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Eurotunnel aims 
for $1.27bn with 
latest rights issue 

Eurotunnel is likely to seek about £850m <$1.27tm) 
in its forthcoming rights issue - 20 per cent more 
than expected by the stock market, dwarfing 
its four previous equity-raising exercises. The 
disclosure of the sharp increase in the Channel 
tunnel operator's refinancing requirements comes 
as it faces continuing problems in raising £700m 
of new senior bank loans. Page 21 

BAT buys into Uzbekistan: BAT Industries, 
the UK cigarette and insurance giant, is to take 
a majority stake in the state-owned tobacco indus- 
try of the former Soviet republic of Uzbekistan. 
Under the agreement BAT win invest $20Qm during 
the next five years. Page 20 

Fed meeting stabilises markets: US financial 
markets firmed as dealers anticipated that today's 
meeting of the Federal Reserve's policymaking 
open market committee would end the uncertainty 
over interest rates. Page 20 

Malawi hopes for brighter future: 

Malawi ranks among 
the 15 poorest nations 
in the world. Nearly 
half the country's chil- 
dren are stunted by 
malnutrition and seven 
out of 10 women c anno t 
read. Many believe 
that today’s parliamen- 
tary and presential 
elections will end 30 ' 

years of d ominati on 

by President Hastings 
Banda (left). But any new government will find 
ft difficult to explain to impoverished Malawians 
that democracy alone is no guarantor of prosperity. 
Page 6 

Barclays acts to offset losses: Barclays 
is to hedge itself partially against farther losses 
on its £L2bn UK property loan portfolio by issuing 
£150m of derivative debt securities to offset the 
risk. Page 21; Lex, Page 20 

Wal-Mart winning discount store battle: 

Contrasting results from Wal-Mart and Kmart, 
the two biggest US discount store groups, highlight 
how Wal-Mart is continuing to grow at Kmarf s 
expense. Page 21 

Lufthansa heads back to black: Lufthansa 
is on its way back to profitability after three years 
of losses, according to the German airline's chief 
executive. Page 21 

Moslems renew efforts at Tuzfa: Moslem 
forces tried to push forward around Tuzla, the 
biggest Bo snian government stronghold in the 
north-east, as an upsurge of fighting defied renewed 
efforts to end the war in Bosnia. Page 3 

Syria praises IIS peace efforts: Syria 
welcomed US efforts to broker progress in peace 
talks with Israel after US secretary of state Warren 
Christopher delayed his departure from Damascus 
for more talks before carrying the results of his 
discussions to Israel. Page 6 

US Senate flexes its muscles: President 
Bill Clinton's conduct of foreign policy has been 
heavily criticised in academic and establishment 
circles, but increasingly the US Senate seems 
ready to act where most others merely write in 
complaint. Page 9 

Oil links China and Saucfi Arabia: Hi sham 
Nazer, the Saudi oil minister now on his first 
visit to Beijing, will seek more extensive co- 
operation with China in the oil sector. Page 8 

London police to carry guns: Armed police 
will become a more familiar sight in London 
under measures announced by the UK government 
For the first time, some officers will be routinely 
allowed to carry guns in holsters. Page 10 

Spanish pick-up boosts Telefonica: 

Telefdnica, the partly privatised Spanish telecom- 
munications group, showed a 15 per cent increase 
in consolidated net profit in the first quarter 
to Ptal7.34bn (5126m). Page 22 

Strikes challenge ANC government: 

Although South Africa's new government has 
been hoping to focus on development issues, strikes 
have broken out among South Africa’s provincial 
government employees, and ambulance workers 
in Pretoria have walked out. Page 6 

Quercia to run for presidency! Mr Orestes 
Quercia, one of Brazil's most controversial politi- 
cians. will run as presidential candidate of the 
country's largest party, the Brazilian Democratic 
Movement, following his victory in a party vote 
at the weekend. Page 9 


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Delors attacks 
German plan for 
EU deregulation 


■ STERLING! 

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1.5017 


London; 


S 

1-5039 

(1-5004) 

DM 

is\n 

(25012) 

FR 

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(2L5//6J 

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FR 

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a 

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FR 

5.7396 

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SR 

1-4285 

(1.4Z43) 

Y 

10453 

(104.755) 

$ Index 

65.7 

(same) E 

Tokyo dose Y 10407 


By Lionel Barber in Brussels 

Mr Jacques Delors, president of 
the European Commission, yes- 
terday launched a blistering 
attack on a German plan, 
strongly supported by Britain, to 
push for faster deregulation 
inside the European Union. 

His intervention reopened 
political divisions over the degree 
to which the EU should promote 
labour market liberalisation in 
order to strengthen competitive- 
ness and tackle unemployment. 

But it also reflected fears in 
Brussels that Germany, the 
Union's most powerful member, 
may be tempted to challenge the 
Commission on industrial and 
social policy. 

Mr Delors’ message was deliv- 
ered to two meetings of EU 
finance and foreign minis ters in 
Brussels. He singled out for criti- 
cism a German economics minis- 
try initiative to create a taskforce 
of experts to root out unneces- 
sary Euro-legislation. 

But Mr Kenneth Clarke. UK 
chancellor of the exchequer, said 
the proposals put forward by Mr 
Gunter Rexrodt, German econom- 
ics minister, were an “excellent 
idea". British experience showed 
that the only way to make prog- 
ress on deregulation was to 
bypass the bureaucracy, he said. 

“President Delors is resisting 
this," Mr Clarke said. “He gave a 
splendid illustration of how 
bureaucracy will not reform its 


Divisions reopened over 
liberalising labour market 


own procedures and is somewhat 
impervious to suggestions that 
we might make faster progress in 
relieving the burden on industry 
caused by excessive legislation." 

Mr Theo Waigel, German 
finance minis ter, stressed that 
the Rexrodt plan should not be 
seen as signalling mistrust 
towards the Commission. Other 
German officials noted Mr 
Rexrodt’s Initiative was unveiled 
ahead of a German election cam- 
paign in which it was important 
to address the concerns of Ger- 
man Eurosceptics. 

Other countries, notably Bel- 
gium and Portugal, warned that 
efforts to roll back Brussels' leg- 
islation risked damaging the 
European single market and the 
Commission's authority. 

France, whose rightwing coali- 
tion government is struggling to 
balance its commitment to priva- 
tisation and liberalisation with- 
out incurring higher unemploy- 
ment remained on the fence. 

Ironically, it was Mr Delors 
who propelled the debate over 
deregulation to centre stage with 
his request a year ago, to pre- 
pare a discussion document on 
jobs, growth and competitive- 
ness. The 12 heads of government 
endorsed the paper at the Brus- 


sels s ummit last December. The 
paper was more in favour of 
labour market deregulation than 
expected, but strongly defended 
the social chapter of the Maas , 
tricht treaty, which seeks to pre- 
serve trade union influence. 

Aides to Mr Delors stressed 
that the Commission president 
was not opposed to deregulation, 
and they pointed to his call yes- 
terday for a “big step" towards 
faster deregulation of Europe’s 
telecommunications market 

But they added that the Com- 
mission president was concerned 
that the UK and Germany had 
“hijacked” the message of labour 
market deregulation at the 
expense of the rest of the docu- 
ment 

In particular, they pointed to 
its call for generous financing of 
so-called trans-European net- 
works - the huge, multi-billion 
dollar inves tmen ts in road, rail, 
energy and telecommunications. 

Mr Delors' fears appeared to 
have been confirmed when EU 
finance minis ters again blocked 
Commission efforts to win sup- 
port for special funding for the 
networks. 

Brussels chief draws a line in the 
sand. Page 3 



Silvio Berlusconi, Italy's new prime minister, pictured in parliament 
yesterday, has pledged that his government will expand the country's 
role in Europe and seek to widen its influence in international 
affairs Report. Page 20 Pietro Reuter 


Share price to be set next month for biggest flotation seen on Amsterdam stock exchange 

Dutch telecoms sell-off may raise over $4.2bn 


By Ronald van da Krol 
In Amsterdam 

Shares in the stateowned Dutch 
postal and telecommunications 
company are to be sold to inves- 
tors early next month at between 
FI 46 and FI 52 each, valuing (he 
company at FI 21bn to FI 24bn 
($10.9bn-$li5bn). 

The Dutch government, which 
yesterday released details of the 
long-awaited sell-off, said it 
would float up to 138.15m shares 
in Koninklijke PTT Nederland 
(KPN), representing 30 per cent 
of its 100 per cent holding in the 
company. The banking syndicate, 
led by ABN Amro, will be 
allowed to sell an additional 
20.72m shares if demand is heavy. 

If the shares are offered at the 


top end of the range and the 
banks exercise their option to sell 
the extra tranche of shares, the 
flotation could raise more than 
FI8bnfor the state, 

At the lower end of the range, 
the shares would still be worth 
more than F1 6b n, making the flo- 
tation the biggest in the history 
of the Amsterdam stock 
exchange. 

The price per share will be 
announced on June 6 after a 
book-building period among insti- 
tutional investors. The subscrip- 
tion period opens the same day 
and runs until June 9 with trad- 
ing in KPN shares expected to 
start on June 13. 

The price range of FI 46 and 
FI 52 is roughly in line with pre- 
dictions by analysts, who had 


forecast a flotation price of 
between FI 45 and FI 55. 

About half the shares are likely 
to be sold in the Netherlands, 
with the rest divided among the 
UK. US and the rest of the world. 

Late last month, the banking 
syndicate announced that private 
investors would receive a price 
discount of about 5 per cent on 
allotments up to 75 shares. They 
will also be given preferential 
treatment in tbe allocation of 
shares, though details have not 
yet been released. 

Government officials said yes- 
terday some 200,000 potential pri- 
vate shareholders had requested 
detailed information about the 
flotation. 

Mr Wilco Jiskoot, ABN Amro’s 
senior executive vice-president 


for equity and merchant h anking , 
said “pre-marketing” talks had 
been held with 1,000 institutional 
investors around the world in the 
past three weeks. 

The company's first roadshow 
took place yesterday in Amster- 
dam. Roadshows will be held in 
more than 20 other financial cen- 
tres in Europe, North America 
and East Asia, 

The shares are to be listed in 


Amsterdam and on Seaq Interna- 
tional in London. KPN is expec- 
ted to apply for a listing in New 
York by the time the government 
sells a second tranche of shares 
in two or three years. The Dutch 
state’s eventual aim is to reduce 
its shareholding to about 30 per 
cent 

Background, Page 22 
Lex, Page 20 


EDS and 
Sprint in 
talks on 
‘strategic 
alliance’ 

By Martin Dickson m New York 


General Motors said yesterday it 
was considering spinning off its 
Electronic Data Systems subsid- 
iary to pave the way for a possi- 
ble merger or strategic alliance 
between EDS and Sprint, tbe US 
telecommunications group. 

EDS and Sprint simultaneously 
confirmed that they were in talks 
which could lead to a “merger of 
equals” or other types of alliance. 

A marriage between EDS. the 
world's largest computing ser- 
vices company, and Sprint, the 
third largest long-distance US 
carrier, would create a new infor- 
mation services powerhouse, 
with annual revenues of more 
than $20bn. GM said EDS would 
best be able to pursue a strategic 
alliance if it were an independent 
company. 

EDS has held discussions with 
numerous potential telecommuni- 
cations partners in recent years - 
including British Telecom - but 
has found it hard to -clinch an 
alliance because of its unusual 
ownership structure. 

GM, which acquired the com- 
pany in 1984 from its founder. Mr 
Ross Perot, re tains ownership of 
its assets, but holders of a special 
type of GM stock, known as' class 
E. have a claim on EDS's divi- 
dend stream. 

GM said yesterday it was con- 
sidering sp inning off ownership 
of EDS to Class E stockholders 
through an exchange of shares, 
provided this transaction was tax 
free. GM bought EDS for S2.5bn, 
but the company now has a mar- 
ket value of around $15bn. so sale 
of the group could trigger a large 
tax liability. It will be up to the 
US Internal Revenue service to 
decide whether the spin-off is for 
legitimate business purposes 
rather than tax avoidance. 

GM said the spin-off would be 
dependent on two other factors. 
It must be able to conclude a 
plan, announced last week, to 
inject the remaining $6bn of class 
E stock held by its treasury into 
its underfunded pension plan; 
and the spin-off must not result 


Continued on Page 20 
Compatible partners at the 
multi-media ball. Page 21 
Editorial Comment. Page 19 
World stocks. Section n 


Greek interest rates soar 
amid fears of devaluation 


By Kerin Hope in Athens 

Greek interest rates soared to 
record levels yesterday amid 
speculation the government may 
be forced to devalue the 
drachma, following its surprise 
decision to free short-term capital 
movement 

To avoid renewed pressure on 


The interest rate rise seemed to 


Dealers said the surge in inier- 


per cent, reduced pressure on the 
drachma early in the day and the 
central bank was not forced to 
intervene. Last week, the Bank of 
Greece spent some Slbn out of 
foreign exchange reserves total- 
ling around $9.5bn to support the 
currency. 

The government lifted all 
restrictions on short-term capital 
movement at the weekend, six 
weeks ahead of schedule, in an 
attempt to ease mounting pres- 
sure on the drachma. Central 
bank officials said overnight 
interest rates (including the sur- 
charge) would go “into four fig- 
ures if necessary" to protect the 
currency. 

But analysts said pressure on 
the drachma would quickly 
resume as such high interest 
rates could not be sustained for a 
long period. A fall in rates would 
fuel fears of a devaluation. 

On the other hand, the govern- 
ment would be reluctant to 
devalue the drachma ahead of 
next month’s European parlia- 
ment elections. A devaluation 
would most likely lose the Social- 


ists several percentage points at 
the polls in June, in their first 
electoral test since taking office 
last October. 

Instead, the Central hank ma y 
have to abandon its “hard 
drachma” policy, intended to 
restrict depreciation this year to 
around 7 per cent, and let the 
currency slide more rapidly. "We 
should expect increased depreda- 
tion, perhaps an extra 3 and 5 per 
cent, over the next couple of 
weeks,” said Mr Spiros Damaskos 
of Sigma Money Brokers. 

The Bank of Greece is in the 
uncomfortable position of having 
to defend the drachma on its 
own, as Greece has never joined 
the European Union's exchange 
rate mechanism, which would 
allow it to call on other EU cen- 
tral banks for support 

The government is relying on 
today's issues of Ecu* and doUar- 
linked bond issues at higher 
interest rates to prevent a heavy 
outflow of capital and boost for- 
eign e x change reserves. 


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Arts 

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Trsflonal Options .42 

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© THE FINANCIAL TIMES LIMITED 1994 No 32,368 Week No 20 LONDON ■ PARIS ■ FRANKFURT ■ NEW YORK ■ TOKYO 







Wl« l 




NEWS: EUROPE 


Riva sets its sights on new steel target 


By Andrew HH hi Milan 
and Judy Dempsey in Berlin 

Riva, the private Italian steelmaker, 
has joined forces with German and 
Italian steelmakers to bid for the spe- 
cial steels division of Eva, Italy's 
state-owned steel company, only days 
after dropping its offer for Eko Stahl, 
the east German manufacturer. 

Fried Krupp of Germany and the 
Italian companies Riva, Falck and 
Tadfin, lodged a bid last week for 
Acciai Special! Terai, one of two 
main Dva divisions to be privatised. 

News of Riva’s decision to abandon 


its offer for Eko Stahl emerged on 
Friday and the Italian company has 
refused all comment on why it broke 
off negotiations with Germany's 
Treuhand privatisation agency. 

In a statement issued yesterday by 
Lazard and Morgan Grenfell Italia, 
which are advising the Halo-German 
bid for AST, the members of the con- 
sortium promised “a long-term com- 
mitment” to the state-owned com- 
pany. 

Iri, the Italian state holding com- 
pany, is also reporte d to be consider- 
ing Offers from Steno Marcegaglia of 
Italy and the French-owned Ugine, 


and two separate bids for the flat 
steel division of Dva. 

The Trenhand, meanwhile, is 
looking for a new buyer for Eko 
Stahl. It has been trying to sell the 
company for three years and the 
European Commission had approved 
a DM8l3m ($487m) German govern- 
ment subsidised modernisation plan 
provided privatisation was complete 
by June 30 this year. 

The agency has wanted to modern- 
ise the plant by integrating its steel- 
maMng and its steel processing 
operations. That would involve bond- 
ing a new hot rolling mill. At pres- 


ent, Eko Stahl ships its slabs for hot 
rotting to plants in western Germany. 
These are then returned and cold 
rolled. 

Eko Stahl a n d the Treuhand have 
straggled to find credible ways in the 
past few years to sell the plant One 
plan involved converting the site into 
a large modern mini-mill to melt 
soap metal. This would have allowed 
them to dose the last two working 
blast furnaces, but would have 
involved heavy job losses. 

Even with steelmaking retained on 
the site, the modernisation plan - 
which would save 3,000 jobs until the 


end of they year and guarantee 1,700 
until 2004 - is viewed with scepti- 
cism by the industry 

Mr Ken Iverson, chairman of 
Nucor, a large integrated mini-mill 
operation based in North Carolina, 
has his doubts. 

“In terms of efficiency, the manage- 
ment might just about get away with 
it with these large numbers. But I am 
not so sure," he said. “It would be 
difficult to save lots of Jobs and have 
efficiency at the same time.” 

Eko Stahl employed more than 
12,000 before German reunification 
in 1980. 


St Petersburg’s belief in better times fades 

Reform has brought citizens little more than hardship, writes Leyla Boulton 


Europe’s 

changing 

cities 


A bust of Felix 
Dzerzhinsky, 
founder of 
Soviet Russia's 
hated secret 
police, still dec- 
orates the 
lobby of St 
Petersburg's police headquar- 
ters. Other than that, little tan- 
gible is left of the communist 
era as Russia's second city 
forges ahead with pioneering 
market reforms that have 
brought its inhabitants hard- 
ship, bewilderment, and mixed 
hopes for the future. 

Mayor Anatoly Sobchak, a 
pro-western reformer, dreams 
of transforming this port city 
of 5m people into an important 
financial centre and haven for 
foreign investment. Convinc- 
ing the European Bank for 
Reconstruction and Develop- 
ment to hold its annual gover- 
nors' meeting in St Petersburg 
last month was part of his 
efforts to “sell" the city to the 
outside world. 

But the main fthallangp fac- 
ing him and other liberals 


around the country is ensuring 
that market reforms deliver 
tangible benefits for ordinary 
people in time for presidential 

and parliam entary elections 
due in 1996. 

Few of his fellow citizens 
believe he can. Popular cyni- 
cism is such that city council 
elections last mouth almost 
aborted when turnout - tradi- 
tionally high in the Soviet era 
- only reached the required 25 
per rant minimum after polling 
was extended by a day. 

The discontent centres on 
crime and corruption, an 
inability among pensioners 
and the lower paid to make 
ends meet, nostalgia for the 
fixed prices and safe streets of 
the old order, and a lade of 
investment to restructure or 
convert St Petersburg’s numer- 
ous rtrfenw plants to civilian 
uses. 

On the bright side, foreign 
and local investment in the 
retail sector has already con- 
tributed to a boom of western- 
style shops, restaurants and 
hotels in a city with consider- 


able tourist industry growth 
potential, a few big companies 
- such as Gillette, ABB, and 
Unilever - have started to 
invest in the city's ailing man- 
ufacturing sector. But the 
trickle of investment has yet to 
turn into a flood. 

“We can handle political 


parliament and government in 
taking the decisions he needs 
from them. These range from 
state subsidies for transport to 
lower business costs, a reduc- 
tion in companies’ tax burdens, 
and new laws to fight eco- 
nomic crimes ushered in by 
market reform. 


Mayor Anatoly Sobchak dreams 
of transforming the city into 
an important financial centre 


instability, inflating and even 
the Mafia,” says an executive 
for RJR-Nabisco, which makes 
cigarettes at a privatised local 
tobacco plant “But what we 
can't handle is the unstable 
legal and tax regime. That’s 
where it all breaks down.” 

Mr Sobchak says that his 
plans for an economic renais- 
sance are hampered not just by 
psychological and bureaucratic 
barriers to investment but by 
the "slowness” of the Russian 


Although he has already 
talked three western banks, 
the BNP-Dresdner gOianr-P arwi 
Credit Lyonnais, into setting 
up subsidiaries in the former 
imperial capital, they have 
found little to do. 

Lacking both the volume of 
Moscow's forex market and the 
capital’s range of western cor- 
porate clients, western banks, 
as everywhere else in Russia, 
are nervous about local 
lending opportunities. 


If Sobchak wants to make 
the city a financial centre, he 
bffs to offer ap p ropriate incen- 
tives,” says Mr Yevgeny Yelin, 
head of St Petersburg's Cur- 
rency Exchange, where well- 
dressed dealers trade dollars 
and D-Marks underneath a por- 
trait of Catherine the Great 
That has not stopped his 
exchange and 27 leading banks 
and investment funds from ini- 
tiating a regional system for 
ni spring share transactions in 
an effort to build a western- 
style stock market 
However, despite Mr Sob- 
chak's help in securing prem- 
ises for western companies, 
Rraaaan entrepreneurship has 
so Ear flourished in spite of, 
rather than thanks to, the 
authorities. A living embodi- 
ment Of tins state Of affair s is 
Mr Vladislav Gerasimov, an ex- 
navy captain who, three years 
after acquiring the city's first 
privatised shop, has become a 
millionaire- T his summer he 
plans to start manufacturing 
the womens’ shoes he ban been 
importing from China, at a 





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new factory employing 400 peo- 
ple. 

But the price he has to pay 
for driving a top-of-the-range 
Mercedes, owning a beautiful 
house and having a daug hter 
who has learnt fluent English 
at private school and visited 12 
countries, is to keep himself 
“free of enemies". This means 
paying off not just the criminal 
Mafia, which at least does 
favours for him in return, but 
also corrupt officials. 

“All I encounter from the 
state are extortion attempts by 
bureaucrats. If I knew that my 
money was being spent use- 
frilly I would not try to avoid 
paying taxes.” he says. 

Major General Arkady 
Kramariev, the city's police 
chief, who admits that corrup- 
tion is rife among city officials, 
the judiciary, and even his own 
men, says the good news is 
that crime M 11 per cent in 
the first quarto- of this year. St 
Petersburg, with 845 murders 
last year compared to 150 a 
decade ago, is now only as dan- 
gerous as the most crime-rid- 
den cities of western Europe 
but still safer than New York 
or Washington. 

Gen Kramariev says that 
much of the crime nowadays is 
due to an antiquated legal sys- 
tem which cannot cope with 
the requirements of a market 
economy. When, for instance, 
businessmen refuse to repay 
their debts, creditors' only 
resort is “Judge Kalashnikov” 
because by toe time a court 
takes a decision it is “meaning- 
less". 


A large part of the prob- 
lem is psychological - 
with an increase in 
domestic crime doe to a loss of 
old certainties. Many citizens 
are convinced life is getting 
worse even if, in some areas, it 
is getting better. 

Despite earning a decent 
monthly salary of Rbs365,000 
thanks to government 
attempts to strengthen law 
enforcement, Captain Victor 
Koverzin, a police officer who 
patrols the city’s elegant tour- 
ist area, plans to vote for Mr 
Vladimir Zhirinovsky, the 
ultra-nationalist leader, as the 
country's next president His 
wife has been in effect l a i d off 
by a defence plant which has 
been closed since January but 
continues to pay her Rbs25JXX) 
a month, just enough to buy a 
pair of shoes at one of Mr Gera- 
simov’s stores. While Capt 
Koverzin does not believe all 
Mr Zhirinovsky's promises, he 
thinks that “at least the world 
will stop pushing us around" if 
one of the few leaders 
“untainted by office” comes to 
power. 

Mr Alexei Kudrin, the dep- 
uty mayor responsible for eco- 
nomics, is optimistic that eco- 
nomic reform will produce an 
upturn in time for 1996. “The 
next two years will see the eco- 
nomic crisis peak, with unem- 
ployment and restructuring of 
enterprises. Hopefully, by that 
time there should also be some 
results, with the creation of 
new jobs and new manufactur- 
ing capacity.” 

The big unknown is whether 
an increasingly weary public 
will appreciate the improve- 
ments by the time they take 
place. 

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FINANCIAL TIMES TUESDAY MAY 17 1994 


EUROPEAN NEWS DIGEST 

Russian loses 
minis terial job 

Mr Sergei Shakhrai, 38, a Russian deputy prime minister, 
became the first casualty of the recently reformed Russian 
cabinet when he yesterday lost his post as nationalities minis- 
ter, though be kept that of deputy premier. 

His successor, Mr Nikolai Yegorov, is a governor of foe 
Krasnodar region who has shown conspicuous loyalty to Ro&. 
sian President Boris Yeltsin and appears to be benefiting from 
it Like Mr Shakhrai, he is from a Cossack background. The 
Russian press has speculated that Mr Shakhrai's loss of posi- 
tion ste mme d from his sturdy opposition to Mr Dzhokar 
Dudayev, president of the breakaway autonomous Ru ssian 
republic of Chechnya - with whom the Russian president Is 
now seeking a rapprochement 
Mr Shakhrai had earlier called for presidential elections in 
Chechnya as a condition for talks with a man who has defied 
ifrvarfnn central authority for more than two years. 

Mr Shakhrai had created a centrist grouping in the small 
but Influential Party of Unity and Accord, which boasts two 
deputy prime ministers, Mr Shakhrai and Mr Alexander 
shrdrhin the deputy prime minister for the economy. Both 
have taken a centrist position after some time in toe liberal ! 
camp, ami both have str o n gly supported Mr Victor Gheroo- ' 
myrdin, the prime minister. John Lloyd, Moscow. 

Portuguese bugging row grows 

The discovery of a hidden microphone in toe Portuguese 
attorney general’s nfflra and allegations that other leading 
nfflHfliq are subject to electronic surveillance are producing a 
climate of intense suspicion in the country, with parliamen- 
tary ftopuHo*:, p ol itical parties, trade unions and other bodies 
calling for police to search their premises for bugging devices. 

Mr Anihai Cavaco Sflva, toe prime minister, has ordered a 
fuflracale investigation to find out who placed the miniature 
microphone under floorboards directly beneath the chair of 
attorney general Josd Cunha Rodrigues. Suspicion fell on tbs 
government intelligence service, SIS, after Mr JoaO Maria 
Marques de Freitas, attorney general on the Portuguese island 
of Madeira, accused SIS agents of placing an electronic bug fa 
his •; 

Press reports that the telephones of at least five cabinet 
minis ters were also being tapped has led to sugges t ions that 
commercial espionage might be involved. Some of the mins-, 
tors have been engaged in the adJudicatkai of important gov- 
ernment contracts. Peter Wise, Lisbon. 

New French daily launched 

The beleaguered French press yesterday gained yet another 
new recruit when the first issue of Paris 24.00 landed on the 
capital’s newsstands despite production problems that halved 
the size of its print-run. 

Paris 24LOO manag ed to produce only 50,000 of a planned 

110.000 copies, but its first issue was virtually sold out by : 
Lunchtime. The new daily, which is aimad at the mass market 
with a mini-tabloid, format and FFr3 cover price, is described 1 
by Philippe Lecardonnel, editor-in-chief, as a “city paper” that 1 
could be “read in 15 minutes cm toe metro without getting 
your fingers dirty or poking your neighbour in the eye". Paris 

24.00 is the third new daily launched in Fiance this year. 
InfoMatin and Aujourd'hni, two tabloids which were intro- 
duced in January, have seen their daily sales settle at 95,100 
and 74JX30 respectively. Alice Reoosthom, Paris. 

Peugeot chief warns on sales 

Mr Jacques Caivet, chairman of Peugeot' Citroen, the French 
motor group, yesterday warned that the French car market 
was still in a fragile state and that sales were likely to fell 
again once the short-term stimulus provided by the govern- 
ment's incentive scheme wore off. The car market was badly 
affected by the recession last year, with the number of new car 
sales felling by 1&3 per cent However a government scheme 
to offer payments of FFr5,000 to people trading in vehicles 
more than 10 years old to buy new cars helped to fuel a 135 
per cent sales increase during the first four months of this 
year. Yet Mr Caivet said cm French radio that the scheme was 
likely only to have a short-term effect and that car sales “may 
fell or even return to a relatively weak level” when it ente 
next year. Alice Rmosthom, Paris. 

Strike to close Greek airports 

Greek air traffic controllers announced a 48-hour strike begin- 
ning today that would paralyse the nation’s airports and 
create chaos for thousands of fa™? arriving for the European 
Champion’s Cup football final tomorrow evening. A dvfl avia- 
tion union official, Mr Dimitris Petrissis, said yesterday the 
walk-out was called to protest against legislation under debate 
in parliament placing civil aviation employees under the con- 
trol of local governess. About 300 extra flights were scheduled 
to arrive in the next 24 hours from Spain Italy carrying 
fens for toe AC hfilaii-Barcelona game. AP, Athens. 

SPD criticises business chiefs 

The German opposition Social Democrat (SPD) leader, Mr 
Rudolf Scharping, has rebuked business leaders for throwing 
their weight behind the conservative chancellor, Mr Helmut 
Kohl, ahead of elections on October 16. In a letter to Mr Hanfi 
Peter Stihl, head of the German Federation of Chambers of 
Commerce (DIHT), made public yesterday, Mr Scharping 
defended his p arty's policies and denied that terra would rise 
under an SPD government Mr Stihl said last week that cm 
SPD victory would be bad for the economy and the labour 
market. “Your ta king sides with the ruling coalition is 
one-sided and based on false premises,” Mr Scharping said in 
the letter. Reuter, Bonn. 

ECONOMIC WATCH 

French current account slips 

. France's current account slid 
. A . v. . . : . . to a FEr4.3bn (E500m) season- 
_ ' ... ... ; •: .. ally adjusted deficit in Fto- 

‘ ’ ary from a FFrHUbn surptas 

20 • I* January, toe econcanfcs 

- . *”■*■■* ministry said y es ter day . The 

. . : ' ministry said that the deficit 

is.- - ~ — fl- reflected interest coupon pay- 

I 1 . 1 meats on F rench governnw® 

io • — ~ — — f -1- bands to non-residents and an 

r 1 I I '• unusually large Fteoto 

. 5 — J.LL tribution to the European 

• . I If U' I ' Union that month. The gov - 

o I t » - 1 eminent said that its defbu - 

. ^ I I ' tive surplus for 1993 wa® 

_s *— * - - - r . . . . • . .1. FFr595bu, or 05 per cent <S 

1333 :• tas* gross domestic product, cojj 
aewwFT<wite pared with FFrtO^bn, w '** 

^ 0 f GDP, in 1992- 

Prance had a basic balance of payments deficit in February 
FFr51 £8bn, compared with a deficit of FFriJ4.42bn in January 
and a surplus of FFri3J30bn in February 1993, ton ministry 
said. The cumulative deficit in the first two months of 1®4 
was FFr76.1Qbn, compared with a surplus of FFiSOJSbn in tbs 
first two months oE 1993. . 

* public sector deficit narrowed to a provisional 

Lie.ioobn (£6.7bn) In the period January-February 1994 to®* 
L2l,4l0bn deficit in the corresponding period of 1983, die 
treasury announced yesterday. ,, 

■ Norway's trade surplus rose to NKr2£6tm <£264m) in Atpt 
from NKn.67bn in March, the Central Bureau of Stating 
said. The cumulative Januaiy-April surplus fell to NKri4^5hn 
from NKr20Albu in the same period a year ago. 

* iJonmark’s unemployment in the first quarter of 1994 rog 
S’ 7 cent °f the workforce, compared with 1SJJ per 

m the Brat quarter of 1993, according to the Danish national 
statistics agency. 


FT GtqpHte 





FINANCIAL TIMES TUESDAY MAY 17 1994 


NEWS: EUROPE 


French 
airline in 
Heathrow 
complaint 

By David Buchan in Paris and 
Jenny Lussby in London 

The Anglo-French "airport 
war" yesterday took another 
twist as Air Liberty, a small 
private French airline, said it 
was complaining to the Euro- 
pean Commission abont its 
failure to get adequate slots to 
open a service to Heathrow. 

Ur Cedric Past our, deputy 
director of Air Libert*, said 
his company was taking pre- 
cautionary action bo that 'if 
we do not get satisfaction out 
of the new negotiations 
between the French and Brit- 
ish governments. . . Brussels 
will take up our case”. 

Over the weekend, the two 
governments agreed that by 
the end of June, British Air- 
ways and UK Air could start 
flying into Orly, the main 
domestic French airport, in 
return for French carriers get- 
ting better access to Heath- 
row. 

Mr Pastonr said there was a 
particular problem for new 
airlines at Heathrow. Air Lib- 
ert* had last November 
requested four landing and 
takeoff slots at Heathrow, he 
complained, only to have half 
of them refused last week and 
the other half granted “in an 
commercially unusable form”, 
such as having to beep an air- 
craft at the UK airport for 5 Vi 
hours. 

The British Airports Author- 
ity, which runs Heathrow air- 
port, said yesterday that all 
slots were allocated every 
November by Airports Co-ordi- 
nation Limited, an indepen- 
dent company. The decision on 
Air Liberte slots would have 
been made according to IATA 
roles, it said, and without prej- 
udice. 

There is intense pressure 
on slots at Heathrow, with 
the limited access to the air- 
port having already led to a 
breakdown in talks between 
the US and UK on the renegoti- 
ation of their bilateral air 
agreement 

The problem has been 
greatest for new airlines and 
airlines seeking access to 
Heathrow as part of the Euro- 
pean Union’s “open skies” pol- 
icy of deregulation, with over 
a third of Heathrow’s slots 
already allocated to British 
Airways. 

Virgin and American Air- 
lines are just two of a large 
□umber of airlines that have 
complained of delays in 
launching new services, or 
continuing limits on their ser- 
vices, dne to the lack of avail- 
ability of Heathrow slots. 

Earlier this month, the Brit- 
ish Air Transport Association, 
which represents UK airlines, 
complained that all of the 520 
daily departure slots available 
at Heathrow this summer, all 
were already booked, while 
496 of the 517 daily arrival 
slots were pre-booked. 

The association is pushing 
for an extra runway in the 
Heathrow and Gatwick catch- 
ment area as soon as possible 
to alleviate the problems of 
congestion. 

Meanwhile, only a few 
flights to Corsica are expected 
to escape today's strike at Air 
Inter, the domestic carrier 
belonging to Air France, held 
in protest at its Imminent 
exposure to foreign competi- 
tion. Mr Bernard Bosson, the 
transport minister, yesterday 
said the strike was “compre- 
hensible, bnt not the solu- 
tion". 


Common free trade zone by end of the century is the aim 

EU close to Russia-Ukraine deal 


By David Gardner In Brussels 

The European Union is poised 
to cement a close relationship 
with Russia and Ukraine at 
next month’s heads of govern- 
ment summit in Corfu which 
would lead to a common free 
trade zone by the end of the 
century. 

Following a meeting in Brus- 
sels of the Twelve's foreign 
ministers, all now ftfogpg on a 
visit to Moscow later this week 
of France's foreign minister, 
Mr Alain Jupp£, aimed at 
resolving residual French 
objections on Russia's exports 
of enriched uranium. 

The EU has already Initialed 
a "partnership" agreement 
with Ukraine, and yesterday 
all but overcame French objec- 
tions to a s imil ar but broader 
agreement with Moscow, 
which should be ironed out 
before Corfu. 

If achieved, both agreements 
are seen by the EU as the foun- 
dations of a stable relationship 
with profoundly unstable and 
powerful eastern neighbours, 
and the necessary precondi- 
tions for the EITs common for- 
eign and security policy. 

“It's going in the right direc- 
tion,” said a spokesman for Sir 
Leon Brittan, EU external eco- 



Spain’s Foreign Minister Javier Solana (left) laughs with Mr Antonio Martino, the new Italian 
foreign minister, who was making making his debut at a Brussels ministerial meeting yesterday m> 


notnlc affairs commissioner. 

The hope is that both Mr 
Boris Yeltsin, the Russian 
President, and Mr Leonid Krav- 
chuk. his Ukrainian counter- 
part, will be in Corfu on June 
24 to close the deal. 

The controversies which 


have snagged the negotiations 
with Russia have now been 
largely resolved. Moscow has 
agreed a safeguards regime to 
prevent sudden export flows of 
uranium Fuel which might 
undercut French production 
for its network of nuclear 


power plants. The EU and Rus- 
sia have also arrived at a 
modus vwendi on treatment of 
foreign banks working within 
the Russian federation. 

Paris nevertheless insists on 
further guarantees over Rus- 
sian uranium exports beyond 


the planned expiry date of the 
safeguard regime in 1997. Mr 
Juppe is looking for a quotas 
agreement in his Moscow talks 
this week, but EU diplomats 
believe France values an over- 
all deal with Moscow too 
highly to jeopardise it over the 
fine print 

The Ukraine deal, although 
it was reached earlier and for 
that reason alone has con- 
vulsed foreign ministries 
across the European Union, 
still awaits additional agree- 
ments on how to finance the 
complete shutdown of the 
Chernobyl nuclear complex. 

The EU wishes to develop a 
separate policy towards Kiev, 
through food aid, macroeco- 
nomic support and possibly 
very expensive aid to build 
alternative nuclear reactors. 

The potential cost of this, 
estimated at between EcuSOOm 
($580m) and Eculbn. was 
underlined yesterday by Mr 
Douglas Hurd. UK foreign sec- 
retary. who. like his EU col- 
leagues. wants to share the 
cost with the US and Japan. 

“We will have to come back 
to this, particularly on Cherno- 
byl." Mr Hurd said, referring to 
the summit of the Group of 
Seven industrial countries in 
Naples in July. 


Brussels chief draws a line in the sand 

Lionel Barber assesses the reasons for yesterday's outburst by Jacques Delors 


For most of this year, Mr 
Jacques Delors has been as 
quiet as a church mouse. But 
yesterday he confounded those 
who hoped he might be ready 
to leave Brussels quietly after 
10 years as head of the Euro- 
pean fV>mmi.QgMin 

Mr Delors’ outburst against 
Mr Gfinter Rexrodt, the Ger- 
man economics minister and 
champion of deregulation, sig- 
nals he is prepared to fight to 
the last minute over bow to 
strengthen Europe’s competi- 
tiveness without destroying 
the European social market 
modeL 

But the Delors-Rezrodt clash 
is also about power, about how 
far the Commission should 
hold sway over European 


In the past year 
the power of 
Brussels has 
visibly 
diminished 


industrial and social policies. 

Mr Rexrodt, a Free Democrat 
who has one eye on the coming 
German general election, 
believes his campaign for a 
European deregulation initia- 
tive has strong support among 
German business. He wants to 
create a group of indep endent 
experts to root out Euro-legis- 
lation which could barm 
employment and growth. 

The German initiative, 
which has enthusiastic British 
support, drew a withering 
response from Mr Delors at 
yesterday's sessions of Euro- 
pean foreign and finance min- 
isters. He wondered aloud 
whether Mr Rexrodfs real goal 
was to gut the Maastricht trea- 
ty's social chapter; or whether 
he was aware that ministers - 
not the Commission - were 
responsible for passing oner- 
ous legislation in areas such as 
the environment 

Mr Kenneth Clarke. UK 


chancellor of the exchequer, 
retorted that Mr Delors was 
acting like any good bureau- 
crat in defending his territory. 
But that is not the whole story. 

In the past year or so, mainly 
as a result of the debilitating 
struggle to ratify the Maas- 
tricht treaty, the power of the 
Commission diminished 
visibly. So, too, has its role as 
power-broker and umpire 
inside the EU, to the point 
where member states are 
increasingly challenging its 
authority. 

• Last week, France declared 
it was not willing to carry out 
a Commission ruling in favour 
of opening up Orly airport to 
competition. The issue was 
defused at the weekend, but 
only after bilateral UK-French 
negotiations in which Brussels 
played no role. 

• Germany declared it was 
ready to take unila teral action 
against imports of British beef 
because of suspected mad cow 
disease. The threat remains on 
hold. 

• This year. Greece ignored 
Commission warnings (and the 
Treaty of Rome) in slapping a 
trade embargo against the for- 
mer republic of Macedonia. 

• France is leading a bloc of 
EU member states questioning 
the Commission’s “community 
competence" to negotiate trade 
agreements on the part of the 
Twelve. “Suspicion after the 
Gatt trade agreement is at an 
all-time high," says one senior 
Commission official. 

Some observers view these 
challenges as part of a trend of 
“creeping unilateralism" in 
which member states are pur- 
suing their national interests 
aggressively at the expense of 
the common good which the 
Commission is supposed to 
define and represent 

Mr Delors is clearly worried 
that Germany, the most power- 
ful and populous country in 
Europe, may be tempted to stir 
up greater mistrust of the cen- 
tre - either under the guise of 
the Rexrodt initiative, or 
through the concept of “subsid- 


iarity", the code-word for 
devolving decision to the low- 
est natio nal regional or munic- 
ipal level. 

Germany takes over the rota- 
ting presidency from Greece on 
July 1. Chancellor Helmut 
Kohl has already declared his 


determination to “free our- 
selves from the notion that 
everything that has a Euro- 
pean dimension automatically 
falls under the jurisdiction of 
Brussels” and make this a 
presidency priority. 

Mr Delors' aides say they are 


worried about Mr Rexrodt 
more than Mr Kohl; but Mr 
Delors’ intervention yesterday 
still looks very much like a 
pre-emptive strike against the 
incoming German presidency 
ahaad of the European summit 
in Corfu next month. 


Forces defy 
fresh Bosnia 
peace efforts 


By Laura SHber in Belgrade 
and Chrystia Freeland 
in London 

Moslem forces yesterday tried 
to push forward around Tuzla. 
the biggest Bosnian govern- 
ment stronghold in the 
north-east, as an upsurge of 
fighting defied renewed inter- 
national efforts to end the war 
in Bosnia. 

Sarajevo radio said the Bos- 
nian army had advanced on 
Mount Mgjevica. high ground 
overlooking Tuzla. one of six 
UN “sale areas” in Bosnia. The 
radio also said the centre of 
Tuzla and the north-west part 
of the Tuzla airfield came 
under Serb fire. Serbian radio, 
quoting military sources, con- 
firmed heavy fighting in the 
region. The Bosnian army push 
is seen as a move to strengthen 
the land links between Sara- 
jevo. Tuzla and Zenica. the 
three main government strong- 
holds in Bosnia. 

Some European observers 
felt the international communi- 
ty's failure to come out clearly 
in favour of a specific peace 
plan has fuelled the renewed 
fighting. 

In particular, Mr Warren 
Christopher. US secretary of 
state, has been criticised for 
agreeing on Friday to a 'deal 
giving the Moslems and Croats 
51 per cent of the territory and 
then appearing to contradict 
this position on Sunday by 
acknowledging the possibility 
that the Mosiem-Croat Federa- 
tion might win as much as 58 
per cent of the land. 

The Mosiem-Croat offensive 
may also have been encour- 
aged by the US Senate's vote. 


last week, urging the US gov- 
ernment to lift the Bosnian 
anus embargo. .. 

General Sir John Wilsey, 
joint commander of British 
Forces in the former Yugo- 
slavia, told reporters yesterday 
that “uncertain political mes- 
sages make things difficult for 
us on the ground." 

In Belgrade, Mr Vitaly Chur- 
kin, Russia’s special envoy, 
met Serbian president Slobo- 
dan Milosevic and called for 
the urgent implementation of a 
plan, agreed on Friday in 
Geneva at a meeting of the for- 
eign ministers from Russia, the 
US. and the EU. 

Mr Churkin said Mr Milos- 
evic “very strongly supported" 
the immediate cessation or hos- 
tilities. but was leaving it to 
the Bosnian Serbs to decide on 
the other aspects of the plan. 

The agreement calls for a 
four-month ceasefire and for 
the Bosnian Serbs to keep 49 
per cent of the war-torn coun- 
try with the remaining 51 per 
cent allotted to the newly cre- 
ated Moslem Croat federation. 

Mr Nikola Koljevic. 
vice-president of the self-styled 
Serbian state, offered the possi- 
bility that the Serbs may con- 
sider the settlement, although 
Bosnian Serbs have previously 
rejected the deal, demanding 70 
per cent of Bosnia. 

Speaking to a Serbian news- 
paper. he said: “The Serb side 
is ready to change the borders 
jon the basis of the 51:49 split] 
inasmuch as this creates a 
functioning state. As long as 
this would mean that the inter- 
national community would 
consider trading quantity for 
quality." 


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FINANCIAL TIMES TUESDAY MAY IZ tS9S 



NEWS: EUROPE 


A jobless problem that recasts Euro-debate 


By David Buchan in Roubaix 


■ Where Europe isn’t working 



To judge by the 
behaviour of 
other French 
cities, Roubaix 
should be In 
flames by now. 
With 28 per 
cent of its 
workforce job- 
less, it has an 
unemployment 
rate that is 
more than dou- 
EU ROP EAN ble that of 
ELECTIONS other French 
■JHSS 9 and J&. cities and 
towns which saw violent street 
protests this spring against a 
proposed cut in the minimum 
wage to promote youth 
employment 

But this traditional north- 
eastern textile town of 90,000 
has stayed relatively calm, per- 
haps because of the attention 
paid it by the government, 
whose prime minister and inte- 
rior and urban affairs minis- 
ters have all taken care to visit 
it in recent months. 

There is no question that 
unemployment is the predomi- 
nant political issue in Roubaix 
as much in the current cam- 
paign for the European Parlia- 
ment election next month as in 
any local or national polL But 
the broad Euro-debate on 
unemployment, pitting the 
right’s argument in favour of 
ftATiWa pay «wri labour mar - 
kets against the left's emphasis 
on increased training and 
work-sharing through shorter 
hours, is re-cast in Roubaix in 
far more basic terms. 

Before launching into 
debates about more vocational 
training, Roubaix first needs to 
tackle “the problem of the 
more than 30 per cent of its 
kids who leave school at 16 
without being able to read or 
write,” says Mr Jean-Philippe 
Lederq, the head of the town's 
new special employment direo- 


’.Vjc-C, 



Denmark 

Unemployment ot labour force) 


Fiance 

Unemployment {% of labour force) 


G er ma ny 

U nempte y ment 06 of labo u r fame} 


„ ■ . 

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UNEMPLOYMENT UNLIKELY TO HAVE A BIG INFLUENCE ON VOTERS 


The last time Europeans went to the 
polls to elect a new European Parlia- 
ment in. 1989 registered unemploy- 
ment" in the region was nearly 5m 
lower than it is today, writes David 
GoodhartLabour Editor. 

But given the intractability of the 
jobless problem, and the universal 
political commitment to resolving it, 
unemployment may have surpris- 
ingly little impart on voting patterns 


next month. In l9f& unemployment 
was beading down towards the cycli- 
cal low of &3 per cent, reached the 
following year. It is now stabilising 
at a cyclical Ugh of around 11 per 
cent In actual numbers it was then 
about 14.5m and it is now 19m. 

But in most large European Union 
countries the electorate has lived 
with persistent l y high unemployment 
for nearly two decades and any party 


offering a quick-fix solution would 
face a large credibility gap. 

The differences between left and 
right on the issue have became mare 
not less blurred in the past few years. 

The right has tradttianaDy stressed 
labour market de-regulation while 
fbp left has placed more importance 
on active labour market policy and 
macro-economic stimulus. Increas- 
ingly, the policy mix transcends 


these polarities. Where the left has 
been out of office, as in Britain, it has 
been easier to make some rumring on 
the issue. But in France, for example, 
the Socialist party embraced mone- 
tary and fiscal orthodoxy and lived 
with persistently high unemploy- 
ment. If anything Mr Eduard BaQa- 
dnr, the Gaullist p rimp minister, hag 
placed the issue closer to the centre 
af national politics than his predeces- 


torate. 

Equally, before ' getting 
worked up, like the rest of 
France, about changes in the 
so-called Smic minimum wage, 
Roubaix has a more fundamen- 
tal problem. This, says Mr 
Leclerq, Is that an increasing 
number of Roubaisiens simply 
prefer to draw France's basic 
RMI welfare premium, rather 
than seek a full- time job (on 
the Smic or not). 

At FFr2,400 (£281) a month. 


the RMT is less than half the 
Smic, but by doing some work 
“on the black”, they can do 
just as well as Smic-eamers 
with half the effort (If some- 
one refuses a job offer, undo' 
French law they cannot have 
their welfare payments or fam- 
ily allowances docked, Mr 
Lederq c omplains ) 

“With 4,000 on welfare and 
11,000 people on unemploy- 
ment dole, Roubaix, relative to 
its si2e. has the worst situation 


in France” says Mr Lederq. 
Jobs- exist in the town -46,000 
in all - but most of them go to 
people from the surrounding 
area, because Roubaisiens 
don't have adequate skins or 
interest 

Mr Lederq points to Rou- 
bzdx's textile industry, given a 
new lease of life by having its 
products sold by the mafl order 
industry, for which Roubaix is 
the centre. 

"The problem is that the 


mail order companies want 
people with computer skills, 
while the tailoring companies 
are now largely staffed by peo- 
ple from southeast Ada, like 
Thailand or Cambodia.” Young 
Roubaisiens “just don’t want 
to re-enter a trade -tex- 
tiles - from which their par- 
ents were made redundant”, 
says Mr Lederq- *T know, 
because we have set up two 
workshops far apprentices and 
can't fill all the places.” 


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mm 


More troubling to Mr Lederq 
is that of the 600 new low- 
skilled jobs created in the town 
each year, Roubaisiens fill only 
about 200. “Even jobs like 
being a cleaner or a building, 
parking or garden attendant; 
require people being able to 
read instructions and being 
able to move around the city 
transport city system if need 
be." 

But in coping with its huge 
unemployment, Roubaix has 
Knmethmfl r older than France’s 
Fifth Republic or the European 
Union on which to fall back - a 
rich, almost medieval tradition 
of private associations whose 
members look after each other. 
The town has some 800 associa- 
tions, which have spread to 
embrace many in the large 
community of Maghreb origin; 
after the 1958 devaluation of 
the franc discouraged Belgians 
from coining, Roubaix almost 
literally sent out the boats to 
north Africa far people to work 
its textile mills. 

“These associations start 
with some leisure activity, 
often sporting, but frequently 
then go on to organise post- 
school education or homework* 
sessions,” says Mr Mohammed 
Benguessi, deputy director of 
the Foyer de Jeunes Travail- 
leurs. 

The Foyer also tries to place 
young people in their first job, 
not an easy task, says Mr Ben- 


Soares argues 
the case for 


greater powers 



Mario Soares, 
69, Socialist 
president of 
Portugal since 
1986. Prime 
QUESTIONS minister for 
ON EUROPE three periods- 
between 1976 and 1985, he was 
the chief architect of Portugal’s 
successful transition from dicta- 
torship to democracy. 

Do yon believe the European 
parliament should be given 
greater powers? Yes. We most 
work towards the creation of a 
European constitution and 
true European citizenship. 
This wiD help ensure that the 
people of Europe become 
aware that they have the abil- 
ity to influence their own 
Mure as Europeans. 

Where should the European 
Union place its greatest eco- 
nomic and social priorities 
during the next three or four 
years? The priorities are to 
advance to economic and mon- 
etary union with an effective 
European Monetary Institute. 
We should not forget the Euro* 
pean social charter. Progress in 
the economic and political 
fields must be matched by 
advances in social affairs. 

Is there a danger of a two- 
speed Europe? This is unac- 
ceptable. I see Europe as a 
broad space for solidarity 
between people, regions and 
countries. The existing 
inequalities, aggravated by an 
unfavourable economic cli- 
mate, cannot be used as an pre- 
text for creating a two-speed 
Europe. 

Should the EU give priority 
to deepening integration 
among the 12 members or to 
widening it towards eastern 
Europe? Both policies are 
equally necessary. There can- 
not be true broadening without 

deepening. The EU should 
adopt policies aimed at eventu- 
ally admitting the countries of 
central and eastern Europe as 
full members. 



Soares: broader and deeper 


Are you worried that Ger- 
man unification and a shift In 
the Eli’s centre of gravity to 
the east and north could harm 
Portugal's interests? There is 
an unquestionable possibility 
of this happening. The- EU 
should take steps to avoid this 
development 

Will assistance for poorer 
EU states inevitably have to be 
cut after the expiry of the 
1993-99 package? It is impor- 
tant, necessary and urgent to 
supply aid to central and east- 
ern Europe. But this should 
not be done at the price of 
reducing aid to southern Euro- 
pean countries, which are full 
members of the - European 
Union. Aid should continue for 
as long as inequalities 
between countries justify 
it 

Ik European monetary nufau 
In 1999 still practicable? 
Europe has lately been gripped 
by pessimism over the poten- 
tial of the European project 
Some voices' describe it as uto- 
pian. I do not share this opin- 
ion. Only by pressing forward 
towards full European union, 
with realism and resolution, 
will we overcome our difficul- 
ties. 


Italy Ijai 
no timet; 
to catcb 
breath 


«r. 


By Robert Graham** Rom* 

-t* 


For Italy's 
opposition parties, ton Ne- 
pean elections come af « 
ward time. The country 
catching its breath aft q? tfe 
March general elections 
produced a landslides 
far Mr Silvio Berioscc ‘ 

In as prime minister kg&Msk 
at the brim of tin 
Freedom Alliance;' 

By June 12, toe Befiasceai 


sons. In Spain, the Socialist Workers’ 
party has lived with the highest 
unemployment of any of the larger 
EU countries, «nd the number is not 
expected to peak until next year. 

In Germany the unemployment total 
aeons to have peaked at just over 4m, 
but that figure disguises the fact that 
many people have dropped out of the 
labour market and many others are 
on temporary make- work schemes. 


guessl who meets a certain 
amount of anti-Maghreb preju- 
dice ffom employers. 

In general, Roubaisiens rue- 
fully agree with the Defers 
White Paper’s conclusion that 
“there is no miracle cure” to 
unemployment. They appear to 
expect little possible improve- 
ment as a result of the Euro- 
elections, or indeed any other 
election, pinning more hope on 
their own fecal efforts. 

But there is also a specifi- 
cally French reason why Rou- 
baisiens and their co-citizens 
are apathetic about the Euro- 
elections. It lies in the 
“national list” system France 
still uses for Euro-elections, 
whereby the country is consid- 
ered as just (me big constitu- 
ency represented by 87 Euro- 
deputies who get elected 
according to the relative tally 
that their party amasses 
nation-wide. 

It Is a pure system; unlike 
regional or single-member con- 
stituency systems, no votes are 
“wasted", but nor is there any 
geographic identification 
between a French Euro-MP and 
his or her electorate. So, Rou- 
baix has no Euro-MP it can call 
its own or complain to. 

All French parties now 
recognise this as a weakness 
that has compounded the sense 
of remoteness of their Euro- 
MPs from their voters, and me 
that needs changing. 


than a month in omce -“as- 
suming it remains in-jpiace 
after this week’s parfiamfehiary 
vote aF confidence. The opposi- 
tion parties, for their part tear 
they will have top httie time to 
reassess their perfqjmanfeeaad 
make a fresh impact cm tee 
electorate. 

The election, will; be' more 
about personalities. “thaa 
Issues. It seems likely to result 
in a general emtorsementeTMr 
Berlusconi, although' notfifces- 
sarQy of his generally sceptical 
views about the European 
Union. According to latest 
opinion polls, his Forza Safia 
movement wftt obtain 25 per 
cent or more of the vote - 
almost five percentage prints 
more than In March. 

Mr Berlusconi is headfag the 
Fozza Italia list in. ah five of 
the electoral colleges into 
which Italy is divided for the 
European elections. This prac- 
tice is bring followed by all the 
main political leaden. Of tee 
i,33i candidates far the 87 
seats, 186 are standing to more 
than one electoral college. 

Although .his position s 
prime minister would rale out 
his attendance at the Stras- 
bourg assembly, Mr Berlusconi 
hopes his aura of popularity 
will lend a general glow to 
Forza I talia. Only five mouths 
rid, it flaminfc yet be considered 
a fully fledged party,' and has 
not even held a constituent 
congress. Though better 
funded than any other party, 
its or ganisation ' is confused. 

The main purpose of Forza _ 
Italia’s 13,000 supporters’ clubs 
around the country was to get 
Mr Berlusconi elected prime 
minister. Their function in tee 
European elections is less 
dear. 

Mr Berlusconi will be helped 
by favourable coverage pro 
vided by his own Fininvest 
television network, as well as 
by the increasingly obsequious 
position takm by the state-run 
RAI networks. 

Mr Berlusconi’s position 
gives rise to a dear risk of 
conflict of interest Fmmvesfs 
advertising agency recently 
sent all parliamentary parties 
a faxed letter offering advert^ 
tag spots for the European 
nlenHnng nn Finin vfisl's three 

channels. In addition to the 
name of the advertising 
agency. PubBtaHta, the papa 
bearing the message was 
headed by the name Forza 
Italia - an oversight which 
caused a chorus of protest 

Forza Italia’s ga ins are likely 
to be at the expense of toe an- 
tra — flu* va rio u s fragmented 
parts of the Christian Demo- 
crats which were dissolved in 
the ron-up to the March elec- 
tions. • 

Apart from the score attained 
by Forza Italia; the most close- 
ly-watched development will 
be the vote obtained by the 
populist Northern League of 
Mr Umberto BossL The League 
emerged from the March polls 
with the largest number of dep- 
uties within the Freedom Affi- 
ance, thanks to its alliance 
with Forza Italia. 

Aware that it is competwc 
far votes with Forza Italia m 
the north, the League has cho- 
sen to fight these elections 
alone, fielding its best known 
local naroeR , including 
mayors of major northern 
cities like Alessandria a® 1 

Milan. -.- t 

In contrast to other part*®- 
which are often putting W 
candidates who failed to w® 







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FINANCIAL TIMES TUESDAY MAY 17 1994 



NEWS: INTERNATIONAL 



» 


Tax report shows wealthiest are recovering from recession 


Indonesian 


Japan’s rich raise earnings 


By WHEam Dawkins in Tokyo 

A rise last year in the number or Japan's 
top income tax payers suggests that the 
rich may be starting to recover from the 
ravages of recession. 

According to the National Tax Adminis- 
tration Agency, 128,000 people paid more 
than YiOm (£65,700) in tax In 1993, some 
3,000 more than in the previous year, when 
the total fell for the first time, from 175,000 
in 1991. 

The figure may not be a completely 
accurate guide to wealth, given the highly 
publicised tax evasion cases to have gone 
through the courts recently, like that of 
Mr Shin Kanemaru, former political godfa- 
ther of the Liberal Democratic party. But 
it does at least indicate that the richest of 
those who do care to declare their reve- 
nues earned more in 1993. 

Japan’s top taxpayer is Mr Yasuo Takei, 
chairman of the Takefuji consumer 


finance group, a classic rags-to-riches 
entrepreneur, who paid Y4.3bn in personal 
taxes last year. Much of that was in capi- 
tal gains from selling shares in his com- 
pany, to build up a core shareholding 
ahead of a listing, Mr Takei explained yes- 
terday. Mr Takei, 64, started his career 
working in pachinko parlours and selling 
vegetables in the streets, before founding 
Takeffiji in 1968. 

The top 10 include a selection of 
self- m ade business people and their rela- 
tives, including a race-horse breeder, a 
computer game producer and the owner of 
a video rentals company. 

Senior executives of Japan’s industrial 
establishment held relatively modest rank- 
ings, such as Mr Sho Ichiro Toyoda, chair- 
man of Toyota, Japan's largest car maker, 
who came in a mere 92nd, with a Y330m 
tax bill 

The annual list is a rare guide to the 
identity of Japan's rich, who are otherwise 


hard to spot given that only gangsters and 
the few property tycoons left feel it 
socially acceptable to flaunt wealth. 

A record 102 MPs are to be found among 
the YlOm-plus taxpayers, topped by Mr 
Yasu Kano, a member of the opposition 
LDP, with a Y579m tax bilL 

Mr Ichiro Ozawa, the government’s 
backroom power broker, put in a surprise 
appearance as Japan's seventh most taxed 
politician, but a long way down the overall 
national rankings. 

He paid Y48.6m in 1993, three times as 
much as the previous year, much of it on 
the Yl05m royalties on his new book. 

Blueprint for Building a New Japan, 
which sets out Mr Ozawa’s argument for 
reforming the political system and taking 
a more prominent role in international 
affairs, has sold 700,000 copies since publi- 
cation last May. It just goes to show, Mr 
Ozawa commented yesterday, that people 
have high hopes for reform. 


Tokyo banks tire of Euro-mess 

Emiko Terazono explains the resistance to European loans 


J apanese banks are exper- 
iencing a bad case of Euro- 
phobta. “We're all saying 
anything which starts with 
'Euro' ends up in a mess,” says 
an official of a leading Japa- 
nese bank. 

Large European projects 
such as Eurotunnel and Euro 
Disney have become big disap- 
pointments for the Japanese 
banks, which are alarmed by 
the continuous refinancing 
requests. Among the largest 
creditors in the projects, they 
now perceive that what they 
had expected to be one-off fin- 
ancing programmes have 
turned into commitments to 
chum oat endless amounts of 
money. 

Since the burst of the eco- 
nomic “bubble" of the late 
1980s, Japanese banks have 
been generally cutting their 
international operations and 
their exposure to overseas 
investments. 

Capital flows. from Japan to 
the US and Europe have 
nhangpri sharply. According to 
Sanwa Research Institute, the 
research arm of the commer- 
cial hank , average annual Jap- 
anese investment of the past 
two years to the US has fallen 
by 48.6 per cent from 1988 and 
1989 levels to $29.7bn (£20Bbn), 


Japan 

Capital outflows ($bn) 



O ' 1 1 1— J ' 

198ft 89 90 91 92 

SouctEDKBM&MMaby of finance . 

while it has dropped 30.5 per 
cent to $4L2bn in Europe. 

The sluggish domestic econ- 
omy and the sharp fell in loan 
growth have led the banks to 
turn instead to tbe fast-grow- 
ing Asian economies. Capital 
flows to southeast Asia have 
grown more than 20 per from 
the late 1980s to $7.1 bn in 
1991-92. 

The rise in the yen has 
increased direct investment 
into Asia by Japanese manu- 
facturers and companies, and 
h anks have increased exposure 
in the region. Investment in 
the south-east Asian countries 
has started to slow during the 


past year, while growth in 
China has drawn investments 
from Japanese manufacturers 
and banks. “We don't get a feel 
of what's really going on in 
Europe as we do with Hong 
Kong, c hina or Singapore,” 
says one banker. 

The prolonged haggling over 
Euro Disney’s financial 
restructuring package, and the 
tensions over the £700m refi- 
nancing efforts of Eurotunnel, 
which needs new funds 
because of delays, have 
stemmed from the banks’ un- 
Japanese show of resistance. 

Last month they grudgingly 
agreed to help Euro Disney 
reduce its FFr21bn (£2.45bn) 
debt. But earlier in the year, 
some of them appeared to have 
already unloaded their equity 
holdings because of pessimism 
over the project 

The lack of enthusiasm in 
large Euro-projects, say the 
banks, is partly due to the 
abs e n ce of traditional and emo- 
tional ties to the region. Pro- 
jects like Eurotunnel and Euro 
Disney are providing services 
which are not exportable, and 
have little commercial rele- 
vance outside Europe. 

“The hanks feel that they do 
not have the level of control 
they do in Asia, where Japa- 


nese companies wield influ- 
ence." says Mr Mark Faulkner, 
banking strategist at brokers 
SG Warburg in Tokyo. The 
lack of any political or other 
business benefits have meant 
decisions over the European 
projects have become purely 

mmm pr rial 

Japanese banks have gradu- 
ally started to Increase lending 
to US companies, which are 
seeking fends as the economy 
recovers. The large refinancing 
programmes for blue chip US 
companies have started to 
attract Japanese lenders. For 
example, the banks played a 
leading role in International 
Business Machine’s $10bn loan 
syndicate last November. 

While some h anking officials 
claim that they are not deliber- 
ately avoiding European deals 
and would still actively partici- 
pate in leading European fin- 
ancings, the Euro projects 
have left a bad aftertaste. 

Suggestions that central 
bankers and the government 
would use pressure to force the 
refinancing have left many 
banks especially angry. “If the 
European governments t hink 
it's such an important project, 
they should use public funds," 
says a Japanese b anking offl- 
dal 


bank loan 

trial 

begins 

A former official of an 
Indonesian state bank went on 
trial yesterday in a massive 
loan scandal that has pro- 
voked a public outcry and stu- 
dent demonstrations question- 
ing the role of senior officials 
in the ease, AP reports from 
Jakarta. 

Mr Maman Snparman, 48, 
former manager of the Jakarta 
branch of the state-run Bank 
Pembangunan Indonesia, was 
charged with corruption and 
abuse of power. 

The loss to the state from an 
initial $430m (£287m) loan In 
1991 to ethnic Chinese busi- 
nessman Mr Eddy Tansil by 
the bank has swelled to 
$448.8m, including unpaid 
interest, the Central Jakarta 
Court was told. Newspapers 
put the amount as high as 
S650ra. 

Mr Mohammed Yamin, state 
prosecutor, told the South Jak- 
arta District Court the bank 
official received bribes of 
256m rupiahs (£79,000) from 
Mr Tansll for helping to 
arrange the credit 

He said Mr Snparman ille- 
gally converted a letter of 
credit submitted by Mr Tansil. 
Prosecutors have said tbe aim 
was to permit Mr Tansil to use 
the loan money without in fact 
buying machinery for which it 
was intended. If convicted, Mr 
Snparman wo old face between 
20 years and life in prison. 

Mr Tansil, 40, wait on trial 
separately last week. He is 
charged, among other things, 
with diverting part of the loan 
for his personal use. 

On Saturday, Mr Gant 
Djemat, who leads Mr TansiTs 
four-lawyer defence team, told 
the court that the charges 
should be dismissed and that 
the case should be treated 
under civil law, not criminal 
law. Mr Djemat acknowledged, 
however, that Us client feces 
difficulties in repaying the 
loan. 

Thousands of students dem- 
onstrated in several large 
dries last month, demanding 
resignation of two senior offi- 
cials ova- the loon case. Some 
called for interrogation of 
President Suharto’s son. Mr 
Hutomo M andalap ntra 


Sumatran town lives 


in thrall to gangsters 

Victor Mallet on military-licensed rackets 


A t first glance, it is hard 
to see why the planta- 
tion managers, traders 
and factory owners who make 
Medan their home keep confid- 
ing to visitors that the place is 
a throwback to the Wild West, 
“a bit of a cowboy town". 

Busy and polluted, with its 
uneasy mix of Dutch colonial 
architecture. Chinese shop 
houses and new shopping 
malls of concrete and glass, the 
largest city in the Indonesian 
island of Sumatra looks like a 
typical product of Asia's indus- 
trial revolution. 

There is nothing very 
unusual about the illegal 
brothels, the fights in bars, or 
the policemen who stop cars 
outside the town, accept Rp500 
bribes (about 25 US cents), and 
wave the cars on without even 
a pretence of looking at the 
drivers’ documents. 

What is special about Medan, 
according to residents, is the 
size and strength of tbe gangs 
running the town's protection 
rackets. 

Foreigners rarely come into 
contact with the gangs because 
their main targets for extortion 
are the ethnic Chinese busi- 
nessmen who control most of 
the town’s commerce and 
industry. 

Yet the two largest gangs are 
believed to have hundreds of 
members, are unofficially 
licensed by factions in the 
army (the dominant force in 
Indonesian politics), and are 
implicated in almost every sig- 
nificant event that occurs in 
Medan. 

Recently, for example, gang- 
sters took sides in a violent 
dispute between members of 
the wealthy Pardede family 
Over the managpwiwit of the 
Danau Toba, Medan’s largest 
hotel. People trying to play 
t ennis mi the hotel courts were 
startled to see groups of men 
fighting in the car park; one of 
the Parti edes, a family of indig- 
enous Bataks. was stabbed in 
the lobby and the hotel was 
closed pending resolution of 
the dispute. 

The gangs are also accused 
by ethnic Chinese businessmen 
and trade unionists of acting 
as agents provocateurs during 



MALAYSIA 


SINGAPORE 

> BORNEO 






JAVA 

INDONESIA 


the April workers' demonstra- 
tions in support of higher pay. 
The demonstrations degener- 
ated into anti-Chinese rioting; 
one Chinese factory owner was 
killed. 

Mr Mucbtar Pakpahan, 
leader of the Indonesian Wel- 
fare Labour Union, says he bas 
evidence the gang members 
were paid to cause trouble in 
Medan to discredit the inde- 
pendent trade union move- 
ment. Mr Pakpahan, who is 
from Medan, calls the gang 
members “gangsters like the 
Mafia in Sicily". 

The bread-and-butter busi- 
ness of the gangs is protection 
- threatening violence against 
a business or a person and tak- 
ing money in exchange for not 
carrying out the threat "They 
make their money really by 
hassling downtown mer- 
chants," says one foreign resi- 
dent of Medan. 

I t is alleged that officials 
tolerate, even encourage, 
the practice, which is seen 
as a form of informal taxation 
by tbe locals of the rich ethnic 
Chinese minority. “It’s a way 
of getting money off the Chi- 
nese,” says one Indonesian. 
“It's easier to pay a gang than 
the military." 

The two largest gangs oper- 
ating in Medan are Ikatan 
Pemuda Karya (Association of 
Working Youth) and Pemuda 
Pancasila (Pancasila Youth) - 
Pancaslla is the official state 
philosophy of humanism, 
nationalism and belief in God. 

“Pemuda Pancasila is a 
nationwide organisation,” says 
one Medan resident, “but in 
northern Sumatra it has long 


had a history of doing dirty 
work for the military in return 
for being given a free hand in 
illegal activities such as gam- 
bling and prostitution." 

The IPK was established in 
the 1980s as a counterweight to 
the PP, which the authorities 
feared was becoming too pow- 
erful, and now the 1FK is said 
to have the upper hand. 

One of tbe curious features 
of gang leaders is that many of 
the locals in Sumatra believe 
they have magical powers. 
Both Mr Olo Pangabean, the 
Qatak who heads the IPK, and 
Mr Azwanni Wan. a senior 
Acehnese figure in the PP. are 
regarded as magicians; rumour 
has it that, when Mr Azwanni 
Wan was beaten in captivity 
by a soldier, the soldier went 
home to find his wife inflicted 
with identical injuries. 

Life can be good for gang- 
sters, even those who spent 
only a couple of years at 
school. “A gang leader can live 
like a businessman," says one 
of Mr Azwanni Wan's associ- 
ates. pointing to his friend's 
imposing, 14-room house. “He 
runs protection for more than 
20 theatres and shopping cen- 
tres." 

Inside the house there are 
pictures of Mr Azwanni Wan 
meeting the mayor and wear- 
ing a white suit and white 
shoes, but tbe man himself is 
not there. Found guilty of sup- 
porting the banned Aceh sepa- 
ratist movement - an accusa- 
tion doubtless endorsed by 
rival gangs - he is serving a 
13-year Jail sentence. 

His wife, Ms Rosmaini Rang- 
kuti, a singer, makes some 
money in the meantime by let- 
ting out the upper rooms of the 
house. She says her husband 
lives in style in prison and 
could be free in four years to 
take frill control of his busi- 
ness. 

Since being in prison, the 45- 
year-old Mr Azwanni Wan has 
started saying his Moslem 
prayers again after a hiatus of 
two decades, but his associates 
say he still regards four things 
in life as particularly impor- 
tant: money, friends, magic 
and - last but not least - pow- 
erful connections. 



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FINANCIAL TIMES TUESDAY MAY 17 199* 


Syria praises ‘keen’ 
US peace efforts 


NEWS: INTERNATIONAL 


Regional divide marks Malawi poll 

Lack of policy differences has changed the contest, writes Nick Young 


By Hark Mchohon 
ki Damascus 

Syria yesterday welcomed 
“intensified" US efforts to bro- 
ker progress In peace talks 
with Israel after Ur Warren 
Christopher, US secretary of 
state, delayed his departure 
from Damascus for two 
unsche duled rounds of 
with the Syrian leadership, 
before carrying the results of 
his discussions to Israel. 

Praise for Mr Christopher’s 
“keen efforts" to bridge the gap 
between the two sides, carried 
an the state-run Syria radio, 
was virtually the sole official 
comment on the progress of his 
two days of talks in Damascus. 
US officials would say only 
that Mr Christopher was “inch- 
ing" the talks forward. 

However, the secrecy, com- 
bined with Mr Christopher's 
evident willingness to tailor 
the present mini-shuttle. Ills 
second in two weeks, to the 
course of discussions, suggests 
the secretary of state is 
exchanging detailed and spe- 
cific proposals between the two 


sides, and is determined to 
achieve tangible progress. 

The two unexpected rounds 
of talks with Mr Farouk al-Sha- 
raa, Syria's foreign minister, 
were punctuated by trips by 
Mr Christopher to the US 
embassy in Damascus, where 
he is understood to have called 
Washington. Yesterday's talks 
followed a four-hour discussion 
on Sunday ni gh t with Mr Hafez 
al-Assad, the Syrian president 

Mr Christopher is under- 
stood to have presented a 
series of proposals to Mr at- 
Sharaa and obtained a 
response before flying on to 
Israel. He went straight Into 
talks with the Israeli leader- 
ship last night anti US tifflriaia 
said he had Left open the possi- 
bility of returning to Damascus 
tomorrow after today's short, 
symbolic trip to Jericho. 

Though no details* of the 
talks have emerged, Tishreen, 
the state newspaper, yfesterday 
again indicated an apparent 
Syrian softening on its previ- 
ous demand for an “immedi- 
ate" withdrawal of Israeli 
farces from the Golan Heights. 


In a front-page comment it 
said Israel must offer a “fan 
withdrawal" from the Heights 
according to a “speedy time- 
table". Israel is understood to 
have offered a three-stage with- 
drawal over eight years - a 
timetable Syria 1ms rejected - 
in exchange for Syrian pledges 
to establish “fall peace". 

Al-Hayat, the London-based 
newspaper, meanwhile quoted 
anonymous Syrian officials as 
saying Mr Assad had presented 
a five-point schedule for prog- 
ress on the peace talks. This is 
reported to have begun with 
Israel anmiiung its parliamen- 
tary resolution annexing the 

flnifln, and offered as a final 

phase Syrian undertakings to 
normalise political and eco- 
nomic relations with Tkt ?p1 

The newspaper said Mr 
Christopher was also aimfap 
daring his present tour to win 
agreement from both sides to 
establish a joint Israeh-Syrian 
military committee to decide 
on mutually acceptable 
security measures on the 
Golan and post-withdrawal 
borders. 


Just hours after Israelis evacuate notorious jail . . 

Gaza prison inmates 
relive horror of torture 


By Julian Ozanne in Gaza City 

Palestinian inmates of the 
notorious Gaza prison, forced 
by Israeli soldiers to wear dirty 
canvas hoods over their heads, 
knew the geography of the jail 
by names which captured their 
torment: “The Slaughter- 
house", “The Refrigerator”, 
and “The Bus”. 

Yesterday, hours after Israel 
quietly evacuated the prison in 
the middle of the ni g ht, several 
emotional ex-political prisoners 
swept through the corridors, 
spitting on freshly painted 
walls, hanging doors, cursing 
Jews and reliving the painful 
experiences of their confine- 
ment 

One row of murky, tiny cells 
were known by detainees as 
“The twenties" after their 
numbers. Here, in claustropho- 
bic 9ft by 5ft cells, up to six 
handcuffed prisoners awaiting 
interrogation had to sleep with 
their backs on the floor and 
their legs resting on the walls 
for several days. 

