 

40 *SIVIG£&f221) 

41 OWributon(31] 

42 Lsteta 6 HM 0*9(22) 

43 MedtapS) 

44 RstaDon, FoodflT) 

46 RNaHen, GwwrN«4) 

48 Swpoirt Sarvfcw (40) 

49 ItiinwwtflQ 

51 OMwr Sf ~*~- « a«*naM(121 
bo unuTEsee) 

02 Bactridtynh 

64 On Dtotifctaton{2) ' 

00 Tatoe o mnartoatlomW 


Oay1» Yaw 

Mar 29 cftga* Mar 20 Mar 2S Mftr 24 apo • ; 

247107 -00 2492.15 2S174M 2524417 218040 

388202 -00 388090 3947.69 389075 310700 

237000 -1.0 240004 342033 243000207040 

180013 180006 1837.14 1817416 205600 

2072.70 ”O0 200404 2091.7B 2106.14 170<40 
130082 -101321.19132140134099 92100 

216302 -1 A 218304 217102 21W.71 146040 

246071 -04 247001 2467.78 247065 208060 

2067.72 -07 2062.78 210<41 2119.43 183800 

196208 —042001^8202108 2038477 180400 
192103 -4X2 192408 192034 193208 142060 

224031 -03 2286432 228873 2274.73 176950 

2002.06 +02 289078290022290104233040 

178115 -00 179240 17B203 100039 187010 

272044 -0.4 273700 278BL73 273014 279200 

220087 4052180202131022182^0200030 

2920.75 -05 SS3SJQ 260046 288108 289020 
228506 __ 228844 228809 229075243070 
250808 +1 02501 .04253034259012 230900 

174008- . fO1 174074174248174705370700 
287074 -05268300290028289020287400 

369059 -203787473^006880146412X30 

203035 203548 202705 202146 177040 

207804 -ft* 288007 3048L78 3O78L07 207050 

2224.95 222037 221001 219702 170100 

314007 4063127.08310166308703222740 

161005 405 100028 157021 150648 187070 

171052 171039171107 170014 147100 

1662.18 -4X1 160138 106003 16B805 152300 
254109 -00 2S62.76 255103 254209 2070.10 

117703 -04 118107 118300 119101 128070 
2381.79 404 233145234404 234010218100 

233603 +08 231077 225404 2292.70 T7407O 

303034 -0.1 2041.91 2OB305 197304 207700 

208106 +00 2048.00 203402 203706 200600 

187003 -03 188107 184306 163706 183030 

170" 60 -02 170702 170409 176742 1S318B ' 

225028 +05 224014 22BO44234100 188070 

2073.13 410284407205204 282546229600 

135052 -02 135005 136040 1337 J0 132070 

248059 +02 248001 257074 283024 2S540O 

2959.04 414 2917.73 283091 290123 232600 

196209 -05 197207 197347 1832.16 135010 

159806 -10 181402 1822.18 162037 120300 

40.1 283604 284068 266096 2203.80 

157099 -Ol 150200 168104 158144 140067 


yWdH yte*d% ratio 


l 70 FMAKOALSttiM) 2SSB06 +052240142 

71 BwiMia 3873.13 +102844072 

73 feannwria 135052 -02 135005 1 

74 Ufa AasmancetfS) 2486*9 ^22480«* 

75 kteeftail 2950.04 +14 2917.73 2 

77 Ottwr Hnar*taKZ5) 196209 -051972071 

■ 79 ProoM SSl 139806 -UJgllffil 

80 WWESmaiT TRUSTSf1211 283901 +01,283604 2 

89 IT-SE-A ALL-8HARE(B88) 157099 -0.1 158200 1 

■ Hourly movements 

Qpan OOP 1000 1UU 10 

FT-SE 100 31360 31420 31305 31284 312 

FT-SE MU 260 37934 37904 37904 37930 S7« 

FT-SE-A 3S0 15908 15908 15800 1S0O7 1S9 

Ifena oC FT-4E 100 Hgli 348*a lo* 1.10pm 

■ FT-SE Actuaries 350 ImlusUy baskets 


500 2401 3000 97013 
408 2827 41.01 105808 
505 2075 3108 96020 
306 3010 1508 103104 

<16 3080 1&55 103500 
078 3307 012 100011 
094 4S06 606 98052 
401 2708 2502 107107 

446 2901 2009 103604 

541 1013 089 9(052 

309 4302 1200 108060 

305 3948 2047 107039 

<29 2801 2300 112508 
620 21.12 1709 99160 

7.40 . 1507 2171 91503 
7.70 15,75 1101 96703 

030 IBM 1093 957.05 
7^ 1504 3015 94167 

7.15 1601 3135 91801 ' 
544 2106 807 99178 

709 1525 3608 89602 
80S 13.18 000 796.75 

S47 2224 *05 98000 
&T3 20 43 1227 101121 

AST 2807 1304 107014 
117 2800 2021 1078.17 

092 1252 2.06 93842 

542 23.10 520 896.14 

8.88 IBM 007 90343 . 

306 3804 1083 07802 
3.87 3802 109 96240 
728 -1804 500 88403 

1060 1109 1506 843.72 

2 ’* 000 90104 

607 2000 008 85742 
1505 8.88 848 90204 

601 2104 1141 117828 

032 1308 3609 88051 

809 1800 5508 84809 

709 1400 2050 91005 
407 2502 6708 943.17 

709 1528 2122 07403- 
807 2102 1848 1OZ80S 

105 3129 207 89232 

1.78 5097 1832 94178 

8.75 21.12 1233 121700 


WO H IglWMg t g w jj Wr 


CaunxMoat 

Cootaon 

Oowtafekt 

nurrii 

OalaW 

nsmft 

EaatamBaoL 

fiHrM9nfBec 

issssr 


Granadat 
Qnrt Matt 


6KN 

CUoraaaT 

Hsacwp vwt 

{iissy" 1 

rtaroCETf 


EU*t 

JoMaon UMtav 

eafsr 

LK»«*4t 
Land Secotiaat 

Upon* 

Uga aeMivt 


MHMtakt 
National P<Mort 
Naw 

North Whi Vtan't 
Northam Bact. 
Nodwi Foodaf 


ftwarOant 

AudMdVf 


«7^ofetant 


fVadhntt 


BaanlMi . 

«n*n(WK)A 


vn 378 -1 

2.CCO 54ft +1 

22M 4U 4 

1900 681 a 

1700 189 

402 5+7 -4 

1200 474 -4 

3.100 79* +47 

10XJ 3S* -9 

5500 26SF* J, 

•52 209 -1 

£900 £99 -4 

1,703 17* +1 

>78 - 343 

3200 TO -2 

<100 915 

1000 004 419 

•300 667 

. MB 901 +4 

1500 198 -1 

1300 941 -4 

1.100 - 799 -0 

1.700 479 -4 

173+06-4 
3000 368 +4 

1000 123 *2 

949 *1ft +19 

1400 »l% -1% 

.1000 194 

W « 41 

797 181 -3 

B9 129 +11 

1200 4174 

761 6*3 +15 

10Q0 119 +1 

4000 2264 -124 

3000 470 +8 

1.100 454 -1 

7000 231 «« 

1.100 641 -4 

am «89 *34 

1200 213 

576 676 +19 

2000 974 0 

1.700 705 +1 

1/700 Ml -1 

1.100 935 

4.700 512 

as 957 -1* 

1000 844 ^ 

i0o ate 

1000 . 401 +1 

1400 919 0 

1«0 ESS -14 

2000 6S1 +M 

1200 3** +1 

an 2oz4 

6200 175 -ft 

1200 419 -2 

10CO 281 *4 

1.100. 579 +8 

120 1195 +30 

1200 S35 

977 384 -4 

1000 40S4 -64 

H00 120 *2 

2000 206 +2 

626 337 

482 572 -2 

5.700 ass +2 


BUg & Cnram 
Phvmacauilcto 

WuHr 

Sonia 


12080 1267J 12604 12000 12803 125S2 12500 12506 12430 12403 

28^0 2863.1 28400 2848.4 28505 28470 2848.7 20470 2847.7 28470 

iS 18 mU 13804 18820 1873.1 18708 18720.10703 13714 10722 


Clo— Rwluw Changa 

12409 12502 -170 

■470 28630 -150 - 

10722 1877.7 -5.5 


2^8 29T7-S 29130 29010 29010 29QZ0 ' 29110 29110 29006 28708 +207 


Untad. Ona 9cU)iaaix Ol 

.4 MtuBiaHMImh 
:r Tha FT *S«r hal 6+an IW1 


SF AtawM »wa Mn* e iwbMwl h SaMRlw Mte Un of csnaflbinrta lift awtaUa tanlia FtaftocW IbnM 
SSSTreT tM fT-06 AftJJi Dm bM6B6 (avi» Wt*f» oowa • rang* « dsairanlc tad MPWfeMW pnSiea 

ftJSS WeFHS loa rtwFT-BE SU FR0E AcftaUea3» Mm FT-SE Actariaft todurtiy 

IMiM Kkv*an «U fteart* M MaiU «U 9ia FT^E AaneriaaAHMra kite N 
Tm+ 7 both H oorfejnSnrt nOh *m kmUua of tatariaa nd tfea FaeuBy of Aouariat under a andaU m b( gmaift ftlftfc 
■nTlyaLlMlBd HMvbVu Renefc el htaw LMiad 1901 0 1h» RnaocW Him UrtM 1904. AI nonad. 


jSSmtaSstaUiB eM** uaw IBB*, o TteAtaKH Tinea UiM M04. 
! , ay m i gp n * < aiam^Ktoii sax* EMtaDga n) mo Financial TV66+ Umftad.Uie FT- 

ItafJfttadndM iS^SSwTSSrronrtiaa fltartwttw. 60 « Mrtnn feWftta wiapM MMECHMMft I 
»loncix>en«9NCtf*»w1W. 


CHMOa tandan Mwota »». Trt 


*n« Beodam ’ACC 544 -5 

MlMM. 4C8 479. -3 

Southern Bacfct 1.1 » »S «» 

South Wataa 9«cL 173 897 410 

SoudiVrtwfWtar MJ 6BZ +1 

Bourtt WaaL Pact 499-697 +8 
Bu rthe n i »taa 899 577 -ft 

Standrtri CAaiKLt V400 1090 -47 

Stonhonaa 1*00 228 +4 

SuiUawt 1JB90. 334 . -a 

X4N 3U 229 -h 

71 Qroupt 14S0 380 +1 

T88t , 1300 219 +1 

Tirr^ct 3J00 181 -1 

-taaftlrta 3,100 440 

T*)4or Vfcodrort 3X00 M3 

Taacof • 3X00 SIS A 

-ItertWWrtwt 664 513 -4 

■thomBrtt 1300 low +3 

Tom*Jrrtt 6X00 24ft +1 

IMtairHaiM 3330 97 -9 

uSmt BOB 309 +7 

ItfMrt . MOO 1029 +6 

UMadCkotaf 1300 *38 -8 

UsLNaurtpapn 978 027 -6 

Vo«9*«f WOO G32 

IjOO 732 +19 

N Acir+t <900 570 +6 

WetrtlWfeNr 280 998 410 

W aaaa rW tar 349 872 -1 

VM ta alt 1200 S2S -1 

VMftn»MdBft.t 13® 305 41 

raMConaon 1,100 £29 ■€ 

Wknoav . <400 104 -1 

Wdtar/t 216 611 -19 

yahMBM 1X00 642 +19 

ToricrtMtertBr 457 530 -1 

Ztaaaf M 7ft 4 

SMftd on ftadog aotana fera Mtodton ofiwWr 
atauWw data tfntfi tt>* SEN) ftaai 
yartarday aft 43tfcoL Ttataa M one reMon or 
nm ■« ramM dowiL f incSaaN an FT-SC 
100 ka» oarartBMrt 


the two defence-related compa- 
nies being dominated by for- 
eign interests - raised, to 490 
per cent Rolls-Royce shares 
fell 6 to 175p. 

Shares in high street bank 
Lloyds jumped yesterday as 
hopes for a pick up In growth 
and lower UK Interest rates 
prompted one securities to lift 
forecasts and a no the r to pro- 
mote the sector. The shares 
were 13 better at best before 
drifting with the market to 
dose 6 stronger at 568p. 

UBS sharply upgraded divi- 
dend and profit forecasts and 
issued a buy re cnmmftnria ti <V1 , 
The house believes Lloyds has 
begun to adopted a more 
expansionary attitude and the 
bank’s dividend win incre ase 
by IS per cent a year to hit 
2&5p this year and 34p in 1996. 
UBS increased its 1994 forecast 
by £S0m to £L37hn and its 1995 
number by £70m to £L62hn bil- 
lion. 

Meanwhile, Salornnn Interna- 
tional, the US investment 
bank, highlighted its belief 
that i nt er est rates have further 
to foil and focused on the bank- 
ing sector as offering attractive 
yields as well as exposure to 
further rises in the stock mar- 
ket NatWest up 6 at 470p and 
TSB, up a penny at 219p, also 
benefited from the Salomon 
recommendation. 

Strong results from Next 
powered the shares forward 6 
to 232p, with turnover hitting 
7.3m. Profits for the high street 
retailer were at the top end of 
market forecasts and the final 
dividend was doubled. .Ana- 
lysts were further encouraged 
by the comments on current 


NEW HIGHS AND 
LOWS FOR 1993/94 

•miamstite 

ftWLDB+a ft CNSTRN (11 ShmHt MM*. 
DflnHMDtMU la H9M. DO. 'A'. 
aUCTRMCA OMCTBOUPtn TTwpftffWJ, 

BtOWaBBNQ w Mawe . Sx Ktotaaa Orp. 
UMEOQ, DM. VB8CLE8 fl) Danta-Bm, 
Brnwema MD6 (0 Cort ho. Manwtfi Bn. 
N8M. 6L Bfttan, Warn Bfefca. HEALTH CAM 
10 Fanari* HOtmtQLD 00008 (0 DMiqr, 
MveSTMBHT TRUSTS 0) l*M«hrt FikL 
VtMl Inv Tftl. UnUM < H9TB0 (1) AftWOMn 

amkHouam. 

NEW LOWS 90 

083* |H) onm FKB) KTVBST pj 

auaiiaia a cnstrn ( 1) M (M< 
nwmMD tNDia 0) TMftrtBta Hftft WOL 
aXTRACnVE 1ND6 10 Rnwan. FOOD MftWP 
(1) Ort+pak FowJA HEALTH CARE (D An+owv 
M9URANC8 (1) Men Srtea Ina F< 
aweSTKENT TRUSTS (2) Btang 6ng Cm. 
KMnon B««0 Pn« Witt. L96UM 4 HOTteB 
(R TomonoM LrtMta. MSDM (1) Ota 
Qtaaton Trod. 08. EXPLORATION a PROD (1) 
OopMcRM. DTHBt RNANCIAL {1> Enarfly 

cap«< erman anva a su8Mi «* PMt»-ftte 
Shwta A Me&mi. PR0KR7Y m CtetaWA 
RETAILBtB, TOOO 0) BuOftn. ReTAURS, 
QENBIAL (f) Alaaon. TEXT8JB A APPARSL <0 

IMBOta IQ. LOM 0UL), AMMCANB (I) 

* ■ — * “ 

trading, with talk tb*t sales 
from the mail order business 
were 20 per cent up on last 
year, 

A raft of upgrades pushed 
next year’s forecasts towards 
the £90m mark, with some bull- 
ish analysts looking for 
another doubling of the divi- 
dend to 8p. But with the shares 
having performed so strongly, 
there were some notes of cau- 
tion being struck. Hoare 
Govett was one bouse suggest- 
ing the shares as a ‘hold’ with 
doubts over whether the 
impressive sales performance 
could be sustained. 

Croda International fell 
smartly after announcing - a big 
jump in full-year profits to 
£48.9m. The company said 
there would be no pension holi- 


day tins year and some dilu- 
tion from a disposal. The two 
technical factors are expected 
to knock about £3 5m off earn- 
ings and analysts cut forecasts 
accordingly. Smith New Court 
reduced its 1994 estimate by 
£4m to £40m and advised cus- 
tomers to take profits yester- 
day. The shares slipped 24 to 
352p. 

Hickson International eased 
only 2 to 208p in spite of a year 
which saw profits drop to 
£22.im from £243m previously. 
Analysts felt moot of the had 
news was out of the way and 
there was optimism over a new 
washing detergent agent. 
Kleinwort Benson held its 
profit forecast at £28m. 

Oil stocks again reacted to 
this week's sharp fells in oil 
prices. Fundamentally bearish 
broker SGST reiterated its 
gloomy stance and argued that 
oil price weakness was now a 
long term fact of life rather 
than a temporary phenome- 
non. BP fell 9% to 356Kp on 
very heavy turnover of more 
than 14m shares following 
sharp falls in New York on 
Monday night Exploration and 
production group Enterprise 
lost 3 at 404p. Shell Transport 
recovered 2 to 659p from what 
many consider an oversold 
position. 

Pharmaceuticals group 
Glaxo shed 7 to 614p after 
Swiss rival Ciba-Geigy said it 
was confident about its efforts 
to market a cheap version of 
Glaxo's Zantac, the world’s top- 
selling drug. 

British Bio-technology, 
which announced a one for 
three rights issue at 400p a 


share to raise £4om to pay for 
product development added 5 
at 470p. The rights issue had 
been flagged but analysts 
pointed out that the issue 
included, a warrant which 
would yield a further £48m in 
1996, thus solving the compa- 
ny’s funding requirement for 
the next two years. 

Standard Chartered was one 
of the few banks in the sector 
to lose ground as Credit Lyon- 
nais Laing lowered its profit 
forecasts and reinforced its sell 
stance. Worries on Hong Kong 
margins prompted Laing to cut 
this year’s estimate by £26m to 
£441m and next year’s by £23m 
to £425 dl The shares fell 17 to 
1046p while rival HSBC gained 
27 by the same amount to 7S4p 
with 9ome talk of switching 
between the two. 

Manufacturer Dominick 
Hunter made an encouraging 
market debut opening at the 
issue price of 200p but gaining 
24 to 224p. 

Coal Investments which 
were suspended last month at 
76p resumed trading at 77p and 
jumped to 84p. 

Publication of the full report 
and accounts saw Reed Inter- 
national bounce 16 to 851 p. The 
shares fell recently in spite of 
increased figures as analysts 
focused on the pressure from 
rising paper prices, but those 
worries have receded as com- 
panies have stressed that they 
have locked in prices. 

MARKET REPORTERS: 

Christopher Price, 

Peter John. 

■ Other statistics. Page 28 


LONDON EQUITIES 


UFFE EQUITY OPTIONS 


Optoo 


Apr Art Oct Apr 

Xi 

Oct 

Optioe 

AM4jm 

540 

28 39% 50% 

4% 

24 30b 

ffenm 

C536 ) 

589 

« 17 a 

35 

55 

n 

ra»> 


240 

15 24% a 

4 

IB 

21 

Lasmo 

C2M) 

260 

4% 14% 19% 14% 

28 32% 

HMJ 

ASOA 

50 

• n u 

1 

2% 

4% 

Iks in 

r») 

60 

» 17k 

4% 

7 

9 

HB3) 


BrtMMW 390 30 CM 16 21 H 
C*H ) 420 IM 34H 31H 15 31 36JS 

MIMA 360 27 30 « 4 15 22ti 

r3M) 380 *23* 44 17* 30 37)5 

Boon GOO 25 38H 49 5 ZM 26 

rS19 } 550 31ft 14U 31 36 50 54)5 

BP 330 30 19 MV, 2 BH 14 

(*356 ) 360 9 19)4 27)4 12* 22 20)4 

Britt SM 140 6)4 13)4 17 4)4 12 15 

CHf) 160 IM • 0 20)4 25 27 

8m 500 40 8EM 63 3 13M 20M 

£*533 ) SO OH 24 96 S4 39 45 

Cafe a Mb 425 MM43M - 5 19* - 

C4U ] 450 13 39 - 16 31)4 - 

CtertR** 500 39M 4BH 57H 3H 21 28 

(*530 ) 550 7)4 23 32M 2BH 48M GSM 

cm IHM SSO 31 01)4 9914 3 13)4 21M 

rS7B) 600 0 23 31% 26 37 48 

O 80Oa*3BH46K 14 33 48* 

rB15) B5Q 6% 32 45 04 60 75 
Nntfsnor SSO 20% 34% 4B% 11M 32 42 
057 1 600 3% 18 26% 47 64M 72 

Land S«r BOO «7 5«%8IMi 4)4 13 17 
C640) . 650 • 22 33 T7H 38 42 

Htta&S 380 30 37 44 1%10%12M 
f<17 ) 423 9% 19 27 11 23)4 2Sh 

MM* 480 19 3n4 47 8 1SV4 3>i 

(•460 ) 500 4% 21 27% 34 43 52 

SfeabUT 360 34% 34% 41 4 IBM 23% 

(*373 1 9B0 7 2im 2BT7H35 % 39 

Sfe* Trtaa. 69) 13 37% 47 BH20%3tm 

r*57) 700 3 18% 23 46 5D» S8» 

Mm 220 12 21 S% 3% 13% 14% 

r22/) 240 I 11 16 15% 23% 36 


1M*D* 97 612% — 5 9%- 

(V7> 106 3 • - 11 15% - 

feamr 1000 39% M 61 6%21M3Z% 

0026) 1050 12 36% 50% 31 45% 56% 

Tenets 700 O 75% 97 3 17 29% 

r?40 7 ■ 750 17 44% 69 19 47 52 

Option Ray tag Bne May Aug War 

Bond Met 420 47 67 64% 3% 10% 15% 
(*459 ) 460 If 32 *1% 16 26% 32 

Uferpta ISO 29 90 91% 4 7 U 

(*197 ) 200 9% 17% 34 11 16 23 

UtdBfearil 330 29% 31 41 7% 13% 21% 
(*337) 360 7 17% 20% 26% 30% 37% 

Op—i Jta 3ftp OftC Ju Sep Dec 

Ham ‘ 130 14 22 29 4 14% 19% 

034) 140 I 18 20% 15% 20% 24% 

Op— MW A9Q Mot m fUj HOI 

Brit Aero 500 .38% 99 72 20% 46% SB 
(*300) SSO 17 39% 41% 91 76 88% 
MThfe -420 26 39 42% 13% 21% 29 
("442) 460 0K If 27% 38 43% 53 

arm aoo to 29 36%io% « 24 

C3B61 390 9% 10 21% 29 34 40% 

MtUacm 3S0 «%2S% 19 6% 17% 22% 
(*400 ) 420 5% 14% 22 24 35% 39% 

CarimSd) 4532MI - - 5 - - 

r473 ) <93 9% - - ZS% - - 

EsHHiQk BGO 31 '49 96% 14 33% 41% 
(-662 ) 700 M 23 38% 44 M 71 

tt w 460 34% 37 46% 14 24% 32 
(-47B) 500 7% 10% 30 39 48% 65% 

SEC 280 W 23 27% 3 IS 1« 

1*201] 300 1% «17% 15M%Z7% 


Cah Mi — . 

Option —y Abb Sm May Aup M 

New 260 15% 20 25 4% 0% 13% 

(*268 ) 280 5 11 15% U% 20 24 

tamo 128 12 1*% 24 7 12% 16% 

n» ) 130 7% 14 10 12% 18 22% 

UCB Ms 16018% 26 30 3% 9 14 

HB3 ) 200 8% 14% If 13 18 24% 

PAD 700 31 52% 71% 21 37 51 

(VUG) 750 71 2B% 60% 53% BS» 07 
PMogOai 180 19 22 27 3% 9 13 

(*180 ) 200 5 11% 16% 13% 19% 24 

PradBriM 300 19 20% 34 5 10% 16% 

rStt.) 330 4% 14 IB 22% 27 32% 

H1Z 600 90 03 «• 11 29% 30 

(*844 ) 960 20 54 00% 81 48 61% 

RKland 500 44% B 62 11 16% 31% 

(*533 ) 580 12 23 37% 36 40% 58 

Hoyri taaca 260 14% 25% 32% 12 18 27 

(780) 300 6% 10% 34 24% 30 38 

T99» 200 IB 34 20% 5 0% 14 

(*215 ) 220 6% 14 HH 16 20% 25 

VDdBfono 500 42 Bl 75 6% 24 31% 

rS3t) 55010% 32 60 32% 47 57 
WKaaa 390 10% 25 31% 16% 22% 28% 

(*385) 420 0 13 It 37 41% 47 

Option Art am oet Apr -U Oct 

BAA 1000 27% 52% 71 19% 46% S< 

(1003) ICO 8% 30 49 54% 75% 82% 

ItanttMte 500 25% 96 42% 5 23 27 

r5») SSO 3 » 10% 34% 55 07% 

Opion Jm Safe Dae job Sap Dac 

Abbey Me* 460 29 41% 09% 14% 24 29% 

(*470 ) 500 11 23% 32 38 48 SO 

Anatnd 35 4% 6% 7% 9% 5 6 

<*36 ] 40 2% 4% 9% 0% 7% B 

techy* 500 *m 83% 72% 9 22 27% 

(-S3S ) 550 22 39 49 31% 40 51% 


RISES AND FALLS YESTERDAY 


British Find* 

Other Rx»d ferturaal 
Mineral Extraction _ 
GftneiW M a nutecti taB. 

Gonaimftr Good* 

Services 

uawea 

Rnandato 

feiwtnnont trusts 


Orta Meed on thoee cempenhe Irtrt on Bm London Shwe S+ntce. 
ft am not poottrto to pitatt feft IMMmd Qptata Mia today. 

LONDON RECENT ISSUES: EQUITIES 


Rfeee 

Feta 

Seme 

11 

57 

8 

4 

0 

11 

35 

96 

74 

120 

ISO 

375 

40 

51 

101 

08 

112 

317 

20 

13 

13 

01 

120 

iaa 

SZ 

57 

911 

48 

47 

45 

545 

739 

1435 


Issue Amt 
price paM 
P UP 

Mtt. 

cap 1994 

(Em.) Moti Low Stock 

Ctoae 
price 
p +/- 

Nat 

ttr. 