“There were no windows and 
you never knew what time of 
the day it was. Even the smell 
was a horrible form of tor- 
ture," said Mr Taller Shriteh, a 
Gaza-based journalist who 


spent 38 days inside the prison 
for having a fox marfiinp fa ins 
house which belonged to a 
lpfldwr of Hie extremist Uamaa 
Tdamir Baaafamwi Movement. 

Upstairs Mr Shriteh showed 
journalists “the bus”, where 
blindfolded prisoners were 
seated in long rows on small 
children’s chairs fcfr days 
waiting to be interrogated by 
Israeli Shin Bet intelligence 
agents. “You could hear people 
screaming and crying as they 
were beaten behind these walls 
in the slaughterhouse and 
everybody was very scared.” 

At another set of windowless 
rooms with just a small round 
ventilation hole fa the root Mr 
Shriteh said Israeli officers 
would inject freezing air dur- 
ing the chilly winter. 

Before slipping out of the 
prison at Sam yesterday Israel 
whitewashed the building and 
broke down walls between 
cells to conceal the cramped 
living conditions. 

The prison was part of a 
larger complex of buildings 
which included Israel’s mili- 
tary headquarters and func- 
tioned as a nerve centre of 
more than a quarter century of 
occupation. 

Before the 1967 Arab-Israeli 


war the compound had served 
as an Egyptian prison and 
headquarters, and was known 
as “The Palace". One room still 
had the rUSty riming and trap- 
door apparatus of an execution 
chamber. 

Exhausted Palestinian sol- 
diers from the Egyptian-based 
Ain Jalut brigades bedded 
down in rooms which just 24 
hours ago had housed young 
Israeli soldiers. 

Hundreds of residents 
thronged outside the prison 
and pressed up against the 
gates to ask whether their rela- 
tives were among newly 
arrived Palestinian policemen. 
Palestinian security officers 
had difficulty holding back the 
youths as tempers flared. 

One teenager who was being 
questioned by plain-clothes 
security staff threatened that a 
new civil war would erupt if 
the policemen did not respect 
the “shabab* - the youths who 
sustained the seven-year inti- 
fada or uprising. 

Israel said yesterday it would 
complete its withdrawal of the 
Gaza Strip fa time for an offi- 
cial hand-over ceremony today, 
less than two weeks after sign- 
ing the Palestinian self-rule 
accord fa Cairo. 


Correction 

Kazakh oil 
pipeline 

Because of a computer 
transmission error the World 
Bank was incorrectly given as 
the source of a report on a pro- 
posed Kazakh oil pipeline 
quoted fa an FT article about 
delays to the Tengiz oil project 
published on May 13. The 
source was actually a report by 
Oxford Analytics. 


Pakistan decides to switch 
to a two-day weekend 

Pakistan said yesterday it would switch to a two-day weekend on 
Friday and Saturday from next month, reversing the practice of 
observing a one-day break on Friday only, Farhan Bokhari 
reports from Islamabad. 

Mr Khalid Kharal. the information minister, told a press confer- 
ence that the change would save up to SlOOm (£66m) a year in 
power, fuel and transport costs. The government also said it 
would introduce daylight saving time to be able to increase work 
hours during the winter. 

The change comes as Pakistan is struggling with me of its 
most difficult power shortages this year. 


N early half Malawi’s 
children are stunted 
by malnutrition, 
according to the governments 
own figures. Seven out of ten 
women cannot read. Nearly 
half a miTHrai famili es live (HV 
fa rina of thaw an 8CTB (l6SS 

than fl.Bha) and earn less than 
$50 a year in cash and kind. 

This is the grim reality of 
the “least developed” tag con- 
ferred by the UN on a country 
that ranks among the 15 poor- 
est in the world. 

It is a reality that has 
received little attention on the 
husting s during Malawi’s first 
multi-party election campaign, 
because the contenders barely 
differ on what to do about it 
Yesterday Malawi’s parlia- 
ment approved an inter im con- 
stitution cm the eve of today’s 
parliamentar y and presential 
elections that many analysts 
believe will bring an end to 30 
years of dfurntnatipp by the ail- 
ing President Kamuzu Has- 
tings Banda, believed to be in 
his mid-90s, and his Malawi 
Congress party. 

The interim constitution cur- 
tails thp sweeping and abso lut e 
powers enjoyed by President 
Banda ami was worked out by 
an all-party panri earlier rtife 
year after opposition parties, 
harmed gface 1966 in a crack- 
down on dissent, were legal- 
ised. 

President Banda’s grip on 
power was evident when the 
MCP chose him as its presiden- 
tial candidate, despite his infir- 
mity. But public impatience 
with his dictatorial ways have 
showed up in the final days of 
the camp ai g n , when his rallies 
have drawn smaller numbers 
of supporters than those of the 
opposition. 

A small, land-locked country 
with negligible industry and 
an overwhelmingly rural popu- 
lation, Malawi has relied since 
independence in 1964 <m rain- 
fed subsistence agriculture and 
cash-crops: tobacco, tea and 
sugar. Tins will not cfaangB in 
the short term, although diver- 
sification into low-volume, 
high-value crops is being 
encouraged. 

In 1990, Mr Banda’s govern- 
ment adopted a “growth 
through poverty reduction” 
strategy of allowing smallhold- 
ers a share in the lucrative. 


Malawi: thirty years of Banda 



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Mulnzi: votes in the south 

export market for Barley 
tobacco, previously dominated 
by large estates. Gradually the 
economy has been liberalised 
thought the reduction of 
import barriers, divestment 
and privatisation of para-sta- 
tais and the lifting of foreign 
exchange controls. 

All of this, the government 
believes, will enhance effi- 
ciency, boost exports and 
attract foreign capital. The 
opposition agrees. 

Two years ago, when trade 
unionist Chakufwa Chihana, 
leade r of the opposi ti on Alli- 
ance for Democracy (Afoul), 
was Imprisoned for bis advo- 
cacy of political pluralism ar) d 


(K of school ago poptMfcn) 
■4o: _ 

f Squkk WbSO Bank - 


donors imposed an aid 
embargo to press for “good 
governance”, political change 
seemed inevitable and Mr Chi- 

Tumn the Wmllact man to tala 

the hplm 

Now President Banda’s MCP 
has accepted change, albeit 
erudeinsdv. and is struggling 
to graft a new, democratic 
identity an to its “flour Corner- 
stones" of Unity, Obedience, 
Discipline ^md Loyalty. 

One fs that Mr 

(Unhang has lost the p olitical 

initiative and probably, with it, 
his chances of the presidency. 
For lade of policy differences 
has, for many voters, tamed 
the election into a contest 
between the regions. 

Aford is associated with the 
north, the MCP with the cen- 
tre , and Mr B a frflf Muluzi’s 
United Democratic Front with 
the south. If people vote along 
regional tines, Mr Muhm will 
win, because the south is the 
most populous. 

Ethnically com pter re gional 

distinctions were embedded in 
the early colonial period when 
British missinnari *** developed 
flip best srhqnfing in the north, 

and consolidated the south’s 
commercial orientation, which 
Itself stemmed from early Arab 
influence. 

Censuses in the Banda era 
did not acknowledge tribal dif- 
ferences, merely div iding the 
population into Africans, 

Asians and a diminishing nnm - 



Karatseu Bandi 


flftMatacHonirJnkrfodi 

EBgfeta voters . •. Vi*.-.-; 

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for wpandsd 17 7 te a t pM temwtt 
MtenpotBas: .'.-V; 

MataM C o og ra as Patty .(MCP? 
fed by Prasktant Hastings Banda 

tMMDafMorafenoakM^' ' * ' 

jedbytaninttamipBaltaiArfmd 
A lan oe Far P n oc ra c y •* v > 

led by (rate tffteoW Chakufoa Oftwre 
Malawi Damocmfc Are****** • ' •. * ;V V* • 
lad by poODcai scientist Karoiepo Mfcja V'Vv , 

Tha leaders of the tour main partis*.' .- 
ora starctag In Iba prastdsntirf pot 

Rasulteaxpaatad on Thursday V\ 

New head of stata and gowusiwe 

to be sworn fc on May 2? ' ' • : 


bar of Europeans. Yet the 
north-sonth divide has 
remained marked with persis- 
tent jockeying for regional 
advantage. 

When President Banda was 
invited bade to Malawi in 1958 
to lead the independence move- 
ment, after many years in the 
US, Britain, and fihana, he, as 
a native of the centre, was the 
compromise candidate between 
better-known contenders from 
north and south. Since then he 
has favoured and developed 
the centre, buQdfag a new capi- 
tal city there and making its 
language, Chichewa, an offi- 
cial. national language along- 
side En glish 

Mr Chiba™ could probahly 
have transcended the regional 
divide by endorsing the wage 
demands of striking private 
and public sector woxkers who 
brought the country to a stand- 
still last September. 

But his “trade unionist” 
label is deceptive. If he was 
ever drawn to “African social- 
ism”, Mr Chihana is no longer. 
He not only embraces the mar- 
ket but is rammttted to an aus- 
terity period to check the infla- 
tionary pressures of 
devaluation, Aford’s political 
secretary and chief ideologue. 
Mr Mapopa Chipeta, identifies 
the future goal as “developing 
a dynamic, indigenous, capital* 
ist class”. 

Such talk echoes the first 
days of African independence. 


reflecting the extrat to which 
economic power in Malawi has 
remained in the hands of Prest 
rimrt Banda and the family of 
his consort, “Mama* Cecilia 
Kadzamira, through their own- 
ership of the enormous Press 
Group of companies, long man- 
aged by Brfflah and South Afri- 
can expatriates. ■ 

That capitalism needs popu- 
larising Africamsing is 
also exactly what Mr Muluzi 
and other UDF leaders believe. 
Moreover, several of than, as 
medium-scale entrepreneurs 
frustrated by Mr Banda’s grip 
on the economy, can convinc- 
ingly claim to be prototypes of 
the new capitalist 
It is this class which will 
most clearly benefit from eco- 
nomic liberalisation in MalawL 
Mr Muluzi, as representative of 
it and of the south, seems most 
likely to take the presidency, 
particularly if memories of 
repression obliterate the MCP 
vote in the centre, and despite 
his own long association with 
the MCP in foe past 
But any new government 
will face two big problems. 
With regional divisions - 
exposed by the campaign after 
a long period when unity was 
enforced through repression, it 
will not be easy to maintain 
national cohesion. Not will it 
be easy to roqflain to impover- 
ided Malawians that demoo- 
racy alone is no guarantor of 
prosperity. 


S African strikes pose challenge to ANC 


By Mark Suzman in Johannesburg 
Although the newly elected South 

African gQ un Tnnwnt Hao hunting to 

focus its attention on development 
issues, its first real test seems likely to 
be In the thorny labour relations arena. 

Strikes have broken out among pro- 
vincial government employees and yes- 
terday ambulance workers in Pretoria 
walked out to protest against planned 
privatisation of the city’s emergency 
services. 

More serious are labour relations in 
the country’s huge mining industry. A 
strike at Kloof gold mine was resolved 
only yesterday after the loss of six days 
of normal underground production. 
While the problem appears to have been 
solved for the m oment , many analysts 
feel this is a sign of things to come as 
anions hope to take advantage of a 
sympathetic government to wring con- 
cessions from the mines. “The workers 
t hink it's pay-back time,” observes one 

mining anal yst 

All this will pose a serious problem 


for the ruling African National Con- 
gress, which remains in formal alliance 
with the Congress of South African 
Trade Unions, the country's largest 
union fede r ation. Many unions, because 
of their position at the forefront of the 
tiberatian struggle, fieri that the new 
government owes them a debt which is 
now falling due. 

The 280,000-6trang National Union of 
Mmewarkers, which has been asserting 
itself in a wide range of limited actions 
over the past few months, has si gnalled 
its intention to push harder on tradi- 
tionally intransigent companies now 
that a black government is running the 
country. 

Right at the top of the NUMs hit list 
is Kloofs parent company. Gold Fields 
of South Africa, one of toe country’s 
biggest mining conglomerates. 

Gold Fields, which has large interests 
in gold, platinum, copper and zinc, has 
a history of poor labour relations, and 
the union is determined to step up pres- 
sure on the company. 

According to Mr Jerry Majatladi, the 


NDM spokesman, the primary issue is 
GFSA's general approach to unions, 
particularly the right to organise, 
although Gold Fields riahnw tha prob- 
lem stems from misconceptions rather 
jeal grievances. 

The NUM plans a big march on 
GFSA's head office in Johannesburg 
over the weekend and will consider far- 
ther strike action to pursue Its goals. If 
the campaign succeeds, the onion 
in t e nds to target other recalcitrant min- 
ing houses, notably Johannesburg Con- 
solidated Industries, the parent of the 
Western Areas mine where several 
workers have been killed fa political 
clashes over the past week. 

According to Mr Gavin Brown, an 
industrial relations consultant, further 
strikes in the rest of the private sector 
are now increasingly likely, given that 
many companies delayed wage negotia- 
tions until after the election. He also 
predicts more unrest among civil ser- 
vants, particularly in the health and 
education areas. 

Despite their longstanding links, ten- 


sions between Cosatu and the ANC 
began to surface shortly before the elec- 
tion, when the federation resisted ANC 
calls for a moratorium on strikes. They 
are likely to widen further when Cosatu 
launches Its public sector union later 
this month, expected to draw In soma 
150,000 civil servants. 

Meanwhile, the demands of office are 
already forcing many former union 
leaders to try to rein in workers’ 
demands. 

The former Cosatu general secretary, 
Mr Jay Naidoo, who, as minister wife- 
out portfolio In the new cabinet, is 
almost certain to be given responsibil- 
ity for implementing the ANCs planned 
reconstruction and development pro- 
gramme, has already publicly commit- 
ted the ANC to squeezing productivity 
gains out of the civil service to hefe 
ftrud development. 

Other ANC leaders have also urged 
restraint in wage demands to help keep 
down inflation, but, so far at least. 
Cosatu seems unlikely to heed too 
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FINANCIAL TIMES TUESDAY MAY 17 1994 


7 


No major European country 
has a growth rate of 9%. 


But one major 
European company does. 


It’s a first quarter figure that not only 
governments, but also many other 
companies, would love to release. 

Because this 9 percent year on year 
increase in sales for the technically 
identical Opel/Vauxhali range is more 
than double the 4.2 percent increase 
recorded for the Western European 
car market as a whole. 

Consequently, for the first quarter of 
this year we were once again the Num- 
ber One car brand in Western Europe 
with a best ever market penetration 
of 12.5 percent. 


It’s a happy situation which should get 
even better. After all, Opel/Vauxhall has 
a state-of-the-art product range which 
is able to succeed in a steadily impro- 
ving market. 

Take the new Corsa, for example. 
According to press reports, it is one of 
the safest, roomiest, most attractive 
and practical of small cars. Sales have 
increased to the extent that in Western 
Europe it is now the biggest selling 
product in its segment - typical of the 
huge success this “grown-up small 
car” is enjoying in 50 countries around 
the world. 


Then there’s the new Omega. It’s sure 
to make tremendous inroads into the 
upper mid-size car sector and we al- 
ready have orders of 50,000 units. 

So don’t be at all surprised if, for Opel 
and Vauxhali, the next three quarters of 
1 994 turn out to be every bit as good 
as the first quarter. 




FINANCIAL TIMES TUESDAY MAY 17 l&fr 


NEWS: WORLD TRADE 


Saudis in oil 
supply talks 
with China 


Telecoms groups eye India 

Liberalisation plans leave some tangled lines, writes Stefan Wagstyl 

M r Nagarajan Vittal, The government is relying services such as cellular tele- ment will be responsible fo 
chairman of the on private companies to raise phones and voice mail were overseeing their entry, actmi 
Indian government’s much of the extra Rs230bn liberalised, the department has as both a competitor in nrovicl 


NEWS IN BRIEF 


By Tony Walker in Beqng 


China and Sand! Arabia are 
this week consolidating a 
closer oil trading relationship, 
as Beijing seeks long-term 
suppliers to help it overcome a 
shortfall in its own production. 

China last year became a net 
importer of crude. 

Mr Hlsham Nazer, the Saudi 
oil minister now on his first 
visit to Bering, will be seeking 
more extensive co-operation 
with China in the oil sector, 
including possible new con- 
tracts for shipments of Saudi 
crude. 

The minister’s low-key mis- 



Nazer: Discussing refinery 


sion also coincides with 
reports of Saudi involvement 
in a $L5bn (£lbn) oil refinery, 
with Chinese and South Kor- 
ean partners. 

The Saudi embassy in Bei- 
jing said that Mr Nazer would 
meet officials from the China 
National Petrolem Corpora- 
tion, the China National Chem- 
icals Import and Export Corpo- 
ration (Sinochem), and the 
Ministry of Foreign Trade and 
Economic Co-operation. 

China has been looking to 
the Middle East to satisfy 
increasing demand for crude 
and derivatives in order to fuel 


its booming economy, which 
grew in 1993 by more than 13 
per cent 

A western ofl industry repre- 
sentative described China's 
relationship with the Middle 
East, and especially with Saudi 
Arabia, as “absolutely crucial” 
because of China’s growing 
demand for crude. 

At a recent oil industry con- 
ference in Beijing. Mr Han 
Gensheng, vice-president of 
Sinochem, forecast that 
imports would reach 50- 60m 
tonnes by 2000 to meet proj- 
ected demand. Imports would 
exceed exports this year by a 

^maTI marg in 

China, the world's fifth larg- 
est oil producer, registered out- 
put of 143.7m tonnes last year, 
an increase of 22 per cent over 
the previous year. 

China is expected this year 
to match the production of 
1993, but is doing so with great 
difficulty because most of its 
oilfields are mature, including 
the Dating field, which 
accounts for about 40 per cent 
of output 

Beijing’s need to develop 
closer trading relations with 
Gulf states was underlined by 
the visit to the region last June 
by the Chinese vice-premier. 
Mr Li Lanqing. 

He signed supply agreements 
with Saudi Arabia and Oman. 
This was the first time the Chi- 
nese had dealt directly with 
Gulf states for oil purchases, 
rather than via intermediaries. 

While on his current visit to 
Beijing, Mr Nazer will also dis- 
cuss details of a new oil refi- 
nery project involving Aramco, 
the Saudi state oil company. 
South Korea's Ssangyong, Sin- 
ochem, and the municipal gov- 
ernment of Qingdao in, Shan- 
dong province, south-east of 
Beijing. 

The official China Business 
Weekly reported at the week- 
end that Aramco would take a 
45 per cent share in the 200,000 
barrels-a-day refinery, to be 
located near Qingdao, and 
Ssangyong 15 per cent, with 
-the remaining 40 per cent 
shared between Sinochem and 
the Qingdao municipality. 


M r Nagarajan Vittal. 
chairman of the 
Indian government’s 
Telecommunications Commis- 
sion, reads a letter handed to 
him by a secretary. It is an 
appeal from a VIP for two tele- 
phone lines. “Ten him he can 
have one. He can’t have two,” 
says Mr Vittal, handing back 
the letter and moving on to the 
next item. 

It is a measure of the short- 
age of telephone lines in India 
that the telecommunications 
department’s top civil servant 
spends titru* allocating individ- 
ual connections. “I have to 
play God here," says Mr Vittal, 
“in big things and in smalL" 

If Mr Vittal, a strong advo- 
cate of pro-market reform, has 
his way, in a few years the 
telar nmninriT wi Hnns commis- 
sion’s chairman will not have 
to help VIPs secure priority 
lines. Last week the govern- 
ment approved a new telecom- 
munications policy, designed 
to provide telephones on 
demand by means of a huge 
expansion of the telephone net- 
work. 

Since the government cannot 
frmd this transformation, it is 
ending the state monopoly of 
basic telephone services and 
inviting private companies, 
including foreign groups, to 
Invest. Potential investors 
have welcomed the news but 
have said that much will 
depend on how changes are 
implemented. If bureaucrats 
drag their feet, as they have in 
the past, then Mr Vittal and 
his successors could still be 
dispensing VIP connections 
well into toe next century. 

With only eight lines per 
thousand people, Min has one 
of the least developed tele- 
phone networks in the world; 
nhinfl has 17 per L000 people, 
Malaysia has 130 and the 
global average Is 100 lines. The 
country needs telephones, not 
only to fulfil its aim of increas- 
ing international trade and 
investment but also to provide 
a basic domestic communica- 
tions network. 

Until last week, the govern- 
ment’s aim was to increase the 
number of lines from 5.8m in 
early 1992 to l&3m by the end 
of the current five-year plan in 
March 1997. But this would 
have left about 2.5m people 
still on the waiting list, so the 
target has been raised to 10m 
new lines. 


The government is relying 
on private companies to raise 
much of the extra Rs230bn 
(£4Abn) it needs on top of 
Rs330bn ear-marked from pub- 
lic funds for 1992-97. Even 
before last week’s announce- 
ment, private groups, includ- 
ing foreign companies, submit- 


services such as cellular tele- 
phones and voice mail were 
liberalised, the department has 
been entrusted with handling 
potential competitors from the 
private sector. 

The result has been confu- 
sion and delay. Cellular tele- 
phones contract awards made 


T have to play God here, in big 
things and in small,’ said Mr 
Nagarajan Vittal, telling a VTP 
he can have only one of the two 
telephone lines he had been 
asking for 


ted 21 plans for telephone net- 
works together worth $4bn. 

Among the foreign compa- 
nies are industry leaders such 
as US West, AT&T, and Moto- 
rola of the US, Siemens of Ger- 
many, and Japan’s Fujitsu. Ms 
Boh Medappa, director of inter- 
national projects at US West, 
which plans to invest up to 
glbn in basic services, says: 
“The new policy will stimulate 
the rapid expansion of commu- 
nications networks” 

But it will be difficult to 
meet the government’s 
demanding timetable, given 
the department’s past record in 
accommodating the private 
sector. With 46 trade unions, 
representing 470,000 workers, 
the telecommunications 
department has long been sus- 
picious of changes which curb 
its influence. 

Since 1992, when value-added 


in October 1992 have been chal- 
lenged by unsuccessful bidders 
in a case now before the 
Supreme Court 

As Mr Amit Sharma, Moto- 
rola's executive director for 
south Asia, says: “Much 
depends on the speed and 
transparency with which the 
[new] policy is executed. Hope- 
fully, the problems and delays 
that have occurred in licensing 
of value-added services wil not 
be repeated now.” 

The prospects are not good. 
The department’s trade unions 
lobbied against the early entry 
of private companies and 
found an ally in Mr Sukh Bam, 

t-ha triAmmtmmiraHnns minis- 
ter, who argued with Mr Vittal 
over the aHmjwrinn of private 
companies. 

The result is a compromise; 
while private companies are 
being admitted, the depart- 


ment will be responsible for 
overseeing their entry, acting 
as both a competitor in provid- 
ing services and as a regulator. 
The unions successfully 
resisted plans for splitting the 
department into a state-owned 
corporation and a separate reg- 
ulatory body. 

Mr Vittal yesterday disclosed 
plans to divide toe department 
into service and regulatory 
divisions, and, as head of the 
department, he alone would 
have authority in both areas. 
Mr Vittal said detailed guide- 
lines would be laid down soon 
for the operation of private 
companies. 

These will include a require- 
ment that companies operate 
in both urban and rural areas 
and that tariffs arrange- 
ments for sharing revenue 
with the telecommunications 
department be approved by the 
government Mr Vittal said he 
expected the first private oper- 
ators to secure licences in two 
months. 

Proposals involving foreign 
capital will still be required to 
win separate approval from the 
government's Foreign Invest- 
ments Promotion Board, which 
oversees foreign investment 
The permissible level of foreign 
participation is to be decided 
“case-by-case" but Mr Vittal 
said be hoped investments of 
up to 100 per cent should be 
permitted. 

Even if no new conditions 
emerge, there are more than 
enough hurdles for private 
companies to dear. Until last 
week it was not certain that 
they would be permitted to 
rater the race at all; now at 
least they are under starter’s 
orders. 


Mexican plant 
for Johnson 


Matthey 


fihomirak group Johnson Matthey is to buQd a. car axfaaott 
catalyst plant in Mexico with a capacity of lm unite. a year, 
writes John Griffiths. • _ : 

The facility, costing £5m ($7.5m) and to. be located.UO ojjEji: 
north-west of Mexico City, near Quer&aro, is due to go on stream 
at the end of this year, supplying Mexico's rapidlyexpasdhig 
motor industry. 

The catalysts, comprising a thin coating of precious mews ana 
cy lindri cal substrate, are the active component of the catalytic 
converter systems being made mandatory by the Me x i can govtitn*. 
rrmrit as part of efforts to reduce severe city air pollution. 

Johnson Matthey, which claims to be the world’s largest cata- 
lyst producer, with over a third of the world market, is afae 
planning to build a similar plant in Malaysia, in a joint vanttae 
with HICOM Berhad, a government investment agency. 


John Brown in Holland 
wins German chemical deal 


John Brown, part of Trafalgar House of the U K, sa id its Dutch- 
office had won an important contract to rehabilitate the caprobo- 
tam complex at the Leuna chemical works in ©astern Germany, 
writes Andrew Baxter. 

Terms were not disclosed for the contract, awarded by Da mp 
Group, the big Belgian carpet and textile manu fa cturer. Caprolac- 
tam is the raw material for nylon fibres. 

'Hie contract is one of the largest and most complex undertaken 
by John Brown Zoetermeer, which will handle engineering pro- 
curemeot and construction, and will work with Ingmieurbetrieb 
Anlagenbau Leipzig, the German engineering company. 

John Brown Zoetermeer has also won the job of mana ging 
contractor for a FI 100m ($53m) project to replace the propylene 
splitter at Shell Nederland Chemie’s solvent plant at Pends tn the 
Netherlands. 


Merck agrees Chinese 
pharmaceutical venture 


Indian telecommunications market 


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Merck said it had signed an agreement with Hangzhou. East 
China Pharmaceutical to form a joint venture for manufacturing 
and marketing certain Merck pharmaceutical products in China. 
This Is to be Merck’s first joint venture in China, Renter reports 
from New Jersey. The venture, which must be approved by toe 
local authorities in China, will produce tabulated forms of certain 
Merck products, as approved for the Chinese market. Part of toe. 
sales and marketing group of MSD China, a Merck subsidiary, 
will become part of the joint venture. 

The venture will be at Hangzhou, Zhejiang Province, in facili- 
ties near the East China site, which have been contributed by 
East China to the joint venture. 


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worth about $185m (£123m) to supply two 300-MW anthracite 
coal-fired s team generators for the Ezhou power project in Hubei 
Province, China, Reuter reports from Clinton, New Jersey. 

Foster Wheeler Energy said the contract marks its third big 
power plant project in China. 


INTERNATIONAL ECONOMIC INDICATORS: NATIONAL ACCOUNTS 


Rpna lor GDP/GNP a n in bflfaw of European anrancy unto (Ecu). The firat breakdown is In currsf* prices and tha ascond shows g rowth rates In the oorwtant pries scrips. 

■ UNITED STATES ■ JAPAN ■ GERMANY 

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■ UNITED STATES 

Atom Mmm pi tab Owl 

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INTERNATIONAL 
MEDIA PARTNERS 


ING.lt) BANK 


sao i7.7 iB.i 

662 162 10.5 

87.2 182 19.4 

87a 18-2 1&7 

67.1 152 18.8 

67a 14a ia.e 

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552 192 

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58.1 18.1 


are pleased to announce the establishment of 


Emerging Markets CEO of the Year Awards 


1st qtr.1993 
2nd qtr.1993 
3rd qtr.1993 
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32 3.1 

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L esser developed 
economies have 
become emerging 
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arc being replaced by debt 
underwritings. Equity is not 
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multilateral funds, it’s about 
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Against this backdrop. International Media 
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two important new awards. 

The Emerging Markets CEO of the Year 
Award will be given to two business leaders. The 
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mance have best shown the par- 
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1st qtr.1993 
aid qtr.1993 
3rd qtr.1993 

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1st qtr.1993 
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02 -9.1 

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FINANCIAL TIMES TUESDAY MAY 17 1994 


NEWS: THE AMERICAS 


Military 
in Chile 
adamant 
on general 

By David PflGng In Santiago 

Chile’s democratic government 
faces renewed embarrassment 
at the hands of the military 
today If, as expected General 
Rodolfo Stange resumes his 
po st as chie f of police In spite 
of government insistence Chat 
he step down. 

Gen Stange, who is being 
investigated for the alleged 
cover-up of police involvement 
in three killings, said he 
would defy government 
requests to extend his leave 
indefinitely. 

Under the 1380 constitution 
handerf down by the military 
regime of General An gusto 
Pinochet, Chile’s president 
cannot dismiss commanders- 
in-chief of the armed forces, of 
whom Gen Stange is one. Gov- 
ernment spokesmen have 
resorted to oblique references 
to the “inconvenience" of the 
situation or to the general's 
“moral” duty. 

At one point, public bicker- 
ing was reduced to a discus- 
sion of the legality of an 
“indefinite vacation". 

Behind such semantics lies 
the conflict between the resid- 
ual power of tbe military, 
which ruled for 17 years, and 
that of a four-year-old democ- 
racy, gradually growing in 
confidence and intent on 
regaining its traditional con- 
stitutional powers. 

President Eduardo Frei, who 
took over in March, has 
pledged to democratise the 
1080 constitution. Some com- ■ 
mediators argue that Mr Frei 
may have deliberately pro- 
voked confrontation with Gen 
Stange in order to galvanise 
public opinion in favour of 
constitutional amendments. 

US trials 
for French 
abortion pill 

The controversial French 
abortion pill HU 486 will be 
made available for US clinical 
trials in the autumn through 
an unusual arrangement dona- 
ting all US patent rights to a 
non-profit population group, 
Reuter reports from Washing- 
ton. 

Roussel-Uclaf of France, a 
subsidiary of Germany's 
Boechst, has agreed to donate 
all US patent rights to the 
drug to the Population Coun- 
cil, a New York-based interna- 
tional non-profit group. 

The Population Council is 
seeking a manufacturer for the 
drag. 

Abortion rights activists 
hailed the agreement as a tre- 
mendous victory, but anti- 
abortion groups were angered. 
The American Life League 
called RU 486 a “human 
pesticide”. 


Senate flexes its muscles over foreign policy 


By Jurek Martin In Washington 

President Bill Clinton's conduct of 
foreign policy has been heavily crit- 
icised in academic and establish- 
ment circles, but Increasingly the US 
Senate seems ready to act where 
most others merely write in com- 
plaint 

Yesterday Senator John Kerry, the 
Democrat from Massachusetts, took 
to the opinion pages of the New 
York Times to demand that the US 
oust the military junta in Haiti by 
force - preferably in conjunction 
with others but still by Invasion. 

Over the weekend. Senator George 
Mitchell, the majority leader, and 
Senator Bob Dole, his Republican 
counterpart, called for economic 


sanctions against North Korea for His blunt comments need to be set 
refusing' to subject its nudear £acUi- against his known willingness to 
ties to full inspection by the Interna- help the adm in istration find a way 
tional Atomic Energy Agency. out of its dilemma, but Mr Dole 

With the problems in Bosnia and North 
Korea, it appears frustration is growing 
across party lines within the US Senate 


Mr Mitchell also said he was In 
favour of imposing trade penalties 
on China unless visible Improve- 
ment In its human rights record was 
evident in the two weeks remaining 
before Mr Clinton determines 
whether to extend most favoured 
nation trading status. 


threatened to embarrass the presi- 
dent to the maximum extent by 
urging him to renew MFN and admit 
he had made a mistake last year in 

Ihdring it to human rights. 

Last week, in somewhat contradic- 
tory votes, the Senate twice urged 
the lifting of the anus embargo on 


Bosnia. Mr Dole’s motion urged that 
the US do so unilaterally while Mr 
Mitchell’s called for the maximum 
effort to persuade US allies to go 
along. 

Though neither yet has the force 
of law, both constituted advances on 
an earlier non-binding “sense of the 
Senate" resolution. 

Senator Kerry is not the first 
member of Congress to call for the 
use of force in Haiti, though he may 
be the most influentia l to have done 
so. It is considered axiomatic that 
the administration would not launch 
an invasion, without some form of 
prior consent by Congress. 

However, the Republican party is 
generally opposed, in spite of the 
fact that Presidents Reagan and 


Bush both conducted military ven- 
tures in the region, in Grenada and 
Panama respectively. 

With Bosnia and North Korea, 
however, senatorial frustration 
appears to be growing across party 
lines. 

Many of those who supported Mr 
Mitchell's compromise amendment 
last week may be persuaded to 
switch sides on the arms embargo if 
hostilities persist and no progress is 
made in negotiations. 

Lifting the arms embargo is, as 
Senator Claiborne Pell, chairman of 
the foreign relations committee, put 
it “the easy cost-free solution”. One 
of Mr Dole's central arguments for a 
unilateral lifting was that no US 
lives would be put at risk. 


The Clinton administration, intent 
on pushing healthcare reform 
through Congress, is sensitive to the 
dangers of additional political con- 
troversy. One reason why Mr Clin- 
ton selected the relatively uncon- 
troversial Judge Stephen Breyer for 
the Supreme Court seems to have 
been his nervousness about yet 
qppther bruising public battle in the 
Senate. 

But this caution has already 
invited criticism that the president 
is unwilling to take a stand on too 
many matters. This sense could well 
encourage the Senate to take mat- 
ters further into its own hands, as it 
last did in prohibiting the Reagan 
administration from funding the Nic- 
araguan contras in 1980s. 



Caldera pressed 
to alter course 



Tom Corey (in wheelchair), secretary for Vietnam Veterans of America, arrives in Vietnam with a delegation of war veterans yesterday. They are due to hand over 
documents on up to 1,800 Vietnamese troops whose fates are unknown to their families, hoping Vietnamese veterans will provide information on missing Americans *p 


By Joseph Mann in Caracas 

The administration of 
Venezuela's President Rafael 
Caldera faces growing pres- 
sure to change its economic 
policies after a steep devalua- 
tion, predictions that inflation 
will surge to 60 per cent or 
more this year and violent stu- 
dent protests. 

The Caldera government 
began a five-year term in Feb- 
ruary rejecting the free-mar- 
ket policies of the previous 
administration, and offering 
“a competitive economy with 
social justice”. Thus for, it has 
produced measures that 
attempt to find a middle 
ground between market eco- 
nomics and government con- 
trol of the economy, placing 
greater stress on the latter. 

The two leading opposition 
parties, Democratic Action 
and the Christian Democrat 
party (Copei), have accused 


the government of incoherence 
in economic policy, allowing 
cabinet members to contradict 
one another in public and 
advancing a populist strategy. 
They have sought a return to 
market-oriented policies. 

Economic and political 
uncertainty over the last three 
weeks has sent the bolivar 
down UL5 per cent against the 
dollar at the official exchange 
rate and by over 22 per cent on 
the parallel market 

This has caused economists 
to raise their inflation projec- 
tions for tins year. One promi- 
nent Venezuelan economist, 
Mr Pedro Palma, predicted 
that inflation could reach 80 
per cent or more in 1994, up 
from 46 per cent last year. 

The administration -has 
faced violent protests in Car- 
acas and other cities after 
police shot and killed a high- 
school student during a pro- 
test on May 5. 


Poll choice may 
split Brazil party 


By Angus Foster in S5o Paulo 

Mr Orestes Quercia, one of 
Brazil's most controversial pol- 
iticians, will run as presiden- 
tial candidate of the country's 
largest party, the Brazilian 
Democratic Movement 
(PMDB), following his victory 
in a party vote at the weekend. 

Mr Qu6rda was earlier this 
month indicted on fraud 
charges relating to Sao Paulo 
state government purchasing 
policies while he was governor. 
His candidature has divided 
the PMDB and threatens the 
stability of President Itamar 
Franco’s government, based on 
a shaky PMDB- backed coali- 
tion in Congress. 

Mr Quercia wants tbe PMDB 
to break with the government 
because it will be easier for 
him to campaign for president 
as an opponent rather than a 


supporter of the already rook 
and ineffectual Franco admin- 
istration. 

If the PMDB withdraws sup- 
port -and a decision is likely 
in tiie next few days - the gov- 
ernment will face more prob- 
lems co-ordinating congressio- 
nal business. 

Congress has already Almost 
stopped because of October”? 
general elections. Legislators 
are spending more time in 
their home states than in the 
capital. A long-awaited consti- 
tutional revision, due to be 
completed this month, has so 
for made almost no progress 
and would also be further in 
doubt without PMDB backing. 

Some analysts say Mr Quer- 
cia's nomination will lead to a 
serious and perhaps irrepara- 
ble split in the party, which 
evolved from groups opposed 
to the 196445 military rule. 





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Retail sales growth eases tax rise fears 

By Peter Norman and GDflan Tett According to the Central Statistical flarkp. chnnrellnr nf Dip pvrhpnner The imnravp.mp.nt Mr Micro! mnnthc it in innmli rrwH nfa nf r 


A survey pointing to moderate retail 
sales growth In April and news yes- 
terday of a seven-year low in the 
inflation rate for goods leaving facto- 
ries suggested that Britain remains on 
course for a steady recovery with low 
inflation in spite of April’s tax 
increases. 

The Confederation of British Indus- 
try reported overnight that retail 
sales volumes grew rather more 
quickly than expected in the year to 
April maintaining the “relatively 
modest annual growth in vol umes " of 
the first three months of this year. 


According to the Central Statistical 
Office yesterday, producer output 
prices - the price of goods leaving 
factories - rose by Z2 per cent during 
the year to April, the lowest such rise 
since December 1986. 

The two reports, at the start of a 
week packed with statistics, appeared 
to support the Treasury’s belief that 
the risks of higher inflation are not as 
great as feared by the Bank of 
England and that the economy is 
strong enough to withstand increases 
in direct and indirect taxation that 
took effect last month . 

That message was hammered home 
in Brussels yesterday by Mr Kenneth 


Clarke, chancellor of the exchequer, 
when he rejected European Commis- 
sion forecasts that UK growth will fall 
next year to 2^ per cent horn IS per 
cent 

“The forecasts are plainly wrong 
and quite out of line with other peo- 
ples' forecasts," Mr Clarke said. 
“Britain’s recovery is well on course. 
Inflation is staying down and I think 
we are going to have a good, steady, 
sustained non-inflationary recovery." 

The CBTs monthly distributive 
trades survey, carried out between 
April 18 and May 4. showed that most 
retailers reported higher sales vol- 
umes in the year to ApriL 


The improvement, said Mr Nigel 
Whittaker, chairman of the CBI sur- 
vey panel, showed that the “high 
street recovery remains on course". 
However, he warned that April's vol- 
ume growth remained below the year- 
on-year growth, rates of late last year 
while retailers considered sales below 
the seasonal average. 

The picture of an unspectacular 
recovery with low inflation was sup- 
ported by the producer price figures. 
The “underlying" seasonally adjusted 
output price index, which excludes 
food, drink, tobacco and petroleum, 
showed no increase in ApriL 

The index rose in the latest three 


months at an annualised rate of only 
1 per cent Meanwhile, input prices - 
the cost of raw materials used by 
manufacturing - edged up slightly, 
reflecting higher commodities and 
imports costs. The index of input 
prices rose by Ojj per cent in April 
from March and fell by 15 per cent 
during the year to April compared to 
the previous year. 

While output prices are generally 
regarded as a good indicator of future 
inflation trends, last month’s figure 
may have been slightly subdued 
because move in the annual budget 
from March to November meant no 
increase in excise duties last month. 


Blair courts the 
left as Brown’s 
support fades 


By Kevin Brown, 

Political Correspondent 

Support for Mr Gordon Brown, 
shadow chancellor, was ebbing 
rapidly among MPs of Britain’s 
opposition Labour party yester- 
day as Mr Tony Blair, shadow 
home secretary, put out feelers 
to the left in his bid to succeed 
Mr John Smith as leader. 

Mr Blair, who met left-wing 
MPs in his office at the Com- 
mons, was believed to be seek- 
ing the endorsement of Mr 
Robin Cook, shadow trade and 
industry secretary, who is one 
of two potential left-wing can- 
didates for the leadership. 

Mr Cook is picking up sup- 
port from the small group of 
hard-left Labour MPs, but his 
backers among soft-left and 
Scottish MPs believe he would 
be well advised to reach an 
agreement with Mr Blair 
because he cannot win the 
leadership. 

If support for Mr Brown con- 
tinues to fade, such a deal 
would open the way for a 
straight fight between Mr Blair 
and Mr John Prescott, the cen- 
tre-left employment secretary. 

Friends of Mr Prescott said 
Mr Blair would “definitely” 
face leadership contest, even if 
all the other candidates- with- 
draw. "The party will demand 
an election,” one said. 

Some MPs said the leader- 
ship race would be simplified if 
Mrs Margaret Beckett, the dep- 
uty leader, enters the contest 
Mrs Beckett Is not expected to 
run, but her candidacy - 
which would create a deputy 
leadership vacancy - would 


open the way for a strong left- 
right ticket teaming Mr Blair 
with Mr Cook. 

The rapid growth of support 
far Mr Blair opens the prospect 
that the contest could be 
reduced to two candidates 
shortly after campaigning 
begins in earnest following the 
funeral of Mr Smith in Edin- 
burgh on Friday. 

Candidates for the leadership 
are carefully avoiding public 
campaigning until after the 
funeral, in deference to the 
wishes of Mr Smith's family 
and the shadow cabinet Mr 
Blair withdrew from a sched- 
uled speech to a police audi- 
ence, and Mr Brown cancelled 
a planned visit to South Wales. 

However, Mr David Bhmkett, 
the party nhairman said the 
party was already suffering 
from election “hype,” in spite 
of requests for “the dignity 
that John Smith deserves.” 

Mr Blunkett said that 
Labour’s r uling national execu- 
tive committee would probably 
decide next week to complete 
the election by the end of the 
third week in June. 

He dismissed a call from Mr 
John Evans, a member of 
labour's organisation commit- 
tee, for the election to be held 
at the party conference in Sep- 
tember. “For this to go on 
through August and September 
is not a happy prospect for the 
Labour party and ugly for 
Britain as a whole,” he said. 

Friends of Mr Brown said he 
believed that a substantial 
number of MPs would rally to 
his support when open cam- 
paigning begins next week. 



A PC demonstrates a handgun yesterday after the announcement that specially-trained officers will carry weapons i 

London moves towards armed police 


By Aten Pike, 

Social Affairs Correspondent 

Armed police will become a 
more familiar sight in London 
under measures announced by 
Mr Michael Howard, home sec- 
retary, yesterday. 

Crews of armed response 
vehicles - patrol cars which 
attend incidents involving fire- 
arms - will be allowed to wear 
sidearms in holsters at all 
times. Until now, they have 
drawn their guns from lockers 
in the cars only when arriving 
at incidents. When officers are 
in shirtsleeves, holsters and 
guns will be clearly visible. 


The number of armed 
response vehicles on 24-hour 
patrol in London is being 
increased from five to 12. 

Mr Howard said the changes 
could be introduced in other 
British rides and it was up to 
local police chiefs to deride. 

He defended the moves as a 
“measured response” to cur- 
rent problems facing police. 

Mr Alun Michael, home 
affairs spokesman for Labour, 
welcomed the move. 

“I think it is right to be 
responding and reassuring to 
police who are at the sharp end - 
and subject to very violent 
attacks,” he said. 


He called for work on local 
partnerships between police 
and local communities to 
reduce the atmosphere in 
which carrying guns was 
almost acceptable in some 
areas. 

Although critics will see the 
step as a further move towards 
the abandonment of Britain’s 
t radition of an Tmarmud police 
service Mr Paul Condon, Met- 
ropolitan Police commissioner, 
said he hoped it would “post- 
pone the necessity to routinely 
arm police officers.” The move 
would restrict the issuing of 
firearms to highly trained 
staff. 


The Police Federation confer- 
ence, which opens in Brighton 
today is expected to release a 
survey of police and public 
views on arming officers. It is 
likely to show growing support 
among officers for wider avail- 
ability of firearms. 

Federation vice-chairman Mr 
Fred Broughton welcomed Mr 
Condon’s announcement as 
“positive ami constructive”. 

He told the BBC: “The prob- 
lem of policing London particu- 
larly is that there is an expec- 
tation of violence, an 
expectation among police offi- 
cers that they will face life- 
threatening situations." 


Cable 
boost for 
phone 
services 

By Andrew Adonis 

Sapid growth In the market 
for premium-rate telephone 
services was predicted yester- 
day by Testis, Britain's tele- 
phone information services 
watchdog. 

Icstis said ft expected cable 
companies to join the market 
soon, offering premium-rate 
services over their telephone 
and television networks in 
urban areas. 

Baroness Dean, Icstis chair- 
man, said: “There win need to 
he a level playing field for all 
companies operating across all 
networks.” 

Icstis wants the cable indus- 
try to sign up to its code of 
practice regulating premium- 
rate services, to which BT and 
Mercury already subscribe. 

Mr Richard Wooflam, direc- 
tor of the Cable Television 
Association, said he was “con- 
fident" it would do so. 

The premium-rate industry 
had a turnover of £250m last 
year. There are more than 360 
service providers; nearly 
20,000 services are in opera- 
tion with an estimated 6m 
calls made each week. 

The entry of the cable com- 
panies into the business is 
likely to boost the number of 
services, and increase price 
competition between opera- 
tors. At present, calls cost a 
standard 39p a minute cheap 
rate and 49p a minute at other 
times, with only one premium- 
rate number - Mercury’s 0881 
- charging a lower rate. 

However, higher tariff-bands 
are also in prospect for “qual- 
ity” business and information 
services, subject to Icstis 
approval. The group said it 
was “unlikely” to agree to 
higher tariffs for sendees with 
appeal to children and a mass 
audience. 

The Icstis annual report 
shows high usage of premium- 
rate services by children. A 
survey of 1,000 children aged 
between seven and 19 found 
that 21 per cent had used a 
service in the previous three 
months, with usage highest 
among 11 and 13-year-olds (34 
per cent). 


AA Insurance to alter working patterns 


By Richard Lapper 

AA Insurance Services, one of Britain's 
biggest motor and home insurance 
retailers, is to switch many of its 5,100 
staff to flexible labour contracts in 
response to the growth of telephone 
insurance companies like Direct Line. 

This will mean further part-time 
working for the mainly female labour 
force as the company seeks to reduce 
costs and frirr upsp the efficiency and 
flexibility of its network of 250 shops. 

Details will come next month when 
the company, which is talking to 
unions about the changes, announces 
an overhaul of its operations. 


Like other chains of insurance shops, 
AA has lost business over the last three 
years to Direct Line and other “direct 
writers", insurers which sell by tele- 
phone directly to the public, bypassing 
the industry’s traditional middlemen. 

Recent price competition in motor 
insurance has also put extra pressure 
on margins. Shops which typically 
obtain a commission from insurers of 
between 10 and 15 per cent on business 
sold have seen their income squeezed 
by recent falls in premium rates. 

“There is a fundamental chang e in 
the amnimt of marg in available as a 
reward for distributing insurance prod- 
ucts," said Mr Mark Wood, who took 


over as managing director of AA Insur- 
ance Services earlier this year. 

The AA expects the amount of com- 
missions on motor insurance available 
to the country’s broken and intermedi- 
aries to foil from £700m in 1992 to £435m 
in 1995. 

Mr Wood said the competitive pres- 
sures faced by chains of insurance 
shops from the “direct wrltere” were 
similar to those faced by supermarkets 
from discount warehouses. 

The number of AA Insurance 
part-time staff has increased from 420 in 
1988 to more than 1,400 and seems 
Kkely to rise further as greater flexibil- 
ity is introduced to shop opening hours, 


with evening and Saturday afternoon 
opening being introduced. 

“Frequently insurance brokers tend 
to say let’s open our offices when every- 
one is at work. We need to turn that on 
its head,” said Mr Wood. “The industry 
is very confused about the retailing 
proposition. There is a traditional view 
of our being a service like an accoun- 
tant or a solicitor,” added Mr Wood. 

The AA recognised that more con- 
sumers were prepared to buy insurance 
over the telephone, but Mr Wood 
insisted its network of shops made the 
group ideally placed to follow-up on 
claims which customers frequently pre- 
ferred on a face-to-face basis. 


Britain in brief 


American 
Express plans 
credit card 

American Express, the 
US-based financial services 
company, is test-marketing 
a credit card in the UK aimed 
at individuals who do not have 
an Am ex charge card but who 
fit the cardholder profile. 

The move comes at a time 
of increasing competition in 
the credit card market with 
several providers launching 
products which undercut 
traditional bank providers 
on both interest rates and 
annual charges. 

American Express has been 
test-marketing a similar credit 
card product in the US and 
Ha nn Ha fo r several months 
and is likely to launch it in 
North America first 

"Our initial research tells 
ns there are people ont there 
who like the American 
Express brand but who 
definitely want revolving 
credit” the company said. 

American Express is 
considering a range of annual 
fees and interest charges 
which will be lower than those 
of bank-sponsored credit cards 
bat higher than those of tee 
most competitive products 
on the market. 


Car dealers 
increase profits 

The UK's top 200 car dealer 
groups almost doubled their 
profits last year as sales began 
recovering from their steepest 
recession since World War II. 

However, the improvement 
was the result more of tough 
cost-cutting measures than 
increases In sales volume, 
according an analysis of the 
sector's performance by motor 
trade monitoring group 
Sewells International and trade 
newspaper Motor Trader. 

The analysis shows that the 
top 200 groups, which between 
them ar cpnnt for around 
one-third of new car sales in 
the UK. collectively earned 
pre-tax profits of £294m, a 75 
per cent increase over 1992. 
Total value of sales, at £i7bn. 
was 21 per cent higher than 
the £14bn a year earlier. 

Hie figures were achieved 
against an 11.6 per cent rise 
in the UK new car market last 
year, to 1.78m - well below 
the Z3m achieved in the record 
year of 1989. 


Hitachi to open 
UK design arm 

Hitachi, the Japanese 
electronics company, is 
establishing a wholly -owned 
semiconductor design 
company in the UK as part 
of a plan to improve 
engineering services to 
European customers. 

The value of tee investment 
In the division, which will be 
called Hitachi Micro Systems 
Europe, has not been released 
bnt tee number of engineers 
in Hitachi's existing European 


micros yst ems design division 
will roughly doable from 
aroand 30 at present 

Mr Jim Duckworth, 
executive general manager 
of the electronic components 
group of Hitachi Europe said: 
“Customers expect ever 
increasing levels of high 
quality local engineering 
design and development 
services to support their own 
design activities." 

Mr Hajime Yasnda. 
managing director-designate 
of the new company, said it 
would offer a comprehensive 
range of design skills for all 

aspects of hardware and 

software design. 


London to see 
more office jobs 

Central Loudon is likely to 
see a growth in total office 
employment of between 50,000 
and 65,000 jobs by the year 
2000. according to a report 
published yesterday. 

The growth in office 
employment could generate 
demand for nearly 10m sq It 
of extra office space by the end 
of the century, according to 
chartered surveyors St 
Quin tin. 

However, the growth in 
employment is likely to be less 
important in generating 
demand for offices than the 
need of City occupiers to 
change and upgrade their 
acco mmo dation, the report 
says. 

A quarter of City tenants 
are housed in unrefurbished 
pre-l970s buildings. 

The chance of another 
explosion in the financial and 
business services sectors, 
which grew sharply in the 
mid-1980s, is “extremely 
unlikely” says the report. 


Second term 
for regulator 

Prof Stephen Littiechild. 
electricity industry regulator, 
yesterday received a mandate 
to continue in office until the 
end of tee century when he 
was re-appointed for a second 
five year term of office. 

The announcement by the 
trade and industry department 
yesterday confirmed industry 
expectations but comes after 
speculation that he may have 
lo6t the confidence of the 
government because of 
controversial stands on issues 
including coal and electricity 
generation. 

The re-appointment to 
August 1999 will enable him 
to oversee the introduction 
of a system which many 
people believe will be as close 
to foil deregulation as is 
possible. 


Tate and Lyle 
demonstrations 

Demonstrations are planned 
today outside 15 plants of Tate 
and Lyle in Britain, the United 
States and Canada in support 
of 750 workers locked out for 
11 months from its A E Staley 
starch and sweetener 
subsidiary in Decatur, Illinois. 

“These actions will send a 
messag e that workers on both 
sides of the Atlantic are united 
against Tate and Lyle's 
conduct in Decatur”, said Mr 
Alan Gordon, national 
organiser for the British union 
GMB yesterday. 


London irritated Searching for equity in Ulster’s workplaces 


by Irish PM’s 
upbeat remarks 


Michael Cassell on the Fair Employment Commission 


By David Owen 

Hopes of a breakthrough in the 
search for peace in Northern 
Ireland were set back yester- 
day as it emerged that the 
upbeat tone of recent remarks 
by Mr Albert Reynolds had 
irritated London. 

The Irish prime minister’s 
comment that written ques- 
tions from Sinn FSin, the IRA’s 
political wing, about last 
December’s UK-lrish declara- 
tion were “answerable” was 
seen as unhelpful by some in 
the UK government because it 
raised expectations the dead- 
lock migh t soon be broken. 

Mr Reynolds’s comments 
came after unscheduled talks 
in the US with President Bill 
Clinton. The Irish prime minis- 
ter said he hoped London 
would give the most positive 
response it could. 

But Downing Street yester- 
day moved towards clarifying 
one of the questions raised by 
farm Ffein by hinting strongly 
that acceptance of the joint 
declaration was not a precondi- 
tion for involvement in politi- 
cal talks. 

Downing Street said the “pri- 
mordial" requirement for Sinn 
Fein to enter talks was a per- 
manent end to the IRA’s armed 
campaign- It said this renunci- 
ation of violence was “at the 
heart" of the declaration. 

London intends to publish 


Sinn Fein's questions, which 
were forwarded by Dublin, at 
the game Hme as its comments , 
probably tomorrow 
Mr Gerry Adams, the Sinn 
Ffin president, has sketched 
out the areas covered by the 
questions without giving pre- 
cise details. 

Government sources at West- 
minster were yesterday 
playing down expectations of 
what might emerge from Lon- 
don’s comments. 

They said many of the ques- 
tions raised matters that would 
only be resolved after further 
talks between Ulster’s constitu- 
tional parties. 

At least one of them consti- 
tuted a “trick question", since 
it appeared to refer to a union- 
ist veto that the government 
has consistently maintained 
does not exist 
As unionists warned of a 
likely upsurge in loyalist vio- 
lence if the government’s 
response to Sinn F&n was too 
explicit, police launched a 
drive against suspected loyalist 
terrorists in Belfast 
Downing Street insisted last 
night that the government was 
not “in the business of clarifi- 
cation" and had only “helped 
the Downing Street Declara- 
tion to expiate itself". 

It said the exercise of com- 
menting on the Sinn Fete doc- 
ument was “no different in 
kind" from previous speeches. 


M r Bob Cooper may 
not be amused at the 
prospect of his 
organisation being taken 
before Northern Ireland’s fair 
employment tribunal to 
answer an employee’s allega- 
tions of religious bias. The 
organisation In question is, 
after all, the Fair Employment 
Commission set up to help 
eradicate decades of damaging 
workplace discrimination. 

But Mr Cooper, the FEC’s 
c hair man, can perhaps find 
some consolation from know- 
ing that the tough set of anti- 
discriminatory laws he is in 
business to enforce in Ulster 
are increasingly understood 
and that workers will not hesi- 
tate to invoke them if they 
believe they have a grievance. 

It Is nearly five years since 
the government revamped leg- 
islation to try and tackle 
head-on the unlawful discrimi- 
nation which for decades has 
scarred many aspects of life in 
the province. With problems 
over the allocation of housing 
and electoral abuses largely 
overcome, new measures were 
felt necessary to wipe out the 
religious discrimination still 
rampant in the workplace. 

The answer was the Fair 
Employment Act 1989, a tough 
package placing fresh responsi- 
bilities on employers to moni- 
tor the religious composition of 
staff and to enact equal oppor- 
tunities at work. The Act cites 
more than 20 rr imina! offences 
and lays down punitive eco- 
nomic sanctions against 
defaulting employers. The com- 


pensation ceiling for tribunal 
awards to individuals has just 
been raised to £35,000 and 
already a pay-out close to the 
maximum ha s been made. 

Next year, the legislation is 
to be reviewed and organisa- 
tions across the province are 
assessing its success so far and 
compiling recommendations 
for changes. The general, 
though not universally 
accepted, view is that the Act 
has made a useful start in com- 
batting discrimination in the 
office and on the shop floor but 
that there remains a very long 
way to go. 

For decades. Catholics were 
effectively banned from whole 
areas of public sector and com- 
mercial life and knew it was a 
waste of time even applying for 
jobs they were qualified to do. 

Most grades of the civil ser- 
vice were devoid of Catholics - 
now they hold three of the 
province’s 10 permanent secre- 
tary postings - and there were 
few in the professions or in 
skilled industrial jobs. With 
unsuitable schooling and poor 
qualifications, they were 
trapped to. a vicious circle. 

Catholics, who make up 
nearly 40 per cent of the avail- 
able workforce, are still under 
represented right across the 
economic community 
remaining “blackspots" 
include senior civil service 
grades - but the gap is slowly 
narrowing. 

Discrimination nevertheless 
remains well in evidence, with 
a spate of tribunal findings 
suggesting that Ulster’s dis- 


trict councils and health and 
education boards among the 
worst and most persistent 
offenders. Many private sector 
companies, overwhelmingly 
manned by workers from one 
or other side of the religious 
divide, have so far failed to 
make significant changes in 
their employment profiles. 

The picture is not just one of 
stubborn protestant bosses. 
Among the biggest employers, 
some Catholic-dominated com- 
panies are apparently proving 
slower than businesses with 
predominantly Protestant 
workforces in redressing the 
balance. 

It is accepted, however, that 
effecting change can be 
impeded by the religious 
make-up of the local iabour 
pool and by declining work- 
forces in the wake of recession. 

The biggest imbalance 
though remains among the 
unemployed, with Catholics 
still more than twice as likely 
to be out of a job than protes- 
tants. The situation has barely 
improved in 20 years with 
many employers avoiding an 
under-skilled and Inexperi- 
enced labour force rather than 
consciously discriminating on 
religious grounds. 

As a review of the Act 
approaches, Mr Cooper is not 
complacent: “So much more 
remains to be done but if you 
look at where where we were 
coming from we have already 
moved an enormous distance”. 

Ulster politicians, predicta- 
bly, are divided. While the 
mainly-catholic Social Demo- 



Bob Cooper, chairman of the Fair Employment Commission, set 
up to correct years of workplace discrimination 


cratic and Labour Party 
believes that the 1989 legisla- 
tion is beginning to have a 
beneficial impact on employ- 
ment imbalances, some Ulster 
Unionists complain it is now 
discriminating unfairly against 
Protestants. 

There will, even so, be pres- 
sure on the government to 
make changes. 


The CBI believes the tribunal 
process has become too 
lengthy, overly legalistic and 
costly, encouraging some 
employers to opt for a quick, 
informal settlement irrespec- 
tive of the strength of the case. 

Employers also believe too 
many aggrieved employees are 
using the law as an act of first, 
rather than last, resort. 


FINANCIAL TIMES TUESDAY MAY 17 1994 









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FINANCIAL TIMES TUESDAY MAY 17 1994 

MANAGEMENT: THE GROWING BUSINESS 


Factoring’s unsung 
role for exporters 

An overdraft is not the only option for companies 
trading overseas, says Mark Runiewicz 


Richard Gourlay continues his 
series on business angels 
with a visit to a nursery 


Seeing it 
from both 
sides 



lb i* Andrew 

CMkfa play: Sarah Anderson atTeckSaa Ninety with a Toodte loo. 


E ddie George, governor of 
the Bank of En gland gave 
factoring a generous “plug" 
at a dinner hi London last week. 

Yet for all the publicity which 
this form of finance now receives, 
a surprising number of businesses, 
notably exporters, remain 
Ignorant of its charms. 

Around 85 per cent of TO 
exports are still financed by the 
traditional bank overdraft, despite 
the advantages of using facto ring 
companies - which buy debts in 
return for an Immediate rash 
payment, take over debtor records 
and provide a collection service 
for clients. 

Overdrafts, indeed, are seldom 
used effectively to finance 
i overseas trade. Most banks seek 
security for loans, often using 
a company's assets - TnniwHwg 
its trade debts - to support any 
overdraft. Secured by a floating 
charge, they will usually lend 
up to 60 per cent of the value of 
a current UK receivable, but they 
still win not lend anything 
against the value of foreign trade 
debts. 

This leads to the absurd 
situation where a company might 
be given no credit on the back 
of an export sale to, say, a leading 
multinational conglomerate — 
but would be advanced up to 60 
per cent of the value of a sale to 
a small corner shop. 

Some of the clearing banks 
admittedly have export finance 
schemes using credit insurance 
on the overseas buyers as security. 
Unfortunately, the number of 
these schemes has fallen from 
14 to five ova - the last two years, 
although National Westminster 
Bank has recently re-entered this 
market 

As many factoring compan i es 
are owned by large financial 
institutions, tt is perhaps 
s urpris in g that the wide variety 
of services provided by factors 
are not adopted by the dealing 
banks for their export finance 
schemes. 

There are, of course, deeply 
rooted reasons why some 
exporters are reluctant to take 
advantage of factoring companies. 
Undoubtedly the old image of 
factors as “lenders of last resort” 


haunts factoring companies- 
Suppliers are sometimes 
concerned that overseas buyers 
might consider the ex po rter to 
be in financial difficulties if 
export debts are factored. It is 
an attitude which needs to be 
revised. 

The factors now provide highly 
competitive financing rates 
with fast information reporting 
systems and also keep exporters 
informed of payments received 
and outstanding debtor values. 

Factoring is also considered 
expensive by exporters, but they 
seldom take the various savings 
into account. For instance, there 
is less need to send out invoice 
reminders to customers and there 
is less requirement for internal 
credit control and bookkeeping. 
There are no legal costs in 
collecting bad debts. 

Experience shows that 

Companies using 
factors ob tain 
payment faster than 
when traditional 
methods are used 


companies using factors obtain 
pay m en t faster than when 

traditional payment methods are 

used, because debts can be paid 
to an asso ciate fa ctor in flie 
buyer's country. 

A company with a turnover of 
£2m can expeet to save about 
£25,000 in costs or L25 per cent 
of turnover in a year. Factors can 
finance a company's total debts 
or sometimes selected invoices. 

Factoring, though, is not . 
suitable far all companies and 
exporters must assess their 

yriSi* financing mquIimnaniK. 

Take Company A, which exports 
90 per cent of its £2m t ur nov er 

to TnnWinaHnnal companies hi 

overseas markets. The company 
receives payments on average 
wttitin 80 days from the date of 
despatch, far which it requires 
work in g capital of 
£300,000. 

The company had an overdraft 
facility of £50,000 and fanded the 



need from reserves, causing 
pressure on its liquidity. The 
company's bank would not 
increase the overdraft because 
of the large proportion of overseas 
debts. 

Company A had two options; 
reduce export turnover or find 
an alternative source of finance. 
By turning to a factor the 
company was granted a facility 
covering 85 per cent of its 
debtor book with a limit of 
£240,000. 

The factor provided finance and 
a debt collection service in the 
buyer’s country - an altogether 
more efficient way of receiving 
and collecting payment Overseas 
debtor days were reduced from 
60 to 45, reducing interest charges 
and inc reasing wn HriTig na pHfl l, 

The interest rates charged by 
the bank and the factor were the 
same although the factoring costs 
were L5 per emit of turnover. This 
cost was offset not only by the 
reduction in the interest bill but 
also by greater use of working 

wi pital. 

Company B, which exports 60 
per cent of its £5m turnover and 
sells mairtTy to the atid 

Far East markets, r e qu i re d 
additional funding to complete 
a series of contracts. 

The company sold mainly on 
letter of credit terms with a credit 
period of 60 days and needed its 
bankers to confirm both the 
letters of credit and provide 
funding. Although the company 
had a «mnll overdraft facility, 
file bank was happy to extend 
facilities based on the large value 
of work in progress and the 
company’s assets. 

The company had considered 
factoring tat found it was not 
appropriate because of the large 
volume of letters of credit received 
and the small volume of open 
account business. 

The lesson is that exporte r s 
should seek the most appropriate 
financing arrangements for 
trading overseas; and an overdraft 
should not be considered the only 
solution. 

The author is trade finance 
consultant at the Bank Relationship 
Consultancy ' ‘ 1 


Some! marriages 
may be made in 
heaven, but the 
relationship 
between private 
investors and entre- 
preneurs is almost 
invariably stormy. 
Sarah Anderson can vouch for 
this, having seen it from both sides 
of the business. Founder of Mayday 
Staff Agency Services, an employ- 
ment bureau far the ca ter in g indus- 
try in which outside investors took 
a stake, she is now lead investor in 
a start-up business, Teddies Nurs- 
eries. 

Anderson is convinced the nur- 
turing of business relationships is 
crucial if private investors and the 
entrepreneurs they back are to 
stand a chance of succeeding. 

"When a business is running well, 
the entrepreneur thinks they are 
putting everything in and the inves- 
tors are vultures,” says Anderson. 
“When it goes badly it is the other 
way around, with resentment that 
they are not pulling their weight' 1 
■ It was the arrival of her children 
that launched Anderson’s career as 
a business angel and has inspired a 
number of ber subsequent invest- 
ments. T was bored with running 
Mayday fun-time, got married and 
pregnant," she says. “In 1990 I 
started going to makings of poten- 
tial investors at LLNC” - the Local 
Investment Networking Company 
run by a group of government- 
backed Enterprise Agencies. 

Toddies Nurseries was one of the 
companies that gave a presentation 
at LINCs regular investor semi- 
nars. Its entrepreneurs — Nicholas 
Botterin and Amanda Ramage - 
wanted to open a chain of high- 
quality, branded day-care centres. 
The first flagship operation would 
be launched in a residential area. 
The rest would be set up near large 
office blocks to service what they 
hoped would be a boom in corporate 
gpgrwttrtg on child care for staff. 

“I could recognise a good plan 
because I had been running a busi- 
ness," says Anderson. “They were 
very young, bright and one had 
been a management co nsultant 
with Stoy Hayward. I liked the peo- 
ple and the product and it was a 
start-up which I wanted." 

Starting with 20 per cent of the 
equity, the entrepreneurs were 
encouraged by a ratchet agreement 
that would have given them control 
of the company if they performed to 
plan. . However, Botterill and 
Ramage quickly ran into the quick- 
sand of London’s planning laws. It 
took longer than expected to find 
buildings with the right planning 
c onsents. The first Teddies in Ful- 
ham - now full and thriving - was 
late in opening, the second in 
Twickenham only opened in Octo- 
ber, 10 months late. 

-?Baeh centre ihakag more money 
'*ttan*-vre*%ver projected but the 


ratchet was Sawed because it was 
fau wd on a tima apaia winch when 
extended maria majority ownership 
impossible to achieve over the five- 
year period,” says Ramage. 

Whatever the reason, the missed 
targets and the argument over 
whether the ratchet should be 
changed, soured relations. The busi- 
ness ate rash anri Teddies neftitori 
re-stuffing with money-. “The 
ratchet was dearly not going to be 
available to them so they were not 
incentiviaed," says Anderson. 


“I always fait the investment was 

oxnwt H ing ftat Trvipht b@ lost,” tt ff 

says. “I was far more angry about 
the relationships that were going 
wrong and that it was no longer 
fan." 

Anderson decided refinancing 
would not be pouring good money 
af t e r bad. The business, now suc- 
cessfully operating two full nurs- 
eries, has recently broken even, and 
the concept is now proven. But 
Ramage is trying to find new inves- 
tors to buy Anderson out 


“If I had my time over again I 
would negotiate the contract differ- 
ently but I am perfectly happy with 
the way we found the Investors and 
the people we went in with,” says 
Ramey *. Both sides marie mi s t ake s 
in negotiating the original con- 
tracts, she says. 

This tension is familiar territory 
for Anderson. At Mayday she had to 
put up with outside shareholders. 
For ten years she had been “happily 
working” far Compass, the catering 
company, ending up as a personnel 
and training manager. Asked to 
find ways to make money from the 
personnel department, she 
suggested an internal staff agency 
to replace outside contractors 
through which Compass was put- 
ting £500,000 of business a year. 

Six weeks after Anderson had set 
up the agency as a subsidiary, she 
persuaded the chief executive she 
was doing him a favour by taking 
t-hfo “lousy business” off his h antte- 
For the princely sum of £7,600 to 
buy the goodwill she was running 
her first business. 

Though she did not need the 
finance, Anderson's father came on 
the board and the venture capital 
company he was then working for 
took a 10 per cent stake. 

“My view of private investors was 
very antagonistic,'’ says Anderson. 
“I felt I did all the work and that 
was why I had a successful com- 
pany. 1 look at it slightly differently 
now." 

While Mayday has been a success 
- with turnover of £2m and 21 per- 
manent — yftri Teddies is com- 
ing good, Anderson has had one 
“unequivocally disastrous invest- 
ment”. Attempting to repeat May- 
day’s London success in Cambridge 
and Bristol, Anderson backed two 
entrepreneurs to set up and run a 
subsidiary. Their sales forecasts 
proved unrealistic and £35,000 later 
the business failed, Anderson says. 

*T learned you need to be brave 
enough to pull the plug early," 
Anderson says. “We should have 
pulled the plug after six months. An 
individual's capability does not 
change very dramatically over 
time" 

Anderson has also raised commi t- 
ments far money to set up chil- 
drens* activity centres. Again Lon- 
don’s planning laws tripped her up 
and she Is now leading her backers 
into a similar project in Guildford 
she found through LINC. 

And faR circle Anderson 

has also started investing in herself 
again. With a neighbour she is 
launching intn the manufacture of a 
folding childrens’ lavatory seat 
called a Toodle-loo. 

A startup, a single product, an 
uncertain route to maiket: It has 
everything that makes bankers and 
institutional venture capital suppli- 
ers run a mile, but all the features 
that private investors like Anderson 
embrace. ■ 





* 


BUSINESS OPPORTUNITIES 

inn nrnr wmonwraow —own w w o m w anwrannD co i —nii i 


- 


!?f c * 



. \ it I*? 


COOK-CTILL FOOD PRODUCTION UNITS 
, t NOTICE CWF DISROSAL 

Aug^a and- Oxford Regional R»? hh A uth o rit y offer far dis posal 
two yijiy modem CPUs, one in Oxford and the other m Reading. 
Botirifacilities are free-standing buildings; have excellent 
aunnnuncation links; a design capacity far 60,000 lbs per week 
(b&sqd on a 60 hoar production week); and use a cryogenic 
difflfag method with the ability to chill and freeze food. The nnits 
bavebeen designed to the highest standard with modem batch 
production and bulk chilling technology. 

Tbe-production units may be of interest 

■ to provide extra capacity for an established supplier, 

■ as-a new business proposition 

■ to improve business process; or 

■ to upgrade existing prodoctioocapabflities. 

Expressions of interest are invited for oneorbotb of ft c fa c iliti e s . 

For ffeth«HribnmtionandaTw6a^^ease calk 

Joanne Smith ; 

Touche Ross Management Consultants 
071 936 3000 ext 2233 



Fully furnished offices 
Trafalgar Square 



Secretarial nervScc* • Conference fa ci liri cl 

photocopier, fax, WJ. * flexible l*ax Term* 

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Tel: 071 872 S9S9 

Yoor Partner in over 80 Intemidonal Bonnem Location* 


TRAVEL CONSULTANT 

Maioi multi-site UK based i ulema tkmd company, unimpressed by savings 
achieved by 1 '— business travel companies, wishes to appoint a consultant to 
advise on the means by which very substantial air travel' expense can be 
l w i m mi w t whfla toOming n-anonabb flaribjUtV- 
The consultant, who will have first class credentials, will be expected to : 

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technology. 

Please write to Box B2S5, financial Times. 

One SotAbwark Bridge. London SE1 9HL 


Recently esttbBahcd Food Manufacturing Company with excellent 
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Any agreement reached to be finalis ed through solicitors to . the .entire 
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For further details contact Mr. Keith Webster (Solicitor), 

KJL. Webster & Co„ 

Omega Court, 36S Cemetery Road, Sheffield Sll 8ET 

(TeL 0742/669071) or (Fax 0742/664870) 


COMPANIES REQUIRED 

Public company quoted on USM wishes to acquire 
profitable service companies based in tbe UK. 
Reply in confidence to: 

Bex B2861,RnancW Times, 

One Southwark Bridge, London SE1 9HL 


PERSONAL CAREVOTC 
BRANDS WANTED. 

International Company seeks 
outright purchase, distribution or 
licensing rights for UK and/or 
abroad. Suit c ompan ies looking to 

ifivCit Mid fyfjrffftrete OQ TBRU1 core 

activities. 

Brands seed to be established with 
provep back record. 

Writs toe Box Blast 

Hnaads! Tinea, One Soutfa w a d. 
Bridge, London SCI 9HL 


Financial 

Advisors 

US. Tdecommurication 
company s ee k in g financial agents 
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only to offer a unique high yield 
(insured) program. 
Excellent r iM i nnig dnn^ 

ff mumsted please call David or Seas; 
TW OSA: 3*1-897-4163 or 
FhxUSA:3U-OT44ff 


ESTABLISHED MULTIMEDIA 
PRODUCTION BOUSE 
with worVLcteM orient base and ■ 
ponftlb ittki ps^BcoUp 

with cam pfcmf.nwi y baencte dh so 
fund relocation and growth. 

VMM toSsxB3aS3, Fbuadal rU«, 


Tktl 


SSI ML 


mI C au yny, • firm — tfariwit tj tor 


A privately owned bulking 
construction company, itKter 
new ownership operating in 
London and South East, wlh a 
turnover approaching £20 mfiBon 
seeks private Investors or 
investment orgartsaflons. 
Equity available as an opinion. 

Write ID BOX B288T, HounoM 
Tknmo, Onm So uttmm * Bridge, 
London SE1 


West End Musical 

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

Fte mom atiteaatioo pkate 
Write kkBoxBZ 5H BawdslUmML 
One Sotehmk Bridge, London SE1 9HL 


FUNDS AVAILABLE 
TO PURCHASE 
-Lenars of Credit 

• Ban lr Guarantees 

• Other Acceptable Collateral . 

• Backed by Private Investors 

THRU MAJOR UTTL BANKS ■ 

CAPITAL SUPPORT CORP. 
U& (7MVBM070 • fas (71^757-1230 


COMMERCIAL PINANCB/VENTURE 
CAPITAL . aanatXi rates, HraUetau, 
Aigto American warns FscOGES 201 377 


FOR SALE 
SECURITY/ALARM 
. PRODUCT 

Raze opportunity to acquire the 
design date. drawings, toofog, stock 
anri W1P of sn advanced and anateiri 
BABT approved aecurity/tlarm 
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Uses inctede domestic, indnstiial 
and process oonixnl applications. 
Contact Jane Jenkyn 

0932 561181 


MANUMCTUMRMHPOHmS 

MAI1. ORDER CAN MPROVE 

CASH-FLOW AND INCREASE 

PROFITS 

8Mhg by Msfl (Marts fw qridesat 
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gflte KM svcSante. 

Tabs arirnWga of tha Imprortoo economy 
now; by wntedfeig us far a RK 
appratariof yew product Swat ' 


■rati 


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BySseL Suney. ICTI47MM. 


CHARTERED 
ACCOUNTANTS M INDIA 

An oMtwtebHshed top 10 
tii ii i seeks an 
International alSance with 
UK firm ot Chartered 
Acc ou ntants. Senior 
Partner visftfng UK end 
of May. 