Dtv. 

car. 

On 

Y« 

WE 

net 

- FP. 

31 J) 

248 

241 Afabust N Dawn C 

248 


_ 



135 FJ>. 

412 

142 

134 AppJfftd Oton 

136 

WK3.6 

04 

33 

151 

- FP. 

50 

12 

12 MKhudi Res 

12 

- 


- 

_ 

1« FP. 

4592 

166 

156 Baezer Horn* 

188>t 

L5.0 

22 

33 

143 


- 

FP. 

945 

137 

133 Brighatone 

135 

-1 

13.75 

1 2 

33 

300 

105 

FP. 

322 

118 

101 Cederriata 

105 


RN1S1 

2-9 

23 

170 

- 

FP. 

1Z4J) 

85 

62 Csrin) 6*0 Swft 

02 


- 

•a 



- 

FP. 

902 £871, 

£87 Chaaaar Warn 

£87 


t23M 


3.4 

90 

- 

FP. 

350 

125 

125 County Snflr C 

125 


- 

- 



- 

FP. 

733 

224 

200 Oomrfc* Hunter 

224 


W425 

22 

04 

24.1 

- 

FP. 

1213 

44 

411j Etta Naur tiger 

43^2 

+1 





• - 

FP. 13250 

4» 

469 F & C toe Qrwtb 

400 



a 

- 

_ 

- 

PP. 

122 

50 

49 F&CPrtmeEq 

49 


m 

- 

_ 

_ 

100 

FP. 

1410 

BO 

93 RdeHy Jpn Values 

94 

-1 

ta 

- 

_ 

_ 

150 

FP. 

325 

155 

ISOFkMBst 

149 

+1 

Ria 

Z2 

20 

193 


- F.P. 2^010 E31>i £21 1* PnOdfn Reft 

- FP. 51-5 103 100 Gartmcra Brtt Ina 

- FP. 502 113*2 110>2 Da Zero « 

- FP. 1064 213 206 Do Urts 

170 FP. 053 17 1 149 Qrtaatxmult mi 
183 FP. 2400 218 195 daham Graft) 


Guangdong I 
brad Raid 


BteCfeda 300 


43 10% 19 20% 


mi ) 330 14 MH 20% 29% 35% 38 

Britt Baa 300 16 *2 39 14 19 24% 
(*308 ) 330 5 10 12% 38 37% 4* 

Dfem 200 16 23% 28 9 18 20% 

<*205 ) 220 0 19 19% 21 29% 33 

Hbadowi ISO 15% IBM 22 7% 10% 12 
(171 ). 160 8% 10% 13% 21 23 3« 

Unto 140 30 20% J2 7 13% 10 
H91 ) in 10% 17 23 17 » 27% 
NrtfoMr 420 40 04% 01% 0 15% 2D 
(**56 ) W 20% 11% 36 27% 31 38 
Sent famr 390 *1% 38% 46 10 20% 24 
(*405 ) 420 16% 25 30 25% 38 39% 

Sam 120 7 911% 8 10% 12 

net 1 ■ 130 4 0% 7% 16 17% 10% 

Forte 240 20% 2B 31% 9 14% 17% 

(*254 ) 280 19% 18 22 2D% 24 28% 

lanOBE 174 17 - - 9 - 

(181 > 193 8% - - SDH - - 

TtaaBW tOSfl 51% 74% 07% 35 64 7» 


- FP. 8L2 110 100 NMD 

260 FP. 2500 253 2» AteDonwO Info 

- FP. 5330 405 409 Mornay Euo Pnrtn 

140 FP. 2209 172 163 Midland Mp Nwe 

- F.P. 548 105 06 Ntaport 

- FP. e<8 228 21BPano) 

- FP. 524 200 190 Ptarmigan tntl C 

125 FP. 159 133 110 Raostora Tech 

100 FP. 650 103 S3 Robot tMaamn 

100 FP. HI b D Saracen VWu» 


t31>2 

103 

1101* -1* 
213 
140 

212 +2 
701* +1* 
54 ■* 

104 

253 -7 


0286-00 


mos ZB !S IBS 
LN4.8 23 2.7 203 


W525 23 51 77J 


650 103 
M0 S0 


166 +1 WNZ.B 23 21 227 

96 - - - 

219 LB 35 23 51 159 

199 - - - 

110 R30 2A 3.4 13S 

103 R26 26 30 153 


- FP. 1150 506 491 Schaefer UK Qwtfi 


50 FP. 103 72 63 Warn Racycfing 66 +1 - - - 263 

SOS FP. 513 210 203 WOfeigton 218 *2 4V5.tr 20 30 21.1 

FP FkrtjHNM aaony. PP ParHaM aaouAy. For m mtamdon M Mher nm (+»«■■ nta- to dia 
Qua)* to me Undon She** 8e*v%e. 

RIGHTS OFFERS 


P055) 1100 30% 80 96 64 05 103 

TSB 200 27 32% 39% 4 9% 11% 

(*218 ) 220 14% 21% 24% 1218% 31 

Tontts 240 19% 35 29% 9 15% 18 

(246) 260 9 1910% 31 27% 39% 

VMcam 660 49 67% 78 23 37% 47 

rS79 ) 900 04% 45 69 51% 65 74% 

Opfcn Apr Jd OB Ay M Od 

am 600 27 99% 99 13% 33 S3 

(*613) no 6 34 46% 42% 61 62 

108075709 750 41 82 106 23% S5 » 

(767 ) 800 10% 97% 71 32 6! 9«% 

Raufes 9000 84 142 IBS 33% .BB 110 

f2Q20 2D5Q S ITT 199 90% 113 143 

Option MM Ata fee May Auq few 

Mtftpa in as% 30 3% 7% 11% 
CITS I 160 7 14 18% 11% 16% 21 

- UMrtVfttg leeway pM,MveWrtn 


Issue 

price 

P 

Amort 

peu 

*9* 

Lsmt 

Renun. 

twa 

1994 

Hlpt Ixw 

Stock 

Closing 

price 

9 

+cr- 

225 

ra 

W5 

fttfspm 

33pm 

Acal 

33pm 

-4 

490 

re 

ISA 

53pm 

34pm 

AfiatS Lyons Lite 

48pm 

+2 

02 

re 

11/4 

13pm 

7pm 

Burtord 

Ol-injii 


173 

re 

5/4 

Z7pm 

11pm 

JCapi 6 Regiorat 

Upm 

-1 

05 

re 

IBM 

65pm 

npm 

cm tnw» 

B3pm 


55 

re 

17/5 

18pm 

16pm 

DCS 

18pm 


m 

- re 

- 

2Bprn 

20ta> 

Oagsriien Mtt 



62 

re 

a/4 

10^ pm 

2pm 

Kftdan MecLalan 


+ J » 

290 

re 

4/5 

43pm 

27pm 

Hftrtys 

27pm 

-5 

25 

re 

OB 

2*2pm 

l-'jpm 

/*>•» 



A400 

re 

9/5 

33pm 

33pm 

Mah Conn 

33pm 


280 

re 

20/4 

18pm 

IDpm 

Prottus kri 

15pm 


65 

re 

25/S 

12pm 

4pm 

Ftahedaon Wm 



150 

re 

5/S 

ISpm 

10pm 

(Mon 


-1 

SO 

re 

sa 

lipm 

3pm 

Utwn tamr 

3pm 



pm Prtoa at a pmwii 

FINANCIAL TIMES EQUITY INDICES 

Mar 29 Mar 28 Mares Mar 24 Mar 23 Tr a^o -wtfi lorn 

Ordbftty Shata 24751 2479.6 2473.1 24603 24933 22203 27TL6 2124.7 


Manta 25 T 
Pufc 11*405 


Ord. effw. yWd 

3.74 

3.74 

3.74 

3.75 

3.70 

404 

402 

3.43 

Earn. yld. % fid 

509 

500 

5.09 

5.10 

5.04 

001 

008 

302 

P/5 ratio net 

2132 

2138 

21.35 

2131 

2107 

19.90 

330 

1040 

P/E ndo nil 

»«l 

2234 

2230 

2235 

2232 

1806 

3090 

18.14 


FT GOLD MINES INDEX 


MW %*| 
a sen ir 

Ifer Mr YMr 
a 24 toe 

Gran* 

1*U% 

32HN4K 

109 

2t36.11 -23 

21 BUS 21 1004 127107 

136 

236740 124832 

2S97S5 -40 

303730 3064.43 154<04 

473 

344000 146827 

267722 -1.7 

272309 2666,18 132804 

1JB 

301309 132S04 

183<6B -1A 

188822 183806 1107a 

(LSI 

203903 116207 


Nortf AmMa (!1) 163408 -10 188522183556 110726 031 203905 11B22i 

Copyright, Fhanofeiltoa* Urnftta 1994, 

HgiM In feaefetta Ihoa rwnb w ot oor y ni el Barta US DeBm One I feft ie r 1QOOOO 3V12A2. 
PnedeoeaHr Geld Mm Mas Alta 2K 2X7 i -1U Pfe«c Yftv apse 1100 7 MU 

Lattat ptee* were uwrtta fe» tte etiFtoa. 


Tor 199SW. Odhaqr Sai Index dm c emJ taoit Nph 27156 2(03/94: low 49A 3UU0 
FT any 8m Mex tine <M> 1/7/35 1 

Ordfemy 8hf hotidy P ha ngftft 

Open OOP 1000 11J» 12J0 laap i<00 1600 1500 Wtft Lw 
2483.0 24857 24750 2475.0 24703 24740 2473.1 2473.1 24740 2407.1 2400.8 
Mar 29 Mar 28 Mar25 My 24 Mar 23 Vr^o 

SEAQ batgaha 41^43 37,420 40389 41,621 39,100 43395 

EqUiy lutaotrar (tm)t - 11033 22051 20073 17851 14003 

Eqrity bvgttat - 44J60 50368 48,173 44.206 fiijBO 

Short* tridKl (rrijt - 4773 7203 624.1 000,7 6600 

T Enduring t taM nna l buarteea end u wet ea ne nmorn. 


I 




FINANCIAL TIMES WEDNESDAY MARCH 30 l*** 




LONDON SHARE SERVICE 


-1% 

-1 119 

nw 

— n a 


-91* *57J 

172 

— «% 


18M -4 197% 

112* -e m 

Ti tt 

+% ■« 

*186 

-4 *120 


— -MO 

— 38 
*% 


McCatttraa._$cn 


ts?e 


mca - 

*i 

3114 *3 


8 % — 

77« 

5 =«fi S 5 

118 

bo +: 

222 -3 

74 

322 -8 

172 — 1*a 

87 

148 

3874 -2 

22M. -21a 

sa „ 

Z73 

383 -a 
188 -1 
544 


non _ 

814 

Ensof «H M 

Ejmtn hi 329 


3 % — 

23* 


3321. -% 

383 

1124 


4 -% 

tS7 *8 


1894 

182 — 
1884 -11 

1314 -1 

1184 -1 

883 -2 

26 

US -1 
185 *3 

IQ 

191 -1 

ind 

2 

857 -12 

30 

538 -14 

8 * 

13 ♦% 

US 

sou -a 


E77*i -B 

16% 

18D 

73 

2884 +2 

£ i 
181 -1 
220 __ 
338 *t 
28 


K 4 va 

1 U 


isw capOB 

Grt 

WE 

£ 18 % 6408 

AB 

i 

in 

U 

181 

345 6.196 

17 

151 

179 1147 
a 1852 

U 

71 

104 

415 K 3 SB 
£ 13 % 34 a 

07 

15 

57 

S 24 & 3413 

53 

151 

323 357 

51 

« 

177 1202 

59 

181 

!SiS 5 

31 

9.1 

261 

123 % UU 

9.1 

- 

362 ftTW 

3 J 

77 A 

e 2 ^tS« 

as 

11 

654 

£ 16 % 22 ft: 

37 

01 

46 VOS 

24 


55 UB 

91 

_ 

106 73.1 

57 

— 

87841,07 

04 

— 

*74 1 VB 4 

17 

* 

490 6463 

31 

$ 

482 7298 

59 

121 

01 % 5240 

01 

— 

4 Q 2 U •fiMW 

01 

151 

374 <00 

07 

203 

322 72 X 

53 

134 

396 701 
£ 23 % 1521 

41 

121 

41 

73 

207 301 

31 

181 

E 5 % 25063 

06 

521 

£ 7 % 4142 S 

04 

_ 

078 200 

21 

102 

92 % 9*1 

91 

- 

437 % 

04 

m 

OB 

733 

145 % 300 

44 

14.9 

E*% 150 » 

07 

455 

<11 508 

07 

B 3 J 

121 3209 

24 

* 

343 5063 

U 

<50 

li *4 HU 

m 


KM Cftfift 

STB 

WE 

4 % 2 &S 

— 

— 

Ml AS 42 

56 

141 

189 Sftl 

37 

157 

129 361 

31 

141 

75 01 

28 

251 

SO M 28 

5.1 

656 

338 Bftft 

2.1 

154 

1 « 271 

24 

01 

347 BOM 

31 

141 

504 2141 

51 

1 A 2 

E 8 XI 

57 

221 

0 841 


553 

2 S 38 8*1 

1.7 

206 

OX 5238 

U 

291 

10 1281 

21 

141 

231 2357 

21 

151 

466 XU 

55 

161 

6 % 410 

11 

171 

MS 36 J 

51 

257 

393 2,787 

51 

151 

7 113 

— 

— 

213 4007 

51 

153 

216 mi 

51 

27.1 

435 2.740 

53 

156 

*63 33 U 

51 

Ml 

475 153 

31 

01 

415 251 

moN 

51 

187 

794 MM 

TO 


tar CtaEn 

0*1 

WE 

73 70 S 

1.4 

300 

sr mo 

57 

353 

65 2457 

31 

221 

70 1822 

71 

— 

36 % E a 


_ 

65 131 

si 

— 

0 301 


_ 

ISO 101 

14 

27.1 

83 703 

53 


16 317 

24 

$ 

32 20 

74 

94 

13 261 



66 141 

47 

91 

0 50 



M « 5 I 

27 

Ml 

152 % 2321 

U 

224 

Ifi 231 



296 % 3781 

11 

205 

46 241 

11 

04 

18 eu 



230 8 U 

21 

155 

16 SAB 

— 

— 

22 % 111 

— 

— 

ISO 231 

57 

171 

89 4351 

53 

241 

S 3 387 

IS 

- 

4 am 


— 

11 Bit 

— 

— 

*g ua 
0 185 * 

52 

A 

86 % 1251 
35 % 1053 

32 

305 

11 


54 % ai 

u 

— 

27 224 

31 

* 

13 111 

7.1 

901 

1 % 378 

— 

- 

65 as 

54 

« 

15 131 

11 

4 

252 ms 

ZB 

1*1 

3 4 S 7 



a as 

21 

- 

896 nu 

11 

171 

82 852 

03 


73 02 * 

101 

153 

5 U 4 



TO 381 

- 

- 

75 301 

53 

01 

37 6*7 

55 


13 aa 

57 

— 

35 114 

as 

— 

12 % XI 


— 

37 * 802 
196 188 ! 

33 

04 

* 

ia HU 

31 

4 

103 502 

U 


55 TU 

58 

255 

ISO 611 


— 

122 eu 

27 

234 

96 1553 

21 

37.1 

23 471 

11 


4 % 11.1 


84 

62 1141 

21 


187 2 BU 

31 

262 

02 % 1 ft 7 

50 

208 

80 14 U 

21 

_ 

75 % X 17 

59 

157 

23 518 

U 

- 

82 281 

17 

25.7 

n sa 

81 

2 A 5 

x om 

01 

_ 

196 224 

58 

167 

295 824 

11 

* 

10 621 

55 

204 

63 6357 

11 

♦ 

*0 2451 

07 

257 

19 50 

14 


Z 151 

41 

J 

113 3 53 

U 

0 421 

34 

351 

2 D 341 
SO CTV .7 

81 

309 

2 % Ml 



3 AM 

_ 

_ 

3 BJ 

_ 

ma 

10 36*1 

59 

322 

362 4771 

53 

52 $ 

10 * 8833 

31 

; , •JTTTTTTT* 


in* mo 

TO 


tar CsEm 

81 

FIE 

12 151 

01 


207 % 964 

24 

171 

*5 12.1 

28 

— 

245 2508 

51 

151 

a 121 

21 


73 XI 

154 

- 

14 % 871 

U 

71 

a 152 

31 

— 

180 102 

21 

355 

57 *57 

34 

341 

32 % 27 U 

5 T 

4 

» 304 

— 


X 104 

17 

— 

189 5220 

54 

— 

129 % 3824 

05 

- 

78 271 

51 


82 251 

41 

07 

200 iin 

24 

* 

10 % 201 

41 

171 

18 278 

m 

— 

205 W 7.7 

41 

105 

234 5271 

21 

01 

128 3341 

41 


45 482 

51 

103 

35 Ml 

07 


92 10 

67 

202 

57 9 .X 

7.7 

141 

8 20 



178 6*1 

59 

0.1 

32 321 

U 


3 418 


_ 

97 171 

52 

201 

22 . SIB 

34 

22 ? 

10 01 

21 

29 1821 

55 

1 SJ 

73 ax 

51 

152 

a i 7 i 

51 

171 

301 89 U 

AS 

x£ 

X 489 

51 

IX 017 

53 

155 

173 3971 

41 

252 

9 * 301 

41 

- 

a 2 xi 

14 

— 

1 % us 


_ 

104 1 U 

li 

« 

43 % 314 

53 

57 

£38 5981 

50 

300 

105 102 

09 

- 

103 417 

17 

159 

103 111 

74 


83 4748 

31 

22.7 

0 nu 

58 

- 

74 % 731 

7 ! 

- 

272 83 U 

21 

904 

X 879 

51 

1 U 

708 2058 

41 

* 

122 % 2853 

03 

2 AI 

B UB 

- 

_ 

97 % 1,50 
28 % was 

1.7 

- 

IS 2381 

11 

191 

1 % 873 



655 1185 
18 710 

21 

351 

<02 2 JTO 

u 

01 

64 121 

54 

124 

10 % 241 



138 MI 

57 

i 

2 D 7 8849 

21 

♦ 

43 l&t 

11 


£53 5882 

33 

114 

6 413 

1.4 

as 

GB 311 

53 

+ 

X 840 

U 


86 % 2021 
41 % 2851 

55 

01 

11 

4 

1 121 



100 10 

31 

_ 

150 2*0 

24 

153 

m 3464 

31 

4 

31 2 M 

11 



*<r 1 SOW m w 

PTfeg - ttab few Coffin Grt WE 

48 19 11*2 117 - - 

81-4 a 25 142 - - 

114 *09 78 4214 1.1 271 

48 +% 33 17 371 11 210 

ill -1§ 876 533 1432 20 220 


199319* MW 
«■ law CBpZs, 




-3 280 210 700.1 

_ W «5 H 

+ 4300 % mu ijm 

-5 770 590 1434 

♦1 *372 199 4X3 

+B E 1 B 8 B non. «M 68 

+1 MB 93 1U 


18* 

1 = "ft 


+2 974 

406 

42 127 


198379* IBt 


-1 31 

-8 *173 


678 

_ 28% 




-% 88 

1*2 

136 

-1 43 


-U 12 U 

*182\ 

*157 


+% SOU 
4« 173 

-1 382 


+% 3 

+1 48 

— 18 

*231 

-8*3*21, 

110 

— a 

181 

138 


8 * 

— 48 

no 

♦I 184 


— TO 

178 

*310 


-1 217 

ZU 

118 

_ 73, 

— a 

~ ** 
♦2 *23* 
-Ha 1*2 


a 

06 

221 

« 

42 336 




INDUSTRIALS 


42 *282 

443 * 08 % 

— 1788 


-7% 881% 555 

-8 400% 318 

-io% ra <t% 

-a 178 90% 

-7 142 BB% 

-8 144 70 

-4 Tl 33 


-4 71 33 62-0 

4-1 1881, 108% 59M 

08 4? 1482 

-2 123 55 1212 

+% 57% 31 1218 

4% 3B W. 52 

812 005 8822 

*6 *286 152 1282 

-2 158% 73 110 

-% M2 222 1323* 
-1 *7% 20% 1882 

+% 030% Z110U 8ft 7 
-1 230 1*7 MS* 

-4, 25 11 107 


-4, 25 

45% 386% 

42 718 

46 38 18 UB 

-% 238H 04% 8714 
-1% 176% 70 T.1M 

42% 787 425 11232 

-t 636 432 1797 

-8 2781, 190 12SB 

42 15 222 

♦1 705 448 4382 

4-10 « 109 1W 

49 168 87 2*2 

8% 4 128 

-7 181 102 2857 

-a 270 201 MOO 

42 229 97 2f&7 

79 25 7J8 

4l *388 211 3808 

41 33 212% 2J72 

203 152 1474 

-am* a im 

-2% W, 125% 4405 
■ *4*8 275% 784 

42 W 201 4074 

44 % 396 176 apn 

13% 44, 182 

4l 421 295% 1JM7 
-% 177% 124 42LB 

170 127 200 


41 780 
+10 W 2 

40 168 
8 % 

-7 181 

-2 270 

42 229 

79 

4| *398 

41 as 


+ar 

M» - 
8911, +11% 
628 4 I 0 


fiW KM capon 

«5 227 8999 


862 +12 
■18 +18 


729 +13 
8*3 +13 


898 42* 

HU -1 
SB +15 


07 +10 
837 46 

aa +17 

M2X +18 


TO 

Grt BE 
is * 

10 209 
20 2*5 
13 ISO 

34 - nxvratlTBeh. 

*0 203 




2a 215 HU 

3* 21 247 

MB 128 480 

M8 06 21.1 

48 28 037 

80S 421 2.130 

38* 228 4812 

1« 103 135 


42% 15% 148 


a ns 

3% 428 

13 198 

17 SJO 
150 SOLI 


35 


-2 824 6C3 MSB 

+% 187% 73 237.1 

-2 8« STB 1470 


35 18.1 

240 12&0 
85 8*7 


-1 IS* 112 OS 
4 % EJ 2 A £18 1387 


342 173 524 

430 412 1121 


-7 «BS 330 1378 
*312 233 2787 


» 334 
212 803 
193 185 
37 199 
14 043 
TO 87 a 
2% ill 
393 M57 

14 1ST 
2 

203 UJ 

23 174 

15 It! 

204 1384 
12 181 
45 214 
TO 118 

19% 58.1 

303 134 
31 47 S 


« 210 
18 MB 
1M 4298 
4 7J3S 
B1 418 
102% 2*4 


391 014 
108 210 
358 1887 
43 35J 

175 2018 
18 147 
92 874 

209 1tL2 
178 408 
340 7712 
a 3.13 
v as 
16 118 
a bjb 

3* 808 

82% 1468 
29 688 


9 Si 


oo ns 

<78 2708 
11 104 

15 444 

SB 174 
97 290J 


10 878 

85 488 


701% 5ft 1 
124 112 


1« 422 

a 8 J 2 


18% 136 
65 715 
32 1222 
12 no 
in ms 

16 5.15 

an 08 
ia 08 
24 7 86 
223 46.1 
14 412 
0% 288 
35 142 
a 124 


19B3/94 Mkt 
htah km Cao&n 
*M2 118 1820 

38% £9A 1415 


9 126 
a M8 

35511336 
08 12240 
11% 9SJ 


227 1999 
289 1271 
309 1,747 


*04 U43 
830 450 06.1 

787 424% 129 

610 273 *S7 

681 440 6312 

301 100 6388 

BOB 439 1.W7 

662 273 4,194 

»% 301 M22 

487 285 338 

*435 218 6584 

826 469 7144 

7a 428 606J 

«3% 408 1,783 

F29% 49 12M 


& ELECTRICAL EQPT 


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( 



sec , ee , cesses « eKsefiesesseSa 

































































FINANCIAL TIMES WEDNESDAY MARCH JO 1994 


FT MANAGED FUNDS SERVICE 



■an w . • 
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CURRENCIES AND MONEY 


MARKETS report 

All eve- 


eyes on Italy 


Traders kept a wary eye on 
Italy yesterday as markets 
sought to assess the implica- 
tions of the election victory of 
the right wing Freedom Alli- 
ance. writes Philip Gmmth. 

Trade was subdued following 
the earlier rise in the currency 
based on exit polls. After app- 
reciating by more than ten lira 
on Monday to L97S.4 against 
the D-Mark, the Italian cur- 
rency had a quiet day finishing 
marginally firmer at L977.9. 

That one of the political 
groupings achieved a victory 
was regarded as positive, but 
concern remains about 
whether the Alliance ca n form 
a stable government. 

Elsewhere in Europe, tighter 
money market conditions 
Induced a measure of pessi- 
mism about the scope for a cut 
in the German repo rate today. 
The D-Mark finished slightly 
firmer in London a gainst the 
French franc, at FFr3.424 from 
FFr3.422. It was weaker against 
the Spanish peseta, closing at 
Pta82.08 from PtaS2.15. 

Sterling, meanwhile, fell to 
its lowest levels this year. The 
trade weighted index finished 
at 79.8 from 80.2. The UK cur- 
rency was hit by the govern- 
ment’s climbdown over voting 
rights in the EU. It closed in 
London at DM2.4889 against 
the D-Mark from DM2^035. It 
was also lower against the 
weaker dollar, finishing at 
$1.4927 from $1.4966. 

■ With Italy apparently set to 
have a Berlusconi government, 
the question now occupying 
markets is whether it will be a 
sustainable one. The Forza 
Italia leader will have to settle 
differences between his two 
squabbling allies - the separat- 
ist Northern league and the 
neo-fascist National Alliance. 

Although there is broad 
agreement among analysts 
that the lira is undervalued 
and the economic outlook 
good, stable government Is 
seen as a pre-requisite for opti- 
mism. A period of uncertainty, 
however, lies ahead as the vic- 
tors attempt to form a govern- 
ment before parliament recon- 
venes on April 15. 

Mr Stephen Yorke, chief 
European analyst at Chase 
Manhattan, Is pessimistic 
about the outlook. He says the 
result is “what everyone 


Against tea DM ffJre per DM) 

975 



985 ' 

22 MarT994 29 

Source Dttaatteam 

■ Pound fa Mur Ybrfc 

■*29 —Latest— -pwr. doss- 
£s»W 1.4860 1.4060 

1 II* 1-4842 1.4940 


feared. No clear-cut winner 
who can govern alone over the 
medium-term, but rather a pop- 
ulist whose ability to govern 
within a coalition wQl be in 
direct proportion to the havoc 
he wreaks mi Italy’s budget" 

The Chase analyst predicts 
that the Lira could fall to 
LI ,000 against the D-Mark by 
April 15 and says it is difficult 
to be positive after that He 
believes the only way the coali- 
tion will be kept together is by 
offering “fiscal sweeties" to the 
South, and tax cuts to the 
North. "The budget will be hit 
at both ends," he says. 

Other are less downbeat. 
T^hman Brothers, for example, 
see the lira finishing the year 
at LS20. 

■ Sterling's weakness can be 
traced to a host of factors 
inte nding interest rate uncer- 
tainty. tax increases casting 
doubt on the sustainability of 
economic recovery, and poor 
trade figures. 

A further factor which has 
reasserted itself Is political 
risk. The compromise over EU 
voting procedures appears to 
have further weakened the 
authority of the prime minister 
Mr John Major. 

Mr Adrian Cunningham, 
senior currency economist at 
UBS, commented: "There is 
growing concern that both 
wings of the Tory party are 
calling into question John 
Major's leadership qualities." 

There is little expectation of 


■ groan cubbbicbs 

Iter 3 E 

Hmgaj 152513 - 132.734 <0 

k» 31400 - 262000 17 

bat* 04431 • 04443 I] 

MW 328606 -329012 22 
htt 261520 - 20162 17 

UAL 04604 - 04834 3 


■32200 - 102300 
174000 • 179040 
02960 -02976 
220375 - 220375 
179200 - 179650 
28715 • 35735 


POUND SPOT FORWARD AGAINST THE POUND 


a near-term rate cut emerging 
from today's monthly mone- 
tary meeting between the 
chancellor Mr Kenneth Clarke 
and Mr Eddie George, governor 
Cf the Rank of Rn gtand 

The futures market contin- 
ues to provide a very bearish 
view on interest rates. The 
June short sterling contract 
fell seven basis paints to 9L56. 
The contract has fallen by 35 
hflgjg points in the last three 
weeks. 

Over the same period the 
December future has lost 70 
points to 93.96, implying base 
rates of over 6 per cent at the 
year end. The December 1995 
contract is discounting an 8 
per cent base rate. 

Many analysts believe the 
marke t is tflO pessimistic and 
predict that subdued inflation 
will allow a further rate cut 

to the discount market the 
Bank of England provided 
£9l5m of assistance after fore- 
casting a shortage of £90Qm. 

■ Tight end of month condi- 
tions caused German call 
money rates to jump from 5.70/ 
5.75 per cent to £25/6.75 per 
cent as banks were forced to 
borrow at the Lombard win- 
dow. This dampened hopes for 
any substantial fell in the repo 
rate at today's weekly tender. 

Banks are likely to have 
been more cautious In their 
bidding for fear the Bundes- 
bank would not allot thnm the 
necessary amount to meet 
their month wnd requirements. 

■ The dollar was weaker 
a ga m fini shing half a p fennig 
down at DM1.6675 from 
DM1572S against the D-Mark. 
It also finished lower against 
the yen, closing at Y103.600 
from Y104.620. 

Analysts said yen strength 
was the result of capital repa- 
triation accompanying the fis- 
cal year end. Further evidence 
of government opposition to 
numerical trade targets also 
renewed fears that the US gov- 
ernment would try and talk up 
the Japanese currency. 


Mar 28 


dosing 

Change 

BdMMr 

spread 

Omfr Md 
high km 

Ona month 
Me MPA 

Three wotdfta 
Rate %PA 

Ona year 

Rate KPA 1 

Barit of 
Eng. index 

Biiopw 













Austria 

(Sch) 

173061 

-0.1256 

002 - 159 

173580 17-4750 

173043 

03 

173987 

02 

m 

- 

114.1 

Belgium 

(a pi) 

513807 

-03011 

545 -069 

513408 813225 

513257 

-1.1 

513007 

-03 

51.6007 

-03 

1153 

Danmark 

<pwi 

93151 

-03456 

113- 186 

93588 93045 

932 52 

-13 

93385 

-13 

93483 

-03 

114.7 

FWad 

(FMJ 

83197 

-0.0836 

093 - 300 

83150 83000 

- 

- 

- 

- 

- 

- 

813 

Franca 

Fft) 

83223 

-0-0431 

180 - 265 

63683 83090 

8.529 

-03 

83427 

-13 

63586 

-OA 

1083 

Germany 

PM) 

2.4889 

-00148 

878 - 900 

23088 2^843 

23896 

-0 A 

ZAS\2 

-03 

2.496 

0.1 

123.7 

Graeco 

(Dr) 

388370 

-1.195 

360 - 979 

370.185 383014 

- 

- 

- 

- 

- 

- 

— 

tawid 

on 

13389 

+00006 

367 - 380 

1.0306 1.0337 

1.0378 

-03 

13386 

-03 

13438 

-0.7 

1023 

Italy 

w 

2434.18 

-1833 

282-563 

2449.18 242S34 

244038 

-3.1 

245338 

-3.1 

249638 

-2-7 

783 

Uneembaug 


51-2807 

-03011 

545-069 

613408 513225 

513257 

-1.1 

813007 

-03 

513007 

-06 

1153 

Nethertsnds 

0=5 

23990 

-00169 

978 - 004 

23184 2.7940 

2.7994 

-02 

2.7893 

03 

Z.790B 

Ol 

1183 

Norway 

(M<d 

103480 

-OOS49 

439-620 

103107 103350 

103423 

03 

103549 

-03 

10846 

03 

851 

Portugal 

(Es) 

267333 

-1379 

123 - 543 

289.102 257300 

258308 

-43 

26Q3iS 

-43 

- 

- 

— 

Spain 

P*a) 

204377 

-1.438 

191 -362 

205310 204.031 

204762 

-33 

205.787 

-23 

209-227 

-2 A 

853 

Sweden 

fSKri 

11.7818 


534 - 701 

113383 11.7418 

11.7828 

-2.1 

113188 

-13 

113378 

-13 

753 

Switzerland 

JSft) 

2.1188 

-0.0083 

173- 196 

2.1294 2.1137 

2.1169 

13 

2.1128 

13 

2.068 

1.4 

1173 

UK 

» 

. 

- 

- 

- 

- 

- 

- 

- 

- 

- 

793 

Ecu 


13828 

-0007 

918 - 931 

13006 13915 

13837 

-1.1 

13967 

-13 

13969 

-03 

— 

SORt 

- 

0-940521 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Americas 

Argentina 

paap) 

1j4812 

-00055 

893 - 930 

13006 1.4880 

- 

. 

- 

- 

- 

- 

- 


Bfftd (CO 

Canada fCS} 

Meodco pew Peat* 
USA (S) 


+19.72 5S5-619 
-05016 527 - 544 
-00161 982-162 
-0L0C39 823 - 930 


133900 131600 - - - - 

20818 £0520 20525 06 20523 03 20672 -4X2 

5.0277 43990 - - 

13008 1.4910 1.4906 13 1.4873 14 1.4787 09 


AusNa (AS) 

HongKong 

infta (Raj 

Jap* 1 W 

Malaysia (MS) 
Naw2aatond (NZS) 
PhBpptaee (Pees) 
Sud Arabia (SR) 
Stagepore fSaO 
S Africa (Com] (R) 
S AJrtca (FtaJ (H) 
Sou* Korea (Won) 
Taiwan (IS) 

Thrihted (BO 

ISOR rate tar Mar 2&BU 
but am knpM hr bum 
Om Dot* Spot taias da 


21147 +00143 134 - 199 2122S 21073 21132 05 21108 0.7 21089 03 

113311 -00301 278 - 346 113932 113190 113181 1 A 113126 03 113638 03 

48.8228 -0.1239 060 - 391 470760 48.7760 - - - - 

154339 -1336 528 - 750 156.150 154350 1S4Z79 28 163^39 3.1 149304 21 

4.0100 -00189 076 - 124 40403 40070 - - - - - 

26403 +00085 380 - 425 28481 26300 26432 -13 28475 -1.1 26661 -03 


03 21106 0.7 21069 03 
1,4 113126 03 113638 03 


154339 -1336 528 - 750 156.160 154350 

4.0100 -00169 076 - 124 40403 40070 
28403 +00085 380 - 425 26481 26300 
41.1599 -0.1089 890-308 413640 403890 
53977 -0016 961 - 983 5.6282 5391 B 

23412 -0016 399-426 23574 23391 

5.1471 -0014 447 - 484 5.1725 5.1432 

7.1602 7.1095 


26432 -13 23475 -1.1 26561 -03 


ii i-'j 1 1 a '"r*- 

11 '+±EZ 

he 


Itiiz 1 

iiZCrj 








7.1200 +00146 106-291 


1204.12 -539 389 - 455 1210.70 120270 - - - - - 

324060 -21042 967 - 152 393200 393600 - - - - 

373521 -0.1371 353 - 684 373500 373180 - - - - 

altar rereads h Via tared Spot table show only me lari Dm dadmri ptasia. Farwwd rata* an not (tees* quoad to tea 
■wrest (tan. Stafcv U< erictetted by tea Ba* of Btfwd. Dmi angg IMS - laaflta. Ota aid HMa to bodi Ms red 
■rad front THE WM4BJTBR8 CLOSMQ SPOT RATES. Soma nba an rousted by Bte F.T. 


DOLLAR SPOT FORWARD AGAINST THE DOLLAR 


Mar 29 

Goring 

mkt-pcim 

Change 
on day 

BldMfer 

spread 

Day*a add 

Ngh km 

One month Three mnwlha 
Rata SPA Rate SPA 

Ona year XP Morgan 
Rate SPA index 

Europe 













Austria 

(SchJ 

11.7295 

-0353 

270 - 320 

11.7K0 11.7220 

11.748 

-1.9 

11.7767 

-13 

11.7882 

-03 

103.2 

Belgian 

(BFr) 

343555 

-0.1105 

460 - 650 

34.4800 343280 

344385 

-23 

943505 

-23 

343158 

-13 

1043 

Denmark 

(DKi) 

63758 

-0.0132 

748 - 786 

63833 63624 

63913 

-23 

63158 

-24 

63868 

-13 

1034 

Finland 

(FM) 

63068 

-00428 

Oil - 124 

53540 6.4961 

53186 

-13 

53213 

-1.1 

53331 

-03 

753 

France 

pFr) 

6.7096 

-03138 

080- 110 

5.7190 3702S 

5-722 

-23 

5.7446 

-23 

6.7865 

-13 

1043 

Germany 

TO 

13875 

-nnraa 

671 - 67B 

13734 1,6650 

13706 

-23 

13747 

-1.7 

13802 

-03 

1053 

Greece 


245660 

-015 

500 - 800 

247.450 245350 

24835 

-131 

2684 

-173 


-153 

704 

Ireland 


13398 

-03048 

383 - 408 

1.4487 1.4402 

14386 

23 

1.4311 

23 

14182 

13 

- 

Italy 

« 

163078 

-637 

02S - 130 

1837.70 162430 

163733 

-4.7 

184036 

-43 

168833 

-33 

773 


35-40 Mp 9.! 
010400+ 


llBteTBriC3»oqwA£C 
,i ra . era sisais 
3400 2422 IMS QCr 

I ran \jm I asasl or 


Luxembourg 

Netherlands 

Noway 

Portugal 

Spam 


-a 11 05 480 
-03063 747 
-0.0175 666 
-03 300 
-03 830 


690 343500 343280 344366 
757 13808 13706 13761 

686 72880 72490 72803 

500 172650 172250 173316 
880 137250 13a 750 137285 


-22 343165 -12 
-13 13878 -0.7 

-20 73428 -13 

-63 180.075 -43 
—44 141,458 -3A 


Sweden 

ESKr) 

73798 

-03052 

760- 835 

73073 

73446 

73048 

-33 

73476 

-34 

83708 

-24 

813 

Swttzertwjd 

(SFr) 

14183 

-03019 

188 - 198 

14220 

14149 

1.4201 

-or 

1.4206 

-03 

14118 

03 

104.1 

UK 

B 

1.4927 

-0.0039 

923 - 330 

13006 

1.4910 

14908 

13 

1.4873 

14 

1.4787 

03 

883 

Ecu 


1.1549 

+03032 

648 -652 

1.1670 

1.1528 

1.1523 

23 

1.1478 

23 

1.1380 

14 

_ 

SORT 

« 

1.40702 


• 

- 

re 

- 

- 

- 

- 

- 

- 

- 

Americas 

Argentina 

(Peec) 

03960 

-03011 

980 -000 

13001 

03960 


. 

m 

. 


m 

_ 

BrazS 

CCr) 

894.966 

+1534 

960-970 

894960 892300 

- 

• 

- 

- 

- 

- 

- 

Canada 

(C3> 

13758 

+0.0024 

755 - 760 

13770 

13740 

1377 

-13 

13801 

-13 

13908 

-1.1 

883 

Mexico [New Peso) 

3364 g 

-03019 

500 - 598 

33800 

33495 

33559 

-04 

33577 

-03 

33681 

-03 

_ 

USA 

(5) 

- 

• 

- 

. 

- 

_ 

. 

- 


_ 

- 

1005 

Padfle/MkUe East/ Africa 
AustraSa (AS) 14167 

+0.0133 

162 - 172 

1.4195 

14077 

14179 

-1.1 

14226 

-1.7 

14332 

-13 

887 

Hmg Kong 

(MO) 

7.72^ 

+03002 

247 - 257 

7.7286 

7.7240 

73282 

-03 

7.7342 

-03 

7.7589 

-04 

_ 

frxSa 

(Pa) 

313688 

- 

660 - 725 

313725 313660 

314338 

-23 

31368S 

-23 

. 

- 

_ 

Japan 

CO 

103600 

-132 

560 - 860 

104300 103300 

103305 

1.1 

103186 

13 

10137 

23 

1473 


Mstayria IMS) 
Now Zealand (NZS) 
PMppInoo (Peso) 
Saud Arabia {SRI 


S Africa (Com) (H) 
SAMea(FhJ (R) 

South Korea (Mat < 

Triwm (IS) : 

Thailand (Bt) i 

fSO« rate lor Mar 28. Bdfe 
tea are implsd by cwrert 1 


-03055 856 - 879 
+03102 077-899 

- ooo - 500 
-03001 500-504 
-03066 680-890 
-03002 475 - 490 
+03225 650 - 750 

-13 600 - 800 

- 000 - 000 
-0325 200 • 300 


26980 26760 26798 
1.7700 1.7655 127 

27.7600 27.4000 
3.7505 27496 27509 
13780 13075 13679 

24515 24460 24848 
4.7750 4.7476 4304 

608300 606300 6027 

283100 26.4000 284685 
252400 253100 26305 


I hi aw Data Spot tefate star edy tea ten tareo datanri 
a UK. featand 4 BCU are quoted in US curancy. j j>. Mi 


21 2384 24 27285 -13 

-03 1.7746 -12 1-7984 -13 

-02 27932 -03 27847 -0.4 

OS 13674 03 1366 02 

-27 24806 -43 33838 -29 

-26 4364 -72 - 

-43 6133 -32 831.7 -21 

-20 26366 -23 - 

-33 23.43 -23 2525 -29 

taesa. Fonaad retea m no* dreedy (pored to On reW 
rgtei Mom *o« tar Mg 32 Dm angt 1W0.10C 


















Js S MtBOOMHvn 


ua un 
IRQ un 

1875 ZM» 
4000 3000 


CROSS RATES AND DERIVATIVES 


EXCHANGE CROSS RATES 

Mar 29 BFr DKr 177 


Belgium 

Danmark 


Swtaariand 

UK 


Ecu 

Van par UOOR 


(Bf+) 100 
(DKr) 5225 
(FFi) 6217 
(DM) 2a 60 
pq 49.45 
(L) 2107 
(FQ 1822 
(NKl) 4728 
(EaJ 19.93 
(Pta) 25.10 
(SKr) 4261 
(SFi) 2430 
(0 6138 
(CS1 2437 
(S) 3425 
(V) 331.7 
39.68 

Dariah Kronor, French 


1632 4254 

2683 2536 

10 2.921 

2424 1 

8-21 B 2-400 
0250 0.102 

2045 0389 

7-894 2294 

3212 0.967 

4.171 1318 

7347 2116 

4322 1.175 

8322 2469 

4,149 1312 

5.708 1.887 

5212 1210 

8391 1.825 

wogian Khnw aid 


2022 4746 

1.057 2480 

1317 2856 

0.417 977.9 

1 2347 

2043 102 

2370 6693 

2950 2243 

2403 9463 

0.506 1191 

2882 2070 

(MSB 1149 
1337 2434 

2505 1185 

a BBS 1830 
2706 15744 

0.802 1882 
D — dtai Kronor par ‘ 


21.16 5013 

11.05 2621 

1273 3013 

4359 1024 

1248 2421 

2448 1257 

3378 91.93 

10 237.1 

4317 102 

2311 1253 

9326 2183 

2120 121.4 

1285 2573 

2282 12S3 

7367 1723 

7218 1664 

2391 1993 

i Fane. Escudo, Lk* i 


- EM0 EUROPEAN CURRENCY UNIT RATES 

Mar 29 Eou can. Rata Change %+/-trom % spread DKr. 

retas agalnatEou an day can. reta weakest tad. 


Spam 

Portugal 


219672 

403123 

134664 

0.808628 

853883 

733679 

154-250 

192854 


216793 

327130 

132782 

0300694 

259522 

730578 

168304 

192313 


-200042 -131 

-20389 -134 

+200021 - 1.12 

+0302415 -298 

-030397 036 

+200285 214 

-0.136 250 

-034 335 


472 

435 9 

432 

437 7 

247 -7 

1.19 -15 

a 77 -18 

200 -22 


UK 100 I 404 

1 ian S3* *“ 

**, 

I— . 1= 2+4 

Z25 1® 

- 400 Ui 

0 106 130 

£79 7M 

249 VM 


Vtatam Itnat Hob Interest anqaaAcc 
TB» innuilteare. PtanufB Pit I3E . 0762 2241+1 
nun, -1479 ual «jm re 

SUOO-C14fi99 430 136 1 4J0 Or 

C1400-C49M— I 425 lit 1 4321 Ok 


XW 231 ITS 

1Z Z+4 1M 

2-25 1M 239 




VeerSterex* 


NON ERM MEMBBTS 

Oraaca 284313 283370 +0303 734 -333 

Italy 179119 188331 -632 536 -133 

UK 2788749 2773169 +0303212 -1.73 6.16 

Ecu create r— re t by taBrepare C c inn taria n .Ctarancteaaretadre cantag rri ril iia aereBSi. 
Pwowrega etrenpaa an tar tec « pate ra cha n ga rte n ota a mwaritounrecy. DWuy re cs rit e— in 


■ D-MARK FUTURES 0MM) DM 125.000 par DM 


I pMM] Yan 123 par Yen 100 



Open 

Latest 

Change 

Hgh 

Low 

Eat vol 

Open tat. 


Open 

Latest 

dange 

HI* 

Low 

EsL vd 

Open taL 

Jun 

03656 

03972 

+0.0017 

03978 

0.5963 

30312 

101,012 

Jun 

0-9634 

88806 

+03060 

89710 

89618 

18.755 

48374 

Sep 

05945 

03957 

- 

03957 

0.5946 

85 

2389 

Sep 

89720 

89743 

+03061 

89760 

89710 

191 

1947 

Dec 

- 

03830 

-00022 

- 

- 

6 

116 

Dee 

- 

89795 

- 

89796 

- 

5 

404 


■ SWISS FRANC FUTURES 0MMJ SFt 125300 par Sfr 


I £82900 pare 


Jin 

87023 87053 +03021 

87063 87023 

12919 

38390 

Jun 

1.4918 14910 4X0008 14948 

14908 

4955 

27,741 

Sep 

87060 

87060 

6 

275 

Sep 

1.4860 

14880 

41 

663 

Dec 

87075 

87075 

3 

46 

Dec 

14840 

14840 

4 

35 


tar a ofrenc)« aid Ore mwdmni pamBMd pwantag* dtetadeo W Sw earereyb readwt inm Ba 
n7/M9q awing «ad Mai Ua MpWKtad tan BM. A«ataMn( oaicteM by RnaneM Ibnw. 

■ PMKADUNBA«KK/> O Fll C m» 931 360 (carta par poraxg 

Strike CALLS — ; PUTS 

Prica Afx May Jun Apr May • Jun 

1300 631 275 265 - - 216 

1-425 247 244 630 - 213 246 

1450 4,04 438 436 202 248 . 297 

1376 (34 233 233 2S8 1.16 133 

1300 257 136 1-77 1.48 2.41 206 

1325 206 263 037 344 4.14 4.74 

PMdoia «ci. Cta 4300 Puli MOB . tav. dtaT* apm teu QMt 4833B7 Mi 413A6I 


1 COMPANY NOTICES 



- CALLS - 
May 

Jun 

Apr 

— PUTS — 

May 

Jun 

891 

878 

865 

- 

- 

aie 

847 

844 

630 

- 

813 

846 

4.04 

438 

435 

802 

848 

. 887 

(94 

883 

293 

839 

1.16 

193 

857 

1-26 

1-77 

1.48 

241 

806 

808 

863 

097 

344 

4.14 

4.74 


WORLD INTEREST RATES 


MONEY RATES 

March 29 Over Oe Three Ste One 

night month ruths mtha yaw 

Baighan 6ft 6* 0j} 84 

week ago 64 64 6M 64 

Frwwe 0K 6» « M SI 

week ago BK 6K 6K 6W SB 

Oarmony 250 530 270 530 243 

week ago 275 280 275 538 238 

Inland 84 6 0 6 6 

weak ago 64 fl 654 6* 8tt 

RWy 8» 84 84 84 84 

week ago aft aj m «% 8K 

Netherlands 253 250 238 233 632 

wreak ago 533 250 535 538 225 


2K 2ft 
2ft 24 


II UK INTEREST RATES 


week ago 

- 

France 

6ft 

week ago 

6ft 

Germany 

850 

week ego 

875 

Ireland 

6A 

mric ago 

Si 

Baiy 

8ft 

week age 

8ft 

Netherlands 

533 

week ago 

533 

Switzerland 

4ft 

week ago 

4ft 

US 

3ft 

week ago 

3ft 

Japan 

2ft 

weak ago 

2ft 


■ TMt 

■H MONTH BUROMMOC PUTURBS (UFFQ* DMIm potato of 100% 



Oprei 

Sett price 

Change 

HBh 

Low 

ESL vet 

Open tat 

Jun 

9439 

9431 

-806 

9430 

9431 

21034 

247116 

Sep 

9431 

84.74 

-805 

9431 

94.72 

14930 

163839 

Dec 

9433 

9435 

-805 

94.93 

94.84 

13137 

161067 

Mar 

9634 

9493 

-037 

9534 

9493 

11895 

156866 


i phiouba acmATi putomp (m=rq Liooom potma at ioo% 


tntartwk 8taMog 5^-3 $&-4^ 5V - 5%-5>s 3>a - 6V 

StaNogCOa - - 54-6i 54-54 6&.S4 

ireewyBBa - 40-45 4V-4fi 

Sank BBa - 4fi-4% 6-43 54-5 

(joeai aittnrity dopa. 51+ - - 5i 5^-6 6^-5% 6&-B& fi4-U 

Dteoounl Mtekat Daps 5-3la 5% • 5 - 

UK deaing bank bare tend ng rata 5V par cent torn February 2 1994 



Open 

Sett price 

Change 

High 

Low 

Eat vol 

Open taL 

Jrat 

9190 

91.75 

-038 

91.91 

91.77 

4771 

59477 

Sep 

32.10 

9192 

-810 

02.10 

91.92 

3819 

22065 

Dec 

9223 

9236 

-810 

<g> •yx 

02.05 

1923 

37571 

Mar 

8290 

9238 

-810 

Q 9 30 

92.12 

466 

5551 

■ TW 

m MONTH 

OUROSWtS 

S FKAMC nnum gjFFQ smm potato Ol 100% 


Open 

Sett price 

Change 

«0h 

Low 

EsL vd 

Open InL 

Jun 

9633 

9830 

-802 

9634 

9596 

2188 

34813 

Sep 

0811 

9638 

-802 

9811 

9638 

592 

8926 

Dec 

9807 

9632 

-032 

9807 

0632 

386 

4420 

Mar 

9691 

35.88 

-802 

9691 

6598 

55 

274 


LONDON MONEY RATES 

Mar 29 Ova- 7 days One Three Sbc On 

night notice month tnontfia months year 


Carta of Tax dap. (Cl 02000 ) 

Crete of lax <tep. mtar Cl 00300 it 1> 
Am tander rare el dteceunt 48OS0pc. 
19B4. Agaed ore tor patad Mw 2B, li 
pretod FA 1, 189+ to Fob 28, IBM. Si 
Mv 1, 199+ 


Up u 1 

1-3 

3-8 

60 

9-12 

month 

month 

months 

moths 

Mi—'-V 

1% 

4 

3 % 

3% 

8% 


[ MONTH ECU I 


I EcuIri points of 100 % 


■ SUBOn FT London 








Open 

Settprioa 

Change 

rtf* 

Low 

ESL vol 

Interbank Fbdnfl 

3fl 

3ft 

43 

43 

- 

- 

- 

Jun 

9431 

9395 

-032 

9431 

9394 

1070 

week ago 

3fl 

4 

4ft 

4ft 

” 

- 

- 

Sep 

9431 

94.15 

-803 

9421 

9415 

150 

US DoOar CDs 

- 841 

338 

399 

436 

- 

- 

- 

Dec 

9492 

9496 

-034 

9433 

9425 

244 

week age 

- 391 

3.75 

436 

4.48 

- 

- 

- 

Mar 

94.32 

9497 

■033 

9433 

9497 

319 


SDH Linked Da 
week ago 


3ft 3ft 
3ft 3ft 


Open Sen price 
Jun 9434 9436 

Sep 94.44 9431 

Dec 94.13 9336 

Mar 8271 9247 

flared on APT. Al Open Mremt Ire. 