Please contact N J Kartya, 18 
St George Street, Hanover 
Square, London W1 R DLL 
Tel: 071 403 1205 
Fax: 071 629 5615 


BridAAodmyAjrard Winner U9L 
Seeks, sponsorship fix superb, 
ria ■ I| " n ff riiiHt— v mm «f animated 
fihns. Ret naty already compton on 
fitm. Contact Gcadoa McEwan, 
Animation Pfr®, Brownings Manor. 
Bbckboys. Sussex TN225HG. 
Tek 0825890 144 


COMPUTER SERVICES 
CONTRACT BASED 
WANTED 

A m^cr Compmar Sendees Croup 
write to acquire contract bases. 

If janBeianetead please reply to : 
Box BZ787, RmdcH ‘rtmo. One 
SombwKk Bridge, London SE1 9HL 


REJNVOICtNG, 

LICENCING 

or other at smfs length tox ptontog 
via ths Netherlands. Contact 
Laurens & Jacob B.V. 

Tei+31 -2&684.78.6S/ 

Fax+ 3 1.20-675.80.88 


BUSINESS ANGEL SOUQKT 
Byerined reond sndTV praducsr seeks 
• In expand record label. TV and muaic 
oopyrigW operations h the Uk and Japsi 
bwBMd h eveiy area ot eoSertaiiante*. 
SuMesM bide ihorL let ort-ai-aot« 
FtoC 001-444-7063 


ATTENTION! 
DEVELOPING! 
COUNTRIES! LHD. 

30 Ion + cargo trucks 
rmjta purpose, tanksre. fopors, slo, 
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Fax (jnQ 31.10.4353205 


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COMPANY 

with large tax tosses, but tracing 
profitably no*, invitee suggestions 
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without the Jiormal cost and 
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vest Bok Basis RnencU Ttowa. 

One Ou uSwa t c Bridge. London SET 9HL 


CHANNEL 

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T«fc 0047X774, Fix 0534 25401 

Ua 4192227 COPORM C 


CONFIRMABLE DRAFTS 
BACKED BY CASH 

* toned la YonrNne 

* Confirmed by M^or Inti Bank* 
m Prove AvaDabffiry of ftmds 

* Backed by Private lavcsocs 

CAPITAL SUPPORT CORP 
US. (714) 757-1070 • fa* (714) 757-1270 



THE SCOULAR 
COMPANY 

Com, Wheel, MBo, Soy Beww 
for sale In large quantities. 

Write: 2027 Dodge Street 
Omtoia, NatnMca6B102 


GOOD NEWS! 

American company seeks to 
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multi-million dollar Federal 
Government Contract. 

Fax Mr Stahl 
407-833-7013 USA 


VAT RECLAH IN BUftOKAM t>aadHna 
SOto June 94 tor Y/E 19SP oooe oin to 
be rectoknad. CM 'Banaana' T« (*44 87 
211 7100 faK (+44} 81 217 7110 


BUSINESSES WANTED 


WAREHOUSE/STORAGE 

COMPANY(IES) 

REQUIRED 

National UK Warehousing Company specialising 
in contract storage facilities throughout UK seeb 
to acquire similar business^) for expansion. 

Expression of interest in confidence to retained 
properly consultant T. J. Corns, FRICS. 


Lambert smith 
Hampton 


021 236 2066 


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ONE SOUTHWARK BRIDGE, 
LONDON SE19HL 


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T/O up to £25 m. 

Write U Box 62890b Ftaacfal Tinea, 
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London SE1 9HL 


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Tat an 325 95SS or fax: 021 500 6301 


WANTED 

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Current management 
to remain. 

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Timas, One Southwaik Bridge, 
London SEI9HL 


BUSINESS SERVICES 


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FINANCIAL TIMES TUESDAY MAY 17 J994 


FINANCIAL TIMES SURVEY 




u Hi rse 


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■ - ■ • i*M?m ■» f, 1 


POWER GENERATION EQUIPMENT 



Tuesday May 17 1994 

Embattled, western suppliers risk more restructuring 
if they fail to win the new business generated by 
Asia’s expanding economies, writes Andrew Baxter 

Centre of gravity 
moves to the east 


A1 » cNiie i a h ^worfcfcM^'afl<K>w»lor Bi«tfBbyl ! ^eoiw t nAlB»sGaoBn e pr s 


A s growth in demand in 
the world market for 
electricity generating 
equipment shifts inexorably 
eastwards, western suppliers 
are warily eyeing each others’ 
efforts to benefit from growth 
opportunities. 

Declining ifemariri jn western 
marVotR has [eft the industry 
with surplus capacity. In the 
new markets of Asia, they are 
with increasing demands 
. to share contracts and technol- 
ogy with local partners. The 
top suppliers, whose wares are 
an show at this week's Power- 
Gen ’94 exhibition in Cologne, 
have yet to demonstrate 
whether they can meet this 
chaDenga ■ 

A review just of April’s 
events in the industry shows 
where the big new deals are 
being struck. On tlje Mmi> day, 
Zurich-based Asea Brown 
Boveri announced a contract 
worth about Jibn to build a 




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ness had clinched an order 
worth nearly DMUm to equip a 
2364MW combined cycle sta- 
tion in Taiwan. 

Also in April, GE of the US 
announced a $i70m order to 
supply a turnkey power plant 
for a 440 MW independent 
power project in' Malaysia, one 
of the first such stations 
planned by the south-east 
Asian country. And Westing- 
house Electric, also of the US, 
pwVpd up an or der worth more 
than $lOQm from Korea Elec- 
tric Power for the supply of 
turbines, generators and 
related equipment. 

Much Of the dgmflnri is kwwg 
met through joint ventures and 
similar arrangements. Two 


doa] g are particularly striking. 
ABB is forming a majority- 
owned joi nt v enture In Viet- 
nam with CTBT, a local trans- 
former manufacturer. The 
European company said the 
venture was the biggest in the 
electrotechnical industry to be 
undertaken in Vietnam by a 
foreign company. 

In the UK, meanwhile, Bab- 
cock International has 
announced a partnership 
agreement with Wuhan Boiler 
Works, China’s fourth biggest 
boiler maker, which is 
designed to help Babcock 
expand its presence in the 
Asian market 

Significantly, the first order 
following the agreement win 
see Babcock supplying design 
expertise while Wuhan win be 
doing the manufacturing. The 
UK company is recognising 
that to win orders in Asia, 
western suppliers cannot 
expect to produce everything 
themselves. 

As ABB’s figures show, (see 
c hart), there is enormous vari- 
ation between different 
regions, which explains why 
suppliers are having to turn 
themselves into global players. 
And the upward line in the 
forecast is due mainly to 
growth in China and Asian 
countries. 

“Suppliers have historically 
been In markets that last year 
were shrinking - Europe, the 
US and Japan,” says Mr G&an 
Lundberg, an ABB executive 
vice-president and head of its 
power plants business. “Global 
growth is coming out of file 
internal growth of China. So 
everyone is tense and nervous, 
as competition is -hardening.” 
Mr Lundberg believes that the 
power equipment industry is 
faring some “quite dramatic” 


changes, as it continues over 
the next five to 3fl years to 
become more global. The ambi- 
tions of equipment suppliers in 
China and Korea will make it 
important for western suppli- 
ers to recognise the need for 
new alliances and combina- 
tions, he says. 

Also, he says, large equip- 
ment suppliers wQl have to 
continue i nv e s ting heavily to 
ensure they have a broad 
range of products for custom- 
ers with widely differing finan- 
cial and technical priorities, 
and will have to raise ing pro- 
ductivity in their traditional 
manufacturing piawfe Suppli- 
ers «bn »iM only manufacture in 
high-cost countries when it is 
competitive to do so, be says. 


A BB’s assessment of 
future growth for the 
industry broadly coin- 
cides with those of its rivals. 
Westinghonse. for example, 
says that the global market for 
new capacity additions is 
about 60.00QMW a year, and 
says demand is expected to 
grow to about 100.000MW 
annually in the next 10 years. 

Even so, the total market 
will only then have recovered 
to levels reached in the late 
1970s, and its geographic and 
competitive profile will have 
been transformed. Mr Land- 
berg believes, therefore, that 
the industry will see farther 
restructuring, and that small 
and medium-sized European 
players will find it tHfRenit to 
cope with the challenges 
ahead. “They may need to get 
into a larger structure so they 
can draw on the resources of 
the larger company with its 
volume,” he says. 

In spite of the heavy 
restructuring that has already 


taken place in the industry, Mr 
Lundberg says it has not gone 
as far as in other “oUgopohe’* 
industries, through exchanges 
of products, for example. 

Meanwhile, although Asia is 
clearly at centre stage, there is 
still activity in the wings. In 
spite of the gloom of recession 
in many European countries, 
the power equipment market 
there looks to be very promis- 
ing, says Mr Ronald Pressman, 
chief executive of GE Power 
Systems - Europe. 

He foresees annual growth in 
the installed power capacity 
base of 1 per cent, which may 
not sound too exciting, but 
equates to an overall 
172.000MW growth in the mar- 
ket between 1994 and 2002 
finnlndiwff Russia and Central 
Europe). There are a variety of 
dynamics driving the market, 
he says, including economics 
and the environment 

“There is an awful lot of the 
installed base that is old, rela- 
tively inefficient, and is not 
burning the cleanest of fuels,” 
he says. No country can afford 
to let its industrial sector pay 
more than the world rate for 
power, so this creates a power- 
ful argument for installing 
replacement equipment 

Privatisation and the devel- 
opment of independent power 
projects is seen by Mr Press- 
man as the third big issue in 
Europe. 

Tim UK, where both GE and 
its business associates have 
supplied independent power 
producers, still provides the 
best model, but Mr Pressman is 
not alone «mmig power equip- 
ment exec u tives in predicting 
the continued spread of privati- 
sation on the continent 

Signs of recovery in Ger- 
many, which could have a 
knock-on effect across the con- 
tinent point to increased 
demand for power. But Mr 
Pressman is also optimistic 
about developments in central 
Europe and particularly Hun- 
gary, the Czech Republic and 
Poland which, he says, are 
“leading the pack”. 

Last month, GE scored a 
notable coup by clinching a 10 - 
year co-operation agreement 
with the much-wooed Skoda of 
the Czech Republic. This was 
the US company's first power 
equipment-related joint ven- 


IN THIS SURVEY 


CHINA wffl provide years of 
work even if Its vast 
programme contracts; 
while Japan's ut3ittes drop 
their Imports taboo, its 
heavy equipment makers 
step up their export efforts 

In Asia PAGE 2 

TOM GIBSON; Glasgow’s 
merchant adventurer; a 
faint smeH of gas as Asia’s 
privatisation tide continues 
to flow PAGE 3 

TURBINE TECHNOLOGY; 
how ABB is trying to turn 
up the heat; unruly Russia 
becomes ripe for 
reconstruction and Joint 
ventures — PAGE 4 

UNITED ARAB EMIRATES: 
failing oil revenues are 
forcing a reform of the 
electr i c i ty market and may 
offer prospects for 
independent power 
producers; Latin America 
emerges from Its cash 
black-out PAGE 5 

DIESEL ENGINES Rve down 
their dirty Image to Join the 
power game; fuel caBe and 
the promise of cheap 
chemical power . — PAGE 6 


ture in eastern Europe and was 
negotiated under the nose of 
Siemens, which has been 
talking intermittently to Skoda 
for more than two years. 

Russia has also received con- 
siderable attention from suppli- 
ers in recent months, as much 
in words as in deeds. 

Mr Percy Barnevik, ABB’s 
president, was one of the first 
western businessmen to criti- 
cise the low level of funds 
being made available to the 
countries of the former Soviet 
Union to upgrade their, power 
stations and bring the more 
modern nuclear stations up to 
western safety standards - and 
close the rest. 

Earlier this year, Mr Bame- 
vik said the west had missed 
an opportunity to help Russia 

• Continued on next page 




Can you light Natural gas - affordable, safe and available - is an increasingly 

up the sky without popular choice for driving turbines that generate electrical 
clouding the air? power all over the world. Although it burns relatively cleanly, 
combustion does produce nitrogen oxide, implicated in acid rain. Abatement 
techniques have reduced emissions, but heightened awareness among 
the industrial nations continues to generate tighter legislative controls 
and the development of ecologically-sound power plants. 

Conventional methods of controlling emissions are costly and dampen 
efficiency. However, ABB research has now developed a way to burn them 
off. It is a total solution, reducing pollutants while maintaining efficiency, 
thus consuming less fossil fuel. ABB has installed its innovative “EV-burner” 
. . in the Midland Cogeneration Venture, a joint project to produce power 

for the Dow Chemical Company and the State of Michigan, USA. At full 
power load, this plant is now producing emission levels well below the 
world’s most stringent requirements. 

As a leader in electrical engineering for power generation, transmission, 
and distribution, in industry and transportation, ABB is committed to 
industrial and ecological efficiency worldwide. We transfer know-how across 
borders with ease. But in each country, ABB operations are local and flexible, 
"ies, you can. That means we can help our customers respond swiftly and surely to 

technological challenges which stretch the limits of the possible. Like 
burning gas without clouding the sky. 


ABB Asea Brown Boveri Ltd., Reeder Services Center, P.O. Box 822, CH-8021 Zurich 


Al 






F INANCIAL TIMES TUESDAY MAY 17 1994 

POWER GENERATION EQUIPMENT^ — 


China’s huge electrification plans will ensure opportunities for many years, writes Frank Gray 

Hong Kong groups lead the charge 


C hina is currently astride the 
world's most ambitious power 
development programme, having 
set itself a target of 900.00QMW of installed 
capacity by the turn of the century. 

The programme, according to China's 
Ministry of Electric Power, calls for a fur- 
ther 22.QGGMW of capacity to be added this 
year, boosting levels horn the end-1993 fig- 
ure of 17S.000MW. The pace of new power 
additions will be accelerated on a year-by 
year basis and will reach a remarkable 
rate of 2Q.00GMW per year In new power 
plant additions by 1996 at least. 

The programme is breathtaking by 
global standards and exceeds by a wide 
marg in expansion programmes being 
planned by other developing nations. Even 
if the target is not achieved, the gains still 
will be substantial enough to provide 
exceptional business opportunities for 
western equipment suppliers, consultants, 
banks companies seeking partnerships 
in the power sector. 

Not surprisingly, the front runners in 
Chinese joint ventures are such Hong 
Kong-based groups as the private sector 
utilit y Chi na Light & Power (CLP); Gordon 
Wu’s CEPA, a division of Hopewell Hold- 
ings; New World Development, Hutchison 
Whampoa and nhanwg Kong Holdings. 

An increasing number of outside groups 


is joining the long queue. Among these are 
the US Wing Gimp, as well as equipment 
manufacturers General Electric and 
Westmghouse Electric; PowerGen and 
BICC of the HE and numer ous other com- 
panies from Europe, Japan and North 
America. 

According to the Ministry, a total of 


Most foreign partner schemes 
are coat-fired, but some hydro 
plants may also be offered 

35.000MW of capacity will be up for grabs 
by foreign independent power developers 
between now and 2000. Without such for- 
eign help, its ambitious targets will fan far 
short of target It has identified a total of 
34 projects, both large and small, which it 
wants to see developed on a bufld-own-op- 
erate or build-opera te-transfer (BOO-BOT) 
basis. 

Most of its proposed foreign partner pro- 


grammes are coal-flred, and same smell 
hydroelectric schemes are also being con- 
sidered for the private sector. However, 
the government wants to diversify its 
energy sources for foreign joint ventures, 
particularly along coastal sites whore coal 
is not easily available owing to rail trans- 
port problems, away from coal and hydro 
and Into other fuels, notably piped gas, 
LNG and nuclear. 

This will be a big challenge In that the 
two power sources comprise virtually all 
China's electricity supply. A natural gas 
pipeline will supply the first 2,40QMW 
phases of Hong Kang's Black Point power 
station starting In 1996. The complex is 
owned by CLP of Hong Kong. Preliminary 
discussions suggest that some of 
fatfpn f rom Hainan island, could be used 
for other power stations, but that win 
depend on the Hainan reserves. At pres- 
ent, the gas is the only such supply being 
used for power generation In China. 

Several foreign ventures are bidding to 


establish LNG te rminals along the China 
coast, notably the Wing Group, which is 
eramining terminal sites in the Shanghai 
region. The LNG would have to be 
Imported but would alleviate coal pollu- 
tion and transport probtems. 

The World Bank recently announced a 
$£5m development loan to boost natural 
gas potential in Sichuan Province to 
underpin a $945m scheme. The aim of the 
«re h f» mp I s 10 cut down reliance on coal, 
particularly for home heating, and to cre- 
ate a base of gas for power station use isn 
the region. 

A major development is China’s nuclear 
programme. The first 950MW unit of the 
Anglo-French-built two-unit complex at 
Daya Bay, 50 km northeast of Hong Kong, 
went on line over the winter and is now 
delivering electricity to China Light & 
Power. The second unit is now completed 
and is being prepared for commercial oper- 
ation. A further complex is planned 
nearby, also to be foreign built. A farther 


complex of similar size is being planned 
for Yangjiang, near Macau, west of Hong 
Kong. 

chiiffl is also operating a separate 
300MW domestically- engineered reactor in 
the northeast and Is planning new home- 
built unite of 600MW each, with consul- 
tancy hf»1 p from Electricity de France. In 

China’s own plant builders are 

working flat out and producing 
only mid-range technology 

all, it hopes to see some 7.500MW of 
nuclear capacity operating or near comple- 
tion by 2005. 

A major reason for the reliance on for- 
eign help is the fact that China’s own 
power equipment manufacturers are oper- 
ating at full tot and producing only mid- 
range technology. For Tnannfacturarg, the 
willingness to transfer technology and 
form joint ventures with Chinese counter- 


parts will be the key to success, - 

According to Nomura Research Institute 
in Hong Kong, China's manufactures are 
capable of producing up to 40QMW hydro, 
electric power generators and thermal 
electric power generators with a maxi, 
mum 600MW capacity. China's big time 
equipment makers are China Harbin 
power Plant Equipment Group; Shanghai 
United Electric Corp.; and Dongfang 
trical Machinery Waits, the last or which 
is in the process of trading shares oaths 
Hong Kong stock exchange. AQ are imfo. 
stood to be seeking maim 1 equity share- 
holdings from their foreign coanterparti 

It is their output shortfall that has 
helped open the doors to western hard, 
ware supplies, analysts say. -These 

imports, which generally cost about 50 per 

cent more than locally-manufacteed 
goods, are now estimated to contribute 
about 20 per cent of China’s annual 
installed capacity. 

Indeed, so serious is the domestic equip- 
ment supply problem that Carina's giant 
Three Gorges hydroelectric project, wfcfch 
is projected In the early part of foe next 
century to reach 22,QQQMW, wIH require ^ 
least 12 of its 28 hjtiraulic turirines to be 
foreign supplied, say Beijing nfiWdtr 
□ Frank Gray is editor of Pouter in Asia, a 

FT energy pubKeation 


J apan’s power equipment 
market is changing fast, 
presenting foreign suppli- 
ers with opportunities to cash 
in an one af the world’s largest 
but toughest markets. 

Japan is a mature economy 
where overall growth has skid- 
ded to a halt after several 
decades as one of the world's 
top performers, and its 
increase in electricity dwnand 
has slowed accordingly. 

According to Tokyo Electric 
Power Company (Tepco), 
Japan’s largest power com- 
pany, which sells about a third 
af the country’s total electric- 
ity, total Japanese electricity 
demand win rise from 68ttm 
kwh in 1993 to just 885bn in 
2003. In the 10 years between 
1965 and 1975 It tripled. 

Estimates for annual growth 
in the generation equipment 
market are correspondingly 
low. Mitsubishi Electric Corp 
(MEQ. which provides machin- 
ery in power projects run by 
its cousin Mitsubishi Heavy 
Industries (MHI), reckons 
Japan win yield around 84GW 
of new capacity over the next 
10 years. 

It is a very mature market,” 
says Del Williamson, president 
of GE Power Systems Asia. 
"The low growth has contin- 
ued to decline. Percentage wise 



A vary mature market main reactor control panel bi Japan’s 


Pictire: Ashley Ashvraod 


Japan buys little but imports are no longer taboo, says Ronald Ayers 


it’s like the US - in the one to 
two per cent range.” 

Two growth areas will be 
plants r unning 1 off luprid natu- 
ral gas (LNG) and nuclear 
energy. 

Japan has always been 
extremely nervous about the 
fact that it depends on the out- 
side world for almost all its 
energy requirements, and has 
been trying to cut down the 
amount af power it generates 
from oil to reduce its depen- 
dence on the Middle East LNG 
and nuclear has been a major 
feature of this policy. 

In 1978, Japan generated 60 
per cent of its electricity from 
oil, but last year that was 
down to 16 per cent In 2003 the 
figure is expected to foil fur- 
ther to 10 per cent, according 
to Tepco. 

LNG accounted for 33 per 
cent af total electricity genera- 
tion in 1993, which should rise 
to 37 per cent 10 years later, 
while the nuclear proportion 
will increase from 25 per cent 
to 26. 

There Is also a move towards 
upgrading existing facilities 
with equipment that Is cleaner 


Land of the rising paradox 


and more efficient- The niflfa 
feature of this Is 
combined-cycle systems, which 
can boost energy use efficiency 
some five per cent to around 48 
per cent 

“The modernisation and 
upgrade and replacement is 
similar to what was seen 10 
years ago in the US." says 
George Butterfield, president 
of Westinghouse Energy 
Systems Japan. “A lot of 
equipment for the growth 
period in Japan in the 1960s 
and 1970s is r e a ch in g the age 
for modernisation.” 

Tepco says it has already 
increased capacity by replacing 
some of the ther mal facilities it 
started up during the period 
from the late 1950s to 1970. It is 
now considering scrapping a 
plant in Shinagawa In Tokyo, 
consisting of three 125MW 
generators, and building a 
1.108GW facility instead. 

Recently, however, recession 
and two successive cold 


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summers, which cut electricity 
demand from air condi tioning , 
have eaten into the power 
companies’ revenues, 
prompting them to rein in 
their spending on new capital 
equipment Tepco announced 
in April that its capital 
Investment for the 1994/95 
fiscal year (ending March 31, 
1995) will fell 0.2 per cent from 
the previous year to 1.692 
trillion yen - its first decline in 
seven years. 

Combined Investment by 
Japan's 10 electric power 
companies is likely to slip 
below five trillion yen in the 
year, from 591 trillion in 1993/ 
94. 

"Investment by the utilities 
has been very strong, but it’s 
starting to stow,” says Timothy 
Marrable, a senior analyst at 
Baring Securities (Japan). 

While there may not be 
much good news for Japan's 
market as a whole, it at least 
looks more enticing for foreign 
companies. 

Pressure on Japan, especially 
from the US, to reduce its 
enormous trade surplus has led 
the government here to 
encourage companies In all 
sectors to look beyond their 
domestic suppliers and buy 
equipment from abroad. 

"The requirement to import 
more equipment to offset the 


balance of trade has caused 
Tepco to buy even more 
equipment on a direct basis 
from outside Japan,” says Mr 
Williamson of GE. “It’s 
opening the door a crack at 
least to outride suppliers." 

However, with the yen 
reaching unprecedented highs 
over foe last six months, many 
companies, under pressure to 


Most business won by 
foreigners has been 
through Japanese firms 


cut costs are all too glad to do 
this. Tepco recently announced 
It would publish annually a list 
of equipment purchases it is 
planning far each year. Also, 
starting with Tepco foe power 
companies are planning to 
increase the proportion of 
outside procurements they 
make through competitive 
bidding which currently 
accounts for only around a 
third of these. 

Westinghouse’s Mr 
Butterfield sees costs as foe 
main factor in the industry’s 
new openness. *T don’t believe 
there’s been restrictions in the 
power industry. It’s difficult to 
do business here because of the 
expectations of foe customer in 
foe power industry and I think 


some of these expectations are 
reasonable," he says. “The 
power companies themselves 
have taken foe initiative to go 
to the world looking for 
components and equipment I 
think cost is more of an issue 
[than trade ftictionl." 

Up to now most of the 
business won by foreigners in 
Japan has been through 
relationships with Japanese 
makers rather than through 
direct sales. Westinghouse has 
worked closely with MHI , 
while GE has relationships 
with both Hitachi and Toshiba. 

GE’s co-operation with 
Toshiba in the gas turbine field 
has included providing 
combined-cycle units for 
Tepco’s Futtsn Thermal Power 
Plant in Chiba, near Tokyo, 
commissioned between 1985 
and 1988. 

It is supplying Hitachi with 
three of the seven gas turbines 
for a 1.650MW Chubu Electric 
Co plant near Nagoya, and 
building nuclear reactors anil 
supplying two LS50MW steam 
turbine generators for the 
world's first advanced boiling 
water reactor plants in Niigata, 
on foe Japan Sea coast Part of 
a Toshiba-led project these are 
foster and easier to construct 
than ordinary boiling water 
reactors and will also ran more 
safely and efficiently. 


Japan’s Big Three join race for East Asian orders 


Too quiet at home 


SLOW GROWTH at home is 
making Japan’s power equip- 
ment makers torn to the high 
growth East Asian markets. 

They are led by Toshiba and 
Hitachi, better known for their 
light electronics products, and 
Mitsubishi, foe heavy indus- 
trial group. 

While the electronics indus- 
try has been suffering over the 
last few years, both Toshiba 
and Hitachi have remained 
profitable thanks to their 
heavy electrical businesses. 

Now, however, these divi- 
sions are also In trouble as 
Japan’s economy slows and as 
Japanese companies become 
increasingly ready to take 
advantage of cheaper imports. 

For the Japanese power 
equipment makers this compe- 
tition reduces their margins 
even when they succeed in 
winning domestic butness. 
"Until now, the power compa- 
nies have stuck with particu- 
lar makers,” says Katsnro Tsu- 
jiyama, manager of the power 
systems marketing planning 
department at Mitsubishi Elec- 
tric Corp (MEG), which pro- 
vides generating equipment 
and electrical systems for 
power stations contracted by 
Mitsubishi Heavy Industries 
(MHI). 

“But this system is collaps- 
ing, partly because of pressure 
from America and Europe,” he 
says. "It has a big effect on ns. 
Baying abroad is cheaper and 
foe power companies can get 
us to reduce our prices.” 

The solution they have hit 
on is a traditional one far Jap- 
anese companies: look abroad. 
However, this time they are 
not eyeing Europe and the US, 
whose markets are marred by 
recession and trade friction, 
bat Asia. Countries with fest- 
growing economies such as 
Malaysia and Indonesia are 
still plagued by power short- 
ages which they want to 
remove as soon as possible. 

“We’re thinking about devel- 
oping countries," says Btiro- 
hara Takayasn, deputy man- 
ager of the overseas marketing 
group of MECTs power depart- 
ment. “The priority market 
now is Hong Kong - the econ- 
omy is g rowing and its Ught 
industry is getting bigger. 
China is the biggest hope for 
the future and Thailand Has a 
lot of potential.” 

Baring Securities (Japan) 
reported last year MHTs 
Asian sales could well rise 
from around 10 per cent of 
total parent turnover in the 
year ending March 31, 1993 to 


around 30 per cent over the 
next five or 10 years. The com- 
pany’s power equipment divi- 
sion increased its export ratio 
from 30 per cent in fiscal 1991 
to 35 per cent the following 
year, it said. 

The pattern of increasing 
demand is rimfiar throughout 
the region. First, demand 
comes from industrial develop- 
ment. Countries i nviting for- 
eign investment need a solid 
i nfra s tru ct ur e, a major aspect 
of which is electric power to 
run factories. Later, consum- 
ers using the products of these 
factories create further 

demand. 

However, countries vary 


At Toshiba and Hitachi, 
heavy plant made up for 
losses on electronics 


widely in how they award con- 
tracts to satisfy this. China, 
says MECs Takayasn, while 
having the largest potential, is 
one of the trickiest markets. 
Foreigners angling for con- 
tracts have to negotiate a 
maze of opaqne regulations 
and tariffs, which often vary 
from state to state. 

Thailand, on the other hand, 
is clear and open, making it 
he says, “the hardest in the 
world”. The Mitsubishi group 
has received an estimated Yen 
30bn order for three steam tur- 
bines and generating equip- 
ment for Indonesia’s Surabaya 
thermal power station, winch 
will make a total of 24 steam 
turbines it has supplied to that 
country's electricity generat- 
ing authority. 

Hitachi and Toshiba are 


moving in the same direction, 
a policy that sits well with 
their company-wide strategies 
to get into emerging consumer 
markets: as well as making 
electricity generating equip- 
ment, they also need electric- 
ity to set up consumer goods 
factories and to see their prod- 
ucts being used in people's 
homes. 

Most developing countries 
want to develop their own 
equipment industries to a 
degree, so participating in 
their markets often means 
local joint ventures or 
co-operation at the teduutogt 
cal or manufacturing level 
rather than exporting com- 
pleted products, according to 
Toshiba. 

While India, Vietnam and 
foe Annan nations are an 
attractive markets, China 
stands out with its vast popu- 
lation, double-digit economic 
growth and untapped natural 
resources. Hitachi says there 
are already plans there to add 
I5GW of new capacity annu- 
ally. Two thirds of this will be 
in thermal plants, to take 
advantage of the country's 
abundant coal, and Hitachi 
announced last November a 
joint venture, Beijing Hitachi 
Huasun Control System, to 
make and sell control systems 
for thermal plants in China. 

In January, It set up a joint 
venture with Harbin Electric 
Machinery Works to provide 
engineering services tar elec- 
tricity plants, mainly in hydro- 
electric power. It hopes this 
company wifi later become a 
base for supplying generating 
equipment 


Ronald Ayers 


Centre of 


gravity 
goes east 


• Couid from previous page 
and his commsits were echoed 
last month by Mr Heinrich von 
Pierer, chairman of Siemens, 
who said Western companies 
and countries should work 
together to help Russia 
improve safety standards at its 
nuclear power stations. 

On the technical side, the 
major suppliers continue their 
quest for ever higher thermal 
efficiency from combined cycle 
power. Developments in the 
past year included the 
announcement by ABB of a 
new range of gas turbines for 
which it is claim fng efficien- 


cies of 5U&5 per cent in com- 
bined cycle. 

Thermal effiriency:r«naiDs 
one of the key advantages of 
gas-fired combined cycle, and 
Dr Hans Baton, a member of 
the executive m anage ment 
group at Siemens KWU, -says 
foe next step Is to reach 60 per 
cent thermal efficiency to com- 
bined cycle. It will not need 

more than two .or three' years 
before such a machine is scad." 
be says. ■/' . 

This month, he says, Sie- 
mens is due to begin! testing in 
Berlin of a new gas tfohfaifi 
which wffi achieve 60 percent 
thermal efficiency in combtoed 
cycle. Dr Btihm thinks the nat- 
ural limit will occur: some- 
where between 60‘ and 82per 
cent, because of .the togb 
research . and development 
costs required ester to -raise 
temperatures ' by a -small 
amount. 



. ^ he international supplier qf computerised cable 
identification systems for the power generation Industry- 


A GE craftsman at GE’s manufacturing faefflty at Schenectady, New Yocfc, checks the replacement rotor of a large steam turbine to bo used , 
nuclear plant In the northeastern United States. Schenectady is the world’s largest steam turbine and generator manufacturing plant 


Cntchley Ltd. Brimscembe, Stroud, England 0453 8KS4&1 


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FINANCIAL TIMES TUESnAv 


MAY 17 1994 


in 


POWER GENERATION EQUIPMENT 3 


Profile: TOM GIBSON OF THE GIBSON GROUP 

Slow boat to China 
that got there first 


Tam Gibson likes to keep his 
Chinese customers and official 
contacts happy on their fre- 
quent visits to bis company's 
headquarters in Glasgow. He 
pats them np in a company 
guesthouse with a Chinese 
cook. 

Doing business in China is 
all about bonding long-term 
relationships and establishing 
trust, says Mr Gibson, chair- 
man of Gibson Group. For the 
small hot fast-growing power 
plant contractor, these rela- 
tionships are vital - all its 
business is to China. 

Mr Gibson worked for Bab- 
cock before setting op an engi- 
neering contracting business, 
Gibson Wells, in 1978. Poor 
years later, the company was 
sold to Foster Wheeler, but not 
before it had. won & contract to 
build the power station for the 
Daqlngr oilfield In Heilongjiang 
province. 

In 1990,. Mr Gibson bought 
the company back from Foster 
Wheeler for a nominal sum. 
He had been working in the 
late 1980s for GEC selling 
power stations in China, and 
saw a “massive niche” bond- 
ing smaller power stations 
there tibiat would not interest 
the big boys of the industry 

Having completed one can- 
tract already, albeit some 
years previously, Mr Gibson 
had a head start in winning 
further business In China. 
Since 1990, his c omp any has 
picked up three more power 
contracts, all for coal-fired chp 
plants: two 30MW stations, Wa 
Fang Dian and Che Re Goa at 
Dalian, and a £36m contract 
for a plant at Fushun. 

Much to Mr Gibson’s sur- 
prise, he also won a contract 
last year from the Dalian 
Munidpel Engineering Depart- 
ment to supply a traffic light 
system for the southern Chi- 
nese city. Gibson Group has 
no expertise in traffic lights, 
but Dalian wanted to work 
with the company, and Gibson 
Group is now working with 
GEC to fulfil the contract. 

Already, the company has 
won some £70m of business 
from China and turnover is 
naming at £3Sm a year- %»- 

- u..ui. ■ 'i-VhVtKiuiAl t 


tag of a contract worth about 
£85m for a 120MW coafcfired 
CHP station at Dadong, 
Guangad province, is near. 

AH this for a company with 
fewer than 50 employees and 
only six permanent staff tn 
China, in two offices in Bei- 
jing. Mr Gibson has often con- 
sidered increasing the Chinese 
representation, but says the 
Chinese want to work with a 
British company s**d have the 

opportunity to visit the UK. 

Mr Gibson, mea nw hile, has 
made around 40 trips to China 
building the long-term rela- 
tionships that have brought 
success. “They trust us,” be 
says. Patience, he makes dear, 
is a virtue when negotiating 
contracts - “nobody few winks 
a decision, but everybody has 
a veto,” says Mr Gibson. The 
process can take years, and it 
Is always necessary to have 
some talks continuing while 
other contracts are being car- 



Qfosorc surprise at the sudden 
stress an Hang Kong democracy 

rled out, to maintain momen- 
tum. The company has already 
spent three years - and 
£800,000. - bidding for the 
Dadong contract. 

But Mr Gibson quotes a say- 
ing that often proves to be the 
case when H .seems that nego- 
tiations have become bogged 
down intractably: “In . China, 
everything is impossible, but 
anytirfng'ifi posstMe.” In other 
word* somehow, a way will be 
found round a problem. 

Hr Gflwou has also benefited 
from good contacts at home. 

Former ' Prime Minister 

n 4 *> P-t » 


Edward Heath has helped the 
company, and Mr Gibson will 
he accompanying Mr Richard 
Needham, the trade mi n k h w, 
on a 'visit to China in the 

au tumn . 

He has also struck up a good 
relationship with the Depart- 
ment of Trade and Industry 
and the Export Crwflts Guar- 
antee Department (ECGD). 
While some exporters moan 
about the help they receive, 
Mr Gibson gays he has 
received strong support The 
four recent Chinese contracts 
were financed with aid from 
the UK, while the forthcoming 
job will be paid for with a 
“super-subsidised loan”. 

Mr Gibson is now position- 
ing the company to participate 
in much larger power station 
contracts in China, up to 
about 350MW. The company is 
working very closely with 
Rolls-Royce on one contract 
for which Gibson Group is 
contributing its relationships 
with the prospective Chinese 
clients. But it needs to work 
with Rolls-Royce and similar 
companies to handle contracts 
of such a size, says Mr Gibson. 

For the future, a number of 
smaller Chinese contracts are 
being discussed, along with 
three much larger bufid-oper- 
ate- transfer (BOD schemes 
Involving Mission Energy or 
the US and Rolls-Royce. Each 
scheme would be worth about 
£300m, says Mr Gibson, bat it 
will take another two years to 
get contracts signed. 

Mr Gibson has been looking 
very seriously at Vietnam, 
Malaysia, the Philippines and 
Indonesia, bat has plenty to do 
in China even if he has all Us 
eggs in one basket. 

He is not worried by the 
political problems between the 
HE and China over the future 
of Hong Kong, although he 
says the row is “bloody annoy- 
ing”. Echoing a view typical of 
UK businessmen eyeing the 
Chinese market, be asks why 
democracy is suddenly so 
important now in Hong Kong 
when it wasn’t 10, 50 or 100' 
years ago. 

Andrew Baxter 


T he uphill campaign by 
tariepenfent power pro- 
ducers to establish a 
strategic foothold in the state- 
dominated Asian electricity 
industry has received a sharp 
boost in the past year as a 
result of several private sector 
projects. 

At the same time, overall 
energy growth In Asia will 
boom at 4 par cent per year 
over the next 20 yearn, says the 
International Atomic Energy 
Agency, more than double the 
growth in the west 
Natural gas wm be the fast- 
est growing energy tael in the 
region, providing a further 
spur to independent producers 
as gas-fired units can be built 
twice as fast as coal units. 

The recently-negotiated pro- 
jects underline the growing 


Frank Gray reviews trends among Asia’s utilities 

Faint smell of gas 


meats, notably in South Asia 
and Southeast Asia, of the 
need for greater public 
accountability and the reduc- 
tion in electricity price subsidi- 
sation. These changes in per- 
ception are helping establish a 
more hospitable environment 
for independents to negotiate 
thgir deafa. 

In India, the US- Enron 
Power Development Group 
signed a 20-year power par- 
chase agreement with the 
Maharashtra State Electricity 
Board, which will allow it to 
supply the first phase of a 
2.015MW gas-fired (LNG) pow- 
ered plant and related facili- 
ties. 

The scale and nature of the 
project - costing more than 
$2bn and using an imported 
fuel - makes the deal excep- 
tional in a catalogue Of some 70 
Indian power projects seeking 
private sector partnerships. 
The first phase, now nearing 
construction start, calls for a 
695MW unit costing 1930m, to 
be followed by a 1.320MW sec- 
ond phase. Equity partners 
with Enron are General Elec- 
tric and Bechtel of the US. 

The buHd-own-operate proj- 
ect will recoup its costs from 
the MSEB through the sale of 
power at 7J5 US cento par kilo- 
watt hour. The deal followed 
about 18 months of negotia- 
tions - not hmg .by interna- 
tional standards - i*nmp 
an the hsnifo of a similar pack- 
age of independent power deals 
involving British companies 
National Power, British Gas 
and Rolls-Royce, the largest of 
which is a 1.000MW coal-fired 
power station at Visakhapat- 
nam on the Andhra Pradesh 
Coast 

Independent power produo- 
ears are also encouraged by the 


success hi Indones ia of a US- 
Japanese consortium’s 
1.200MW coal-fired Faiton 
power project on east Java. 
The deal is the first sizeable 
independent power deal in 
Indonesia and involves project 
leader M is sion Energy of the 
US and partners General Elec- 
tric of the US, Mitsui of Japan 
and PT Bate ffitamBsrkasa of 
Indonesia. Construction, will 
start early next year with foil 
power from the project planned 
for early 1998. 

The breakthrough in Asia's 
third-most populated country, 
after China and India , ham sent 
power plant equipment suppli- 
ers and potential project spon- 
sors scurrying to the archipel- 
ago. 

Enron, for example, recently 
submitted a feasibility study 
for a joint venture agreement 
for Indonesia’s first forge gas- 
fired plant in East Java. 

The 500MW integrated power 
project is aimed at taking 
advantage of Jakarta's policy 
to bring gas-fired power gener- 
ation into Indonesia’s mrr of 


coal, oil and hydroelectric 
power generating stations. 

The restructuring of the 
industry is not limited to inde- 
pendent power groups setting 
up alongside state utilities. 
There is also the overhaul and. 
In some cases, market flotation 
of the state groups themselves. 
The main reasons are to 
ensure the delivery of efficient 
electricity plant quickly and to 

Energy growth in Asia 
is expected to boom at 
4 per cent a year over 
the next 20 years 

relieve the state of the onerous 
financial burden of build all 
plant under its own wing. 

Legislation was passed in 
Pakistan in April to authorise 
the sale to the private sector of 
thermal power stations oper- 
ated by the Water and Power 

Development Authority. Indon- 
esia's PLN is also bring pre- 
pared for a minority flotation, 
along the lines, two years ago, 


of the 22 per emit divestiture 
by the Malaysian government 
of Tenaga National Berhad, 
the state utility. 

Thailand’s Electricity Gener- 
ating Authority Is preparing to 
set up private sector subsid- 
iaries and is hiving off some 
thermal power unite to inde- 
pendent power operations. The 
Manila government is groom- 
ing the National Power Carp, 
for flotation and plans to allow 
power distributors to built 
their own power stations. Even 
Singapore's efficient Public 
Utilities Board ha« announced 
that its gas and electricity 
business will be commercial- 
ised in about two years. 

It is doing so as it prepares 
the groundwork for the $5bn 
4.800MW Tuas oil-togas power 
complex, to be built by the end 
of the century. 

In terms of equipment sup- 
ply, the ascendancy of gas as 
an important power station 
fuel Is stimulating more inter- 
est in gas-fired projects, both 
by independents and the state 
utilities. Despite the move to 


privatisation, it is state utili- 
ties which still provide the 
vast majority of orders, 
although this is diminishing 
steadily. 

According to David Gcnever- 
Watling, chief executive of 
General Electric Industrial 
power Systems of the US, the 
Asian power generation equip- 
ment market should account 
for 45 per cent of all power 
equipment orders in the 1990s. 
This meant 462.00QMW of 
power equipment orders. Of 
this, 206.000MW would be for 
coal/steam turbines and 
&4.000MV? for hydropower, 
emphasising the point that 
hydro and coal potential in 
Asia are available in enormous 
quantities, albeit not always in 
the right places. 

Significantly, gas, which 
scarcely figured in the equa- 
tion a decade ago, is now loom- 
ing larger, with a prediction of 
82.000MW for combined-cycle 
and 37.000MW for gas turbines. 
GE's prediction also noted that 
nuclear equipment over the 
next it) years would account 
for 50.000MW of orders, 
although this is concentrated 
mainly in Japan, Taiwan and 
Korea. 

China is only now making its 
first foray into nuclear and 
Indonesia will not be a factor 
for a decade. 





A M87P01FA ga» turfafoa hw GFa manufacturing tacEty at Groac rvMa, 3. Carolina, for Sfthe Cna r gtea * 1.000MW power station at Oswego, Hew 
York, which, on completion next Januwy. wfi be the biggest cogeneration facBty ki the US owned and operated by an independent power producer 


Applying technologies 
leads to great advances 


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V 




FINANCIAL TIMES TUESDAY MAY 17 1 994 


IV 

POWER GENERATION EQUIPME NT 4 

Ian Rodger describes how ABB is working to make gas turbines even more fuel efficient 


New ways of taking the heat 


Thermal efficiency is a key 
factor in power generation 
equipment, and it has long 
been a harder to further devel- 
opment of gas turbines. 

The conventional way to 
improve the thermal efficiency 
of a gas turbine is to increase 
the heat of the gases coming 
through the combustion cham- 
ber. But the problem with that 
is that the greater the heat, the 
more durable the critical com- 
ponents, such as turbine 
blades, must be. 

Manufacturers of both aero 
engine and industrial gas tur- 
bines have for a long time been 
straining against the endur- 
ance limit s of metals and 
applying ever more sophisti- 
cated techniques to remove 
heat transmitted from the gas 
to the blades. 

Through this approach, net 
thermal efficiency of gas tur- 
bines in combined cycle config- 
urations has risen from the 40 
per cent range in the early 
1980s to the 55 per cent level 
today. However, manufactur- 
ers know there is not much 
further progress to be made 
through this route, not least 
because, as heat increases, so 
do nitrous oxide (NOx) emis- 
sions. 

ABB Asea Brown B overt one 


of the three international sup- 
pliers of industrial gas turbines 
that runs some distance behind 
market leader General Electric 
of the US, startled its competi- 
tors last September by announ- 
cing a new range of turbines 
based on a novel approach to 
the problem of raising thermal 

efficiency. 

The ^ain innovation in the 
new GT series is the adoption 
of two combustors, instead of 
one, installed sequentially 
along the rotor and separated 
by a single-stage turbine. The 
idea is that more power can be 
generated for each increment 
in heat. 


Turbine manufacturers 
have long been straining 
against the endurance 
limits of metals 


An initial burst of power is 
generated in the single-stage 
turb in e by the expanding gases 
coming oat of the first combus- 
tor and then further power is 
generated in the normal multi- 
stage turbine following the sec- 
ond combustor. The concept 
has long been used in steam 
turbines. 

Zurich based ABB said the 


first versions of its new GT 
sales turbines would achieve 
gross thermal efficiencies of 58 
per cent to 58.5 per cent, 
roughly two per cent higher 
than any other in the 

market. This improvement 
could give a combined cycle 
user more than 15 years 
savings with a present value of 
$40m, ABB claimed. 

Ironically. ABB first pro- 
duced a dual combustor gas 
turbine in the 1950s, but with 
silo type combustors over the 
top of the turbine. They woe 
well suited for dealing with dif- 
ficult fuel combinations, but 
not particularly efficient One 
problem with them was that 
the fuel did not spread evenly 
as it changed direction to move 
into the turbine, and so left a 
high volume of emissions. 

To solve this problem. ABB 
developed a more efficient, 
multi-nozzle burner in the late 
1380s, which it claimed would 
reduce NOx emissions from 60 
parts per million to 25ppm. 

At the same time, it was 
developing an awuTar combus- 
tor system similar to those 
used in aero-engines. The idea 
is to wrap the combustor noz- 
zles around the turbine so that 
the fuel flows evenly - and in- 
line rather than perpendicu- 


larly - into the compressed air 
stream, contributing to better 
performance as well as fewer 

pmisfilonfl 

ABB installed its first anolar 
combustor in a peaking power 
turbine built by. Kawasaki 
Heavy Industries of Japan 
under licence tor Tokyo Elec- 
tric Power last year, ft is a 
164MW 50-cycle (hz) installa- 
tion, and the design was 
approved for general use in 
Japan by the Ministry of Inter- 
national Trade and Industry 
(Mm) at the beginning of this 
year. 

From there, it was a rela- 
tively smaJl step to thin k of 
putting anular combustors tntn 
a sequential combustion con- 
figuration. One potential com- 
plication was that the whole 
machine would have to be 
lengthened to accommodate 
the extra turbine and combus- 
tor, possibly creating a need 
for a third bearing and perhaps 
a second rotor. But ABB found 
that its rotor, made of welded 
discs, was strong enough to 
support the additional load 
suspended between two bear- 
ings at each onH 

The company is offering two 
GT models. The GT24 for 60 
cycle power systems is to pro- 
duce 165 MW of power and 


achieve gross efficiency of 58 
per cent in combined cycle 
applications. The GT26 for 50 
cycle applications, will produce 
24QMW of power and achieve 
585 per cent efficiency. 

The claimed $40m cost sav- 
ing from these systems was 
based on a 15 year period, with 
20 per cent equity financing, 
an average nine per cent inter- 
est rate and a fuel cost of $5 
per million Btu. “The saving 
would be greater if the fuel 
price goes higher," says Fritz 
Gautschi, senior vice-president 
and general manager of ABB's 
turbine division. 

ABB announced as initial 
$S0m order for the GT24 from 
Jersey Central Power and 
Light in New Jersey, USA, 
which will initially be a single 
cycle peaking power applica- 
tion. It is to be delivered at the 
end of this year and upgraded 
to combined cycle by Septem- 
ber, 1996. 

The group has been very 
pleased with the reaction to its 
new approach. “There has been 
enormous interest from cus- 
tomers and from engineering 
consultants, and a total 
absence of mudslinging from 
our competitors," Mr Gautschi 
says. 

That is not to say that com- 



GT24/26 

A<Jvanced;C^de %stem ; 


ABB's advanced cycle idee an artist's 
combustion system, fn combined cycle, 


petitors are uncritical. Mr Rod- 


of a gas turbine thermat block fuhrtig 


ger Bricknefl, vice-president, 
marketing and product man- 
agement of GE industrial and 
power systems, suspects the 
claimed efficiency gains will be 
less than advertised once the 
gross figures are boiled down 
to net figures. 

ABB concedes that GE’s best 
performing F series turbine at 


Seoinchon in Korea achieves 
net efficiency of 553 per cent, 
only 1.4 points less than the 
piann pri level of the GT24. But 
the average of the eight tur- 
bines installed at Seoinchon is 
over two points lower, ABB 
believes. 

BrickneU also wonders if the 
GT24 is going to operate at a 
significantly lower tempera- 


ture than the 2250F of the F 
series. ABB said it would he 
"slightly below". 

BrickneU says GE believes 
there were ways other than 
sequential combustion of ach- 
ieving significant thermal effi- 
ciency gains, “but we are not 
in the habit of giving the com- 
petition something to shoot 
at". 


Unrest fails to dent Russia's attractions, reports Andrew Baxter 

Partners see growth potential 



Undeterred by the political 
upheaval in Russia over the 
past 12 months, western power 
equipment suppliers have been 
forming a number of joint ven- 
tures to ensure they are posi- 
tioned to exploit the country’s 
tong-term growth potential. 

Leaving aside the controver- 
sial issue of where the financ- 
ing wQl come from to fund the 
virtual rebuilding of the Rus- 
sian power sector, there is gen- 
eral agreement among suppli- 
ers on what needs to be done. 

First, the oldest Chernobyl- 
type nuclear power stations 
have to be dosed down, and 
the newer reactors should be 
modernised. Secondly, new 
power stations have to be built 
quickly to replace the older 
nuclear stations — and for a 
country with the world's larg- 
est gas supplies that suggests 
qnick-to-build gas-fired com- 
bined cycle plants. 

Thirdly, the existing gas- 
fired stations in Russia need 
to be repowered to make them 
more efficient - ending the 
wastefulness that has devel- 
oped because supplies of gas 
are so plentiftiL 

Tbe joint ventures are aimed 
at addressing one or more of 
these needs but are also 
intended to recognise that, as 
Mr Fritz Gautschi. a senior 
executive in ABB's power gen- 
eration business, puts it, "Rus- 
sian potential clients have fit- 
tie or no bard currency". This 
means that, as for as possible, 
high-value added machinery 
has to be built in Russia 


rather than imported. 

Mr Gantschi sits on the 
board of two joint ventures 
which ABB has announced in 
the past few months in Russia. 
In September, the Swiss-Swed- 
ish group formed a joint ven- 
ture with Saturn, a Russian 
company that produces aero- 
engines and other high-tech 
equipment. The venture, ABB 
Unitnrbo, will supply power 
generation components and 
was thus a precursor of a sec- 
ond, bigger deal announced by 
ABB in January. 

In this rifial, ARB teatnal op 

with Nevsky Zavod, a big man- 
ufacturer of gas and steam tur- 
bines, to create St Petersburg- 


New capacity must be 
built quickly to replace the 
Chemobyl-type plants 
which need to be shut 


based ABB Nevsky, which will 
make the latest ABB designs 
of turbines, power plants and 
related equipment for the Rus- 
sian market 

The two ventures have 
begun with a total workforce 
of 1,800, and will work 
together, with Uniturbo sup- 
plying puts to Nevsky. Thus 
ABB is developing a network 
of interdependent plants 
which is analogous to the sys- 
tem operating across much of 
the modern western equip- 
ment industry. 

One of the challenges, how- 
ever, is to develop the similari- 


ties with the west throughout 
the supplier base for the facto- 
ries. Suppliers of strategic 
materials, which otter the 
break-up of the Soviet Union 
may not even be in Russia, axe 
having to be educated about 
supplier-customer relation- 
ships, says Mr Gautschi. 

Within the factories, though, 
ABB is on schedule with such 
thing s as Twfa m iu ring its pro- 
cesses and methods, reorganis- 
ing layouts, and training 
employees. The aim, says Mr 
Gautschi, is to train local peo- 
ple as quickly as possible. 

Modi as tat the few other 
wes te rn companies with man- 
ufacturing joint ventures in 
Russia, the general manager 
of the ventures is Russian 
while his deputy is a non-Rus- 
sian. ABB has also brought in 
outsiders as financial control- 
lers and engineering experts. 

Mr Gantschi will not say 
how much ABB has spoil on 
the ventures, lmt says it Is a 
significant sum if all the 
investment in training, and 
management time, is included. 

He stresses, though, that the 
investment is not dime out or 
charity. Depending an how the 
first year works out. ABB is 
looking for the ventures to 
start producing a positive pay- 
back after about two years. 

The ABB ventures are hop- 
ing to clinch their first orders 
in the next few weeks, but 
meanwhile Siemens of Goman 
has already delivered equip- 
ment from Interturbo, its St 
Petersburg-based venture with 


turbine manufac turer LM Z. 

Last month. Inlet turbo com- 
pleted its second 150MW gas 
turbzne, which like the first 
will be incorporated by Sie- 
mens into world market pro- 
jects. Interturbo will also man- 
ufacture four additional gas 
turbines for the St Petersburg 
Northwest combined-cycle 
cogeneration power station 
and a further four units for 
the Aktyubinsk IPP combined- 
cycle plant in rarrakfmim i . 

Last year, Siemens also 
announced two further power- 
related ve n t ure s in Russia, fn 
August, it said it would 
co-op erate with Kaluga-based 
KTZ, Russia's largest manu- 
facturer of Industrial turbines, 
in the production and market- 
ing of industrial steam tur- 
bines and power plants. 

Three months later, Siemens 
announced tt was establishing 
a Moscow-based joint venture, 
TnferanfonyifilMi , to handl e the 
engineering, sales and market- 
ing of Siemens instrumenta- 
tion and control equipment for 
fossil-fuelled power plants. 
Siemens sees the venture as a 
milestone towards playing an 
active role, as a partner in the 
Russian power supply indus- 
try, in the modernisation of 
the country's power plants. 

If the European suppliers 
have more solid evidence of 
activity from their joint ven- 
tures, their US rivals have also 
been active or are at least hop- 
ing to be so. 

Westinghouse last month 
announced two power-related 


business agreements which 
will significantly increase its 
presence in Russia. 

An agreement signed with 
Mmatom, the Russian Minis - 
try for Atomic Energy, will 
enable Westinghouse to begin 
establishing partnerships that 
will concentrate on modernisa- 
tion and safety enhancement 
of operating nuclear power 
plants, and on completing 
plants that are under construc- 
tion by applying current 
safety technology. 

As part of the deal, there 
will also be a joint venture for 


thu design and manufacture of 
instrumentation and control 
systems and another that will 
provide unclear fuel cycle ser- 
vices worldwide. 

In a second agreement with 
RAO Rosa, the world's hugest 
utility, the US company will 
become involved in projects to 
improve powm* plant efficiency 
and reduce emissions. 

The two organisations will 
jointly pursue opportunities to 
modernise existing turbine 
generation, repower older sta- 
tions with state-of-the art 
equipment, and develop new 


power projects. The companies 
will do engineering jointly, 
but will also have co-manufac- 
turing initiatives with other 
leading Russian companies. 

General Electric, meanwhile, 
does not yet have any direct 
power-related joint ventures in 
Russia, although it was a sig- 
natory to a deal in 1991 
between Anglo-French GEC 
Alsthom, with which it has 
technology links, and the St 
Petersburg-based Kirov 
Works. The venture Is produc- 
ing 25MW gas turbines for 
gas-pumping applications. 


But Mr Ronald Pressman, 
chief executive of GE Power 
Systems Europe, says Russia is 
"pretty fertile ground for part- 
nerships”. GE views itself bath 
as a supplier of gas turbines to 
Russia mid as a potential part- 
ner with a Russian steam tur- 
bine manufacturer to serve the 
combined cyde market 
In time, GE wants to become 
a local player in Russia, he 
says, and would prefer to 
develop more of a "greenfiekr 
partnership with a smaller 
company rather than with an 
existing large organisation. 


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nology outperforms all others: 
from fossil, nuclear, and hydro 
generation, to air quality 
control, to transmission and 
distribution. 

One company -with Four 
times the experience of any 
other supplier-and, the depth 
to provide total solutions - 


from project feasibility, to 
extended scope, to project 

financing. 

One company, unmatched 
for complete life cycle support - 
from advanced planning, to 
parts and upgrades, to opera- 
tion and. maintenance services. 

And finally, one company 
with both the commitment to 
technology leadership and the 
R&D resources to back it up. 

In a world of uncertainties, 
there is one choice you can 
count on. 

That choice is GE. 




FINANCIAL TIMES TUESDAY MAY 17 1994 


V 



POWER GENERATION EQUIPMENT 5 







With four separate utflftles Dubai (above) is leading ttw mam to private power Picture: Tony AnCtews 

Pat Kimber studies electricity reform in the UAE 

Privates on parade 


End of debt crisis offers hope, says Stephen Fidler 

Latin America starts to 
turn on the lights again 


T he United Arab Emir- 
ates, in common with 
many Gulf states, is 
affected by the continuing low 
oil revenues. So for the past 
few months there has been talk 
of privatisation and the intro- 
duction of independent power 
producers (IPPs). 

Privatisation, it is argued, 
would release funds for other 
projects, cut bureaucracy and 
speed decision-making. 

The opposing arguments are 
practical and emotional. They 
include the difficulties of pri- 
vate sector involvement in a 
complex power-producing sys- 
tem and a previously unchal- 
lenged policy of cheap electric- 
ity for the people. 

But now things are chang- 
ing. An official announcement 
that the government is to 
finance a study cm the privati- 
sation Of public Utilities namt» 
on the heels of the federal fifln- 
istry of Electricity & Water's 
l"MEW) hint that it will phase 
out subsidies. 

Tariffs have remained 
unchanged since federation in 
1971, with no regard to power 
costs or inflation. Electricity 
prices will now begin to be 
raised - initially from two US 
cents to a still very low three 
cents a unit 

Close attention has been 
paid to what the neighbours 
are doing. British Gas in Bah- 
rain and international group 
UPGI in Oman are already 
building gas turbine plants. In 
Qatar the government has set 
up a private company which 
will eventually run all its 
power stations. 

Rumours have been circulat- 
ing in Dubai that, private sec- 
tor companies are ready to con- 
struct power plants on the 
build-operate- transfer (BOT) 
and build -own -ope rate (BOO) 
systems, so popular in the Far 
East 

It is not surprising that 
Dubai - the long-established 
trading centre of the region - 
should be the prime mover on 
privatisation si nce it has four 
separate power and water 
authorities. 

The UAE was formed by the 
federation of seven emirates - 
Abu Dhabi, Dubai, Sharjah, 
Fujeirah, Ajman, Ras A1 Khai- 
mah and Umm A1 Qwain. 
Before federation e « c h emirate 
had its own utility and it was 
a ssum ed that the newly set-up 
MEW would take responsibility 
for the whole country. 

It never came about. The 
three large emirates of Abu 
Dhabi, Dubai and Shatj ah still 
run their own electricity 
organisations while MEW 


looks after the four smaller 
emirates which have compara- 
tively little income and very 
sca ttered populations. 

MEWs budget this year is 
around $100m, according to 
minister Hmnaid bin Nasser A1 
Owais. This will provide 
another ISO megawatts in the 
northern emirates which the 
federal ministry administrates. 

MEW is headquartered in the 
federal capital, the city of Abu 
Dhabi, under minister A1 
Owais. The deputy minis ter, 
Saaed Majid A1 Shamsi, works 
mainly from Dubai. “MEW is 
politically responsible for elec- 
tricity and water,” he said. 

“We represent the UAE 
internationally - for instance 
on negotiations for the pro- 
posed Gulf grid project. We 
also cooperate with the elec- 
tricity companies in the three 
large emirates - especially on 
tariffs which are highly subsi- 
dised throughout the counfry.” 

Of the UAE’s entire total 
installed capacity of 5.500MW, 
s ame 900MW is controlled by 
MEW and is mostly gas tur- 
bines with 130MW from diesel 
generating sets in the more 
remote areas. It is also respon- 
sible for a 132 kilovolt trans- 
mission network which is 
being upgraded by UK consul- 
tants Ewbank Preece. 

Power in Abu Dhabi emirate 
(including the city) is looked 
after by its own Wat er an d 
Electricity Department (WED). 
The WED is now in the process 
of adding some LDOOMW to its 
present generating capacity of 


2.440MW. By far the largest 
slice of this will crane from the 
SL8bn 732MW A1 Taweelah B 
power and desalination plant - 
an extension to the original 
253MW A1 Taweelah A commis- 
sioned in 1985. 

A1 Taweelah B is being built 
by a consortium headed by 
Asea Brown Boveri. the Swed- 
ish-Swiss multinational, and 
hvfluriing ABB Kraftwerke of 


Tariffs have remained 
unchanged since the 
UAE was formed in 1971 


Mannheim, SAE Sad elm! of 
Italy and Six Construct of Bel- 
gium. Tract ebel of Belgium Is 
the consulting engineer for the 
project which will be the 
world's largest power and desa- 
lination station when it comes 
on stream in 1996. There is cer- 
tain to be yet another exten- 
sion and ABB looks to be a 
frontrunner for this contract 
when it is announced. 

Other WED power projects 
under construction include 
Medina Zayed (60MW), the 
200MW Abu Dhabi main power 
station extension and 100MW 
at A1 Ain. 

A 2Q0MW gas turbine station 
with desalination plant is aim 
being built in Mifra by a con- 
sortium led by Ansaldo Ener- 
gia with gas turbines by Sie- 
mens. Deutsche Babcock of 
Germany has a $74m contract 
to undertake power station 
maintenance and refurbish- 


ment work. WED has commis- 
sioned UK consultants Kenn- 
edy & Donkin (recently merged 
with the US Rust organisation) 
to study existing transmission 
networks and make recommen- 
dations for future demand. 
Ewbank Preece is overseeing 
two new 220kv links and the 
enhancement of an existing 
220 kv overhead line system. 

Proposals to build a load des- 
patch centre to monitor all the 
water and electricity flows in 
Abu Dhabi emirate have 
finally been accepted by WED. 
The $90m contract has been 
awarded to ABB. 

Electricrte de France (EdF) is 
consultant for the project 
which will involve a regional 
centre in A1 Ain. Power Mea- 
surement of Australia is sup- 
plying instruments to monitor 
the grid system. 

Sharjah is in a construction 
boom reminiscent of Abu 
Dhabi and Dubai in the late 
1970s and early 1980s. The 
Shaijah Elec tricity and Water 
Department (SEWD) currently 
produces some 700MW, nearly 
all from its Layyah. station in 
Sharjah town. Two General 
Electric Frame 9E gas turbine 
units and additional riemiina- 
tion plant are now being 
installed. 

This will help to meet the 
high summer peak when the 
24-hour air conditioning 
demand often overwhelms the 
emirate's ability to cope with a 
rapidly Increasing population 
attracted by the rapid building 
programme. 


Distribution remains a prob- 
lem on a network which 
started life supplying power to 
the long-departed British 
forces base and airfield. A new 
link is to be built from the 
Sajaa gas field to Layyah and 
further major power line 
ingtaTiatirme are planned. 

Dubai has seen a phenome- 
nal growth in its power supply 
since the first lights were 
switched on in 1961. The 
recently set-up Dubai Electric- 
ity & Water Authority (DEWA) 
has grown out of the Dubai 
Electricity Company which 
dates back to 1959. 

Capacity was then just 
1.4MW from privately owned 
generators. Now it is nearly 
2.000MW and increasing, as 
more plants come on stream 
this year. In March, the 457MW 
Jebel Ali G power and desali- 
nation station built by a Sie- 
mens-led consortium was frilly 
commissioned 

Jebel AH E is undergoing a 
$8im conversion to combined 
cycle by a consortium led by 
ABB Kraftwerke. Kennedy & 
Donkin is consultant for the 
project which includes ABB 
SAE Sadehni for civil works 
and boiler supply by Combus- 
tion Engineering (Italians). 

The extension will add two 
waste heat recovery boilers to 
the GE Frame 9E gas turbines 
installed in 1992. The much- 
talked-about Jebel Ali H is 
alm ost certain to appear in 
DEWA's plans before the year 
is out 

Dubai’s primary I32kv trans- 
mission system voltage has 
been reinforced by a 400kv net- 
work u tilising the latest tech- 
nology. 

The construction work was 
undertaken by the National 
Thermal Power Company of 
India (NTPC) which has 
recently opened an office In 
Dubai to supervise its 
increased workload in the 
emirates. 

Last year, DEWA was fre- 
quently in danger of having to 
cut power supply. This would 
have been a severe blow for 
the extremely efficient utility 
and for the people of Dubai 
who enjoy a highly-sophisti- 
cated lifestyle. 

Kennedy & Donkin is advis- 
ing DEWA on upgrading its 
control and management 
systems but the possibility of 
black-outs has forced power 
engineers into thinking that 
yet another large station, 
either mmhinBd cycle or steam 
turbines, must be sanctioned. 
It could be the UAE’s first 1PP. 
□ Pat Ember is editor of Mid- 
dle East Electricity 


By any measure, Latin 
America's need for new power 
generating capacity is huge. 
The World Bank expectsde- 
mand of $24bn a year for 
power projects in the region in 
coming years. 

There is no doubting the 
need: the debt crisis brought 
new spending on power pro- 
jects almost to a halt across 
the region. The big electricity 
deficit that developed has led 
to widespread power cuts In 
many countries. In some, such 
as Colombia and Honduras, it 
has had a palpable effect in 
slowing economic growth in 
recent years. 

The debt crisis brought 
about another development: 
budget stringency led many 
governments to shed responsi- 
bilities, to privatise and to 
encourage privately-financed 
projects in areas previously in 
the government domain. 

Yet handing over more 
responsibility to the private 
sector has raised questions 
about how growth in generat- 
ing capacity will be financed, 
particularly since the big proj- 
ect financiers for governments 

- the World Bank and the 
InterAmerican Development 
Bank - are unable, or have 
limited ability, to lend direct 
to the private sector. 

The reaccommodation of 
Latin America in the world's 
financial markets has helped 
to ease the way, although 
many international banks 
remain inhibited from lending 
for a variety of reasons. Only 
ChSe - the pioneer in develop- 
ing p riva te electricity generat- 
ing capacity in Latin America 

- has developed its local capi- 
tal markets sufficiently not to 
depend on foreign finance. 

Bankers agree that the nec- 
essary. if not sufficient, condi- 
tion for private finance is the 
establishment of a regulatory 
regime that lenders feel they 
will be able to trust over a 
long period of time. 

The pricing of electricity is 
of huge political significance 
and governments are often 
tempted to keep prices down 
to preserve their popularity. A 
study by the Latin American 
Energy Organisation (OLADE) 


showed that In 1990 only five 
Latin American governments 
were charging prices at or 
above long-term marginal 
cost “This is changing quite 
rapidly,” said Mr Vljay Chau- 
dhry, head of the power divi- 
sion of the International 
Finance Corporation's infra- 
structure department Now 
more and more governments 
are introducing realistic pric- 
ing policies that send the right 
signals to investors. 

Not everywhere, however. In 
Brazil, where government 
ministers have spoken about 
bringing in private generating 
capacity, the local price or 
electricity is under 5 US cents 


Power cuts are 
widespread and economic 
growth has slowed 


per kilowatt/hour. “You can't 
build world scale generating 
capacity at that price and and 
make money,” said Mr J. Scott 
Swenseo. senior portfolio man- 
ager at Scudder Latin Ameri- 
can Trust for Independent 
Power. This bust, which has 
investment of Sioom, was 
launched with the idea of gen- 
erating some S500m from insti- 
tutional investors. 

In Mexico, where the gov- 
ernment has ostensibly 
allowed independently-fi- 
nanced power generation, the 
state electricity company has 
made life difficult for would-be 
private-sector investors. 

Mr Swensen says many 
investors are comfortable with 
Mexico and there is a big 
scope for large-scale Invest- 
ment in power generation 
there. There have been some 
recent signs of progress on the 
long-delayed 700MW Samala- 
yuca II plant near the US bor- 
der in the state of Chihuahua, 
south of El Paso, Texas. This 
envisaged a 20-year build, 
lease and transfer agreement 
with plant to be owned by a 
consortium led by GE. 

Mr George Aguilera, general 
manager of GE Power 
SystemsJdexico, told a confer- 
ence in January that he expec- 
ted Mexico to add 18 gigawatts 


to its generating capacity over 
the next decade, with steam 
turbines accounting for nearly 
55 per cent of orders. 

New generation orders in 
Brazil were expected to reach 
22GW Argentina llGW. Col- 
ombia 4.5GW and Venezuela 
nearly 10GW. He predicted 
that gas turbines would 
account for 45 per cent of the 
generation mix, with steam 
turbines steady at a little over 
25 per cent and hydro installa- 
tions a little under 30 per cent. 

Some, of these figures might 
seem too high. When generat- 
ing capacity already nnder 
construction comes on stream 
in Argentina, for example, 
some observers think the 
country may even have an 
electricity surplus. Private 
refurbishing of existing plant 
has already generated impor- 
tant gains in capacity. With 
heavy rains helping hydro- 
electricity generation this 
year, prices fell to -1 US cents 
per kilowatt-hoar. 

Bat it is not only in the 
large economies that private 
generating capacity Is coming 
on stream. Two companies. 
Amoco and Southern Electric 
International, have Just won a 
bid in Trinidad & Tobago to 
expand generation to tbe 
installed l.IOOMW capacity. 

And even in countries where 
the overall pricing regime is 
not particularly investor- 
friendly, a growing number of 
stand-alone private projects 
aimed at generating electricity 
for a group of users Is emerg- 
ing. This seems particularly 
workable where the potential 
users have a foreign exchange 
generating capacity - it has 
been used in the Dominican 
Republic to provide power for 
a group of hotels. 

Overall, manufacturers of 
power generation equipment 
are enthusiastic about the 
prospects. Mr Aguilera of GE 
commented: “Latin America 
and the Caribbean, when com- 
bined with the US and Cana- 
dian markets, make a poten- 
tial trading bloc that could 
surpass the European common 
market, and more than hold 
its own against the emerging 
mega-market of Asia." 


SIEMENS 





Increasing efficiency by more than 20% Blading of a gas turbine 



Efficiency - a magic word in power 
generation. Greater efficiency 
means using fewer resources, and 
that in twri is a plus for the environ- 
ment; emissions are reduced and 
our resources conserved, so ther- 
mal and electric power are gener- 
ated with minimum environmental 
impact. New processes and op- 
tions from Siemens are opening 
up new perspectives - in terms of 
cost-effectiveness, too. 


Greater efficiency with combined 
cycles 

Our unfired combined-cycle IGUD®) 
plants have already achieved a 
52.5% efficiency with natural gas 
fuel. For example the Ambarii 
station in Turkey achieves an effi- 
ciency more than 20 % higher than 
the maximum attained by conven- 
tional coal-fired steam power plants. 


Brighter future for coal 
Advanced gas turbine technology 
for GUD plants has also helped us 
to open up new perspectives for 
coal-fired power plants. By pro- 
ducing fuel gas from coal, we are 
able to achieve efficiency levels 
significantly higher than in conven- 
tional coal-fired power plants. 


Clean energy 

Only cost-effective, clean power 
generation will be able to meet the 
growing worldwide energy de- 
mand while conserving resources. 
We are committed to putting this 
principle into practice. In all fields 
of power plant engineering we 
design, develop and supply state- 
of-the-art systems, equipment and 
turnkey plants tailored towards 
pollution control and higher cost- 
effectiveness. 


Committed to the future. 
M Siemens Power Generation 


Stamens AG. Power Goneration Group (KWU) 
Freyeotebanslr. 1. D-91D58 Erlangen, Germany 
A19100 - UQ1 -2216 - V8 - 7SX) 



VI 


FINANCIAL TIMES TUESDAY MAY 17 19»4 


POWER GENERATION EQUIPMENT 6 


Diesel makers seek a bigger market share, says Andrew Baxter 


Grimy name 

cut down the lead of gas tur- 


Diesel engines, the workhorses 
of everything from vans and 
buses to ships and small-scale 
power generation, are not nor- 
mally associated with generat- 
ing power on a large scale. 

This is perhaps not surpris- 
ing given the fast growth of 
gas turbine combined cycle 
power generation over the past 
decade. Most statistics on ther- 
mal power generation tend not 
to give diesel a separate cate- 
gory of its own, yet according 
to Diesel and Gas Turbines 
Worldwide new orders for die- 
sel, dual fuel and gas-engine 
power plants grew to a record 
7.000MW last year, about 12 per 
cent of the annual global 
power market 

Quietly, diesel engine pro- 
ducers are working to address 
the common perception of die- 
sel power as dirtier than rival 
methods of generation, and 
invest heavily in producing 
equipment that can be used for 
reliable, baseload power gener- 
ation. 

Mr Pentti-Juhani Hintikka, 
F inni sh president and chief 
executive officer of Strasbourg- 
based Wartsila Diesel Group, is 
naturally enthusiastic about 
prospects for an industry of 
which, his company is the 
leader - it claims a 20 per cent 
share of the diesel power plant 
market and has the broadest 
product range. 

Mr Hintikka believes diesel 
could in time lift its share of 
the power plant market as a 
whole to 25-30 per cent, 
depending on how the industry 
develops, and says that already 
over the past five years it has 


bines over diesel engines from 
eight-to-one to four-to-one in 
terms of total power capacity. 

The type of engine and of 
customer is very varied. Wart- 
sila delivered 1.400MW of 
power plant installations last 
year, with half going to south- 
east and east Asia. China 
emerged as an important cus- 
tomer - Wartsila 'a Dutch sub- 
sidiary won a contract for a 
110MW power plant in Guan- 
dong province, while its Furn- 
ish company is supplying 13 
diesel generator sets to the Pan 
Yu plant, also in Guandong 
and due to be completed by the 
end of the year. Short lead 
times were an important a fac- 
tor in winning the business. 

Several larger heavy ftiel- 
buraing diesel plant deliveries 
were completed to independent 


Diesel and dual fuel 
plants last year grew to 
12 per cent of the annual 
global power market 


power developers and the min- 
ing industry in Central and 
South America, containerised 
plants were delivered and com- 
missioned in Russia, while in 
Europe orders were received 
for combined heat and power- 
type gas engine installations. 

The bread-and-butter busi- 
ness for the diesel engine 
Industry has for years been the 
heavy fuel oil-buming engine, 
with, which Wartsfla, for exam- 
ple, has had great success in 


to live 

India. But in the mid-1980s, rec- 
ognising that gas was becom- 
ing the fuel of choice for power 
generation, the company began 
a major effort to develop a gas- 
burning diesel engine, and now 
claims to be industry leader in 
gas and gas-diesel engine tech- 
nology. 

There are two types of 
engines that bum gas. First, 
there is the gas-diesel engine, 
which Wartsila pioneered in 
1987. The important advantage 
of these engines over every 
other type of prime mover is 
that they can run on any type 
of fuel from heavy fuel oil to 
natural gas, and with com- 
puter control can be switched 
from one fuel to another with- 
out any interruption in opera- 
tion. 

This flexibility, says Mr Hin- 
tikka, was a major argument 
used by Wartsila to clinch an 
order in the Philippines last 
year. The second basic type of 
gas engines uses ' so-called 
“lean bum" technology, with 
spark ignition and a lean air- 
to-gas mixture that raises ther- 
mal efficiency and gives very 
low NOx emissions. The con- 
cept is ideal for smaller power 
plants in the 400 to 3 ,000k W 
range, says Wartsila. 

Mr Hin tikka has a twin strat- 
egy for increasing the use of 
diesel power. In developing 
countries, the aim is to offer a 
reasonable price and East con- 
struction times, but Wartsila 
also wants to be a player in the 
industrialised world, where 
high efficiency, reliability and 
low ftmissinns are the priority. 