•jpc-CtepodBwthteww torredi Vpc. 

BCQOtad rets SSg. Bport Rnreica. Itato «b day Faemrey 32 
m » Apr 22 1BB*. SArerna 0 £ ■ BiQpo. Mnroi rare tar 
dremret tv a V 63B8pe. Rnanre Hoore Brea Rare alspc tan 

PUTUMS (UFFE SS00300 points of 100% 


Change High Low EsL vol Open bit 
-206 9436 9434 28306 120775 

-209 9447 9430 22104 86689 

-0.14 94.17 9334 31674 110634 

-030 9273 9345 11820 43305 

. ere tar prrerewa day. 


BCU Unkad Oa arid retare 1 mdn ej; 3 nrtai eifc a mthre 1 yean ei. S UBOR tatrebark Uig 
nt f* . mm am d oMa tar SlOro rented to tna muhre by lar n teranea breda w i lam aeeh wnrtang 
cter Tha banka are: Barfwre Trust. Bank t* T<*yre areckqn aid NMtond WaMnatar. 

S rate* are shown ter Sm domaatta Morey Raw. U3 * CO« and OCR LMred Dapreka m 

EURO CURRENCY INTEREST RATES 

Mar 29 Short 7 days One Three Ste one 

tain redeo month momha months yeor 


’ SnBKJUM OPTOMS (LJFFQ 2500300 pObSa of 100% 


I MONTH EURODOLLAR (94M) Sim potate of 100% 



Open 

Latest 

Change 

rt*i 

LOW 

EsL ml 

Open tat 

Jtei 

9634 

9534 

-801 

9866 

9864 

89913 

492946 

Sep 

9692 

9819 

-033 

9593 

9819 

58924 

353,427 

Dec 

9474 

9471 

-803 

9475 

9471 

37990 

284971 


Belgian Ftaic 
Danteh Krone 
D-Mark 
Odch Odder 
French Fraic 
Portuguese Esc. 
Spartah Peseta 
Sterttag 
Sate Franc 
Can. Odor 
US Dotar 
Ratal Lira 
YBn 

Aata SStag 
Short tam nmi a 


6^-6(< 

5li-5^ 

S -8^« 
-5,1 
w* .6% 
ioi+ - io 
®*«- B 
6 s * - Sh. 

414-4 
4A-4* 
34- V. 
9- 712 
24-21+ 
3ia-2ia 
icutete 


6^ -6^4 

6V+ -6 
5% -6% 
64-5.S 
6V-0 1 ! 
10 % - 10 % 
8% -S 
54-64 
4% -4 
4%- 4% 
3H-34 
8% -7% 
3% - 34 
3% -2*2 
US Data and 


84-64 

«%-e% 

5H-6JJ 

6 % - 6 % 
10 % - 10 
8% -84 
54 -54 

4% -4% 
4H-4H 
3ft - 34 
8%-7% 
2 % - 24 
34-2% 

Yon. oOwre: I 


i 0134) Sim par 100% 


6207 9206 2314 38310 

95.68 842 7371 

9334 50 2377 



Lake FSC, Ltd. 

A Bermuda co n iot a t i oo is avaMMe 
id enter into lentng tta imetm i B as 
Lessor, with, respect to U.S. 
mannfectuied property to be used 
ouoide tte US. If tatBRamA please 
contact the company an 

lake FSC, Ltd 
ota COOAN Services Ltd. 
Chrcadtm House 
Cbanb Street 


First Chicago 
Leasing FSC, Inc. 

a US. Vagin hlands axpacatioa is 
available Id arrange leases of US. 
manufactured property to be used 
predominantly outside the US. If 
interested, please contact the 
company at 

not Chicago Least* BSC, lac. 
Cltlbauk BoBrfta* SMla 208 
8L Thomas, US.VXHM1 


Oak Street FSC, Inc. 

a Bermuda corporation is 
available to enter into leasing 
transactions, as lessor, with 
respect to U.S. manufactured 
property to be used outside the 
U.S. by any affiliate of John 
Swire & Sans Limited. If 
interested, please contact the 
company at: 

Oak Street FSC, Ltd. 
cfoCOOAN Servicea LnL, 
CJarendou House, Otarch Stmt, 


LEGAL NOTICES 


iRtefer Mlteitel 


eMMi ma» awrei 

HUB 1210 1210 

10S1 1222 1222 

mas . 1224 1234 

1263 1224 1224 

1200 1221 1221 

ISM 1222 1222 

1209 1222 1222 

1216 1218 
1204 T2D4 
1062 
t&SQ 
1200 


nga. are tar prevtaua (tejr 
K oraatt QJFPQ DMIm pcftna Of 100% 


Jun 

— CALLS - 
Sep 

Dec 

Jun 

— purs 
Sep 

812 

834 

849 

0.11 

810 

804 

020 

033 

828 

8 21 

CL02 

810 

821 

851 

838 


■ THHftB MOUTH PMOH PUTWB3 (MATT) Paria Interbank aWared rota 


Low 


are, Cos zbSS naa im. Pravtau. da/ » span mi, Cali 200*03 pus --rim 
1 6WI8S WIMO OPTIOM8 (LFFE) 8Fr ltn poWs of 100% 


.LI : Jjj 

■Jtei - te ta v g S; 







upto" 15 ^M) 

off electricity 

021 423 3018 


public smaoiia'adning and apaatei.-- 

wittnfl by award wtm*ig apaeker. Brat 

tenon traaTU: (07Z7J86J133 



Wr*j». 
































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MEMO Cop 772SD 7110 7B686 0003 84537 MOO 

(i8«w (2s n&aw 


Or do you rely on seeing someone else^? Every 
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•SwaccEBSS 1993 


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141636 289 


StadA MCn/ttW 133223 13*606 183268 14263* 31/1 
58?6nuf(U«fi7) mOt ICOtM 68178 108126 31/1 


WVtaftODWHr ' « 533140 536217 846*42 STt 

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tavtacsrovrai 125541 10*434 mom nonvi 

tatav 

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taU 

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BHlta-l00(2BS«| 1217.11 122611 121712 IKIlt 2C 
jctanpft pi/raw 44 Xus so*?*, mm in 

Badop Bn*8(7/us2) mse isboi 15&12 wni«2 


smn iaa 
taotts zia 


mua 2/3 

mta 2 a 

anas 


Dow Janes kdl Dtw. YMd 
S 1 P hi av. ytad 

81PM.PC ntae 


Mar 25 Mar 18 Mar 11 Ymapo 
2.7D 2.82 231 216 

Uar 23 Mv 16 Mar 9 Vaarapo 

239 217 Z37 249 

24*13 ■ . 24JB 24^3 26-13 


■ araiMMHP awp r oo m boo —x wmmm goo art indM 

Opan I aft Changa ■ Mgfi Low EaLvoL Opanin*. 
Jun 401.33 46010 *115 481^5 460.10 60185 179,714 

Sep * 46X40 4.1.45 - 328 5133 

Dec - 466.70 +1 JO - - 29 4167 

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Opan SanPrtoo Cbanga taipi Low EaL not Oprei ot 
Mr 2152.0 211 BJ) -26 JO 2154X 2118.0 31MB 2*598 

Apr 216i5 2129.0 -2X5 2164^ 2127^3 12,183 11270 

htay 2161 JS 21325 -235 21615 21335 1 546 5,796 

Opwi aamre taa Sir pmtaa «%. 


Mad prtca on dqr 
4.7527m 80X 4 


urea Mara uw 24 
262053 24B522 303,742 
11809 11248 16513 


M$CtaU(4WW • *138 851 A3 WHO 131*48 5/1 «L4J ?8fl 


.. - ^ mi B»»i^».dflMaiwiafl!taib« Crtf tOomeflnL - CMaAde d ■ 1&0O GMT. 

~ 3u tar 2ft TMm Wri fltaci QU*S&ao Top-ioq 0EO Ovffc Tfrwmo QwpABfa * 4 Tha DJ Ind. Intaa 6WMflo* dM/a Hgt 

»*e :jft wnwaj—d. any, tgt^anw M Cc^m - wand aStad m —A- ta W flta f w tta—dayaiiVBMi 

fH&uaSZ**** ta Mr a- gltata ■ —Vflw—litalfaainfdfrw. 


Coup Amec 4M4JQ0 3 St -3H J^BO0 16513 

Ovyaler ■ 4JBBJB0 54K +M ASH2 2 fift B178t?W JBm 

BM ‘ 63S4JOOO 530 A* MUSE 

AtaMlM 3532900 51 H -H taw TwM 2,762 2J28 1761 

TUltaOtaD 286X900 6H -H Rtaa 6*0 8*6 S20 

Gan Mena 2.7*6.760 57M +* Mk 1560 1.197 1.726 

Mkren . Z1905DO 8ZM -» Uncbaotad 578 60S 632 

ktatk ■ 2,1*4^00. 3 0* taHMoha 16 ' 34 32, 

MSaml 208X700 21 -H taw Lota tS5 « 120 

• B— Honda, a MaM pta Untee, n— a and Ttanaport aa oo. 

■ id f aia fta a m apaa el flu w i ta aaa am bf pflem mataad ciatog W tay ny aarei 
fa ta*l*d bsr' ItaMtal Ifaaani me H0M ana Mat if that ita hdm baa nachad 
parian day* f Sfaor a eflf laefatam. « Iww* « «tr are UML 


• Carney njtrr art orij wW for rtr man? m tMrk tay «nr pan/, Sahxcripricm Price* are coma or /Mr ef 
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Financial Times. Europe’s Business Newspaper. 











































46 


FINANCIAL TIMES wanNESDAY MARCH 30 l994 _ 




NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


ie •% 

27 a 704 82* 62* !| *-% 

zs 3200 eft *59% so* -* 
IS 252 4% 4% 40* +2 
2JJ0 A5 29 455 45* 44* 44% -S 
1TB 29 16 735D 27% Z?* ZT ' 
ISO 40 B 12B 12* 12b 12: 

21 S< 11* 11% IT 


a«o 15 


* 1GB 
1W 
38 
248 
904 
114 
224 
72 

32 - 

n 27% 
172 — 


51* 

ft 8*/ , 

3) tb* Ann hex 

57* 49* Awn ADR 

85* 54 AenaL 

jjft 25* Aftte 
20* lB*Atansn 

S * J*Atote 
44*AWrCx 
33*AW08Prt 

zb is* Akyufec 

18* IS* AsteBBi 
10ft 101 Wng .18 

21$ 18 Atony M- 

15* 13* Afiml 
25* 21*4009 
21 § IBAKubrA 


58% S3* 

30* 23* 

22* 1ft AMU 
24% ib* AOegn bri 
2B*23*AfcBP 
18* 13* Ate Can 
29* 21*AIVBn 
4* 2* Alton 
27* 22* A&ce (tep 
10* ftWnB 
27* 22 AU0H 

ssasu 

5* 4* Afosm 
27* 21* AtBsax 
82 88% «a» 

30* 21* AtoCpA 

11* ftAaGMnc 

S* ft An Procter 024 13 25 
8 8* Amfid 
25% 21 Amcaritod 
«ft 44* Aan&Ht 
9% 3* ABASH 
31 23* AaBaikk 
35% 30%An8md 

19* 17* AmStdU M 

25% 22* An But PM 080 13 15 
B 7 An Capiat OJBS 93 
2ft 18* An Cm 80 
23* 21 An Cap CV 
50* 42* AmCy*> 

37* 31* AnfiPn 
33* 28AmEwr 
29* 25* AnGtni 
9* 7% AraGoKto 
27* 34* An MB A 
20* 17* An HefUgs 
85* SBAnHome 
2% 2* An Hunk 
90* B1% AudnO 
11* ft AmQgptoc 
34 29* An ma 
B* 7* Am Rate Es 
64* 41* AflSfcrx 
57* 50* ATSTx 


27 a* 28% 
11* (HI* 11* 
8* m* 8J2 
o* a* s* 
a* mo* 10* 

1® a 

s a a 

27* 27* 
8 * 8 * 
12 * 12 * 
«7 17* 
SO* 99* 
29* 29* 

as* 6* 
IB 18 



■ABUMStek h Win IB is 

17* 14* AAR 0.48 39533 101 16* IB 

£&Whu*‘**’‘ — H* ■ !5 ™% 

72* a* MB 
S 3%AflX 
SB* 44* ASA 
30* 25% AMES. 

13* II* JttlEXPr 
13* 11* ACDBBriB 

31 25% ACE lid* 

12* 11* ACM 8*1 lax TJB 9J 
ift s*Acwe>onx mo 94 
10* ftACMGKSD* 096105 
12lO%ACHCM9sx 1.0S 107 
11* 9% AOIlfcnx 1.08 11.1 
9* 8*AOIItBOUiU2 OS 
10* 8* AonCr 044 49 11 

B* 7*AcneEaa 33 

28* ZSAcunta 090 22 13 

ft SJ|M» 036 S3 2 172 7* 

IS* ifttoncn ST 225 12% 

18* 17% Auras Em 038 21 0 118 17* 

“4ftAdVm 100 50 624 60* 

IB* Maas 100 102 1218808 29* 

016 29 10 95 8* 

aid 06128 <1 18% __ 

1-23 24 11 70 SO* 50* 

178 11 10 1053 55 54* 

040 13 13 708 KJ% 

asa 5.1 11 8623 17* 

2 55 3* 

092 10 25 I486 46* 

030 OB 21 882 38% 

35 2795 21* 

1-8411.7 12 32 16% 

8.16 79 3 104 ... ... 

020 13 81488 15* 14% 15* 

035 1.7 38 14B 21* 21 21* 

031 12 2881 15* IS 15 -* 

026 U IS 91 22dZ1* 21% .* 

023 1.4 14 78 19% IS* 19% -* 

044 16 TO 3041 29* 28* a % 

030 12 43 2506 23% 23* 23* h 

190 1909 399 55* 54* 54* -1% 

060 23 4 407 27* 28% 26* -1 

100 59 32 STB 1B*tf17* 18 -* 

048 15 18 1830 IS* 19* 19* -* 
144 7.1 12 613 23% 23* 23* 

016 14 13 1076 16* 16 IB" 

040 14 13 2378 22 (El* 21 

9 2GS 2* (Q* 2 

184 7 3 23 413 24*622* 22 
018 14 76 B* 

1-24 14 14 181 2f~ 

048 14 8 4892 37' . .. 

043 U 18 1602 28* d26 
19 738 S* 4 
7 2450 — 

140 2.1311480 
43 2787 
096 07 216 

7 

008 14 6 2651 
048 14 17 104 
060 1.3 14 2480 

045 4.7 247 

008 03 34 3951 _ 

147 64 9 3204 30* 30* X* 

052 24 12 B 17* 17* 17* 

3 24* 24* 24* 

53 7% 67 7 

13 19* 19 19* +* 

.. ... . B 22* 22* 22* 

1.75 17 25 3382 47* 48% 47 ■* 

240 74 16 2658 32* 31% 32* •% 

1.00 34 1212840 29* 28* 26* -* 

tl6 42 24 1297 28% 27% 27% ft 

077 BA 136 8 07* 7* ft 

228 OB 9 195 28 2S% 22% 

040 14 II 18 17% 817* 17% 

242 44 12 2990 59* 58* S3* +* 

075 286 9 3 2* d2* 2* 

040 05 14 STS 06 84* 85* ft 

140104 247 10* 09% 10 

040 14 11 857 31 30* 30* -* 

044 54 5 302 7* 67* 7* 

006 14 15 1410 53* 51 51* -1* 

142 24 17 6826 52% 52 52* -* 

22* 20An1M5% 125 8.0 0 21 ZO* 21 

32* 29* An War MB 16 13 1ZT 29* 628% 20* -* 

1.SZ 44 142839 40* 40* 40* ft 

148 12 6 H 40* 40* 40* 

034 14 75 434 13 13* 12* ft 

240 4.1 H 3048 54* 53% 54* 

OlO 14 6 39 8% 

012 11 17 IB 4 

1.40 A5 10 428 31* 

15 1621 U4* 

030 07 65 1525 45% 

S 1334 27% 

044 34 22 53 25* _ _ 

1.44 2 7 24 7995 53 52* 52* 

267101 4 USB* 2B* 26* 

21 368 31* 

044 27 18 IB 16* 

142 40 11 841 



144 01 33 
108 <4 0 


42* ... 

43* 35% ABWunH 
13* 11* Amtfak 
5B* 50% Amoco 
0* 7A«pCSm 
4* 3* Ann Inc 
32 29%AmsouBt 
4* 3*Aramnv 
50* 42* AaacMa 
31* 23*Ara*m 
29* 24* AnoAa 
5ft 47* Atom 
26* BfeAMPpe* 
34 2ftMhem 
18* 14* Amotlla 
52* 45 Aon 09 



2B% 22% ApecM op * 028 14 34 1437 34 
10* 9%ApaxMunF 073 74 7HS 


2S7B3B 
2 98 

012 04 S 403 


16 IS* AM 
3 5 ARM MtB 

22* 16* And Pa A 
27* a*AR00a 
50* 43* Arm Cwm 
B 7AMa 
40 38* ArtdaPI 100 6.1 
51% 48*Annen44P 440 94 
6% 5* Aran 

124* Aran 21P 210 89 


31 31 

IB* 16* 
48* 48* 
23% 24 

a f 

oio 04 17 7753 25* 24* 24^ 
250 14 a 144 46* 48* 48* 
028 16 Z7 949 7* 7* 7* 



42 

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27% 23* BnlnCx 
21% 11%B0BB&H 
13* 0% Bonk On 
18% 13% Bondv 
21 18* Ben CW( 
24% a* Berate 
31* 16% terafl Fix) 
34* 32* BEAep 
BO* 80* BrtgSt 
50* 38% BrMmt 
59% 5l*tet«Sqx 
74* 61*BrAr 
54* 44* tef Gbx 
89 56* BP 
27 23%VPiutn 
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20% 17* DboPreda 040 11 IB 170 19* 19* 19* 

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10% 9* Draw 048 06 37 90 10* 10* 70* 

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48% 40ESwtoi 
27% 24* EBWIHi 
27* 23% EEntp 
46% 30*EnriQl 
56* 4ieKodra 
82* 5D*Eam 
35* 27% EsMkiX 
23* 21 BceUbhe 
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24* 19*Edmria 
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24* 18* Beer Carp 
3% 1* BlQAta 
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9* 7%Bnaratemr 
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20* 18*Ent**Dte 
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55% 4G% EndntADfl 
23% 20% BenganCb 
31* 23* Bran 
16* 13EorAlteian 
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ZhnUff 1.12 9 21 38$ 38 38 



WORLD STOCK MARKETS 


FINANCIAL TIMES 


Wedne sday March 30 1994 


AMERICA 


US shares weaken in 
line with bond market 


EUROPE 


Fall in oils as German financials revive 


Wall Street 

The four-day sell-off in US 
stocks accelerated yesterday 
morning as the bond market 
reacted negatively to news of a 
resurgence in consumer confi- 
dence, unites Frank McGurty 
m New York. 

By midday, the Dow Jones 
Industrial Average was 34.54 
lower at 3.727.81, while the 
more broadly based Standard 
& Poor's 500 was down <L33 at 
456.13. In the secondary mar- 
kets, the American SE compos- 
ite was off 4J29 at 45732. The 
Nasdaq composite fell back 
11.36 to 761.14, bringing its 
cumulative loss over the past 
week to 42 points, or 5 per 
cent. 

Volume on the NYSE was 
moderate, with 137m shares 
traded by midday. Declining 
issues outnumbered advances 
by 1.686 to 372. 

The late recovery in share 
prices daring the previous ses- 
sion failed to carry over into 
yesterday's opening. On Mon- 
day, the Dow industrials bat- 
tled back from a 45-point defi- 
cit to close Just 12 points down. 
The improvement came as 
bond prices extended their 
gains. Likewise, yesterday’s 
setback ran closely in parallel 
with activity in the US Trea- 
sury market. 

In early trading the yield on 


the benchmark 30-year govern- 
ment issue again pushed above 
7.00 per cent. The move came 
after the Conference Board 
said that its March consumer 
confidence nwijp a stron- 
ger-th an -expected recovery 
from February's weather-re- 
lated slump. For equity inves- 
tors, the unsettle! mood in the 
bond market clearly oat- 
weighed the implications of 
more buoyant consumer confi- 
dence in sustaining economic 
expansion. 

The impact of bond yields on 
market sentiment was clearly 
reflected in a recommendation 
issued yesterday by one of 
Wall Street's biggest brokers. 
Smith Barney Shearson urged 
its clients to cut their equity 
holdings from 55 to 50 per cent 
of their portfolios, saying that 
the uptrend in interest rates 
could depress share prices by 
another 8.7 per cent before the 
correction ends. The Dow 
industrial index has already 
dropped by well over 5 per cent 
since peaking at the end of 
January. 

In yesterday’s activity, cycli- 
cal stocks again led blue chips 
down. Some of the issues 
which had held their own over 
the previous three sessions suf- 
fered the worse declines. 3M 
dropped Sl% to S98K and Good- 
year $1% to $41 Vi. 

UAL, the parent of United 
Airlines, was marked down 


to $130% after filing details 
of a proposed $5bn buyout by 
the carrier’s employees with 
federal regulators. 

On the Nasdaq, the sell-off In 
computer-related stocks 
showed no signs of abating. 
Microsoft was $2% down at 
$83%, Intel $1% at $67% and 
Wellfleet $2% at $71%. 

Canada 

T or o n to stocks were lower at 
midday on a weak Canadian 
dollar and worries of a rise in 
interest rates expected later in 
the session. 

Losses in communications, 
oils, financial services and for- 
estry overpowered gains in real 
estate and consumer products. 

Some analysts said they 
were expecting an increase of 
50 to 60 basis points in the 
bank rate, currently at 5 per 
cent The TSE 300 index was 
off 7837, or L7 per cent at 
4,409.70. 

Mexico 

Equities opened lower on news 
of a rise in interest rates, 
before rising at midday on 
rumours that tba ruling party 
had chosen Mr Ernesto Zedillo 
as presidential candidate fol- 
lowing last week’s assassina- 
tion of Mr Luis Donaldo Colo- 
sio. The JPC index had gained 
2131 at 2,467.96 by midsession. 


Bourses mostly foil. oil shares 
dropping into line with their 
North American counterparts, 
although German financials 
took a turn for the better. 
writes Out Markets Staff. 

MILAN reacted uneasily to 
the general election victory of 
the right wing Freedom Alli- 
ance, with profit-taking by 
domestic investors evident fol- 
lowing Monday's sharp gains. 
The BCI index rose a modest 
030 to 69332. 

Reaction from analysts was 
mixed. Mr Fabio Basagni of 
ActirrvBst was bullish, saying 
that this was the first tftnp in 
50 years that a government 
bad been elected with a clear 
majority. A free market policy 
would be adopted, and there 
would be an acceleration in the 
number of priva t is a tions. 

Mr Richard Davidson, a Mor- 
gan Stanley strategist, com- 
mented that there remained a 
question marie over how the 
alliance partners wonld 
co-operate. “We maintain a 
zero weighting in our model 
portfolio,’’ he said. "We think 
that the incoming government 
is unlikely to continue with 
budgetary policies as vigorous 
as those of the past two gov- 

ASIA PACIFIC 


ernments.-and that will dam- 
age interest rate hopes”. 

Elsewhere Olivetti, which, led 
the consortium awarded the 
licence for the 'second mobile 
telecommunications network 
by the outgoing government 
late on Monday, went asainst 
the trend, rising L54 to L2.650. 

PARES was hit by weakness 
in the bond marten and a 
in ofl stocks, the latter reacting 
belatedly to falls in oil prices, 
following the Opec agreement 
to maintain output until the 
twH of the year. 

The CAC-40 index lost 22.01 
or 1 per cent to 2022.48. 

Turnover was slack at 
FFr3.6bn. 

Elf Aquitaine Total both 
foil back on the Opec news, the 
former - losing FFr12.70 to 
FFT387 and the latter FFr7 JO 
at FFr31050. 

Casino, which held Its 1993 
dividend at FFr5, dipped 
FFr530 to FFr1 71. 

PRANKFUKT put up a rela- 
tively strong performance, the 
index riradw the session 
633 higher at 2,16835 and the 
post bourse at 2,16232. 

Ms Barbara Altmann, at B 
Metzler in Frankfort, said tfarf 
the influence of the bund 


FT-SE Actuaries Share indices 


Mar 20 THE EUROPEAN SERKS 

Hoartyttonaa Open IBJtt ICQ&t 1ZW 131)0 UJO 1600 Paw 

FT-SE EaroWdc 100 143232 142609 142753 142660 142X57 14208Z 142258 W2L05 

FT-SE EUWMBt 200 146034 1457.07 146791 14B754 14S5J7 148X91 14S153 14S257 

tty 2B Mr 25 Bar 24 VBB 23 Mar 22 

FT-SE BHftaek 100 143650 141248 142&41 144673 148X48 

FT-SE Emm* 200- . ■ 146X31 144855 14645B 1478J0 147701 

BW no cart WK IMMW MB- MS» m ■ 1402* MW; 100 - 141UI2H - 1O0S4 1 MM* 


futures marfcrf had been mod- 
erated by the strength of the 
D-Mark against the dollar: 
"People don't want to get out 
of it just now,” she said. 

T u rnover rose from DMT.Tbn 
to DM83bn. Share prices 
reflected a consolidation in 
cydicals, favoured in the first 
quarter of 1994, and a revival 
in financials. 

Afiianz was 

winner, up DM50 to DM2375 
for a two-day gain of DM99 
although Dresdner Bank, up 
DM10 to DM406, ran the 
insurer close. Among hip 

cydicals, BMW and Hoechst 
fell DM9 to DM829 and DM6 to 
DM33230 respectively; both, of 
these were strong performers 
on Monday. 