In particular, Mr Hintikka is 


down 

looking to exploit th ejnd epen- 
dent power producer 0PP) mar- 
ket in regions as diverse as the 
US and south-east Asia. IFF cli- 
ents accounted for 45.6 per cent 
of Wartsila’a diesel power plant 
sales last year - “they are 
really setting a new trend, 
inaking it Important for us to 
perform better” says Mr Hin- 
tikka. They are followed by 
utilities which accounted for 
25.7 per cent of sales and 
industry with 20.4 per cent 
The remaining 8.3 per cent 
came from natural resources 
and other customers. 

To succeed against gas tur- 
bines, diesel power has to be 
competitive in terms of ther- 
mal efficiency and emissions. 
By including a steam turbine, 
gas engines can be used in 
combined cycle formation, and 
Mr Hintikka says Wartsila has 
designs for 1O0MW plants with 
thermal efficiency of 54 per 
cent closely comparable with 
combined cycle gas turbine 
generation. 

: As for emissi ons, the relative 
performance of gas engines 
and gas turbines depends on 
how they are measured. The 
diesel engine industry prefers 
to measure emission levels in 
terms of grams per kilowatt- 
hour, under which diesel 
m ginBi come out cleaner, but 
gas turbines emerge on top if 
emissions are measured on 
parts per million (volume- 
based). 

There are size constraints on 
diesel power, Mr Hintikka 
admits. Ten engines is proba- 
bly the maximum practical 
number in each plant an d at 



through a combination of 
investment in new machinery 

and -rimplUy frn g ami shor tening 

the route taken by engines as 
they progress through the 
plant towards completion. Mr 
Maiti Tulkki, president and 
chief executive of the French 
unit, quotes reductions in 
internal lead Httmk from seven 
months to L5 months, or from 
11 months to five months for 
the biggest engines. 


16MW apiece plus a steam tur- 
bine total power output of 
200MW is possible. Beyond that 
size, the efficiency of gas tur- 
bines improves, further loading 
the odds in their favour. 

Even with this limitation, 
though Mr HTnHkka believes 
there are plenty of opportuni- 
ties for diesel power. The tradi- 
tional heavy fuel oil market 
will remain, but the real 
growth mil be in gas engines 


in both the industrialised and 
developing countries. 

The key technological chal- 
lenge, he says, is to keep 
improving thermal efficiency 
while keeping emissions under 
control, involving continuing 
heavy spending on research 
and development 

At the time, as lead 
times are so important to win- 
ning orders Wartsila Diesel is 
engaged in much the same 


kind of continuous cost reduc- 
tion and manufacturing reor- 
ganisation as has taken place 
among the gas turbine produc- 
ers, against whose perfor- 
mance it measures itself. 

An example are the changes 
at the Wartsila SACM Diesel 
plant at MuEbouse, where 
employment has fallen from 
1,000 in 1389 to 750 now. Pro- 
ductivity has risen as lead 
times have been reduced. 


Andrew Baxter on the persistent dream of winning cheap electricity from chemical fuel cells 

It started in London back in 1839 


T he race to achieve ever higher ther- 
mal efficiencies from combined-cycle 
gas tnrbine power stations may be 
the most crucial in the short term for the 
big equipment suppliers, but other “next 
generation” technologies are not being 
ignored. 

One of the most interesting involves 
solid oxide fuel cells. Both Siemens and 
Westlnghouse are involved - separately - 
in developing this technology. 

The direct conversion of chemical 
energy into electrical energy in a simple 
hydrogen/oxygen-based fuel cell was 
achieved in 1839 by Sir William Grove in 
London. Fuel cells with liquid electrolytes 
have been used in space travel but terres- 
trial applications have remained limited 
to specialised uses in military and tele- 
communications. 

However, according to Siemens, with 


advances in knowledge, and especially in 
materials science, there is evidence that 
the “forgotten” electrochemical conver- 
sion of energy can equal or perhaps even 
surpass today’s successful energy technol- 
ogy under current ecological boundary 
conditions. 

There are various types of fuel cells, 
depending on the type of electrolyte used, 
and two broad classifications, low-temper- 
ature and high-temperature. 

Among lowtemperature cells, Siemens 
has been developing the polymer electro- 
lyte membrane (PEM) type since 1982. 


These ran on very pure gases, are easily 
transportable, and are available up to 200- 
300KW. But their cost means they are 
likely to be used only in specialist appli- 
cations. 

A second low-temperature type with 
phosphoric add electrolytes is also avail- 
able in 20GKW units, which can be used in 
combination up to 1MW, says Siemens. 
Their thermal efficiency In combined heat 
and power applications can be as Ugh as 
90 per cent, but the cost per kilowatt 
produced Is high. 

Interest is now focused an the Ugh- tem- 


perature type of fuel cell, and particularly 
solid oxide fuel cells which operate 
between 950 and l.OOOdegC and have 
sophisticated ceramic electrolytes. 

“The technology is more difficult but 
there are big advantages,” says Dr Hans 
Bflhm, a senior executive at Siemens’ 
KWU power generation unit 

The hot exha ust gas from the cell could 
be used in conjunction with a gas and 
steam turbine combined cycle, giving a 
relatively high electrical efficiency of 
about 68 per emit for a 40MW plant Other 
combinations, for example an industrial 


CHP plant could attain a total tad effl- 


stacks of 300-500KW will be needed un- 
even modest commercial or Industrial 
power generation. Achieving that will 
take several years. 

Westlnghouse, meanwhile, has 
announced a two-year contract valued at 
$7.3m for a programme to develop and 
demonstrate solid oxide fuel power 
systems for the NASA Lewis Research 


Centre. The multi-phase programme will 
focus on developing transportable solid 
oxide fuel cells to produce electricity for 
military applications. The cells will use 
hydrogen-based finds such as Jet fuel and 
diesel (del to produce direct current 
power with very low emissions. 

The programme wfll culminate with the 
dem o n st ration of a fuel cell with peak 
output of more than 30KW. ft will also 


Mr Frank Bakes, vice president and 
general manager of the Westinghouse 
power generation business unit. Bays: 
“This technology’s high efficiency and 
very low emissions will make it an impor- 
tant power generation resource in the 
coming decades.” 


dency of 75 per emit 
The cells are still very small scale - 
even a 1KW version will not be available 
for a few months, says Dr B&hm - and 


produce conceptual designs which will 
lead to both commercial and military 
applications of solid mode fttd cell tech- 
nology. 



1 


Win it all with Wartsila ! 

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Choosing W&rcsilM Diesel Group’s 
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edge technology for natural gas and 
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■ The expertise and experience 
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;the world over, 
from the arid 



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■ The power station 
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■ One thing you can be sure of, well 
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■-Not counting the few days 
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If you want to hit the 
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on (33)88522070 
Information 
Department 


Jr 






A METRA COMPANY 






I 


FINANCIAL TIMES TUESDAY MAY 17 1994 

I FINANCIAL TIMES SURVEY 


WORLD FOREST PRODUCTS 

Tuesday May 17 1994 


A cartoon passed around the offices 
of the Swedish Pulp and Papa* 
Association aptly captures the 
mood of the world's forest-prod- 
ucts industry: “We’re depressed, frus- 
trated, alienated, disillusioned,” the cap* 
tion reads, “but we’ve adapted to the 
market" 

This sense of discomfort mingiwi with 
accomplishment is the miinfrinHwiy of the 
gruelling ordeal which timber, pulp and 
paper producers have endured for the past 
five years. 

Already reeling from weak markets arid 
heavy losses, the industry has been frog- 
marched into . unfamiliar surroundings, 
where it has had to reexamine the entire 
.spectrum of its- biuto^s, .frtto the way 
trees are cut to the future of paper in the 
electronic age. 

The challenge has been compounded by 
the fact 1 that the industry, long a bastion 
of conservatism, has had little control over 
the pace of cheuga The niaw»rang orders 
have come largely, from outsiders, includ- 
ing customers, politicians, bankers 3»ra -. 
hot least - environmentalists. 

An unexpectedly strong rebound in pulp 
and paper prices since late 1993 has raised 
hopes that the worst Is over. Most compa- 
nies around the world, with the notable 
exception of Japan, are likely to return to 
profit this year. 

The prospect of better times ahgqfl tips 
also enabled debt-burdened producers to 
repair their balance sheets, either by sefl- 
ing assets or raising new equity. Canadian 
forest-products companies have floated 
four of the 10 biggest initial public offer- 
ings on the Toronto stock exchang e in. the. 
past 13 months. The Swedish government 
launched its biggest-ever p rivati sation ear- 
lier this year by s elling 49 per cent of its 
stake in AssiDomfin. 

It would be wrong to Rnnr.hiite, however, 
that the road ahead is all dowhhilL. Wel- 
come as the recovery in prices may be, it 
will not deflect powerful, longer-term 
forces which are g raftin g the in dustry 's . 
centre of gravity away from, traditional 
products, operating methods, investment 
patterns and corporate structures. 

At one end of the production chain, for- 
ests have become the industry's main 
environmental battleground. ‘T have a 
feeling it’s the thtng well he daaHng with 
for the next five to 10 yean,” says Patti 
Laine, director of industrial and environ- 
mental policy at the Unnish. Forest 2xuhis- 

. tries Federation in wfoigmiri 

Calls for the preservation of okl trees in 
British Columbia, spotted owls in Oregon, 
and tropical rain-forests in Brazil and 
Indonesia have shrunk the area available 
for logging, especially in North America! . 
Ifoviroixmentalists have also pressed for 
more eadbgLcaDy-sensitfve forestry prao-. 
tices, h acking up. . their demands with 
threats of consumer boycotts and cftdl cHs- 


- ‘ J 1 \ ‘ 

•>* • ■ ■ ^ 

• ; ‘rW *+ • 






Ctayoquot Sound, Vancouver Wand, Brffish Columbia, which has become a focal pobit for environmental protests agakut k>ggng praotum. No 
logging wfl taka place within view of the water. In Los Angelas fright) a mOk carton recycling programme has reduced nM waste and helped to 
teach schoolchildren Die advantages of saving valuable tandfli space and recovering paper products 



Back on course after a gruelling ordeal 

The industry has been frog-marched into unfamiliar territory, where it has had to 
re-examine the entire spectrum of its business practices, writes Bernard Simon 


obedience campaigns. 

The forestry companies have adjusted 
their logging practices by shrinking the 
WM of rmciphtiy clear-cnts and leaving 
trees standing along lakes and rivers. 
United Paper Mills of Finland two years 
ago stopped buying old-growth timber for 
its pulp mills. It has gone so far as to 
replace the mineral ofi In its traefijling 
mprihinM with biodegradable vegetable 
oils. 

Such changes have pushed up costs, for- 
cing companies to examine the efficiency 
of their entire forestry operations. But far- 
sighted members of the industry have 
come to appreciate that environmental 
pressures also create opportuniti es. 

- Opo example is a joint venture in Indon- 
esia involving Enso-Gutzeit, the Finnish 
. group. Eqso has insisted that all. wood 


supplies for a proposed new pulp mill in 
East Kalimantan must iwwa from planta- 
tions, and not from the rain forest As a 
result Enso’s contribution to the project 
will include reafforestation of vast tracts 
of grassland. 

Pulp and paper mft* have also under- 
gone radical changes. Toxic emissions 
have dwindled as rfUm-two gas has bom 
steadily replaced by other, less harmful 
bleaching agents such as dioxi de , 

hydrogen peroxide and enzymes. 

Mill owners boast that fish are starting 
to return to once-polluted rivers. Effluent 
from mills in some Scandinavian towns is 
now diverted to heat nearby offices, and 
waste material is used to generate electric- 
ity- 

Perhaps the industry’s biggest upheaval 
has .came from the drive to recyde an 


evergrowing p roport i on of waste paper. 
Recycled materials now make up more 
than 40 per cent of the raw material con- 
sumed by paper mills worldwide. While 
global paper production has edged up by 
only about 1 per cent a year in the early 
1990s, consumption of recycled paper 1ms 
grown by 5 per cent 

A law due to take effect in Germany 
in mid-1995 will break new ground 
by requiring at least 80 per cent of 
used packaging paper and board to be col- 
lected, and 80 pa cent of that to be recy- 
cled. 

The pressures an the forestry industry 
have reverber a ted all the way to retail 
stores and construction sites. Cut-price 
warehouse outlets, mainly in North Amer- 
ica, are itoimmWTig that wood suppliers 


tnaicw their do-it-yourself products more 
“consumer friendly", for instance, by pack- 
aging components in kits. 

Efforts to broaden the use of wood as a 
b uilding material have led to the growth 
of engineered wood products, with a 
strength and consistency which matches 
steel, concrete and aluminium. 

This top-to-toe shake-up in the way for- 
estry companies do business has accompa- 
nied a Structural tr ansfor mation compara- 
ble to the upheavals in the global steel, 
textile and shipbuilding industries In the 
1960s and 1970s. 

Production of commodity-grade items, 
such as market pulp and newsprint, is 
gradually migrating to parts of the world 
- such as Brazil, Indonesia and Chile - 
where trees grow fastest, costs are still 
relatively low, and environmental stan- 


dards are less exacting. 

At the same time, growing demand for 
recyclable waste paper Is s h i f ti ng produc- 
tion capacity from thinly-populated Can- 
ada, Sweden and Finland to the “urban 
forests” of the US and central Europe. 

The biggest investments currently under 
way by Swedish and Finnish compa ni es 
are recycled newsprint mills being built, 
respectively, by SCA at Aylesford, UK, and 
by Enso-Gutzeit near Leipzig, Germany. 
Among Canadian producers, MacMillan 
Bloedel and Fletcher Challenge Canada 
have drawn up plans for similar mills in 
California and Arizona. 

The three northern countries are mov- 
ing towards more specialised products 
which still require a relatively high pro- 
portion of virgin fibre. Trees take from SO 
to 110 years to grow in Canada, Sweden 
and Finland, but they produce wood of 
unusually high quality. 

Finland has become a leader in fine writ- 
ing and printing papers, while Sweden’s 
emerging strength is in high-grade packag- 
ing materials. Many Canadian west coast 
lumber wiiiia have shifted from churning 
out basic planks to more sophisticated 
buOding materials, such as decorative pan- 
els. 

Weak prices and heavy debt burdens 
have also forced individual companies to 
narrow their sights, mainly by selling 
assets. Abitibi-Price, of Toronto, has 
decided to stick to newsprint and uncoated 
ground wood papers. Conversely, Georgia- 
Pacific, the second-biggest North Ameri- 
can group, has withdrawn entirely from 
newsprint 

“We recognised that in our present size, 
we can’t be all things to all people," says 
Harrl Plehl, chief executive of Finland's 
Kymmene, which is focusing on fine 
papers, lightweight coated papers and pan- 
els. 

Only a handful of broad-based multina- 
tionals r emain. They include International 
Paper, the world’s biggest - and still one 
of the most aggressive - companies, and 
New Zealand’s Fletcher Challenge, whose 
operations stretch from Australasia to 
North and South America and the UK. 

Perhaps the most telling sign that the 
worst is ova is that long-suffering forestry 
executives are gradually moving from 
defence to attack on environmental Issues. 

A blizzard of publicity material from all 
the main pulp and papa-producing coun- 
tries argues that few other industries can 
match forestry's “sustainable cycle” of a 
renewable raw material recyclable prod- 
ucts, and energy from its waste. 

This industry can be totally dean,” 
says Henrik Ehmroodt, chief executive of 
Jaakoo POyry, the Finnish forest-products 
consultancy. But the industry is still 
pleading for patience. To complete the job 
that has been started will require more 
time and a lot more money. 


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II 


FINANCIAL TIMES TUESDAY MAY 17 1984 


WORLD FOREST PRODUCTS 2 


Forest products fight for survival in the electronic age 


Paperwork expands 


The spectre of a paperless 
society hung over the for- 
est products industry for 
decades. As people turn from 
newspapers to television, from 
letters to phone calls, and from 
office memos to electronic 
mail , paper should he going the 
same way as quill pens, copper 
kettles and buggy whips. Yet 
paper consumption continues 
to grow. 

Even in North America, 
where the electronic age has 
progressed furthest, demand 
grew by an average of just over 
2 per cent a year between 1971 
and 1990. 

Jaakko P6yry, the Helsinki- 
based consultancy, forecasts 
tha t consumption in North 
America will rise by L6 per 
cent a year to 2005, with aver- 
age personal use ^i ii Fwhhig from 
300 kg to 309 kg. “There’s still 
a psychological desire for the 
feel of paper," says Mr Dick 


breakthrough that could dra- 
matically broaden paper's hori- 
zons. 

Pressure from the environ- 
mental movement has diverted 
much of the industry’s R&D 
and new capital investment 
towards conserving and recycl- 
ing paper, rather than finding 
new uses for it Some compa- 
nies are going even further by 
experimenting with materials 
other than wood as an ingredi- 
ent in fresh paper. 

Weyerhaeuser, the US forest- 
products group, is using 
pulped wheatgrass from fields 
in central Oregon as a supple- 
ment to woodpulp. Other US 
producers are working on ways 
to revive the old Chinese prac- 
tice of making paper from 
hemp. 

A process similar to paper- 
making has been developed to 
produce lightweight “spun- 
bond” fabrics from natural and 


World paper and board per capita consumption 



Per capita consumption 1 

10-year 

1990 

Ragton 

ta»p 

ISM 

CAGA(%) popubAon* 

European Union 

162.0 

158.1 

02 

328,183 

Scarxfinavia 

230.0 

225.6 

0.2 

17,650 

Eastern Europe 

33.0 

34.3 

(0-4) 

427,250 

North America 

310.0 

302.1 

Oil 

276.216 

People's Rep of China 

ISO 

12.6 

3.6 

1.143330 

India 

4.0 

3.1 

2.8 

843,000 

Indonesia 

9.5 

7.7 

2.1 

179,140 

Japan 

230.0 

228.3 

0.1 

123,600 

Brazil 

30.0 

27.8 

0.8 

150,367 

Chile 

3&0 

31.7 

1.8 

13,131 

Mexico 

39-0 

38.4 

0.7 

82,000 


rnnoandictf bcrk 2 tSatomon Boa MftmatK 3 TtauaoM* s am PR a« q D Mi facttoo* and 

Salomon Baa 


Storat, chief economist at the 
American Forest and Paper 
Association in Washington DC. 

The growth of electronics 
has brought some comfort to 
paper makers. Computer sup- 
pliers have yet to Arid a substi- 
tute for their bulky manuals. 
Computer magazines have 
mushroomed. Products such as 
uncoated freesheet, otherwise 
known as plain white paper, 
have gained a new lease of life. 
As personal computers become 
just another household appli- 
ance. the paper used for print- 
ers has become a value-added 
consumer product, complete 
with brand names and fancy 
packaging. 

Could forestry industry lead- 
ers be hilling themselves into a 
false sense of security? Mr 
Henrik Ehmrooth, Jaakko Poy- 
ry*s chief executive, cautions 
that forestry has traditionally 
been a capital-intensive rather 
than a technology-driven 
industry. 

Research and development 
spending is low compared to 
many other sectors. The for- 
estry industry's conservatism 
is reflected in a widespread 
assumption that future growth 
in paper consumption will 
come mainly from incremental 
improvements to existing prod- 
ucts, rather than an exciting 


synthetic fibres. These fabrics 
are increasingly used for dia- 
pers and sanitary towels. In 
Japan, scientists are said to 
have found ways of producing 
synthetic cellulose fibres, the 
basic ingredient of paper. For 
the moment, none of these 
alternative materials seems 
likely to displace wood entirely 
as a raw material. But every- 
one acknowledges that technol- 
ogy is moving at a rapid and 
unpredictable pace. 

Paper makers’ confidence in 
the future rests mainly on the 
assumption that fast-growing 
demand in newly-industrialis- 
ing countries, especially China 
and south-east Asia, will more 
than make up for aUckening 
consumption in the developed 
world. Consumption in China 
is currently only about 20 kg a 
person every year, about 5 per 
cent of the level in North 
America. 

Most paper companies’ 
efforts to broaden consumption, 
centre on producing new 
grades with a combination of 
improved brightness, printabfl- 
ity, smoothness and strength. 

Paper is now used in such 
diverse products as hospital 
gowns and heavy bags that 
store animal feed or heavy 
automotive parts. 

Each producer hopes that its 


own new grade will find a 
niche where competition is 
minimal and margins high. 
SCA, the Swedish group, mea- 
sures its managers’ perfor- 
mance partly by the number of 
new products they launch. Not 
surprisingly, some new prod- 
ucts are more successful than 
others. 

Extra-smooth and bright 
newsprint has enabled newspa- 
pers to improve dramatically 
the quality of their colour 
reproduction. But demand for 
coated kraftliner - thick card- 
board with a glossy white fin- 
ish. rigsignwT as a packaging 
mnt-wjfd for items such as fine 
glassware - has been disap- 
pointing. 

Forest products companies 
are also seeking new uses for 
their raw material The popu- 
larity of engineered wood prod- 
ucts, which share many attri- 
butes of building materials 
such as steel al uminium, 
has grown enormously in 
recent years. 

Wood components are 
increasingly being assembled 
into entire roofing and flooring 
systems. 

Canfor Corporation of Van- 
couver puts grass seed and 
wood-fibre residues on a textile 
base to make lightweight 
"take-home” lawns, which can 
be rolled out in a garden like a 
carpet. Another Canfor prod- 
uct, known as Woodmat, is 
formed into interior car door 
panels, dashboards, kitchen 
cabinets and p«cir«g fn g trays. 
Much of the industry's effort is 
directed at replacing increas- 
ingly restricted supplies of 
high-quality, old-growth timber 
with smaller, lower-quality 
trees. 

Mr Chip Dfilon^ui analyst at 
Salomon Brothers in New 
York, predicts that North 
American production of ori- 
ented strand board, which is 
made from multiple strands of 
low-quality timber, wQl grow 
by An sq ft over the next four 
years. Plywood capacity will 
shrink by at least 2bn sq ft 

Some questions about forest 
products' future may be 
answered by an ambitious US 
task force which was set up in 
August 1993 by the Environ- 
mental Defence Fund and six 
big paper consumers, including 
McDonald's (fast food). John- 
son & Johnson (healthcare 
products). Time Inc. (maga- 
zines), Prudential Assurance 
and NationsBank. 

The participants plan to con- 
sult a wide range of groups 
involved with paper, including 
producers, environmentalists, 
investment bankers and 
graphic designers, in the hope 
of learning how paper can 
meet world demands. The task- : 
force is expected to complete | 
its work in early 1995. 

Bernard Simon 


SMART 


COMPANIES FIND 


VALUE 


IN UNEXPECTED 

PLACES 


The Scots pine plantations of Northern Scotland must 
be thinned regularly to make space for growing trees. We use 
these thinnings to make NORRORD Sterling, a low- 
cost, high-performance substitute for traditional plywood. 


Our Inverness oriented strand board (OSB) mill is 
the largest in Europe, supplying over 50% of 
the European market. And we just doubled capacity to meet 
rapidly increasing demand. 


II noranda forest 


A Canadian forest products company, with operations in Canada, 
the United States and Europe, serving customers world-wide 
with building materials, pulp and paper made from sustainably managed 
forests in environmentally superior mills. 


For a copy of the 1993 Norandu Forest Inc. annual report and environnu-nul report contact 
Geoffrey Elliot; Vicc-Prcsidcm Corporate Affairs. Fax; 

Listed on the Toronto, Montreal, and Vancouver Stock Exchanges under die tymbvl NF. 


Management of trees has become a hot topic 

Green lobby focuses 
on logging practices 

are also being put into ednea- 


A xel Springer, the big 
German publishing 
house, sent its paper 
suppliers a detailed question- 
naire late last year, requesting 
information on their forestry 
practices. 

fin March, two UK paper 
companies cancelled pulp con- 
tracts with Mhdfflllan BloedeL 
the Canadian forest products 
group, after environmental 
groups thre atened to o rganise 
consumer boycotts in protest 
at “clear-cut" logging in Brit- 
ish Columbia. Incidents like 
these confirm that forest man- 
agement has become a hot 

topic, with increasingly tangi- 
ble commercial consequences. 

Companies that cannot dem- 
onstrate “good” techniques 
are faring the threat of cus- 
tomer boycotts. In Nordic 
countries and North America, 
the issue of which trees to cot 
and how to cut them now 
grabs more headlines than pol- 
lution by pulp and paper mills, 
the industry's traditional envi- 
ronmental bugbear. 

Concern has arisen because 
of fears that logging is system- 
atically destroying biodivers- 
ity, in contravention of the Rio 
environmental accords of 1992. 
It is not just a question of 
whether replanting exceeds 
harvesting levels. It Is also 
about protecting old trees, ani- 
mal species, soil quality and 
unique en viro nm ents. In Swe- 
den, for example, as many as 
200 species are thought to be 
threatened because of the 
impact of conventional for- 
estry practices. 

Environmental pressures to 
protect forests have helped 
posh lumber prices to record 
levels in recent years. The vol- 
ume of timber sold by US gov- 
ernment agencies has shr unk 
from l2J>tan board feet in 19S7 


to an estimated 4L5tm board 
feet this year. The impact has 
been most keenly felt in the 
US north-west, where efforts 
to protect the spotted awl have 
halted logging in federally- 
owned forests. 

The Clinton administration 
promised last year to relax the 
curbs. The administration pro- 
posed a compromise in late 
April, which would allow lim- 
ited logging in the area - pro- 
vided the plan does not 
become bogged down In the 
courts by forestry companies 
or environmentalists, both of 
which are unhappy with some 
of its contorts. 

Enviro nm ental groups have 
identified the main vfflain as 
dear-cutting, which involves 
completely clearing large 
areas of forest land with little 
or no heed to forma and flora. 
Greenpeace in Germany has 
led the way in Europe by 
insisting on an end to the 
practice - a demand which has 
led to the actions of companies 
like Axel Springer. 

One result is that forestry 
conservation, cultivation and 
felling methods are coming 
under scrutiny as never 
before. This is forcing chang es 
to traditional forestry prac- 
tices and leading to a more 
active role by governments. 

Many Nordic forest compa- 
nies insist they no longer 


clear-cut, although, in most 
instances, neither have they 
gone so for as to adopt the 
practice of “thinning” that 
many environmentalists advo- 
cate. 

Companies in Scandinavia 
and North America have 
instead opted for a compro- 
mise - reducing the size of 
dear-ent areas, allowing some 
trees to remain standing, 
buficHng fewer logging roads 
and restricting foiling around 


Environmental pressures 
to protect forests have 
helped push lumber 
prices to record levels 


rivers and lakes, which are 
favoured wildlife habitats. 

Jnhani PyykkO&en, a for- 
estry manager with United 
Paper Mills, one of Finland’s 
biggest forestry groups, says 
the company now cuts a maxi- 
mum of 10 hectares at one go 
- and between 2 and 4 per cent 
of the trees are left standing. 

UPM has phased out chemi- 
cal tr eatmen t and ploughing; 
stopped planting non-tndlge- 
nous pines; started using bio- 
degradable vegetable oils to 
lubricate finest machines; and 
placed more emphasis on natu- 
ral regeneration (seeding not 
planting). Increased resources 


tion, so that finest managers 
can recognise sensitive envi- 
ronments and adapt their har- 
vesting methods accordingly. 

Not for the first time, the 
Industry feels that it is 
unfairly under assault. But 
there is no doubt that it is 

feeling the pressure. 

Sweden is discussing an 
international forestry certifi- 
cation s ys te m with the World- 
wide Fond for Nature. Similar 
moves are afoot in Canada, 
including Independent audits 
of individual companies* for- 
estry practices. 

Governments, too, are doing 
their hit - though not always 
to the liking of the forestry 
industry or its employees. 

Sweden introduced a new 
forestry law at the start of the 
year, to give equal priority to 
production and environmental 
goals. Finland bas just 
announced proposals which 
will double the amount of pro- 
tected “wilderness forest” to 
600,000 hectares, as part of its 
nature conservation pro- 
gramme. 

British Columbia’s social- 
democrat government has 
promised to expand the prov- 
ince’s protected park and wil- 
derness areas to 12 per cent of 
the province, from about 8 per 
cent now. Although the indus- 
try has signed on to that tar- 


get. strong disagreements 
remain on precisely which 
pieces of land should be barred 
from resource development 

A storm has also erupted ta 
BC over suggestions by a gov. 
eminent commission that fo 
12 per cent target he an*, 
men ted by large -tracts of 
“regionally significamt lamp, 
such as corridors between 

existing parks, covering ahott 

8 per cent of toe province. 

More than 20,000 loggers 
showed their displeasure at a 
rally in Victoria, the provin- 
cial capital, in March. Such 
protests appear to have coated 
the government's ardour for 
setting aside protected areas. 

“New knowledge -from 
research, demands from cus- 
tomers and new legislation are 
the main forces promoting the 
development of environmen- 
tally sound forestry practices,* 
says Jan Remrfid, managing 
director of the Swedish Pulp 
and Paper Association. But he 
stresses that toe process car-' 
lies a cost 

Besides time spent on pfen- 
ning and education, it is esti- 
mated that toe restrictions 
will cut long-term harvest lev- 
els in affected areas by 10 per 
cent That may be a cost that 
the bigger companies can 
absorb. But for the small pri- 
vate farmers who dominate 
forest ownership in Sweden 
and Finland, it is another mat- 
ter. 

Companies and governments 
alike appear to be nearing the 
point where environmental 
friendliness in toe forests may 
have to take a back seat for a 
while to commercial and polit- 
ical realities. 

Bernard Simon and 
Christopher Brown-Humes 


Recycling continues to increase, but can it replace the forest? 


T rees are being cut down to size 


Waste paper recycling has 
become a way of life in most 
industrial countries. But in the 
process, it has raised issues for 
the forest-products industry 
which are for from mundane. 

The crux of the problem in 
North America is that mills are 
concerned about their ability 
to collect enough waste paper 
to meet recycling targets. 

In Europe, the problem is 
precisely the opposite. Legisla- 
tive decrees and government 
subsidies have flooded the mar- 
ket with used paper at 
rock-bottom prices. 

The trend towards recover- 
ing and recycling used papa- is 
furthest advanced in Germany. 
By xnid-1995, 80 per cent of 
used packaging paper and 
paperboard will be collected, 
and at least 80 per cent of that 
win be recycled. Legislation is 
also in the pipeline requiring 
the collection of 80 per cent of 
news p r in t, magazine and office 
wasfcepaper. 

In the US, the American For- 
est and Papa Association esti- 
mates that, for the first time 
last year, more paper was 
recovered than was sent to 
landfills. Nearly 80 pa cart of 
corrugated materials but only 
one-third of all packaging 
papa is recycled. 

US papennakers aim to recy- 
cle half of ah waste paper by 
2000, compared with about 40 
pa cent now. Dick Storat, the 
AFPA's chief economist, esti- 
mates that to reach this target, 
the collection rate far corru- 
gated material will have to 
reach 8005 pa cent in urban 
areas. 

US paper mills find it 
increasingly difficult, however, 
to lay their bauds on cheap 
recyclable material. 

They face stiff competition 
from local governments and 
from a growing number of 
waste- to-energy plants. Mr Sto- 



rat estimates that about 10 per 
«»nt of papa which might nor- 
mally go to landfills or recycl- 
ing plants is being channelled 
into energy generation. 

Municipalities are eager to 
collect recyclable materials to 
help raise money for their 
waste-management services. 
The terms of bond issues 
floated to finance waste-toen- 
ergy plants frequently require 
municipalities to control the 
flow of combustible mgtqlafe- 

The paper companies want 
free-market forces rather than 
municipal ordinances to decide 
what happens to discarded 
papa. ‘Trust as to put it in 
the products where it makes 
the most sense," Mr Storat 
says. 

Two cases before the US 
Supreme Court, involving ordi- 
nances passed in California 
and New York, are expected to 
help clarify the contentious 
issue of when a household or 


business gives up ownership of 
its waste material. 

At present, the recycled con- 
tent of different types of papa 
varies widely. Recycled fibre 
makes up more than 90 pa 
cent of tow-grade corrugated 
materials and 80 pa cent of 
board produced in the Euro- 
pean Union. But the proportion 
is only 7 pa cent in fine print- 
ing and writing papers, where 
the strength and cleanliriaBR of 
virgin fibres have so for proved 
irreplaceable. 

The degree to which recycled 
material can continue to 
replace virgin fibres is a tricky 
question for forestry compa- 
nies. Enthusiasm for recycling 
among Scandinavian and 
Canadian producers in particu- 
lar, is tinged with nervousness 
about the future of their vast 
investments in trees. 

“There's a TnisimrierR tflnrlwig 
that recycling can replace the 
forest,'’ says Jan RemrOd, 


director-general of the Swedish 
Pulp and Paper Association. 
The industry has strong mis- 
givings ova a Belgian proposal 
for an “eootax", which would 
be levied an virgin materials as 
a way of pressuring papa pro- 
ducers to raise the recycled 
content of their products. 

The forestry companies have 
so for been able to demonstrate 
that high-quality papers 
require a high proportion of 
clean, strong virgin fibres. 
Even recycled material needs 
to be topped up with fresh- 
from-the-forest fibre. Scientists 
estimate that cellulose fibres 
cannot be recycled more than 
five or six tunes, even fa the 
to west-grade papa products. 

The forestry companies also 
hope to convince environmen- 
tal groups and consumers that 
trees are among nature's most 
renewable products. Not only 
do new trees grow where old 
ones are cut down, but recy- 
cled fibres can be used as a 
fuel when they are too worn, 
dirty a short for paper-mak- 
ing. 

The problem for the industry 
is that the tide is moving 
towards an ever-higher recy- 
cled content in an ever-widen- 
ing variety of products. The 
technology to de-ink printed 
papers is improving by leaps 
and bounds. 

The AFPA forecasts that the 
rate of growth in consumption 
of all grades of recovered paper 
wQl for outstrip new produc- 
tion capacity ova the next two 
years. 

In the case of printing and 
writing papers, demand for 
recovered material is projected 
to jump by more than a third, 
compared with a 6 pa cent 
increase in capacity. The recy- 
cled-content in these grades is 
expected to rise from 10 pa 
cent to 15 pa cent ova the 
next six years. 


David Reiki u, director of 
ma gaarw papa purchasing at 
Time Inc, the big US publisher, 
predicts that at least three- 
quarters of the 250.000 tons of 
papa Time buys each year - 
mostly lightweight coated 
groundwood grades - will be 
recycled stock by 1998. 

Sensing which way the wind 
is blowing, Scandinavian and 
North American companies are 
now directing the lion's share 
of their capital spending to 
facilities based on recycled 

Twatprialg 

Commercial common-sense 
dictates that miDs whose main 
feedstock is waste papa are 
more likely to be built close to 
heavily-populated urban cen- 
tres than to natural forests. 

The Nordic forestry compa- 
nies’ biggest projects at pres- 
ent are the recyded-newsprmt 
miDs being put up by Finland's 
Enzo-Gutzeit, near Leipzig, 
Germany, and by SCA of Swe- 


The trend towards 
recovering and recycfing 
used paper is furthest 
advanced in Germany 


den at Aylesford in the UK. 
MacMillan BloedeL of Vancou- 
ver, has spent years trying to 
gain regulatory approval for a 
CJlbn recycled-ne wsprin t mill 
near Sacramento; natifamia. 

A growing number of pro- 
ducers are also moving into 
waste paper collection as a 
means of securing their raw- 
material supplies. In their 
search for a cheap but reliable 
source of waste paper, many 
Noth American tissue makers 
now place their own collection 
bins at strategic points in 
urban areas. 

Bernard Simon 


Profile: AssiDoman is Sweden’s fourth largest forestry group 

Newcomer with a strong base 


A ssiDomAn bas just joined the 
breaks of Europe's top ten for- 
estry groups, and Lennart Ahl- 
gren, its president, is clearly relishing 
every minute of the experience. 

Not only does he display an ebullient 
confidence In wood as a raw material - 
T firmly believe this is a product for 
the fixture" - but he has a clear strate- 
gic vision of the group’s development. 
“Our objective is to be Europe's leading 
company in the fields of packaging 
paper, papa-based packaging and sawn 
timber.” he states. 

Lest anyone should doubt hhn , Mr 
Ahlgren has been busy even in the few 
weeks since AssiDomin emerged in its 
current form, following a state-orches- 
trated merger and privatisation. It has 
made a successful bid for Neb, a par* 
dally state-owned forestry group, and 
acquired a Swedish saw-milling opera- 
tion. 

Further acquisitions would seem only 
to be a question of time, not least 
because the company wants to make 
good use of its financial strength to 
back its strategic ambitions. 

A lot has happened in a short time. A 
few months ago, AssiDoman did not 
even exist It was formed at the start of 
the year from the merger of two wholly 
state-owned forestry groups, Assi and 
Doman. In March it gained new 590,000 
shareholders when the state sold out 49 
per cent of its holding, garnering 
SKr7.6bn in Sweden's largest ever pri- 
vatisation. When shares in the group 
began trading last month, its market 
capitalisation amounted to SKrlfibn. 
With 1998 sales of SKrl4^bn, Assi- 


Doman is Sweden’s fourth largest for- 
estry group after Store, SCA and MoDo. 
It claims to be the world's largest pri- 
vate forest owner, with 3.4m hectares of 
productive forest land. It also ranks as 
Europe's fourth largest producer of 
sawn goods, with annual output of 
950,000 cubic metres, and one of 
Europe's five biggest producers of cor- 
rugated board. Operations span nine 
European countries, with 5,000 of the 
group's 12,000 employees based outside 
Sweden 



Umart Ahlgren: something bigg* afoot? 


Mr Ahlgren says the emphasis on 
packaging and large forest holdings 
provide the group with considerable 
resilience in an industry notorious fa 
its cyclical peaks and troughs. But this 
is just one aspect of a strategy based on 
high-quality products, added value, and 
greater material processing. 

The starting point for the strategy is 
virgin fibre, which is hardly surprising 
given the company’s extensive forestry 
reserves. “We will concentrate on vir- 
gin fibre and will invest in ea-isting 
mills in Sweden to upgrade produc- 
tion," says Mr Ahlgren. In fact, the Ahl- 
gren philosophy can be summarised by 
the word “concentration” - concentra- 
tion on virgin fibre, concentration on 
sawn goods, concentration on packag- 
ing and packaging material. “We wont 
get involved in printing and writing 
papers or tissue,” he stresses. 

The other priority is finan cial stabil- 
ity. The group has a healthy cash flow, 
and an equtty-to-assets ratio which, at 
around 50 pa cent, is surpassed fay few 
forestry groups worldwide. Results are 
on rising trend, with a profit of between 
SKrL2bn and SKrl^bn expected for this 
year, after last year's SKr876m. 

Without the strong financial base, it 
is unlikely that the group would be 
emphasising its expansion strategy so 
forcefully. The programme can be sum- 


marised as follows: 

■ In Sweden, the company will con- 
tinue to build up its -saw-mill 
operations, both by investment and 
acquisitions, aiming to reach an annual 
production level of i.lm to L2m-cubic 
metres In the next two years. 

■ In Europe, where many of the pack- 
aging operations are based, the grow 
wants to be close to its markets and is 
looting to bolster its position, in seg- 
ments like corrugated board. Although 
it has a relatively strong market posi- 
tion In the UK. Danish and 'Swedish 
markets, its share in countries hire 
France and Germany is low. 

The acquisition erf Neb - a- packaging 
company - will not leave much of 3 
dent in AssiDomdn’s financ es, as the 
bid only valued the company at sop* 
SKrl.4bn. But most analysts believe Mr 
Ahlgren i$ hntehing flfl m illing biggw. 
including, possibly, a strike at his ft®’* 
mer company, KbranSs, where he 
managing director for seven years. 
Though coy on the subject. Mr Ahlgren 
admits there would be a “natural over- 
lap” with Korsn&s, which is also strong 
in packaging and sawn timber. There 
have also teen suggestions that u> e 
group might be interested in buylof 
MoDo Packaging from MoDo, 

Christopher Brown-Humes 




FINANCIAL times TUESDAY MAY 17 1994 


^ 111 

WORLD FOREST PRODUCTS 3 ‘ ' 


Japanese paper and paperboard production POOO tonnes) 


Grads 

1965 

1987 

1988 

1989 

1990 

1991 

1992 

1993 

Newsprint 

1592 

2,668 

3,067 

3£17 

3,479 

3.516 

3,253 

2,917 

Printing & communication* 

5,991 

6337 

7,628 

8.630 

9251 

9,730 

9.610 

9,542 

Packaging A wrapping 

1,078 

1.115 

1,129 

1,175 

1.185 

1.177 

1,110 

1.076 

Sanitary tissue 

1,089 

1.226 

U281 

1,349 

1,366 

1,438 

1,474 

1.S22 

Miscellaneous' 

1.040 

1,181 

1,238 

1,155 

1.148 

1,187 

1,144 

1,144 

Paper total 

11,790 

12,607 

14,343 

15,726 

10,429 

17,048 

164*92 

16JD2 

Paperboard total 

&679 

9,730 

IQjHI 

11,083 

11,657 

12,020 

11.718 

11,559 

Paper & paperboard total 

2QAB 9 

22,537 

24,624 

26.809 

28£88 

2B£88 

2&310 

27,761 


' Paper etertamon tebwnmdMwiaft BgwwMtiii Source: hbsc y at Ma wma nai Ttada attf tndutuv 

Huge problems are besetting the Japanese industry, says Paul Abrahams 

Tormented by the rising yen 


J apan's paper industry is 
going through the shred- 
der. Plagued by over-ca- 
P®p*ty. poor demand, plunging 
prices and high financial costs, 
the industry has most recently 
been tormented by the ever 
appealing yeu. Corporate 
profitability has plunged. But 
if the causes of the Japanese 
paper industry’s present crisis 
are deceptively simple, the 
remedies r emain elusive. 

The scale of the problems 
besetting the Japanese paper 
industry are huge, but the 
most significant remains over- 
capacity, a self-inflicted 
wound. During the bubble 
years of the late 1980s, paper 
demand increased 1.3 times 
GNP growth, which itself was 
buoyant at that time As paper 
and board selling prices rose 
and raw material prices santr , 
thanks to the rising yen, so 
virtually every company took 
advantage of cheap funding to 
increase capacity. Paper manu- 
facturing capacity rose [Tom 
13.5m tonnes in 1987 to 19.5m 
tonnes by 1991 as 43 stateof- 
the art paper machines «ynw 
on stream. 

The basic problem facing the 
industry is that this 44 per cent 
rise in capacity was not 
matched by a commensurate 
increase In demand. Indeed, as 
the new capacity came on 
stream, Japan began to slip 
into the longest and deepest 
recession since the second 
world war, an economic down- 


turn which continues to grip 
the country. Demand for paper 
and board, which during 1992 
tumbled for the first time in 11 
years, fell again last year 
according to the Japan Paper 
Association (JPA). 

"Demand For newsprint, 
wood-free printing papers, and 
art papers all fell last year.” 
says Eiyosbi Shirakawa, dep- 
uty general manager of the 
international department. 
“Only light-coated papers 
increased.” 

“The Japanese market Is in 
deep depression. There is no 
growth and there is massive 
oversupply in almost every 
grade. Paper prices are Gelling 
and most companies are losing 
money,” explains Mr Tadahiro 
Rondo, general manager of the 
International division of the 
JPA. 

The plight of the industry, 
already suffering from weak 
demand and excess capacity, 
has been exacerbated by the 

appreciation of the yen which 
has sucked in imports and hit 
the ability of Japanese paper 
manufacturers to export their 
excess production. The US dol- 
lar, valued at Y145 in 1990, 
plummeted to nearly Y1Q0 this 
month (May). 

Japanese paper exports 
plunged by 3L7 per cent last 
year to only 474,400 tonnes, 
while paperboard exports also 
slid, down 23.3 per cent to 
161,700 tonnes. Barclays de 
Zoete Wedd estimates imports 


of paper and board rose just 
under 10 per cent last year, 
although volumes remain 
small at about 110,000 tonnes a 

year, according to Mr Rondo at 
the JPA. 

Given poor demand at home 
and abroad, falling exports and 
rising imports, output of paper 
and board fall far the second 
year running during 1993, 
down 1.9 per cent at 27.7m 
tonnes. Meanwhile, paper pro- 
duction, which had fallen 2.6 
per cent in 1992, dropped 
another 2.4 per cent this year, 
according to the JPA. Operat- 
ing rates have fallen brutally, 
from 93.7 per cent In 1989 to 
82.1 per cent last year. Brokers 
Smith New Court expect them 


to fall further to 79.5 per cent 
The impact of overcapacity 
on prices has been brutal, in 
the last quarter of 1993, the 
prices of tissue paper fell 16 
per cent, while high-grade 
paper tumbled 12 per cent The 
prices of almost every grade oF 
paper, except newsprint 
remain on a downward curve. 

C orporate profits among 
the paper companies 
have fallen five years 
r unning . The sector's pre-tax 
profits are now almost entirely 
dependent upon sales of mar- 
ketable securities, according to 
Smith New Court Both Mitsu- 
bishi Paper and Settsu were 
forced to sell these to avoid 


losses during the first half of 
last year, for example. 

Faced with such a dire envi- 
ronment, the Japanese paper 
and pulp industry has reacted 
by implementing a series of 
gigantic mergers. In April last 
year, two of the country's larg- 
est groups, Jitfo Paper and San- 
yo- Kokusaku Pulp, fused to 
create Nippon Paper Indus- 
tries, Japan's biggest paper 
company by turnover. 

The following October, Oji 
Paper, the country’s largest 
paper maker, and Kanzaki 
Paper, the seventh biggest, 
also combined to create New 
Oji Paper, Japan's largest 
paper manufacturer in terms of 
tonnage. Smaller alliances 


include the link between Hon- 
shu Paper, the leading paper- 
board manufacturer, and Taka- 
saki Paper, the 11th largest 
paper group, to share distribu- 
tion and purchasing channels. 

The benefits of such mergers 
have not yet fully materialised, 
however. Sales and distribu- 
tion costs have been cut, as 
have financial costs, but the 
willingness to reduce labour 
costs - representing about 12 
per cent of all costs - remains 
limited. The paper companies, 
like other Japanese groups, are 
reluctant to make compulsory 
redundancies, cutting the num- 
ber of employees through 
reduced graduate recruitment 
and early retirement. Nippon 


Paper Industries has managed 
to cut its headquarters staff by 
400 since the merger through 
such means. But according to 
BZW, the only company to cut 
aggressively has been Toraoe- 
gawa Paper which is in partic- 
ular difficulties. 

Another response has been 
to sell assets in an effort to 
reduce debt Daishowa Paper 
Manufacturing. Japan's third 
largest paper group, has been 
forced to announce a five-year 
restructuring plan aimed at 
reducing debt from Y434bn in 
March this year to Y270bn. in 
addition, two creditor banks, 
the Industrial Bank of Japan 
and Fuji Bank, and a share- 
holder, Marubeni, have sent in 
managers to help management. 
The company expects to make 
a net loss of Y28.2bn during 
the current financial year. 

The prospects for the indus- 
try remain grim. The price of 
pulp, representing half of raw 
material costs which in turn 
represents 42 per cent of total 
costs, have begun to rise. Pre- 
viously. the paper companies 
had been benefiting from a fall 
in pulp prices from a peak six 
years ago of $820 a tonne, to a 
low last year of $370, according 
to Nippon Paper Industries. 
Prices in December reached 
$500 a tonne, the company 
adds. 

The big question is whether 
the paper companies will be 
able to make price increases 
stick given the sickly state of 


demand. BZW does not expect 
them to succeed. The danger is 
the paper groups will be 
caught between rising pulp 
prices - partly offset by the 
appreciation of the yen - and 
static paper prices. Their 
unwillingness to cut capacity - 
and cede market share - 
means there is unlikely to be 
an improvement on the supply 
side. The one exception has 
been Nippon Paper Industries 
which scrapped a plant at 
Yatushiro last June. 

Meanwhile, most of the 
industry's overseas invest- 
ments has been aimed at secur- 
ing upstream supplies. The 
industry has wood supply ven- 
tures in Australia. Papua New 
Guinea, Vietnam. Indonesia, 
the US. Canada, Brazil and 
Chile. Last year, for example. 
New Oji Paper and Nisslio-lwai 
formed an acncia and eucalyp- 
tus plantation joint venture on 
New Britain Island. 

Mr Kyoji Hanamizu. general 
manager of public relations at 
Nippon Paper Industries, says 
it is highly unlikely his com- 
pany will build capacity in 
Japan for a long time. Any new 
production is likely to be 
linked with the company’s 
plantations, probably in Indon- 
esia where the company is par- 
ticipating in a YlOObn 45U.UU) 
tonnes a year pulp mill based 
on acacia trees. Given the high 
operating costs in Japtrn. the 
future of the Japanese industry’ 
is clearly going to be overseas. 


Latin America’s forest industry has continued to expand, says David Pilling 

A region well positioned to cash in 


L atin America’s forestry industry, 
dominated by Brazil and Chile which 
account for 90 per cent of regional 
exports, bas continued to expand hi the 
face of tough global conditions. Although 
some companies saw profit margins 
squeezed last year - as new capacity cum* 
on stream Just when the market hit 
rock-bottom - most are wen placed to 
take advantage of any sustained upturn. 

As profits in the northern hemisphere 
are sapped by tough environmental 
requirements and high costs of labour, 
energy and transport, production of pulp 
and other wood products is seeping south. 

Latin America, which boasts 27 per cent 
of world forests, is well positioned to cash 
in. Costs are generally low and environ- 
mental legislation, although ti ghtening , is 
more lax as governments drive for eco- 
nomic growth. 

The continent's greatest asset is its cli- 
mate. In Brazil trees grow all year round, 
halving the normal cycle of eucalyptus 
plantations to five years. Radiata pine, 
which accounts for 80 per cent of Chile's 
1.6m hectares of plantations, grows In a 
quarter of the time It takes in Canada. 

Such natural advantages have led to 
huge investments in Brazil and Chile, 
where an estimated $9bn was spent 
between 1987 and 1992, mainly in the 


pulp sector. Such investment has trans- 
formed Latin America from a net 
importer of wood products in 1987 into an 
important e xport e r, now accounting far 
15 per cent or world pulp supply. Analysts 
predict that, within 10 years, Latin Amer- 
ica could be accounting for 30 per cent of 
global trade. 

Although Chile faced tough conditions 
last year, Eladio Susaeta, of Chile’s Wood 
Corporation, predicts a 20 per cent rise In 
export volumes in 1994 mid earnings of 
$L45bn. Mr Juan Moya of the National 
Forestry Corporation (Conaf) sees indus- 
try confidence reflected in last year’s 
130,000 hectares of new forest, at lOha per 
Chilean, one of the world's highest plant- 
ing rates. 

The industry, entirely privately-owned, 
has advanced rapidly since the mid-70s 
when it counted on only 30Q,000ha and 
exports of $125m. Generous planting sub- 
sidies have quintupled the area of 
man-made forests, which should double 


again to 3mha by 2005. 

Planting is expected to continue apace, 
despite the end. of state subsidies next 
March, because of the commercial incen- 
tives to supply Chile’s six pulp mills 
which have a total annual capacity of 2m 
tonnes. Three mflla came on stream in 
1992, all with substantial foreign partici- 
pation, nearly doubling potential output. 
One, the Santa Fe plant, fed by eucalyp- 
tus, marks a trend towards foster-growing 
hardwoods for the production of short-fi- 
bre cellulose. The Santa Fe mill, a $460m 
joint venture between Scott Paper of the 
US, Royal Dutch/Shell and Citibank, has a 
230, OOO-tonne animal capacity. 

Pulp makes up less than Half of Chile’s 
forestry exports, with sawn wood, planks 
and ehips also exported. Several Chilean 
companies are looking at projects in 
Argenttna’6 potentially rich, but underde- 
veloped, f o restry sector. 

Unlike Chile, Brazil’s industry inw not 
had the advantage of a stable mafiro-eCo- 


nomic environment, but has managed to 
prosper despite regular changes at the 
finance ministry and skyrocketing infla- 
tion. Some $6bn has been invested in as 
many years, with billions more waiting 
for better conditions at home and abroad. 

Hie industry has exploded over the past 
two decades, trebling output of paper and 
board and lifting pulp production from 
Llm tonnes in 1973 to 5m tonnes cur- 
rently. In 1992, Aracrnz Celnlose became 
tire world's biggest producer of short-fibre 
pulp, earning $460m from sales of 977,000 
tonnes after a $1.2bn expansion of its 
Espirito Santo mill. 

T he potential for further increases in 
installed capacity are enormous. 
Mining conglomerate Companhia 
Yale do Rio Doce - which has five big 
reforestation and pulping projects, some 
involving Japanese investment - could 
boost pulp output by 1.7m tonnes by 2000. 
Brazil, In contrast to Chile, has a huge 


internal market of 150m people which 
devours 75 per cent of domestically-pro- 
duced paper and more than 60 per cent of 
pnlp. Bnt this still leaves about 1.3m 
tonnes of paper and 2m tonnes of palp for 
export which last year fetched $1.5bn. 

In addition to palp and paper, Brazil 
also earns more than $5 00m annually 
from exports of logs, planks and wood 
manufactures. This year, pulp and paper 
production are expected to rise by 8 and 6 
per cent respectively, according to Mr 
Horado Cherkassky, president of industry 
association ANFPC. Few doubt Brazil’s 
potential to better its ranking as the 
world’s eighth biggest pulp producer. 

Such expansion plans will need, how- 
ever, to take account of Latin America’s 
growing environmental awareness. In 
Chile, for example, where a law on native 
forests is working its way through parlia- 
ment, much controversy has been raised 
by the commercial exploitation of 100- 
year-old native Ienga trees to provide 


woodchips for Japan. Last year, Chile 
earned more than $100m through export- 
ing chips produced predominantly from 
native forest species. 

Forestry companies argue that native 
forests are exploited rationally in a man- 
ner which protects by placing a commer- 
cial value on land that might otherwise be 
cleared for agricultural use. Mr Moya of 
Conaf says the subject has provoked 
"much passion and tittle logic” and that 
Chile, a poor country, must make ade- 
quate use of its resources. Conaf says that 
90 per cent of Chile's forestry industry 
uses man -made wood. 

Mr Nicolo Gligo, a Santiago-based UN 
expert says the industry could be sustain- 
able, but only if tougher regulations are 
enforced. He would like to see a ban on all 
chips produced from native species. Of 
industry c laims that it plants more trees 
than are felled, he says: "I am in favour of 
plantations bat in addition to, not as a 
replacement of, native forests.” 

Whatever merits differing arguments 
may have, the fact remains that 200mha 
of Latin America forest have been 
destroyed in the past 30 years, according 
to the Food and Agricnltnre Organisation. 
If the forestry industry is to eqjoy a long, 
prosperous future in the continent it must 
reverse that trend. 


Canada’s forests 

A VOYAGE OF COMMITMENT 


Mapping a Route 


In 1992, Canada embarked on a new National Forest Strategy developed by a broad cross-section of 
Canadians. The Strategy, Sustainable Forests: A Canadian Commitment , is an action plan to make 
the goal of sustainable forests a reality. The Strategy maps the route for Canada to achieve worldwide 
objectives for sustainable forestry — a significant step beyond sustained yield for timber production. 

The Canadian Council of Forest Ministers and representatives of non-government organizations are 
committed to implementation of the Strategy through Canada’s first Forest Accord. 


Steering the Course 


Taking into Hcconni a wide range of environmen- 
tal, economic, social and cultural values, the 
Strategy charts the direction for stewardship of 
Canada’s forests. Through public participation, 
the dialogue among partners is expanding. Economic 
opportunities are fostered through diversification 
and a host of forest values are accommodated. 


Everyone on Board 


Every day, Canadians are turning the idea of 
sustainable forests into a reality. In a spirit of 
cooperation, the combined efforts of government, 
industry, labour, professional foresters. Aboriginals, 
environmentalists, private woodlot owners, 
educators and others are moving the 
National Forest Strategy closer to 
realization. 




Mile," lone- 


By virtue of its geographic vastness and 
ecological complexity, Canada faces a 
host of challenges in its voyage to sus- 
tainability. The great strides being 
made are refleeted in the numerous 
accomplishments of the forest 
community across Canada from 
Newfoundland on the east coast 
to British Columbia on the west. 

Achievements include developing new 
policies and practices, enhancing 
inventories, creating educational opportu- 
nities, and practising sustainable forest 
management on the ground. 


Around the World 


Canada is reinforcing its role as steward of 10 percent 
of the world's forests. At the Earth Summit in Rio in 
1992, Canada endorsed the Statement of Principles on the 
Management, Conservation and Sustainable Development 
of Forests, the first international consensus on forests. 

In the international arena, Canadians are proud of leading 
the movement toward sustainable forests. The establishmmt 
of a network of Model Forests in Canada has led to the 
birth of an international Model Forest Program. 


Currently, Canada is working with other countries to 
develop internationally acceptable criteria and indicators 
of sustainable forest management. 

If yoa want to know more about Canada's forests and 
their future, please contact: 

Canadian High Commission 

Macdonald House 

1 Grosvenor Square 

London WIX OAB 

Teh 7 1-258-6600 Fax: 71-258-6384 


Canada 


Life itself springs forth from the sun. 
Sinar Mas, as one of the leading 
business groups in Indonesia, 
appreciates the gifts of nature and is 
committed to the responsible devel- 
opment and preservation of the 
environment in order to improve the 
quality of life for the benefit of mankind. 

FOOD 

The Group's agro-business activities help provide the 
most fundamental of all human needs - the need for food. 

The Sinar Mas Group has roots in 
the vegetable oil business, having 
begun operations in this area more than 
40 years ago. Today, the Sinar Mas 
Group has modern refineries 
producing edible oils and fats 
required by domestic consumers and 
food industries. The Group also owns 
and develops 
over 160.000 
hectares of 

plantations devoted to oil 
palm, tea, coconut, cocoa 
and bananas. 

Through its vertically 
integrated struc- 
ture, the Group 
has achieved 
significant 

market share in agro-industry 
while adhering strictly 10 the 
national standards of health, 
safety and environmental 
protection. 

SHELTER 

From urban housing estates to 
luxury hotels, the Sinar Mas Group 
contributes to the essential human needs for 
housing and shelter. 

As one of the leading developers in Indonesia, Sinar Mas 
ensures its diverse real estate projects are developed in 
harmony with the surrounding environment The Group's 
interests include commercial real estate and office buildings, 
residential subdivisions and condominiums, shopping centers, 
industrial estates and golf course developments. 


EDUCATION 

As one of the leading exporters of pulp and quality paper 
to over 40 countries, and with its dominant share of the 
printing and writing paper market in Indonesia. Sinar Mas 
helps make learning possible. 

Its subsidiaries, Tjiwi Kimia and Indah Kiat, provide u 
model for Indonesia and the world in waste management, 
including their exemplary waste water treatment processes. 
The Group also makes extensive use of recyclable paper 
products in its pulping operations. 

The Group's activities in the pulp and paper industry 
adhere to strict environmental policies, including extensive 
reforestation projects and maximum use of forest plantations. 

QUALITY OF LIFE 

Sinar Mas works to enhance the 
quality of life with its wide range of 
financial services. The Group ope- 
rates one of the most profitable local 
private banks in Indonesia. Bank 
Iniernasional Indonesia (BID. which 
actively supports 
programs such 
as the World 
Wildlife Fund’s 
endeavour to save the Javanese 
Rhinoceros. Through its 
consumer marketing program. 
BU contributes to this 
project for every 
new credit card 
issued. 

Sinar Mas was selected to 
participate in the government spon- 
sored program "Care '92”. designed to 
educate the public on environmental 
issues, including pollution control 
and recycling. The Group's 
activities in this program include providing 
loans to small businesses for waste management 
projects, and the purchase of materials for recycling 
purposes. 

With the source of its business and inspiration found in 
nature, the Sinar Mas Group is committed to responsible 
development through its environmentally sound policies and 
activities. 

Just as the rays of the sun give life to nature, so Sinar 
Mas shares the benefits of its successes. 


The Rays 
of Life 



huiiwn activities 



Sinar Mas Group 

WbrneBLAUK Tlunmkiv XL 
Jakarta 10350, mdmsib 

wt itt-si>2aooU6/2ttaMa. foe ( 62.21 J hkbu 


PT. BtmklntaTissfona] Indonesia, Mm nix hh jam latt&hoan ik (srajnittu (ts-ji) zjqi-k® uccghgobiia 

PT. Dlita PertiwiJalamljaifflBl^TridiOWf*, 7Vi4Wi*oocXArtKltbn98jDisR»ia.Jilaita1«X.l»*«)«Si, a (B3-?1|60197W Far (e-ujsiosSM 

FT. SMART Corporation. AioiaiDiiipaii^iMCB*n.WRw.XAriBiUiwttaFt^j|iMi44aLiBdoMsfxM Fai&aijstnmsftaiiTMi 

PT. Indah Wat Pulp & Paper Corp. wm a* i* « am j. ur h *ym i» «l mi sm mm**, m. pmd nm* r« nmu imhmx tsjho. 7975373 

PT. P^k »Brta« T^I KJmfa wwaiijjwhittaw.xui ajaam w (sw>7B7aw4anJO»« fsr t^!i)7376ii4.a 





as 






IV 


TIMES TUESDAY MAY 17 1994 


WORLD FOREST PRODUCTS 4 


W hen the Indonesian forestry min- 
istry recently announced that it 
had banned a large timber com- 
pany from listing shares on the Jakarta 
Stock Exchange, the move caused a stir. 
For the minishy imposed the ban because 
of its suspicion that the company was 
involved in illegal logging. 

It would certainly not surprise timber 
rarhwtry flfflrinrtflrtfl fi jf t*w flllpgptjnn wiflre 

true. What crated the Interest was that 
after many years of complaint about lack 
of resources and information, the ministry 
was now taking steps to enforce the law. 

Indonesia has the largest rain forest in 
the world after Brazil- It totals 144m hect- 
ares and covers 70 per cent of its land 
area. The country has long been aware of 
the value of its forestry resources and the 
need to conserve them. 

Government policy concentrates on con- 
trol of illegal logging and the introduction 
of higher value added products, a reduc- 
tion in shifting cultivation by forest dwell- 
ers and the provision of new employment, 
and the establishment of renewable timber 
plantations to support a fast-growing pulp 
and paper industry. 

Log exports were banned in 1985, and 
low interest loans offered to companies 
establishing plywood factories. As a result, 
exports of plywood have jumped from 
DS$991m that year to US$3Jftm in 1992. 
Total exports of processed wood products. 
Including furniture, readied US$42bn in 
1992, the third largest export earner after 
oil and textiles. Principal markets are 


Indonesia has the largest rain forest in the world after Brazil 


Crackdown on illegal loggers 


timber industry in Indonesia and casta, 
nies have been regularly hit by 
plaints- Indorayon, a large pulp and ray». 
producer which had earlier bam accused 

HHitar eitnnVoc mUTnni i m ~ a 


Of polluting waser auppufeH, smranea a saj. 
ous chlorine leak at Its North S onata 
plant last year and was farced to cease 
operations far a time. 


Japan and South Korea. 

At the same time, the pulp and paper 
industry Has also shown remarkable 
growth. The industry has been privatised 
and capacity is expected to grow from 

L5m tonnas of pulp and a 2m town eg of 

paper to 14.8m tonnes of pulp and. 7.2m 
tonnes of paper ova- the next 10 years. 
With pulp production costs of US$250 a 


Indonesia is aware of the value 
of Its forestry resources and the 
need to conserve them 


tonne, significantly lower than European 
and North American producers, Indonesia 
is expected to become a significant pro- 
ducer. Exports of pulp and paper have 
already risen from 188,000 tonnes in 1987 
to 660,000 tonnes in 1992. 

The timber industry is dominated by the 
giant Bari to Pacific Timer, the largest 
listed company on the Jakarta Stock 
Exchange and th^ holder of 5m hectares of 
forestry concessions, an area larger than 
Switzerland. 

Baitto is controlled by Mr Prajogo Pan- 


gestu, a young ethnic Chinese Indonesian 
businessman with dose links to Indone- 
sian President Suharto raid his family. It 
exports 95 per coot of its annual produc- 
tion of 1.3m cubic metres of wood products 
and 90,000 tonnes of adhesives. 

Barito had sales of US$459m last year 
and net profit of US$145m, a rise of almost 
100 per cent on the previous year. The 
company is benefiting from a rise in ply- 
wood prices from around US$300 a cubic 
metre in late 1992 to more than US$500 a 
cubic metre now. 

The company made an initial public 
offering of shares last year, raising 
tJS$292m. It has plans to expand into the 
pulp indus try and has purchased a total of 

660.000 hectares of forestry land, some of 
which Is already replanted. 

Barito last signed a preliminary 

agreement with Marubeni and Nippon 
Pulp and Paper of Japan to establish a 
US$lbn pulp plant with a capacity of 

500.000 tons. This is expected to come cm 
stream in 1997. It is also acquiring timber 
assets in Malaysia. 

Another . Large ethnic Chinese-owned 
business group, the third largest in Indon- 


esia, is the p rin c i pal participant in the 
gYisft'Tig ’ palp and paper industry. The 
SLoar Mas group, a long es tablished busi- 
ness with interests in banking, property, 
food and agribusiness, controls the two 
principal listed companies, Indah Kkt and 
Tjtwi Kmda- 

Tnriah Trial, with timber plantations 
TmHq in Sumatra, has production capacity 
of 790,000 tonnes of pulp, of which 410,000 
tonnes has just came an stream, and 
344JXX) tonnes of papa:, backed up by a 
timber concession of 300,000 hectares. 

The company had turnover of US$305m 
in 1993, up 53 per cent an the previous 
year but earnings were hit by lower world 
pulp prices and fall from US$57m to 
US$42m. 

Brokers W. L Carr expect a recovery this 
year as the new pulp output pushes fore- 
cast sales to US$48&n and improved export 
pulp prices and do mestic paper prices 
increase net profit to US$76m. 

Smar Mas’s other big producer, TJiwi 
Simla, has a production capacity of 21A00 
tonnes of pulp and 394,000 tonnes of paper. 
It supplies 35 per cent of the domestic 
paper market and 50 per cent of the local 


stationery market and exports 40 per cent 
of its production. .. . 

Its expansion plans Involve upgrading to 
high quality papers such as non-carbon, 
required paper and cast coating paper and 
installing new machinery. 

The company’s turnover last year was 
up 25 per cent to US$288m and is forecast 
to rise by a similar amount this year. Net 


pulp with a capacity of 260.00Q tonnes 
backed up by 269,00Qha of tropical font 
and BMQQba of pine forest Its rayon plant 
has a capacity of 60,000 tonnes. 

Forestry and environment officials have 


Barito Pacific Timer has 5m 
hectares of forestry concessions, 
an area larger than Switzerland 


profit was US$37m, up 19 per cent A surge 
in the domestic price of paper to US$900 
per tonne, compared with US$600 per 
tnnriR Interna tionally will push up profits 
this year. 

But the government is expected to move 
to reduce tariffs and surcharge against 
imports, currently at 40 per cent, to reduce 
prices. Nevertheless, TJiwi Eamia is expec- 
ted to increase net profits far 1994 by 39 
per cent to U5$5lm. 

Rapid growth in environmental action 
groups accompanied the rise of the 


pollution controls and have enforced 
requirements to install expensive waste 
treatment facilities. I nd ah EM was fined 
last year far allegedly acquiring timber 
ftom Improper sources. 

But environmentalists believe thatv is 
still much to be done, especially in the 
monitoring of illegal logging. They pcdm 
out that, according to Indonesia’s own 
rules on sustainable forest management 
the maximum amount OT timber teat can 
be cut is 31.4m cubic metres a year. But 
actual demand is 44m cubic metres, 

40 per cent higher. 

More effective monitoring of resources, 
plus better tax collection from timber cor- 
porations are the main recraftwwiriatinna 
from action, groups for the future control 
on one of the country's most valuable 
resources. 


Maggie Ford 


Profile: the South African producer, Sappi, has been hit hard 


Ready to exploit changing political climate 


It has been a rough few years 
for Sappi, the South African 
producer that claims top posi- 
tion on the continent in pulp 
and paper production. Not 
only has it had to contend 
with the industry-wide down- 
turn, hut a severe South Afri- 
can recession, compounded by 
the worst drought of the cen- 
tury, has severely weakened 
the domestic market and 
forced the company to write 
off a drank of operations. 

On top of that. South 


Core operations supply 
over half of the county’s 
paper requirements 


Africa’s volatile political situa- 
tion has played havoc with 
Sappl’s international expan- 
sion programme, first by mak- 
ing it difficult to get permis- 
sion from the South African 
Reserve Bank to export funds, 
and then, as a result of the 
currency’s recent slide, exag- 


gerating the effect of losses in 
its new offshore operations. 

Domestically, therefore, 
while Sappi remains dominant 
in the market, the company 
has been hit hard on all fronts. 
The effects of the three-year 
local recession was aggravated 
by increased competition from 
imports, particularly from 
Brazil and Finland, which 
have exploited the country’s 
low tariffs on paper products 
to exploit the top end erf the 
South African market at low 
prices. 

Despite all this, aggressive 
expansion has seen the compa- 
ny’s t ur nover rise from R2JJbn 
($580m) in 1990 to R5J4bn in 
1994, but after-tax earnings 
have dropped over the same 
period from R604m in 1990 to 
just Rl42^m in 1994. 

Now, however, Sappi 
believes the worst is over on 
both counts, and it is well 
placed to exploit the expected 
upturn in the market and take 
advantage of South Africa's 
return to economic growth 




European operations are expected 
to be hi tee Mack for 1994, says 
Eugene van As (above). Pictured 
left is the giant woodfroe coated 
paper inedible at Hsmovier 
Raptor's Stuttpat m9 


and its newfound interna- 
tional respectability. 

Executive chairman Eugene 
Van As says: “The changing 
political climate is creating 
new business o pportu ni ties for 
our operations." 

The company is a frilly-inte- 
grated producer and its divi- 


sions encompass all sectors of 
the industry from raw timber 
to finished papers. Its core 
operations together supply 
more than half of South 
Africa’s total paper require- 
ments. 

Sappi grows its own timber 
on 340,000 hectares of forest 


Even 


Wh ite 



Green 


in Enso 


MAKING PULP AND PAPER IS EASY. 

MAKING WHITE FROM GREEN IS NATURAL. 

IT'S SECOND NATURE TO ENSO, LET US TELL YOU MORE. 


ENSO-GUTZETT OY 


KAN AVAR ANT A I FIN-OOISO HELSINKI F1KLAND 
TELEPHONE +35S O 16391 TELEFAX #331 O ZC29472 


land in the southern Africa 
region, most of which is then 
used in the company’s own 
plants. These in turn are 
divided into Sappi Timber 
industries, kraft papers, fine 
papers and pulp. 

The timber operations sup- 
ply structural wood products 
for the building and raining 
industry, as well as particle- 
board and medium density 
fibreboard for use in home fur- 
nishings. For its other prod- 
ucts, the group has three fine 
paper mills and three kraft 
paper mills around the coun- 
try, used for packaging and a 
wide range of home, school 
and office requirements. Its 
Usutu pulp division, based in 
Swaziland, is the lowest cost 
producer in the world of 
unbleached kraft market 


paper. 

Sappi’s forests benefit, in 
non-drought years, from the 
local climate, which allows far 
fast growth of frees suitable 
for pulp. Combined with 
access to some of the cheapest 
electricity in the world, this 
puts the company among the 
cheapest producers in the 
world despite the relatively 
high, quality of its output 

This cost competitiveness is 
true of most of Sappi 's South 


African operations, helped by 
a combination of cheap inputs 
and low delivery costs. And, 
given tiie company's substan- 
tial excess capacity, Mr van As 
believes that the end of South 
Africa’s recession, combined 
with increased spending plans 
by the new government in 
areas such as education, will 
significantly benefit the local 
paper market thus helping lift 
domestic results in the near 
fixture. 

Over the past few years, 
however, the export market 
has become the main focus for 
many of the company’s divi- 
sions. Sappi now ships a wide 
range of products, accounting 
far around 65 per cent of total 
output, to all parts of the 
globe, with east Asia and 
Europe being dominant, 

Spearheading this drive is 
tiie company’s SA1CCQR divi- 
sion, the world's lowest cost 
dissolving pulp producer, 
which reserves nearly all of its 
production for overseas 
demand. The operation has a 
capacity of 450,000 tonnes and 
is undergoing a Rib expansion 
plan which will make it by far 
the world’s biggest single pro- 
ducer. 

To complement these 
exports, over the past few 


years the company has focused 
on increasing its overall for- 
eign exposure and its foreign 
asset base. 

In addition to being listed in 
Frankfurt, Paris and London, 
the company now runs a sub- 
stantial European operation, 
with subsidiaries in the UK 
and Germany, ranking it raw 


The local climate allows 
for fast growth of trees 
suitable for pulp 


of the largest producers of 
paper products on the conti- 
nent 

However, despite Impressive 
recent productivity gains arid 
improvements in output these 
acquisitions have proved very 
costly for Sappi. The group’s 
five paper mins in the UK, 
acquired in 1990, were particu- 
larly severely bit by the Brit- 
ish recession, although they 
have managed to increase 
market share. 

Similarly, Sappi’s Ugh pro- 
file purchase of Hannovier 
Papier the biggest German 
producer of coated papers, 
made in 1992, Juts also suf- 
fered from the domestic reces- 
sion there. As a result, the 


Mark Suzman 


Profile: prospects have improved for Chicago-based Stone Container 


Reprieve for debt-laden company 


Stone Container, the 
Chicago-based paper and pack- 
aging manufacturer, is count- 
ing on this year’s modest but 
steady increases in linerboard 
and newsprint prices to rescue 
it from the financial conun- 
drum that has brought it three 
consecutive years of deepening 
losses. 

Stone, a 68-year-old company 
winch started as a family busi- 
ness that traded In twine and 
used corrugated cartons, 
entered the 1980s as a vertical- 
ly-integrated packaging com- 
pany with sales of $600m. 
Then, under the tutelage of 
Roger Stone, a grandson of the 
founders and a disciple of junk 
bond king Michael Milken, 
Stone Container ballooned to a 
company with $5.7bn in sales 
during its peak year, 199G. 

However, the growth was 
achieved through a series of 
highly leveraged acquisitions 
that left the company in debt 
The purchases coincided with 
a boom in the cyclical paper 
and packaging business, and 
the biggest were made at the 
height of the market 

The largest of these, the pur- 
chase of Montreal-based Con- 
solidated Bathurst, came in 
1989 at a price of $JL6bn. Con- 
solidated Bathurst owns four 
newsprint plants in Canada, 
and one in Ellesmere Port In 
the UK. 

Analysts say Stone’s acquisi- 
tion of Consolidated Bathurst 
was an exercise in bad timing. 
"Basically. Stone paid a high 
price for Consolidated and got 
stuck with a lot of debt just as 


the market (for paper and con- 
tainer board) weakened and 
cash flow was going down,” 
says Brian Bogart, a bond ana- 
lyst for Duff and Phelps. 

As a result, Stone Container 
entered the 3990s more than 
$4bn in debt, and with cash 
flow that was not adequate to 
meet both operating needs and 
debt-service obligations. 
Annual losses grew from 
$49.Lm in 1991 to 1993’s record 
8358.7m. The company's des- 
perate need for cash led to a 

dilutive plan 

for a $5O0m 
equity offering 
early last year 
that was 
aborted after 
the announce- 
ment sent 
Stone's shares 
into a tailspin, depredating 
their value by half 

However, since then the mar- 
kets for Stone's primary prod- 
ucts have strengthened. The 
industry announced price 
increases for newsprint and 
linerboard in March, and has 
been successful at implement- 
ing them. Linerboard supplies 
are particularly tight, with 
manufacturers, including 
Stone, operating plants full-out 
in the first quarter. Stone 
announced a second $40 per 
tonne price Increase for liner- 
board effective June 1, and is 
Optimistic it will stick. At the 
same time, discounts for news- 
print have been trimmed. 