MADRID hit a new low for 
th« year, the general fac- 


ing 234 to 324-48 on Wall 
Street’s losses as turnover 
picked up to Pta30-8bn. 

Bepsol was the hardest hit, 
foiling ptalSS, or 3 per cent to 
Pta4365 on Wall Street, the 

weaker dollar and foiling crude 
dll prints 

ZURICH chose to ignore 
favourable analytical reaction 
to the Ciba-Geigy results, and a 
drop in Swiss In flatten. Ciba 
registered foil SFrl7 to SFr864 
and the smi index by 353, or 
L2 per cent to 2327.4. 

B anka were pressured by 
continued worries that Euro- 
pean interest rates might not 
ifooiina as for, or as quickly as 
previously thought. 

UBS headed fixe actives list 
and d roppe d SFrl9 to SFrL2Q9. 

AMSTERDAM was marked 
down in low volume, with 


some heavy falls "g 
the major issues. The A£A 
fo«tox slipped 4.03 or I per cent 

FI 190.20, reacted to ^^hlity 
S oil Prices following the 
Seettogrf Opec at the week- 

^ING the financial services 
giW’ which said g* it was 
Harming to issue & FI lba bond 
irt reported a ll per cent nse 
in 1993 net profit, ““J 1 ™ 
expectations, lost FI 130 to 
FI 81 10. 

BRUSSELS was flat, the 
Bel-20 index ending just 033 
lower at U8035, but a loss at 

the Luxembourg-based steel- 
maker, Arbed. left the latter 
down BFrl75, or 4 per cent at 
BFr4335, , . _ 

STOCKHOLM racked up 
anrrthftr decline in a two-week 
downtrend which has wiped 
out the gains achieved earner 
in 1994. The AflHrsvariden Gen- 
eral index fell 183 to 1,416.7._ 

• On the world stock market 
prices and indices page Mgbs 
and lows are now shown for 
1994. 

Written and edited by WlWeni 
Cochrane and John Pttt 


Asia pacific Confidence in 

Dollar decline triggers Nikkei loss f s ° s h h ^ burg 


Politico-economic bet on 
Euroconstruction stocks 

Christine Buckley looks at prospects for the sector 

A s economic recovery been seized upon by Fomento for stocks in the sector as i 
across Europe remains de Construcriones y Contra tas significant increase in publii 
limp and equity mar- (FCC). which will soon make spending on constructiox 


A s economic recovery 
across Europe remains 
limp and equity mar- 
kets nervous and fragile, the 
construction sector is attract- 
ing politico-economic bets. 

Typically, governments 
attempt to boost flagging econ- 
omies in periods of recession 
by gearing up infrastructure 

piiig iammM 

The tumround in the indus- 
try may not be instantaneous, 
with several analysts maintain- 
ing forecasts of further, albeit 
slight, slowdowns for 1994. But 
looking to later this year and 
early 1995. many of them are 
positive about better prospects 
for the sector. 

In France, housing starts are 
up by 12.7 per cent in the first 
two months of this year 
against the same period last 
year. Nikko Europe is expect- 
ing a bounce of 2 per cent in 
French construction output 
this year, after a 2 per cent 
decline in 1993. 

Lafarge and Saint-Gobain, 
the building materials groups, 
stand out as two of the stron- 
ger stocks. Mr Michael Wood- 
cock of Nikko says that the 
exposure of Saint-Gobain and 
Lafarge to the US is becoming 
less of a concern. 

“Saint-Gobain is a very good 
recovery stock," he says. “Its 
prospects are multifarious with 
eight or so divisions." Lafarge, 
he adds, also had the benefit of 
having better than expected 
results for last year, inspiring 
more confidence over its pres- 
ent and future performance. 

Spain’s construction sector is 
in bullish mood, having 
enjoyed a large boost from 
infrastructure projects, many 
of which began two years ago. 
That boost was enhanced by 
last year’s huge increase 
in public tender awards, which 
coincided with Spain's general 
elections. Tenders rose by 80 
per cent 

The positive sentiment has 


been seized upon by Fomento 
de Construcriones y Contra tas 
(FCC). which will soon make 
the largest ever equity placing 
by a private Spanish company. 
FCC, one of the top two stocks 
in the sector, is to place 20 per 
cent of its shares. The majority 
will be offered to US and UK 
institutions in two main 
tranches. 

Ms Alexandra Peril cone of 
James Capel believes that FCC, 
along with Dragados. with 
which it shares leadership of 
the industry, has identified 

European construction 

Shoe prices rebassd 

Lafarga Cnpp ta 

130 "if 


Oct 1993 94 Mar 

Sauce: Dsiaatnasni 

that diversification is the key 
growth area for the sector. 
“Urban waste management is 
one of the expanding areas," 
she says, “and these companies 
have responded by diversifying 
more." 

Ms Perricone warns, how- 
ever, that while Spanish con- 
struction stocks are enjoying a 
measure of interest, comp anies 
are labouring a little under 
reduced margins. 

For the Netherlands, this 
point is echoed by Mr Marc 
Slendebrook of Kleinwort Ben- 
son, who says that as life is 
stirring in the industry, “oper- 
ating margins are stuck at 2 to 
3 per cent in a fairly competi- 
tive market". But be is reason- 
ably upbeat about prospects 


for stocks in the sector as a 
significant increase in public 
spending on construction 
begins to take effect 

Italy, having suffered the tri- 
ple burden of a cut in the gov- 
ernment’s public spending, the 
European recession, and the 
corruption scandals, saw 
investment in construction 
tumble 23 per cent between 
1992 and 1994. Hoare Govett, 
however, is confident that this 
steep slide will be reversed this 
year, and that recovery will 
begin in earnest now that the 
elections are over. 

It recently issued a strong 
buy recommendation for Coge- 
for. the country’s largest pri- 
vate construction company. 
Although Cogefer is faring full- 
year figures shortly, likely to 
record a loss and prove the 
worst in its history, Hoare 
Govett predicts a strong recov- 
ery next year. The shares have 
generally outperformed a weak 
market over the past few 
months. 

Germany remains Europe’s 
wild card for the industry, 
given the country's reunifica- 
tion and the consequent boost 
for rebuilding projects. In west- 
ern Germany, business has 
been lifted by increased activ- 
ity in residential development, 
propelled largely by increased 
tax incentives and the hire of 
low mortgage rates. 

J ames Capel is cautious 
about Germany, recom- 
mending an underweight 
position with a buy stance only 
on DyckerhofL which has just 
taken control of Ciments Lux- 
embourgeois from Arbed. On 
Hochtief, a stock favoured by 
many analysts following reuni- 
fication, Capel advocates a seU 
Mean white, NatWest Securi- 
ties notes that German con- 
struction stocks have tended to 
outperform in the first quarter 
of a given year, and wane a 
little thereafter. 


Tokyo 

The Nikkei 225 average lost L2 
per cant as prices were pulled 
down by the sharp fell in the 
dollar, writes EmSto Temzono 
in Tokyo. 

The index was down 232.05 at 
19,709.74 after a day's high of 
19369.19 just after the opening 
and a low of 19353.03 in the 
afternoon. 

The dollar moved below Y104 
for tile first rime irinrp March 
4, currency traders fearing that 
the US government would be 
dissatisfied with Japan’s trade 
package, which included mac- 
roeconomic measures and mar- 
ket n panfng schemes. 

Analysts predicted volatility 
in the dollar/yen marfad- “The 
US is going to maintain pres- 
sure on Japan to meet its 
demands over trade, using the 
yen as a stick." said Mr Rich- 
ard Werner, chief economist at 
Jardine Fleming Securities. 

Volume remained almost 
flat, at 260m shares. The Topix 
index of all first section stocks 
slipped 1633 to 139631 and the 
Nikkei 300 shed 339 to 292.47. 
De cline s led rises by 693 to 328, 
with 148 issues unchanged. In 
London the ISE/Nikkei 50 
index eased 531 to 1309.46. 

Export oriented high-technol- 
ogy stocks retreated on profit- 
taking. NEC dipped Y30 to 
Y1.120 and Toshiba Y20 to 
Y779. Multimedia and telecom- 
munication related shares 
were down, with NTT losing 
YL8.000 to Y914,000. 

Mining and non-ferrous 
metal stocks, recently firm on 
the rise in commodity prices, 
declined: Dowa Mining relin- 
quished Y25 to Y550 and Nip- 
pon Light Metal Y13 to Y617. J 

Ricoh, the high-technology 
office equipment maker, drew 
heavy buying, was the most 
active issue of the day, and 
rose Y13 to Y838. The group 
forecast double digit increases 
in profits for the third consecu- 
tive year due to restructuring 
efforts. 

In Osaka, the OSE average 
declined 10830 to 22,02031 in 
volume of shares. 

Roundup 

A more positive mood per- 
vaded many of the region’s 
markets yesterday. Taiwan 
was closed for a holiday. 

HONG KONG aided shandy 
higher, assisted by a late surge 


in index futures. The Hang 
Seng index advanced 283.11, or 
3 per cart, to 9,480.14, although 
turnover contracted from 
CTTysghn tO WKj ft .ghn 

Investors appeared unper- 
turbed by news that measures 
to cool speculation in the 


with HSBC surging HK$4 to 
HK891 and its Hang Seng Bank 
iTTitt pnrnfnp HKJ2 at HKS54. 

SINGAPORE saw bargain 
hunting after faffing In recent 
sessions. The Straits Times 
Industrial index rallied 33.79, 
or 13 per cent, to 2393.72. 


Goodman Fielder, Australia's largest food group, yesterday told 
the Australian Stock Exchange that it was “not aware of any 
recent major change hr die beneficial ownership of its shares", 
writes Nikki Tait in Sydney. 

The statement followed a spate of intense bid and/or stake- 
tedMing speculation, resulting from some very heavy trading of 
the group’s shares on Monday. Around 26m shares riiarig wri 
hands, more than 2 per cent of the equity, but the share price, at 
ASL62, has foiled to move. Goodman has been the subject of 
Tnnrh Tnanagwnw^ upheaval in recen t foiw; . and reported a 12 
per cent foil in first-half profits after tax. 


property market would be 
announced this summer. 
Among property stocks, 
Cheung Kong rose HKgl to 
HK34130, Sun Hung Kai HKJ2 
to HK$56 and Henderson Land 
HKSL50 to HE546. 

Major banks were strong. 


Brokers said some in vestors 
were heartened by reports that 
Malaysia’s Bank Negara will 
report smaller than expected 
leases in its foreign exchange 
dealings. 

KUALA LUMPUR rebounded 
an bargain limiting after Mon- 


day's 2 per cent decline, but 
brokers said that sentiment 
remained nervous. The com- 
posite index recovered 1035 
to 961.78. 

SEOUL eased as hanks 

wimnntwM p mH t - talring Tha 

composite index lost 732 at 
875.62 and the financial sub- 
index shed IRS to 13M3a 

MANILA ended higher on 
buying of major issues. The 
composite index added 17.45 at 
2,703.13. Turnover slipped 
slig htly to LlSbn pesos. 

AUSTRALIA was dragged 
lower by volatile trading in the 
futures and bond markets. 

The All Ordinaries Index lost 
8A at 24003 after a steep fell 
in tire famiririg sector. 

BOMBAY improved on 
active buying by mutual funds 
and flnanrfal institutions. The 
BSE 30-share index put on 
67.02 at 8.78030. KARACHI 
opened the new account with 
the KSE 100 index recovering 
1532 to 2377.42. 


A weaker gold price added to 
the upset on the Johannesburg 
Stock Exchange, still reeling 
from the impact of Monday’s 
gun battles in the city centre 
which rocked market confi- 
dence, writes Matthew Curtin 
in Johannesburg. 

The overall index shed 58 to 
4368 after losing nearly 8 per 
cent the day before. The golds 
index fell 97 to 2,026 as bul- 
lion ftrifprf to hold above 1388 
an ounce. But dealers said bar- 
gain hunting by local institu- 
tions pushed the industrial 
index up 38 to 5,762 after the 
previous day’s 2 per cent drop. 

Mr David Scfaapiro, of stock- 
brokers Frankri, Poliak, VJn- 
dertne, said that Monday’s 
events had done severe dam- 
age to International investor 
confidence in the short term, 
even if there had been ttttie 
panic selling. 

The finrand dosed at R4.765 
against the dollar after 
starting the week at R4.705. 


FT Asia- 
Telecoms 


fic 

lys 




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FT -ACTUARIES WORLD INDICES 


Jointly compiled by Hie Financial Times Lid- GoKfcnan, Sachs & Co. aw Natwast Securitas Ltd. In c onjunction with the Instate of Actuaries and the Faculty of -Actuaries 
NATIONAL AMI 

REGIONAL MARKETS MONDAY MARCH 28 1994 H8DAY MARCH 2S 1994 DOLLAR IND6X- 

npuras In pa mm h aooo US Day’s Pound Locsl Local doss US Pound Local Ya 

show nuntier of Hnas Dote Change Storing Yen DM Currency % ehg Dtv. Dear Staring Yen DM Curancy 1963/94 1993/94 ag 

of stock Indue % Max Index Indax Index on day YMd Index Index Index index index Hgh Low (optx 


AiattttafBS) 160.70 -1.9 168.11 112.23 147.50 158.40 -2 

Austria (17) — 18558 -tLB 18354 122.73 181.39 161.46 -O. 

Belgium (43 167.82 0.1 16634 111.05 14643 142.72 Q 

Canada (107) 136.15 -0.7 13458 9004 118*1 135*0 -O 

Denmark (32) 261.74 08 25928 17309 227.82 23455 1. 

Finland (22) 14221 -(L3 14088 94-05 12X88 165.62 -O. 

Fomas (06) 174.06 O 2 J 72.42 115,10 151.37 15028 Q. 

Germany £9) 13652 1.1 137.23 9151 120*7 120*7 1. 

Hong Kong (56) 38251 -0.1 37953 253-23 333.02 379.77 -O 

belaid (14) 18755 02 188.08 124.23 16357 163^9 -U 

Italy (6S) - 81.40 6.0 80.72 5358 70.67 89.61 4. 

Japan (460) 1S455 02 152.01 10201 134.15 102.01 0. 

Malaysia (69) 445*0 -1.1 44123 29455 38736 461.78 -2. 

Mexico (18) 215005 -1.0 212901 1421.88 106952 7801.00 -0 

Nethariand (26) 197.73 05 195.88 13CL76 17158 16950 0. 

Naw Zealand (14) 6459 -15 642B 42.91 56*3 6050 -1. 

Norway 03) 196.71 -15 194.87 13050 17157 19451 -O. 

Sfergapara (49 30057 -15 29756 198.64 201.23 Z1&01 -1. 

South Africa (00) 24754 -3.7 24S52 103.70 21558 25658 -5 

Span (42) 14253 -05 14159 9452 124.30 14854 -O, 

Sweden (38) 20853 -0.1 20659 137.71 1B1.10 243LD7 -0. 

Swttzertand (48) 16356 05 162*2 108*3 14259 144*6 1. 

Uritsd Kingdom (215) .18252 -0.1 190.71 12752 167*3 190.71 0. 

USA (519) 167.46 -02 1BS59 12356 16352 167*5 -O- 


Day’s 

Change 

% 

Pound 

Storing 

Index 

Yan 

index 

Local Local 
DM Currency % chg 
Indax Index on day 

3oss 

Div. 

YMd 

US 

Door 

Indax 

Pound 

Storing 

Index 

Yan 

Index 

Local Year 

DM Cursncy 1993194 1993794 ago 

Mac Index Hgh Low (approx) 

-15 

168.11 

11253 

14750 

158*0 

-2.1 

3*4 

17253 

17151 

114*9 

14848 

101.79 

189.15 

130.19 

13958 

-05 

18354 

122.73 

16159 

181.46 

-05 

056 

18750 

195.44 

12450 

192*2 

10140 

196*1 

13953 

142*7 

0.1 

16654 

1115S 

1465a 

142.72 

05 

356 

187.78 

186.11 

111.08 

146*9 

14256 

17158 

14152 

14677 

-0.7 

13458 

9054 

118*1 

135*0 

-05 

2*8 

13756 

136.70 

9074 

11858 

138*4 

14651 

121*6 

12457 

05 

2S958 

17359 

22752 

23455 

15 

059 

259.57 

257.10 

171.92 

22S.19 

23253 

Z75.79 

19651 

19661 

-05 

14056 

9455 

12358 

165-82 

-0.7 

050 

142.70 

14159 

94*6 

12375 

16677 

15672 

7451 

7451 

05 

172*2 

115.10 

15157 

15026 

03 

258 

173.74 

17201 

11502 

1SOS8 

15&7B 

18657 

14950 

162.19 

1.1 

13753 

9151 

120*7 

120*7 

1* 

1.73 

13753 

135.68 

9072 

11853 

11853 

14258 

10759 

11254 

-0.1 

37953 

25353 

333.02 

379.77 

-ai 

2.78 

38313 

37953 

syire 

33225 

33052 

60656 

25054 

284.17 

05 

186.09 

13453 

16357 

16359 

-ai 

357 

18758 

186.70 

124.17 

16255 

183*5 

20953 

15457 

16650 

&0 

80.72 

5359 

70.87 

89.61 

45 

150 

7751 

7654 

5158 

6750 

9551 

81*8 

5621 

57.16 

05 

152.81 

10251 

134.15 

102.01 

0.1 

070 

15341 

16259 

10140 

13347 

10150 

16541 

12359 

12359 

-1.1 

44153 

29455 

38756 

461.78 

-2.0 

155 

46051 

44654 

29859 

39068 

471.07 

62153 

277.11 

277.11 


EUROPE (744) 167.72 05 106.15 11052 14588 16&76 a 

NanJC (113) 20353 05 201.72 13458 17759 20750 0. 

PacWc Basin (722) 10257 0.1 16056 10758 14152 11158 -O. 

Bro-PacHc (I486) 164*5 05 162.91 108.75 14502 13050 0. 

North America (626) 16456 -05 1B253 12155 16024 18352 -O 

Eunope Ex. UK 629) 150.65 OS 14024 99.63 13152 139.12 1. 

PacHc Ex. Juan (253) 24257 -05 240.10 16059 210.79 22253 -1. 

World Ex US (1661) .IBS. 77 0.1 16452 10853 144.17 133.65 0. 

Wbrid Bl UK (1955) 16959 05 16859 112*1 147.82 14650 O 

World Ex So. AL Cl 10) 17154 0.1 183.83 113.44 149.18 14953 O 

Wtarid Ex tapan (17OTI 18955 -Ql 191.63 12155 159.45 T7S.72 a. 


TM World Indrei (2170) -17157 go 17056 113.73 14956 150*7 0- 


Dnut, Tba Awidrf Ohm* LAM Goidmsn. Sachs and Co. and MBWoh BaoaSMS UifML 1937 
UMr^rtcas u «“»». 


-15 

212941 

142158 

196952 

7891.00 

-03 

064 

217258 

215051 

143621 

188352 

7987.03 

264758 

1431.17 

101329 

06 

195.68 

130.76 

17158 

16950 

09 

350 

19658 

19453 

13016 

17048 

16827 

207*3 

16350 

16853 

-15 

B45B 

4291 

56*3 

6059 

-1.7 

354 

8656 

6653 

43.48 

5699 

6151 

7758 

4671 

48*5 

-15 

194.87 

13059 

17157 

18451 

-05 

1.71 

19661 

19664 

131.49 

17223 

18678 

208*2 

15061 

15623 

-15 

29756 

19664 

291.23 

21601 

-1* 

151 

30406 

30154 

20150 

29697 

221.08 

37692 

21662 

21952 

-37 

24552 

163.70 

21558 

26658 

-25 

9on 

25755 

25460 

17018 

22231 

28449 

28026 

18159 

17438 

-05 

14159 

9452 

12430 

14854 

-0* 

358 

14350 

14257 

9520 

12470 

140*8 

15679 

11633 

12828 

-0.1 

20629 

137.71 

101.10 

24357 

-03 

156 

20639 

20632 

13756 

18071 

24351 


15827 

15661 

05 

162*2 

108*3 

14259 

144*6 

15 

1.60 

18272 

161.10 

107.72 

141.1Q 

14358 

17856 

11622 

11522 

-Q.1 

19a71 

12752 

167*3 

19071 

05 

355 

18285 

19074 

12756 

167.07 

19074 

21498 

17052 

17154 

-05 

19659 

12356 

16352 

167*5 

-02 

252 

187.79 

16550 

12431 

16252 

187.76 

19604 

17691 

18258 

06 

16615 

11052 

14688 

16676 

05 

259 

16688 

16622 

110*8 

14471 

15752 

17858 

141*1 

141*1 

05 

201.72 

13468 

17759 

20750 

05 

155 

20358 

20158 

13478 

17654 

20723 

22050 

148*8 

148*8 

ai 

19098 

10758 

14152 

11158 

-0.1 

1.08 

16228 

16068 

107*5 

14074 

11137 

16850 

127.68 

127.88 

05 

162.91 

10675 

143.02 

13028 

05 

155 

16406 

162*2 

10661 

14226 

13051 

170.78 

133.18 

13618 

-05 

16253 

12155 

19054 

18352 

-02 

251 

18461 

182.77 

12222 

1B05B 

184.18 

192.73 

173.70 

17927 

OS 

14624 

99.63 

13152 

13612 

15 

251 

14637 

14759 

9659 

12953 

137.79 

15673 

122.37 

12250 

-05 

24010 

16059 

210.79 

22253 

-12 

2.75 

24464 

24221 

161 56 

212.15 

22464 

29621 

17258 

172.74 

0.1 

18452 

10853 

14417 

13665 

ai 

158 

16555 

16331 

10950 

14356 

13350 

17251 

13424 

13424 

05 

18859 

112*1 

147.82 

14650 

ao 

253 

16852 

16623 

112*8 

14755 

146*8 

17858 

14750 

14750 

ai 

18693 

113*4 

149.18 

14953 

05 

220 

171.43 

169.72 

113*9 

14685 

14957 

17856 

14957 

14957 

-at 

161.63 

12125 

I59.4S 

17472 

OJO 

280 

163*5 

101.93 

721*6 

159.08 

178.77 

18620 

164*2 

16621 

05 

17056 

1 13.73 

14956 

150*7 

05 

221 

17153 

17022 

11352 

14959 

15048 

17837 

148.63 

14663 












L 




FINANCIAL TIMES SURVEY 




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Sft Cjy **.; 


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‘"■istfsyfc, 
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•■■ f :.'Wi 


INVESTMENT IN INDIA 




□ Finance minister's five 

year forecast Manmohan 
Singh talks about reform and 
development PAGE 2 

□ A new c hapt e r first year 
of the Irtdo-Brftlsh Partner- 
ship Initiative 

□ Squeeze on labour the 

unions chafe as more Jobs 
are shed — PAGE 3 

□ Fund managers’ “Jewel*: 
a wide range of investment 
options 

□ Welcome to Bombay:, 

the rush » on PAGE 4 

□ America’s change of 
heart US investors throw- 
aside their otd inhibitions . . 

Q Legal view: lawyer Arun 
Singh explains the frame- 
work for companies .PAGE 5 

□ The Daimlers of Poona: 
Germans on the move 

□ Textile exports: Benetton 
and Cardin test the water 

□ Engineering products: 

Bfe after subsides PAGE 6 


□ Defence .sales: BAe 
Hawks deal is up in the dr. 

□ joint venture profile: 
Lucas and TVS PAGE 7 

□ Unscr am bling the phone 
fines; a giant potential mar- 
ket is about to be tapped 

□ Punjab’s peace divi- 
dend: industry revives after 
the 10-year insurgency 

□ The gold of Santacrue 

export zone manufacturers 
takeoff PAGES 

□ Finance markets thrives 
the biggest boom — PAGE 0 

□ GE’s $500m commit- 
ment: US flagship shows its 
colours 

.□ Processed food e xp ort s: 
appetite grows _ — PAGE 12 , 

O Photography: 

Tony Andrews j 


Many people recognise the difficulties 
India faces - and the need for further 
radical reforms. What is missing is any 
widespread sense of urgency. India, ft 
seems, will modernise - but at Its own 
steady pace, writes Stefan Wagstyl 

Air of quiet 
satisfaction 


India is beginning to enjoy the 
first fruits of the economic 
transformation it launched 
three years ago. 

Foreign investment and 
exports are rising fast, the 
stock. market is up. and long- 
stagnant industrial output is 
starting to recover. 

After six years of good har- 
vests, the richer farm ers are 
content - and spending money 


FernfrytrvwSy 










India's yaar-on-year 96 growth 






- '•••gyi 


: :•$ 


Wednesday March 30 1994 


mm**? 



as never before. 

An air of quiet satisfaction 
hanp over the government of 
Mr PV Narasimha Rao, the 
prime minister, whose position, 
is stranger then at any time 
since he took over the ruling 
Congress (I) party from the 
assassinated, pajjv r^nvrhi & 
199L. He. 1ms steered India 
through a halance-of-payrnents 
Crisis aru ^ through the nnrwit 


which followed the sacking- of 
the Ayodhya mosque in 
December 1992. The Bharatiya 
.Tnnntu party, the Tnahi opposi- 
tion party whose supporters 
stormed the mosque, no longer 
looks the threat it was a year 
ago. Mr Bao has silenced Ms 
critics in the Congress par^y 
and seems likely to stay te 
command at least until the 
next general election which is 
due to be held by mid-1996 at 
the latest 

While the post Ayodhya vio- 
lence rttme as a flhnrit, TnrHa 
has avoided the deep-rooted 
social unrest which has hit 
Russia and some other states 
struggling with pro-market 
reforms. As Mr Rao told 'the 
Financial Times in a recent 
interview: “The best tiling fa to 
show people that [reform] 
works . . . Perhaps in many 
other countries it has taken a 
longer time, therefore people 
have lost their faith and ah 
HnHs of riwiirnitips are threat- 
ening to bww- In Tndia fortu- 
nately we have been able to 
convince the people though, of 
course, much more remains to 
be dona” 

The question is whether the 
celebrations will prove 
short-lived - or whether India 
has at last entered a time of 
rapid and sustained economic 

pindemifintinn. 