The market turnaround has 
given Roger Stone the reprieve 


mountain of debt and ward off 
creditors. 

In December, be created a 
company called Stone-Consoli- 
dated using most of Consolidat- 
ed-Bathurst’s assets, and then 
sold a 25-4 p er cent stake in the 
new entity to Canadian inves- 
tors hungry for new offerings. 

A series of smaller asset 
sales have followed, and the 
company has not ruled out sell- 
ing a further stake in Stone- 
Consolidated as a means of 
raising cash. 


Even with some debt 
relief and an upswing in 
business conditions, 
analysts say Stone has 
a rough year ahead 


he needs to restructure Stone’s 


In February, 
the company 
completed a 
public offering 
of 16JSm shares 
of common 
stock and 
$7iom in senior 
debentures. 
The proceeds from the $925m 
offering were used to prepay 
creditors. 

Ira Stone, Stone Container's 
chief spokesman, says the com- 
pany has met all of its require- 
ments for long-term debt 
maturing through 1995 and 
much of 1996. 

However, the debt clock con- 
tinues to tick, with another 
$732m in long-term debt due in 
1997 and some $2.9bn due 
thereafter. 

Even with some debt relief 
and what appears to be an 
upswing in business condi- 
tions. analysts say Stone has a 
rough year ahead. "I thiw* 
their business will continue to 
get better, but they still lost 
money in the first quarter, 
even with the price improve- 


ments," says Mark Rogers, an 
industry analyst far Prudent 
Securities. If annualised, the 
first quarter loss translates 
into a $5 00m deficit far the 
year, he said. • ; 

Part of the problem s a® 3 - 
even though product pric® 
strengthened in the first 
ter, they still did not re cover y 
the point where they w**® 

the first quarter of 1998. 

products analyste says that" 
the forest products market cte 
tinues to firm it will be in 
areas where Stone 
heavily invested 
corrugated containers, 


Mr Bogart with 
Phelps, says Stone may ®*®* 
a profit until 1996. *^^ 

done a great deal of 
to stay ahead of its daK®*' ? 
rities, and now ite casb &j? 
improving," he -said, 
have a high degree rf **55 

ing leverage, and'eaehj?**" 
increase has agewroreu®** 
on their bottom fine.’’ 

However, he -*aidi. 
faces hefty enviror” 
charges to clean op 
water emissions -at I® ^ 
and factories. Thbsej-t^- 
according- to 
could be as high « •» WP r 
Shareholders 
banking on 
position in a 

ucts market 

'shares , have neartytf®“2J 
from a 1998 low rf 
share to more; ^ 
recently. 


company has proved a seven 
drain on resources and its 
losses have severely depressed 
Sappi’s bottom Hue because of 
their denomination fa 
D-Marks. 

However, the sell-off of some 
assets has recently improved 
Hannovier’s cash base, and 
here, too, Sappi feels that ft 
has turned the corner and is fa 
an excellent position to exploit 
Hu* upturn. 

“Our European operations 
are very much in the val- 
ue-added area of the market, 
encompassing high-quality 
coated and tmcoatod papers, 
and we expect to be fa tee 
black for 1994," asserts Mr 
van As, citing a 24 per cent 
growth in exports last year as 
support for this view. 

That investors share this 
view is evident in Sappi’s 
share price, which has been 
buoyant in spUa of the. the 
company’s recent dismal 
results. 

However, some analysts 
warn that this picture may be 
overly rosy, particularly as 
modi of tiie group’s machin- 
ery in the UK and Sooth 
Africa is old and outdated, 
requiring a hefty dose of new 
capital expenditure over tee. 
next few years. 

“The company’s basically 
healthy, but it wOl probably 
take a little longer to achieve 
substantial profitability, espe- 
cially in Europe,” warns Chris- 
topher Sloan of brokers Fer- 
gusson Brothers Hall Stewart 

Nonetheless, Sappi has man- 
aged to increase its market 
share on the continent, helped 
by the successful operations of 
Sappi Trading, a Zorich-based 
marketing arm formed in 1891 
that conducts its activities 
through Speciality Pulp Trad- 
ing in Hong Kong and regional 
distributors in Europe, Africa 
and America. 

South Africa’s increased 
respectability as a trading 
partner has allowed the group 
to start tapping previously 
closed markets, and overall 
exports have been growing 
rapidly. Farther expansion, 
particularly in east Asia and 
the Americas, is expected over 
the next few years. 


Rll&TlR i- 
Tl&EL Vi-r >- 
FiSMI: 



V 


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A- 


V, 





V 





13 



Bj Older d/The Secrct.«y of Stati for Defence 
ONTHE INSTRUCTION OFTHE DEFENCE LAND AGENT, PLYMOUTH 

'.'fe 


Rom Naval Hospital 


Stonehouse • Plymouth 

A Substantial Collection of Historic Buildings Wtthly a 
Selkontaked Srre on the edge of Plymouth City Centre. 


BUSINESSES FOR SALE 


24 ACRES 


380,000 


Knight Frank 
u & Rut lev 

071-029 8171 
0292 1220:-?, 2 


FREEHOLD 
FOR SALE 
BY PRIVATE 


Gosberton Group limited 

The joint AdraMatratM Receivers oner for sate the twalweMea and assets of the Goeberten Group. 

based in Spalding, a leading grower /processor of vagetanie produca- 

PffaCtfte features rncfuda- 

■ vegambie pwesalng/pacfang taeWy in Gosberton coretoUrg of freehold premises and 
procttangfeadcinfl plant and equipment 

■ produce haulage business located to Qosbanon Rtesgare. Spalding turning over B4 mWon per 
annum; 

■ vegetable prccessingrpacking faculty m woofer. Northumberland consisting of freehold premises 
and processing/ peeking plan] and equipment 

■ Cold Stores in Pennygate. Spalding consisting of 50000 square I eel of cold/chtlled and dry 
storage, in a die of some 45 acres- Gross Storage Income of some £900500 per annum, 

m vegetable procesatog/packfng faculty in Leedafown, Cornwall, consisting of feasehpfd premises 
and procass in g/padang ptant and equipment; and 

■ development site fat Bourne. Lincolnshire extending to some 27 acres 

For further fntormaBon please contact the Admimstraiwa Receiver. Rodney Owen, 

KPMG Peat Warwick. Saw re Court 20 Caette Terrace. Ednbuigh EH1 2EG 

Telephone: [091) 222 2000 Fax: (031) 222 2020 




Corporate Recovery 


Lease 

portfolios 

[■ \\>u ,v.v looking io a cjualiiv 
pi Ten >! it' 1 i u -'cs ii'i the t ' f !i c*.‘ sAjuiptriont 
mvUw onnlwt us ni nv. 

V'v.. 1 or v- ikr i t,\i vc, ,'.rrn ui c uvv.ur 
i. j U i ' ! t ' i i pic. «. LUTeiuiv ti * 

porifi.'lii -■> \ ,i!ui.‘i.l K'tvvcn Lim 
cik: L ii'i'nv 

■or ilv hi.uhos! sic: v.LnsL- or -crvio.' in Io.im.* 
Ci. p| ns r- i ! ion \v fits.- iiisi \ i t i i Oi/tci!' ii i : 

Bo\ \o. l?2s?~, I'iiunv'i.i! linuo. 

i Suilhw/irk RriJ'Cv London SL! u i II 


CHESHAM. 

BECAUSE YOU ONLY SELL 
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And you want the right buyer. With 
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So if youVe thinking of selling your 
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to arrange a confidential discussion. 


Well Established 
Travel Agency 
For Sale 

Prime position 
North London. 
Owner wishing to retire. 

Good passing trade 
as well as considerable 
business accounts. 
Great potential for 
expansion. 
Principals only. . . 

Reply to: Box B28S2, Ftaanda] Theca, . 

Om SotXbwnfc Bddgo, LowdoB SE1 9HL 


FOUNDRY 

Central 

Scotland 

Medium sized, - 
iron foundry. 
Good client base. 

Write to Box B2814, 
FfaaoiialTixncB. 

One So o d wn ifc Bridge, 
London SB1 9HL 


itiiete 
Ross 
_ & 


(In Administrative Receivership) 
The Joint Administrative Receivers, N. J. Dargan and P. H. Bendall, 
offer far sale the hnsineas and assets ofWJdon (UK) Limited. 

■ ‘Well-ecpnpped worktop. 

■ Skilled w o r kf o r c e of 22. 

4 Ijira £1 milhop turnover pw- annum: 

■ Freehold p rop er t y 12,000 sq ft near the centre of Wigan. 

■ Nationwide Local Authority and PLC chent base. 

For further details, please contact Nick Dargan or Bill Dawson 
at Touche Ross & Co., Abbey House, PO Box 500, 7+ Mosley Street, 
Manchester M60 2AT. TeL- 061 228 3456. Fax: 061 236 0720. 

— ■■»* II 


Upon the Inxmafan ef Wrote Kknpfca 
k PMCtovtahtr 


|i» 




cerf 


g^^TOR sale ' . 

Ill ** A G0WG CONCBSN 

-• • ^ tuny 3 rr J 
PUBLIC BOUSE & HOTEL 
Saiterhebble Hill, Huddersfield Road 
Halifax, West Yorkshire . 

S ubSK ap p ar tu nk y tonctMre « Itriiini MiM Iwiin— »■ ujo,lua * prkne aam -road 

tpex tt o n . 3 rate Aon J34, MB ui e tempy. Spat BmMW — e hnM nite eomtefac 
CP) The Pub*c Boom rad ar pete* MBu - 

<U 31 - BedtfMKncd Houi Block. CaMcr Home. D<y 
Peck. Steicro [to ■JdM nwl car partwag 
SUBSTANTIA!. OFFKKS inpaud for wbote 

wk&Mln-wriilbmakMp ^TTll»lJTwni 

■nd GoodwiL SAV. 

Cwwc HkMkFiHcfa 


CONTRACTS & TENDERS 


^flfeMetropofitan 

Borouahofl 




w Borough of Wirral 

W1RRAL DIRECT 
Metropolitan Borough of Wirral 


Tenders are sought to undertake consultancy work 
as part of an inward investment programme. 

Documents are available from: 

Alan Brown 
Wirral Direct 
North Annexe 
Brighton Street 
Wirral L448ED 
Tel: 051 - 691 8181 


OFFICE EQUIPMENT 


sell off of quality range of 

COMPUTER WORKSTATIONS 

1 MILLION £s 

WORTH OF STOCK MUST GO 


Less than Vs of normal cost 
Also fine ranges of executive desking. Operational 
workstations, desking, storage, executive & operator 
seating, conference & meeting tables & chairs, board 
room furniture, divider screens, many other items. 

081 549 9339 


OFFICE FURNITURE 

We have available high quality executive and system range 
- conference and receptions. 

Large choice of veneers: (Walnot, Rosewood, Ash etc.) 
witii dboosat of sp to 

40% fromRJLR! 

London Showroom for viewing 
Foil cam cad planning servicesif reqaired. 

Please contact: UNEABURO LTD 

0992 503313 


BUSINESSES FOR SALE 


Appear in the Financial limes 
on Tuesdays, Fridays and Saturdays. 

For further information or to advertise 
in this section please contact 

Karl Loynton on 071 873 4780 or 
Melanie Miles on 0718733308 


FINANCIAL TIMES 

. EUROPE'S BUSINESS NEWSPAPER 


LEGAL 

NOTICES 

crrYsrreE gfATE S 
PUBLIC LIMITED 
COMPANY 

ARn»»taiiMpMmvteOxM«r 
Sate, Seated, by Cty Site EttaM pobEc 
ttniwid Caspar?, wfaMa Kiglia mi Office b M 
2J9 Sl Wooed Street, Gtagoar, fct cwfifflWlDB 
of (Mfaite oT tee wptal br Os caocaOte 
of da whole — pom d to cipiial mfcaqafw 
want, la lb* Petite *c Coan hax t»uf—r j 

V ■■ - -f . . — Li — u 

T*c ma.itfw a* 

BAtefbUdi Mi; I»4 
The Inah fpaiij tta PaUn n hi tainted 
oa the valla. la coamoa form aad Id ' be 
adwAad cbob h tc e dia b uigb Ganac. tbe 
Ptaactal TtaKi teii Iba HaaU aarapw^ 

afp** Hr fBf bliari a g an tea to Up 
Aamo (benu Ksa dirised vilbfa 21 4*71 
after Hch bxiawiaB nd admtemi. 

S & ad 
lAJi.BBfe.1pi 

OfiH abid liafi aafa) b bnebyrlaea. 

MCQdffV OhxU 

SoUdtoo 

IbcOeBote 

10WNB3U 

Ohbov 

SefitiMMlWIbaCtepaar 

ITIhbfajiSM 


COMPANY 

NOTICES 


CANAOtAN PACtRC LIMITED 
Qncoipoi ffia d In Canada) 

CANADIAN PACIFIC UMTTED 
PERPETUAL 4* CONSOUDATH) 
DfflENTURE STOCK 
NEW BRUNSWICK RAILWAY 
COMPANY 

4% DBBamJHE STOCK 
CAlHAflY t BSiKMTON RABWAY 
COMPANY 

4% DEBENTURE STO CK 

InpnpaMtontorfhapajnHMflftMhflif- 
yaaity tatoraat due JUiy i 1994 an the 
! Bbow Stada, ffie mbr books wN be 
ctead at 3k30 pjn, on Mw zr 199* and 
aifl ba ivepanad on July 4. 

DlELKEAST 

D^xar Secretary 

(BeGiMqjvSirM 
UxxtxiwcaNsnr u^iiiw 


BUSINESS 

SERVICES 

maMIMLCOmULTAIlON- eeapKH 
and pacaond taxation. Mudtag VAT, MT 
and WB Planning. Hants & Co. 

nad—wl man T* 07D8472811 


COMPUTER 
SOFTWARE COMPANY 
FOR SALE 


AS/400 UTILITY PRODUCTS 
EXISTING CUSTOMER BASE 
INCLUSIVE OP 
MAINTENANCE CONTRACTS. 

Please reply «y. Bxo B281S. 
Financial Times. One SoDibwBit 
Badge, LcndooSEl 9HL. 


i MtiikSZ ■ Will" 


(In Administrative Receivership) 

The Joint Administrative Receivers, AMD Bird and R G Ellis, 
offer for sale the goodwill, business and assets of Empire Stone 
Limited - the leading manufacturer of high quality architectural 
pre-cast concrete cladding — based at Narborough, near Leicester. 
Principal features include: 

■ Complete in-house design, manufacture and installation. 

■ Spacious, 17 acre leasehold or freehold site. 

■ Modem, on-site batching plant. 

■ Specialist concrete flooring subsidiary. 

■ Turnover approximately 47M. (1991 -II9M) 

■ Tenders and enquiries total approx L40M. 

■ Skilled workforce of 220 employees. 

For further details, contact J Reid, AMD Bird or R G Ellis at 
Touche Ross & Co., Queen Anne House, 69-71 Queen Square, 
Bristol BS1 +JP. Tel: 0272 211622 or 0222 481111. Fax: 0272 
292801. Or at the Company. Tel: 0533 864301. Fax: 0533 863512. 


louche 
Ross 
_ & 


Ukanribi Ik b< M >f ulCWtirnA b«u 







The lotnt Administrative R ece iv ers offer for sale on a going concern 

basis the badness and assets of Needham Brothers and Brawn Limited. 

• Proven design and manufacturing capability. 

• Expertise in completing large engineering contracts for the 
marine, construction, mining, water control and power 
generation industries. 

• Highly skilled workfor c e. 

• Freehold factory, stores and offices located on 1.26 acre site 
adjacent to the Alhambra Shopping Centre in Barnsley town 
centre. 

• Substantial quantity of pbnt and machinery. 

• Current annualised turnover £3.8 million. 

For further details please contact Robert Matusieartcz, 

at die address below. 


BDO 


BDO Binder Hamtyn 
Chartered Accountants 
206 Derby Road. Nottingham. NG7 INO 
Telephone-. 0602 415312 
facsimile; 0602 410193 


BUSINESS FOR SALE 

REGIONAL BUILDING 
MAINTENANCE COMPANY 

GLASGOW/WEST OF SCOTLAND 

• Well established building maintenance and 
refurbishment company serving major public and 
private organisations 

• Excellent opportunity to penetrate major markets in 
the Strathclyde region 

• Wide range of building services including joinery, 
plumbing, and decorating - excluding M&E 
maintenance 

• Experienced management team committed to the 
development of the business 

• Profitable with turnover in excess of £2.5 million 

Potential purchasers please write to Samantha Penn at 

the address below. 

Livingstone Fisher pic 

Acre House. 11-15 WHIiam Road, London NW1 3ER 


\Wu VI NGST0NE FISHER 


The Acquisition & Disposal Specialists 
A Member of F1MBRA 


LEISURE 


.. HOLIDAY VILLAGE COMPLEX 

FOR SALE 

IN WILLI NGCOTX NORTH DEVON 

Sac in approx. 108 acres, approx. 2 mites from the North Devon 
coast Rare comptasad wkh fanning permission fan 
20 CONVERTED COTTAGES 
• «2 NEW BUILD UNITS 
t-HOLE GOLF COURSE 
CLUBHOUSE ft SWIMMING POOL 
BOWLING GREEN it PAVILION 


Grim le v | R Eve 




GROW AVENUE. QUEB4 SQUARE. IRSTOL BSI 4Q* 


OP IN1EREST TO HOTBUERS/RESIDEPmAL DEVELOPERS, 
IMPOSING CORNER SITE BAYSWAXER. LONDON W2. 

9 ADJOINING AND INTERCOMMUNICATING PROPERTIES 
PRESENTLY 225 BEDROOMS PLUS PUBLIC ROOMS. 
59.000 SgjTT. INTERNAL 
FOR SALE FREEHOLD £4.5M S.T.C. 


Bole Agents Casacdy Coopen 
071-222-8888 Fas 071-976-7110 


: v - «-V. -'••• ::k • ■ v.k ; ^ 


Prtndpol iMims o( tfe« butaan tadDde: 

• tumovw clrco £ 2.0 inHon 

• supplier ol dnkxX Mffia to boding phonncaUHcal cumpantox 

• supfOv cl o h« mgs at clognodfc sentcat 

■ 35 smpioysss 

• U range of laborataiy aid iflognosOc aqufprmnt required by ifn 
hurinew 

■ iaasefwid pramtas uuoBabto In Wad Lundon. 

For farther dafoffx ptoan wite to Coopwa A Lybrand (ananflon UJ 
London! St Andrew^ House. 20 SI Andrew 9raaL London EC4A 3AY. 
Tetephoofc 071-583 5000. Foe 071-212 6900. 


DIY AND GARDEN 
PRODUCT RANGE. 

Unique and wefl established in 
ratal markets, UK & Eire, with 
potential in Europe. Sales and 
distribution Induing major DIY 
multiples. Self contained 
production. T/O £170,000 at 
45% gross profit, 40% growth. 
OiRO £320,000. 

Please write to Box Si 128, 
RnencMTknaB, One Soutteric Bridge, 
London SE19HL 


DIRECTORY 

FOR SALE 

Profitable pubUcation with 
no competition. • 
Opportunities for expansion. 

Current owners wish 
to pursue separate interests 
Apply toe 

Bax B2817, Finaaen] Timex, 

One Somb wn * Bddga. 
London SE1 9HL 


CONCRETE REPAIR 
COMPANY 

with pre-tax profits of £400,000 
approx p-& seeking kiterested 
parties wishing to purchase 
axparefrg compsiy, 

MMtoto BOXB2S94. FmncW Urea. 
OWSqutwwkWdga, 
UrxXxiSEI SHL 


FOR SALE 

Kingswood House. W oMngha m . 
Berkshire. 

Freehold, satfeed dten eperatton - 
pnxkxing ckca £63,000 income pj. 
price tesopoo Cortact Vsl w«em$ 

Tet 0703 631973. 


RECEIVERSHIPS LIQUIDATIONS 


PINK PAGES Is the weekly guide to 
every Insolvent company. The most 
comprehensive guide avaBatofe It Is a 
proven source of business for those 
working in the Insofwncy marketplace. 
Fully Indexed and guaranteed PINK 
PAGES offers direct contact with 
Liquidators & Sftceivers, tells your 
Company Activity and Location, sad 
offers Financial summaries for every 
company, tooting for a buyer. Can you 
afford not to know about EVERY 
in solvency opportunity EVERY week? 


r»£S SAMPLE ccf'» iC273; 62fc-:-S2 :24H3Si 


100+ LIVE 

Businesses for 
sale and 
sales of assets 
fortnightly 

071 2821164 
Fax: 071 7063464 


TRAVEL AGENCY 

West Sussex Coast 
A0W1AIA 

Sales T/O 2560000 
Guide price Sdoxxn 

Contact W. Brennan 
Tet 081*871-2994 
Fax:081-871-9461 


STRUTT 

PARKERS 


DORSET ABOUT 48 ACRES 

Bradford 3 mila, SaOstmy 25 miles. Bofntemouth 1 5 mOa 

ADdfehcUlUidMlIBaHM 
with a Frail Ften, Vfeqwd Bad Thriving FamBy IhriuHt 

MiU House - 3 reception rooms, 5 bedrooms, riverside and port walled 
gardens. Productive finit farm and The Partridge Vineyard. 
Keynstoo Mfli Farm Shop and MiQwIied Restaurant 
Traditional farmbuildings. Fishing on the Rivets Stour and Tarrant 
Current annual turnover approximately £240,000. 

41 Maford Street, Safebory, Wiltshire SP12BP Tcfc (6722) 328741 


EDUCATION 
AND TRAINING 

Highly profitable snail company with 
own nniqoc prodnet range in 
cdnrarfan/uaiaingxectoi. Sail com pan y 
wishing lo expand lls range or 
hxSvidnaL Owner idiring. 

For details call Peter Miles. Toncbc 
Robs & Co. Cbbnore Cue, 2 Cohnore 
Row. Bfarminghain B3 2 BN. TeL’ 021 
200 221 LAs 021 2361513. 

Atented by <he baXfeaie arOsMed 
Aeonatmtia Bngte «d Wte 
many on lavewnew Hntino. 


For Sale 

PRECAST CONCRETE 
CO. IN PORTUGAL 

Nr. Columbia, 10 min from 
m’way 28.000m 2 covered 
£285,000 

Fax: (351-1) 7970051 


UNIQUE 
PRODUCT LINE 

for safe lifting of heavy loads. 
£150K t/o, gross profit 75%. 
Easily relocated. 

Tflfc Ce&fc Robertshaw 

071 631 0650. 


COMPUTER 
SOFTWARE HOUSE 

• J0 profitable yean ia North Wot 

• Pkcxfigfeos premises 

• Large established cummer base 

• Maitnemaro A support revenue 
£300K+pa 

• TO m excess af£lm pa 

• SpecalBi software matfeeis 

• Cfeatpotealial 

Write KK 

Box 82862, Hemal Timro, 

One Smthwaik Bridge. LotxhmSBlpHL 


GRAPHIC EQUIPMENT 
DISTRIBUTOR 
FOR SALE 

Turnover £2J)m + Prolltable 

RqdynPBaflry, KPMGQxporeefimee 
1, TbC Embuktneut Ncviflo Street 
Leeds LSI 4DW 

tlnteteteBeW— tWO — TiiMHimh 


For Sale 

Exclusive resiauranl in 
Old Beaconsfield, Bucks. 
Superb location. Real 
opportunity to acquire 
profitable business. 

Contact 

MrRenalo Santocri 
on 0494 674124 


Channel Islands 

Well established light 
manufacturing business. 
Full order books and 
expansion potential. 
Price guide £500,000 
Write to: 

Bax 52860, Financial Times, 
On© Southwark Bridge, 
London SE1 9HL 


Successful and 
profitable magazine 
publishing company 
for sale. 

Turnover circa film. 

Apply; 

Box 82819. Finnrhl Timm, 

0*K Southwark Bridge, Loodoa SE1 9HL 























14 


FINANCIAL TIMES TUESDAY MAY 17 1994 


DON'T 

CRACK 

UNDER 

PRESSURE 



FT/LES ECHOS 

The FT can help you reach additional 
business readers in France. Our link with 
the French business newspaper, Les 
Echos, gives you a unique recruitment 
advertising opportunity to capitalise on the 
FT's European readership and to further 
target the French business world.For 
information on rates and further details 
please telephone: 

Philip Wrigley on 
071 873 3351 



m 9 TO SAVE ALL 
* THESE TREES WE 
9 • HELP CHOP « 
tvwmtutC nvc 



Tnapacri tunhrood oca an 


kvn lave no qoabm About d cj n ti y iag 
other RO that toad m Aar ray. 

So a WWF pqea ■ Coaa Bio b 
nvranAii^g wijs of (effing a tree wbbosc 
bn n g juu down Kraal och 


Aad how to renorr « wUioot MUonng 


t f Ac nindin iri are mod w iicly. they 
can be «acd fan-wx Hdp WWF prove 

An m niuiirrm amuad d* wudd, by 
viriwm a Ac Mxmbcxrfrip Officer a Ac 


& 


WWF 

World Wide Fund For Nature 


PEOPLE 


Goodall takes on 
another chair 


In the week of 
27 June 1994 
the Financial Times 
will publish its 

ANNUAL REPORT SERVICE 

In 1993 companies received an average of I22S report requests 
from respondents In 93 countries world-wide. Nealy 52% of these 
requests cane from chief executives axt manafltag drectors who 
woiid use the report for business. 

To reach this highly Influential audience by advertising your 
company’s report In this years feature please call Elizabeth 
Vaughan on Teh +44 71 873 4268. Fax: *44 71 873 3062 a your usual 
Fkiandaf Times representative. 


Man web, the Cheshire-based 
regional electricity company, 
has become the latest power 
group to appoint a relative out- 
rider to one of its two senior 
posts. Bill Goodall, on the com- 
pany's board for less a 
year, is to fofce over as non-ex- 
ecutive chairman at the end of 
August. 

He will succeed Bryan Wes- 
ton who is retiring after 45 
years in the industry. 

Before privatisation four 
years ago, the way to the top 
in electricity was a lifetime in 


the industry. Western’s appoint- 
ment yesterday means that 
half of the 12 regional electric- 
ity companies have chairmen 
who have spent the bulk of 
their careers in other indus- 
tries. 

The Man web appointment 
means Goodall, 62, now chairs 
four companies; the others are 
Volex, electrical controls 
group. Hopkinsons, engineer. 
and inveresk, paper manufac- 
turer. 

Goodall began his career as a 
management trainee with 



Scapa Dryers in 1956 after 
graduating from Pembroke 
College. Cambridge, and Leeds 
University. From there he rose 
to be chairman of Scapa 
Group, a post lie relinquished 
last October. 


Non-executive 

directors 



Sir Peter Thompson, 66, the 
businessman who has been 
heavily involved in promoting 
wider share ownership, has 
joined the board of Brewin Dol- 
phin, one of the UK’s biggest 
private client stock brokers. 

Sir Peter (above), who is 
president of Pro Share and sev- 
eral quoted companies, mad* 
his namp as chai rman of NFC, 
the employee controlled trans- 
port group which he brought 
to the stock market He is one 
of two non-executives joining 


the board of Brewin Dolphin 
shortly before it gets its shares 
floated on the market 

Dame Angela Rumbold, 62, a 
deputy chairman of the Con- 
servative Party and MP for 
Mifpham and Warden, has also 
joined the board. 

Brewin Dolphin, which has 
32,000 clients and a network of 
12 regional offices, has devel- 
oped through a series of merg- 
ers of old-established stock- 
broking firms. It was bought 
by the Scandinavian Rank in 
1987 at the time erf Big Bang. In 
April 1992 its management 
bought the business fiom the 
Scandinavian owners and In 
April 1993 it bought Bell 
Lawrte, one of Scotland’s larg- 
est stockbrokers. 

■ Derek Arkley at ASH & 
LACY; Norman Askew, Jeremy 
Potter and John Vernon are 
retiring. 

■ David Quysner, a director of 

Ahrng wnrfrh HfanagBWi>nt , 
ATwatulw- Smtfli an aggj g fant 
director of Rothschild 
Ventures, and Sir Michael 

RirhanTunn , chairman of Smith 
New Court, as chairman at 


SURGICRAFT. 

■ Werner Dieter, retiring 
chairman of the hoard of 
m upflpuiiAnt at Mannpgmann, 

at TI GROUP. 

■ Stuart Henderson, former 
chairman fljl d rod nf 
Contractors Services Group, 
and John Jess op, re tired GKN 
director, at BRITISH 
BUILDING AND 
ENGINEERING APPLIANCES. 

■ Billy Carimtt as chairman at 
CO MAC GROUP. 

■ Lionel Ross, former finance 
director of Whitbread & Co, at 
CARPETRIGHT. 

■ David Newbery. director of 
the department of applied 
economics at Cambridge, at 
MARCIAL ECHENIQUE & 
PARTNERS. 

■ John Uthiby has resigned 
from TRANSPORT 
DEVELOPMENT GROUP. 

■ Barry Eldred, joint md of 
John Briton, as chairman at 
BARNSLEY BUILDING 
SOCIETY. 

■ Rhiannnn Cha pma n a 

former director of the London 
Stock Exchange and former 
head of the Industrial Society, 
at SR. GENT. 


Phibro entices Bonner to return 


Nothing bears testimony more 
eloquently to the gradual re- 
emergence of Phibro as a force 
to be reckoned with in interna- 
tional commodities trading 
than Peter Bonner’s decision to 
rejoin the Salomon subsidiary 
to he«d its non-ferrous and pre- 
cious metals team in London. 

Bonner, now 49. joined what 
was then known as Philipp 
Brothers as a junior and 
worked his way to the top of 
the metals team daring 25 
years with the organisation. 
With impeccable timing, he 


jumped ship in 1988 because he 
could see Phibro sinking 
beneath its huge overhead 
costs. A year later Salomon 
reduced Phibro, once world 
leader in commodities, to a 
shell, closing or selling many 
of its core businesses and mak- 
ing heavy redundancies. 

More recently. Salomon has 
been rebuilding its commodi- 
ties business mid now has 15 
people in its metals trading 
team, as well as trading coffee, 
cocoa, grain, sugar and. of 
course, oiL 


Bonner spent some time with 
Credit Lyonnaise Rouse and 
then joined Barclays Metals 
which has grown quickly since 
the banking group decided to 
embark on London Metal 
Exchang e trading three years 
ago. Barclays now wants to 
pause for breath and consoli- 
date - which means that Bon- 
ner was mare than ready to 
listen when Salomon offered 
the Phibro job. He says: “From 
Salomon’s point of view, it was 
.better the devQ you know, I 
suppose." 


Finance moves 

■ Richard Horitek, formerly 
a director of Newton 
Investment Management, has 
been appointed md, UK and 
European institutional 
business, at FIDELITY 
INTERNATIONAL. 

■ Mike Allen has been 
appointed strategist for the 
Japanese market for BZW 
SECURITIES (JAPAN). 

■ Charles Wilcox and Stephen 
Wright have been appointed 
directors of LAWRENCE 
KEEN. 

■ Frank Wong, formerly 
regional treasurer for. North 
Asia for Citibank, has been 
appointed regional director 
for the Aria Pacific region of 
Na tWest Treasury, part of 
NATWBST Markets. 

■ Martin Goodall has been 
appointed a director of 
LAZARD Investors. 

■ Peter Skinner, formerly 
general manager, customer 
service at British Telecom, has 
been appointed a director at 
APAX PARTNERS. 

■ David Lewis has been 
appointed a vice- chairman of 
HAMBROS BANK, chairman 
of Hambro Pacific and a 
director of Hambros Australia, 
based in Hong Kong. Thomas 
Candy ami Ken Williams have 
been appointed executive 
directors of Hambros Bank, 
and Ian Beauchamp, Dolf 
Campman, David Curtis, . 
Andrew Hamilton, Harrinder 
Hungin, David Jenkins, 

Graham Jones. Paul 
Remington and Vesa 
Snurmunne have been 
appointed directors. 

■ Charles Metcalfe, formerly 
vice-president of jp. Morgan’s - 
pnipjging markets group, has 
been appointed director of 
marketing for MERRILL 
LYNCH global asset 
management 

■ Job Curtis has been 
promoted to become a director ■, 
of TR HIGH INCOME TRUST. 

■ Chris O'Connell, a director 
of Kleinwort Benson 
Deutschland, has been 
appointed a director of IBI 
CORPORATE FINANCE. 

■ Larry Armstrong has been 

appointed senior vice-president 
and director of business ^ 

development at FIDELITY ^ 

BROKERAGE; he moves from 
Fidelity Brokerage Group in 
Boston. 

■ Stewart Douglas-Mann, 

formerly md, has been 
appointed chairman of the T . 

corporate finance department -K 
at GUINNESS MAHON. David ~ 
Hickey, Christopher Stainforth 
and Andrew West have been, 
appointed joint mds. 



A Bold New Spirit 





A nd a fresh chance to provide the 

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the moment you approach our 
check in desk until you reach your final 
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As you step aboard you will have the 

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of travel each 
offering an 
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comfort and 
passenger care. All you have to do is sit back 
and enjoy the superior service you'll 
experience aboard all Kuwait Airways flights 


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to any of over thirty two 
destinations worldwide. 

Having successfully 
met the challenges of the 
past, we are now flying 
into a brighter future. 

Providing a unique 
combination of modern 
aircraft, traditional Arabian hospitality, and 

standards of service that symbolize Kuwait 
Airways today. 

We look forward to welcoming you 
aboard very soon. 



KUWAITAIRWAYS 

A spirit you can feel. 


FINANCIAL TIMES CONFERENCES 


European Telecommunications 

Responding to Change 

London 20 & 21 June 1994 

This conference will examine the challenges and 
opportunities facing the telecommunications industry 
in Europe at a time of rapid technological change. For 
example: 

• Competition & privatisation 

• The future shape of regulation 

• Multimedia & telecommunications culture 

• Network investment - how much and when? 

Speakers include: 

Mr Per Westerberg 

Ministry of Industry & Commerce 
Sweden 

Mr Wim Dik 

Royal PTT Nederland NV 

Mr Eugene P Connell 

Nynex CableComms Limited 

Arranged in association with the 
FT Newsletter ’Telecoms Markets" 



Multimedia 

Vision and Reality 

London 12 & 13 July 1994 

QUALITY GIFT AVAILABLE FOR PAH) BOOKINGS 
RECEIVED BY JUNE 7, 1994 
This conference, by casting a sceptical eye on the 
multimedia phenomenon, will assist businesses to 
make strategic decisions and take full advantage of 
new developments. Issues include: 

• The regulatory and technological framework 

• The demand for multimedia services 

• Strategic alliance - a critical assessment 

Speakers include: 

Mr Alfred C Sikes 

Hearst New Media & Technology 

Mr Scott C Marden 

Philips Media 

Prof. Nicholas Negroponte 

Massachusetts Institute of Technology 

Arranged in association with the 
FT Newsletter ’New Media Markets" 


This is an ideal opportunity to attend two conferences of critical importance 
in assessing the future development of the entire communications industry. 
A discount of 10% is available for those attending both events. 


EUROPEAN TELECOMMUNICATIONS 
MULTIMEDIA - VISION & REALITY 

□ PleaM tide if you would on ‘SimipHo TelecammunicaiioBS.* 

n Please tick if you wonl4 like debate as 'Multimedia - Vision & Reality.' 
CD Please tick if you would hka details on the Ft Newsletter*, 
n Please tiek if you vrunid like details on Business development 
opportunities available at these wafeiences. 


Financial Times Conference Organisation 
PO Box 3651, London SW12 8PH, 

Tel: 081-673 9000 Faxs 081-673 1335 


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FINANCIAL TIMES 
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FINANCIAL TIMES TUESDAY MAY 17 1994 


TECHNOLOGY 


Spiders 
spin 
a profit 

D aunting from Its web, 
a spider uses the 
strangest and most 

elastic material in the world. 
Proportionally, a spider’s silk 
can support external pressures 
of aOMOOb per square Inch 
and can stretch up to 135 per 
cent of its original length, ft 

is stronger than steel and more 
flexible than nylon. 

Researchers from the 
University of Wyoming have . 
now doned the genes that make 
the proteins found in an 
especially tough and elastic kind 
of spider’s sflk. Genes from the 
golden orb web spinner, found 

on the US southern coast, have 
been inserted into bacteria, 
which have produced small 
quantities of the proteins. 

By harnessing tbe properties 

of these proteins, dubbed 
Spidroin 1 and Spidroin 2, an 
array of new kinds of 
snpertongh, elastic materials 
could be developed, says 
Randolph Lewis, the molecular 
biologist who heads die 
Wyoming research group. He 
reported his discoveries at a 
recant meeting of the American 
Chemical Society. 

Lewis says the proteins are 
the Meal material for super-thin 
sutures that would cause 
minimal scarring in surgery. 
They could also be used for 
artificial tendons and ligaments 
that could withstand the body's 
demands, yet still bead. 

go far, Lewis’s group 1ms only 
produced tiny amoun t s of the ■ 
pr o tei ns in genetically altered 
bacteria. Hie neat step is mass 
production. “With large-scale 
production it wfll be possible ' 
to start making fibres Cor 
testing in various applications,” 
says Lewis. 

Other academic and military 
scientists in the US are also 
m n Hii h ig % nmnwml 

properties of proteins found 
in spider sfiks, although the 
work has not yet attracted 
commercial companies. 

However, some are likely to 
take an interest if researchers 
can mass produce and then spin 
the proteins into real thread. 

Marjorie Shaffer 


T hey lumped for joy la Eat 
gwrife, centre of the new 
Western Australian gold 

_rosh . when owners of the 

Karpa Spring mine announced that 
test results showed its ore con- 
tained nearly 10 times more gold 
than usual for mma? |q the state. 

Joy soon turned to shock when 
the fraud squad was called in 
Karpa Spring had been sold and 
drifling by the new owners, Nor- 
anda, Canada’s biggest natural 
resources group, and a gwwii Ana, 
tralian company, Perflya, showed 
the mine had scarcely any gold. 

Three people eventually appeared 
in court. Some vital evidence for the 
successful prosecution case was 
provided by John Watling. HJs anal- 
ysis showed that the first sample 
from Karpa Spring - with the high 
gold content - con tained gold from 
two sources. One must have hem 
added artificially. 

“Salting" a gold rmrip | by a tiffing 
precious metal from elsewhere, is a 
confidence trick as old as the indus- 
try itself But it will be much more 
difficult to avoid detection from 
now on, to Walling arid Tn> 

colleague, Hugh Herbert, scientists 
at the Western Australian Depart- 
ment of Minerals and Energy's 
Ch e mistry Centre in Perth. 

They have developed an analyti- 
cal process that gives every mine a 
unique “fingerprint”, its basis is the 
fact that each of the earth’s geologi- 
cal regions has unique characteris- 
tics in terms of the minerals present 

and the paHam of their ^Mftriatliin 
with other minerals. Gold from a 
particular region, sometimes even 
. from a particular mine, has its own 
identity. And; as with human fin- 
gerprints, the technique can be 
used in a courtroo m to show a jury 
patterns on a sheet of paper to com- 
pare one' gold sample with another. 

This technological breakthrough 
affects not just sabers of mines and 
gold thieves: it wfll mafcft life much 
more tHWfcnit for fraudsters and 
drug barons too. Wailing hopes that 
the work will result in much of the 
world’s gold bring fingerprinted so 
that its origins rm be prrrpntnt^d 
with certainty. It will cease to be an 
untraceable international currency. 

This could, for example, make 
laundering illegal drug receipts 
more »ww«iit. One way in which 

Ille g al drrrg fhi g * m/wp their money 

into the banking system is to buy 
exhausted gold nriraw Stolen grid Is 
bought with the illicit cash and 
mixed with dirt and possibly some 
metaL the metal goes to a local 
refinery; which has no way of 
knowing it is not newly-mined grid. 
When it leaves file refinery, it has 
become “legal." 

Watting, a British geologist and 
geo-chemist, first successfully put 
his theory to the test in 1975 when 
four tonnes of grid were found at 
Heathrow airport in London, _dta- 




Healthcare’s 
Holy Grail 

By Daniel Green 


Mw i af yt ng each mrtna n&ara g o o to m ca t ' ftmwprin t' wB stop grid being used as an uuti au e ub ls btf af uaP u nrt qawncy 

Worth its weight 


in gold 


A ‘fingerprint’ test for substances is beating fraudsters, 
thieves, and money launderers, writes Ken Gooding 


guised as a consignment of lead. 
Waiting was wo r k i n g in Johannes- 
burg at the South African Council 
for Scientific and Industrial 
Research. He showed that the gold 

ramp from a mtnA near Walfcnm fo 

South Africa and the owner, Anglo 
American Corporation, eventually 
got back its precious metaL 
It is only Hist he fln d 

Herbert perfected the technique, 
using an A$6Q0JXK) (US$425,000) 
laser ahiatip n, inductively coupled, 
plasma spectrometer. Only a tiny 
trace of gold is required. The sam- 
ple is cut by a laser linked with the 
spectrometer which identifies the 
trace elements present 
Today, defence l awyer s in West 
era Australia no longer question 
the validity of the tpf-hntq np Wat- 
ting and Herbert have been asked to 
give evidence in 20 gol d thfft and 
fraud cases In the past two years, 
but most defendants changed thrir 
pleas to guilty once tbe scientists 
showed their evidence. 

Twenty gold-producing countries 
around the warid have asked Wat- 
ting to carry out work for thwn. The 
technique can be applied in m an y 
other ways, ranwahfa can be traced 


to where it was grown through the 
nutrients to the water and fer tiliser 
— the plant’s “signature" is detar- 
mined by what has sustained it 
Also, where routine blood testing of 
employees has to be carried out at 
mines or process plants for such 
jnihgfamnfla as lead. cgdwrfinn, mer- 
cury and arsenic, the technique 
could be used by a nurse who would 
take only 20 mlcrolitres of blood (a 
pm pHrfr) instead of the 10 ndDfl- 
itres usually needed. 

Watting was asked to fingerprint 
the artefacts at the Angkor Wat and 
Preah Khan templ es in Cambodia. 
Artefacts are stolen at ancient sites 
an over the warid, but where, for 
example, a head has been, cut from 
a and definitive fingerprint- 
ing could prove which statue it 
came from, “collectors would not be 
so waling to boy and it might not 
be so worthwhile for such things to 
be stolen”, says Watting 

He worked with the Australian 
pearl Industry which was worried 
about the way same cultured pearls 
were discoloured. This project cost 
A$8JiO0 and to the past 14 months 
has saved the industry 
AglJim, equivalent to. 2 per cent 


of annual production. 

Now, Watting Is fingerprinting 
De Beers, which, domi- 
nates the industry, last month 
delivered a mn«4gnm«>nt of uncut 
diamonds from, around tbe world to 
test whether the technique can he 
Used to Hiwn 

However, all this work must be 
completed by July 1, when the 
Chemistry Centre haenmea a p rofit 
centre ami it will be impossible for 
him to carry on as before, doing 
much of the work in Us free thn» 
but natrig thft centre’s ly gni p n umt 

He hopes to find sponsors to take 
the technique into the private sec- 
tor. It would, he suggests, require 
A$3m to buy a plasma spectrome- 
ter, rent some space, hire three peo- 
ple - atm! ftill-Hmw _ ±0 

take the new business through its 
first 18 months 

Apart from bufldtog up a library 
of gold fingerprints. Watting has 
been working on a computer pro- 
gramme could over from 
him the job of interpreting data 
fro m the spectrometer. When that is 
perfected, he says, there could be a 
number of lfafcwi gn ld fing erprin t- 
ing centres mound fiw world 


Pharmaceutical 

_ _ companies have a 

PrcbtePK thrir cus- 
^Ql * fi&tomers want value 

Tjl f Bt fnr money. This 
— J-S=U t ■■ would be taken for 
” granted in other 
industries. But it is news to the 
drugs sector because not long ago, 
doctors decided which pills to pre- 
scribe and someone rise paid with- 
out question. 

Now, those who do pay - gov- 
ernments, employers paying 

health ingwaw* pre m i ums , a nd 
insurance companies paying drag 
companies - are flexing their mus- 
cles and pushing down drugs’ 
profit margins. 

The industry’s solution so for 
has been to pour billions of dollars 
into buying health management 
organisations and pharmacy bene- 
fit managers, the middlemen of 
the business- Last summer, Merck 
paid $6bn (£4J0bn) for Medco; ear- 
lier this month. SmithKline Bee- 
chain paid $2£bn far Diversified 
Pharmaceuticals Services. 

Other com pani es such as Pfizer 
and Bristol Myers Squibb have 
preferred alliances to takeovers, 
but the intention is similar to 
force the middlemen to promote a 
narrow range of products. 

Such an approach would be 
doomed to foil in most other 
fadw tfr feq , Which of insur- 
ance broker would you prefer to 
deal with: one that peddled one 
company's products, or one that 
could offer the best product to.* 
your circumstances? 

It la not easy for the drugs 
industry to convince customers 
that it is offering good value. 
Once, the sales pitch discussed 
safety and effectiveness, and clini- 
cal trial results provided the facts. 
Now, file buyer wants to know 
whether the deal is good, but 
there is no reliable body of eco- 
nomic data. 

Everyone recognises that there 
is more to a good deal than price. 
One anaesthet ic ma y be cheaper 
than another, but if it takes longer 
for the patient to recover from the 
operation, the extra cost of an 
overnight stay outweighs the sav- 
ing an the drugs MIL 

According to Jan Leschly, the 
new chief executive of SmithKWne 


Beecham, providing the right kind 
of healthcare for “managing" dis- 
eases is better than curing than. 
But disease management relies an 
a firm knowledge of health eco- 
nomics. What are the patterns of 
drug use and the costs of different 
levels of treatment? How and why 
do hospitals and doctors vary in 
their costs per patient, per disease 
type and a host trf other measures? 

i gnmn of Wife information is In 
the hands of drugs companies. 
Much more is held by, for exam- 
ple, health insurers. Like all insur- 
ers, they need to know actuarial 
and demographic figures to charge 
competitive premiums that return 
a profit. 

Pharmacies, too, have informa- 
tion that the drugs companiM do 
not Dispensing data could be 
valuable to a drugs nmfcw in the 
way that point of sales data from a 
supermarket is useful to a soap 
powder manufacturer: rapid feed- 
back of the level of demand helps 
in the m«mwgprm>nt of any manu- 
facturing business. 

Then there are other drugs com- 
panies which, in the right alli- 
ances, could exchange information 
with partners. 

ff any one big drugs company 
could combine these information 
sources, it would have the build- 
ing blocks for a sales pitch that 
was as convincing economically as 
rfiwfaai trials are for safety and 
effectiveness. At the same time, it 
could avoid the accusation that 
customers were forced to buy Its 
pills simply because the middle- 
man was piwWTig flmni. It could 
offer doctors, hospitals, employers 
and governments the real holy 
grail of healthcare reform: a treat- 
ment that was rational in terms of 
safety, effectiveness and cost 

Of the large pharmaceutical 
companies, Glaxo is one of the few 
yet to make public its strategy. It 
has plenty of cash, a distaste for 
takeovers and an image of itself as 
the world’s foremost drugs 
company. 

Whichever company succeeded 
in pulling off alliances to 
exchange information could claim 
to have leapfrogged its rivals. It 
would offer customers what they 
wanted - a recipe for success in 
any business. 


Vft ^ 

ii it 

» k* 




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16 


BUSINESS AND THE LAW 


FINANCIAL TIMES TUESDAY MAY 17 1994 



Barber ruling 
put to the test 



Preliminary 
opinions were 
given recently by 
the European 
Court of Justice in 
two test cases aris- 
nmrwFAN big out of the Bar- 
ber judgment on 
the equalisation of 




pensions. The court is examining 
the compatibility of methods of 
pension equalisation adopted by 
occupational pension funds post- 
Barber with equal pay rules. 

The first case concerned the 
occupational pension fund of 
Avdel Systems and focuses on the 
equalisation of benefits in 1991 
referred to the ECJ by the Bedford 
industrial tribunal. 

The second involved similar 
questions from the Hague can- 
tonal court concerning 
equalisation of the pensionable 
age for employees of the Royal 
Dutch Shell group occupational 
pension fund in 1985- 

Advocate General Walter Van 
Gerven said it followed from Bar- 
ber that sex discrimination in 
occupational pension schemes 
must be abolished. 

The central question in the pres- 
ent cases was whether and, if so to 
what extent, an occupational pen- 
sion scheme can equalise pension 
ages to take account of Barber by 
raising the pensionable age for 
women rather than lowering it for 
men. 

Each of the pension schemes 
had chosen to raise the normal 
pensionable age for women which 
meant female employees in future 
had to remain longer at work to 
gain a foil occupational pension. 

In the Avdel case, the ECJ was 
asked whether it was inconsistent 
with the equal pay rules for an 
employer to replace different nor- 
mal pension ages for men and 
women of 65 for benefits received 
in respect of particular periods of 
service. These include: 

• after the date of equalisation 
on July 1 1991; 

• before the date of equalisation, 
but after May 17 1990 (the date of 
the Barber judgment); and 

• before the 17 May 1990. 

In the Dutch case, the 
equalisation was in 1985 before 
Barber and the pensionable ages 
were raised from 55 to 60. 

In response, the Advocate Gen- 
eral said the ECJ should rule that 
it was not contrary to the equal 
pay rules for an employer to raise 
the pensionable age for women 


rattier than lowering it for mpn in 
respect of future periods of service 
after Barber and after the date of 
equalisation, 

EU law does not preclude a 
reduction of benefits provided that 
the level of benefit is the same for 
male and female employees. To 
rule otherwise would ^"iminf to 
an uodesireable interference in a 
policy area presently within the 
competence of member countries. 
European law also does not pre- 
clude such equalisation applying 
to periods of service completed 
before Barber. 

But, in respect of periods of ser- 
vice between May 17 1990 and the 
equalisation date (where later), tt 
is necessary to increase the level 
of benefits of the disadvantaged 
sex because those rules form the 
only valid frame of reference for 
direct enforcement of the principle 
of equal treatment, pending the 
adoption of new rules to remove 
the discrimination. 

In answer to other questions 
from the national courts, the 
Advocate General said that there 
was no obligation on the employer 
to minimise the adverse conse- 
quences to women whose benefits 
are affected by the employer’s 
decision to eliminate the differ- 
ence in pension ages. 

In particular, an employer was 
not permitted to maintain transi- 
tional arrangements agreed before 
Barber under which a limited 
group of females enjoyed a lower 
pensionable age of 55, while the 
age for men was 60. with regard to 
periods of service after May 17 
1990. as in the Dutch case. 

However, an employer could 
only justify a cut in benefits paid 
to women during the period after 
Barber and before equalisation In 
exceptional circumstances. 

It is for the national court or 
tribunal to assess whether factors 
which have no connection with 
sex discr imination and which rep- 
resent a need relating to the exis- 
tence of the business or the sol- 
vency of its occupational pension 
scheme justify a restrictive imple- 
mentation of the principle of equal 
treatment But they must ensure 
the principle of equal treatment Is 
not restricted unnecessarily. 

C-4Q8I92 and C -28193, Smith v 
Avdel Systems and Van den Akker 
v Stickling Shell Pensioenfonds, 
opinion AG Van Gerven, 4 May 
1994. 

BRICK COURT CHAMBERS, 
BRUSSELS 


Robert Rice on disarray in UK competition policy after a pro-industry shift by Michael Heseltine 


R ecent inquiry reports from 
the Monopoly and Mergers 
Co mmis sion point to a sig- 
nificant shift in UK compe- 
tition policy. The MMC has adopted 
a pro-industry approach which 
threatens a rift with tire Office of 
Fair Trading, the competition 
watchdog. 

The change in policy was inspired 
by Mr Michael Heseltine, trade and 
industry secretary. Competition 
officials and other advocates of a 
stricter policy believe the Depart- 
ment of Trade and Industry and the 
MMC have relaxed policy to help 
create strong UK champions capa- 
ble of competing in global markets. 

The growing frustration of compe- 
tition officials and consumer organi- 
sations is echoed at Westminster, 
where Influential backbenchers led 
by Mr John Watts MP, ch firman of 
the Commons Treasury Committee, 
have set up a lobby group, the Com- 
petitive Forum, to press for tougher 
consumer-oriented competition pol- 
icy and reform of the MMC. 

When he took over at the DTI, Mr 
Heseltine signalled his preference 
for industrial over competition pol- 
icy. His long-awaited competitive- 
ness white paper, due next week, 
should confirm that preference. 

Mr Graeme Odgers, the business- 
man who took over as chairman of 

the MMC a year ago, appears to 
share his views. Last weds he said 
he was “four-square" with Mr 
Heseltine on privatisation, competi- 
tiveness and deregulation. 

Since his arrival at the MMC, Mr 
Odgers has also tried to instill a 
consistency of approach by encour- 
aging a collegiate atmosphere 
among the Commission's 35 mem- 
bers. The result, say critics, is an 
increasingly doctrinaire style which 
places the interests of firms under 
investigation ahwafl of those of the 
public and consumers. 

This shift appears to be causing 
alarm at the OFT. Under Sir Bryan 
Carsberg, director general of fair 
trading, the OFT has taken a 
strongly consumerist approach to 
competition policy. 

Sir Bryan gives the impression 
that he believes markets should be 
free of any anti-co mpe tlti ve 
restraints unless they can be shown 
to benefit the consumer. He has 
made a number of referrals to the 
MMC recently, among others on 
fine fragrances and ice cream, 
which demonstrate his particular 
concern with vertical restraints 
(those affecting the chain of supply 
to the marketplace), such as mea- 
sures tying in retailers to suppliers. 

But the MMC under Mr Odgers 
appears to take the view that that 
vertical restraints and anti-competi- 
tive practices must clearly damage 
the consumer interest before it win 
interfere in an industry. 


Watchdog barks but 
the MMC moves on 


Companies that have built up 
competitive advantage should be 
allowed to profit from their invest- 
ment, innovation and enterprise, he 
said last week. This increasingly 
laisser {hire approach by the com- 
mission puts it on a direct collision 
course with the OFT. 

The clearest evidence of the shift 
in competition policy comes from 
recent monopoly Inquiry reports. 
Some competition lawyers and 
economists trace the change back to 
the report in March 1989 on the 
supply of beer, when robust recom- 
mendations made by the MMC 
aimpd at weakening the control of 
the brewers over pubs were rejected 
by the government following 
intense lobbying by the industry. 

Since then, critics say, the MMC 
has taken a much less intervention- 
ist approach and shown far too 
much respect for the views of the 
firms under investigation, an 
approach reinforced by the arrival 
of Mr Heseltine at the DTI and Mr 
Odgers at the MMC. 

The pattern began with the 1992 
report on the supply of new motor 
cars, criticised by consumer groups 
for relying too heavily on mam rfar, 
hirer’s own survey data and con- 
sumer satisfaction j priiraq to estab- 
lish that there was little wrong with 
the present system of car dealer- 
ships and aftersales service. 

The MMC again found itself 
under attack in November last year 
over its report on fine fragrances 
which concluded “snob yaffie" - 
high prices and exclusivity - were 
more important to consumers than 
value for money, so allowing lead- 
ing perfume houses to contin u e ref- 
using supplies to cut-price retailers. 

That was followed in March by 
the ice cream report which found 
that, although the three leading 
manufacturers Had more than 90 
per cent of the market for wrapped 
ice creams, the system of freezer 
exclusivity - providing free freezer 
cabinets to shops on condition they 
are not used to stock rival suppli- 
ers' ice cream - did not limit con- 
sumer choice by keeping rival prod- 
ucts out of smaller shops. 

The unease at these reports 
should be imriaHinpd next month 
when the report on recorded-music 
is expected to clear the record 
industry of acting together 
to keep the price of compact discs 



Michael Heseltine (top left) and Graeme Odgers of the MMC (bottom left) 
are on a collision coarse with Sir Bryan Carsberg (right) and Us OFT 


in Britain artificially hi gh 

There have been additional 
reports on mortgage valuations, 
newspaper supply, television broad- 
casting services and animal waste - 
all of which have drawn criticism 
for producing either halfhearted or 
unworkable recommendations to 
remedy adverse flnriings. 

Mr Stephen Locke, the Consum- 
ers' Association director of policy, 
says that at the heart of these 
reports seems to be a confusion 
between the interests of industry in 
general and the interests of existing 
companies. But there is no guaran- 
tee, he says, that what existing 
companies want will necessarily be 
in the Interests of the productive 
sector of the economy. 

Mr BQl Bishop of Lexecon, the , 


economic consultants, says you 
only have to contrast the beer 
report with the recent ice cream 
report to see the change of 
approach. On beer, the commission 
found the system of tied public 
houses did damag e the public inter- 
est It rejected the industry’s argu- 
ment that, if consumers did not like 
the choice of beer in one pub, they 
could go to another. But on ice 
cream it readied the opposite con- 
clusion. 

Mr Derek Ridyard, associate 
director of National Economic 
Research Associates, says the dis- 
pute is really about the extent to 
which one supplier should he 
obliged to give competitors a leg-up 
in the market 

.Even in the. case of ice cream 


there were perfectly sound eco- 
nomic arguments for saying that 
Unilever had taken the initiative 
and developed the market mm 
invested in freezer cabinets, and 
that all Mars had to do to compete 
was take the same risks. There w® 
a feeling that Mars was simply fry. 
ing to use the competition laws as a 
short cut. he says. 

Mr Ridyard believes that, if then 
has been a change in approach, 
then it has come from the OFT 
which has become more hawkish mi 
vertical restraints undo: Sir Bryan. 
He has referred areas such as 
recorded music and ice cream, 
which had been looked at and 
rejected for referral by his predeces- 
sor, Sir Gordon Borne. 

Mr Christopher Bright, a partner 
in City solicitors Linklaters & 
Paines, says it is easy to understand 
the frustration felt at the OFT at 
threw developments. But he believes 
the OJTs main problems lie with 
(he DTI rather than the MMC. 

T wice in February last year 
Mr Heseltine rejected Sir 
Bryan’s advice to refer 
mergers to the MMC. The 
first case concerned the acquistttai 
by GEC of the Philips infrared com- 
ponents business: The sectm# con- 
cerned the hostile bid by Airtoors 
for Owners Abroad. Mr Heseltine 
considered the issues raised did not 
justify referral. 

These actions were not excep- 
tional. Other trade secretaries have 
gone against the advice of the direo- 
tor general - in all In 11 cases over 
20 years, says Mr Bright But these 
instances suggested a swing away 
from the approach of forma: trade 
secretaries such as the late Mr 
Nicholas Ridley and Mr Peter LiHey 
- one of “if In doubt refer". 

Further evidence of tension 
between the DTI and tiie OFT came 
in February this year when Mr 
Heseltine ordered Sir Bryan to stop 
his investigation into bus services 
on the Isle of Arran. It was the first 
time a trade secretary had ever 
used his powers to overrule a direc- 
tor general in that way. 

But the real problem for the OFT 
is that the DTI seems to have com- 
pletely lost Interest in competition 
policy. Merger referrals are at an 
all-time low. Only three mergers 
have been referred by Mr Heseltine 
to the MMC In the past 12 months 
When the MMC publishes its 
recorded music report next month 
there will be only two monopoly 
inquiries on the go. The DTI is also 
dragging its heels on reform of the 
law on restrictive practices and 
abuses of market power. 

These developments are not lost 
on UK companies, says Mr Bright 
No wonder OFT officials are said to 
. be. concerned qt recent events. 












17 


FINANCIAL TIMES TUESDAY MAY 17 1994 

_ ARTS 


The singular 
art of success 


S o much, In any successful art- 
ist's career, is a matter of tack. 
Talent win out, we say, to which 
the reply can only be: up to a 
point, Lord Copper. It is not to 
begrudge the Israeli painter, Avigdor 
Arikhs, his long and co ntinuing 
to take his current exhibition to make the 
point. Now 65, he has been showing regu- 
larly and consistently around the world - 
Tel Aviv, London, Zurich, Stockholm, 
Paris, New York, Amsterdam, Tokyo, Los 
Angeles, the Venice and Sao Paulo bien- 
nales, definitive group exhibitions from 
Washington to Vienna - for more than so 
years. Good luck to htm_ 

It is only when we consider the actual 
nature of his work that we. come in tar the 
surprise.' For hoe is no daring of the 
avant-garde, no conceptualist or latter-day 
surrealist, no neo-dada, post-Duchampian, 
thought-provoking poseur. He is nothing 
more, nothing less, than a painter of unex- 
ceptionable portraits, figures and still-life. 

William Packer reviews 
the work of Avigdor 
. Arikha and other 
refreshingly non-avant- 
garde artists 


with, a delicate touch and a quick eye for 
the charming gesture and the intimate 
detaiL 'He is, in short, a somewhat 

old-fashioned and crn r g ientinnfll figur ati ve, 
painter and none the worse for that. 

Who would then say that representation. 
U old hat — Arikha paints did hats rather 
well:' and who can begin to account for 
such critical success? How is it that he 
should be {diked out for such shows as 
"European Painting in the. 70s* (Los 
Angeles 1974), or “Art as Art (Venice Bien- 
nale 1982), or “Raphael and F rench Art* 
(Paris 1963)? And how does, he come to be 
painting the portrait of the keeper of the 
modem collections at the Tate? 

It is hot that Arikha is no good. He is a 
very clever painter, with the gift of bring 
able to make the simplest line or smudge 
of paint, or twist and scrape of the brush, 
register as the true and lively intended 
image. His prints are especially impressive 
in this way, with the subtlest effects, 
achieved by the simplest means. His chief 
fault is only that he seems in the newer 
work a shade complacent in his clever- 
ness, notably in his drawings and paint- 
ings of the figure and the imifa j which 
proclaim an accuracy and attention of 
observation which are no' longer there. 

He remains' an. intensttag~paihter. 
the mare general and serious point is that 


even here in England, most especially here 
in England, there is no end of figurative 
painters at the very least as nrt p rw erfn g in 
their work as he, and certainly no 
competent We have only to go round any 
su mme r show of the Royal Academy, or 
the {size exhibition of the Portrait Award 
at the National Portrait Gallery, both of 
them coming up iw y* month, to be pres- 
ented with the evidence. Yet who among 
those painters of the figure or the land- 
scape is ever likely to be picked out for 
any British Council tour »hm»H or inter- 
national survey at the Grand Palais or 
Venice Biennale, or asked to paint a por- 
trait of the deputy director of the Tate? 

The annual show of the Boyal Society of 
Portrait Painters is another case in point 
It may have as always rather more than 
Its fair share of jokes in doubtful taste, but 
in the last few years, notably under a 
r ecent president, David Poole, it has 
revived remarkably from its framer mori- 
bund state. Younger members have been 
recruited from the Portrait Award - Jeff 
Stultiens, a former winner, now mrioea the 
Society's secretary - and the wH»mher«hip 
generally stiffened. 

Many of the works on show are very 
good by any contemporary measure. 
Howard Morgan, the current star, may 
continue to dis ap po in t: his ambition is 


If only he would give as attAn+wm to 
drawing as to overall effect, and yet bis 
drawings themselves betray the inade- 
quacy. Directly alongside, three portraits 
by Michael Reynolds offer a mercfless con- 
trast, one, of a seated woman in a white 
jumper, as fine a portrait, and as interest- 
ing a new painting as any we might see in 
a year. Its watercolour study is exquisite. 

Thomas Coates, tamgat the other ad of 
the flghihitinw , is another hero, an artist of 
true flair whose energy and variousness 
sometimes tend to obscure his underlying 
distinction. He is a T Miwi ta Wo draughts- 
man. I only take exception to an occa- 
sional eccentricity in Ins choice of subject 
Were he to come down within the speed 
limit, more might be able to judge him at 
Ids true worth, as he finches past Daphne 
Todd, Hans Schwarz, John Ward, TDly 
WHIis and' Martin Yeoman are awwng the 
others whose work stands out John Boyd 
and Susan Ryder successfully take on the 
caomreatian piece, that most testing of 


And do we find a Reynolds or Coates 
among the recent acquisitions at the Tate, 
or an tour- with an Arts Council whrfim, 
nr indniM h> ft suniMy of current painting 
at the Hayward Gallery? I only ask. 

Avigdor Arikha: Marlborough Fine Art, 6 
Albemarle Street Wl, mittl June 4. Royal 
Society of Portrait Painters Animal Exhi- 
btftoti; The Mall Galleries, The Man $WI; 
until. May 80. 



'Self Portrait Jn Jeans’ by Avigdor A rikha 



The Devils’ brought to life 


Alastair Macaulay hails the Maly Theatre’s three-part production in Glasgow 


T he climax of the Maly Drama stage,, but also the tremendous way in that Igor Ivanov (so different in his lower- ere you want to watch at all times; I would 
Theatre's current tour has been, which each leafing character is down in - key role In Stars in the Morning Sky ) pay money to watch these actors in these 
its three-week residence in das- a completely fresh psychological light in brought to the role of LeMadkta. This is roles simply listening- to each other. Yet 
gow. Only in Glasgow, as part of scene upon scene. , • the kind of towering force you can find in this is not particularly "physical" theatre, 

its annual Mayfest splurge of artistic activ- Thus,, the flrat time we See Piotr Ver- records, photos and accounts of Chatiapta; These actqrmakB Russian sound as bean- 
ity, has this Russian company been able to kbovskmsty (actor Sogei Bekhterev), at yet not only have I never really encocm- tiful as greet -rangers do; and their vocal 
present all eight plays in its current Brit- . Mrs Stavrogin’s house, we see him- as a tered : it onstage before, but Lebiadkin is eloquence catches character, emotion, 
ish repertory; four at the Citizens Theatre, socially awkward blabbermouth, newly -eventually, only a minor role. mood, in astonishingly natural abundance. 

four at the Tr am way. This is only just, for returned home, who tries, fairly fisas- Fully as fine are the performances of The staging is by the Maly’s director, 

it is the Tramway’s programme director, trendy, to ingratiate himself Scene by Pfotrfiemak as Stavtogfa<tbe work's mott Lev Dofin. Praise far the acting is also 
Neil Wallace, who has worked hardest to scene, however, he emerges as a horrifying heroic and selfdoamed character). Sergei praise for him, but I also praise the brfl- 
idan the Malytour. Audit is only at the wfhilfa*, a pathetic hero-worshipper, a Vlasov as Shalov (whose death is the most - Bant use of- silent imagery (such as the 
Tramway that the greatest Maly event erf heartless planner of murders. And we are affecting of all because his life has been twiceseen view of a young girl slowly 
all has occurred - its three-part, afi-day stffl seeing new tides of Mm in the trito- irradiated by the most hope),' and Serges climbing a. ladder - which in due course 
production of Dostoyevsky’s The Deoils. gy’stong penultimate scene, during which Kuryshev as Kirillov (whose mad obses- makes alarming sense) and various sound 

To cany superlatives further, I add that he L engages in half-tadicroas religious and . sion with self-extinction is seen as noble, . effects (such as the distant drumming that 

this is the most marvellous theatrical epistemological debate- with Kirillov, often fanny, intellectual, pointless, vain by so rtritingty catches the pounding of Stay- 
event I have, yet seen this year. It is also thereby delaying his own purpose, which turns). ~. - rogtn's heart during ins great confession), 

the first adaptation of a novel I have seen isgto.fagg Khfflov on into committing std- ft is astonishing that acting in Russian. I have only space to skim the surface of 
that can be compared with the RSC’s 1960 tide. . ' can be so enthralling to non-Russian- - 'this enthralling production. The Deoils 

Nicholas Nickleby. The scenery - by This kind, of plasticity of characterise- speakers. The Deoils makes one grateful must, must, be brought back to Britain, to 
Eduard Kochergm - is wandertafiy efleo- tioa originates with the gesnns. of Dostoy- for surtiflea, and. impatient of them too; . other cities. Lucky Glasgow. . 

tiro, indeed eloquent, hut what carries all- evj&y, tart it is heartstopping to see it they are so needed and helpful amid a : 

three parts of The DeoHs is the acting. Not achieved in. the flesh onstage. 1 was complex plot, yet they are also so made- \ The Maly Drama Theatre tours to Newcas- 
mily are Dostoyevsky’s psychologically amazed at the robust diablerie - danger- quate - and, worst, they take one’s eyes tie this week and to Nottin gh a m next 
extraordinary studies brought onto the ous. colossal, warm, vulnerable, by turns - off the stage. The Maly actors are perform- week. 


Opera in Berlin/Andrew Park 

Dreyfus: a grim 
centenary 


T he chorus of Berlin’s Deutsche 
Oper screams “Filthy Jew! Bas- 
tard! Yid! Pig! Death to the Trai- 
tor! Death to the Jew!". A foyer 
exhibition of poster-portraits includes a 
caricature of a Jew's head, depicting him 
as greedy, dishonest and parasitical. In the 
city where the Nads plotted the final solu- 
tion. no-one raises an eyebrow. 

But this fa not anntbpr p-rampip of Ger- 
man anti-Semitism. It is documentary evi- 
dence of the Dreyfus Affair, which divided 
Flench society 100 years ago and set the 
racist time for 20th century Europe. To 
marie the Dreyfus centenary, the Deutsche 
Oper has staged the world premiere of 
Dreyfus - The Affair, with music by the 
Swiss composer Jost Meier and a libretto 

by George Whyte, a Hungarian-born Jew 
who Iw* Tns»gtpr - TT»TT)HpH & fl gfjes of cente- 
nary events. 

ta to the opera and exhibition, 

there will be a Dreyfus ballet with a new 
score by Schnittke and a musical satire 
using anti-Semitic songs of the period, 
orchestrated by Berio and performed by 
Ute Lemper. All these win come together 
in Basle in October. 

Alfred Dreyfos (1839-1935) was a Jewish 
officer in the French army. In 1894 he was 
falsely accused of spying for Germany, 
court-martialled and exiled. Despite evi- 
dence proving his innocence, a retrial 
failed to clear Ms name. After a campaign 
by his wife and Influential supporters, cul- 
minating in Biwfle Zola’s pam- 

phlet “J 1 accuse". Dreyfus was released and 
eventually rehabilitated. 

The case uncovered a violent strain of 
antiAimitigm in fiance. Half a century 
later, Dreyfus’s grand-daughter was 
among the French Jews sent to die at 
Auschwitz. In 1988, Dreyfus’s grave in 
Montparnasse was desecrated. In a coun- 
try renowned for its reluctance to delve 
into the more uncomfortable aspects of its 
past, the case still toadies a raw nerve. It 
is to Germany’s credit, and France’s 
shame, Berlin kick-started the 
Dreyfos centenary. 

With racist attacks again making news 
across Europe, the Dreyfus Affair is both 
topical and salutary. The ntuilleng p faring 
the authors of the new opera was to turn a 
tale pf pni faimt and winm l Ki gntfirflTin p rnfrrt 
a successful work of art The mere fact 
that an anti-racist opera was being premi- 
ered fa Berlin was enough to guarantee 
the approval of the capacity first-night 
audience, which included local dignitaries, 
Jewish leaders mid members of the Drey- 
fas family. By the second performance, the 
euphoria had subsided, and the work’s 
flaws were all too clear. 

The libretto, based on contemporary 


sources and mating use of nightmarish 
flashbacks, offers a resume of the Dreyfos 
case - public humiliation, torture and soli- 
tary confinement, an appeal to the Pope, 
the discovery of the real spy* establish- 
ment cover-up, re-trial and release. 

In an unbroken span of 90 minutes, such 
prejudice and personal suffering should 
hit the audience like a sledgehammer. But 
Dreyfos is never allowed to develop a per- 
sonality: he remains typecast as a symbol 
of injustice, his wife Lurie a symbol of 
resistance. Zola's “J’accuse" aria is fins- 
tratingly repetitive. Minor characters like 
the traitor Esterhazy are cardboard bad- 
dies. Far from seething with dramatic con- 
trast, colour and tragedy, the opera fails to 

rise above the level of righteous polemic. 

For this. Whyte. Meier and the stage 
director. Torsten Fischer, bear equal 
responsibility. Whyte, most of whose fam- 

With racist attacks 
again making news 
across Europe , the 
subject is both topical 
and salutary 


Uy were gassed by the Nazis, appears to 
have been too close to his subject. The 
opera was his baby, the product of years of 
struggle. He has not taken the leap of 
imagination which transforms human 
experience into art: his material Is more 
the stuff of musical documentary. 

Meier's pale Bergian modernism wears 
less well than his previous operas - the 
best of which, Augustin (1988), deserves a 
wide hearing. The chansons mid dances of 
the Moulin Rouge scene have the right 
sort of brash vulgarity, but the most tell- 
ing moments are when Meier refines the 
music down to the barest thread. The 
overall impression Is of competence rather 
than inspiration. 

Fischer’s production, designed by 
Andreas Reinhardt, unfolded on a triangu- 
lar platform and made theatrical use of 
paper walls. What it lacked was a sense of 
place, of genuine human feeling. Paul 
Frey's Dreyfus came across as a rather 
ordinary chap. Aimee Willis was the spir- 
ited Lurie, Artur Korn a shadowy Zola. A 
large supporting cast and chorus went 
through the motions of rage and outrage. 
The performance I heard was adequately 
conducted by the composer, stepping in 
for an indisposed Christopher Keene. 


Concert/John Allison 

Mahler's Sixth 


A weekend at the Barbican foamed 
by illuminating accounts of 
music from the early years of our 
century - Friday brought the 
first UK performance of Rimsky- 
Korsakov’s Kashdiey the Immortal (1902) 
- ended with Mahler’s Sixth Symphony 
(1903-5). given an. Sunday by the London 
Symphony Orchestra under Michael 
TBson Thomas. 

The LSO and its principal conductor 
embark on a com plete cycle of Mahler 
symphonies fa the autumn as pert of the 
orchestra’s 90th birthday celebrations, 
and this concert provided both a tantalis- 
ing foretaste of that series and a welcome 
opportunity to hear one of the less fre- 
quently performed works. 

The Sixth Symphony, a cornerstone of 
modern orchestra) music, was once 
regarded as “dtfBculf ; no British orches- 
tra played it until 1950. Most of Mahler’s 
symphonies mid affirmatively, but the 
Bfoa nd-death struggle of the Sixth aids 
in catastrophe. With its atmosphere of 
unreal, almost expressionist fantasy. It is 
a work one stands back from, and Tflson 
Thomas was persuasive in drawing the 
aud i e nce in. 


TDson Thomas conducted with his char- 
acteristic afi-out intensity, favouring fast 
tempos and lush o rchestral sound. The 
performance was unrelenting; but no emo- 
tions were lost to speed. The Andante 
gained in concentration, and brought 
forth a stream of lustrous playing. The 
opening march had grim power and bite, 
the •’Alma" theme could hardly have been 
more passionate. Indeed, the LSO excelled 
itself with playing of great beauty and 
virtuosity. 

This was a performance that left very 
few reservations. But although Til son 
Thomas caught the heaviness the com- 
poser directs fa the Scherzo (placed sec- 
ond here), the movement sounded too 
deliberate. It lost momentum, and conse- 
quently some of its horror. 

Perhaps the Barbican Hall acoustics 
were to Warn*, but at every appearance 
tire cowbells clattered intrusively, instead 
of providing a hazy echo of Alpine 
slopes. 

Overall, though, Tflson Thomas welded 
tills gigantic work together impressively. 
His approach is at once emotional and 
clearheaded, qualities Mahler conductors 
require in equal measure. 


(020-6255455) 



■ AMSTERDAM 

Concertgebouw Tonight Sergiu 
CeHbidache conducts Munich 
Pbfflwmopic Orchestra In 
Bruckner's Fourth Symphony. There: 
Oliver Knussen conducts Hague 
PhUhanaorto Orchestra In wort® 

by Messiaen, with soprano Lucy 

StaAu^Sat, next Mon and Wed*. . 
Paul Frbeman conducts Berlin 
Symphony Orchestra in a Beethoven 
cycle, with piano soloist Derek Han. 
Sun: Buenos Abes Philharmonic 
Orcharira plays Gfonno, Sibetiu9 
and Mandeteoohn, with vfafin 
soloist Saskfa Worsen '. 

(24-hour information sendee 020-675 
4411 ticket reservations 020-671 
8345)-; 

Bern yan Serfage Tomorrow, 
■nxrar.latwfrParkanyl directs 
Nefoertands Chamber Orchestra 
in worts by Vanhal,. Haydn. 
Ddiwadorf and Mozart (020-627 


Wtafakfiieater Thure, Sun: 
jjfefofrta nd8 Opeta presents Pater 
Sews new work Sympoafem, 
^ducted by Hans Vbnk and 


■ BRUSSELS 

Palate (dee Baaux Arte Tonight 

- (Conservatoire): : Ortando Quartet 
pfaye swig quartets by Beethoven, 

‘■Brahms arid taang Yun-Thure: Eri 
■;(Gae Conducts Bdgian National 
v Orchastra'in works by Haydn, 
—Ntoaitt, Qenfeovand Bfcat, with 
-.dpoe atilotst Heinz Hotyger (02-507 

..V-. ' - " • 

ifaraithpater Tomorrow, Thurs, fir. 
Sat Belgian experimental 
choreotyapher Anna Teresa Oe - 
Keeremaeker and her. dance group 
Rosas present a t hree p a rt ^ - 
progra mm e entitled Kfnok, inducting 

- De KeefWWBker’s fates* creation 
eat to nutete by Tfaerry tie May 
(02-2185959/02-218 1211) 

■ GENEVA 

Victoria Haa TortwaoWr fit Annin 
Jordan conducts Orchestra de ta 
Suisse Romande kr works by 
Bach- Webem, Berg and Schumann, 
with violin .soloist Frank Pater 
Zimmepnarin (322-31 1 2511). Thurs: 
Jacek Kaspszyk conducts Geneva 
Chamber Orchestra in a Beethoven 
prog ramm e (022-310 9193) 

Theatre deCarouge Comeffle’s 
Le Cid, directed by Simon Sne, 
runs daBy except Monfll June 7 
(022-3434343) 

Comddte Eugene Lablche's play 
Un chapeau depaMe dTtafie runs 
daBy except Sat Sun and Mon iH 
May 28 (022-320 5001) 


■ GHENT ; ; 

de Vtafahaa Opera Fri, Sun 


afternoon, next Fit Stefan Sbftesz 
conducts Wflly Decker’s production 
of Sidy Budd, with cast headed by 
Michael Kraus, Nigel Robson and 
Gidon Saks (09-225 2425) 


■ SAJNt Ubfel^ ; 

Opera Theater of Saint Louis, one 
of theworfcfs most plooeurOte - . . 
opera festivals, opens Its new 
season on Sat with the first US 
performance of Leonard Bernstein’s ' 
revised version of Candida. Stephen 
Locd conducts a staging by Gafin 
Graham. This year's other-, 
productions ^are Fatetaff conducted 
by Andrew Litton (May 26), Iphigdnte 
an Taudde starring Patricia Hacetta 
(June 5) and a revival of Coread 
Susa’s 1975 opera Black River (June 
16). AU performances take place 
at the Loretto-HHton Center 

(314-961 0171) 


■ SALBCRG ' 

The Chicago Symphony Orchestra 
returns to Salzburg to give three 
concerts over WhR weekend (May 
21-2% The opening pro g ramme 
of Brahms andStravtasky Is 
conducted by Dared Barenboim. 
Georg SoW conducts Beethoven 
and Stravinsky on the following two 
evenings (0662-841307) . 


■ VIENNA/' - 

CONCERTS . > 

MusBcverebi Tonight Carlo Maria 
GUN conducts Vienna Phflharmonic 
prchpstra in works by Beethoven. 
Tomorrow: Christian Aftanburger, . 


Nobuko tmaL Tiuis Mode and Bruno 
Can loo play chamber music by 
Mendelssohn, Brahms and others. 
Thurs: Pinch as Steinberg conducts 
Austrian Radio Symphony Orchestra 
.. in Haydn, Richard Strauss mid 
Musoigsky. RL Sat Iona Brown 
directs Academy of St Marlin In 
the Fields. Next Tries: Sheriff Mines 
. song neefeti (505 8190) 

Konzerthaus Tonight, tomorrow. - 
' Janos Starker ceHo recital (712 
' 1211 ) .-r* 

■OPERA 

Staatsoper Tomorrow: t Puritan! . 
with Edita Quberova^Mario 
GSordani and Dmitri' Hvorostovsky. 

. Thurs; Der Rbsenkavafidr with- 
Gwyneth Jones, Anrie Sofie von 
Otter and Kurt. Mod Fit Prokofiev's 
ba&et Romeo and JuBet Sat Die 
ZauberflOte. Sun and next Wed: 

Don Giovanni with James Morris 
and Marie McLaughlin. Next Mon 
and Frt Andrea Chenier with Eva 

- Martbn. ©useppe-Gfacomfnl and 
Piero CappuccffL June 3: new 

. production of Hindentittrs GardSac. 
June 5/12, 18, 26c Wagner’s Ring. . 
June 21, 24, 28: Riccardi Muti 
conducts Le nozze d Rgiaro, with 
Ruggero RaimondLand BrynTerfe) 
(51444 2955) 

Theater an der Wien May 26, 28, 

- 30: Claudio Abbado conducts revival 
of Jonathan Miter's 1991 Vienna 
Festival proctoction of Le nozza dl 
Figaro, with Ruggero RaimoncG, 
Ludo Gate, Cectta.Gasdta and 
Barbara Bonney (586 1676) 

THEATRE 

hfiflhfigbts of the comtog fort nigh t 
. are two Ibsen productions - The.- 
W3d Duck from Hamburg’s Thafia 
Theater directed by JQrgen Fflmm 


(tomorrow, -Thire, Fri, Sat at 
Ronacher) and Hedda Gabter from 
Berlin's SchaubQhne directed by 
Andrea Breth (May 22-25 at 
Volkstheater). Both prodiRriions are 
guests of the Vienna Festival (588 
1676). A third Ibsen production, 
Peer Gynt directed by Claus 
Peymarun, is in repertory at the 
Burgtheater (51444 2959) 


■ WASHINGTON 

DANCE/MUSIC ' • 

• San Francisco Ballet opens 
a week of performances tonight 
at Kennedy Center Opera House. 
Repertory includes choreographies 
by Tomasson and Balanchine 

(202-467 4600) 

• MIkhaa Baryshnikov's White 
Oak Dance Project is in residence 
at Warner Theatre from tomorrow 
ta Sun, with choreographies by 
Mark Morris, Jerome Robbins, Twyla 
Tharp and Merce Cunningham 

(202 -432-seat) 

• James DePriest conducts 
National Symphony Orchestra 
tonight in a Beethoven programme 
at Kennedy Center Conceit HaiL 
Rochas Zukerman is conductor 
and vioOn soloist in a Dvorak 
programme on Thurs, Fri, Sot and 
nextTues (202-467 4600) 

THEATRE . 

• The Winter’s Tale: Britain’s 
Royal Shakespeare Company is 
in the final week of its residency 
at Bsenhower Theater (202-467 
4600) 

• A Room of One’s Own: Bleed 
Atidns in her acclaimed portrait 
of Virginia Woolf. Till June 19 

at Arena Stage, Kreeger 


Theater (208-488 3300) 

• The Baltimore Waltz: the 1992 
Otae Award winner by Paula Vogel 
takes us on a grand tour of Europe 
wHttan ailing man and his 
resourceful sister. Tffl June 12 at 
Studio Theater (202-332 3300) 

• - The Revengers Comdcfies: Alan 
Ayckbourn's two-part comedy, 
directed by Douglas Wager. Till June 
12 at Arena Stage (202-488 3300) 

• Ghosts: Ibsen’s play about 
social and religious hypocrisy, 
directed by Irene Lewis. Dll June 
6 at Center Stage (410-685 3200) 

• Hot Mikado: David Befi’s 
rousing remake of the classic G&S 
operetta is at Ford’s Theater 
(202-347 4833) 

• Hofn’ColK a Cole Porter 
musical revue comprising mere than 
50 great songs by the master of 
American popular music. Till May 
29 at Otoey Theater (301-924 3400) 


■ ZURICH 

Opemhaus Tomorrow: Lamberto 
Garden conducts fatal performance 
this season of Andrei Serban's new 
production of Adriana Lecouvreur, 
with Mara Zampteri and Neil ShJcoff, 
Thurs: Fedora with Agnes Bgftsa 
and Luis Lima. Frfc choreographies 
by Bienert, Be and Van Marian. Sat 
Nikolaus Harnoncourt conducts 
JOrgen Fllmm’s production of 
FkJeOo, with Gabriels Bertackova 
and Peter Saffert May 28: 
Harnoncourt conducts first night 
of Helmut Lohner’s new production 
of Offenbach’s La Belle Hdfene 
(01-262 0909) 


ARTS GUIDE 

Monday: Berlin, New York and 
Baris. 

Tuesday; Austria, Belgium, 
Netherlands. Switzerland, Chi- 
cago, Washington. 
Wednesday: France, Ger- 
many. Scancfinavta. 

Thursday: Italy, Spain, Athens, 
London, Prague. 

Friday: Exhibitions Guide. 

European Cable and 
Satellite Business TV 

(Centred 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 

Euronmoc FT Reports 0745, 
1315. 1545. 1815. 2345 

Wednesday 

NBC/Super Channel: FT 
Reports 1230 

FRIDAY 

NBC/Super Channel: FT 
Reports 1230 

Sty News: FT Reports 0230, 
2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 

Sty News: FT Reports 0430, 
1730; 





18 


FINANCIAL TIMES TUESDAY MAY 17 193a 


I t is a long time since Aus- 
tralia called itself **1116 
lucky country" 1 . After the 
post-1987 crashes of debt- 
laden entrepreneurs, the coun- 
try has been struggling in the 
1990s to cope with corporate 
restructuring u> meet the chal- 
lenge of loner tariff barriers, 
double-digit unemployment 
and low commodity prices. 

But in his annual budget 
Speech recently, Mr Ralph Wil- 
lis. the eelf-effaemg treasurer, 
not only invoked the old 1960s 
Label - a reference to Austra- 
lia's vast resources, spread 
around a small population - 
but suggested that the nation 
was about to go one better. 

He talked of annual growth 
rates at. or above. 4 per cent 
for the nest four years; of con- 
tinuing low inflatio n ; and Of 
the budget deficit - A$l3.6bn 
(£6L5tm) in the current year - 
falling away to nothing by the 
Iate-1390s. 

All this, he suggested, was 
the product of a recharged 
economy and could be 
achieved with few government 
initiatives. Assets, such as the 
government's remaining stake 
in the Qantas airline, would be 
sold this year, raising A£L5bn. 
But there would be no 
increases in taxes or in the 
Medicare levy, Australia’s 
national health surcharge. 

The biggest new expenditure 
item - a four-year jobs pro- 
gramme. designed to tackle an 
nmemployment rate of 10.1 per 
cent and scheduled to cost 
more than AJlbn in 1994-95 - 
would be funded by higher tax 
receipts resulting from the 
upturn in economic activity. 

“Australia.” he concluded, in 
a rare flash of oratorical style, 
“has probably never been bet- 
ter placed to achieve a pro- 
longed period of high economic 
and employment growth.” 

Australians, not given to 
enthusiastic credulity, blinked. 
“A gamble an growth”, decided 
the newspapers. “The budget's 
deficit figures and growth fore- 
cast are a total fudge,” de- 
clared Mr John Hewson, leader 
of the coalition opposition. 

So who is right - a mild- 
mannered treasurer, renowned 
for caution, or a wary public? 

In the post-budget round of 
seminars and speeches, Mr Wil- 
lis has been anxious to spell 
out bow unexceptional his pre- 
dictions are. “I'm not a gam- 
bling mas and never have 
been," he told Sydney busi- 
nessmen. “The growth fore- 
casts were a realistic appraisal, 
provided we continue to play 
our cards right” 

He pointed out that the Aus- 
tralian economy was already 
growing at an annual rate of 4 
per cent and that the nation 


The economic upturn in 
Australia may prove difficult 
to sustain, writes Nikki Tait 

Growth is not 
the only fruit 



had sustained growth rates of 
more than 4J> per cent for sev- 
eral years in the 1980s. 

However, this upturn in eco- 
nomic activity is very recent, 
and many people are still try- 
ing to understand it The 4 per 
cent rise in gross domestic 
product in 1993 was largely due 
to a spurt in the final quarter, 
when growth was 1.7 per cent 
Even in the dries, recessionary 
fears are only just be ginning to 
fade. While chic Sydney restau- 
rants are well-attended, they 
are not packed. As one Mel- 
bourne-based economist put it 
“This doesn't feel like a boom.” 

Even Mr Willis admits that it 
will take a strong revival in 
business investment to push 
the growth rate up to the fore- 
cast of 4^ per cent in 1994-96. 
The government's own. figures 
predict that business invest- 
ment will have grown by a 
miserly 1 per cent in the year 
to the did of June, yet Mr Wil- 
lis is talking of a 14J per cent 
rise next fiscal year. 

Some observers claim this is 
unrealistic. “It’s ridiculous," 
says Mr Stephen Kates, econo- 
mist for the Australian Cham- 
ber of Commerce and Industry. 
Recent surveys of business 


confidence by the chamber 
have shown improvements in 
sentiment, but only to levels 
that are “in general, satisfac- 
tory^. Mr Kates worries that 
real interest rates (adjusted for 
inflation) are rising, and that 
many companies face labour 
cost-related pressures - for 
example, on the superannua- 
tion front, as responsibility for 
pension funding is shifted to 
the private sector. In addition, 
profits growth in small and 
medium-sized companies may 
be la g gin g behind that in. the 
quoted corporate sector. 

C ritics also cite a ten- 
dency by Australian 
companies to invest 
offshore - notably in 
Asia - and to continue to 
search for efficiency gains, 
rather than invest in new 
capacity. 

But there are more optimis- 
tic voices. Mr Paul Simons, 
chairman of Woolwortbs, one 
of the nation’s largest retailers, 
describes the 14.5 per cent 
uplift in investment as “not 
unrealistic". His company's 
capital expenditure has 
increased from A$150m in the 
early 1990s to A$200m in 1994, 


and win head towards A$250m 
next year. “I don’t think we’re 
unrepresentative . . . There 
comes a time when you must 
catch up," he comments. 

Mr Bill Shields chief econo- 
mist at Macquarie Bank, the 
Sydney-based investment 
bank, points out the tumround 
predicted by Mr Willis is “not 
out of synch” with experience 
in the mid-1970s and 1980s. 

If business investment is one 
potential obstacle to the trea- 
surer's objectives, a second 
question mark hangs over the 
current account In the past, 
Australia has tended to lurch 
from boom to bust and part of 
the problem has stemmed from 
instability on the balance of 
payments front, as imports 
have shot up. This could be a 
worry for the government once 
again: if business investment 
surges too late, and all at once, 
imports (of capital equipment 
and. the tike) are likely to get 
sucked in, mod the balance of 
payments position could go 
badly out of kilter. 

The test will be whether 
Australia’s efforts to create a 
competitive, internationally 
focused manufacturing sector 
really have developed a stron- 
ger export base. 

Third, there is question 
of whether low inflation can be 
maintained, particularly if 
Labour costs rise Far the past 
10 years, Australia has had a 
centralised “wages policy”, 
thanks to a wins of accords 
between the ruling Labor gov- 
ernment and the unions. The 
current accord, is stni in place, 
but government efforts to 
encourage enterprise bargain- 
ing - that is, wage agreements 
struck at individual company 
level - mean an increasing 
number of workers foil outside 
this centralised framework. 

While decentralised wage 
agreements can help to contain 
labour cost Inflation, because 
ailing or inefficient Industries 
are not obliged to pay a cen- 
trally agreed wage rise, it is 
unclear whether workers will 
be more aggressive in their 
demands if prosperous compa- 
nies start to award more sub- 
stantial pay increases. 

At the mid of the day, few 
commentators claim that the 
treasurer is wrong, just that 
his scenario makes crucial 
assumptions. If the economy 
foils to meet growth expecta- 
tions, perhaps because busi- 
ness investment is sluggish, 
Mr Willis's strategy would go 
awry. In that case, the govern- 
ment’s deficit reduction target 
would be met only through tax 
increases or fairly big cuts In 
spending. For political reasons, 
the farmer is more likely - and 
that would not be so lucky. 


J t r M » ck a*l Bwkop - C k«w f»n St \ \ M Id la n d 

Card member I i * 1 t J q ^ ^ 



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Joe Rogaly 


The young pretender 



This is getting 
dangerous. If 
Mr Tony Blair 
is chosen to 
succeed Mr 
John Smith, we 
shall have to 
consider voting 
Labour. The 
last time I did that was in 1964, 
or it could have been 1966. 
Those days are now long gone. 
It is as if we have been beamed 
up to a different planet, with 
Labour or a large section of it 
left behind. The party may 
show by its selection of a new 
leader that It has at last caught 
up, that it understands how 
different our polity has 
become. If so, British public 
life will be transformed. We 
would see a break in the gloom 
that began to descend after 
April 1988, when Thatcherism 
peaked out. 

Did I say gloom? Look 
around. The electorate is 
trapped. We either continue 
with a moribund Tory govern- 
ment, or take a with a 

party many of us mistrust. 
Only something completely 
fresh, like a totally remodelled 
Labour party, could break such 
an impasse. Voters would 
enjoy the forgotten luxury of 
real choice. A majority might 
decide that the kindest way to 
treat the Conservatives would 
be to put them out to grass for 
a season or two. There would 
be little fear, as there 
was in April 1992, of Labour 

The people's party might 
even win an overall working 
majority, although 1 would not 
bet on it Just as likely, many 
who might have voted Liberal 
Democrat in 1992 but were 
deterred by the apprehension 
thafr that would fagd to a Lab- 
Lib coalition will not be so put 
off in 1996 or 1997. Either way, 
the opposition would take over. 
The reason is plain. It is best 
expressed in a wry remark 
attributed to an unnamed Con- 
servative MP in one of the Sun- 


day papers. People will vote for 
Mr Blair, said this phantom 
Tory, “without feeling they are 
voting for Labour”. 

The young pretender will 
thank nobody for recycling 
that observation. It expresses 
what his enemies consider to 
be his fatal flaw. The wide- 
spread endorsement of Mr 
Blair's candidacy by the news- 
papers is also said to be 
resented by Labour activists. 
The correct response is: grow 
up. If Labour insists on being 
fed fay whoever is most disliked 
by the it. is not serious 
about victory. If it only feels 
comfortable with whoever 
most accurately personifies the 
traditions of a party four times 
rejected by the electorate, it 

wffl lose again. 

As Mr Kmnock 
would argue, 
the real suffer- 
ers would tie 
the poor and 
the disadvan- 
taged, the very 
people Labour 
exists to 
help. 

This is not to 
say that Mr 
Blair is super- 
human. He may or may not 
prove to be a good leader. 
Whether or not he is chosen 
will tell us more about the 
Labour party than it does 
about him. We already know of 
several counts against him, not 
the least of which is that he is 
without experience of office. If 
he becomes leader, be will foil 
imrior a sharper spotli g ht than 
has yet played upon his boyish 
young features. If he has faults 
of personality, they will be 
revealed. If not, some of the 
tabloids will invent them. 
Short of changing Its name, bis 
programme for modernising 
the Labour party is about as 
radical as you could imagine. If 
he presses ahead with it he 
risks Internal rows. If he holds 
back, he will be derided for his 
caution. Whatever he does, the 


People will vote 
for Tony Blair, 
said a phantom 
Conservative 
MP, Vithout 
feeding that 
they are voting 
tor Labour* 


fawning that has attended his 
putative candidacy is likely to 
be replaced, should he win the 
{size, by scepticism. 

His advantage is the subcon- 
scious perception that his 
beliefs have their roots In 
Christianity, as did those of Mr 
Smith. Mr Gordon Brown, the 
alternative “modernist” con- 
tender for the Labour leader- 
ship, is seen in a different 
light. Ostensibly as reform- 
minded as Mr Blair, Mr Brown 
was in early life an intellectual 
of the now old-fashioned social- 
ist left. Britain is more likely 
to restore social democracy in 
the name of Jesus Christ than 
of Karl Marx. To be fair, Marx 
would not recognise Mr 
Brown’s contemporary utter - 

ances, which 

are similar 
though not 
identical to 
those of Mr 
Blair. Yet the 
shadow 
chancellor’s 
intensity, his 
fierce attention 
to his anger, his 
apparent lack 
of self-confi- 
dence, work 
against Wm. If you voted for 
Mr Brown you would know 
that you were voting Labour. 

Mr Blair's philosophy is 
expressed in a foreword to 
Reclaiming the Ground, essays 
published last year by Hodder 
and Stoughton and the Chris- 
tian Socialist Movement On 
the cover is a photograph of Mr 
John Smith, who contributed 
the key chapter. Mr Blair’s few 
pages demonstrate how Labour 
could capture ground from the 
other parties. Try this: “There 
is right and wrong. There is 
good and bad. We all know 
this, of course, but ft has 
become fashionable to be 
uncomfortable about such lan- 
guage.” Tory minister after 
Tory minister has tripped up 
with “back to basics" of this 
sort, but in a Labour leader ft 


could be an asset. Or try: 
Christianity... “Is about the 
union between individual sod 
community, the belief that we 
are not stranded In helpless 
isolation, but owe a duty bath 
to others and to ourselves aod 
are, in a profound sense, 
dependent on each other to 
succeed". 

It is probable, given a long 
enough search, that you might 

find similar sentiments 
expressed by Mr Stephen Dar- 
rell, financial secretary to foe 
treasury, or even, at a stretch, 
Mr Kenneth Clarice, the chan- 
cellor. This does not make Mr 
Blair a closet Conservative. Be 
remains attached to Labour 
principles. Anyone who firing 
of voting Labour if he leads it 
should do so with his or her 
eyes open. This is to left-wing 
Tory, but a proponent of famil- 
iar elements of Labour think- 
ing. spoken in language that 
should be acceptable to 
southern opinion. In Reclaim- 
ing the Ground he affirms fats 
belief in equality, adding “not 
that we are uniform in charac- 
ter or position, but cm the con- 
trary that despite our differ- 
ences we are entitled to be 
treated equally, without regard 
to our wealth, race, gender or 
standing in society". 

Those of us who can recall 
1964 will remember not only 
the excitement that preceded 
the election of the then Mr 
Harold Wilson but also the 
long years of dudllusionineot 
that followed. Again, this 
speaks of the party more than 
the man. It was Labour, mid 
the unions, flmfc scuttled “hi 
Place of Strife.” the Wilson 
government’s effort to bring 
order to labour relations. Mr 
Blair is likewise just a chap. 
He is a former banister who 
has mastered a couple of prom- 
inent shadow cabinet briife. A 
Labour party at ease with the 
philosophy he expresses would, 
however, be more than that. 
It would refresh British poli- 
tics. 


LETTERS TO THE EDITOR 

Number One Southwark Bridge, London SE1 9HL 

Fax 071 873 5938. Letters transmitted should be dearly typed and not hand written. Please set fox for finest resolution 

Venture capital provides lifeline to Czechs 


From Mr Rudolf 3 Minor. 

Sir, I share Christopher Par- 
kes's opinion (“Old ways ham- 
per new prosperity". May 9) 
that there is a dearth of 
finance capital available for 
new enterprises in the Czech 
Republic. But I would like to 
add that there is an alternative 
source - venture capital, 
which Is beginning to, and 
should increasingly, play a 
meaningful role in financing 
growth for small businesses. 

In the US and Europe equity 
capital is an important source 
of financing and nurturing 
new enterprises. According to 
the European Venture Capital 
Association Ecu4.2bn (£3.2bn) 
were raised and Ecu4-7bn were 
invested by European venture 
capital firms in 1992. Statistics 
about the impact of venture 
capital on economic growth 


are simflarty impressive. 

While foreign direct invest- 
ment in the Czech Republic 
has slowed, private equity 
investment is taking off. 
Besides officially-sponsored 
programmes such as PHARE 
and the Czech American Enter- 
prise Fund, at least half a 
dozen venture capital firms 
have sprouted up within the 
past year to provide financing 
and technical assistance to 
entrepreneurs. It is estimated 
that Ecu40m has been raised 
for investment by venture 
firms. 

For the entrepreneur, ven- 
ture investment has advan- 
tages over debt financing. 
Besides providing much- 
needed equity capital, it pro- 
vides know-how. Venture capi- 
talists work actively with the 
managemen t of their portfolio 


companies, contributing their 
knowledge and experience to 
help the new businesses grow. 
They may also bring strategic 
partners or other links to for- 
eign markets. 

As your article pointed out, 
many Czechs are reluctant to 
give up control of their compa- 
nies, especially to foreigners. 

But according to recent sur- 
veys (“The emergence of pri- 
vate sector manufacturing in 
the former Czech and Slovak 
Federal Republic", World Bank 
Technical Paper 230, November 
1993), most entrepreneurs want 
management and other train- 


ing as much as they need capi- 
tal 

The primary problem Is one 
of education. Most entrepre- 
neurs do not know about or 
understand venture c a p i tal , in 
the three years Catalyst has 


been placing private equity, we 
have spent as much time edu- 
cating Czech companies about 
the capital and helping them 
develop Trmq^gpmAq t sk ill s and 
systems as we have in arrang- 
ing finance. Once entrepre- 
neurs understand that equity 
participation brings training 
and technical assistance, they 
are more wilting to surrender a 
stake In their enterprise. 

The Czech Republic’s rapid 
progress to a market economy 
stems from a dynamic private 
sector. Venture capital is ide- 
ally suited to provide the criti- 
cal lifeline of capital needed by 
small and medium-sized com- 
panies that have jump-started 
the economy. 

Rudolf J Minar , 

Barclay Catalyst, 

685 Fifth Avenue, 

Neto York NY 10022, US 


Emu goalposts are still firmly in place 


From Mr Ian Harden, 

Sir, Your report, “Emu fens 
ready to move the goalposts” 
(May 12 ), risks perpetuating a 
myth about the Maastricht 
convergence criteria. To under- 
stand the treaty's provisions 
about public finance, it is nec- 
essary to appreciate that there 
are two relevant protocols, not 
one. The 60 per cent debt-to- 
GDP and 3 per cent deficifrto- 
GDP ratios are contained in 
the protocol on the excessive 
deficit procedure. The figures 
are “reference values”. They 
form only part of the criteria to 
be applied. The treaty requires 
other factors to be token into 


account by the Commission in 
deciding whether to invoke the 
excessive deficit procedure and 
by the council in determining 
whether there is an excessive 
deficit, if and when the proce- 
dure is invoked. 

The second protocol is on the 
convergence criteria. As 
regards public finance, this 
protocol merely requires that a 
state shall not be the subject of 
a council decision that ft has 
an excessive deficit. It is to this 
protocol that the judgment of 
the German Constitutional 
Court refers In pointing out 
that the treaty only allows the 
criteria to be changed by a 


unanimous council decision, 
thus ensuring a German right 
to veto any weakening of them. 

This is dearly correct, but 
does not mean that the refer- 
ence values have become rules. 
That would not be an interpre- 
tation of the treaty, but a 
rewriting erf it The treaty as it 
stands requires a highly com- 
plex exercise of judgment by 
the Commission and council 
and allows thom a considerable 
margin of appreciation. 

Ian Harden, 
faculty of law, 

Ontoersity of Sheffield, 
Oookesmoor Budding, 

Sheffield SlOlFL 


To ‘Du’ or not 

From Mr Peter Frankel 
Sir, You reported that Chan- 
cellor Helmut Kohl called 
Prime Minister John Major by 
the familiar “Du” form during 
their conversations relayed via 
interpreters (“Major backs 
Kohl over EU links with east- 
ern Europe", April 28). This 
appears friendly, but there Is a 
danger that Mr Kohl's attitude 
might appear condescending. 

1 was bom in Berlin, and I 
can say that I would never call 
another person “Du” unless £ 
was a member of their family, 
bad been at the same school, 
was a member of the same 
club, or had received their 
express permission to use it. I 
do not think French President 
Francois Mitterrand would be 
happy if the German chancel- 
lor addressed him as “tu” 

A British prime minister 
must be treated with the 
respect be deserves, whatever 
the relationship, which cannot 
be measured through the voice 
of an interpreter. 

Peter Frankel, 

Ltmpsfleld Common 
Surrey RE8 OSX 


Referendum on European 
constitution is required 


From Mr Ernest Wistrich. 

Sir, Joe Rogaly (“The right 
question time” May 10} sup- 
ports the European Move- 
ment's call for a referendum on 
any major reforms that might 
emerge after the 1996 intergov- 
ernmental conference on politi- 
cal union. Yet he sees no need 
to examine the actual propos- 
als on the grounds that Mr 
Major is unlikely to support 
them. This is a pity, for the 
European Movement's propos- 
als are hugely In line with the 
views of the European Parlia- 
ment and those of the over- 
whelming majority of political 
leaders in other EU countries. 

IT we in Britain are not to 
remain totally isolated from 
our partners on the future of 
European integration, a rea- 
soned debate on the subject in 
this country would be in our 
national interest 

The European Movement 
wants the European institu- 
tions to be more democrati- 
cally accountable and thus nar- 


row the yawning gap between 
them and the general public. 
That is why it recommends 
that all European legislation 
should be enacted in the open 
by exposing the secretive law- 
making: of the Council of Min- 
isters to public scrutiny and 
ensuring that all European 
laws and actions are subject to 
democratic approval by the 
European Parliament. 

A written constitution, defin- 
ing the rights and duties of 
European citizens and specify- 
ing which of these are to be 
exercised by the European 
institutions, is surely the best 
way to make the European 
Union comprehensible to the 
public. 

Such a constitution could 
only become generally accept- 
able if it were approved by a 
referendum of ail the European 
citizens. 

Ernest Wistrich, 
management board member of 
the European Movement, 

37b Gaytan Road, London NW 3 


Small price 
for quality 

From Mr Richard Davison, 

Sir, in his otherwise tbor- 
ough analysis of pupil numbers 
In the independent sector 
(“Sums don’t add up”, 13 May). 
John Autbers gives the impres- 
sion that overspending during 
the 1980s on “luxury items 
such as swimming pools and 
sports halls” was responsible 
for rising school fees. 

What actually happened dim- 
ing the 1980s was that all edu- 
cational costs, independent and 
state, went up. 

Between 1984 and 1991, aver- 
age fees at ISIS schools 
increased by 94 per cent in 
cash terms. Over the same 
period, unit costs In state 
schools rose by 86 per cent 

Teachers' salaries - which 
account for up to threeqna^ 
ters of a school's costs - am 
the principal reason for this 
rise, which may have bean teas 
obvious to the taxpayer than 
to the independent school 
parent 

If independent schools are to 
maintain a competitive advan- 
tage. they must employ high 
quality teachers. They must 
also invest in their plant 

Parents of boarders expect 
modern accommodation stan- 
dards. All parents expect 
schools to be equipped for the 
rapidly changing demands of 
the modem curriculum. ‘ 

And although only 42 per 
cent of independent schools 
have got one, I am sure flat 
neither Iain Sproat, sports mm- ’ 
ister, nor John Patten would 
regard a sports hall as a “hs- 
uryltem”. 

Richard Davison, 


ISIS. 

National headquarters. 
56 Buckingham Gate, 
London, 

SW1E BAG 






fr • — 1 •• j'" 


.FINANCIAL TIMES TT IBMIAV MAY 17 1994 


FINANCIAL TIMES 

Number One Southwark Bridge, London SE1 9HL 
Tel: 071-873 3000 Telex: 922186 Fax: 071-407 5700 

Tuesday May 17 1994 

Revisionism 
on pensions 


The conventional wisdom among si 
pensions experts In the UK has a 
long favoured final salary related e 
occupational pensions over 
sche m es that peg benefits to aver- n 
age salary, or to the returns on si 
the investment of fixed cootribu- ai 
ttons to a fund. The Inst itute for ol 
Fiscal Studies (IFS) can thus w 
expect a sceptical response from fl 
the pensions establishment to its A 
latest report on pensions policy, b> 
which argues that the risk in ei 
defined contribution schemes has fe 
been overstated, and that the 
defined benefit system may be ,, 
delivering a worse deal to a major- v 
ity of people. Others will welcome 
the IFS's pioneering attempt to ii 
quantify the different returns to ai 
pensioners under defined benefit si 
and defined contribution arrange- bi 
meats respectively . This, together pi 
with a readiness to question long- tt 
standing assumptions, is overdue, aj 
The prejudice in. favour of a s 
defined benefits has its roots in n 
the experience of rising inflation ei 
In the 1960s and 1970s, when the gt 
link to final salary provided a a 
measure of badly needed protec- k 
tion against rising prices, and p( 
employment patterns were re la- in 
tively stable. Antipathy towards la 
defined contribution pensions, 
meantime, was strengthened by tt 
the experience of stock market ss 
crashes in 1974 and 1987. as 

at 

Renewed inflation ^ 

Today circ umstanc es are very gt 
different No one. admittedly, m 
could afford to ignore the threat of la 
renewed inflation for the purposes al 
of long-term pension planning, nc 
But the pattern of employment in in 
the UK Is no longer so heavily re 
geared to large companies provid- de 
ing long-term stable employment. 

The financial markets are able to an 
provide a wider array of instru- do 
ments with which to hedge to 
against market volatility. And the sii 
political climate is more hostile to sii 
the paternalism that has been the ret 
driving force behind an entirely no 
desirable build-up in private-sec- toi 
tor occupational pensions. sal 

In essence pensions are a form tht 
of insurance. The IFS authors Me 
make the important point that the fin 
two main forms of private pension mi 
provision insure against different pe 
things. Defined benefit plans, Bo 
which take the form of a promise a s 
related to final pay, insure against lei 
uncertainty about capital market gr 
returns. Defined contribution an 

IT’s not a 
knockout 


schemes, in. contrast, insure 
against the risk of fluctuating 
earnings and the loss of jobs. 

Using data Grom the 198849 UK 
retir ement survey, and on a plau- 
sible set of assumptions, the 
authors conclude that three-fifths 
of the people in a sample of 3^00 
would have enjoyed higher bene- 
fits In a defined contribution plan. 
A privileged minority of mainly 
better off. male, long-staying 
employees, they find, have been 
feather bedded by the majority. 

Wider concerns 

This is not particularly snrpris- 1 
ing, in that so-called early leavers 
are known to have made a sub- 
stantial subsidy to long stayers 
because of inadequate inflation- 
proofing of deferred pensions. But 
the extent of the cross-subsidy 
appears greater many had 
assumed. Can the legitimate ' 
requirement of paternalistic 
employers to attract and retain 
good employees really justify such 
a hugely redistributive process, 
especially when there are wider 
policy concerns about the adverse 
impact of the cross-subsidy on 
labour mobility? 

It is still possible to argue about 
the relative merits of the two 
systems in the light of different 
assumptions that could be pmrfa 
about inflation and investment 
returns in flitnre. But in practice 
defined contribution schemes are 
growing rapidly because they 
match the requirements of today's 
labour market better than the 
alternative. And even if the eco- 
nomic arguments are deemed 
inconclusive, subject to Anther 
research, the wider case for 
defined benefits is strong. 

Such schemes are transparent 
and preclude cross-subsidy. They 
do not incorporate any incentive 
to sack old® workers, whose pen- 
sion rights become more expen- 
rive in defined benefit schemes as 
retirement approaches. They can- 
not be so easily milked by direc- 
tors who bump op pre-retirement 
salaries at huge actuarial cost to 
the fund and thus to shareholders. 
More work needs to be done to 
find ways of reducing the capital 
market threat to the value of the 
pension on the date of retirement 
But when City Ingenuity provides 
a satisfactory answer to that prob- 
lem, the gover nmen t «ho ii M give 
greater encouragment to comp- 
any-backed defined benefit plans. 


Reports that General Motors plans 
to sell its majority stake in Elec- 
tronic Data Systems, its large 
computer services affiliate, sug- 
I gest the world's biggest vehicle 
maker is not just seeking to raise 
badly needed cash, but may be 
abandoning what was once a 
l mainstay of corporate strategy. As 
well as promising relief to its 
hard-pressed shareholders, GM’s 
apparent rethink holds salutary 
lessons for managers of other 
businesses who are tempted to 
view Information technology as 
their competitive salvation. 

Purchased for $L5bn a decade 
ago when CM was flush with 
funds, EDS has proved a spectacu- 
larly profitable investment How- 
ever, it has not met GM’s original 
goals. One was to match Japanese 
car manufacturers' crushing pro- 
ductivity advantage by using 
EDS's computer wizardry to revo- 
lutionise GM’s antiquated produc- 
tion facilities. Another was to pro- 
vide a path for diversifying into 
fast-growing IT markets. 

These hopes have been disap- 
pointed because the industrial 
logic was flawed. With hindsight, 
the acquisition seems to have 
teen motivated by a desire among 
GM's top managers to escape 
from, rather than tackle head-on, 
a legacy of Industrial decay. Daz- 
I tied by IT, a market they did not 
understand, they tailed to see EDS 
for what it was. In reality, the 
company's factory automation 
experience Is minimal. Its success 
is based an processing large vol- 
umes of data efficiently for outside 
clients - notably the US govern- 
ment - and aggressive salesman- 
ship. It is a business closer to the 
economics of the laundry than to 
rocket science. 

Magic bullet 

GM's recent gains in productiv- 
ity and market share have been 
largely dae to the pursuit of 
down-to-earth objectives. These 
include renewed emphasis on flex- 
ible working practices, quality, 
sourcing, product design and mar- 
keting. Such steps are indispens- 
able to the company's recovery. 
The idea that massive investment 
in computers and robotics could 
avoid than was always suspect 

Yet fiaith in IT as a magic bullet 
lives on, in governments as well 
as businesses. The latest convert 
is the Clinton administration. 


which is backing a range of com- 
mercial high-technology projects 
in the belief that they will yield 
aboveaverage economic and com- 
petitive benefits. But the belief is 
based on shaky evidence. An 
exhaustive recent study of manu- 
facturing productivity by 
McKtasey, the management con- 
sultants, failed to unearth any 
company which had succeeded 
mainly because of superior high- 
technology. 

Short-lived gain 

That is not to belittle IT’s impor- 
tance to business. By rendering 
obsolete many middle-manage- 
ment functions, powerful elec- 
tronic information systems have 
provided much impetus for the 
recent trend towards corporate 
“down-sizing”. By linking the 
world's main financial centres, 
they have vastly accelerated capi- 
tal mobility. And by tearing down 
barriers between computing, 
entertainment and telecommuni- 
cations, they are revolutionising 
the delivery of media to homes 
and workplaces. 

However, for individual compa- 
nies, IT atone procures only 
short-lived competitive gain. That 
is true even in service industries, 
such as banking and re tailing , 
which are its most intensive users. 
While FT has encouraged product 
innovations, notably in retail 
banking, these are usually easily 
copied by competitors. As a conse- 
quence, it has ceased to guarantee 
enduring advantage in financial 
markets and become simply a pre- ■ 
requisite of survival, {a re tailing , 1 
reliance on rr to generate market 
research data has helped some ' 
retailers challenge branded manu- j 
facturers’ franchises. These gains, j 
however, depended crucially on 
sustained investment in gfflrf>nt 
distribution, supplier networks 
and just-in-time delivery systems. 

To view IT as a means of erect- 
ing competitive barriers is errone- 
ous. Its real impact is to level 
them and make it easier for new 
competitors to enter markets. 
Though it can enable the fleet 
footed to draw maximum advan- 
tage from shrewd judgment, entre- 
preneurship, innovation and 
sound organisation, it cannot sub- 
stitute for these qualities. Still less 
can it exonerate managers from 
the consequences of their past 
neglect 


I f the cold logic of commerce 
were the only factor, then the 
French foreign legion would 
be using bullets from Lanca- 
shire. and French shells 
would be whizzing across the Brit- 
ish army's training ground on Salis- 
bury plain. 

Such a pooling of resources 
between munitions makers makes 
business sense. As tensions have 
eased after the cold war. almost 
every western country has been 
quick to claim the peace dividend, 
and governments have trimmed 
defence budgets as a proportion of 
gross national product 
At least on paper, European coun- 
tries are committed to the principle 
of pooling arms procurement efforts 
as companies grapple with declines 
in both riiMwogty- anrt foreign Bftlas 
Mr John Weston, chairman of Brit- 
ish Aerospace defence, is confident 
that talks on collaboration between 
Royal Ordnance, the BAe subsidiary 
which makgs bullets, and (Hat of 
France will bear fruit 
But before this happens, both 
companies will have to satisfy a 
small caveat from the UK Ministry 
of Defence. If the UK has to use 
French bullets, then France has to 
use B ritish ones. As a ministry offi- 
cial pot it “Any dependence must 
be mutual” 

This lingering wariness between 
Europe's ancient nations means the 
continent’s defence industry is not 
streamlining as fast as its counter- 
part in the US. As American groups 
rationalise and regroup, Europe's 
politicians and industrialists are 
still searching for ways to follow 
suit without sacrificing all their 
secrets and sovereignty. 

The commercial rationale for con- 
solidation is equally powerful on 
both girfes of the Atlantic. Through- 
out the western world export sales 
are in decline. At constant 1991 
prices, Britain, France and the US 
saw total arms exports fall from 
825.71m in 1987 to $14.4bn in 199L 
In the US, the response to this 
challenge has been rapid. The 
plunge in government arms pur- 
chases - to about $40bn next year 
from $120bn a decade earlier at con- 
stant 1993 prices - has already 
prompted an extensive restructur- 
ing hi the industry. General Dynam- 
ics has sold its tactical aircraft busi- 
ness to Lockheed, its missiles 
operations to Hughes and its elec- 
tronic systems to Carlyle. Most 
recently, Grumman was the target 
of a $2~2bn tug-of-Iove bid between 
Northrop and Martin Marietta, 
which Northrop won. 

Compared with this hectic activ- 
ity. rationalisation in Europe has 
been sluggish. Europe still produces 
three types of main battle tank, 
against one In the US. It is also 
desi gning three advanced fighters - 
the Eurofighter, the French Rafale 
and the Swedish Grippen, while the 
US is concentrating on one - the 
Lockheed/Boeing F-22. 

The contrast has not gone unno- 
ticed in Europe. Mr Louis Gallois, 
chairman of Aerospatiale, the state- 
owned French group, said in Lon- 
don recently: “Not without govern- 
ment intention and support, the 
American aerospace industry is 
completely restructuring. Ignoring 
merger control and anti-trust legis- 
lation, very profitable mammoth 
companies are being formed in 
almost all product categories." 

Behind these comments ties a 
gnawing fear that economies of 
scale will enable US companies to 
launch a price war long before 
Europe has had time to get its own 
corporate act together. 

There are a few signs that Europe 
is starting to react Dasa, the Ger- 
man aerospace company, 
announced a plan to cut 16,000 jobs 
last year; British Aerospace has 
been in negotiations for the past 18 
months to mage its missile busi- 
ness with Matra of France; Aerospa- 
tiale is in s imilar talks with Dasa; 
the UK defence and automotive 
group GKN has bought the helicop- 
ter-maker, Westland. 

Yet progress has bear painfully 
alow, and there is tittle consensus 
on how European industry should 
rationalise. 

Some, including Lord Weinstock, 
managing director of GEC, believe 
defence is essentially the business 
of Individual countries, and that 


Waves from 
the ocean 

■ Bernard Tapie, France's 
much-investigated businessman 
cum politician, seems to have added 
an offshore tax problem to his many 
woes - in the shape of his 

splendiferous yacht 

Currently away from her usual 

berth undergoing repairs, the 
Photea. socalled to evoke the 
ancient name for Marseille, 
normally bobs about right in front 
of the town ball In the midst of 
the city where Tapie would be 
mayor. 

Bui the French authorities are 
threatening to take the wind out 
of Phocta’s sails. Until now, the 
four-masted. 74-metre schooner, 
purchased a decade ago from the 
widow of racing sailor Alain Colas, 
has been registered as a 

“commercial" vessel. Hence Tapie 
has teen able to treat large 
renovation expenses as a business 
tax deduction - not to mention 
escape paying VAT when the yacht 
was originally imported from 
Tahiti. 

Now the tax people are jibbing 
at the boat's commercial status, 
and are also investigating whether 
Tapie may have used money from 
his various companies in order to 
help with the lovely lady's very 
considerable running costs. 

Another interested party has 
also surfaced. According to its new 
president Jean Peyrelevade. Credit 


The best lines 
of defence 

Bernard Gray and Bruce Clark assess 
the political and commercial challenges 
facing Europe's arms industry 


Europe's defence under attack 

Leading cross-border projects ' 

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larger groupings will be formed 
within states rather than between 
them. For instance, Lord Weinstock 
says that GEC and BAe may even- 
tually work together as joint prime 
contractors on projects or conceiv- 
ably pool some defence interests. 

Sir Cotin Chandler, chief execu- 
tive of the UK tank maker, Vickers, 
takes a difference view. He sees 
cross-border cooperation in weap- 
ons production as the most likely 
way forward: keeping separate the 
co mpanies making particular prod- 
ucts, but allowing for joint ventures 
and joint weapons development 

The virion of cross-border collabo- 
ration is shared by Sir David Lees, 
chairman of GKN, who says: “There 
is no other way forward. The pres- 
sures on stretched budgets are driv- 
ing towards more collaborative pro- 
grammes.” 

The most spectacular multina- 
tional project to date Is Eurofighter. 
This £3Zbn bid by Britain. Germany, 
Italy and Spain to be in the van- 
guard of military aircraft technol- 
ogy has divided German opinion. 
Also in the pipeline are a $7bn proj- 
ect to build a new military trans- 
porter, the Future Large Aircraft 
(see chart); a Franco-German 
armoured car; and a frigate Involv- 
ing Britain, Fiance and Italy. 

As technology becomes more 
expensive, it may no longer be feasi- 
ble for any European country to 
build a cutting-edge weapons plat- 
form alone. Cooperation therefore 
sounds appealing and politically 
prestigious. But grandiose plans for 
the future will not remove the need 
for painful derisions about current 
production. Building weapons in 
more than one country may make it 
easier to raise development capital, 
but it does not necessarily save 
money. Overheads and production 
facilities may be duplicated unless 
some countries are prepared to 
r elinquish manufac turing. 


re _ .•;» *••'•» • war 



— ;2Q.. 


— 4-L — U LUwL_. O. 

flb .SI- 02 93 - V , 


Matra. for Instance, has derided 
that collaboration on specific pro- 
jects is not a sufficiently radical 
solution to Europe's cost-cutting 
problem, ft argues that it needs to 
pool equity as well as expertise with 
its European counterparts to com- 
pete with rivals In the US. 

But does Europe have to choose 
between national giants, cross-bor- 
der project collaboration, or multi- 
national mergers? Mr Weston of 
BAe thinks not. He foresees “a mix- 
ture of national and international 

mergers to rationalise the indus- 
try”. Nor is he persuaded that 
Europe is falling behind the US. 

Ironically, the end of 
the cold war, which 
brought such savings 
for the US, may 
increase the burden 
on Europe’s taxpayers 

“Europe does have some barriers to 
overcome which the Americans do 
not But then the European indus- 
try probably started to sort itself 
out long before the US.” 

However, as Lord Weinstock 
points out, European companies 
cannot be expected to make strate- 
gic decisions until governments 
have defined their foreign policy 
priorities more clearly. “The 
defence industry needs direction 
from governments, but the situation 
is far more complex now that the 
cold war Is over,” he says. 

European governments are draw- 
ing up a defence shopping list In the 
light of a partial, and possibly total, 
US withdrawal from the continent 
This should be concentrating minds 
In foreign ministries and board- 
rooms, but so Ear there has been 
only a stumbling convergence 


Observer 


between leading members of the 
Western European Union, the 
embryonic security organisation. 

Britain, the standard-bearer of 
link s wit h the US, now accepts that 
the WEU’s importance will increase 
and that in certain conflicts, Europe 
may act alone. France, long suspi- 
cious of Washington’s intentions 
toward Europe, now worries about 
too little US presence in Europe 
rather than too much. 

But key questions about the size 
and function of Nato remain wide 
open, and all discussion of Ger- 
many's role will be hypothetical 
until this summer's verdict by the 
constitutional court on whether the 
Bundeswehr can serve overseas. 

European governments broadly 
agree on what they need for home 
defence or to fight a small version 
of the Gulf war without US help: 
mobile armour, a strategic airlift 
capacity, satellite intelligence, and 
early warning systems to detect and 
intercept long-range missiles. 

Where they do not agree is on 
what all this implies for the arms 
Industry. 

For France, it is axiomatic that 
European self-sufficiency in arms 
can only be attained through 
self-sufficiency in aims production. 
With its own budget under strain, it 
feels more strongly than ever the 
need for cross-border collaboration. 

Next week, France and Germany 
will reaffirm their commitment to 
establish a joint arms agency, ini- 
tially to manage existing projects 
but with the possibility of becoming 
a powerful procurement executive. 

There is some scope for mutual 
advantage between France and Ger- 
many in export markets. France 
needs German capital and engineer- 
ing skills, while Germany some- 
times benefits from France’s global 
connections, and its relative free- 
dom from export restrictions. 

German companies are barred by 


Lyonnais has slapped a lien on the 
yacht as security for Tapie’s 
onrepaid debts to the bank. 

TS pie’s own cork-like properties, 
meanwhile, were amply 
demonstrated when an If op poll, 
published in the weekly Journal 
du Dlmanche, showed the Marseille 
deputy to be the 14th most popular 
person in France. 

Not a single other politician 
makes it into the top 15. 


Premature 

■ Maybe Yasuhiro Nakasone 
shouldn’t be written off just yet 
The domestic reputation of Japan’s 

prime minister between 1982 and 

1987 may be tainted by involvement 
in one of the country’s many 
bribery scandals, but he is still in 
demand as an international elder 
s tatesman. 

A colleague bumped into him 
in Geneva recently, where he was 
advising the United Nations on 
next year's 50th anniversary 
celebrations, and was surprised 
to find him just as keen to talk 
domestic Japanese politics as 
international affairs. 

Nakasone's view is that an early 
realignment of Japan's political 
parties is on the cards to restore 
much-needed stability. 

He won’t predict who will cuddle 
up to whom, but says any new 
grouping will share a common view 
on that all-important relationship 
with Washington. 

In such circumstances would 






C f ? 


‘Yon know what I miss? Tobacco 
advertising' 

he be tempted to reenter Japan's 
political fray? Given that Nakasone 
turns 77 this month, it’s hard to 
believe he would want - let alone 
get - a big political job again. But 
he refuses to rule hiinselTout 
entirely by echoing General 
MacArthur “Old soldiers never 
die..." 


Tunnel vision 

■ What with all the Channel 
tunnel pomp and the Driay 
landings razzmatazz, it is perhaps 
to be expected that another little 
marker in the history of 
Anglo-French merry-making has 


been allowed to slip by virtually 
unnoticed. 

Last month was the 90th 
anniversary of the entente cordiale, 
an “understanding” cobbled 
together by Lord Lansdowue, 
Britain's foreign secretary, and 
Paul Cambon, the French 
ambassador in London. Roughly 
speaking, the French conceded that 
the lobster was a fish, to return 
for control of various small corners 
of west Africa. 

Although Douglas Hurd, Britain’s 
foreign secretary, and Alain Juppe, 
Ins opposite number, had a spot 
of dinner to mark the occasion, 
the anniversary had been otherwise 

ignored. 

Step forward the British Business 
Lunrii Club in Copenhagen, ft has 
Invited French businessmen to a 
celebratory lunch on May 28 @0 
days late, but who’s counting?) 
where the British commercial 
attac h e. Anthony Layden, and his 
French counterpart, Bruno Caron, 
will debate to what extent the hole 
under la Manche threatens to 
destabilise the entente conhaie. 


Nice insider 

■ It as seems increasingly likely, 
William Donaldson derides not 
to seek a second term next year, 
the New York Stock Exchange may 
well look no further than his 
current number two. NYSE 
president Richard Grasao, for its 
next chairman. 

The diminutive Grosso is the 


law from exporting arms to areas of 
actual or potential tension. Last 
year's &5bn sale of French tanks 
with German en gines to the United 
Arab Emirates looked like a neat 
way round that problem - although 
even that deal required a special 
permit by the Bonn government 

The UK, for its part, does not 
accept that defending Europe neces- 
sarily implies buying European. For 
its forthcoming purchase of helicop- 
ters, the British arnfy is though to 
favour the US-designed Apache 
rather than the Franco-German 
Tiger. To meet its strategic airlift 
requirement, it is keeping open the 
options of buying more US Hercules 
aircraft or coming hack to the Euro- 
pean Future Large Aircraft, from 
which it withdrew in 1989. 

Evan France is conscious of the 
high price of investing to European 
capabilities. Mr Francois Leotard, 
the French defence minister, has 
acknowledged that in pure budget- 
ary terms, it might be better for 
France to buy Hercules aircraft He 
has even suggested that both FLA 
and the four-nation NH-90 helicop- 
ter may have to be axed unless pro- 
duction costs can be trimmed by 20 
per cent However, he remains com- 
mitted to both projects because of 
their importance for European 
industry. 

Other items on the European 
wish-list will be even more expen- 
sive. France has virtually completed 
one military satellite programme, 
the Helios, with help from Spain 
and Italy, but it cannot drum up 
mnffh enthusiasm for further space 
extravaganzas. 


W hite apgking finan- 
cial help from its 
European partners, 
France is tradition- 
ally reluctant to 
share sensitive technology. Recent 
defence ministry documents state 
clearly that the country no longer 
has the money to be self-sufficient 
in defence electronics or weapon- 
building material. But its insistence 
an in<iqii>n(toi« in nuclear matters 

is nTuiimfniflhori- 

Nuciear technology is proving 
increasingly costly, but among 
European states which do not trust 
each other enough to make bullets, 
such strategic collaboration is even 
harder. Besides, while France is 
protective of its own nuclear 
secrets, Britain's relationship with 
the US prevents it from passing on 
American technology to other coun- 
tries. 

The most ambitious European 
dream of all would be the construc- 
tion of a strategic anti-missile 
defence system to rival America's 
now-deftmet Star Wars plan. The 
militar y case may be growing, as 
rocket technology becomes avail- 
able to increasing numbers of 
uncomfortably close and potentially 
unstable countries in the Middle 
East and North Africa. 

However, even the US has been 
forced to curtail its aspirations in 
the field of anti-missile defences. So 
it seems unlikely that Europe will 
be able to raise the enormous sums 
necessary to implement such flights 
of fancy. At a more practical level, 
even a streamlined European 
defence industry may not be able to 
afford to design a shield against 
low-technology Scud missiles of the 
kind used in Yemen over the past 
few days. 

Such large-scale projects would 
require clarity of military purpose, 
political will and industrial cohe- 
sion - all of which are lacking at 
the moment. Ironically, the end of 
the cold war, which has brought 
such savings for the US, may 
increase the burden on the Euro- 
pean taxpayer. Politicians may be 
called upon to explain to voters that 
they face a peace levy and not a 
peace dividend, if the continent is 
to defend itself without US help. To 
make matters worse, the political 
challenge coincides with intensify- 
ing competition from American 
defence contractors which can 
merge and co-operate without hand- 
wringing over technology .transfers 
and issues of sovereignty. 

As one European expert put it 
“The US is rationalising over three 
to five years. Europe is moving over 
10 to 15 years. That is the kind of 
gap you just don’t dose.” 


ultimate insider (in the nicest 
possible sense). He joined the 
exchange to 1968 as a corporate 
listings representative, and has 
since learnt almost every aspect 
of the NYSE’s business on bis way 
up. 

He has built up close 
relationships with the frontline 
troops, the specialists, who have 
an important say to the choice of 
thefr dairmam "He Is very ranch 
liked on the floor, because he 
spends a lot of time there and really 
understands the needs of the 
specialists." one former NYSE 
executive points out 

The feet that Grasso looks and 
talks more like a trader than the 
current incumbent also does no 
harm. During his tenure, the more 
aloof Donaldson has never been 
much of a hit <m the floor. 

Grasso also happens to be the 
market’s technology chief, which 
ought to count for even mime. At 
least he should be aware of the 
complexities of dragging the world’s 
largest floor-based exchange into 
the 21st century. 


Foot down 

■ It's not just the policemen, but 
the joy-riders too, who get younger 
by the day. And Boots, the chemist, 
is doing Its bit to curb their 
activities. Its catarrh syrup, for 
l-12 year olds, carries a wanting 
that a dose of the medicine causes 
drowsiness. “If affected do not drive 
or operate machinery.” tt says. 


i 






20 






FRUEHAUF 

TRAILERS 


Carrying the 
nation's goods 



For information c.all 0362 695353 


FINANCIAL TIMES 

Tuesday May 17 1994 



TRAFA16AR BOOSE 

cwnw cTwr ^ 

COMMITTED TO QOAlJfi 


0816892266 



Lift in industrial production adds to strength ahead of FOMC meeting 


US rate rise hope boosts markets 


By Jurek Martin in Washington 


US financial markets firmed 
yesterday as dealers anticipated 
that today’s meeting of the Fed- 
eral Reserve's policymaking open 
market committee would end the 
uncertainty over interest rates. 

The Fed is widely expected to 
raise short-term interest rates for 
the fourth tune this year, from. 
3% per cent, perhaps coinciding 
with an increase in the discount 
rate - the rate at which the Fed 
lands to hanics - from the current 
3 per cent 

Markets also took heart from 
April's industrial production fig- 
ures although the modest 03 per 
cent increase, the 11th consecu- 
tive monthly rise, was somewhat 


less than the 0.5 per cent 
advances recorded in each of the 
previous three months^ 

The Dow Jones Industrial 
Average was up about 13 points 
around midday at 3,672.03, bond 
prices were up about half a point, 
with the 30-year government long 
bond yielding 7.431 per cent, and 
the dollar was trading slightly 
higher. However, trading vol- 
umes were low as many dealers 
were on the sidelines ahead of 
today's FOMC meeting. 

The industrial production fig- 
ure was reduced by a little over 
0.1 percentage points because of a 
23 per cent decline in car assem- 
blies. This reflects an adjustment 
following the figures which 
showed production close to 


capacity in February, a level 
which has proved unsustainable. 

But most of the other compo- 
nent parts of the index remained 
steady. Industrial capacity stayed 
at 83.6 per cent, well below the 
inflationary threshold, and both 
the average work week and man- 
ufacturing employment were 
pgRAwfiaTTy Tmcbangw ri- Technol- 
ogy was the strongest sector, 
with output up L2 per cent in 
April. 

The production returns and 
last week’s slim 0.1 per cent 
increase in consumer prices rein- 
force the impression of sustain- 
able noranflationary g m w i i i 

Against this background, the 
logic of a further Fed tightening 
of monetary policy would be to 


ensure that economic growth 
remains steady and no& inflatioB- 
ary, and to reinforce the value of 
the US dollar on the foreign 
exchange markets. 

The Clinton administration 
made no attempt to second guess 
any Fed move yesterday. Mr 
Roger Altman, the deputy trea- 
sury secretary, said: “We don’t 
have any quarrel with tire Fed- 
eral Reserve an monetary policy 
- our hope is that this recovery 
will be a durable one.” 

He also avoided substantive 
comment on the dollar, repeating 
what he described as the Trea- 
sury's “basic belief" that eco- 
nomic f undamgntaU should be 
the best guide to a currency’s 
value. 


EDS and 
Sprint talk 
of alliance 


Continued from Page 1 


in a recapitalisation of 6 shares 
into GM common stock at a 120 
per cent exchange ratio, as pro- 
vided for under the group’s certif- 
icate of incorporation. 

EDS and Sprint emphasised 
that many issues remained to be 
resolved in their merger discus- 
sions, Including the relative 
value of the two groups, and 
there could be no guarantee a 
deal would be wmgwnwflfad 

However, Mr Les Albert hal, 
chairm an of EDS, and Mr Wil- 
liam Esrey. chairman of Sp rint 
said the two companies had the 
opportunity to “create a single 
source for products and services 
to meet the co n verging informa- 
tion and enmmunicatinns naaria 

of customers'. 

EDS’s strength in the large 
business market would help 
Sprint expand here, while 
Sprint's presence in the con- 
sumer market would allow EDS 
to develop products for the indi- 
vidual. 

Shares in Sprint jumped $1% to 
$38 in lunchtime trading, while E 
dass stock was up $1% at $34%. 
GM was unchanged at $53%. 


BAT buys majority stake 
in Uzbeki tobacco industry 


By Steve LeVIne In Tashkent 
and David Wighton in London 


BAT Industries, the UK cigarette 
and insurance giant , is to taka a 
majority stake in the state-owned 
tobacco industry of the former 
Soviet republic of Uzbekistan. 

The agreement, under which 
BAT will Invest $20Qm during the 
next five years, represents the 
first large foreign Investment in 
the central Asian republic since 
the government announced its 
economic reform programme in 
January. 

The deal mirrors that struck by 
BAT’S US rival Philip Morris in 
neighbouring Kazakhstan last 
year. Both cover support for local 
tobacco formers as well as invest- 
ment in processing and mflTnifaft 
turing plants. 

“We won’t actually own the 
land on which the tobacco is 
grown but we will provide advi- 
sory services to farmers,” said 
BAT. 

It believes that Uzbekistan is 
the more attractive of the two 
republics with a slightly bigger 
market, about 25bn cigarettes a 
year, and much hi gher tobacco 
production. 

The state factories are cur- 


$200m investment aimed at improving 
quantity and quality of local product 


rently supplying less than 4bn 
cigarettes a year with the bal- 
ance met largely by imports from 
other former Soviet republics. 

BAT said the priority was to 
increase the quantity and quality 
of Uzbek-made cigarettes rather 
than build brands as In more 
developed markets. It hopes even- 
tually to introduce its own inter- 
national brands at the tap of the 
market. 

BAT also said It saw an export 
opportunity for Uzbeki tobacco 
leaf. “We believe we could get it 
to a grade that is acceptable on 
the international tobacco mar- 
ket". The “oriental” tobacco 
grown in central Asia is used In 
blended American cigarettes 
such as BAT’S lucky Strike. 

Uzbekistan has lagged behind 
Kazakhstan in economic liberalis- 
ation, and western investors 
remain slightly sceptical about 
the economic ref or m programme. 
This promised to allow limited 
private land ownership and repa- 
triation of profits. 

The government has recently 


sought a support agreement with 
the International Monetary Fund 
for its currency, the som, which 
it hopes will reassure interna- 
tional investors banker s that 
it is serious about r efor m. 

BAT expects to start gsieratr 
ing profits from Uzbekistan 
within two to three years, 
althoug h it would not start tak- 
ing out dividends for about five 
years. It plans to invest $50m 
over the next two years to refur- 
bish the existing tobacco factory 
in Tashkent and $140m to build a 
new factory in Samarkand. 

The Uzbeki investment is by 
for the largest in the former east- 
ern bloc by BAT, which has joint 
ventures in Hungary and 
Ukraine. It is also in "fairly 
advanced” discussions over facto- 
ries in Russia and Kyrgyzstan. 

Mr Shukrat Gafurov, of the 
Uzbeki state property committee, 
said: “The government is fully 
committed to developing a mar- 
ket-orientated economy, and this 
agreement is clear evidence of 
the success of this strategy.” 


Italy ‘to play bigger role in Europe’ 


By Robert Graham in Rome 


Italy’s new government will 
expand the country's role in 
Europe and seek to increase its 
influence in international affairs, 
Mr Silvio Berlusconi, the new 
prime minister, pledged yester- 
day. 

Italy has consistently played a 
disproportionately small role In 
relation to its economic strength 
and strategic position, and Mr 
Berlusconi yesterday showed 
a willingness to lift that 
profile. 

Outlining the government pro- 
gramme of his rightwing Free- 
dom Alliance to the senate. Mr 
Berlusconi also indicated reserva- 
tions about the Maastricht treaty 


on the future of the European 
Union. But, in a speech lasting 
nearly an hour, he declined to go 
into details on foreign or domes- 
tic policy, as he is still putting 
together a programme. 

Mr Berlusconi also appeared 
reluctant to reveal his policies in 
the senate, where his govern- 
ment is at least eight seats short 
of the 164-seat majority required 
to win a necessary vote of confi- 
dence. 

The confidence vote is due 
tomorrow, and yesterday the 
prime minister appealed to sena- 
tors of the small centrist parties 
for support- He hinted that they 
should observe a truce to allow 
his government to set its policies 
in place and judge by his actions. 


Mr Berlusconi began by focus- 
ing on foreign policy and with 
the admission that his govern- 
ment - sworn in last week with 
five ministers of the neo-fascist 
MSI/National Alliance - had 
been received “in some respects 
with a certain justifiable anxi- 
ety”. 

He said Mr Antonio Martino, 
the new foreign minister - in 
Brussels yesterday for his first 
meeting with his EU colleagues - 
had already begun “to state and 
reinforce Italy's role as a protago- 
nist In the European Union”. 

“Italy must be in favour of 
enlargement of thp. Union, also 
towards eastern Europe. . . . but a 
careful process of reflection on 
the Maastricht treaty should not 


delay the process of union.” 

To aid employers, he promised 
to introduce, in his first 100 days, 
fiscal measures which would ease 
the cost of employment and help 
part-time and temporary employ- 
ment 

On privatisation, he was very 
brief, contenting himself with 
saying: “The government is 
pledged to accelerate the privati- 
sation of Ina [insurance 1, Stet 
[telecoms 1, Enel [electricity] and 
Eni [oil and gas]-" 

On the possible conflict of 
Interest between his role as pre- 
mier and his position as owner of 
the Fininvest media empire, Mr 
Berlusconi said he hoped he 
would be judged “by foots and 
not by prejudice". 


FT WEATHER GUIDE 


Europe today 


Most of western Europe wffl continue 
unsettled with rain or Isolated showers in 
many places. Sunny intervals will lift 
temperatures to between 20C and 25C. 
Thunder showers with heavy rain are 
expected over southern France. The rain wfll 
spread towards Switzerland and northern 
Italy. Spain and Portugal wiH be unstable and 
cod but the eastern Mediterranean will be 
sunny and warm again. Inland temperatures 
win exceed 30C around the Adriatic and In 
Turkey. Afternoon showers win cool the 
Balkans. Scandinavia wffl continue cool with 
ran or sleet In foe north. Central regions will 
have sunny intervals but southern Sweden 
wiH have rain. 


Five-day forecast 

A lot of rain is expected aver central Europe 
on Wednesday and in southern Scandinavia 
later In foe week. It wfll be much cooler after 
the rain. Northern Spain and Portugal wfll 
remain unstable and cod but south-eastern 
Europe will have an increasing risk of founder 
showers. The north-west continent wfll be 

warmer by foe weekend. 


%‘ioib; 1?20 



Wind speed la KPH 


TODAY’S TEMPERATURES 


Situation at 12 GMT. Tampeiatunts maxtnvw for day. Forgcaate by Afefeo CortSu# of Che Nettertands 



Maximum 


cloudy 

SO 

Caracas 

cloudy 

28 

Edinburgh 

cloudy 

12 


Gdsfea 

Seftaat 

Cloudy 

12 

Cardiff 

showar 

11 

Faro 

shower 

20 

Abu Dhabi 

sun 

42 

Belgrade 

sun 

32 

CuaHvca 

fatr 

21 

Frankfurt 

fair 

25 

Accra 

fair 

31 

Borin 

Mr 

26 

Chicago 

sin 

18 

Genova 

showar 

23 

Algtera 

cloudy 

22 

Bermuda 

fair 

26 

Cologne 

shower 

23 

Qforalta- 

shower 

21 

Amsterdam 

idn 

17 

Bogota 

fair 

20 

C Salaam 

found 

30 

Sasgow 

cloudy 

13 

Athens 

sun 

28 

Bombay 

ter 

32 

Dakar 

fair 

25 

Hamburg 

rata 

19 

Atlanta 

sun 

27 

Brussels 

ter 

21 

Deltas 

found 

30 

Hotel Id 

Mr 

15 

B.Airas 

fair 

19 

BudWMSt 

fair 

30 

Delhi 

sun 

41 

Hang Kong 

rata 

30 

Shorn 

shower 

11 

Chagen 

shower 

18 

Dubai 

sun 

41 

Honeteu 

Mr 

30 

Bangkok 

thund 

37 

Cairo 

sun 

37 

Dubfei 

shower 

11 

btankte 

ter 

27 

Sftvefona 

fair 

21 

Cape Town 

fair 

17 

Dubdvnft 

3U1 

30 

Jersey 

fair 

18 



Your bonus program. 
Lufthansa Miles & More. 


Lufthansa 

German Airlines 


KaacH 
Kuwait 
L Angeles 
Laa Palmas 
Lima 
Lisbon 
London 
Lux-bourg 
Lyon 
Madeira 


tab- 

fair 

shower 

cloudy 

Gfoudy 

shower 

shower 

fair 

ahawer 

fair 


36 Naples 

20 Nassau 
23 New Yak 
23 Mca 

18 Nicosia 
IS Oslo 

22 Rsb 

23 Perth 

21 Prague 


fair 

SOI 

shower 

cloudy 

dowdy 

shower 

tfund 

shower 

shower 

fair 

shower 

shower 

sun 

fair 

shower 

shower 


fair 

fab- 


id Rangoon 
23 Reykjavik 
30 Rto 

10 Rome 
34 S. Fratxj 
18 Seoi 

26 Singapore 
32 Stockholm 
26 Strasbourg 
is Sydney 
18 Tangier 
23 TelAvfv 
23 Tokyo 

29 Toronto 

30 Vokoww 
16 Venice 
22 Vienna 
29 Wareaw 

11 Washington 
22 WeSngton 
26 Wbrfpeg 
26 Zwfch 


fair 8 
Ur 25 
tab- 26 
shower 18 
tab- 21 
found 31 
shower 


fair 24 
ft* 22 


shower 

sun 

dnmr 

tab- 

fair 

thund 

tab 

tab 

cloudy 

s hower 

rain 

tab 


18 

32 

24 

14 

15 

25 

26 
27 
18 

16 
20 
23 


THE LEX COLUMN 


Dutch auction 


Does it make sense to privatise a 
telecoms operator in tandem with a 


FT-SE Index: 3115.6 (-3.6) 


post office? The Netherlands thinks so. 
KPN, whose preliminary prospectus 
was published yesterday, combines 
both teleplume ami postal services. 
Part of the thinking is that steady 
p ro fi t s from PTT Post will help PTT 
T eleco m in its more volatile market. 

PTT Post is in better shape than 
most European post offices, ft is not 
only profitable but fras been making- 

inmaris into foreign markets by offer- 
ing bulk remaning services - to the 
chagrin of Britain's Post Offi ce. Sven 
so, the combination with PTT Telecom 
is unfortunate. Telecommunications is 
viewed by mnKf- fatenwHrmai inves- 
tors as the more araftfag industry, so 
the association with PTT Post may 
drag down KPN’s share price. Equally, 
the uniqueness of a quoted postal com- 
pany would have been enhanced if it 
had been floated separately. 

That apart, the KPN flotation looks 
like being a success. The indicative 
price range of FI 4B to FL 52 seems con- 
servative on most of the yardsticks 
used to value miwnatinnui telecoms 
stocks. KPN’s prospective priceeam- 
ings ratio of 12 co m pares with 17 at 
recently priv at is e d Tele Danmark and 
13 at BT. Equally, the prospective 
yield of 4Jj is Mghw than Tele Dan- 
mark's 3.6, though lower than BTs 5.7. 

Moreover, KPN’s regulatory climate 
■ is fairly benign. Plans to license a sec- 
ond Dutch telecoms operator are mak- 
ing only slow progress. Meanwhile. 
PTT Telecom’s tariffs are allowed to 
rise in linn with inflation gp, by con- 
trast, not only faces an army of com- 
petitors but is required to cut its 
prices by the inflation rate mititis 7.5 
percentage points. 


vimtoroH 


Share price retafive to the: 
FT-4sE-A BreweriM Index 
,125 1 — 



1992,. 
SourcacFTQosfoto 


Whitbread 


Having restructured Its capital in a 
way that would permit it to raise 
equity on the market, Whitbread has 
ironically ended up with virtually no 
gearing. Though yesterday's results 
were in Hna with expectations, the 2 
per cent foil in its share price may 
reflect the company's reticence about 
how it intends to use this balance 
sheet strength. Gapitfll spending will 
Increase by around £100m a year, 
allowing the group to capture continu- 
ing growth from its hotels and pub 
retailing businesses. But the extra out- 
lay will simply prevent Whitbread 
from piling up cash; it will not absorb 
its considerable borr owi ng capacity. 

The questions are thus whether and 
when the market wfll start to show 


sustained signs of impatience. There 
are grounds for suggesting Whitbread 
can afford to watt. The cash inflow 
from the sale of its regional brewing 
states will not dilute ftarning g this 
year. Growth elsewhere will continue 
to offset weakness in brewing. The 
decision not to buy Chef & Brewer 
shows an aversion to overpaying for 
acquisitions. With Sir Michael Angus 
and Mr Peter Jarvis at the helm, Whit- 
bread promises gamrihle and well-artic- 
ulated strategic decisions. 

Just the same there is a worrisome 
hint of drift. Whitbread says it wants 
to remain in brewing, which generates 
a lot of cash. But transfer pricing 
change will reduce the stated return 
on brewing and may make other parts 
of the business more attractive targets 
for investment. Strategic dithering 
will mate the comparison with Scot- 
tish & Newcastle doubly unflattering 
if the latter’s acquisition of Chef & 
Brewer turns out to be an unqualified 
success. 


to justify the frill price Portals’ share- 
holders would rightly demand. Integ- 
rating printing and papermaking 
would give De La Rue access to Par 
tals’ technology and a list of custom- 
ers broads' than its own. That could 
open opportunities for selling 

ery or other services. But sudh vertical 
in te gr a tion carries risks. If De La Rue 
took all of Portals’ paper production ft 
would lose the flexibility to pick and. 
choose its suppliers. If Portals was 
still selling to allcomers, customers 
might resent it being swallowed up. 

If De La Rue makes a full bid, these 
arguments will doubtless get a fun 
airing. If the logic is so persuasive, 
though, De La Rue will have to 
explain why it overlooked the syner- 
gies until now. The group has been 
looking for acquisitions and holding 
net cash since its rights issue in 199L 
This time last year Portals was trad, 
frig at little more than half yesterday's 
closing price. 


De La Rue/Portals 


Even before the recent nrn-up in 
Portals’ shares, De La Rue stood little 

chanra of winning the paper mater Ott 

the cheap. Portals enjoys a strong 
martet position in bank note paper, 
backed up by anti-fraud technology. 
With a good record of cash generation, 
an ungeared haiminp sheet and divi- 
dend cover of two times, there is no 
question of finanriai distress. While 
efforts at diversification have been at 
timAs puzzling, Portals' management 
has made a decent fist of steering the 
group through recession. 