With luck, including further 
adequate monsoons, the ener- 
gies released by the reforms 
which have already been car- 
ried out should enable India to 


achieve the government’s tar- 
get of a steady growth rate of 
54 per cent over the next year 
or two, up from, an estimated 
<L8 per cent for the year ending 
♦Mb ynnth However, aim 
is quite modest, given that 
India grew at an average rate 
of 5 l 5 per cent in the pre-re- 
form 1980s. To reach a signifi- 
cantly hlghw rate, India may 
need to undertake the radical 
reforms it has so far largely 
avoided - notably organising 
large-scale investment in infra- 
structure and cutting its 
bloated public sector. 

Moreover, as ministers 
acknowledge, without a growth 
rate of above 6 per cent, the 
country is unlikely to create 
jobs for its unemployed and 
underemployed masses or gen- 
erate sufficient resources for 
education, health care and 
other development spending. 
As Mr P fiMdamharam, a for- 
mer commerce minister and 
staunch supporter of reform, 
says: “Only if we grow at 64 
per cent for 10 years win 
growth percolate down to the 
poor." 

The immediate prospects 
seem bright In last month’s 
1994-65 Budget, Mr Manmohan 
Singh, the reformist finance 
minister, deliberately relaxed 
curbs an public borrowing to 
Rtimubitp growth, the second 
pump-priming in two years. Hie 
also extended, the deregulation 
policies which have been a cen- 
tral feature of reform since 
1991, cutting peak customs 


duties from 85 per cent to 65 
per cent (300 per cent before 
1991). 

Wp annmmrffd an nwr teaul nt 

the complex and confused 
domestic indirect tax system. 
He cut interest rates by a per- 
centage paint to 14 per cent for 
the minimum landing rate. The 
Budget also set out plans for 

further financial market 
reforms, including steps to pro- 
mote efficiency in h a nk in g and 
insurance. 

Mr Singh admitted he was 
taking a calculated risk with 
the public ftnaiwax by permit- 
ting high levels of public bor- 
rowing. He Justified the deci- 
sion by pointing to record food 
stocks and record foreign 
exchange reserves of &4bn (op 
from ftiut in 1991) combined 
with much idle capacity in 
industry. 

Businessmen have pledged to 
seize the opport u nities created 
by the pro-growth Budget. 
Industrial growth in the first 
half of 1993-94 was Just L6 per 
c e nt ; but there are signs of a 
marked recovery in the winter, 
led by consumer demand. 
Rural outlets, in particular, are 
posting large sales increases as 
farmers spend some of the 
gams of the good harvests. 

Tmtian pmnpaniwi are raising 
record amounts of capital: 
though some of it is being used 
to repay bank loans, some is 
intended for substantial pro- 
jects. For example, no fewer 
than five oil refineries and 
Continued on Page 2 




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II 


FINANCIAL TIMES ^^^mrsdAY MARCH 30 l9 **. 


INVESTMENT IN INDIA 2 


Interview: finance minister Manmohan Singh discusses development and makes a five year predictio n 


‘We will surprise ourselves and the world’ 



Hm Treasury bubflng in New Delhi 


Ur Manmohan Singh, the 
finance minister, was inter- 
viewed by Richard Lambert 
and Stefan Wagstyi a few days 
after presenting his 1994-95 
Budget, which sets out the 
government's latest p lan* for 
farther economic reform. Here 
are highlights from the inter- 
view: 

QUESTION: (Vos this Budget 
framed with political rather 
than economic considerations in 
wind? 

SINGH: I think every Budget 
is a political document. The 
economy anyway does not 
function in a political vacuum. 

Could you please comment on 
the fiscal deficit? 

Well I would say that the 
fiscal deficit which has 
emerged in the current finan- 
cial year is not a happy devel- 
opment As I said In my Bud- 
get speech we have to get back 
to the path of reducing the fis- 
cal deficits. But this year hnd 
peculiar circumstances largely 
because of the very sluggish 
industrial economy, which 
reduced the government's cus- 
toms and excise revenues. 

I could have cut expenditure 
further. But in the public sec- 
tor we have cut expenditure to 
the bare bones, except for 
social sector expenditure. Cut- 
ting that would be economi- 
cally as well as socially and 
politically an unproductive 
exercise. It would perpetuate 
the stagflation and low-level 
equilibrium with the fiscal def- 
icit remaining as high as 
before. That would discredit 
the whole reform process. 

The only effective way to get 
the economy out of stagnation 
was to create an enviroment 
which was friendly to higher 
growth. Now there are risks in 
what I have actually done. If 
for example we have a drought 
things could go wrong. But if 
we have a big drought, things 
could go wrong anyway. But 
today we have an insurance 
against the drought which we 
never had for many years. 

Record toodstocks of 33m 
tonnes, idle industrial capac- 
ity, and record foreign 
exdiange reserves. If we can 
ever bring about a balance 
between demand and supply at 


a higher level of activity then 
this is the year it could hap- 
pen. 

Hasn’t overspending also con- 
tributed to the six of the fiscal 
deficit ? 

It is true that our food subsi- 
dies, for example, have turned 
out to be much higher than 
expected. It has happened 
because it was an election 
year. The government raised 
prices paid to farmers but 
prices paid by consumers were 
not adjusted until last month. 
We did the same with the 
administered oil and fuel 
prices. 

WUl forthcoming state-lead elec- 
tions and the prospect of the 
next general election, due by 
mid- 1996, effect policymaking ? 

1 think this is a normal cycle. 
We have this year four or five 
important states having elec- 
tions. But I am heartened I am 
being criticised that the fiscal 
deficit is too much. That is a 
measure of the success of our 
programme. When I started I 
was accused of inventing the 
fiscal deficit to destroy the 
Indian p lannin g system. 

Looking at the reforms overall, 
what are the remaining chal- 
lenges? 

I have done a sweeping 
reform this year of customs 
and excise duties. In two more 
Budgets the process or tax 
reform can be completed. Capi- 
tal market reforms have also 


*We are now in a 
position to create a 
futures and options 
market* 


gone pretty well, including der- 
egulation, the establishment of 
the Securities and Exchange 
Board of India [the markets 
supervisor] and new codes of 
conduct Our capital markets 
will function with greater 
transparency. The badla sys- 
tem [speculative forward trad- 
ing in equities] has now been 
banned so that the bulk of 
deliveries are cash deliveries. 
We are now in a position to 
create a futures and options 
market 


Fiscal deficit 


as a % of GDP 



Inflation 

. Annual % change in-Cft 
T6 — 



Yoavtn Much 3t 

Source: IMF. Indian gramifuM 

The National Stock 
Exchange, which links trading 
across the country and should 
have started operation in 
April, will start operating in 
the next few months. As 
regards the banking sector, the 
bill to allow the government to 
dislnvest up to 49 per cent In 
public sector banks has just 
been passed. The State Rank of 
India already had legislative 
permission and has raised 
Rs30bn. That process will now 
start for other banks. We will 
have private sector banks. 
Banking is no longer a monop- 
oly of the government. Interna- 
tional banks will be more 
active. 

Next on our agenda is the 
insurance sector. We have a 
report I propose to deal with 
[which suggests liberalisation]. 
Since it was our party which 
nationalised the banks and 
insurance I have to create a 
new climate, therefore I want 
an extensive debate on insur- 
ance over the next two or three 
months. As for exchange con- 


currency; reserves 


Sbflfcn- 



Indian frame* mm farta r • 
-Manmohan Singh 


tool, we have now a system of 
current account convertibility. 
The next logical step is capital 
account convertibility. But I 
would like to wait for some 
time more. 

The prerequisite is a credible 
fiscal aryl monetary stance. As 
far as foreign trade is con- 
cerned, the over-protection of 
industry is being reduced and 
reduced fast enough. The lev- 
els of protection which will 
prevail in the longer run, in 
two years we will reach them. 
We stffl don’t import consumer 
goods but I have started a 
debate. I feel confident we can 
manage tbat too. Once that 
comes about I think foreign 
trade system will have only 
moderate tariffs and the 
exchange rates will be the only 
determinant of trade flows. We 
are 7040 per cent of the way 
there. 

We must also remove restric- 
tions on farmers to enable 
them to export and have an 
import/export regime with 
moderate tariffs and without 


quantitative restrictions. 
Finally, there is exit policy 
[redundancy laws]. 

This is a sensitive issue, 
even though the present rigid 
system is hurting labour Itself 
because It gives our employers 
a strong disincentive to employ 
more labour even where more 
labour is justified. But it takes 
time to carry conviction in a 
country of high unemploy- 
ment 

If we reach an economic 
growth rate of 6 per cent then I 
t hink we will reach conditions 
where jobs are being created 
and we can make changes. But 
we are still not there so that's 
why we are deliberately going 
slow in this area. To help this 
change, we have to establish 
social security institutions. We 
have an industrial relations 
bill which talks about all these 
things including getting flexi- 
bilities. 

I have to convince our Cabi- 
net colleagues. I feel this thing 
also can be tackled in less than 
a year's time. I think this 


whole programme should be 
completed in less than two 
years' time, before we go to the 
next general election in 1996. 
But we are deliberately not 
adopting the chunk therapy of 
the kind that has been advo- 
cated. Because I believe civilis- 


‘I can reduce interest in 
a big way if I have the 
freedom to efismvest in 
a much bolder way* 


ation is a very delicate plant 
It's very easy to destroy it, 
especially in a large and com- 
plex country like TTttfia_ 

Ctm you comment on the role of 
foreign capital? 

As far as foreign direct 
Investment is concerned, we 
welcome it including foreign 
majority participation for 
which permission is automatic 
in most sectors. We have also 
opened markets to foreign 
institutional Investors in the 


past year. People have warned 
me that these are fair-weather 
friends so we have moved cau- 
tiously. But these investors 
have behaved responsibly. 

What is your attitude to disin- 
vestment an a larger scale ? 

I said in my Budget speech 
that in order to reduce my defi- 
cit in a big way I must do 
something about my interest 
burden which is a heritage of 
the past Given my options I 
can reduce interest in a big 
way if I have the freedom to 
dislnvest in a much bolder 
way. How bold that Is I will 
have to test with my Cabinet 
colleagues and party. We have 
got consensus on disinvest- 
ment 

But the other ministers 
would like to keep the proceeds 
for themselves. Politics is 
about patronage and patronage 
is about spending. So they say 
if we dislnvest you allow us to 
expand our empires. I have 
now to persuade them to use 
the proceeds to retire debt 


How does India compare with 
other developing countries, 
including those in east Asia ? 

I certainly would like the 
pace of reform to be foster in 
India but we have to realise we 
are a large and complex coun- 
try trying to carry out social 
nnri economic transformation 
in the framework of an open 
society. Maybe the changes we 
make will be more durable 
than changes in countries 
where you can carry out 
reform by fiat. 

Development is a complex 
process, it cannot simply be 
imported. We have made mis- 
takes for example in not univ- 
e realising elementary educa- 
tion. At the samp time given 
our size, given our natural 
resources, given our science 
and technology infrastructure, 
our skilled manpower, 1 have a 
gut feeling that India in the 
course of the next five or six 
years will surprise itself and 
surprise the world also. 



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resting on our 
laurels 


An air of quiet satisfaction 


Continued from Page 1 
nine petrochemicals complexes 
with investment totalling 
$30bn are planned, though not 
all are likely to come to frui- 
tion. 

For foreign investors, India 
looks more promising than at 
any time since independence. 
With signs of the Chinese econ- 
omy over-heating, many inter- 
national investors looking for 
alternatives among developing 
countries are turning to India 
and its vast unexploited mar- 
ket of 890m people. 

Since mid- 1991, India has 
approved foreign direct invest- 
ments totalling $5bn, including 
over $3bn in the past year. 
Much of it is concentrated in 
power, a top government prior- 
ity. 

The amount actually flowing 
into India is also growing - 
from $148m in the 1991-92 to an 
estimated $l-5bn in 1993-94. 

Foreign financial investment 
has mushroomed, since India 
In Late 1992 opened its stock 
market to foreign institutions 
and eased rules for Indian com- 
panies to issue paper overseas. 
Investment from these sources 
has soared from virtually noth- 
ing three years ago to an esti- 
mated $3-5bn in 1993-94. 

The growth has been so East 
that it has clogged the Bombay 
market's settlement machin- 
ery. 

Across India, there are high- 
growth cities where reforms 
are already bringing wealth. In 
Bombay, businessmen are no 
longer embarrassed about 
being rich. “Before even if you 
had a Mercedes, you kept it in 
the garage," says one," Now 
it’s okay to take it on the 
streets." 

Jobs for well-educated com- 
mercially-minded young people 
are growing fast, particularly 
In financial services, advertis- 
ing and other business ser- 
vices. Bombay yuppies no lon- 
ger limit themselves to 
Indian-branded goods but shop 
for foreign names, often 
abroad, but increasingly in 
India, where, for example, 
Lacoste T-shirts, Ray-Ban sun- 
glasses and Pierre Cardin ties 
are all available. 

The same is true in affluent 
corners of Delhi and in Banga- 
lore In the south. Some rural 
districts also share in the 
spreading wealth, notably in 
the western states of Gujarat 
and Maharashtra, and in Pun- 
jab in the north, where formers 
have grown rich supplying the 
nearby cities. Scores of entre- 
preneurs are benefiting from 
the expansion of exports - up 
21 per cent in the 10 months to 
the end of January - and from 
exporters’ tax-breaks. "IF you 


1 .... 

II KEY FACTS | 


.. 3.28ftnn0 an Ion 










Average exchange rate — 

ApriHVtach 1993 S1=Rs 31.12 


22/3/94 Sl=Rs 31.13 




ECONOMY 




180203' 

1993/W 

Total GNP (current Sm) 

238,159 

NA 

Real GDP growth (%) a 

4.0 

3.8 

Exports (Sm) 1 

18,537 

15,682 

Imports (Sm) 3 . — .... 

21,882 

18.414 

Annual average % growth in 



Consumer prices (tod. wkrs, %).. 

6.1 

&6 4 

Wholesale prices (%) — 

7.0 

8J? 5 

' Industrial production (%) “ 

1.8 

1.6 

Ayicultural production (%) 

3.9 

-0.9 

Direct investment 0m) 

343 

1,500 

Portfolio Investment 0m) * 

242 

3,500 

Share price index (%) . 

-48.5 

81 w 

Discount rate end period (%) 7 

12.0 

12.0 

Lending rate average (%) 7 • 

1892 

16.27 

Money growth M3 (%) ”. 

14-2 

141 

Foreign currency aste gwth (%) 




382 

69.9 

Reserves minus gold 0m) 

5,757 

10.199 

External debt (Sm) ._ 

76.983 

NA 

Current account balance 0bn).._ 

-5 

-2.4 

Main tracEng partners (%) 

Exports 

Imports 

nr* 

29.1 

31.0 

US .... 

18.9 

8.9 

Japan. 

9.5 

6.9 

Former USSR... 

9.2 

2.4 

Germany. 

8.0 

8.5 

UK.. 

7.0 

7.8 

United Arab Emirates. 

4.2 

46 

! (1) April to April. (2 ) 1993/94 figure is an estimate. 


(3) 1993/4 figure April-Dee only. (4) Dec 1993 figure only. (5) As 

at 29 Jan 94 (6) Average index April-Oct only for 1993/94. (7) 

Calendar year. 



0) 1993 average to November. 0) Feb 4 for 1993/4 figure. 

(10) April to Jan for 1893/94 figure. (1 1) % Growth between 31/3/ 

[ 93 and 7/1/94. 



j Sources: IMF, EUI, Datasbeam, World Bank, IncMan govt , IIP ] 


can't make money exporting 
from India now,” says Mr 
Narayana Bhatt, a Bangalore- 
based exporter of leather gar- 
meats, “then you should not be 
in business.” 

What is to prevent the activi- 
ties of Mr Bhatt and thnnaanria 
like him from pulling India 
towards full-scale economic 
modernisation? Unfortunately, 
there are potential blocks on 
the road to modernity, and not 
all of them are being tackled 
with sufficient vigour by the 
government 

First, while the government 
cut public borrowing in the 
early stages of reform, it is 
now relaxing the purse strings. 
The biggest surprise in last 
month's Budget was the revela- 
tion that the fiscal deficit for 
the year 1993-94 would reach 
7.3 per cent of GDP - compared 
with a target of 4.7 per emit 
The target for 1994-95 was set 
at a generous 6 per cent. 

Mr Sing h defended his deri- 


sion by saying that there was 
scope in the slow-moving econ- 
omy for pump-priming. The 
underlying reason is that the 
government does not wish to 
reapply the brakes so close to 
important state elections this 
year and the next general elec- 
tion. The danger Is that infla- 
tion - now running at 9 per 
cent annually - may rise, 
adding to the sufferings or 
India’s poor. It would only take 
a bad monsoon or an external 
shock such as a rise In oil 
prices to knock the govern- 
ment's plans off course. 

Poor Infrastructure is an 
even greater hurdle. While 
India is making progress in 
trying to attract private invest- 
ment into power projects, it 
will be the late 1990s before 
these new schemes make much 
of an impression, on the gen- 
eral shortages. The govern- 
ment originally planned to 
install 48,000 megawatts of gen- 
erating capacity in 1991-96, a 


of financial constraints. Ho 
ever, a review late last ye 
showed the public sector wou 
only build 13JJ00-14.00QMW; P 
vate companies would ha’ 
started work on stations wi 
an output of 3JJ00MW. 

The inadequacy of telecor 
municatfons is equally acut 
with investment delayed by 
combination of legal dispuft 
over contracts for mobile toll 
phone networks and politic 
argument about privatisatio 
policy. The liberalisation < 
investment in roads, rail an 
ports is even further away 
though domestic air travel ha 
quite successfully been opens 
to privately-owned carriers. 

The inefficiency erf public!] 
owned services and Industrie 
remains a strong drag on tt 
economy, accounting ft 
nearly half the nation's capifc 
bat producing only about l 
per cent of its output. The go< 
eminent has sold stakes i 
leading state-owned ente; 
prises, including banks, stei 
operations and electronic 
m a n ufacturers. But ministei 
have opposed selling moi 
than 49 per cent of a unit & 
fear of losing control. As Mr 
Rangarajan, the governor c 
the Reserve Bank of India, th 
central bank, says: “There 1 
not been much movement o 
reforming public sector unit 
we recognise that Partial di 
investment is where it stands. 

Ministers are also reluctar 
to liberalise India’s restricts 
labour laws, which seriousl 
limit employers’ rights to mak 
surplus workers redundant 
While companies can find way 
around the law - through vo 
untary schemes and redeploi 
meat - large-scale dismissal 
are virtually impossible. 

Finally. India's progres 
could be held back by the loi 
educational standards of muci 
of its population. Only 52 pe 
cent of Ind ians can raid, con 
pared with about 75 per cent c 
Chinese. It will take time i 
integrate the remainder o 
even their children, into 
modern economy. 

None of these medium- an 
wng-term problems is insol l 
Die. India has one or the besi 
educated elites in the devetot 
mg world, including civil se\ 
vants, businessmen and techn 
cal experts. Indians livS 
abroad are a fimd of energ 
and ideas, as well as can It! 

““se people recoins 
the difficulties the coStr 
feces - and the need for ftn 
tom* radwai reforms. What 1 
missing is any widespreai 
sense of urgency. India 

modernise -but a 
its own steady pace. 


\ 







in 




FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


INVESTMENT IN INDIA 3 





r 


T he Royal Yacht, anchored at 
Bombay last November, was 
a potent symbol of the 
rhjmgp g in Britain and India dnrtng 
tills century, and in the relationship 
between the two. 

Far from being an emblem of 
empire, the Britannia was an 
instrument of business.' Parties and 
seminars an board, were attended by 
1,400 people, fndnding 300 voting 
British businessmen, and contracts 
■ worth £L2bn were signed. 

The week in Bombay, waa the 
highlight of. the-fost year of the 
bdo-BiiOdi Partnership Initiative, 
an unusually energetic add close 
exercise in boosting bilateral trade 
«nH inv es tment which, has already 
produced <rtpmf>ngnt resoltsL Meet- 
ing last wwiHi in T/m%i l Mr John 

Major and -Mr .FV Naraamha Rao, 
Si p P riHdi g fid initiflti p nme minis- 
ters, to gvtend tht» tnitia- 

ttn. 

ySwp Tnrfia garniwd MeptndWCB 

from British rule in 1947, relations 
had been “friendly but distant,” 
according to British officials. Apart 
from the awkwardness inevitable 
between former imperial power and 
subject state, India had opted for 
Jawaharlal Nehru’s brand of 
self-sufficiency and socialism, 
which led it to be much, closer to 
Moscow than to the west 
By 1991, however. India found 
itself having to foceia new world. 

the Soviet orbit, which had been 
a. central element of its foreign pol- 
icy as wdl as its foreign trade, had 


British-lndian relations are being rebuilt on new foundations, writes Alexander Nicoll 

Friendship and an equal partnership 


And despite sporadic, half-hearted 
attempts at reform, its eoanomy bad 
finally slipped into a crisis which 
threatened financial collapse simi- 
lar to Latin America’s in 1962, but 
in a country of nearly- 900m, many 


of wham already lived in poverty. 

: When Mr Major visite d Tntffa fo 
January 1993, Britain desperately 
needed to boost export orders for 
British, companies to help it oat of a 
tang recession. The government in 
New Delhi had shown surprising 
determination to shape a new eco- 
nomic structure. Mr Major, guest of 
honour at the wrmimi Republic Day 
ceremonies, decided to make his 
visit into a high-powered trade mis- 
sion from which sprang the IBPL 
The visit crystallised a dramatic 
improvement in bilateral relations, 
farthered by a rapid series of minis- 
terial visits. Britain's borne secre- 
tary, foreign secretary. Lord Chan- 
cellor, trade minister and others 
have an been India's guests and, in 
wtifffiiffl to Mr Nararimha Rao, min- 
isters Including Mr Mamnohan 
Singh, architect of economic 
reform, have visited London. Virtu- 
ally all such visits over the past 
year have incl uded activities con-, 
nected-with the ffiPL 
Mr Robert Evans, chairman of 
British Gas, was asked to lead the 
British side. His Trahan co u nte rpar t 
is Mr Jamshed Irani, managing 
director of Tata Iron & SteeL The 
two men asked other business iead- 
ers to become patrons of the IBM - 
making it essentially a private sec- 
tor-driven exercise but with strong 
governmental in v olvement on both 



'Among the patrons are to be 


John Major and FV Narastmba Ran: a 
flurry of wdan g w (Picture: AP) 

found British companies which 
already had considerable experience 
in India - cumulative UK invest- 
ment hi India Is estimated at about 

pwmfa flu — ami fhnaa whirh gpB 

at the forefront of UK export efforts 
around the world, such as GEC Als- 
ftmw, Cable A wireless British 
Aerospace. On the Indian sjde are 


giants gnrii as Ashok Leyland and 
Bajaj Auto, as wen as companies 
with old UK links such as Dunlop 
India, Hindustan Lever and Wil- 
liamson Magor. The CoDkdosfUBU 
of British arid Tndiim industry are 
both patrons. 

in addi tion to several missions of 
business people to Britain and to 
Tndiq the IBPI has done consider- 
able work on identifying bnsinass 
opportunities for British industry in 
MhMafl Mm sectors, such as 
power generation, agro-food pro- 
cessing, manufacturing technology 
and commnnicatioos. financial ser- 
vices and i nfra s tru c tu re. 

If the IBPI simply brought 
together the biggest companies, 
however, it would have limited 
value many of their top execu- 
tives on both sides were already 
well attuned to the opportunities 
afforded by India's decision to open, 
its economy. 

An important purpose has been to 
raise awareness among smaller and 
medium-sized companies with less 
extensive experience. Hie IBPI says 
nearly Tj im British have 

its Mwtnur programme on 

lining business with India and that 
2^)00 people visited British technol- 
ogy BThThjHnrm Jn TVt mhay and Ban- 

galore. 

Mr Irani, in a repo rt to t he prime 
ministers, said: “The IBPI has been 
a truly unique process, and has 
ho*re successful to malting ~RHfedn 


aware of the ’new’ India, bringing 
with it new opportunities. On the 
other side, India has become for 
more aware of British capabilities, 
technologies and competitiveness.’' 

Bilateral trade, and British invest- 
ment to India have increased sub- 
stantially over the past year,- 
although it would he difficult to 
estimate how much of the gains 
have been due directly to the IBPL 
British exports to India grew 20 pea- 
rt*^ to IffiW to gl /iaftp and Tnrthm 

exports to Britain rose 26 pur cent 
to £J_09bn. 

In. 1991, new British investment in 
India was virtually at a standstill at 
only £7m. hi 1992 it rose to Ctftm. 
and last year approvals jumped to 
£138m, made up of more than 170 
new coDaboraticos 
The deals done so for vary widely. 

A number of British 
companies have Increased 
their stakes in Indian 
subsidiaries 

The biggest are in power genera- 
tion, which also offers the best 
potential for British companies in 
the future. Rolls-Royce Power Gen- 
eration Systems three con- 

tracts in November to build power 
stations worth a total of £660m, and 
to March RaOs-Royca sub- 

sidiary, Peebles Electric, signed a 


technology transfer agreement 
under which Kirinrimr Electric of 
Ban galore will be able to build 
transformers. 

GEC, which bad already been 
involved to a number of agree- 
ments, ni giwft a m emorandum of 
understanding to March under 
which tt win buOd a LD00MW coal- 
fired power station to Maharashtra 
state, and will have a gloom equity 
stake. National Power, PowerGen 
and National Grid have also signed 
contracts. 