The question is whether De La Rue’s 
industrial logic is compelling enough 


Barclays Bank 

Having ploughed headlong into the 
commercial property slump, Barclays 
is trying to manage its way out By 
issuing pr op er t y- linked bonds to inves- 
tors, the hank has created a useful 
hedge against its outstanding loans to 
property companies. If Barclays has 
done its sums right, pain caused by 
any worsening of the commercial 
propert y market will be of&et by the 
pleasure of repaying the bonds at less 
than foce value. 

But the £150m Barclays hopes to 
raise is only a drop in the ocean when 
set a gainst its £4bn outstanding prop- 
erty loans. Nor does yesterday's issue 
transfer crecBt risk off the bank's bal- 
ance sheet, so no additional capital is 
released. Were that its aim, Barclays 
might securitise some of its property 
assets or sell troubled loans in the 
secondary market Both techniques 
have been used extensively by US 
banks. But securitisation is more 
expensive to arrange than yesterday's 
index-linked bond, while the second- 
ary market price for troubled debt Is 
unattractive. 

With property loans down to around 
7 per cent of UK assets from 9 per cent 
at the peak, Barclays’ over-exposure to 
property certainly looks less acute. 
Commercial propert y bulls might even 
question the decision to reduce expo- 
sure going into the upturn. Still, fluid 
managers of that persuasion could 
always back their judgment by selling 
Barclays shares and buying its new 
bonds instead. 


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gas hixbines icaliiriS Rolis-Royce 

S-RQYCE SIGNS M 


AQRgEMENT WITH CONTI 


loyce has signed an agreement with Contin 
iplete maintenance of the carrier's RB211- 
| its fleet of Boeing 757s. The seven year con 
Continental receives the first of 


hitlines worldwide have selected the 

£ •: 2 




YCE AND EUROFIGHTER 


2000 prototype has made its first test flight, powered by 
;104E engines. Later versions of Eurofighter 2000 will, 
ngine, produced by the Eurojet consortium inj which 
partner. M iMk fifgHi |j 


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MATERIALS AND 
TECHNOLOGY 
T • O • D • A ■ Y 


BRITISH VITA PLC 


FINANCIAL TIMES 


COMPANIES & MARKETS 


■He SAYs ft eases tHe 
IN OF RUNNING 

THE oak fleet' 


©THE FINANCIAL TIMES LIMITED 1994 


Tuesday May 17 1994 



ETIVH.Y: 

021-7063388 

BnommtMUURMMBB 


IN BRIEF 


Spanish pick-up 
boosts Telefdnica 

Telefonica, the partly-privatised Spanish 
telecommunications group, showed a 16 per. rant 
increase in consolidated net profit in the first 
quarter to Ptal7^4bn $125.8to). The company 
said the results reflected a recovery in demand 
for telephone services as the Spanish economy 
began to pick up. Page 22 

Whftbmd rises 32% 

Whitbread, the UK brewing, retailing and leisure 
group, reported a 32.2 per cent increase in pre-tax - 
profits to £234m (S351m) in the year to February 
26 t hank s to a strong performance by its pub 
food, restaurant a n d leisure operations and lower 


Samfaz scales back research vmtura 

Sandoz and The Scripps Research. Institute of 
California have scaled back a joint research pact 
following complaints that the Swiss pharmaceuti- 
cals group would corner the output of a large 
publicly-financed US institute. Page 23 

JP Morgan profits from stake safe 

J. P. Morgan, is to take a profit of more than $20Qm 
from the sale of part of its stake in Columbia/ 
HCA, the US’s biggest private hospital group. 


Interest In P»ru maintained 

Interest from foreign portfolio Investors in Peruvian 
assets continues to be significant despite setbacks 
oyer the past few months. Page 24 

Portals shares Jump on offer talks 

Shares in Portals, the UK security and specialist 
paper maker, jumped 40p to 805p after De La 
Rue, the banknote printer, confirmed that the 
two companies were in talks which might lead 
to it making an offer. Page 2$ Lex, Page 20 

SB offers Tagamet rebates 

SnathKlinfl Beecham is attempting to defend 
its best-selling ulcer drug, Ta game t, from generic 
competition after it loses its US patent protection 
today by offering $20 rebates to some US patients 
buying the drug. Page 27 

Testing J apa nes e taste 



Hairy Ramsden’s, the quoted flahandchipe 
company, is attempting to bring fids British' dish 
to Japan. Page 28 . . 

Platinum restate hft by Investment drought 

Lack of capital for investment and maintenance 
is threatening to hit production of platinum group 
metals in the two biggest producing countries, 
South Africa and Russia. Page 30 


Comp a n ies In this issue 


Audax Properties 

Barclays 
BrierJey Invs 
British 3ns - 
British bwfhjst 
Bute Resources 
Burford . 

Cape 

Cheteffokl 

Cheering 

Cie- Gen. dea Eaux 

Compression Labs 

Dsfmter-Senz 

De La Rue 

Deutsche Aerospace 

Diploma 

EDS 

Eastman Kodak 
Enterprise Computer 
Enterprise 08 
Eurotunnel 
F&C EurcOrust 
Fenner 
Front Lira Art 
GVA 

Hartmenn-Sanders 
Huntingdon Inti 
HutchwOoa 
Iberdrola . 

JP Morgan 
KPN 
Kmart 
La Redouts 


27 
21 
2B 

as 

28 
27 
27 
27 
2B 

27 
22 
23 
22 
26 
22 

28 
21 
23 
27 
2B 
21 

27 

28 

27 

28 
27 
26 

27 
22 

28 
22 
21 
22 


Lasmo 26 

Lite Style Care 27 

Lufthansa . 2t 

ManWeb 14 

Mead 23 

Minorco 24 

NBC 23 

Nedoor 24 

Newman Tanks 27 

Newmarket Venture 27 

Orertftam & Koppel 22 

Philips 23 

Pinnutt-Prfntampa 22 

Ponds 28 

Quarto 27 

Ramadan's (Harr$ 28 

Sandoz 23 

SancMk 22 

Seafield 27 

Seat 22 

Seven-Eleven Japan 23 

Siemens 22 

BmhhKHne Beecham 27 

Sony Music 24 

Sprint 21 

St Modwen Properties - 27 
TR European Growth 27 

Tetettntea 22 

Toys RUe 23 

United Communication 24 

Volkswagen 22 

Wal-Mart 21 

Whitbread 22 

Zenith Bectronlcs 23 


Marks* Statistic* 


{•Annual reports son** 32-33 

Benchmark Gout bonds 25 

Bond futures and options 
Bond prices skS yMda 
COmmodWM prices 
DhUandi aonouocad, UK 
BS cwrancy rates 
GurabaDd prices 
Rasd Intmtf Wk» 

FT-A World Mess Bock F*8» 
FTGaBMhwstodK Back Pago 
FMSilA W! band sve ® 

FT-SE ActaW Indices 31 


Fardgrt aedange 33 

Gffls prices 25 

Utte equity options BackPagt 
London stare sanies 3*33 
London trad options Bade Page 
Managed funds sarvica 34-38 
Money markets 
New M bond Issues 
Recent Issues, IK 
Short-tern int rates 
US Interest rates 
World Swck Markets 


Chief price changes yesterday 


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529 


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Orasn 218J - 172 

tel «« - 

Cra UOW 427 - 13 

TOKYO (VenJ 


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trsmm 9-754 

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SndwU 719 + » 

Sor-fi ttatfesl 813 + S 

Sumacs* Sate 679 + 21 

Mb m „ 

HknIMon 880 - * 

YtosWoHteVI 1020 - 1* 
VMudBWtfkg 897 - 2* 


mob 

RwpsetWi 

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SB + 40 
IBB * V* 
337 + 12 


chores w 

Batata* 

BrebimiUb 

HritavMM 

Morreclrm 

SaaflsW 

warn 

Vftreaw 


174 - 
857 “ 

420 - 

86 - 
285 - 
12 » - 
233 - 

177 - 


10 

21 

12 

3 

15 

214 

11 

7 


Eurotunnel rights may seek £850m 


By Robert Pashm in London and 
Enriko Terazono hi Tokyo 

Eurotunnel’s forthcoming rights 
issue is likely to seek about 
£850m ($1.2bn), 20 per cent 
greater than expected by the 
market, dwarfing its four previ- 
ous equity-raising exercises. 

The disclosure of the sharp 

jnryrasA in tie ffliannd rirnmnl 

operator’s refinancing require- 
ments came as it faced continu- 
ing problems m raising £700m of 
new sailor bank loans. 

Yesterday's deadline for raising 
the loans was passed with Euro- 


tunnel £150m short, largely 
because Japanese banks have yet 
to contribute. 

Eurotunnel confirmed, mean- 
while, that it does not expect to 
pay a dividend until 3KB. 

It also published forecasts of 
revenues and operating costs. 
These show over the next decade 
it will only just he able to service 
its total debt - including loans 
from public sector hanks - total- 
ling almost £8bn, if the latest refi- 
nancing is concluded. 

Even as late as 2003, net reve- 
nue is anticipated at £L3tm, from 
which £376m of operating costs 


has to be deducted and more 
than £€Q0oi of estimated interest 
costs - leaving a margin of just 
2300m, from which, to repay prin- 
cipal on the debt and pay the 
promised dividend. Because of 
the shm margin of forecast reve- 
nues over debt costs, bankers 
said the company’s directors 
have been given little autonomy 
over financial decisions in the 
landing agreements. “We have 
the company where it hurts,” 
said a principal bank cre di tor. 

The rights issue «wnr* him 
place until bankers have pro- 
vided the new senior debt A 


banker said ' 1 remain h^pe flil 
that we will raise the money by 
the mid of the week.” 

Japanese bankers, who have 
collectively provided 23 per cent 
of the company’s commercial 
bank debt, said they had not 
made their final decisions on 
whether to provide new finance 
But one said: "We fed it’s a Euro- 
pean project and European banks 
should play a proper role.” 

European bankers said they 
continued to hope new loans 
would be provided by existing 
members of the 200-bank syndi- 
cate, who have provided £&8hn of 


finance to date. “We are not 
looking to raise the funds from 
outside banks, such as US 
banks,” said a principal creditor. 

Eurotunnel said it was continu- 
ing to assess how much debt and 
equity it needed to raise to pro- 
vide an “appropriate margin” 
over its “central case projection 
of funding needs”. Bankers 
this was a coded statement 
implying the Eurotunnel board 
had decided it needs to raise 
more equity than originally 
planned. “They feel they need 
more than £800m,” said one. 
Tokyo banks tire, Page 5 



Reedy far take-off: Jftrgen Weber expects to return to p rofit this year 



to move back 
into the black 


ByDavtd Wader ki Frankfurt 

Lufthansa is heading back 
towards profitability after three 
years of losses, according to the 
German ufrtine’s chief executive. 

MrJttrgen Weber said yester- 
day he hoped that the airline 
would make a profit for the cur- 
rent year which would enable it 
to pay its first dividend to ordi- 
nary shareholders since 1989. 

Be was speaking as the airline 
reported a sharp fall in losses far 
1993 and farther improvements 
in the first quarter of the current 
year. 

Reflecting the impact of exten- 
sive rationalisation, pre-tax 
losses for the group fell from 
DM310.1m (8185.6m) to 0M&33m 

last year on sales of DMlSJffbn, 
up from DM18. 61m. 

Id the first three months of 
this year, the Lufthansa parent 
company cut its losses from 
to DM82m. 

Mr Weber said he could make 
no forecast about the size of the 
-1994 payout - to be paid in 1995 
- until the second half of this 
year. More details are likely at 
foe airline's annual meeting on 
July 7 when the company wffl 
ask shar eholders* permission to 
raise its nominal share capital as 
a first step towards a rights 


Mr Klims Schlede, Lufthansa’s 
finance director, said the issue 
would raise at least DM1. 71m, 
assuming a 20 per cent discount 
from the current share price. The 
funds were urgently required to 
replenish toe group’s equity cap- 
ital, depleted after years of 
losses. 

The German government will 
not take up its entitlement to 
new shares thereby reducing its 
holding from 5L4 per cent to 
about 40 per cent 

Lufthansa achieved its earn- 
ings turaround last year against 
a backdrop of excess capacity, a 
sluggish world economy and con- 
tinuing price pressure fa the 
global airline industry. It said it 
had managed to decouple itself 
from the general trend by Imple- 
menting a restructuring pro- 
gramme, which led to a substan- 
tial reduction in staffing and 
costs. The airline has reduced 
costs by DML5ta i n the pasttw o 
years imd to trim a further 
DMSOOm costs by 1997. - 

Stripping out theimpact of 
one-off items, operating profits 
far 1998 amounted to DM4Q9m, 
swinging back from a loss of 
DHBCTm. 

fa the first quarter of 1994, 
gross traffic revenues rose 11-5 
pm- cent to DMSLShn for the par- 
ent company. 


The courtship ritual of EDS and Sprint 

Compatible partners at 
the multi-media ball 
T 


he revolution fa the 
world’s information and 
communications indus- 
tries is like a dance of giants, 
with corporate heavyweights try- 
ing a range of partners in the 
hope of finding the perfect 
match. Yesterday, two of the 
most iwperia^t US participants 
confir med that their nuptial prep- 
arations were well advanced. 

Electronic Data Systems, the 
Dallas-based computing services 
group, has become engaged to 
Sprint, the tpitwimc group which 
is America’s third largest 
long-distance carrier. 

Plenty of hurdles gtfn stand in 
the way of marriage - not least 
the fact that EDS is a subsidiary 
of General Motors, which plans 
to pave the way for the deal by 
divesting EDS in a tax-free 
spin-off to stockholders. 

But if the merger goes through, 
it wQl create an important new 
contender in the battle for global 
business as the industries of com- 
puting, communications and 

«ro tertair\mgnt merge — mriWftd 

by technology which allows all 
types of information to be trans- 
mitted in the same digital form. 

This will be biggest tie-up yet 
between a computing services 
company and a telecoms pro- 
vider, although AT&T’s takeover 
of computer hardware manufac- 
turer NCR in 1991 gave It control 
of NCR’s services organisation. 

It will also go a long way to 
solving big strategic questions 
looming for both Sprint and EDS. 

Sprint - which is baaed In Kan- 
sas City, Missouri and had 1998 
operating income of 8481m on 
revenues of $Uj4hn - is unique 
among US telecoms groups: its 
business strategy and regulatory 
controls on rivals mean that It is 
the only company with big inter- 
ests in all three sectors of the 
industry: long distance, wireless 
and local phone services. 

Same analysts think this type 
of nationally branded, integrated 
communications company is 
likely to emerge as one of the 
winners from the US multi-media 
revolution - provided it is suffi- 
ciently large and has a strong 
array of partners. 

Until now, Sprint has stood 
largely aloof from the rash to 
find multi-media partners, while 
its 9-10 per cent share of the 
long-distance market has put it 
far behind sector leaders AT&T 
(60 per cant) and MCI Communi- 
cations (30 per cent). 

St£Q, after a period fa which 
poor marketing meant decBiring 
market share fa long-distance, it 
is now growing strongly, thanks 
partly to its strong braid image 
~ promoted on television by act- 
ress Candice Bergen. Its ceflular 
ope ra tions are also booming and 
its local operations are among 
the most efficient fa the nation. 

EDS was founded in the early 
1960s by 1992 presidential candi- 
date Mr Ross Perot, who sold tt to 
GM in 1984. Capitalising on the 
comptai tt y of mforma- 


Barclays Bank hedges its 
UK property portfolio 


By Jotvi Qapper, 

Banking Editor 

Barclays is to hedge itself 
partially against further losses 
on its £A2bn ($&3bn) UK prop- 
erty loan portfolio by issuing 
eififtm of derivative debt securi- 
ties to offset the risk. 

The issue - the first attempt far 
a British bank to balance risks in 
this way - is intended to protect 
Barclays while it reduces its 

exposure to property. A further 

£10Qm securities may he Issued. 

Barclays, which made a pre-tax 
loss of £242m fa 1992 after allow- 
ing property loans to grow to 9 
per cent of the total, decided to 
hedge because it did not want to 
sell property loans rapidly at a 
heavy discount *Bie capital sum 
from the Property Index Certifi- 


cates, which will he sold to insti- 
tutional investors in minimum 
tranches of £250,000, wQl only be 
partially repaid if property values 
foil, slowing ft to affret losses cm 
its own book. 

Mr Alan Brown, Barclays 1 
director of group credit policy, 
said it was “not trying to rail the 
marker by betting an which way 
property prices would move, but 
wanted to reduce potential losses 
if prices fell This would allow 
the bank to reduce property 
loans from the current 6^ per 
cent of total lending over the 
next two to five years. Without a 
hedge, ft would face pressure to 
refuse new property lrkns, or sell 
old ernes. 

Barclays is marketing the cer- 
tificates, indexed to the £40bn 
Investment Property Databank 


(XPDX as a chance for Investors to 
gain exposure to recovery fa the 
UK property market without hav- 
ing to buy and manage proper- 
ties. If the TPD index rises, a pre- 
mttnn will be paid along with the 
capital on the redemption date 
The quarterly income from the 
certificates is fixed at 7.8 per cent 
this year, but will than vary with 
the index. Many investors want 
to increase holdings of commer- 
cial p roperty hot have until now 
had to hoy and manage proper- 
ties, or Invest in unit trusts. 

Mr lgm«B Woodlock, manag in g 
director of BZW investment Manr 
agement, which devised the cer- 
tificates, said Barclays’ portfolio 
offered an unusual chance to 
devise a security which, tracked 
the pro p er ty market 
Lex, Page 20 


rno 

Worldwide 
1993 revenue: $8.6bn 
Net income: S724m 
Staff: 70,000 
Operates in 30 
countries 
Europe 

1993 revenue: S1.4bn 
Staff: 11,000 
Operates in 19 
countries 

tinn technology, it « pprfflHs«if 
fa “outsourcing” (running other 
companies’ computer and com- 
munications services) and 
systems integration, the design 
imd c ons t ru ction of information, 
networks. It has become the 
world’s largest computing soft- 
ware and services company, with 
1983 Bantings of 8724m on reve- 
nues of gsifibn, and has grown 
rapidly with a series of presti- 
gious contracts, inciniiing a £Um 
deal to-run the UK income tax 
authorities’ computer systems. 

GM still accounts for 39 per 
cent of its revenues, but that is 
down from 75 per cent fa the 
mid-1980s. Under the proposed 
spin-aft, EDS would continue to 
provide the mnw services to GM 
under a new 10-year agreement. 

EDS, however, is also keen to 
play a role in the nascent world 
of multi-media. Late last year, for 
example, it announced a joint 
venture with France Telecom and 
US West, the regional Bell opera- 
tor, to provide Interactive finan- 
cial transaction services to the 
home and business markets. 

But to compete effectively it 
requires a partner or partners; 


“The scale of the investment 
required for these areas is mind- 
bo g glin g ” one industry analyst 
said yesterday. Furthermore, to 
reach the individual consumer it 
helps to have an ally with a 
strong brand image and close 
commercial links to the home, 
which can be provided by Sprint 
At tiie same tim» EDS can give 
Sprint greater access to its cus- 
tomer base, which is concen- 
trated in Fortune 600 interna- 
tional companies, whereas 
Sprint’s long-distance strength 
bac been in targeting groan to 
mwiiinn^iiwi US companies. 

wns expertise sho uld also help 
Sprint provide both large and 
small customers with more 
sophisticated services, and could 
play an important integrating 
role if Sprint goes ahead with 
rumoured plans to set iq) a third 
national wireless network, to 
compete alongside ones from 
AT&T/McCaw and MO/NexteL 
A merger should also save 
costs. EDS, which runs one of the 
world’s largest private communi- 
cations networks, could cut its 
line leasing costs by using 
Sprint’s network, the first all-dig- 
ital fibre optic system fa the US. 
Sprint, in turn, could reduce 
information technology costs. 

But further waltzes around the 
telecoms dancefloor may have to 

aWHlt the ramg n Tnintrtinin of this 

marriage, which still seems 
months away, given the complex- 
ity ofEDS’s relationship with GM 
and the need to clear numerous 
regulatory hurdles. And in that 
time, the partners could cool on 
each other, as has happened sev- 
eral times over the past few 
months ahpafl of much vaunted 
multi-media weddings. 

Martin Dickson and 
Alan Cane 


Wal-Mart 
grows at 
Kmart’ s 
expense 

By Richard Tomkins In New Yoric 


Contrasting results from 
Wal-Mart and Kmart, the two 
biggest US discount store 
groups, highlighted how Wal- 
Mart Is continuing to grow at 
Knuorfs expense. 

Wal-Mart, now the world’s big- 
gest retailer, reported an 11 per 
cent growth in net income to 
$498J£m for tiie first quarter to 
April, while the ailing Kmart 
barely scraped into profit over 
the same period with net income 
of 818m. The result was a farther 
deterioration from last year's 
first quarter when it reported 
net income of 858m before 
extraordinary Hems. Sales rose 7 
per cent to 87.8tm but earnings 
per share fell from 12 cents 
before extraordinary items to 4 
cents. 

Kmart has suffered five years 
of stagnant earnings because of 
its failure to compete effectively 
with Wal-Mart One of its weak- 
nesses has beem poor inventory 
control, leading to excess stocks 
that customers do not want to 
buy. 

Mr Joseph Antonini, chairman 
and chief executive, said the 
group’s niche retailing offshoots 
had performed well, but sales fa 
the main discount store division 
had been below expectations, 
and the company had had to 
make big favraxtory reductions. 

fa contrast, Wal-Mart saw a 27 
per cent surge fa sales to $17.7bn 
- a figure boosted by the recent 
purchase of the Pace member- 
ship warehouse stores from 
Kmart and Woolworth’s 122 
Woolco superstores fa Canada. 

However, the cost of making 
the acquisitions and converting 
the stores had its penalty at the 
bottom line. Earnings per share 
grew 10 per cent from 20 cents to 
22 cents, marking a sharp down- 
turn from the rate of 25 per cent 
a year seen over the last five 
years. 

Wal-Marfs shares suffered a 
downward re-rating last year 
amid fears that the company had 
become too big to sustain the 
same high rates of earnings 
growth. Wal-Mart countered that 
its acquisitions would provide a 
platform for continued rapid 
growth. 

Yesterday Mr David Glass, 
president and chief executive, 
said tiie conversion of the former 
Pace clubs into Sam’s Clubs - 
Wal-Marfs membership ware- 
house operation - was substan- 
tially complete, and the conver- 
sion of the Woolco stores into 
Wal-Mart stores should be 
achieved by the year-end. 


rofirorJeoty. 


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CQRIT 1 MeracQL 

^ • LiMrreD 


£21,000,000 

Management Buy-Out 
of 

Corin Medical Limited 


Equity led, structured and arranged by 

NatWest Ventures 


Advisers to Institutions 

Osborne Clarke Touche Ross 

Corporate Finance 


Advisers to Company 

Cameron Markby Hewitt Grant Thornton 


X Vi VYXsi vrvrtiKi^ 


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22 



FINANCIAL TIMES TUESDAY MAY 17 1994 

INTERNATIONAL COMPANIES AWP FINANCE 




Spanish utilities improve 
their quarterly figures 


By David White tn Madrid 

Telefonica, the partly- 
privatised telecommunications 
group which is the most fre- 
quently traded stock on Span- 
ish markets, showed a 15 per 
cent increase in consolidated 
net profit in the first quarter to 
Ptal7.34im (5125.8m), compared 
with Ptal5.Q6bn in the same 
period last year. 

Parent company earnings 
before tax were 7 per cent up 
at Ptal958bn, with the net fig- 
ure rising 9.8 per cent to 
Ptal5.47bn, as turnover 
increased by 6.8 per cent to 
Pta312.S4bn. The company said 
the results reflected a recovery 
in demand tor telephone ser- 
vices as the Spanish economy 
began to pick up. 


By Christopher Brown-Humes 
in Stockholm 

Sandvik, the Swedish cement- 
ed carbide and speciality steel 
group, said yesterday it expec- 
ted a "s ignifican t* improve- 
ment in its 1994 result after 
lifting first-quarter profits by 
29 per cent 

Like other Swedish export- 
ers, the group is benefiting 
from a weak currency and cost- 
cutting, assisted by recovering 
demand in many important 


Whitbread up 
32% at £234m 

By Paul Taylor in London 

Whitbread, the UK brewing, 
retailing and leisure group 
reported a 32.2 per cent 
increase in pre-tax profits to 
£234hi ($351m) in the year to 
February 26 from £177m the 
previous year, when profits 
were depressed by non-operat- 
ing losses. 

Profit before tax and non- 
operating items increased 5.8 
per cent to £23L7m in spite of 
an -additional £15m charge for 
pensions. 

An increased final dividend 
of 13. 8p against 13p last time 
makes a total of l&8p against 
17.75p. 

Lex, Page 20 


Financial costs in the quar- 
ter held steady at Pta544bn. 
and the company forecast a 
downward trend, reflecting 
declining interest rates. 

Iberdrola, the leading pri- 
vate-sector electrical utility, 
ranking number two in recent 
stock market activity, reported 
a 35 per cent rise in pre-tax 
profit for the quarter, to 
Pta34J25bm The result reflected 
a 12 per cent Increase in the 
company's operating margin 
together with a reduction of 
almost 19 per cent in financial 
charges. The company said it 
had managed to cut operating 
costs by 4 per cent 

Turnover was 2.6 pm- cent up 
at Pta2l2.04bn. Provisions were 
more than doubled in the quar- 
ter. 


markets and the improved 
business climate in Europe. 

Profits after financial items 
for the quarter rose to 
SKr626m (580.8m) from 
SKr486m as sales expanded to 
SKr5.79bn from SKr&3bn. The 
group said six percentage 
points of the 10 per cent sales 
rise was due to price and vol- 
ume increases, and the rest to 
currency and structural 
changes. Operating profit was 
46 per cent higher at SKr566m. 

Improved demand was 


By Michael Undemann in Bonn 

Restructuring costs continued 
to dent results at Orenstein & 
Koppel, forcing the construc- 
tion and mining equipment 
maker to a loss of DM65m 
(539.1m) in 1993. 

However, this is an improve- 
ment on the previous 12 
months when the group 
returned a loss of DMUBm. 

The company reported an 
operating loss of DM3m and 
has set aside DM52m to finance 
redundancies and the re-siting 
of activities in Dortmund. 

Turnover in the construction 
equipment division, which 
accounts for almost 60 per cent 


Another of Spam's top elec- 
trical companies, Sevfllana de 
Electrfddad, reported a 17 per 
cent increase in first-quarter 
after-tax profit to Pta 3£4bn, 
on sales 15 per cent higher at 
Pta64£4bn. It also said it had 
been able to strengthen provi- 
sions by Pta2.33bn due to 
reductions in operating and 
flnarwriwl costs. 

The company faces an 
increasing challenge through 
deregulation of the mobile tele- 
phone market, which is expec- 
ted to be opened up to foreign 
operators later this year, and 
also through the liberalisation 
of cable television. 

It currently has a monopoly 
in both sectors, which are its 
fastest-growing activities in 
Spain. 


shown in a 19 per cent rise in 
orders to SKr6.73bn. 

Mr Per-Olof Eriksson, pres- 
enting his last report as group 
p resident, sa i d: "Order rntairo 
is increasing in most European 
countries. The already strong 
demand in the US and Canada 

continues unabated, as well as 
in South America ^ south- 
east Asia." The two weak mar- 
kets were Japan and Germany. 

Mr Eriksson predicted that 
demand would continue to 
increase. 


of total turnover, fell 17 per 
cent resulting in a "very had 
operating result” which could 
not be offset by improved 
results in the mining and esca- 
lator divisions. 

The company expects "a 
modest profit” this year as it 
begins to benefit from a three- 
year restructuring programme 
which runs until 1995. O&K, 
which is 75 per cent owned by 
Krupp-Hoesch, the steelmaker, 
recently said it would raise 
DMl44m with a rights issue. 

Escalator sales rose 53 per 
cent worldwide to DM382m, 
helped by the UK arm which 
won a D M1 25m contract from 
the London Underground. 


Dasa and 
Siemens in 
talks on 
co-operation 

By David Walter bi Frankfurt 

Deutsche Aerospace, the 
Daimler-Benz aerospace sub- 
sidiary, and the Siemens elec- 
trical and electronics group 
confirmed yesterday that they 
are holding talks about co- 
operating in the defence tech- 
nology business. 

The two German companies 
said the discussions were at an 
extremely early stage and that 
further details were unlikely 
to emerge before the s umm er. 

However, they said that the 
discussions would cover a 
range of structures for strate- 
gic and operational co-opera- 
tion, TnriTidtng fly possibility 
of setting up a joint venture in 
the area. 

The talks take place against 
a backdrop of declining sates 
and orders for the German 
defence industry as the gov- 
ernment cuts expenditure. 
However, the government is 
keen to ensure that Germany 
maiwtaing its manufacturing 
expertise in core defence 
sectors. 

The companies have been 
forced to cut jobs in their 
defence technology businesses 
and co-operation may lead to 
more efficient use of 
capacity, the two groups said 
yesterday. 

VW shake-up 
in Italy 

By Kevin Done, 

Motor Industry Correspondent 

Volkswagen, the leading 
European carmaker, is restruc- 
turing its Importer/dlstribntor 
operations in Italy, Europe’s 
second largest car market 

Autogerma, its wholly- 
owned Italian subsidiary, is 
taking control of the Italian 
distribution operations for all 
of the group’s four marques 
with the takeover of Seat 
Italia, which distributes Seat’s 
Spanish-produced cars in Italy. 

Autogerma is currently 
responsible for VW, Audi and 
Skoda distribution in Italy. 

VW is gradually rationalis- 
ing its group importer/distrib- 
utor operations in afi of the 
main west European markets. 


Sandvik sees continued growth 


Restructuring takes toll 
on Orenstein & Koppel 


KPN sticks to the letter on sell-off 

Dutch take a novel approach to their telecoms privatisation 


T elecommunications pri- 
vatisations are now 
commonplace. The sale 
of KPN of the Netherlands, 
la u n c h e d yesterday, is the fifth 
European offering in the past 
year alone, with up to a dozen 
more in the pipeline. Asia-Pa- 
cific telecoms Is at a niwflar 
stage, with a few sales done 
and plenty to come. 

However, EPN is the first 
large telecoms privatisation to 
include a state postal service. 
Elsewhere, posts and telecom- 
munications have been split in 
the run-up to privatisation, 
with posts remaining in the 
public sector. 

The inclusion of PIT Post in 
the KPN sale should cause 
would-be investors no undue 
concern. The Dutch post nfflnp 
Is one of the few postal organi- 
sations in the world tfo>* own 

afford to feel relatively san- 
guine about the shift away 
fr frm letters in favour of fac- 
simile transmissions and the 
new world of mobile <vwnTnnw<. 
cations 

PIT Post Is one of Europe’s 
few profitable postal 

Operations, fflnfa ihnttng twariy 

a third of KPtTs turnover and 
15 per cent of its operating 
profit. It is marketing itself 
aggressively abroad, and is a 
pioneer in advanced postal 
technologies. Its prime aims 
are to attract greater flows of 
international business post 
through tiie Netherlands and 


to expand in providing direct- 
marketing and mailing ser- 
vices to corporate clients. 

Analysts in. the Netherlands 
recognise the profitability of 
the country's postal operations 
and are positive about their 
inclusion in the privatisation. 
“Postal activities produce sta- 
bility in KPN*s earnings perfor- 
mance in a telecoms environ- 
ment which certainly has 

potential but could on the 
other hand be regarded as ‘hos- 
tile';” stockbrokers CLN Oyens 
& Van Eeghen said recently. 

Postal services apart, the 
EPN privatisation follows a 
well-trodden path. An initial 30 
per cent stake will be floated 
early next month. The govern- 
ment announced yesterday 
that up to l38JL5m shares will 
be sold at a price between Ft 46 

and FI 52 wHaing j rniiri. 

mum of Fl&35bn ($&39bn) for 
tiie state and valuing KPN as a 
whole at more than Fll8bn. 

A farther sale, taking the 
government's stake to under 50 
per «»n t, is likely within three 
years, but at least 30 per emit 
will remain in state hands for 
at least 10 yean. 

The Dutch flotation is taking 
place for broadly the same rea- 
sons as those applying across 
the European Union. The gov- 
ernment wants the money, and 
the state telecoms company 
wants greater commercial free- 
dom. Competition is in tensify , 
ing, particularly in tiie corpo- 


rate sector, and privately- 
owned wwnpwilas are consid- 
ered to be better placed to 
endure the onslaught 
Althoug h sm all in interna- 
tional terms, KPN’s telecom- 
munications division is well- 
placed to succeed in the ElTs 
rapidly liberalising telecoms 
market With fewer than 50 
employees per 1Q,QQQ lines, 
KPN is among the EtPa most 
productive state telecoms com- 
panies. Its network is towards 
the top of the EU league o n al l 
measures except the penetra- 
tion of reUniar hmMIb services. 

On tiie international scene, it 
is already geared up to attack 
the corporate market through 
its joint venture Unisource - a 
partnership of KPN and the 
state operators of Sweden and 
Switzerland, with the strong 
prospect of Telefonica, the 
Spanish operator, joining soon. 

E arlier this year Uni- 
source scored a coup 
whan, in alliance with 
the US giant AT&T, it won a 
contract to provide a private 
telecoms network for 30 lead- 
ing European multinationals - 
the largest "outsourcing" con- 
tract of its kind in the EU. Its 
future relationship with AT&T 
is uncertain, but there is the 
possibility of a more stable alli- 
ance. 

Given such strengths, most 
analysts believe KPN will 
prove a fairly easy sen at the 


offer price. However, the days 
are passing when telecoms 
stocks could be guaranteed to 
float high above their respec- 
tive stock exchanges. A glance 
at BT is a cautionary tale. 

For the past six mouths, 
BT’s shares have fallen 
steadily against thrFT-SE All- 
Share average, and are down 
by nearly 20 per cent on their 
relative value a year ago. A 
contributory factor has been 
the rapid growth of competi- 
tion In the UK market. BT 
commands nearly 90 per cent, 
but the perception that It win 
have to relinquish a larger 
slice of it has spread gloom 
across the investing commu- 
nity. 

KPN could find itself in the 
same boat The Dutch govern- 
ment has indicated its willing- 
ness to license a second 
operator with its own 
infrastructure - likely to be 
formed from the country’s 
cable Industry and its state 
electricity aim rail operators. 

The new company will not 
be able to engage in competi- 
tion with KPN for public voice 
traffic until 1998 - the EU lib- 
eralisation deadline. But if it 
establishes Itself rapidly. It 
could make inroads into KPNs 
data and private corporate net- 
work business. 

Andrew Adonis and 
Ronald van de Krol 


La Redoute holders lose 
appeal over Pinault bid 


Profits advance of 10.3% 
for Generate des Eaux 


By Alice Rawsthom In Paris 

Minority shareholders in La 
Redoute, the French mail order 
group, yesterday suffered a set- 
back when an appeal court 
ruled against them in their 
attempt to oppose the compa- 
ny's takeover by the Pinault- 
printemps, retail group. 

The shareholders, repre- 
sented by ADAM, a French 
minority investors’ pressure 
group, have been lobbying 
against the fori, unveiled this 
year by Pinault-Printamps. 

Pinault, which is one of 
France's largest retail con- 
cerns, has owned a controlling 
holding in La Redoute with 54 
per cent of the equity and 68 
per cent of the voting rights. 


since its acquisition two years 
ago of the Au Printemps 
department store rimm 

However, Pinault, which 
came under fire from minority 
investors over the terms of the 
Au Printemps deal, recently 
revealed plans to buy the 
remaining shares. Last month 
It received a "warning” from 
the stock market authorities 
over the valuation of its offer, 
which was otherwise consid- 
ered to be fair. 

La Redoute’s minority inves- 
tors pressed ahead with their 
lobby a gainst the bid, rlalming- 
that the terms were unfair 
only to be told yesterday by 
the appeal court judge that 
there were no grounds on 
which to pursue a case. 


By Aic* Rawsthom 

Compagnie Gtofirale des Eaux, 
the French industrial group, 
yesterday said it was on coarse 
for continued profits growth 
this year after achieving a 10-3 
per cent increase in net profits 
to FFi&2hn (5550m) last year 
from FFriLSbn in the previous 
year. 

This was in spite of contin- 
ued losses from its cable televi- 
sion and property interests. 

The group, which has signifi- 
cant media interests as well as 
its core construction and util- 
ity activities, surpassed ana- 
lysts’ expectations. 

G&terale des Eaux yesterday 
said it was "certain” to raise 
its profits a gain this. year, but 


added that it oould not give 
precise Indications as to the 
likely figure. 

However, the group did spec- 
ify that it expected to see its 
turnover rise modestly to 
between FFrl50bn and 
FFrl55bn in 1994, from 
FFrl47.6hn in 1993. 

Such an increase would 
repeat last year's rate of 2^ per 
cent sales growth from 
FFr143 9bn In 1992. 

The group said it expected a 
"slight reduction” in the level 
of activity of its construction 
interests, but stressed that tiie 
overall outlook for these busi- 
nesses was showing signs of 
improvement It also forecast 
an hnpmv pniwit from its prop- 
erty management activities. 


v 


.S . 







lip^ 


Maintaining a growth-oriented strategy 


We successfully used the difficult 1993 fiscal year 
to consolidate our position, modify our structures and 
set new objectives.' We plan to continue growing in the 
to us strategically important markets of North America 
and Asia and to increase our earning power. 

High levels of both capital and R & D spending will 
help us attain the technological leadership we seek. 
Improved production facilities and processes are serv- 
ing to strengthen the competitiveness of our Health 
Care, Agrochemicals. Industrial Products, ImagingTech- 
nologies. Polymers and Organic Products business 
segments. 

We are confident of being able to use our own 
strength to expand our position in chemicals and 
health care in 1994. 


FINANCIAL HIGHLIGHTS 


1994 First quarter Group sales up 6 per cent to DM 1 1 MSon. 
income before income taxes up 18 per cent to DM 755 milon. 

1993 Group sales DM 41,007 million, of which 81 .0 per cent 
outside Ge rmany. 

Group capital expenditures DM 3,156 mllion. research and 
development expenses DM 3 . 1 57 mflfi on. 

Group net income (after minority interests) DM 1 327 million. 

Dividend DM ii per share of DM 50 par value. Payout of 
DM 738 million on capital stock of DM 3,354 million to some 
295.000 stockholders. 


We wilt be glad to supply further information on request 
Please write to Bayer AG. Public Relations Department (Kl), 
D-51368 Leverkusen. 

Bayer Aktiengeseltschaft, Leverkusen 





199 


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FINANCIAL TIMES TUESDAY MAY 17 1994 


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INTERNATIONAL COMPANIES AND FINANCE 


m 

Sandoz scales back research pact 


By Ian Rodger hi Zurich 

Sandoz and The Scripps 
Research Institute of California 
have scaled back an ambitious 
joint research pact following 
complaints that the Swiss 
pharmaceuticals group would 
comer the output of a large 
publicly-financed US h wUtnte 
The original agreement, 
announced In December 1992, 
gave Sandoz first rights to all 
Scripps medical discoveries in 
return for $30Gm in cemtribn* 
tions to the institute over a 
10-year period. 

The revised agreement, 
announced yesterday, gives 
Sandoz first rights to only 47 
per cent of Scripps’s discov- 
eries In return for $l00m in 
contributions over five years 
starting in 1397, with an option 

Philips arm in 
multimedia 
joint venture 

By Louise Kehoe 
to San Frandsco 

Philips Consumer Electronics, : 
a division of the Dutch elec- , 
tromes group. Zenith Electron- 1 
ics, the US television and elec- 
tronics manufacturer and 
Compression Labs, a specialist 
in video conferencing technol- 
ogy, are combining thetr 
efforts to develop and market 
technology for interactive tete- 
vision services. 

Under ttys agreement, they 
will jointly develop and market 
TV set-top-boxes for both digi- 
tal and analogue networks. 

These devices will enable 
cable television and telecom- 
munications network operators 
to deliver a wide range of pro- 
gramming options, such as vid- 
eo-on-demand, video games, 
hmfMnihn pp fr ig and other video 
services, with two-way interac- 
tive communications. 

The companies plan to com- 
bine digital and analng np tele- 
vision standards to create set- 
top-boxes capable of receiving 
today's analogue signals as 
well as future digital transmis- 
sions. 

The agreement comes as sev- 
eral network providers are 
selecting the equipment they 
wifi use to provide interactive 
entertahrment and information 
services to the home. . 

The company said its global 
im ginggring , marketing, manu- 
facturing and support infra- 
structures, with those of 
Zmrith and Compression Labs, 
made a group that understood 
what consumers needed. 


far a farther five years. 

Sandoz has also agreed to 
give up Its casting vote on a 
Scripps committee that «*»«*« 
research projects and reduced 
its planned representation on 
the Scripps board from two to 
one. 

The original deal drew 
strong criticism from the US 
National Institutes of Health 
(NIH), which provides 570m of 
Scripps’s $i2fon annual 
research budget 

_Ms Beraadine Healy, NIH 
director, told a congressional 
subcommittee on regulation, 
business opportunities and 
technology last June that the 
agreement “would give Sandoz 
excessive control over 
Scripps." 

It was, she said, “an aberra- 
tion, and in my view, a danger- 


ous exception to an otherwise 
successful record of co-opera- 
tion between industry and 
MH-fanded institutions.” 

Mr Ron Wyden, the subcom- 
mittee chairman, said the deal 
amounted to “a corporate take- 
over of one of our biomedical 
research crown jewels". 

The revised agreement 
explicitly acknowledges 
Scripps’s independence. Mr Urs 
Bdrlocher, chief executive of 
Sandoz Pharma, said yesterday 
the group’s lawyers had per- 
haps been too rigorous in draft- 
ing the original agreement. 

“It is in our interest that 
Scripps be independent," he 
added. 

Mr BMocher noted that pub- 
licly-funded research bodies 
were supposed to help small 
businesses get access to new 


technologies, but it looked In 
this case as if the busi- 
nesses were being squeezed 
out 

He said Sandoz would still 
have the right to look at afl of 
Scripps’s discoveries and could 
select any 47 per cent it 
wanted. As originally p lan n e d , 
Sandoz would send several 
researchers to work at Scripps. 
“There have never been bad 
feelings cm either side, and we 
have been able to maintain the 
spirit of the agreement," he 
said. 

He was pleased the US 
authorities had accepted the 
principle that technology 
developed at a publicly-fi- 
nanced research institute amid 
be transferred to any Inter- 
ested company, inctadfag one 
that was foreign controlled. 


wi if»i icjoca gch eaAigoo ui unw luoi woo wvaamwuwu 

NBC forms partnership with 
Mexican broadcast group 

Rif PAi/nvmri QwwM# ImIviHm * niiO i ftuawf Mnfr (W»m cuiaii Annwou mnxrc onri mini i 


By Raymond Snodcfr 
I In London and Ted Bardtocke 
In Maided 

NBC, the US network broad- 
caster, has agreed a partner- 
ship with Television Azteca, 
the recently privatised Mexi- 
can broadcaster. 

The US grotto also has an 
option to take a stake of 
between 10 per cent and 20 per 
cent in the Mexican company. 

The deal » the latest exam- 
ple of NBC’s globalisation 
strategy - taking stakes or 
forming alliances around the 
world rather than simply sell- 
ing individual programmes. 

Last year, NBC acquired 
Super Channel, the European 
satellite channel, and last 
month announced it would be 
transmitting by satellite into 
Asia. 

Initially, the deal with Trie- 
vision Azteca will involve NBC 


hrfptng with everything from 
on-air promotions, programme 
sched uling ^nit technology, to 
advertising sales and station 

wa»MgpfW>nf 

Television Azteca, with its 
two channels, is challenging 
the four-channel /inmtwaww* of 
Televisa, .Sooth America’s lead- 
ing broadcasting group. 

Mr Tom Rogers, head of NBC 
Cable and an executive 
vice-president of NBC, said yes- 
terday that the deal fitted 
NBC’s globalisation strategy, 
and he saw potential for 
growth in the Mexican market 

Mr Richard Salmas, whose 
family owns the Elektra 
Croup, a consumer electronics 
consortium, bought the two 
networks last July. Channel 7. 
available in Mexico City, is 
largely made up of US pro- 
grammes and aimed at the 
young, nhawnfti 13, a national 
channel, specialises in comedy, 


Reshuffle at Kodak 


Kastman Knrialf of the US is 

combining its corporate and 
Kodak imag in g - Group staffo, 
Rente r reports from Rochester. 

The group said this was one 
step in creating a corporate ' 
structure “consistent with the 
corporate strategy” unveiled 
two weeks ago by chief execu- 
tive Mr George F&her. - - - 

Under the new structure, Mr 
Leo Thomas wifi remain presi- 
dent of Kodak imag in g Group 
with Mr Richard Bourns join- 
ing him in the general manage- 


ment of imag in g as executive 
vice president of the group. 

Mr Bourns is now a senior 
vice president with responsibil- 
ity for Kodak manufacturing 
operations. 

Both wOl have fall respansi- 
bility across the group, Knflak 
said. • 

Mr Wilbur J. Prezzano, who 
remains president of Kodak's 
Health Group, is spearheading 
the company's effort to divest 
its non-imaging health busi- 
nesses, the company noted. 


Philip Morris in Japan retail link 


By Emfto Terazono to Tokyo 

Seven-Eleven Japan, the 
leading Japanese convenience 
store chain, will join forces 
with Philip Morris, the US 
foods and tobacco group, to 
develop processed foods and 
canned beer for the Japanese 
and A m e rican markets. 

The move will provide the 
retailing group with low-priced 
beer and food products and 
give Philip Morris increased 


access to the Japanese market 
and US convenience stares. 

Japanese retailers are trying 
to lower product costs by tying 
up with manufacturers and by- 
passing wholesalers. 

Seven-Eleven and Idler 
Brewing. Philip Morris's brew- 
ing subsidiary, wifi launch a 
low-priced beer in Japan in 
June. The product wOl be sold 
later in the US. The price of 
the beer will be 20 per cant 
lower than the retail price of 


the canned beers produced by 
the four leading Japanese 
breweries. 

The retailer, which owns 
Southland, the Seven-Eleven 
operator in the US, is also 
teaming with Kraft General 
Foods, a Philip Morris foods 
subsidiary. The two c ompan ie s 
have been test marketing chil- 
led sandwiches in Texas, and 
Seven-Eleven plans to sell 
Kraft products, such as cheese 
and coffee, in Japan. 


soap operas, news and sport 

The value of Azteca, partly 
influenced by the NBC deal, is 
estimated to have risen from 
about $650m last year to closer 
to *L2bn_ 

Azteca will be able to offer 
programmes from NBC and 
fTawni de Notidas, the compa- 
ny’s 24-hour -a-day Spanish-lan- 
guage news service, and 
CNBC, the US company's spe- 
cialty cable service, as well as 
locally produced programmes. 

NBC is making more effort 
to expand internationally than 
the main “three esta blished US 
networks - partly because it 
sees the network business In 
the US as an increasingly 
m a ture business. 

Mr Satina* said yesterday*. 
“NBC’s name. Image, manage- 
ment expertise and relation- 
ships will provide a unique 
opportunity to enhance the 
value of Television Azteca.” 


Toys R Us 
restricted by 
overseas 
markets 


By f5chard Tomkins 
! In New York 

Toys R Us, the US toy store 
chain, reported a modest 6 per 
cent rise in profits fa the first 
quarter to April. The group 
said it had been held back by 
poor demand fa overseas mar- 
kets and the cost of Interna- 
tional expansion. 

Group sales Increased by 14 
per cent to 91.461 m, helped by 
the company’s rapid wpmdnn 
in the US and overseas. 

However, with costs sharply 
higher because of Hm? expendi- 
ture of opening stores, net 
income rose by just SSLim to 
*37.6. 

Earnings per share, helped 
by the 01 bn share repu rc h ase 
programme announced in Jan- 
uary, rose to 13 emits from 12 
ce n ts. 

Toys R Us said its interna- 
tional operations had lost 
money in the first quarter, but 
it expected them to produce 
operating income of J15Qm for 
the foil year, compared with 
0103m last year. 

One factor hitting overseas 
sales was continuing weakness 
fa the European and Japa ne se 
economies. 

The company also suffered 
from poor demand for video 
games. It said this was 
because there were no “hot” 
titles around and because 
many people were wafting for 

the next generation of 82-bit 
machines to appear. 

Overall, faknuHonaT stores 
that bad been open & year or 
more suffered a downturn fa 
sales. 

However, comparable store 
sales In the US rose by 64 per 
cent, with some strong 
increases in sales of boric toy 

merchandise. 


JP Morgan sees $200m 
profit from sale of stake 


By Richard Waters 
to New York 

J. P. Morgan is to take a profit 
of more than 9200m from the 
sale of part of its stake In 
Columbla/HCA, the US's big- 
gest private hospital group. 

Morgan said it intended to 
sell 6m shares in the hos pital 
group, out of a total of 2Llm 
that it owns. At yesterday’s 
midday price of $37% - down 
an Friday’s dose - the sale 
would raise 9225m, enabling 
the bank to report a prefax 
profit of some $21 Om. 

The 1939 buy-out of Nash- 


ville-based HC A then an inde- 
pendent company, has proved 
toe most successful merchant 
banking deal undertaken by 
the US bank. Morgan paid 
about *50m for a stake which 
at yesterday’s market price 
was worth $790m. 

HGA was taken public again 
in 1992 at $21,50 a share and 
last year agreed to an all-stock 
takeover by Kentucky-baaed 
Columbia, which valued it at 
about $32 a share. 

The sale seems likely to be 
followed by a rapid disposal of 
Morgan's remaining stake in 
the hospital group. 


EU eases rules for 
cross-border listings 


By Emma Tucker tn Brussels 

European economic and 
finance ministers yesterday 
agreed to simplify listing 
requirements for the shares of 
European Union companies 
that Irish to be listed on the 
stock exchanges of other mem- 
ber states. 

The directive will signifi- 
cantly lower toe cost to compa- 
nies of cross-border listing by 
allowing some of the informa- 
tion previously required for 
listing, to be partially or faBy 
waived by the relevant authori- 
ties in Um host country. 

In future certain companies 
will be able to be listed In 
other member states without 
publishing a new listing pro- 
spectus. 

The move applies mainly to 
companies of “high quality, 
large size and international 
standing, ifofrd in the Commu- 
nity for at least three years 
and showing a good record of 


compliance with European 
Union listing directives”, 
according to toe European 
Commission. 

The move fell short of com- 
plete mutual recognition by 
toe stock exchanges of the 12 
member states but was, accord- 
ing to the London Stock 
Exchange, a “significant step 
towards mutual recognition 
and very useful for smaller 
companies wishing to move to 
full listing". 

The Commission said the 
directive was expected to bring 
about a more efficient simple 
market fa securities. In partic- 
ular, it would assist efforts by 
toe Federation of European 
Stock Exchanges to launch the 
socalled Eurolist project. 

This aims to provide deeper 
and more liquid markets for 
well established European 
Union companies with interna- 
tional standing by 1 feting their 
shares simultaneously in at 
least six member states. 


At of those securities having been sold, this announcement typears as a matter of record only. 




DANMARK 


Tele Danmark A/S 

Global Equity Offering 
of 

63,229,770 B Shares 


Joint Global Coordinators 


The bank declined to say 
whether further sales were 
- panned, but added: "Like any 
investment in that {venture 
capital] portfolio, it has a life 
cycle.” 

Most buy-out Investors hope 
to liquidate their holding s and 
realise profits within five years 
or so of making an investment 

The HCA stake accounted for 
about two-thirds of the $lbn of 
unrealised investment gains 
reported by Morgan at the end 
of last year. During 1993, it 
realised profits of (246m from 
selling equity holdings, $86m of 
it related to HCA. 

Mead plans to 
divest on-line 
services unit 

Mead, the US paper, wood 
products and packaging group, 
plans to divest Mead Data Cen- 
tral, the electronic Information 
division best known for its 
Lexia/Nexis on-line services, 
Renter reports from Dayton, 
Ohio. 

According to analysts. Mead 
should get about (fan for the 
division and will probably sell 
it to a communications group 
with which it has an alliance. 

The Mead Data unit was 
acquired for 96m in 1968. It 
said it is the world’s largest 
provider of on-line information 
services for legal, news and 
financial information and a 
leading force in the electronic 
publishing market 

The legal publishing market 
is worth $3bn and Mead Data 
had revenues of $551m fa 1993. 

The on-line services, legal 
print and CD-ROM products, 
electronic publishing software, 
and productivity software are 
widely used. 


Goldman Sachs International 


Den Danske Bank 




;esp 


orisi 1 


SVNUiOID 

smtrroMNcuuosw ruxoh Torino sn. 

A company belonging to Su fkolo Bank Holding 

1993 FINANCIAL FIGURES 


Total Assets 

Customer Loans 

Customer Funding 

Shareholders* Equity 

Operating Profit 

Income Before Income Ihxes 
Net Income .. 


188,918 Id ballons 40.2 % 

100,839 . +63 

108032 +7.1 

8,526 ils. 

2Q57 +29.9 

1,434 +13.9 

636 +1-2 


■ In 1993 Istituto Bancario San Paolo di Torino SpA merged with its two 
domestic banking subsidiaries. Banco Lariano SpA and Banca 
Provinciate Lombarda Spa 

■ The 1993 financial figures represent the results of Istituto Bancario San 
Paolo di Torino SpA after the merger 

. The branch network at the end of 1993 consisted of 959 (tomestic 
branches, 12 foreign branches and U foreign representative offices 

After thetnerial tax-free provision made in accordance with the Law n. 
" S the net income amounted to It! 479 billion and 

the earnings per share equalled Id 645 
. The dividend per ordinary share is IU 360 payable from May 17. 1994 

Telephone (. 39 ) U 55 S 2 S 68 - ftcrimilc <^ 39 ) II 555 6282 


37,310,000 B Shares 

fn the form of American Depositary Shares or B Shares 

This portion of the olMnglm bean soUot M da the Un/tadStam by the undersigned. 


UBS Limited 


RastofWotU 

Goldman Sachs tatematioral 


Den Oansto Bank 


Deutsche Bank 


Datwa Europe Limited Don Danska Bank 

Robert Renting & Co. Limited Wood Gundy Inc. 

The Development Bank erf Singapore Ltd Nomura International 
RBC Dominion Securities Inc. Warcfley Corporate Finance Limited 


Goldman Sachs international 
BBV fnteractivos, S.V.B. 
CrecBt Lyonnais Securities 
Indosuez Capital 
KB-Securftfee 


Paribas Capital Markets 
CredltanstaK-Bankvereto 


Drasdner Bank 


CrecfitoltaUano 


Internationale Nedertanden Bank N.Y, 
Swiss Bank Corporation 


Wood Gundy Inc. 
Nomura international 


Den Danske Bank 


Carnegie 

Goldman Sachs International 


Blkuben 


SUS&S SSBSSSi 


DnB Ponds AS 
Unibank 
Prospectus Lid 


Den Danske Bank 


Cazenove&Co. 


United Kingdom 

Barclays de Zoete VUbdd Limited 
nfc Goldman Sachs I n tern a tional 

KMnwoit Benson Securities 
i NatWbst Securities Limited 

N M Rothschild and Smith New Court 


25,919,770 B Shares 

In the form of American Depositary Shares or B Shares 

This poitional the oKaringtm been add tithe Untod States by the undersigned 


Goldman, Sachs & Co. 


Merrill Lynch & Co. 


Bear, Stea ms & Co. toe. Lehman Brothers JP. Morgan Securities Inc. 
Salomon Brothers Inc Smith Barney Shannon Inc. 


AprS. 1394 





24 


J 




*r 


FINANCIAL TIMES TUESDAY MAY 17 1994 


Bank of Zambia 

Commercial Debt Reduction 
Programme 

Bank of Zambia fBoZ*) is launching a debt reduction 
programme in the form of a commercial debt buy-back, 
supported by the International Development Association and 
certain donor countries. 

The debt reduction programme is subject to and governed by 
the terms and conditions set forth in the "Invitation to 
Creditors to Submit Offers Covering Eligible Debt of or 
Guara n teed by Bank of Zambia and the Republic of Zambia” 
dated 11th May, 1994 (the “Invitation r> Creditors”). 

In this connection. Bank of Zambia invites persons claim in g to 
be holders of foreign exchange trade bill, dividend remittance, 
te c hnical fee or royalty remittance arrears, incurred prior to 
4th October 1985 (“Pipeline Debt”), in excess of U5S5,000 as 
to the aggregate claim, but ex cl u d in g personal remittances, to 
contact the following if they have not yet rec eiv ed a copy of the 
Invitation to Creditors: 


Bank of Zambia, 
External Debt Division, 
P.O. Box 30080, 
Lusaka, Zambia 
TcL No: 260 1 22 33 26 
Fax Na 260 1 22 33 26 


S-CLWarbutg Be Co. LbL, 
Overseas Advisory Group, 
2 Finsbury Avenue, 
London EC2M 2PA 
TeL No: 44 71 395 2376 
Fax No: 44 71 860 0901 


The Offering Date - the deadline on which offering telexes must be 
received by die Closing Agenr (S.G. Warburg) is 24th June, 1994. 


U.S. $200,000,000 


Exterior Internationa! Limited 

(Incorporated with limited Rablfity m the Cayman Islands) 

Guaranteed Floating Rate Notes due 2001 
Unconditionally Guaranteed as to payment 
of principal and Interest by 


(Incoqooratad with Bmrted BabiBtyln The Kingdom of Spain) 


sparia, 

The Kingc 


Notice is 
May 17. 1994 tri 
Rate of 5.1875% 
interest 
U.S. 


that for the six months Interest Period from 
17. 1994 the Notes vriH carry en Interest 
annum. The Interest payable on the relevant 
i, November 17, 1994 wfllbe U.S. $265.14 per 
amount of Notes. 


By: The Chase Manhattan Bank, NJL 
London, Agent Bank 

May 17. 1994 


CHASE 


«!» National Westminster Bank 

l Incorporated in England with limited liability) 

U.S.$500,000,000 Junior FRNs 

Notice is hereby given that the Rate of Interest has been fixed 
at 5.625% and that the interest payable on the relevant Interest 
Payment Date November 17, 1994 against Coupon No. 21 in 
respect of 11.5.825,000 nominal of the Notes will be 
U.S. $71 8.75 and in respect of U.S. $5, 000 nominal of the 
Notes will be U.S.$1 43.75. 

May 17, 1994, London 

By. Citibank, NA. (Issuer Services), London Brandi, Agent Bank 


U.S.$1«MX»,000 


DENDANSKE BANK 

(Dm Dankg Bank sf 1871 UUmtMab) 
ffncoRwaM m A* tonaaem a! 

Dmaartr *tm Orntod AbSty) 

Subordinated 
Rate Notes 

In occmdane* "Wi the provisions gf 
On Nates, noth* la hereby ^wi that 
tor the Wares! Period tram May 17, 
1984 lo November 17, 1894, the Notes 
1 cany an 

annum. The tamest 
Coupon No. 20 <xi me relevant Interest 
payment dots, Nwamber 17, lB94wll 
MU.S.S281.11. 

By: ItoCMHlWMtRBMMU 
Inks, Ages Mi 


May 17. 1994 


o 

CHASE 


USIMOJMWWO 

Continental Cahle vision, Inc. 

Senior Subordinated Floating 
Rate Debentures due 2004 

La acmdaiKe with the provisions at the 
Debentures, notice Is hereby given that 
for the interest period Hay IS, OM to 
August B, 1994 the Debentures will 
carry no interest rata of 7*4S per sanmn. 
Inwrtsl payable on the relevant Interest 
payment date August IS, 1994 win amount 
to US *2jQ&W per US SBOjOOO 
Debenture. 

Agent Sauk: 

A 

Banque Paribas 

inuiouM 


ECU 350,000000 
Kingdom of Belgium 
Floating Rate Notes due 1999 
lamed la two tranches of 
ECU 200,000.000 Oat tranche) 

EC U laUMOjMO Gad tranche) 

For the period from May 17. 1994 to 
August 17. 1994 the Notes will terry 
an interest rote erf CKift per annum with 
an interest amount of ECU L4SLS1 per 
ECU BO.OOO Note. 

The relevant interest payment date will 
be August 17, IOM. 

Agent Banki 

A 

Banque Pajuhas 

uunNionic 


BANQUE IN DOSUEZ 
US $150000000 

Subordinated Boating Rate Notes 
due 1998 

Notice is hereby given pursuant to 
the Terms and Conditions of the Notes 
that for the six month period from 
May T7th. 1994 to November 17th. 1994 
the Notes wUI carry an Interest rata of 
5.825% per annum. 

On November 17th, 799* interest of 
US SM8L861.11 will be due per US 
SS ,000, 000 Note terCoupon No. 13. 

Banque Indoauez Luxembourg SA 
Fiscal and Agent Bank 


©RiflFE 

RED NAGONAL DELOS 

FERROCARRILES 

ESPANOLES 

USS500.000.000 
Floating rate notes due 1998 
Unconditionally guaranteed 
by THE KINGDOM OF SPAIN 

In accordance midi the 
provisions of the notes, notice 
is hereby given that hr the six 
months interest period 17 May 
1991 to ITNooember 1991 the 
notes wiil cany an interest rate 
of 5.125% per annum. Interest 
payable on 17 November 1994 
win amount to USSXUM per 
CeSS/0,000 note and USS2.6I9.40 
per USS!00,000 note. 

Agent: Morgan Guaranty 
Trust Company 

JPMorgan 


<*► 

HSBC Holdings pic 

U5S250.000.000 
Subordinated collared 
floating rate notes 2008 

The notes will bear Interest at 

5% per annum for the interest 
period from 17 May 1994 to 17 
November B94. Interest payable 
on 17 November 1994 ujOI 
amount to USS2SJS6per 
USSLOOO. USS2SS56per 
USSW.000andUSSZSSS.56 
per US$m000 note. 

Agent: Morgan Guaranty 
Thist Company 

JPMorgan 


(rtiartgdn n gr [n twmatinmil Timf 

& Investment Corporation 

latetSdied under di* At of At 
Proptr* RepabBc rfCUml 

U.S. $150,000,000 
Floating Bane Notes due 1998 
In accordance with the provisions of 
the Notes, notice is hereby given 
that the Rate of Interest for the six 
month period ending 16th Novem- 
ber, 1994 has been fixed at 5.8625% 
per annum. The interest accruing 
for such six month period wifi be 
U.S. 529.96 per U.S. 51,000 Bearer 
Note, and U.S. 5299.64 per U.S. 
510,000 Bearer Note and U.S. 
52,996 J9per 05. S100 .000 Bearer 
Note on Uxh November, 1994 against 
presentation of Coupon No. 3. 
Union Bank of Switzerland 
London Brandt Agent Bank 
12th May. 1994 



The cMerutal not for die •ertou, Invenur 

Market-E ye 

London stock xxchamgb 


Equity rmd 
Options Prices 


071 329 3232 

' cm. 0 7 1 .Vit, 10'H 


Conference - Thursday june 23. 1994 in Paris 


ECOMANAGEMENT 1994 




***** 

***** 





This international conference will examine the challenges and opportunities 
facing ecomanagement and audit. Issues include : 

• The future of environmental management and the ecoaudit initiative 

• Toward an integrated quality-security-environment system ? 

• A European perspective : the EC ecomanagement and audit scheme 

• Environmental reporting : risk or opportunity ? 

■ Ecoaudit : Management tool for your negociations with your banker and 
your insurer ? 


Among the speakers will be top decision makers from the following companies : 


• BP CHEMICALS 

• BRITISH AIRWAYS 

• BRITISH TELECOM 


• KUNERT AG 

■ METALLGESELLSCHAFT 

• ELECTRICITE DE FRANCE 


• BOEHRINGER MANNHEIM • ELF 

• IBM DEUTSCHLAND • ERNST & YOUNG 


• GAN 

• SAINT GOBA1N 

• sociEtE gEnErale 

• ARTHUR D„ LITTLE 

• EUROPEAN COMMISSION 


KCA IN PARTNERSHIP WITH 


FINANCIAL TIMES 

Europe's business newspaper 


I 


Registration & Information 


Simultaneous Translation ; English and Fhsnch 
Hotel and transport facilities will be looking after by us 

□ Register me for Ecomanagement 1994 

Q P L f. t S E SSND ME A FREE BROCHURE 

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Tel : +33 1 42 67 97 79 Fax. : +38 1 42 67 97 77 


m e 


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ADDRESS 


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I wish to attend the congress in accordance with the conditions of 
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including VAT). 


INTERNATIONAL COMPANIES AND FINANCE 


t 


Investors dismiss setbacks 
to Peruvian privatisations 

Lima shrugs off US rate rises, reports Sally Bowen 


I nterest both from foreign 
direct and portfolio inves- 
tors la Peruvian assets 
continues to be significant in 
spite of recent setbadcs- 
Lima’s stock market has 
hwM up mall, in spite of rises to 
US Inter est rates which have 

itorrt flti Hip nnHniqja«fl H of Stock 

and bond investors for Latin 
American markets. 

However, after a successful 
telephone company privatisa- 
tion in February, the govern- 
ment failed in its attemp t last 
week to sell the mining and 

refining giant, C enfrnn rin 

The sale in February of 
Pern's two state-controlled 
telecommunications compa- 
nies, GPT and Rntel tO Telfi- 
ffinica of Spain yielded more 
than US$2bn - well above most 
expectations and setting a pace 
which may have been impossi- 
ble to match. 

However, the inability to sell 
Cfcniromm at the first attempt 
is not being seen by foreign 
bankers as a body-blow to 
Pern's privatisation plans. 

Interest in t he country’s min- 
ing sector remai ns high - some 
800 people are attending a 
three-day gold ranting - confer- 
ence in Lima. The auction’s 
failure was, it is said, more a 
reflection of the mining compa- 
ny's specific problems, to par- 
ticular its possible future envi- 
ronmental liabilities. 

Still to be sold in the next 
tew months are a series of fish- 
meal plants owned by Pesca- 
peru; the distribution and gen- 
eration systems of Electrolima 
and Electro pern; and Inter- 
banc, the first of two state- 
owned banks to come to mar- 
ket The privatisation list also 
includes cement producers 
Lima and Norte Pacasmayo, 
and the Cajarmaquilla zinc 
smelter and refinery 
Mr Efrain Goldenberg, the 
Peruvian prime minister, said 
the government expected to 
raise more than $3bn this year 
from Its privatisation pro- 
gramme - and noted some pri- 
vate estimates are even higher. 

The sale of the telephone 
companies was an indication of 
the distance Peru has come 
since President Alberto Fuji- 
mori came to power to 1990, Mr 


Goldenberg said in an inter- 
view to London. Ten years 
ago you couldn't have given 
these companies away." 

Part of the success was due, 
he' said, to expectations of 
growth. “Our economy grew 
last year by 7 per cent The 
official forecast for this year is 
5 per cent, but we are pretty 


munications company, Tele 
2000. notched up another first 
- a $40m issue of convertible 
three-year Euronotes through 
Barings Securities and Bankers 
Trust - even though It paid a 
hi gher interest rate than origi- 
nally expected. 

Bankers Trust, in a joint 
venture with stockbrokers 
Peruval, Is also co-ordinating 



President Alberto Fojtmori: 
began economic reform in 1990 

sure it will be more than that” 
GDP in the first quarter is 
reported to have been 8 Vi per 
cent higher than, a year earlier. 

Investors to general may 
have been further heartened 
by rises in the prices of some 
raw materials. 

"With the world economic 
cycle becoming more favoura- 
bly disposed towards the pro- 
viders of raw materials, and 
with corporate profits rising at 
30 per cent per annum, the 
expectation has to be that the 
stock market in Lima will con- 
tinue to do better than most,” 
said investment strategist Mr 
Roger Ni ghting ale of London- 
based Latihvest Securities. 

This year has also seen Peru- 
vian companies raise foreign 
ff-nanne for the first time in 
decades - although the envi- 
ronment has become more dif- 
ficult in recant months, to mid- 
March, Peru's Gloria group, in 
association with VestcorPart- 
ners, a Miami investment 
bank, launched a $4Qm Euro- 
bond issue - the first from 
Peru in more than 20 years. 

A privately-owned telecom- 


the first fully-fledged American 
depositary receipt placement of 
shares to a Peruvian company. 
The state has agreed to offer 
its 38 per cent holding to 
Cementos Lima simulta- 
neously on the stock 
exchanges of T-ima and New 
York. No date for the issue has 
yet been set 

At the same time, Peruvian 
companies are seeing growing 
opportunities for financing 
themselves domestically - 
through the growth of private 
pension funds, or AFPs. 

Launched to June last year, 
the AFPs have signed up more 
than 800,000 salaried workers 
out of an initial target group of 
lJ2m who are expected to 
switch from the moribund pen- 
sion scheme provided by 
Peru's social security institute 
OPSS). 

Eight companies are vying 
for the pension funds market - 
almost all have international 
backers, including Aetna, Citi- 
bank, ING Bank of the Nether- 
lands as well as fThfipan coun- 
terpart funds like Provida, 
Habitat and Cruz Blanca. 

The total fund size is small, 
around an estimated 895m. But 
once the state starts rangtinp 
its contributions for public sec- 
tor workers, around 825m a 
month, money will be flowing 
into the AFP coffers, amount- 
tog to some $30Qm by the end 
of the year and a possible total 
fund of $4bn within five years. 

“Peru has had the advantage 
of not being the first-comer," 
says Mr Carlos Bolofia, econ- 
omy minister from 1991 to 1993 
and architect of the structural 
reform programme. “We did in 
two years what took six In 
Chile, and we’ve gone further 
in many reforms than Chile or 
Bolivia.” 

Additional reporting by Step- 
hen Fuller and Sen Warn. 


Minorco to 
restructure 
Chilean side 

By Mark Suzman 

In Johannesburg 

Minorco. the Luxembourg- 
based mining ' and min eral 
resources company which is 
part of Anglo- American, the 
South African conglomerate, 
plans to restructure its Chilean 
operations to a move expected 
to raise up to 8230m for Its 
Mantas Blancos subsidiary. 

Under the plan, yet to be 
approved by Mantos Blancos 
shareholders, Mantos Blancos 
will sell its 49.9 per cart inter- 
est in Minera Mantos Mtooroo 
(MMML) to a wholly -owned off- 
shoot of Minorco for 8110m. 

Minorco already controls the 
other 5 LI per cent of MMML, a 
company formed in December 
1992 to buy a one-third interest 
in the Collahusi copper joint 
venture with Chevron Explora- 
tion Corporation of Chile. 

Mantos Blancos, which is 
74.9 per cent owned by 
Minorco, will also try to raise a 
farther 8120m through a rights 
Issue. The rights issue will not 
be underwritten. 

Of the funds raised, 3146m 
will be earmarked for Mantas 
Blancos' Santa Barbara/ SX-EW 
project, which will expand the 
company's total copper 
reserves to 116m tonnes from 
53m tonnes and extend the life 
of mine to the year 2010. 

The remainder will go to the 
Mantoverde copper project 


Regional growth lifts 
Thai telecoms groups 


By Victor Male! In Bangkok 

United Communication 
Industry (Ucom), the diversi- 
fied Thai telecommunications 
group whose parent company 
is 25 per cent owned by Moto- 
rola of the US, yesterday 
announced almost doubled net 
profits for the first quarter of 
this year to Bt416-6m (316.5m) 
from Bt209Am previously. 

Ucom, one of several Thai 
companies profiting from a 
rapid expansion of telecommu- 
nications business to south- 
east Asia, was listed on the 
Stock Exchange of Thailand 
five months ago. Bantings per 
share were Bt3-56, against 
Btl0.47 because of the issue of 
new stock. 

The quarterly profit 6m com- 
pares with the Bt713m made in 


1993. Further financial details 
were not immediately avail- 
able. 

Samart, a smaiim- communi- 
cations company, reported a 
near quadrupling of net profit 
to the first quarter to Bt 46.62m 
from Btll. 92m. Earnings per 
share rose to Btl.04 from 
Bt0.75. 

• Bangkok Bank. Thailand's 
largest bank, reported weaker 
profits to the first quarter, 
with net earnings slipping 4.3 
per cent to Bt3£5bn. The bank 
ex plained that the comparable 
quarter of 1993 included an 
exceptional gain of BtLSbn. 

Other big banks reported 
increased profits. Thai Farm- 
ers Bank said net profit rose 
34.7 per cent to BhUibn. while 
Krung Thai Bank announced a 
25 per cent rise to Btl.71bn. 


BHP buys Mexican stake 


By NFtdd Tart In Sydney 

Broken Hill Proprietary, the 
Australian resources group, 
has acquired a 14 per cent 
interest in Grupo Ferro 
Mtoero. GEM'S main interest is 
an 82.7 per cent stake to 
Minera Autlan, a Mexican 
manganese ore miner and ferro 
alloy smelter. 

Autlan is based in Mexico 
City, and its local operations 
have the capacity to produce 


more than 500,000 tonnes of ore 
and up to 200,000 tonnes of 
ferro alloys per year. 

No purchase price was given 
for the GFM stake, but BHP 
described the deal as a “strate- 
gic alliance'” which would back 
up a five-year ore sales con- 
tract to Autlan. Daring this 
period. BHP Manganese will 
supply all of Autlan’s imported 
m anganese ore needs. 

BHP said this could be up to 
80.000 tonnes a year. 


Pre-tax 
profits slip 
at Sony 
music unit 

By WHfam Dawkins in Tokyo 

Sony Music Entertainment, 
the 71 per cant-owned enter- 
tainment subsidiary of the 
Sony electronics group, yester- 
day unveiled a fell to profits 
and its first annual sain 
decline for nine years. 

Pre-tax profits fell 11.7 per 
cent to Y19JB4bn ($189<4m) on 
sales down 1.2 per cent to 
Y99.Gtm. This was a result of 
lack of hits by Japanese musi- 
cians, said Mr Kazutoshi SM- 
raishi, Sony Music Entertain- 
ment's managing director. 

The poor performance of 
domestic music was only par- 
tially offset by increased sales 
of discs by Billy Joel, experien- 
cing a revival in Japan, and 
other foreign stars. 

Net profits rose 0.6 per cent 
to YlLOlhn, due to a tempo- 
rary drop in corporate tax pay- 
ments, but will shrink again 
to an expected Y9.7bn this 
year as the tax bin rises, said 
Mr ShindihL 

He expects a revival to sales 
of Japanese music discs, but 
not in foreign discs or video- 
cassettes. On these grounds, 
Sony Music Entertainment 
expects pretax profits to fell 
this year, to Y18-5bn, on sales 
of Y99Jbn. 

The annual divided has been 
Increased from Y22.5 to 725 
per share. Per-share earnings 
were down from 7138.36 to 
7116.62 last year, due to dilu- 
tion caused by a share issue. 


Nedcor buys 
stake in HK 
bank offshoot 

By Mark Suzman 
In Johannesburg 

Nedcor, the South African 
banking group, has taken a 20 
per cent stake in Eqnator 
Holdings, a subsidiary of 
Hongkong and Shanghai 
Banking Corporation. Cost of 
the deal has not been 
disclosed. 

Equator Holdings operates 
throughout sub-Saharan 
Africa, providing merchant 
banking , specialist trade and 
fond management services. 

The move is the latest in a 
series of overseas investments 
by Nedcor, which has publicly 
announced its aim to become a 
banking force throughout the 
African continent 

The group has already 
entered into a strategic 
alliance with three Euro- 
pean banks - Dresdner Bank, 
Banque National de Paris 
and Banque Bruxelles Lam- 
bert -- on operations in 
Africa. 