Other industries to which UK 
i i wiMiiiii wit ii«ik have signed 
include liquor, construction, leisure, 
finance and aerospace. A number of 
British companies, hw-Whig Cad- 
bury Schweppes, Coats Vlyella, 
Reckitt & Colman, Glaxo, Bush 
Boake Allen. BP and Castrol have 
increased their stakes to Indian sub- 
sidiaries from the previous permit- 
ted limit of 40 per cent up to 51 per 
cent. Among interesting jotot ven- 
tures IS planned reft 
of Moscow’s old market region by 
Apollo Enterprises India to part- 
nership with Boris of the UK. 

Clearly, the IBPI «m by no wmm 
take the credit for all recent todo- 
British transactions. But it does 
provide a useful framework for com- 
panies and, importantly, focuses die 
attention of companies and govern- 
ments on the impediments to busi- 
ness as well as the opportunities. 

The British side is most con- 


cerned about totritectnal property 
ri ghts, high tax rates and custom 
duties, labour laws, bureaucracy 
and raflmng e controls - aD issues 
which have been widely identified 
both inside and outside India as 
vital for the government to Delhi to 
address. 

The Indian side worries about the 
cost of British technology, equip- 
ment and services. It is also con- 
cerned that “there is a preference 
among British OWparriM for spe- 
cific contracts rather than 
lang-tenn investment to toifia, for 
new-buOd rather than refurbish- 
ment and for sales to India rather 
than joint manufacturing ven- 
tures,* according to the IBPI report 
to prime ministers. Thera are also 
problems with textile exports to the 
UK because of sudden changes to 
quota 

For the next year, the IBPI plans 
to continue its work but to make it 
more sector-specific, to reach more 
jvmipawtof and to encourage g r eeter 
participation by non-resident 
Indians. The private sector leaden 
believe ministerial fay o h r uent is 
important and that India’s eco- 
nomic reform programme must con- 
tinue. Taster and simpler negotia- 
ting and approval procedures would 
enable agreements to be realised 
more quickly,” the leaders said, 
adding that commercial disputes 
should be resolved more quickly in 
the courts. 

Underlining the belief of th e par - 
ticipants in the success of the IBPI, 
Mr Irani and Ur Evans wrote: 
“Although India and Britain have 
special links which have given the 
IBPI a unique aspect, there is no 
reason why it should not be a model 
for relations between either India or 
Britain and other trading partners.” 


Shiraz Sidhva reports on the 
unions and the need to cut jobs 

The pressure 
is mounting 


Trade unionists fear that 
India’s chronic problems of 
unemployment and iHzdersm- 
ployment will be exacerbated 
by the structural . reform pro- 
gramme. 

Openings for Indians work- 
os, who increase at tbft rate of 
2 per cent a year, may be cur- 
tailed by technological change 
and a tougher line on redun- 
dancies. 

Apprehensive of labour mlH- 
fcancy and its political fallout, 
the government has been drag- 
ging its feet over redundancy 
policy. Officials in the labour 
ministry are reviewing the 
whole gamut of industrial 
labonr laws, to ensurttoey are 
to line with the otberJrefonns, 
but the changes wm be slow to 
c oming . 

The retrenchment of labour 
will eventually be . given a 
legal framework, and the tow 
relating to the regulation of 
trade uuhmg.may be- revised, 
say officials in the labour min- 
istry. The government believes 
that foe reforms wfil benefit 
labonr, at least in. foe long 
term. 

“Trade ■ ■ 

unionists may * 


from retrenchment, even 
though the law does not allow 
retrenchment of workers,” 
admits a Congress (X) MP. 
“The government is shying 
away from an exit policy 
became ft is afttrid to antagon- 
ise labour, but workers con- 
tinue to lose jobs because busi- 
nesses that are un viable 
sim ply shut down.” 

Mr CP Rangarajan Knmara- 
mangalam, a Congress CO MP 
and former union labour min- . 
ister, says that changing | 
labonr laws alone will not 
solve the 'problem of surplus 
labour. He has suggested that 
the government should try to 
persuade management and 
labour to regard each other as 
partners to progres s, instead 
of adversaries. r 

He criticises the negative 
overtones of the term “exit 
policy” (the official euphe- 
mism for labour reductions), 
arguing that labour, like capi- 
tal, can be redeployed rather 
than simply refected. “Good 
labour relations make for good 
business,” agrees Mr Krishan 
Lai Chugh, chairman of FTC, 

: the Calcutta- 

based com- 
rs point out pany, which 


be worried Union leaders point out pany, which 
about the that employers can already last year 
effect of reform . . exploit workers rBac * d .*2“£ 


on labour In . . 

the short term, 

but to the long term, the gov- 
ernment . hopes that the 
reforms and the encourage- 
ment of foreign Investment 
will lead to a substantial 
expansion of employment to 
more labour-intensive indus- 
tries,” says a senior labour 
mlnkt iy official. 

Recognising foot the reform 
process would increase struc- 
tural unemployment, the gov- 
ernment established the 
National Renewal Fund 
(NRF)ta 1992, a social safety 
net i n s trum ent to provide com- 
pensation and transitional 
support to workers who lost 
their jobs. 

The NRF has two constitu- 
ent windows: 

• tbe National Renewal 
Chant Fund (NBGF) compen- 
sates workers affected by the 
closure of both private (those 
under liquidation orders from 
the state governments) and 
pahlic sectors, and provides 
payment for voluntary retire- 
ment schemes by public sector 
units. 

• the Employment Genera- 
tion Fond (EGF) provides 
grants for retraining, rede- 
ployment and approved 
employment . generation 
schemes. But labonr leaders 
complain that the Fund’s 
safety net has been inadequate 
for the loss of lm jobs in 
1992-93, swelling the country’s 
unemployed to 18m. “ft should 
be termed the National 
Retrenchment Fond, because 
tbe total compensation pack- 
age far exceeds foe entire cor- 
pus of the fond,” says a senior 
labonr leader. 

Despite the World Bank sug- 
gestion two years ago that a 
suitable policy be framed to 
fbriHtoa industrial restructur- 
ing, hwhKHng a framework for 
reducing barriers to reducing 
Industrial manpower levels, 
government efforts to intro- 
duce labonr reforms and an 
exit poHey have beat mhrinml . 

“The gover n ment has done 
TKifhfng to pro tect foe workers 


mark settle- 
ment hinging 
on improved productivity. 

Industrial relations have 
remained mainly peaceful in 
foe last two years, despite the 
loss of jobs as aTCsnft of struc- 
tural reforms. The loss of 
man/days to 1992-93 declined 
to 21.15m from 34 -57m in 
1991-02.. 

The main bone of cont ention 
between trade unions and gov- 
ernment is the closure of the 
economically sick public sec- 
tor units. “The government 
wants to dose down foe sick 
mills, while we are fighting 
for their revival," says Mr 
Chfttabrata Majumdar, secre- 
tary of foe Urn strong Centre 

of Indian Trade Unions, affili- 
ated to the Communist Party 
of India (Marxist). “We have 
pot forward a number of sug- 
gestions how sick mills can be 
ran viably, but they do not 
care to listen, and hove only 
taken steps which have 
favoured more sickness.” 

Union leaders point out that 
employers can already exploit 
the workers, using voluntary 
retirement schemes, increas- 
ing contract and casual labour 
that can be easily retrenched, 
and subcontracting produc- 
tion. “The government has to 
evolve a "practical policy to 
tackle the loss of jobs or face a 
worker upheaval”, a union 
leader says. Last year, the 
unions won an important vic- 
tory when they stalle d foe 
introduction of tbe Industrial 
fteintinna Bill in pariiaxndiL 

Tbe Bill tought to delete a 
section of foe Industrial Dis- 
putes Act, requiring govern- 
ment clearance for the closure 
of a company employing more 
thaw 100 workere- 

Says a labonr mfoistxy offi- 
cial: “The government may 
seem ostrich-like about labour 
reform because it. is caught 
between political con slder- 
a fowni at borne and pressure 
from foreign agencies to initi- 
ate it But if s not as if we are 
neglecting tins crucial area of 
reform." 


Up front, most banks look like 
solid business partners. 




• • V.. 




• ’7- • . • 


But will they back yon up 
when the going gets tough? 


Just because it says it’s a bank on the impressi v e facade doesn’t n ecessa ri ly 
guarantee that you’re always dealing with a reliable business partner. Fortunately, 
if you see tbe name ABN AMRO Bank over the door, you can be sure that you’re 
rfwiHng with one of the world’s moat rock sobd financial institutions. 

Solid financial base 

Our financial base represents USJ 253,529 million in assets and US$ 
9,397 nrinkm In shareholders’ equity, placing ns among tbe world's top twenty 
banka. Moreover, our bank comfortably meets die ca pit al adequacy ratio set by 
BIS and EC. ' 

Solid business relations for 170 years 

Since our foundation in 1824, . our goal baa been km^tenn relations wfah 
our cheats, which explains why we’ve been in South America for more than 125 


yean, and in the Far East for over 150 years. What’s more, our associates know 
that they rely onus as business partners not only in good tames, but also when 
the going gas mush. 

Take our offices m Lebanon, for example, which since they opened their 
doors in 1954 have only been shut for 20 days. Needless to say, that pr e s u pp oses 
realty committed staff 


Looking ahead 

But even mote significant is tbe fret that you’ll be wttddng with a bank 
which looks further ahead than tomorrow. Or even the day after tomorrow. 

CREATING THE STANDARD IN BANKING. 


ABN AMRO Bank 


- HUH&HY. 90A. M00NESA. B&OK UAH. KAZAOSTAK OftA IW*W UEOTOCTEK LLC&mJFR M4UYSA, KGOCO. UfMMQX MtHOCCO. J€I>C5W^>CTeLVfflS AMT11ES. 

PEOPLES RSWUC OF CWW. UMNO. PCmUGM. HUSStA. SAUDI ARABW. SM6AHK. SOUTH KOREA. SMK SB UWA. SWUM. SWHW. SMIZ9UND JAnmnMAI«J.Ttittlf.«CRAWE.lHraJ«»BB*Aia«inasrMESOFAI«CA. 
UBUBUAY.VOEUUA WIIWH WON BWMDS. HEAD 0BHC6fWPWfirt(l®2il TO BSAtCIHIWM. THE 01-01 B289BS4. 



IV 


INVESTMENT IN INDIA 4 


KINANC1AI. mieSWI-'DM'^ MARCIl 


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The financial institutions have a wide choice of investment options, says Sara Webb 

A multi faceted jewel in the crown 


India has earned the nickname 
of “jewel in the investment 
crown” among those emerging 
mar ket specialists who scour 
the globe for new and exciting 
investment opportunities. 

Lured by the combination of 
the government's economic 
reform programme, relatively 
attractive growth prospects, a 
vast array of listed companies, 
and a gradual shift towards 
more modem stock market 
practices, foreigners have been 
quick to take advantage of the 
various routes available - 
either investing directly in 
domestically-quoted shares and 
internationally-traded GDRs 
(global depositary receipts), or 
indirectly via the numerous 
collective funds that have been 
launched in the last year. 

Fund managers based in the 
UK point out that India has 
several attractive features. 
They are encouraged by the 
process of economic liberalisa- 
tion set in train in 1991 by Mr 
Manmohan Singh, the finance 
minister. Such reforms were 
bom of necessity after India 
faced a balance-of-pay meats 
crisis and came close to 
defaulting on loans. But three 
years into the reform pro- 
gramme, many UK investors 
believe the process is irrevers- 
ible, especially since both the 
ruling Congress 0) Party, as 
well as the opposition BJP are 
in favour of economic reform. 

Mr Joe Scott Plummer, chair- 
man of Martin Currie invest- 
ment Management (MCIM), 
says the Edinburgh-based fund 
management group decided to 
launch its Indian Opportuni- 
ties Fund last July for several 
reasons. 

“Our prime reason [for 



Bangalore bunders at test the money <3 flowing 


investing in India] stems from 
the major programme of dere- 
gulation and the more efficient 
and effective management of 
the economy forced on India by 
the IMF. India recognised the 


To Reach Out 

And Create A World 
Of Opportunities. 



USHA MARTIN 

That’s The Essence 
Of Success. 


Usha Martin. A world class manufacturer of 
Steel Wire and Wire Ropes. With three 
decades of experience. And an export base 
spanning 40 countries worldwide. 

Usha Martin. Undertaking major moderni- 
sation-cum-cxpansjon programmes. Which 
would result in increased outpuLs. 
improved product quality, reliable delivery 
and a competitive edge In the world market. 
Helping us serve a larger market. 

Usha Martin. Giving our best to the world. 
And earning accolades. Globally. 


USHA MARTIN 
INDUSTRIES LIMITED 

lioruurate Office : MaigiJ tain<fi 

2A Shdtaauin- Samuil. Cakutn 7i» 071 

Kn : 01 33 212107 f. I’hnno : 242-221)1. 2G-43WH 


Delivering the very best Worldwide. 



advantage of international cap- 
ital. and changed the regula- 
tions to allow it in." he said. 
The Martin Currie Indian 
Opportunities Fund raised 
$lG0m originally (which rose to 
$ia0m in value), and is now 
raising an additional tranche 
of $100m-?150m. 

The process of liberalisation 
seems set to continue. The 
recent Budget (in early March, 
1994) was regarded as “pro-in- 
dustry" with measures to cut 
customs duties and taxes, 
encouraging the Import or 
goods and spare parts. 

If foreign investors have res- 
ervations. they are more to do 
with the fact that the reform 
process is associated so closely 
with the finance minister. One 
UK-based portfolio manager 


points out, “the danger is that 
the reform process is so inex- 
tricably linked with [Manmo- 
haul Singh that it would 
clearly be a worry if he were to 
go, for whatever reason". 

Mr Jeffrey Chowdhry, direc- 
tor at Barclays de Zoete Wedd 
Investment Management Lim- 
ited which recently raised 
$S10m for its India Fund, 
expects economic growth to be 
about 5 to 5V* per cent a year 
over the next five years, which 
in the context of other Asian 
economies is not particularly 
high. 

But he points out that the 
growth in the Indian economy 
“is dependent to a lesser extent 
than, say, the Latin American 
countries and NICs (newly 
industrialised countries) on 
growth in the outside world, 
because India has nearly 900m 
consumers of its own”. Of par- 
ticular interest to investors, he 
says, is the presence of a rapid- 
ly-growing middle class, esti- 
mated to be over 200m and 
increasing at 12 per cent a 
year. 

The inducement of a very 
large population with rising 
aspirations and increasing 
spending power may be a 
familiar one for international 
investors, and is frequently 
cited in the case of China. But 
emerging market specialists 
argue that the sheer size of 
India’s stock markets and the 
long-established tradition of 
investing in equities give it an 
added advantage over China. 

The Bombay stock exchange 
was set op in 1875 and with 
nearly two dozen stock 
exchanges spread across Indio, 
investors have about 7,000 
stocks from which to choose, 
although in terms of liquidity 
and available research the 
"universe of investments” is 
probably closer to 1,000 compa- 
nies, according to Mr Chow- 
dhry. 

China, by comparison, has 
more than 200 listed stocks, 
although several companies 
have overseas listings. “India 
has the advantage of a long 
tradition of accounting stan- 
dards. whereas China has a lot 
or opportunities, but without 
the tradition” says one Lon- 
don-based emerging markets 
specialist 


In spite of the large assort- 
ment of Indian listed compa- 
nies, some fund managers have 
reservations about the high 
price-earnings ratios, At pres- 
ent. medium -sized companies 
are seen as offering better 
value for Investors. 

Mr Scott Plummer at Startin 
Currie points out that “usually 
the pattern has been with 
emerging markets that as for- 
eigners discover a market, they 
tend to go for the liquid blue 
chips". However, he adds that 
while the big stocks have p/e 
ratios in the “high 20s the 
second league companies have 
lower p/e ratios in the region 
of 15-20 times”. 

Overseas investors must reg- 
ister as Foreign Institutional 
Investors (Fils) in order to 
invest directly in the domestic 
stock markets. Some of these 
Fils have been fairly active in 
the domestic market, although 
in recent months, the long 
delays izt settlement have hin- 
dered the process. These prob- 
lems are being addressed, but 
are still seen as time-consum- 
ing and inconvenient particu- 
larly in such a paper-intensive 
stock market Mr Chowdhry of 
BZW says “it has been esti- 
mated that about 400 pieces of 
paper are needed for each Sim 

Talk of eurobonds raises 

questions about India’s 
credit rating level 

transaction”. 

The other main way for for- 
eign investors to gain exposure 
has been through the interna- 
tional equity route, which has 
the advantage of providing 
liquidity and avoiding the 
Indian domestic settlement 
problems. 

Over the last couple of years, 
several of the biggest Indian 
companies have turned to the 
international capital markets 
with international share offer- 
ings. 

In 1993. a total of about 
$900m was raised in this man- 
ner by Indian companies, and a 
similar amount in the first cou- 
ple of months of this year as 
more and more companies 
rushed to take advantage of 
international investor interest. 


As a result of this spate of 
offerings. India’s ministry' of 
finance decided In February to 
impose informal - albeit tem- 
porary - restrictions on Indian 
companies seeking to raise 
funds abroad as it wanted to 
slow down the deluge of Inter- 
national equity and convertible 
bond issues flooding on to the 
market 

While international investors 
have had a wide choice of 
equity and convertible bond 
offerings, Indian companies 
have so far shied away from 
launching conventional euro- 
bond issues. The Industrial 
Development Bank of fndia 
(IDBI) was set to launch a 
eurobond this month, but held 
off because of the volatile con- 
ditions in the international 
bond market 

However, talk of possible 
eurobond offerings has raised 
the question of whether India’s 
credit rating is likely to be 
upgraded given that it had 
deteriorated from investment 
grade to speculative grade 
after the balance-of-pnymcnts 
crisis. 

Some of the more optimistic 
market participants appear to 
regard indin as another Mexico 
-*in other words, as a country 
with the potential to achieve 
investment grade thanks to its 
economic reform programme. 

However, the credit rating 
agencies seem rather less bull- 
ish on this front. India’s 
long-term foreign currency 
debt rating is Ra2 (from 
Moody's) and BBh (from Stan- 
dard & Poor’s), both of which 
are below investment grade. 

Mr Guido Cipriani, country* 
analyst at S&P. points out that 
the stable outlook on S&P’s 
BB+- rating indicates tliat India 
is unlikely to be upgraded for 
some time, although he adds 
that the agency is due to meet 
with policy-makers in India to 
discuss the reform process. 

While acknowledging that 
the government has taken sev- 
eral important steps in the 
right direction, he still voices 
concern about subsidies and 
overmanning In the public sec- 
tor, and the need for further 
progress on the fundamental 
structural reform of the public 
sector - a process which could 
take several years. 



On a Delhi building site 


Foreign financial services are sprouting in Bombay, reports R.C. Murthy 

Welcome to the big battalions 


Foreign financial services 
companies are rushing to open 
up shop in Bombay. 

The caution which character- 
ises the approach of companies 
In other Industries to India is 
largely absent, as investment 
bankers, brokers and others 
hurry to find the best local 
partners and staff. 

Major overseas investment 
banks are anxious for gain }a 
foothold in India. Tiny by 
international standards, local 
merchant banks have opted for 
joint ventures with their for- 
eign counterparts. 

J.P. Morgan of the US took 
the plunge )late last year with 
a 40 per cent purchase of ISEC, 
an investment bank floated by 
the industrial Credit and 
Investment Corporation of 
India, a diversified develop- 
ment bank. 

Genera] Electric land Hous- 
ing Development and Finance 


Corporation are floating a joint 
venture for hire purchase 
credit and other financial ser- 
vices. 

The latest to arrive are Pere- 
grine of Hong Kong and Dae- 
woo of Korea. 

Peregrine and ITC Classic, a 
subsidiary of ITC, the Indian 
affiliate of BAT Industries, 
have formed a 5050 joint ven- 
ture. } 

Daewoo and CRB Capital 
Markets, a Bombay securities 
company, /have signed a mem- 
orandum of understanding to 
collaborate and are yet to work 
out details. 

The oldest informal associa- 
tion is a decade old - between 
DSP Financial Services, an off- 
shoot of an old-established 
Bombay brokerage, and Merrill 
Lynch of the US. They now 
urgently need a formal 
arrangement to transfer [new 
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I 'Ill'll! Kill*. I Wit K'hemkxilf. hihpHverimi. 
Scrrkw etc. ore Jirenre unJ cliolleiiijhii). 

I ihhiii ,Vt )(. II. /.< iVii riiui up to moot luJid V 
civ r in./ JenuinJ /or Pctnvheniicnk ;. 

U itll oinhitmu? expo n?ioil fllu* of t S 1.2 hil. 
( \ir ii'Stnulc.' in thi? prestiikwf project 

lift* Noinnni Seen rilkv l.lJ. f r .K. i mJ ('itfvrj 
f.ulviinJ: l\ Tl. /cch nip ft Hiutoni 
ore our (kvIihkv! Ci'Hohorolorg . 
iVt h.7/. Ihij other fc.it her* in it* 
cop. I .‘he export? of nvr / 20 mn. 

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the ( Wur of the Siifctu \Y\iril. 
conferral on NOCIf.hu the 
I British !\ifchr Council. 

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otoiniJ it? i\'tr,nhcmkiil ? a implex 
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it? ciirfurcJ emkvfk'J in 'fualnct 

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to hen ii? to oreol hekilil? »ii /inuitsy. 


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pete with the new investment 
banks coming up in India. 

Another well-established 
relationship - between Lazard 
Brothers of the UK and Credit- 
capital Finance Corporation, 
an investment bank, has also 
recently been strengthened 
with the British merchant 
bank lifting its stake at CFC to 
40 per cent 

TnH Global Financial Trust, 
promoted by Mr R. Sankaran, a 
former Standard Chartered 
executive, is associated with 
Salomon Brothers. Infrastruc- 
ture Leasing and Financial Ser- 
vices, after a brief honeymoon 
with Bear Sterns, decided to 
join h an ds with Orix, the most 
active Japanese financial com- 
pany in India. 

Kotak Mahindra Finance of 
Bombay and Goldman Sachs 
are currently in discussions on 
whether to finalise a formal 
arrangement The focus now is 
on insurance. World insurance 
majors, Eagle Star, Sun Life, 
New York life, AIG and Cigna 
have sent representatives to 
India to scout for local collabo- 
rators. 

Sun Life has announced a 
tie-up with State-owned Life 
Insurance Corporation. Eagle 
Star, a BAT Industries subsid- 
iary, will form a joint venture 
with ITC, once the guidelines 
are announced. 


Bombay SE 

index frebased) 


Real GDP growth 



Annual % change 
12 



Exports 


88*88 87/88 8 9/80 91/92 93/94 

Industrial production 

' Annual % change 
10 



1990/91 91/92 92/93 83/94 
Source: D a a ar aam. Indcn g o n wn i ei * 

New York Life is talking to 
HDFC to form a joint venture. 
The most visible impact is on 
the stock market Nearly 150 


8 SB 6 87/88 88/90 91/82 83/94 


foreign institutional investors, 
registered with the Securities 
and Exchange Board of India, 
the market watchdog, have 


bought corporate stock on 
Indian bourses worth nearly 
Sl.Sbn since the beginning of 
this year. 

The inftow boosted the for 
eign oxchangu reserves, which 
hit a peak of SUbn. The capital 
flows were halted abruptly as 
custodial and depository ser- 
vices were unable to cope with 
the rush. The inflow will get a 
new fillip after these services 
are back to normal, institu- 
tions can now either buy on 
the bonrses or negotiate 
directly private placement of 
capital by companies. 

I ndi a opened its doors to for 
eign brokers late last year. 
Australian-owned Marlin Part- 
ners, Kleinwort Benson, Credit 
Lyonnais Securities and James 
Ca pel. a Hongkong and Shang- 
hai Bank subsidiary, were the 
first allowed to handle foreign 
portfolio investment into 
Indian stocks through local 
brokers. Five others, including 
Jardlne Fleming, have since 
won regulatory approval. 

The mutual funds market 
was opened to the private sec- 
tor late last year. 

Morgan Stanley, the US 
investment bank launched the 
first first domestic foreign- 
managed fund and attracted 
record subscriptions of more 
than Rs.lObn. Tata, the largest 
Indian business group, is to 
offer a 20 per cent stake to 
Kleinwort Benson of the UK in 
an asset management company 
to be promoted by Tata. Merrill 
Lynch is planning to flout an 
asset management company 
with Indian partner DSP 
Financial Services. 


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V 


FINANCIAL TIMES WEDNESDAY MARCH 30 1994 


INVESTMENT IN INDIA 5 


Patrick Harverson discovers a dramatic change in US sentiment 

The Americans are coming 


Viewed fleam, the OS, India is a 
country of enormous po tentia l. 
fflatorica^, however, the bos- 

Hfft y lpf TrWHan p w armminfat to' 

thetreeaiisket and to the for- 
eign Jmsfi^eBS c whmunHy has 
kept US companies and him' 
tors, fronr seeking to take 
advantage of that potential. 

Now, after several years of a 
gradn^econoinijcliberalisa- 
tiaa poiicjaaat.has opened up 


tail, US money is pouring into 
India ixr unprecedented 
amounts. . 

• - - ljffr .Antl tErj g nrmyat, the cmp-- 
maw-ial rrmo nf at .the 
Consulate^!: New York, says 
that US private sector invest- 
ment In India between 1593 
and 1993 exceeded the. total 
amount of . money invested by 
US campanfea in the previous 
40 years. ■ 

to toe first 10 months of last 
year,' for example, 3800m was 
invested in India hy US compa- 
nies, ftofl p. Win waa iri 
the pipeline iat toe -end of the 
year. By contrast, in all off 1990, 
Hr Trigraayat says, total US 
tnvOstmenfT measured just 
390m. " 

As well as the host of giant 
bine-chip corporations which 
have long ties to India (such as 
Citibank; General Electric and 
IBM),, scores of other Mg US 
campames have frftwn moving 
into - dr in some cam, return- 
ing to TniBa, itarnmfjh pur- 
chases aTmajortty stakes ~in 

TnrHgri businesses, nr t T rm ngh 

tfae-eatabfishxneid of new ven- 
tures. 

According to Precision Sour- 
ctog International (BSI), a New 
York based consulting com- 
pany which; works with US 
companies to India, among 
those which have recently 
raisecT theirinterest to Indian 
companies to majority, share- 
holdings are, Colgate Pahno 
live, 'Whirlpool, Chevron, 
PepsiCo. Proc&r ft Gamble and 
J Walter Thompson. 

Others winch have set up 
Joint ventures include Dura- 
cell, Goodyear, Mobil, and 
Alcoa. Inthe financial services 
industry, -toe Capital Group, 
Soros Fund Management,- ami 
Kemper have all created asset 
management businesses with 
Indian partners over the last 
year. 

Mr Bichard Hedberg, vice 
president at J P Morgan, which 


has an investment banking 
joint . venture in Ihrifa, gays 
interrat in India has snowbal- 
led to the past two years. “It 
started slowly, became every- 
one didn’t know [what the 
; reforms] meant, and yon had a 
lot of left-over biases. Then, 
about a year ago, all at once a 
lot of -US companies started 
increasing their minority own- 
erships to majority owner- 
ships. Then you saw toe snow- 
ball headed down the hUL.” 


Mr Robert Bcftfekl is 
equally upbeat about 
India's economic outlook 


US money Is flooding Into 
: India primarily because the 
ff n u i Brnm /mt jg n pftning up thtt 

domestic financial and con- 
sumer markets, albeit gradu- 
ally. Mr Mann Bamrni Qf pgj 

says; "We have been involved 
to assisting US corporations in 
India since 1988, and have a 
witnessed a sea change in the 
economic and business envi- 
ronment. Bather than treat, 
business es a necessary ev3. 
the g Ktp w r wTywnt gees business 
ra a critical part of the solution 
of India’s problems.” 

Mr Bamnd’s comments are 
echoed throughout the US 
business community, which 

ypflanik flip pwmwmte rft ffo-mg 

Introduced to the past two 
yean by toe adhunistratito of 
prime minister Mr PV Nara- 

aiiwTha ’Rqr> and Mu fmnnrft 

m MlN r , BfrafanmolMn ShdL 

“dearly the business dfanate 
has changed,** says Hr Neville 
lisdeiB, vice president responsi- 
ble for Coca-Cola’s operations 
in India- "That is the. direct 
result of toe policies of the cur- 
rent government. They have 
really attacked the major areas 
that were holding back invest: 
merits by international compa- 
nies." • 

Mr Robert JfirhMd, hftflil of 
Citibank's operations to India, 
where the company has a long- 
established consumer hawking 
and* corporate banking busi- 
ness, as well as si unit develop- 
ing' banking software, is 
equally upbeat about India’s 
economic outlook, especially to 
the- light of the February 28 
budget presented by finance 
minister Singh. The feeUng is 
that the reforms are now 


pretty much Irreversible to 
terms of direction, no matter 
what might happen politically. 
This is &e fourth reform bud- 
get to anow." 

TYr to r md fn fpiWa amnny US 

companies is especially strong 
to the consumer goods sector, 
which is hungrily eyeing 
India's vast, well educated, 

twrrwHriwg i y jmyrppmrre middle 
class. In consumer goods, toe 
impact of liberalisation was 
especially «*g"*w«Trt because 
recent reforms mean that for- 
eign companies can now sell 
their products in hvHa under 
their own brand names. 

Coca-Cola, for lyy 

wasted little time to retumtog 
to India (It left with many 
other US companies in the late 
1970s when the business cli- 
mate turned hostile). Last 
October, the company 
relaunched the Coca-Cola 
brand in Oidfa, am) a month 
lifdipT it bought the brands and 
trademarks of Fade, the big- 
gest Tndhm soft drinks manu- 


facturer. Also last year, Coca- 
Cola built a new beverage 
blending plant outside Poona. 

PepsiCo is also moving 
aggressively into India. As wefi 
as its bottling plants, snack- 
food business and tomato paste 
manufacturing plant, PepsiCo 
has just received clearance to 
set up a holding company with 
396m to capital that is already 
negotiating to buy some of 
India’s gmaTtor soft drinks com- 


PepsiCo has also received 
permission from the govern- 
ment to set up Pizza Hut add 
Kentucky Fried Chicken res- 
taurants. 

Ensuring that the notori- 
ously cumbersome . Indian 
bureaucracy handles foreign 
businesses efficiently has been 
a Mg part of the g o vernment's 
liberalisation programme, and 
Mr Suznan Stoha, head of 
PepsiCo in India, says approv- 
als for the company's recent 
expansions were granted and 
processed to just six weeks. 



Foreign conqMntos can now Ml their products In Indta inter their own brand i 


This contrasts greatly with the 
pre-reform days, says Mr 
Stoha. "to the past, if we got 
[approval] in three years it 
would have been a miracle." 

'While the business ciimata 
has changed greatly, US com- 
panies still have their concerns . 
about doing business to Tndiw. 


The country's infrastructure - 
particularly transportation ami 
telecommunications - leaves 
much to be desired. Tension 
between the different religious 
communities, which has bro- 
ken ont into violence several 
times to recent yeans, is also a 
worry for US businessmen. 


And an the economic front, 
the recent budget, which 
placed the emphasis on eco- 
nomic growth over fiscal recti- 
tude, raised some eyebrows. 
"The main concern is that 
there is still a large budget def- 
icit that is going to have to be 
covered at some point in time," 


says Mr Etebfeld of Citibank. 

Moreover, the political situa- 
tion, while stable now, could 
give cause for concern if Mr 
Rao’s government runs into 
trouble. Asks one New York 
banker: "Will there be political 
stability for the long-haul? Will 
the reforms continue? And can 
people count on being able to 
make long-term decisions 
nowT 

Yet, these concerns aside, US 
companies are bullish about 
India, a country with a well-ed- 
ucated and skilled pool of 
labour, a British-based legal 
and accounting system, and an 
English-speaking business and 
political community. All these 
factors, plus the steady liberal- 
isation of the economy, and a 
business-friendly government, 
are in India's favour. 

Mr David Thornes, head of 
Procter & Gamble's Indian 
operations, says: "If India can 
build on this base through the 
efforts at deregulation, and 
involvement of foreign and 
Indian private enterprise in the 
creation of a national infra- 
structure, there is significant 
potential for growth. Asian 
'tiger’ countries have shown 
the way, and there is no reason 
why India should be an excep- 
tion." 


ft is now much easier for 
foreign i nvestors to establish 
operations to India, but there 
remain many regulations 
winch have to be followed. 

Since liberalisation to July 
1991 regulations have been 
i tf ni Hih WTwrt muf foreign com- 
panies have been actively 
encouraged to «nt»r the Indian 
market are 

advised, nevertheless, to seek 
specialist advice from the cratr 
set as to the legal form of col- 
laboration, ton market and tax- 

Broadly speaking, approval 
most be sought and while 
there is an automatic process 
for this, ft js only given if cer- 
tain guidelines are met, such 
as a set sum for payment for 
technology and royalties. 

Foreign investors, too, are 
obliged under the regulations 
to enter into collaboration with 
a local company or individual. 

Generally, there are four 
main routes for pursuing busi- 
ness opportunities to India. 
each route involving varying 
degrees of commercial risk. 

• Foreign companies may ini- 
tially wish to appoint an 

Indian nponttn Trarrirgt and «ftU 

their goods to India and act as 
their local representative. 
Under the new business envi- 


Arun Singh explains the legal framework for foreign companies 

The path becomes smoother 


ronment tot« lux tw-nrw an 
increasingly attractive route, 
particularly in view of the 
reduction of import controls. 

ft is a useful and effective 
method for developing sales 
contacts generally ami for tar- 
geting Tndngfcriftc fn too p nhKr 

or private sector. In view of the 
geography of India, foreign 
companies often appoint a 
number of agents who have 
the necessary knowledge or 
contacts- to specific states or 
towns. 

• Secondly, foreign cnmpnniBfi 
may, in toe place of (or in addi- 
tion to) agents, open liaison 
offices hi India to expiree the 

marke t potential and familiar - 

jse themselves with the Indian 
business environment. Govern- 
ment approval has to be 
obtained to open a liaison 
office but it is a straightfor- 
ward and speedy process. 

• Thirdly, if foreign compa- 
nies wish to undertake activi- 
ties beyond those permitted for 
liaison offices, they have .to. 



ATAT stands 
waves in 


poised to make 
the Indian 


telecommunication scenario. 

Mercedes is about to make 
inroads into the 
Indian market. 

IBM is making its mark 
' in India's fast growing 
computer market. 

One group of companies plays 
a crucial role in aff these 
ventures. 

THE TATA GROUP, 


As India readies id enter the mainstream of 

woitttm<W>nany formation^ 

are haring farher shores. Timken, Cinuidns, 
HoneyweB, Uebert, Befl Canada, Kfefnworc 
Benson, to name but a few. And it is no mere 
coincidence that they aH have teamed up with 
one groupc TheTaxa Group, - 

The Tata Group is virtually synonymous 
with brim's industrial progress. Today, Its 
turnover stands at US $ 5 trillion. And its 
expertise extends from manufacturing and 
marketing a wide range of products to 
providing a host of services. Contributing to 
these successes are the Group's s tr e ng th* - 
irmovadon,kitt^yityanddimanium.Strengths 
that the group's 270,000 employees consider 
thdr personal responsibility. Strengths that 
have gfven the Tata Group an unassailable 
reputation for quality. 

Behind the Group's achievements stands a 
century of trust and a traetdon of firsts. AS 
symbolised by the mark that graces this 
page. The mark of Tata. 


TATA 

INDIA'S MOST TRUSTED MARK. 


Bombay House. 24. Homi Mody Straw, Bombay 400 00 1, indkic Tna Enterprises Overseas. Gocdj 



open a branch office to India. 
The branch office would be 
connected to the business 
activities of toe foreign parent 
company, and can execute con- 
tracts. There are specific roles 
for obtaining permission to 
open liaison and branch offices 
which should be complied 
with, but if they are, the 
Reserve Bank of India will 
grant permission within a mat- 
ter of weeks, rather than 
month*, as in the past. 

Other options relate to the 
transfer of technology, and to 
the setting up of a folly-fledged 
joint venture. 

Technology Transfen Where a 
foreign company wishes to 
transfer technology to an 
Indian company — generally 
through licensing - automatic 
permission will be given, pro- 
vided the application meets 
certain guidelines, namely the 
technology payment, which is 
for the transfer of technology 
and is not beyond RsiOm (some 
£320,000). Royalties are 5 per. 
cent for domestic sales and 8 
per cent for export sales. Lump 
sum payments and royalties 
may be paid for up to a period 
of 19 years from the date of the 
a gnPBgnent. 

Joint Ventures: Foreign com- 
panies seeking to have a mere 
permanent presence in India 


can consider a joint venture to 
manufacture or they may 
establish a wholly-owned sub- 
sidiary. 

Until July 1991, the maxi- 
mum equity that a foreign 
company could have in a joint 
venture in India was 40 per 
cent but the limit on foreign 
equity holdings has now been 
increased to qp to 51 per cent 
in 35 high priority industries. 
These include electrical equip- 
ment, boilers and steam gmer- 


Any arbitration 
agreement ahmdd be 
carefully drafted 

ating equipment, agricultural 
and industrial machinery, 
chemicals, food processing, and 
computer software. 

If the foreign investor’s proj- 
ect does not came within the 35 
hi gh priority industries, or if 
they require a greater amount 
of foreign equity, or specific 
infrastructural projects, such 
as BOT/BOOs, (build -operate- 
transfer/build-own-operate) 
they may make an application 
to the Foreign Investment Pro- 
motion Bored, in the Indian 
Prime Minister's office, which 
considers each, application on 
its merit 


If there is a transfer of pro- 
prietary information, there are 
intelleetaM property rights and 
trade mark protection avail- 
able to the foreign investor. 

As well as making provisions 
for the protection of intellec- 
tual property rights within any 
coEabarafion agreement it is 
important to stipulate an 
agreement regarding toe gov- 
erning law applying to the con- 
tract end how any dispute is 
to be resolved. 

This might be through High 
Court litigation, arbitration, or 
some form of a lte rn a tive dis- 
pute resolution. Indian law per- 
mits agreements to provide for 
disputes to be resolved in what 
is normally considered a neu- 
tral fcrrum, s uch as the Interna- 
tional Chamber cf Commerce. 

Any arbitration agreement 
or clause shqmtf be carefully 
drafted with a view to easing 
enforcement of arbitration 
awards. An Tndiau Supreme 
Court decision not so long ago 
delivered a judgment which 
could have a serious impact on 
the enforceability of sharehold- 
ers agreements and interna- 
tional arbi tr ati on awards, and 
investors would be advised to 
check the applicability of these 
judgments with regard to their 
transactions. 

to summary, before deciding 


to go ahead companies should: 

• check Indian Government 
regulations and comply with 
them. While there has been lib- 
eralisation, specific regulations 
apply to foreign investors; 

• be dear as to the method of 
payment, commission, royal- 
ties, lump sums or dividends; 

• define the role of your col- 
laborator; 

• Incorporate a clause for dis- 
pute resolution and set out the 
metho d of termination; 

• take specialist advice on 
market research, tax and legal 
matters and do not rely on (he 
advisers of your local partner. 
Although you may he working 
to a c omm on end, your indi- 
vidual interests may be differ- 
ent; 

• take steps to protect your 
intellectual property rights and 
confidential information; 

• set a timetable for imple- 
mentation of the collaboration, 
the length of negotiations, and 
time for the execution of agree- 
ments and state approvals to 
be obtained. Consider having a 
project manager for toe negoti- 
ations and a timetable for 
implementation. 

• rememb er that for foreign 
Investors, whilst there are 
approvals and consents to be 
obtained at both the central 
and state government levels, 
red tape has given way to red 
carpet for foreign investors in 
India. 

□ The author is a partner cf 
Masons Sottdtors, in the (Sty of 
London, and a board member of 
the UK DTTs trade advisory 
committee for South Asia 


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THE VIEW FROM GERMANY 



INVESTMENT IN INDIA 


Daimlers in Poona 


k project to build 20.000 
©recutiYe class Mercedes cars 
a nnuall y in Poona speaks vol- 
n mes for the Daimler-Benz 
Drop's expectations for Indian 
prosperity, fi also underscores 
sharpened German interest in 
investment in Tnriia in the 
wake of economic and regula- 
tory reforms instituted since 
1992. writes CHRISTOPHER 
PABKES. 

Encouraged by new regula- 
tions allowing foreign inves- 
tors to take majority stakes in 
joint ventures, and thereby 
exercise greater control over 
their investments’ destiny, 
Daimler and its long-standing 
partner, Tata Engineering and 
Locomotive (Telco), have set 
bp a per cent operation to 
be known as Mercedes-Benz 

India 

Production of the cars wiQ 
start this year, while the fac- 
tory will also be kitted oat to 
produce 50,000 diesel and petrol 
engines a year, starting in 1995. 

The total investment of 
DM250m is modest in relation 
to the scale of the Daimler 
group, but huge when com- 
pared with the $25m invested 
in the sub-continent by the 
Whole of Ger man industry in 
1992, the last year for which 
figures are available. 

. On the one band, the move 
Marks a further stage in the 
company's globalisation policy, 
Summed up by Mr Helmut 
Werner, chair man, as a switch 
fittm a “ marie in Ge rmany " to 
‘’made by Mercedes". On the 
Other, and on the bass of the 
popular credo that "what's 
good tor Daimler is good for 
Germany”, it is likely to be 
seen as a positive signal for 
Other investors to follow. 

Even though deep-seated 
doubts remain in Germany 
about the wisdom of investing 
In. India, the reform pro- 
gramme has already had a 
clear impact on intentions. 
Results of a poll published by 
the respected Munich-based Ifo 
institute last November 
founded up 32 companies (from 
a Selection of 174 which were 
already direct investors or 
involved in joint ventures) 


which said they were planning 
new investments in imWa 
While there were doubtless 
others which escaped the sam- 
plers' net, the most ggnifjfant 
finding was that 18 of the 32 
said they would not even have 
considered moving in if the 
reform programme had not 
been instituted. The survey 
also discovered that in a rever- 
sal of previous practices, and 
as in the Mercedes case, a con- 
siderable majority of the pro- 
jects were to be majority-con- 
trolled by the German 
companies. 

The possibility of real con- 
trol was selected by the sur- 
veyed companies as a "very 
important" result of the reform 

There was stfll 
much to do to attract 
Investment 


programme so for. Also in this 
category woe the convertibil- 
ity of the rupee, reduced 
restrictions cm imports of capi- 
tal goods, semi-finished prod- 
ucts and spare parts, eased 
local content regulations, and 
a general reduction in bureau- 
cracy. 

Even so, more detailed ques- 
tioning turned up considerable 
lingering reservations even 
among this experienced group. 
Asked to name continuing 
obstacles, 90 per cent of the 
direct investors plumped for 
the Inefficiency at the public 
administration. That 76 per 
cent of the joint venturers also 
complained of the red tape 
suggested, that having a local 
partner does not automatically 
spell escape from its entangle- 
ments. 

Other hindrances attracting 
significant numbers of men- 
tions included the labour laws, 
currency restrictions, difficul- 
ties in both foreign and inter- 
nal trade, and lack of legal 
security. 

The Ifo study concluded 
rather dismally that such 
obstacles meant the stream rtf 
German investment would 
grow only slowly. A pragmatic 






* • . 




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analysis of the realities of 
reform and the survey 
responses suggested consider- 
able scepticism about the pros- 
pects for effective change. 

Further liberalisation, such 
as the removal of more admin- 
istrative levies, charges (and 
corruption) would help, but 
what was really needed was 
wholesale reform of the admin- 
istration. it said. The Ifo analy- 
sis indirectly assessed the like- 
lihood of this in the next 
paragraph, devoted to critici- 
sing the frequent, often sudden 
retroactive changes in tiia 
law at the Union level, which 
individual states failed to 
implement. 

"Half-hearted" efforts to lib- 
eralise the labour market awl 
trade union power "considera- 
bly obstruct the practical appli- 
cation of reform measures", 
the survey said. 

There was still much to do to 
attract investment, and the 
Indian government was well 
aware of the shortcomings of 
its efforts so far, the report 
concluded: "But the fact that 
some of the reforms already in 
place are political dynamite 
implies a cautious rather than 
ac c e l e rated continuation along 
the way to reform.” 

In the light of such obstacles, 
and the relative attractions of 
high-growth, or more accessi- 
ble investment sites in eastern 
Asia, Latin America, east 
Europe and even the US, Ger- 
man direct investment in India 
may accelerate from its cur- 
rent snail’s pace. 

• JheGerv Mehr DirektirwesHti- 
onen noch den Wirtsc h aft s nfor- 
men?, Ifo SchneUdienst 3311991 
Contact Ifo Institut fUr Wirt- 
sekaftsforsekung, Postfack 
860460. 81631 Mdnchen. Individ- 
ual copies DMll phis post and 
packing. 



AH segments of the texts® Industry are working Hat out, (slowing two successive years of bumper cotton crops 


India’s textiles increase their share of the world market, reports R.C. Murthy 

Big names line up to test the water 


Deregulation has transformed 
textiles into an export-driven 
industry to attract the foreign 
investment essential for 
upgrading products. 

All segments of the industry 
are working flat out, following 
two successive years of bum- 
per cotton crops. 

Meanwhile, textile exports, 
including garments, rose to 
$4.32bn in the year ended 
March last year, 7JS per cent 
higher than tn the the previ- 
ous year. 

Exports for the year to 
March of this year are proj- 
ected to rise strongly by more 


than is per cent to $5bn. When 
the industry succeeds in tech- 
nological npgradatlon and 
enhances value addition, 
exports are expected to jump 
to more thaw $8. 51m. in three 
years. Even so, with only 2 per 
cent of the world market, 
India is still only a minor 
player - China 's exports last 
were worth $23bn. 

Big names such as Arrow of 
US, Pierre Cardin, La Coste 
and Benetton are an testing 
the Indian waters. Others are 
already trying to weave strate- 
gic alliances with Indian coun- 
terparts. 


E ENGINEERING PRODUCTS 

It’s a tough world 


Indian exporters of engineering 
goods have been shocked by 
the ending of a federal govern- 
ment scheme which enables 
them to buy Indian-made steel 
at lower international prices, 
writes KUNAL BOSE. 

The International Price 
Reimbursement Scheme (IPRS) 
for iron and steel is to be 
ended because the government 
no longer believes it justified. 
i launched in 1981, the scheme 
was financed out of a levy on 
the steel industry's entire bulk 
production. 

The government, however, 
had never been entirely happy 
with the IPRS which was natu- 
rally deeply unpopular with 
steel producers. It was also 
sensitive to criticisms by other 
countries that it was a central 
government subsidy to the 
engineering sector. 

This is rejected by the Engi- 
neering Export Promotion 
Council (EEPC), which says 
that the ending of the scheme 
came as a total surprise. 

The EEPC claims that it 
recently received a promise 
from Mr Pranab Mukherjee. 
commerce minister, that the 
IPRS would remain in force 
until March 1995. Exporters 
had therefore taken many 
antes which they would now 
find difficult to fiiifn. 

Indian engineering products 
will certainly be less competi- 
tive if manufacturers can no 
longer obtain iron and steel at 
world prices. 


Mr Moosa Raza, steel secre- 
tary. rejects the criticism, say- 
ing that the exporters of steel- 
based goods could import duty 
free steeL 

The EEPC says, however, 
that "since the engineering 
exporters need various kinds of 
steel in small quantities, it is 
not easy for them to organise 
import. Mind you, there are 
special steels which are about 
30 per cent cheaper in the 
world market" 

To help ease the situation. 


Indian exports grew by 
an average 37 per cent 
a year 

MSTC, a government trading 
organisation, has offered to 
import steel for the engineer- 
ing sector by amalgamating 
their requirements. 

The government does not 
deny that the IPRS has helped 
to raise the value of Indian 
engineering exports from 
Rs8.8bn in 1981 to around 
Rs90bn in 1993-94. Nearly two- 
thirds of exports are thought to 
have benefited. 

Mr Bijon Nag. managing 
director of (FB Industries, a 
(parting exporter of high value 
components and domestic 
appliances, believes that the 
government anil the Industry 
together will be able to organ- 
ise the import erf steel, though 
it would not be easy. "The gov- 


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eminent will be able to win the 
industry's confidence provided 
it clears quickly the huge back- 
log of Rs3-2bn in IPRS pay- 
ment,” he says. 

Because of their volume and 
high added value, engineering 
exports, according to Mr Nag; 
have mken an important posi- 
tion in India’s foreign trade- 

in spite of the break-up of 
the Soviet Union, the indus- 
try's angle largest market, and 
the recession in other parts of 
the world, Indian exports grew 
by an average 37 per cent a 
year in the last five years. 

The composition of exports 
also changed . Mr JS B bas i n , 
chafrman of EEPC, says that 
whereas in the 1970s and the 
early 1980s India primarily 
exported low value added steel 
and iron based products, today 
nearly 60 per cent of its expats 
consisted of capital goods and 
consumer durables.” 

The commerce minister bad 
offered to help make the engi- 
neering industry "a significant 
player in the global market 
through value added exports”. 
Unlike the localised nature of 
many other countries’ engi- 
neering industries, India’s 
engineering industry is based 
In many parts of the country, 
giving geographical advan- 
tages to its hauliers and ship- 
pers. 

India is becoming an increas- 
ingly important supplier of 
automotive components to the 
US. Europe and Japan. It 
began in the low margin spare 
parts market But some manu- 
facturers, including General 
Motors, Ford and Chrysler, 
apparently hope to buy higher 
quality components from India 
at attractive prices. 

Indian exports of auto com- 
ponents grew from $120m in 
1990-91 to $190m in 1992-93. 
EEPC experts the figures to 
reach 3335m by 199597. 

Engineering exports are 
likely to be boosted farther by 
the decision of some interna- 
tional engineering groups to 
manufacture semi-finished and 
finished articles in Tnd fa either 
for their own markets or for 
delivery to third countries. 
Bosch will buy washing 
machines from IFB for export 
to third countries, while Sie- 
mens is to buy small electric 
motors from a Bangalore engir 
neering company. 

In the past decade, the big- 
gest growth in engineering 
exports has come from the 
small and medium sectors. 
According to one estimate, 
these sectors account far more 
than 60 pm* eg "* of engineering 
exports. 


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Their first target is to win a 
slice of the growing local mar- 
ket. They also see India as a 
springboard for exports to 
other countries with no quota 
restrictions. 

“The Imtiflw miririlA ria« is 
as big as Germany [in popula- 
tion],” says Mr DJL. Gupta, 
director of the apparel export 
promotion council These 
world leaders are waiting for 

tile ritemgwfKng nf th» Trmlti-ft. 

bre agreement (UFA) In six 
y ears to exploit the free mar- 
ket in Europe and the US. 

The UFA is to be phased out 
over the next 10 years to inte- 
grate textile exports with Gatt 
tn two stages - to a level of 51 
per cent of quotas under UFA 
by 2001 and full integration by 
2005. Cotton, jute and silk 
have beat kept oat of the MFA 
and India wffl have to negoti- 
ate bilateral agreements with 
US, Canada and the E uro pe an 
Union. 

La Perla of Italy Is to buy a 
40 per cent state in a joint 
venture with Bombay-based 
Mafaflal gr oup to mafcp shirts, 
undergarments and lingerie. 
Mafatlal, a traditional fabrics 
exporter, has opted for for- 
ward integration to produce 
value-added garments. 

Prem Malik, executive direc- 
tor of Mafatlal Industries, 
says, "We are looking at the 
upper end of the European and 
US makets and aim at 40-60 
per emit value addition.” Hie 


joint venture will use Mafatlal 
fabrics. 

Two suitmaking companies 
- Morrotto of Germany and 
Samsung of Korea - are 

faillring to tWO Indian twtilg 
exporters in New Delhi to turn 
out 100,000 woollen suits a 
year, using cheap Indian 
labour. Critical inputs such as 
knowhow, textile designs and 
marketing skills win come 

Indian textile groups 
are preparing to 
seize export 
opportunities 

from overseas partners. 

As the overseas market 
became profitable by the 40 
per cent r