“We believe the Equator 
deal will help to create syner- 
gies across the region that will 
be of benefit to our foreign cli- 
ents," said Nedcor. 


Telecom NZ 
ahead 15.4% 

By Terry Hall In We fli nqton 

Telecom New Zealand, 
controlled by Bell Atlantic and 
Ameritech of the US, reported 
net earnings up to NZ3528Jm 
(USS308.8m). 

Mr Roderick Deane, chief 
executive, said strong progress 
had been made on aQ fronts 
with operating revenue rising 
by NZ$22. 7m to NZ$2-49bn> 
Telecom claimed success in 
countering competition, 
increasing operating efficiency 
and raising mu volumes. 

Domestic call volumes rase 
9JB per cent, while interna- 
tional calls rose 11 par cent 
Operating expenses fell 3.9 per 
cent excluding abnormal 
res tru c tur ing costs. 


DIVIDEND 

NOTICE 


Agnico-Eagle Mines 
Limited Dividend #14 
of 10 cents (U.S.) a 
share, is payable 
May 24, 1994 to 
shareholders of 
record April 19, 1994. 

Dated this 10th 
day of May, 1994. 

Barry Landen 

Secretary 

Toronto 



ABNICO-EAGLE 





The company is pleased to a nn ounc e that normal operations resumed at the Kloof Division of this 
company with die commencement of the night shift on 15 May 1994. 

This follows an announcement dated 12 May 1994 concerning unlawful industrial action at the Kloof 
Division which commenced on 5 May 1994. 

The resumption of operations follows rhe constant urging of management since the commencement of 
the unlawful industrial action, a subsequent interim court order handed down by the Supreme Court, and 
advice to employees fe™ the President of the National Unioa of Minewarken. 

Discussions at the weekend between the management of the company and the union leadmhip led to the. 
identification of competitive alternative means of expediting forther procedures in trims of rhe labour 
Relations Ace do determine the fiumess of the dismissal of the chairman of the branch committee of rhe 
uni on OQ rh<* minf. 

Given that such procedures have been available throughout the course of the unlawful industrial action, 
which has negatively impacted on die company, its employees and the state, this onion is to be ogiHiad. 
This impact includes a Joss of si* foil days of underground production which could have generated 
revenue at between R20 and R30 million. 


Johannesburg 



16 May 1994 


13 :-v 




■*iue 




J' 







FINANCIAL TIMES TUESDAY MAY 17 1994 


25 



i’r ^ 

*V 
"V 


INTERNATIONAL CAPITAL MARKETS 


US Treasuries start the week with solid gains 




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. * > 'I 




V -l 

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. . . . w 


•. . Sy; 

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By Patriok Harverson tn New 
York and Conner MkMeim a nn 
and Graham Bowfey in London 

US government securities 
opened a week in which the 
Federal Reserve is expected to 
raise interest rates further 
with solid gains. 

By midday, the benchmark 
30-year bond was up 8 at 1838, 
yielding 7.431 per cent Prices 
were slightly firmer at foe- 
short end of the market, whore 
the two-year was up A at 99&, 
to yield &98Q per cent 

Prices firmed gradually after 
the start of trading in New 
York, but dealers struggled to 
explain why the market 
opened in such an upbeat 
mood. - 

The morning's economic sta- 
tistics, showing a 0.3 per cent 
rise in April industrial produc- 
tion, were in line with expecta- 


tions, and some analysts 
suggested prices Climbed afier 
the figures were released 
because the market was 
relieved that there were no 
nasty surprises in the data. 

Trading was described as 
quiet, with, many participants 
choosing to remain on the side- 
lines until afier today's meet- 
ing of the Fed’s open mnricat 
committee. Expectations are 
high that the FOMC will sanc- 
tion an Interest rate increase 
at the nipftHng, 

B Supported by firmer US 
bonds, most European markets 
posted moderate gains in quiet 
trading as dealers awaited the 
outcome of the FOMC meeting. 

German government bonds 
led the advance, with the io- 
year sector gaining about V* 
point an shifts to the longer 
end of the yield curve. 


The Ge rman yield curve has 
steepened sharply in recent 
weeks, with the spread 
between two-year and 10-year 
yields widening to around 125 
basis points, from 80 basis 
points about a month ago. 

However, afier the Bundes- 
bank’s % point cut in its dis- 
count and Lombard rates last 
week, many analy sts are re- 

GOVERNMENT 

BONDS 

commendi n g curve-flattening 
trades, suggesting that inves- 
tors sell short-dated paper and 
move into long-dated bands. 

Last week's rate cut “is 
likely to be the last official 
move until after the summer 
recess”, said Mr Graham 
McDevitt, bond strategist with 
market analysts IDEA. 


Although the weekly repo 
rate can edge some 50 basis 
points lower over that period, 
he feels this is largely dis- 
counted in forward rates. At 
the long end, be said, bunds 
are resisting further selling 
pressure and with US Trea- 
suries also showing sighs of 
resfligpcs, “a decisive [tighten- 
ing] move by the Fed this week 
could spaik a substantial cor- 
rective rally through European 
bond markets”. 

"Since shortening trades are 
quite widely owned now and 
file inflation outlook is going 
to be very positive, 1 think 

mrr o tep Vmg nr tn Germany m>d 

other continental European 
markets could be rewarding 
over the next three months or 
so,” agreed Mr George Magnus, 
chief international economist 
at S. G. Warburg Securities. 

The Jane Bund futures con- 


tract stood at 9BS3 in late trad- 
ing, up 0.66 points an the day 
and near its 9535 high. 

French government bonds 
followed German bunds higher, 
with the June notional band 
future on Matif rising 0.57 
points to 9458. 

■ Trade in UK government 
bonds was subdued as partici- 
pants turned their attention to 
the implications of Friday’s 
announcement of a short-dated 
convertible gflt issue and the 
FOMC meeting. 

“Attention all day has been 
directed towards working out 
what the convertible 
annnnnrampnt moana and as a 

result performance has not 
been dramatic,” said Mr s jynn" 
Briscoe, economist at 
S. G. Warburg Securities. 
Details of the size and matu- 
rity of the issue, which will be 


auctioned on May are due 
to be published by the Bank of 

En gland at 3.30pm 

But Mr Briscoe said that yes- 
terday’s data showing low UK 
producer price inflation helped 
the market hold on to the 
gains it made on Friday afier 
the announcement of the issue. 
Producer output prices in April 
registered their lowest annual 
increase since December 1988. 

“This is very good news,” 
said Mr Briscoe. “There are 
dearly few signs of inflation- 
ary pressures in the economy” 

He said that other UK data 
due th is week, farfnflftig 1 retail 
mice inflation and retail sales, 
will be important for evidence 
of a strengthening recovery 
and of inflationary pressures. 

The June long gilt futures 
contract on Lifife traded at 
105& by late afternoon, down & 
points from Friday’s dose. 


Finland opts for French franc sector with 10-year offering 


■ •. ' >:• ^ 

-• • 





^di'or bin, 

'take in [| 

bank ofisfc 

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• • -.Si?. 

1 • .V 


By Peter John 
and Antonia Sharpe 

The Republic of Finland's 
FFrSbn offering of 10-year 
Eurobonds dominated an enliv- 
ened session In the Eurobond 
primary market yesterday . 

The issue was indeed to yield 
32 basis points above the 5.6 
per cent French government 
bond which expires in 2004. 
Some dealers said the pricing 
was too tight, and when trad- 
ing began the spread widened 
to around 38 basis points. 

They argued that Finland 
had paid U to 15 basis points 
over Libor for the funds, which 
are being kept In French 
francs, and the borrower could 
have achieved better terms by 
issuing in another currency, 
such as yen or dollars, and 
swapping into French francs. 

However, lead manager Pari- 
bas said that swap spreads are 
very tight and such arbitrage 
opportunities are virtually 
non-existent 


Mr Veikko Kant o la, Fin- 
land’s director of finance, said 
he had considered various 
European currencies but opted 
for the Euro-French franc sec- 
tor as it looked the most attrac- 
tive after last week’s flurry of 
European interest rate cuts. 

He added that the pricing of 
yesterday's issue showed that 
Finland’s standing in the mar- 
ket was continuing to improve. 

INTERNATIONAL 

BONDS 

“The last [French] franc deal 
nearly two years ago carried a 
41-polnt spread,” he said. 

According to Mr Kantola, 
Finland is expected to ntaa the 
equivalent of J7bn this year 
because of the recovery in the 
country's economy. This com- 
pares with gll^bn in 1992 and 
$85bn last year. ■ - 

Demand for the bonds came 
mainly from French insurers 
and European central banks. 


Paribas said- SNCF, the French 
state railway company, fs 
expected to launch an offering 
of FFr2bn to FFrSbn later this 
week. 

The dollar was in vogue as 
GECC, the finanring am Of 
General Electric, issued a 
$250m three-year band priced 
to yield 10 basis points over US 
Treasuries. The deal was 
closely followed by a similar 
self-led offering from Swiss 
Bank Corporation. The two 
issues continued a trend estab- 
lished a month ago by AT&T, 
the US tel prams giant, and fur- 
ther deals are expected this 
week. 

Dealers said yesterday’s 
offerings reflected growing 
demand for short-dated Euro- 
dollar paper from European 
retail investors who believe 
that a further half-point rise in 
the Federal funds rate has 
b een d iscounted. 

SEK, the Swedish export 
agency, raised a total of Y45bn 
through two three-year offer- 


NEW INTERNATIONAL BOND ISSUES 

Borrower 

US DOLLARS 

SBC Atwnce (Cayman latevtaO 

ease 

Amount 

m. 

250 

SO 

Coupon 

% 

(L50 

ate 

Price 

99 .TOR 
99.70R 

MMmHy 

Jisv1997 
Jun. 1997 

Fees 

% 

aiasR 

ai88R 

-r* 

Book runner 

Smrlse Bank Gorp 

Orridman Sachs 

VB4 

AS Bvanstai Expcrttoecffi 
Swartsb Export Cracfit 

35bn 

10bn 

3.125 

M 

998BR 

lOOte 

Jun. 1997 
May-1097 

0.1875R 

Untried 

- 

LTC8 ImlAUyiicIl 

Morgan Stanley 

raulrasmiiid sfiiljilj 

. 300 

W 

100-00 

Jui.1999 

020 

. 

DG Bank 

FRENCH FRANCS 

BepubSc of Finland 

BtM 

7-00 

98806R 

JunKXM 

OS2SR 

+32 {554%-oq Benque Peribes 

ITALIAN URE 

EuredmaM 

SOObn 

ftJ2S 

101.125 

Jutl2004 

1875 

- 

BNL/Sen Paolo <S Torino 

Final term* and nofrcaOable unless stated. The yield epread (dyer relevant government bond) at Bunch Is suppBad by the toad 
manager, ^floating rata note. R Seed re-offer price: fees art shown at the r*ofler BveL a) Cordon pays 2.7% intB 31/5795, than p^e 
385% meraet tar. Cafl option on 31/5/06 at per. b) Criteria at pm on the 15/08001/2002/2008. Oj O tffih Rbo plue 088%. 


ings. It is believed to have 
swapped the proceeds of a 
Y35bn issue into doBmi, ach- 
ieving a deep sub-Libor fund- 
ing cost in the process. 

Joint lead manager Merrill 
Lynch said Japanese and Euro- 
pean investors continued to 
have a big appetite for yen 
assets, attracted by the stabil- 


ity in the Japanese bond mar- 
ket and hopes of an apprecia- 
tion in the yen. More issuers 
are expected to tap the Euro- 
yen sector this week. 

Euroflma, the Swiss-based 
rolling-stock financing organi- 
sation, provided a new varia- 
tion. in the recent spate of call- 
able Eurolira bonds. It raised 


L300bn through an offering of 
10-year Eurobonds callable at 
par after seven years. Joint 
land manager ftwwi Naztonale 
del Lavoro said that in con- 
trast to recent issues, which 
were mainly sold to Italian 
investors. 40 per cent of Eurofi- 
ma’s bonds were placed outside 
Italy. 


IFC puts $15m into 
Latin America fund 


By Antonia Sharpe 

The International Finance 
Corporation UFO, the private 
sector arm of the World Bank, 
has invested $15m in a new 
Latin American corporate bond 
fond which it helped to set up. 

A number of US pension 
funds and European institu- 
tions have also put money into 
the Dublin-listed fund, bring- 
ing total investment to S80m, 
said Mr Marc Wenhammar, 
head of fixed-income at For- 
eign & Colonial Emerging Mar- 
kets, the advisers to the closed- 
end fund. 

Mr Wenhammar that 
the fund’s first gains would 
came from the higher income 
which the doUar-denomtnated 
bonds would provide but that 
its medium-term aim was to 
make capital gains from a 
reduction In yield spreads on 
the bonds. He said that it also 


wanted to take advantage of 
sec ondar y market disparities. 

The fond was launched in 
April in the aftermath of a 
sell-off in emerging market 
bonds triggered by a tightening 
in US interest rates in Febru- 
ary. Mr Wenhammar noted 
that yield spreads cm M ex ic an 
corporate bonds had come 
dose to 400 basis points over 
US Treasuries but that they 
had since narrowed to around 
270 basis points. 

About 70 per cent of the fund 
has already been invested, 
with fori under half going into 
Mexican corporate paper while 
Argentine and Brazilian debt 
account for 30 per cent and 20 
per cent respectively. 

Mr Wenhammar said the 
fond’s initial investments have 
been in liquid corporate issues 
but that at a later stage it 
hoped to buy convertible 

bonds. 


Indian oil 
group plans 
public issue 

Oil and Natural Gas Corp- 
oration, the Indian energy 
group, plans a public issue of 
equity to raise RslSbn <|478m). 
The issue will be launched in 
the nett two months, Reuter 

reports from Bombay. 

Mr S. K. Manglik, ONGC’s 
chairman, said the flotation 
was part of a government plan 
to dilute its holding in the cor- 
poration through selling equity 
to the Indian public. He said 
the issue would be followed 
within four to five months by a 
Euro-issue. 

Mr Satlsh Sharma, India’s oil 
minister, said the corporation 
had an offer for a joint venture 
with the Economic Develop- 
ment Board of Singapore. He 
said discussions with foe EDB 
were in their early stages. 


Repola sets 
up ADR 
programme 


By Christopher Brown- Hume* 
in Stockholm 

Repola. Finland’s biggest 
industrial group, is setting up 
a sponsored American deposi- 
tary receipt (ADR) programme 
to assist trading in its 

Mr Tauno Matomfiki, Repo- 
la's chief executive, said the 
move reflected the group’s 
higher profile both in the US 
and worldwide. 

The ADRs, each of which 
represents one share, will 
trade on the US over-the- 
counter market Citibank NA 
will act as the depositary and 
market maker. 

Repola’s activities range 
from pulp and paper to engi- 
neering. 


1 WORLD BOND PRICES 1 

BENCHMARK OOVERNMCffT BOMDS 

Red On/* Week Month 

Coupon Data . . Price - change Yield ago ego - 

Italy 

■ NOTIONAL- ITALIAN OOVT. BOND W1V) FUTURES 

(LiFFEr urn zoom lOOths of 100% 

FT-ACTUARKS FIXED INTEREST INDICES 

Price Mom Mon Da/* Fit Accrued 

UK ana May 16 charge % May 13 Intweat 

ride*. 

ytd 

-low coupon yield Medium coupon yted Kph coupon ytaM — 

May 16 May 13 Yr. ago May 10 May 13 Yr. ago MRy IB Msy 13 Yr. ago 


" s " *■***. 

AueMBa 

BteO 

06/03 

1068100 

+iteo 

8.62 

892 

897 

’ • *+• !>•: 

Brtgfam 

7250 

CHAU 

088000 

♦oteo 

7.41 

799 

729 

r. . .i 

Canada* 

6-500 

0004 

87.4000 

+0800 

838 

8.71 

825 

, 

Denmark 

7-000 

12/04 

964700 

+0400 

730 

732 

7.06 

• ' ■■■■p.vSiA 

ii Franca BTAN 

8.000 

06798 

1068000 

*0370 

6.12 

832 

&04 

l * 

OAT 

&te0 

04704 

904300 

+0.470 

<88 

7.11 

8.78 

• 1 

Germany 

6.750 

0004 

1014000 

+0430 

058 

Bte 

633 


Italy 

0500 

01/04 

■ 96.4000 

+0400- 

9.07T 

9.13 

837 


Japan No 118 

<800 

wn 

107^010' 

+0060 

3-16 

394 

3 AO 

-- ^2 

No 157 

<600 

06/03 

1038780 

-0700 

3-95 

396 

396 

- -F tt. . 

Nethoriands 

5.750 

01/04 

9<1400 

+0620 

088 

895 

896 

’ ** •* 

Spam 

IDteO 

10*3 

1D&900O 

+0550 

9-51 

an 

9.15 

i " , *. 1 /I‘ZZ 

UK Ota 

8LOOO 

06/99 

93-04 

+2/32 

7.82 

795 

7 AO 

p ; ( s L. -• 


6.750 

11*4 

91-02 

+1/32 

503 

899. 

7.73 

. . it- 


9LOOO 

10*8 

107-05 

*2/32 

815 

830 

7.89 


US Treasury 

5-075 

02*4 

90-18 

+20*2 

7.24 

7 AO 

7.11 



6-250 

08/23 

85-28 

+24/32 

7j44 

7.61 

730 


B3U (french Gori) 

SjOOQ 

04*4 

91.4500 

+0700 

734 

7te 

.796 


Open Sett price Change rtgh lxw Eat. vet Open to 
Jun 112.72 11243 4031 11290 111 A3 41818 74434 

Sep ttlte 111.53 4024 111.00 111.07 1042 6282 

■ ITALIAN OOVT- BOHD {BIT) FUTURES OPTIONS {UPFEj LTagPOro IQOthe aMOOtt. 
Strike — CALLS PUTS 


1 Up toSyeer»p2) 123.12 +4X09 12X00 

2 5-15 years (23) 144.19 +038 143 SI 

3 Over 15 yen 19255 40.07 18245 

4 Irredeemable* (B) 18433 +1.45 181.70 

5 Al stocks (805 14107 40.19 141.11 

faApx-Mwd 


195 

<34 Syra 

798 

7.72 

7.14 

798 

7.82 

792 

798 

893 

7.64 

1.78 

592 15yn 

895 

897 

899 

016 

018 

051 

045 

047 

078 

2 97 

496 20 ym 

895 

8.08 

B91 

015 

016 

061 

031 

035 

080 

091 

B.12 bracLT 

<13 

8l25 

8.64 







196 

<82 












— 

— todatton 8%- 

— 

— 

— Medan 10% 




Price * 

- *,-1 -Jun 

... - 1 Sep 

Jun 

. • ?ep'. 

6 Veto's ifearaM 

18492 

+091 

16491 

11200 

■ 0.76 

298 

0-33 

296 

7 Over 6 yeara(11) 

17038 

+0.16 

17010 

11280 

047 

196 

054 

293 

8 AS stocks (13) 

17038 

+014 

17012 

11300 

026 

194 

093 

3.11 






My IB MjW 13 Yr. ago 


kUy 16 M«y 13. VT. ego 


061 

1.02 

097 


263 ■ Up to 6 we 
139 Over 5 yre 
1.77 


3l55 

3.81 


3L54 

3.62 


290 

3S9 


295 

3.44 


284 

3.46 


222 

X42 


&(. SOL (OW, CA seer PUM 3«et. PrariM <te<s aiMH IRL. CWt TOBM Puts 74312 


Debentures and Loans 


B year yMd 15 year yMd 25 year ytekl- 

May 18 May 13 Yr. ago May 18 May 13 VT. ago May 19 May 13 Yr. 


9 Debei Loans (78) 131.30 

A — g» pass is d sn Mhm yMtta n 


4077 13097 1.71 <88 023 934 9.02 931 031 930 

above. Coupon 9nfe Low 0K-7VM; Mvtfunr 8%-IDHH; Hptc 11* and turn. t tel yMd. yW Yav to dm 


t (he tocMtoo MenoMng iss * +23 per esm pwrtSi by 
: U6, UK hi SZndn, (An M ‘ 


YMdK Loon msM mmJbrL 


8ourcs: AMS McmsScnrf 




i.f 

- -j a-.- 


US INTEREST RATES 


Lmftttiw 


Oramtab- 
6\ n« *on» . 
5^ ItmMrth. 


Treasiy Bis and Bond YMfe 
- Tsoyer. 


Spain 

■ MOTIONAL SPANBH BOND FUTURES HBT) 

Open 8ett price Change Hgh Low 
Jun 9086 9052 40-20 98.73 9038 

Sep * - 9080 


Est wt Open tot 
33.063 112,133 

180 1,784 


FT FIXED INTEREST INDICES 

May 18 Msy 13 May 12 May 11 May 10 Yr 090 Higy LoW 


QILT EDGED ACTIVITY INDICES 

May 13 May 12 I 


11 


9.19 9.28 


10 


9.71 


9 


SrnwnOi. 
One year. 


- line iw- 
424 FNyear — 
488 lo*nr 
£39 SOfBV 


883 

<42 

887 

727 

755 


BOND FUTURES AND OPTIONS 
Franca 

■ NOTIONAL FRENCH DOW FUTURES (MATIF) 


UK 

■ NOTIONAL OK Qfl-T RJTUHB3 (UffjJ* SSOjOOO 32ndi of TOOK 

Open Sett price Change Mgp low Eat voi Open W. 
Jun 105-10 1064)1 -0-03 105-12 104-28 44042 124492 

Sep 103-28 103-28 -0-04 104-08 103-28 133 931 


OewL Sees. (UK} 94J2 94.48 9344 83.77 93.45 94.63 107.04 9320 G8t Edged bargains 88.3 77.1 902 88.7 73.4 

RndkiMreet 11228 11210 111J7 111^8 11092 11087 133U7 11092 5-day aneraga 83^ 808 920 900 825 

' ky IBM. Oovemmwt! SearUoe Wgh *nce corrpUorr 1S7.40 b« 48.18 (Vl^. Fted ktmK high gtoce cor«iMtkxr 133JI7 !?mm , low 5053 &nmi . BmI« 100: OouenUMnt SukSh tvuy 

28 aid fixsd MarM 1928. SE acMy tadow rebated 1B74 


FT/iSMA INTERNATIONAL BOND SEHV1CE 


■ IOMQ QX.T FUTURES OPTIONS QJFRE) E50j000 6*ths of TOON - 


Utod an ■» Mtet Haraional bands far wNed tm to «i 

tamed Od 00* Chg. 


s econdary mederL Lelsat pricne at 7M pm en 2Ny 16 
(Had M Oter Chg. 


teuad Md OMir Chg. VWU 


i 1 iiV.WI V- 
rin.it! SM' 1 


Opm Sett price Change Mgh 
Jim 12078 12076 4058 12090 

Sop 11998 11990 +058 11898 

Dec 118.82 11898 +058 11892 

■ LONG TERM FRB<CH BOND OPTIONS (MATIF) 


LOW 

Est voL 

Open to 

Stake 


CALLS 

12096 

110934 

117,346 

Price 

Jun 

3«p 

11044 

1.240 

18968 

106 

0-48 

1-56 

11992 

410 

5935 

106 

0-24 

1-31 




107 

0-10 

1-10 


PUTS 


Sen 

0- 48 3-00 

1- 22 3-39 

2- 06 ■ 4-18 

Ett. ml total Cent 79*4 Putt 4BI. PiwHam dmf% span Infc. Cate 110083 Pun 78488 


US. DOLLAR 5TRAMHT8 

AbbtyMIteeuyetja 1000 5*A 

AfeaMDutaaB^95 600 XH»s 

AeMeftOO . 400 105 


Striae 

Price 

Jun 

- CALLS ~ 
S«P 

Dec 

Jun 

— PUTS 
Sep 

119 

198 

. 

- 

014 

197 

120 

197 

1.70 

- 

093 

191 

121 

042 

190 

- 

066 

- 

122 

- 012 

048 

- 

191 

004 

m 

091 

090 

- 

- 

' 


F -» r ,M 

. •; -1 '■ 

’ jp 

■ -t „ « 

•• • *“' l. 


Dec 


Ed. wL ML Cali 1S9B0 Pun SOMi . Pierian do* opnt te, Qda 51M81 Pne 308711. . 

Qarmany 

■ NOTIONAL OERMAW BUNO R7TDRB8 (URFET DM250900 1008n of 100% 

Salt price Change Wflh U>n Eat ed Open W. 

9593 058 85.96 9047 115788 179994 

8595 Ott B5A0 8498 4410 21321 


BaAdTekyoMW. 

Bdgunfl%IB 

BREA W 

MtdlQeOZT 

c«wfcaaa. 


Ecu 

■ ecu BONO FUTURES (MATTF) 


Jun 


Open 

95.47 

9498 


Jun 


(IS 


Open Sett price Change 
88.10 8890 +098 


High 

8010 


Low 

87.70 


EsL wL Open (nt 
3.180 9929 


Chnng Kong Ai 5*2 98 . 



Quid Ednpe 8 S8 

Credt Fonder fit W — 
Davnk5teflB — — 

ECSC81«# 

EEC 8le 86 

SB 7^ SO 

BBBttSr 


■ US TnSASUmr BONO FUTUFW8(C8T7 3100900 32ndS of TOON 


■ BUMP FUTURES OPTlOWS tUFFg) DM2S0900 potota C* 100% 


Striae 

Price 

Jun 

■ JU 

CALLS — 
Aug 

Sep 

Jun 

Jut 

PUIS 

Aug 

Sep 

9660 

061 

094 

1.12 

196 

028 

099 

197 

191 


032 

063 

OBO 

1.11 

048 

128 

195 

1.76 

9880 

016 

045 

0.71 

0.90 

082 

190 

196 

296 

te. vet wto Ctott 28874 Putt 2*541. Pwriw* JV* open InL. CMi 3MZS? Pirn »3e09 



Jut 

Sep 

Dec 


Open 

103-00 

102-03 

101-19 


103-05 

102-07 

101-20 


Change 

+0-01 

+OOI 

+0-03 


Ugh 
103-14 
102-1 S 
101-25 


Low 

102-31 

102-02 

101-17 


Est woL Open to . 
810292 403,831 
7987 70,409 

878 33935 


Sec do FdrceS 98 — 

Bjtflraft98 

E*4mBa*Jap*a02 . 
Bqnt Dee Coip 9*| 98 . 
FHnJ7%97. 


,100 Mrt 
-259 TOB H 
-150 102»i 
1500 10% 
.MOO 10Ui 
-500 BBSf 

1000 as 

- IOO 102% 
-300 108% 
1000 38% 

-193 103% 
. 100 1031* 

-250 102% 

1000 1065, 

-200 ICS* 


fintth Opart 9>| 95 

Fred Most CM t 8% SB. 
Gen Sec (**89*196 _ 
GMAC9>|9B , 


100 104H 
.500 101% 
.150 W7% 
.200 VBh 
tot 


■ NOTIONAL MEDIUM TStM OBtMAN OOVT. BONO 
(BOSUtUFFET 0M250n0Q 10«te of 1<»* 


Open Saa price Change 
10C.79 100.83 +023 


Hgh 

10079 


LOW 

10070 


Est «of Open to 
1 1749 


Japan 

■ NOTIONAL LONG TERM JAPANESE OOVT. BONO FUTURES 

(UFFE) YlOOih lOOthe el 100% ' 

Open ■ Close Change High Low .Est vd Open InL 
Jun 113te T13LS2 11032 1596 0 

Sep .11285 . 112.65 . 112^48 891 0 

■ UFF8 cortncn badad on APT. Nt Op«n Manat Sga. an in pwAn tmt- 


fcid Bk Jrsh F)i 7% 97 . 
tsar Aner On 7% 98 _ 
8WR23. 


200 
, UDO 
-300 106 % 
-200 103% 
. 200 102% 


209 


Oopm Qs» Bk 8% 01 

Kanni Bk Fur 10 95 _ 

KcraaQac PoMr6%Q3 . 

IJCBRB897. 


. 3500 


)7l*Q2_ 
Nppon Cnd Bt 1D% 96 . 

Nm^71*S7 

Ostato 7% 03 . 


V »■» 


MlTfD 


UK GILTS PRICES 


tat Reo meeC- 


_19M_ 
or- WqH tan 


ct 


Dan.lOpOA 

teb t2*apc.19M 

Ren Bm 1994ft 

Up019« 

toOl 3pcQa* 99-95 

W*Fe1985 

TmnaVeciBW# 

1400 19S5 

15W«36tt— 
BrtutflKiaaBfl: 
ftnwwbn mpe T8 — 
ftmiftpciagm — 

6dnO*jKt9B7 

n»iN8iet9BW-_- 

tea 13561997 

tetnw. 

ta«Jl«Kl008» 

Mn«®eW9M8t*- 

NfleW-i 

taitsijpcwff — 

EWt UM1B98 

nmOtocMBg 


tei 1» tens Tans 

&(* nVpe teee-^w— . 

tenroteeaw 

^■opc iWitt 



n*>atn— 



-ridtf- 

M M Mat +ar- 


— 1894 — 


p) P3 WcsE+W- 


— 199* — 
1 law 


Tram 1 1 ! jpc 3001-4 — 

100 RrtMB^iPCte^ 

lOZi GoMntoaVmcaXM— 

1<MU TranBte02004« 

Cww9i»peaJ05 

Tneel^aww— 

7ipc2005tt 

8PO200S-W—- 

|t ^ InsniW^BltM — 

112S TrWBItfe 2007ft 
tOGA lihfe-o*-*— 

114A TMS»620OBtt 
107 
103.. 

12145 

105B 

*0- 

Tins Bpc 2008 




f98 4B8U 124 147 171 

EDS (789 UT 1581! 

2 ten ma 

2topc*l3 *94 

2bjrc18 {Sin 

24pe*ZO (8340 

Vmim (O.D 

4J*C3ptt_Jl3iO 



_ 203S* i«m 

U3i 1084 

+^ ire? IBS', 
♦* 1T3H 181 

-3 lift IIOJl 
+4* 194JJ 1703* 
+4* 188,'. 1544 
+4, 17SS 1804 
+ 1 * WFt Wk 

*k 157* (401, 
+1* 152S 1344, 
4k MV* MVt 
+t* ioa 1115 


OnrKnwelbaAtfiOi . 

PabriOnadaftW 

PcwteAOO 

aebecHydD9t*aB 

QneDeotewSBB 

SaMaiy9>|86 

SAS 1099 . 


SBNBBJjaS 

SCF9l|* 

Spring® 

9UeKNBW8li9S. 
9Mdan5>i95 . 


102 

(Blj 

-.ODD 104 
-350 1091a 
.1350 a5Sg 
-200 1021, 
. 1000 08% 
- 150 KM 
.1000 101% 
.3000 96% 
-200 104% 
-300 101% 
. WOO 85% 
_ 150 W7% 
-300 105 

_ ISO 104% 
-200 «*% 
-500 1(0% 
-ISO 108 


.1500 


PrapeodM red redsfflpOan rate on pnfeoM MMon of (1) ION 


arrd 'B 5%. (t3 Rgurss m pnrwto i wB S^Mww RPi base lw 


&mtoh&pcrt8%«_ 
TdgoStcRMerMa. 
TatooUnop 0 *! 8% 96 . 

Tojttt Uator 5%W 

U)telHi9bm7%0Z_ 

WattBs*8%99 

MUdBenkAW 


06% 
-200 KB% 
2000 99% 
- 700 103% 

-300 104% 
-200 103% 
1500 85% 

87% 


.3000 
.1500 105% 
.1900 105% 


6 y*pe ana- 


log# 783 117% 
9.4S 7Z8I1QU< 
644 7*1 n% 

9L31 794UQAtf 
— — 

888 791 10411 
1098 820 im 

SlU 8.17 10«S 
740 791 94j| 

»« 890 948 

893 109* 
812 B8*M 

8» mA 


• TV Mn*. O 'an+Hn » n m m n MarKi <m 


CbnrQKtJiSOIlfL— 

Tre*a!*25J12ft-— 

T«w5%|*:I008-l2tt_ 

rr**Bje 20138- 

7 Lpc 2012-1 SO 

rne*e%poaoi 7 » — 

use Srtwpe'i»-'i7- 

108% 

m 

108* 





+% 1=8* 

+* HlA 
+* 101SJ 
+A IZiti 
«f 

1164 
138B 
+A 122** 

1064 

♦* 101* 

3§li£S^' 


810 

<14 

06% 

+4 


7.45 

802 

B3%« 

* & 

9BA 

83* 

<18 

imU 

+i 

12643 

832 

<12 

106 £ 

+i 

127 % 

7.15 

7 39 

788 

+4 

93% 

MB 

<10 

90S 


1173 

891 

<09 

BBS 

-A 

114% 

<19 

<06 

106% 


128% 

888 

830135,19 


159% 


S 


mi ______ 

^ CBw3%wWAIt_— 
,nyi_ TrasM®*- 
97* CBrtlf* 


821 

845 

594 

&5I 

a.18 

833 


- 48* 

- 43fed 

- 56S 

- 35% 

- 304 

- m 


+1% 59I| 

+% MS 

+4 71 

+% 44% 

+S 

+4 37% 


sm 

105% 

106H 

75% 

96% 

M4 

10*4 

1322 


< 8 % 

Si 

34% 

23% 


tadnftg pe 8 (norths pric* to issue) and haw bean n*nl(d to 

radset rebVng 0# m to 100 to January 1987. Conrtrtton (actor 
3946. RPI far August 1081- 1419 md tar Mnth 1984: 142S. 

Ottwr Fixed Interest 


DH/IBCHE NWC snwons 
Aato 6% 24. 


it ^tef Meat *ef- 


Atta>Dw11%2010_ . • 9.15 
AdnOarWocSOOB 891 

Sian u%peam2 L46 

MsdCto>8%pe-10 833 

9pc 0*1396 898 

13peVM 11J9 

HJdb (Mk 15pe 2011- 1091 

LNIIl 13%pc 2005 1091 

Uwrpaoi 3%t* toad. — .837 

Lccapevom 897 


n%xanr. 8Jt 

uetm.w 440 

iMtoAV83%wani. 

4%JCl.aB4 

UUMnSMC 10062006 1192 



1424 12D» 
_ W%.1f2B 

142 119% 

+% 118% 101 
+% 103% 100% 

— 115% 1W% 

44% 33% 

40% 28% 

138% 114% 

78 87% 

150% 135 

145% 12*% 

— 169% 140% 


Qedt Fonda 7% 03 - 

Qbrwk6%9a 

0aptoteaics8%a3, 
0BUchaekRn7»i03. 
BSC 6% 96 

ffice%® 

3B s% co _ 

fttand 7% 00 

tey7%98- 

NcnwBl|98 

0ntoda8%04 .. 

Spato7%03 

8ndan8S7 


.2000 88% 
.2000 101 %. 
.2000 KH% 
.1500 07% 
.2000 102% 
_ no io8% 
.2900 101% 
.1500 99% 
.3000 Wk 
. 5(03 103% 

,1600 Kn% 

. 1500 94% 
.4000 102% 


.2500 106% 





LMed Nngtorn 7% 87 5500 

»l% 

104% +% 

538 

91 

♦% 

736 

tt*MgtnMRn7CS 

_UHJ 

100 

imk 4k 

7/30 

ms 


825 

total Bata0 15 

-2000 

25% 

25% 

881 

105% 

♦% 

738 

total 9a*5% 03 

-3000 

94% 

94% +% 

806 

103% 

-% 

60S 

total to* 8% 00 

-1250 

112% 

113% <% 

am 

MS* 

f% 

721 






KB 

4% 

873 

SMURttNCSIRNCMIS 





«% 


<60 

Aden Dm Bta*810 

_ MO 

103% 

104 

536 

w% 


637 

taitoh4%00 

-ion 

89% 

88% 

4/55 

90% 


842 

CundEtnpe4%86 

— 2S0 

101% 

101% 

438 

86% 

+% 

902 

Derma* *% 98 

— 1000 

88% 

98% 

<81 

103% 


654 

8B6%04 

— SOD 

M6% 

108 

584 

100% 

+% 

737 

Bk defiance 7% OB ___ 

— 100 

111 

111% 

<81 

96% 

4k 

BOB 

Atoni7%fiB 

— 800 

109 

110 

528 

103% 

+% 

<79 

H)utodUobrFtoS%97 

— 100 

107 

108 

<08 

103% 

♦% 

808 

totoxl 7% 00 

— 100 

110% 

111 

632 

102% 

+% 

<51 

Kobe 8% 01 

— 240 

108% 

107 

532 

106% 

1% 

792 

Ontario 9% 03 

— 400 

103% 

104 

539 

100% 

+% 

7.18 

OabacHpta>606 

— WO 

95% 

06% 

5u*4 

105 

-% 

<46 

SNCF 7 04 

— 450 

111 

111% 

557 

«R 

4k 

772 

total BerfcS 03 

— IS) 

W 

99% 

<14 

100% 

<k 

723 

totf to* 7 01 

— 800 

110 

110% 

521 

103 

4k 

838 






1M% 


634 

VSISTTWOHIS 





97% 

4k 

792 

Be%km599 

. 75000 

105% 

108 +% 

333 

W6% 


662 

06 6% 03 

1QQQ0D 

113% 

113% +% 

398 

10* 

*k 

832 

FMmd6%9B 

.50000 

108% 

107% 

239 

103 

4k 

804 

Her Anar Oev A 00 — 

.30000 

117% 

117% +% 

396 

102% 


854 

■ay 3% 01 

300000 

95% 

95% 

428 

82% 

♦% 

BOB 

Jmaa dm Bk 5 99 

100000 

108% 

108% 

334 

104% 

4% 

739 

JefoiDwBk6%61 

120000 

114% 

115 +% 

4.11 

100% 

»% 

840 

Nppon Tel Td 5% 98 

.50000 

107 

107% 

378 

08% 


<00 

Nortey6%«7 

150000 

186 

108% -k 

335 

WA 

+% 

631 

SNCF 6% 00 

-30000 

114% 

114% 

837 

** 

+% 

738 

Sprtn5%02 

129000 

109% 

109% +% 

<35 



039 

Seeder 4% 98 

150000 

wa% 

104% 

342 

101% 

*k 

<71 

total Be* 5% 02 


107% 

100 

<11 

98% 

*k 

<12 






106 

ik 

730 

OTHER STTWBHTS 





101% 


858 

Abed 7% 95 LR 

600 

100 

W1 

7-47 


A* 

802 

Getateneel««%99U7 MOO 

108 

109 

7.13 

W0% 


756 

total Ba*8S6 LA- 

-1000 

100 

101 -1% 

738 

105% 

4% 

TAB 

Bata Voor Nad Gun 7% 02. H 

-MOD 

104% 

104% +% 

898 

105 


637 

EhentoBditar6%9BR 

— 500 

108% 

M0% -1% 

830 

107% 

4% 

822 

Atoetaftovtace 10% 98 CS 600 

104% 

104% +% 

736 

104 


<79 

MCemt»1O%09C$ 

— 150 

MB 

106% +% 

aio 

100% 

4k 

730 

Brttab Ootntota 10 98 Ct — 

— 500 

100% 

103% +% 

<18 

98% 

+% 

738 

m 10% 88 cs 

— 130 

108% 

W% +% 

<M 

T03% 

♦% 

872 

Beo defiance 9% 99 CS — 

—.275 

TM 

104% +% 

<76 

99% 


800 

GanBecCWtaMOBSCS — 

300 

103 

«S% +% 

<35 

108% 


<42 

WWWFhlOOl CS 

— 400 

104% 

105% +% 

830 

W4% 


<70 

HponTdTeMO%»CS — 

— 200 

106% 

106% +% 

834 

ira% 

-J* 

870 

OtariaBCBCS 

_ 1800 

94 

94% +% 

<19 

95% 

* 

741 

(Mato tedn 10% 88 CS 500 

107% 

Wa +% 

837 

87% 

4% 

737 

OnrKmniMtolViWCS 

— 1» 

105% 

106% +% 

<84 

105% 

+% 

7-28 

Oabec Pror 10% 98 C| 200 

105% 

105% +% 

838 

KB% 

♦% 

<71 

B**m9%9BEH 

-USO 

106 

106% 4% 

<15 




Com4Eucpe901 8a 

- 1100 

108% 

1®% ♦% 

7-36 




QvB tens* 9 96 Ecu US 

W% 

104% 

884 

66% 


7A8 


- 1125 

1W| 

108% 

<54 

102% 


<87 

Fort dd 9taM0% 06 £m _ 

— 500 

108% 

110 1% 

735 

vn% 

4% 

173 

MylMtOOfol 

-WO 

«5% 

lift r% 

TAZ 

97% 

4k 

074 

^eto98BGn 

-1000 

105% 

105% 4% 

622 

103% 

-k 

7.10 

UMadKhgdBm9%01 Bar — 

_ 2750 

110% 

110% 4% 

7.15 

107 

4% 

<67 

ADC 10 99 AS 

— 100 

105% 

1(6% +% 

884 

101% 

+% 

<26 

BP America 12% 96 AS — 

— too 

107% 

«0% +% 

738 

100% 

4% 

<27 

Oam Bk AoMa 13% BOAS 

_100 

120% 

121% +% 

<7D 

104% 

4% 

847 

Bepodtaane 12% 8S AS 75 

105% 

MB % -% 

837 

w 

4% 

<95 

McOadfeCandaUK/a. 

-100 

WB% 

108% 

<57 

101% 

4% 

5.78 

NSWTiaaBsyZaoOSOAl 1000 

9% 

9% +% 

nan 

94% 

4% 

743 

R<IBta*7%03AS 

— 125 

80 

80% +1 

8 M 

KB% 

4% 

891 

SBiAtatGBvtHi902AS 150 

98% 

90% t1% 

832 

106% 

4k 

534 

LUMrAumria t288 AS 

— ISO 

111% 

112 4% 

<37 


Nsntetn>ii7t. 

BrtbhL*Kl8%23E_ 

DBMto9(S% SB E — 

ffl1097C 

HbMk1D%97C. 


Hanson 10% 97 E 

H6&C Hok8ga11.ee 02 E . 

W>i14C 

Japan Day Bk 7 COE 

land Sica 9% 07 C 

Ontario 11% 012 

FoaMpMS%032 — — 
Sewn Trent 11% ME 
Tokyo Sec Poww 11 01 E . 
Abbey NaOonalO 98 N28_ 

TCNZ Hi 9% 02 MS 

CffMEWSSm 


SNCF 9% 97 FR 1 . 


MOO 

85 

«% 

*% 

<83 

^ WO 

MB% 

1» 

r% 

73* 

_ 150 

90% 

»% 


KM 

.800 

96 

06% 

4k 

737 

-637 

105% 

108% 


70 

-100 

108% 

107% 


738 

-500 

K#% 

100% 

At 

838 

- MS 

113% 

113% 

+% 

930 

-400 

111% 

112 

4% 

930 

-200 

#% 

04% 

+% 

<12 

-200 

101% 

T01% 

-% 

<29 

_ MO 

111% 

111% 


<82 

-260 

99% 

100% 

i% 

891 

-190 

111% 

1«% 

♦% 

<57 

ISO 

111% 

112 

-% 

<72 

MO 

83% 

84% 

4k 

772 

-75 

WB% 

107% 

4k 

<16 

2000 

101% 

104% 

-% 

893 

3000 

1M% 

110% 

1% 

732 

4000 

107% 

108% 

4% 

<20 


HXMTWQ RATE NOTES 


Bfcf OKtr (Xcpn 


AbbeyMM-Deawy-Affl 1000 

Banco Bane 099 200 

EUBkmAOTPM 500 

BFC£ -002 38 360 

9rtorrteai096E. —150 

Cawto-%99 2003 

CCCEODBEcu. 


.200 


.300 


CradtLycmfeftOO _ . 

Danwk-%98 1000 

Deadm- Branca & BBOM 1D0D 

Rnodd 808010 97 430 

BntandOer 1003 

350 


BSA9SC. 

beknIOOB 

lta*%S8. 


.300 


.2000 


LKB BacWv4*toariBn-% 96 1000 

UoydsatoPopSaiO 600 

405 650 


NMrZaeHnd-%99. 
OwfaOOB — — 
FMds098 


WOO 


.2000 


.500 


SodetotenwriaQK 300 

Sttotabanfc Badn -OJB 90 OM - 6000 

Stm 6k VfcKrta 0X6 OQ 125 

Sweden 09S 1600 

.4000 


Uhtad Kng(tore-% 90 — 
COWBimE BONOS 


99.14 

9980 

10005 

99.74 

pa 

9828 
9879 
9838 
9 ac 
(998 
10008 
9882 
9987 
9958 
10032 
9987 
9280 
9986 
9M0 
9922 
9930 
9937 
9985 
09.70 
10007 
9972 


9930 

9996 

10014 

9987 
10005 

9930 

9905 

mm 

9953 

10005 
10025 
9991 

10006 

9970 
10038 

9946 
earn 

9971 
9074 
map 

9947 
9030 
10003 

9988 
10013 
9979 


47856 

38790 

58780 

14775 

53500 

43125 

62S00 

58000 

47500 

54668 
4X075 
3AW I 
52500 
14400 
<1250 
<5625 
<1000 
42500 
38125 
IMS 
41250 
4X812 
58848 
33344 
17500 


Coot. 

totaled Mm 


ad Oder Pmn. 


aw4mngfBitaB%06 . 
OiitoCj|*alB08 _ 
GM&nmKadek6%0( . 

QoBWgoafc7%CO . 

Hanson 9% QBE 

HartayPnf6Q2 

Ur0Saa6%QZe_ 

UsroAOBE 

l4bU Btata 2% 03 

U«*tte8flnfi%W _ 
WPowtr6%0BE_- 

0gdai8Q2 

Penrrol4%03 -- 
Snokmo Bsrii3% 04 . 
8uiAlfanoe7%OB£_ 
TeecoC9pBl9 05C. 


Tmae hswrwto 2% CC 
* No htonnaOon ttaldsh 
3 OrV m nrtot tMw- «gpM a pm 


400 


91% 

a% 

47X97 

250 

88 

102% 

103% 

+1279 

300 

4L52 

107% 

Wi 

-12Q 

-85 

13564 

110% 

111% 

43245 

500 

<5875 

113% 

114% 

+KTO 

400 

181 

135% 

136% 


.« 

<72 

me% 

103% 

+240 

-90 

564 

87% 

88% 


200 

gran 

69% 

91% 

*1794 

100 

23*3 

107 

106 

♦4J8 

250 

<33 

WB% 

103% 

*31 

.as 

39377 

87% 

88% 

+8832 

500 

117% 

93 

94 

+2990 

300 

3E063 

ask 

88% 

+1831 

155 

39 

88% 

99% 

+1739 

200 

251 

114% 

115% 

42838 

300 

«% 

103% 

104% 

+K19 


*HW4dH7 BONDS; The ykta ta tfe itoM to ttdmpdon cl «■ bUfrira; fie atnae taarntf k h odhn cl onanw ute. Otg te<Om m on. 

RJWW a HOT HQTte Denantmod to arias atom rwa wwa hrawear Cawm 4tew ta rnktoag fTpawi M a » mm ««nto» oawd im (Bwwwafc ^T v-Tho 


tolbsAwrtdltoiH tM, 1094, Avratodton In rticto or ki p*t to **, tarn nr* penMed ntaw wtttn contort. Ms Mped by kteatort SeariHu Mdrtt AmdeBon. 




I gx addend. Ctootog mld^riom an 


ihown fa panda. 





Jr 


ITINANCIAL TIMES TUESDAY MAY 17 1994 


COMPANY NEWS: UK 


De La Rue confirms 
talks with Portals 


By Paul Taylor 
and Andrew Botger 


Shares hi Portals, the security 
and specialist paper maker, 
jumped another 40p to 805p 
yesterday after De La Rue, the 
banknote printer, confirmed 
that the companies were in 
talks which might I rawl to an 
offer for Portals. 

Neither company would elab- 
orate on the one-line state- 
ment, which came after mount* 
ing speculation about the 
Identity of a potential bidder. 

Portals’ shares gained 99p on 
Friday after the group, which 
also includes environmental 
protection and control prod- 
ucts operations, disclosed that 
it had received an approach. 


Market speculation quickly 
focused on De La Rue, one of 
Portals’ customers. It has 
a £200m cash pile and has 
made no secret of Its intention 
to make acquisitions. 

Yesterday its shares closed 
down 2lp at 857p amid market 
concerns that U might be 
tempted to pay too much in 
order to secure the approval of 
Portals’ hoard, which analysts 
believe might have to be up to 
£10 a share, valuing Portals at 
about £65ftra. 

The two companies have reg- 
ular discussions about com- 
mercial matters; however, the 
latest move by De La Rue has 
taken analysts by surprise. 

The acquisition of Portals, 
which controls SO per cent of 


the world market for bank note 
paper, would transform De La 
Rue into an integrated security 
paper maker and printer. 

However, some analysts 
behove that there are strong 
commercial reasons a gainst a 
merger. In particular they fear 
that Portals’ other customers 
would balk at purchasing 
paper supplies from a rivaL 
Since Mr Jeremy Mars hall. 
the ex-Hanson man, became 
chief executive of De La Rue in 
1989 profits have quadrupled 
following a tough p ragwmwnn 
of disposals, closures and effi- 
ciency Improvements. 

Its biggest purchase to date 
was the £94. 7m acquisition erf 
Inter Innovation, In 199L 
See Lex 


BIL reviews 
plans for 
Mount 
Charlotte 


By Michael SfcapMcer, Leisure 
Industries Correspondent 


Fenner surges to £2.9m as 
recovery gets under way 


By Andrew Bolger 


The management of Fenner 
said yesterday that it was see- 
ing the first signs of the prom- 
ised tumround at the Hull- 
based industrial products 
group. 

For the half year to February 
28 pre-tax profits rose from 
£105,000 to £2.91 m, including a 
gain of £795,000 from the sale 
of two operations in South 
Africa. 

Performance had improved 
in all divisions and the return 
to positive earnings pm- share 
had allowed it to resume 
interim dividends via a 0.5p 
distribution. 

The figure took account of 
an exceptional charge of 
£2.06m (£i.4m), most of which 
related to the group’s reorgani- 
sation of its power transmis- 
sion division, which involved 
the closure of a plant in Ghi- 
na.Last year Fenner was 
approached by a possible buyer 
of its power transmission busi- 
ness. but talks broke down in 
December. 

Mir Mark Abrahams, finance 


director, said it seemed pro- 
spective buyers were unlikely 
to after an acceptable price, so 
the group would concentrate 
on Improving the division's 
performance. Power transmis- 
sion incurred a small operating 
loss of £800,000 on sales of 
£33m, but was now trading 
profitably. 

The fluid power division 
increased sales from £Hm to 
£14m and new products 
increased its market share, 
particularly in the US. Operat- 
ing profits rose to £1.2m 
(£800,000). Significant growth 
in both tiie US and UK helped 
the group's niche polymer 
businesses raise sales from 
£17m to £19m and operating 
pr ofits from El ftm to W3m 

Conveyor belting’s sales 
wore flat at £I3m, with a drop 
in orders from British Coal 
being offset by stronger over- 
seas sales in the US pnd Aus- 
tralia. Operating profits rose 
from £800,000 to £lm. 

The group said its South 
African businesses had again 
performed well in recessionary 
conditions, with the political 


rnia»rfaitntii»« not having had 
any si gnificant effect 
Earnings of 0.65p compared 
with losses of 4J5p last time. 


• COMMENT 

Fenner has dearly turned the 
comer. Polymers and fluid 
power are going well, particu- 
larly in the US, and conveyor 
belting has performed credit- 
ably overseas. Power transmis- 
sion is being facd on to 
or until someone is prepared to 
pay a decent price. Profits 
should rebound sharply, 
than Ira to the ftlimitiatimi of 
restructuring charges and 
lower Interest payments. The 
return to profitability in the 
UK after three years will also 
lower the very high, tax charge- 
Tfaese positives are partly off- 
set by the group’s exposure to 
South Africa, with the allied 
political and fo reig n exchange 
risks. Profits are forecast to 
recover to about £7.5m in the 
current year to August, but an 
expected £llm the following 
year puts the shares on an 
undemanding multiple of 
about 14. 


Chelsfleld increases stake in 
Merry Hill shopping centre 


By Vanessa Houkfer, 
Property Correspondent 


Chelsfleld, the property 
company headed by Mr Elliott 
Bernerd, has increased its 
holding in the Merry HD1 shop- 
ping centre in the West Mid- 
lands from 30 per cent to 50 per 
cent 

The company, which, bought 
the in partnership with 
Saudi Arabian investors, has 
paid £7.1m cash and extended a 
share holder loan to increase its 
stake. 

The centre, which was pur- 


chased for £128m last Septem- 
ber, has been revalued at 
£l85m, reflecting increased 
rental income from the project 
and the uplift in the property 
investment market 

Situated in Dudley, it is one 
of the four largest shopping 
centres in the UK, comprising 
some 1.4m sq ft of covered 
shopping mall space and 
approximately 400,000 sq ft of 
retail warehousing. 

The centre’s annual rent roll 
is expected to reach £lfim by 
the end erf this year. 

Senior lenders to the project, 


which originally made a £9Qm 
10 year senior loan, have 
agreed to extend additional 
facilities which will replace a 
V-iftm mezzanine loan, which 
was formerly guaranteed by 
the Saudi Arabian investors. 

• Chelsfleld also announced 
yesterday the acquisition of a 
50 per cent interest in St Cath- 
erine's House in central Lon- 
don. 

The com pany hag bought its 
50 per stake in the building 
through a joint venture com- 
pany, formed with a private 
German investor, for £35m 


British Gas In power 
generation move 


British Gas yesterday moved 
to strengthen its position in 
the fast-growing int ernati onal 
power generation sector by 
buying a 51 per cent stake in 
US4wsed Ges Ventures Advis- 
ers. 

GVA, which was set up in 
1991 with financial help from 
British Gas, specialises in the 
development of private sector, 
gas-fired power generation 
projects, mainly in Malaysia 
and Indonesia. 


LGROUPEJ 



PETROFINA 


SALES IN THE FIRST QUARTER OF 1994 


ISSUE OF PETROFMA WARRANTS 1984-1997 
PROCEDURE FOR ALLOTMENT 
TO THE SHAREHOLDERS 


ConaoWatod ado* of the 8SN Group amounted to FF 177 button 
in the firsl quarter of 1994, 7.3% mom than tha FT 16 .5 billion 
recorded in the same period of 1 993. 


Sales by division were as follow* : 


fa ffmifcoraj 

1994 

1993 

Euraoa 

Dew/ product. 

5M9 

5744 

Grocary preduebrod fcnta 

3.274 

3702 

BboA 

3,121 

3,022 

Bmt 

1,343 

I>00 

Minadwahr 

IA83 

1.268 

Conlainan 

1A« 

1.743 

hitaniiJ ii ■■ rJ 

mwiKnoocH 

1,779 

1,026 

kitrograup Iraraadlara 

1451) 

1468) 

GROUP TOTAL 

17748 

16^37 


The Company mn c anrn the tew at 146X611 HU M which wffl be ■BoOcd free of chugs 

g au p»r*«mgr rym nf tte Krfariny TmidiT 

of tMpfca of 20 co up o n* no. ia 

la elteteg ike mm ibe Company ink to give in taaretoMca • etgn of confidence, by 
»Uowhm then to Bfcc pert, through « ** fimacM lamm e u t end beyond ite rigto waMag 
from their i bgfl-hntiftn g. to the Paroflae Orowp't pro^iqa Sx growth. 

The c ogpoo do. 10 of the Pctrofina tone will be aepmod as lac 3. 1904. and will be 
occteeeaUe. by nmHptai of 20, (gate* ware®*. 

The Pctiofisa will bo ttafcpf cx-coapoo no. 10 boo Jane 3, 399*. 

Fee regarded (hares, the Company win neon! la a register kapt far tbb purpose at Ibe 
Ctampn/t regtaoed office the oreober of wwnal*. end of lights rqitrcneln g ooajna no. 10 
(la B omb er lower tea 20) white ate trg te t wJ temhaUer wfl awn aa Jess 3. faste n ed 
owners wiB teethe ■ catifioae far those seconteloai. 

For sbsrss held ia secoricia' e cco— M with Bne ne i nl mstUatioos, tbe a umber of rights 
repeesemmg coupon do. 10 wffl sppesr on • npetstc Boa of such eocmmi. cod the owner win 


Fran Joe X BW manta, say beUeref eowpen no. 10 or eC risk* reprantefcw cnapoa 
■o. it any moot maj II— cte Inatete terand wtte tee flsmrhl s e nfca at tee 
Ctenpony (see tat am p^e37of Ibe saatf report Kir tee 1993 tmfncn year) toenteaBgr 
otetlpla or 20 soe* rtgUs agshte ■ «eno^ wlte tee etawsetteks deserfted betew. 

The waimt will be mUsblewitbia tbc ben deteyi. ttaoegfa rewtarioa la secariifc-S 1 eccomts. 
ft tell ste> be jvtaMde. n o* A*gmx 1, 1SW, bt bearer ham. 

Tbe exchange of coapoea m lOagsbotwenancaate anexpeaeo SjrthccwBef. 


Tha International Division Includes all Group busirauas outside 
Europe • in the Amarfcm and Africa, in the Ada - Pacific region 
and exports. 


The wwsats will give tte dgftr Id nCacdbe one Pemba stare ktatal to the asteiag ateres - 
with tee cxccptkm of tha special benefits naeresil far tte AFV item - white via be 


I ss goring M pnisnitnn o l tec 
of tens of tte wimas fadode at 


of owncahip as ttf Jsaasrj 1. 1997. The 
■ far adjutants of Ite orate confiUom 


data for 1994 and 1993, due account should be 
ton described below : 


teatUBtaii 

Tte exercise period far the wxRsars iriD exited from Tsesdsy. May 20. 1997 n Tbesday, 
teti, 1997 tadaSTrt. 


The mineral water division now Includes Volvic in France and 
>^uas de Lanjaran in Spain. 


Tbe pace far sabeextpian of one Petrofln testa, eoga Btescatstlon of one wsnsat. 

aEFlZSOQ. 


In the containers division, Verreries da Masnifrres has been 
accounted for by ihe oquBy method since the beginning of 1 994. 


Assuming constant business organ mo tion, teopa of eoroofcdaHon 
and sxchange rotes, changes in sales compared with the first 
quarter of last year are as fbmws : 


CWky products 

Groce? products and ftuta 

Bboub 

Bear 

ASlnaral waMr 

QsU o in an 

IxtlJRlsIi |i| | ■ ■ ,| 

piMnwOna 

GROUP TOTAL 


In ate aw teertSaalty to tew tte etersteWera to miwtlwa iiaiHMu rf20 < 
no. 10, tUi nayn wfli fa gated on tte Unite Block Iwtiqr tea j—o : 
Prtroflna wfl siao rcqnaubwi Jane J, 1994, tfa UXIbi of tte nBU wtte flt* 
tf Ac Braids Stuck Excbas^. 

<te tte nrrs Usa af ante Mtega, ifa C aa n pa ay tete— ■ ten— white 

pteUatariwttfcltetattehrs. 

Tbe ante protecctes wfll be BnOaMa « ite OanacU InadMIana mmted * 
fteaoddaerrice otter Campty- 

TWs saa n i mnmmi Is addroaod ately fa and I aaendeH ter tea aola tewfli oC ba 
femfia* teaiea te barn- tan. 

PamflnSA. 

VAT No. BE4Q3J794S 1 - BjC- Srands Na. 227467 
Eeghfered Office: S2, raa 6m rMotele - MM Bim* 


IF YOU GO DOWN TO THE WOODS TODAY — 

One tiring is certain os ft when bear mnkea arrive, the vaa majority af iimston 
will sufer wtribr die fenowle^geable wfll pick up the twar™* of a H**"""- 1 Avoid 
the ph&Qs of investmems ia the 1990s A ring 061 474 0080 to book year FREE 
place at ibe IDS Gtun Seminar. 


fMQ WK 



Daily Gold Fax - free sample 

■ : Anno ’.Vtiitby 

o; ; ■ 7’-: / : 74 
Fax. 071 - 4 .V? 4 V 4 ;. 


tmir. (>.!>! An.il,'. t tl 
7 ?.. .*■■ sn.-vJ. LC'tidcn V, 1H 711.?. 
tcnio'.odi:-, •jpccwli'.t'. lor over - 2 


Quality streets find ready buyers 

Alison Smith on the advantages of acquiring good mortgage books 


Brtaiey Investments of New 
Zealand is w u h tnMng plans to 
float Mount Chariotte Thistle 
Hotrix, its UK subsidiary, after 
a recent upturn in business, 
particularly in London. 

BIL, which acquired Mount 
Charlotte In 1990, has said 
repeatedly that its eventual 
I aim was to float the chain. 
However, with trading improv- 
ing after a difficult few years, 
some in the New Zealand 
■ group believe it Bright be pref- 
erable to hold on to the chain 
and benefit from the upturn. 

While a flotation has not 
entirely been ruled out, BIL is 
«Tan considering BriTwig - a slice 
of Meant Charlotte equity to a 
small group of investors. In 
1991 BIL sold a 30 per cent 
stake in Mount Charlotte to 
two Singaporean government 
agencies. 

Mount Charlotte made a 
profit of £2.lm after tax in 
1992, compared with £L5m in 
1991. While the chain has, 
along with the rest of the UK 
industry, suffered a foil in 
occupancy and rates during 
the recession, its London 
hotels are i ajm»ntl y thoug ht to 
be well over 90 per cent foIL 

The hotel rimm, the sfftmii 
biggest in tiie UK after Forte, 
is expected to phase out the 
Mount Charlotte hotel naro* tn 
favour of its Thistle brand- 

The company, which oper- 
ates 112 hotels in the UK, has 
said it wants over 60 per cent 
of its establishments to be 
marketed under the Thistle 
brand by the end of next year. 
It said it intends to turn This- 
tle into the UK’s leading four- 
star hotel chain. 1 

Over the past two years, the 
company has upgraded eight 
Mount Charlotte prope r ties to j 
Thistles and will upgrade a | 
further 10 over tbe next few 
mouths. The chain, which has 
no hotels outside the UK, is 
believed to be in no rush to 
acquire properties or manage- 
ment co ntracts in continental 
Europe. 

It believes that London will 
remain one erf the world’s most 
important hotel markets. The 
company has 24 hotels with 
nearly 7,000 rooms in London, 
making it the biggest operator 
in the capital. 


P otential home buyers 

complaining that many 

propaties on the market 
are poor quality and that the 
good ones are snapped up 
quickly at rising prices as buy- 
ers compete, may find it com- 
forting to know that mortgage 
lender s themselves are in the 
$fline position. 

The properties in question, 
are mortgage books rather 
than houses, hut the market 
conditions are not dissimilar. 

For the last few years, 
interest «rrmng lenders in this 
low-profile form of aw piOdtiroi 
has been increasing, and 
competition has become 
intense. 

“A couple of years ago, it 
might be that two lenders 
looked at a book that was for 
sale,” one senior executive 
said, "now, 15 might gee it”. 

Even among centralised 
lenders, who are usually 
as those seeking to leave the 
market, there is jrrtwtert 
in acquiring mortgage books. 
National Home Loans, for 
example, is looking to buy. 

None of the purchases so 
far •pifltriVwad in «fop the ti-ghn 
offered by Lloyds Bank for 
Cheltenham & Gloucester 
Building Society. 

However, the sums involved 

ran still Tip pihsfaintial and are 

rarely Insignificant. Few 
lenders would look at a book 
worth leas thin gjftn. mid for 
the larger organisations swim 
may be the lower limit, which 
makes the process of carrying 


out due diligence wort hw hile. 

HaHfav B uilding- Society 1ms 
built 19 mortgage hook acqui- 
sitions totalling about fiihn 
over the past three to four 
years. In February this year 
Abbey national bought the 
£900m UK residential mortgage 
book of the Canadian Tmpmiai 
Rank of Commerce. 

Birmingham Mlikhhfw a, one 
of the Mwaiw bunding societ- 
ies active in tills area, ma rip 
acquisitions amounting to 
almost £250m in 1993. 

Such activity highlights the 
contrast with the books that 
have failed to find a buyer. 
“There are a lot of poor quality 
loan portfolios out time,” com- 
mented one lender. 

Nothing came, for example, 
of giving potential purchasers 
tiie opportunity to show inter- 
est in the £2hn mortgage book 
of Mortgage Express, the cen- 
tralised lender owned by tha 
TSB. Some potential buyers 
were deterred by the quality of 
the loans. TSB says now that it 
fa committed to keeping the 

opera tion pnfl manag in g down 

tim loan book. 


S imilarly some of the 
mortgage books available 
from foreign banks have 
not proved attractive. These 
banks entered the UK housing 
market in the mid- to late- 
1980s, stopped lending in the 
recession and now want to 
leave an area of noncore bosi- 


Much more attractive have 


Huntingdon chief 
executive resigns 


By DawM WIgMon 


Mr Bennie Wooley is resigning 
as ghigf executive of Hunting- 
don International Holdings, the 
Ufa sciences and anglnaariTig 
services group that has seen its 
share price fall by two thirds 
over the past year. 

The move follows a strategic 
review which concluded that 
the group should focus on 
its original life sciences busi- 
ness. 

Mr Wooley ban headed the 
company for 14 years during 
which it diversified intn engi- 
neering and environmental 
consultancy in the US and 
bought consultants Travers 
Morgan in the UK. 

Tbe review concluded that 
neither of these divisions had 
the earnings prospects origi- 
nally envisaged. 

The group yesterday 
announced a sharp fall in oper- 
ating income from £5.8m to 
£2£7m for the six months to 
March SL At the pre-tax level 
profits were s li ghtl y ahead at 
£989,000 (£984.000) reflecting 
£3m of restructuring costs in 
the first half of last year. 

The company, which has 
Issued two profit warnings 
since March last year, said 
income from operations had 
been "significantly" below 


expectations but that it was 
continuing to generate cash 
surplus to operations. This was 
reflected in an unchanged 
interim dividend of 0.875p. 

The US arm incurred an 
operating loss of £388,000, com- 
pared with a profit of £942,000 
last fciinp, while. profits from 
Travers Morgan fell to £343^)00 
(£L23m). 

Operating hMvwnp from life 
sciences slipped to £3.75m 
(£437m) an turnover af £20.1m 
(£l9.7m). 

The group has appointed 
Kleinwort Benson, the mer- 
chant bank, to help it identity 
strategies for tiie engineering 
businesses. Mr Christopher 
Cliffe, finance director, said 
this would cover options other 
than disposal. 

Mr David Anslow, currently 
chief operating officer interna- 
tional, is to take over as chief 
ex e cu ti ve with Mr Cliffe taking 
an the additional role as dep- 
uty chief executive ‘ with 
responsibility for strategic 
development. 

Although profits from life < 
sciences are e x pected to pick I 
up to. the second half, tiie com- 
pany warned that the shortfall 
for the group as a whole was 
unlikely to be made up. 

The shares closed 3p lower at 


PETROFINA SJl 

Office : 52, rue de iTndustrie - B-1Q40 Bruxelles 
VAT N* 403.079.441 - R.C. Bruxelles n° 227.957 


DIVIDEND NOIKZ 


At the Annual General Meeting held on May 16, 1994, the 
Shareholders approved a dividend payment of BEF 280 (or 
BEF207,9 net after deduction of with holding tax) in respect of 
23,251,817 shares outstanding ct December 31, 1993 
(indudingthe 125.000 AFV shares), coupons numbered 9 to 
30 still attached. 


The dividend vvifl be payable as from May 1 9, 1 994 against 
oaupon no 9 at : 


Banque Bruxelles Lambert Genfrrale de Banque CGER 
Banque Paribas Belgique Kn w fa b cnk Baique Nafcnoie de Paris 
Crfrdft du Nord Banque Internationale 6 Luxembourg 
Banque GAnerale du Luxembourg Commerzbank 
Deutsche Bank Dresdner Bank ABN-AMRO Bank 
Crfcfe Suase Sooite da BrngunSurae UhbndeBonquesSuisses 
Credit© taSano Barclays Bank (FenchurchSt., London) 
Citibank N A (ADR Department) USA 


fi nmilftwiftCliemirel 

Nederland B.V. 
U-S-$2Q,00CMXW 
Floating Rats Notes 
DmSM 

InhftPwii UUMwoob 


Notice or Early Redemption 

State Bank at Soath Australia 


lulu titan &£l2S%DtraBum 

Lnwupmri ntiinuar.iBM 


TotSkNerrenW, 

(atariAaaaotdai 
UANotatatlWi 
par US. 5300000 U-S.Slt2U.iO 

IMbrisaltelt 
Banking Co* Ltd. 

Agon Ba nk 


(ttaooaooaoMissuM) 

5H% Guaranteed Notes due 2004 


Notice b hereby olwn Hat pursuant 
to Common s [Sj o»e» Notes, the 
Bara Shan redeem afl the Nows a 


their ajtst anffln g principal amount 
plus accrued kinrast on June 0,1994. 


BUSINESSES FOR SALE 


plus accrued kiwast on June 0,199 
RBCAL MB HMOML 
RnraMAOExr 

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on Tuesdays, Fridays and 
Saturdays. 

For further tntonraUon 
or to advertise In this section 
please contact 

Karl Loynton on 071 973 4780 
or Melante M&as 071 873 3308 


InnHBflU. 

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been the the staff mortgage 
books of some large financial 
institutions. Even tiie Bank of 
En gland has sold its staff mort- 
gage book to the Halifax, 
which has specialised in this 
type of purchase. 

Mr Peter Walsh, finance 
director of Chelsea Building 
Society, said that in buying a 
mortgage book a lender was 
tniring on business where there 
was a track record of payments 
giving more information than 
may be obtained from vetting a 
new borrower. 

While it is bard to imagine 
what could be safer than tak- 
ing on the Rank of England 
staff mortgage book, this lack 
of risk highlights only «»ne of 
the advantages that a pur- 
chaser can gain from buying a 
book of the right quality. 

Mr John Fry, group services 
director at Abbey National, 
rairi that buying the CEBC book 
was “a way of increasing our 
assets without putting margins 
under pressure”. 

The purchase also gave 
Abbey an additional 17,500 
mortgage customers who were 
"pleased to come to a house- 
hold name”, as well as a facil- 
ity that will enable them to 
securitise fixture mortgages. 

Abbey gave former CEBC bor- 
rowers a 025 percentage point 
interest rate cut, but they are 
still paying about 05 percent- 
age points more than Abbey 
customers generally. 

Mr Stuart Bemau, a senior 
executive at Nationwide Build- 


ing Society, commented that 
even when different interest 
rates paid were harmonised, 
there was still a benefit fa 
acquiring such loans. 

Against the background of 
tbe recent emphasis <m fixed- 
rate mortgage lending, where 
margins are gener ally nar- 
rower, the opportunity to buy 
a significant amount of vari- 
able rate lending fa particu- 
larly attractive. 

Compared with merger or 
the purchase of another organi- 
sation, buying a mortgage 
book can also offer growth 
without tears. 


> r 


T he transaction does not 
require, for example, £1* 
consent of a society’s 
members, and the legal states 
of the process Is not to doubt 
It is also much less hkety to 
lead to large scale job losses dr 
redundancies than having to 
reconcile two branch networks 
into a single organisation. 

Though lenders believe the 
intensified competition for 
mortgage books wffi continue 
for some time, despite the 
impact it has already lad fa 
raising prices, they know that 
whatever its benefits, buying 
mortgage books can only be a 
gMttiitiB compared with seffing 
mortgages. 

“It’s a useful addition, but 
it’s not going to change toe 
way we do business,” con- 
cluded Mr Dick Spelman. mar- 
keting general manager at the 

HaHfaT. 




Enterprise renews 
onslaught on Lasmo 


By Peggy Hanger and 
Robert Corzfaie 


Mr Rudolf Agnew, Lasmo's r.i j 
chairman, rejected Mr mill it * **•! 
Heame’s claims - to particu- 
lar, tbe references to gearing. » , 

“Enterprise takes no account X Hit TLt - 
of Lasmo's operating cashflow A 
over the next three years,” Mr 
Agnew said. 

Mr Heame’s letter also said 
Lasmo's defence document 
misled shar ehol ders. He denie d 
the co mp any’s claim that the 
offer’s unusual equity struc- 
ture would make second class 
citizens of shareholders and, fa $ 
effect, force them to inject cash 
into the enlarged group. Enter- 
prise is offering 27 A shares, 
with limited dividend rights, 

and 12 w a rr ants EXBTClSable at 

470p for every 80 Lasmo shares. 

“The two elements of the 
package are separately trade- 
able and shareholders wfll not 
need to subscribe cash to real- 
ise the warrants’ value," he 
said. 


Enterprise Oil yesterday 
soujdit to step up the tempo of 
its hostile £L9m bid for rival 
explorer Lasmo by casting 
doubt on the credibility of the 
target’s management. 

Mr Graham Hearne, Enter- 
prise rhjrimwm and f-htaf wins 
utive, nailed on i flwmn share- 
holders to ask whether the 
group would ever pay “a mean- 
ingful dividend". He quoted 

management s tatements since 

1961 committing the group, to 
at least a stable dividend 
when, to fact, the pay-out has 
fallen from K5p to 13p. 

Mr Hearne also urged share- 
holders to question Lasmo’s 
financial position, and sought 
to imply gearing could reach 
unacceptable levels as a result 
of the £80Qm investment pro- 
gramme. 


DIVIDENDS ANNOUNCED 


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July IS 

2.6 

4v85 

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July 1 

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12 

0 ^ 

Aug 5 

r* 

- 

nl 

0^75 

July 6 

0.875 

- 

2.775 

isa 

Aug 5 

13 

isa 

17.75 


Dividends shown pence per share net 


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FINANCIAL TIMES 


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FINANCIAL TIMES TUESDAY MAY 17 1994 

Price thought to be slightly less than £100m sou; 

Burford may acquire 
Trocadero centre 




By Simon Davtoa 

Burford Holdings, tie property 
company which purchased the 
Ladbroke property portfolio for 
£l03m earlier this year, fe 
understood to have signed an 
exclusivity agreement for the 
potential purchase of the. 
Trocadero, off London's Picca- 
dilly Circns- 

Mr Nick Leslau, Burford's 
chief executive, said he was 
unable to confirm the agree- 
ment He added, however “For 
gome time, we’ve been inter- 
ested in the Trocadero at the 
right price and under the right 
conditions. “ 

Ur Philip Wallace, the 
receiver at KPMG Peat Mar- 
wick, said an exclusivity con- 
tract had been signed with an 
unnam ed party at' a value 
which was slightly less than 
the initial £l00m asking price. 


. .The Trocadero, which at the 
peak of the market was valued 
at' more than £2Q0m, helped 
drag former owners Brent 
Walker and Power Corporation 
towards the brink of cofiapse. 

The holding company for the 
property went, into receiver- 
ship in January 1903, and was 
put up for sale last October. 

At a price of SiOOm, the 
360,000 sq ft entertainment and 
retail centre would offer a 
current yield of close to 8 per 
cent 

The building has consider- 
able potential, having 1004)00 
sq ft of empty office space, and 
bringing in almost 14m 
shoppers per year. However, it 
has been affected by the taw- 
dry image of its neighbouring 
streets. 

Burford has a reputation for 
buying lower grade properties 
where the management can 


Life Style Care to join market 


'S': 


f renews 

:•« on Las, 


By Peggy HoHnger 

Life Style Care, the nursing 
home group which specialises 
in caring for elderly mentally 
infirm patients, is seeking 
funds for expansion thmngft a 
June flotation expected to 
value the group at between 

Mftm arid MSm 

The company is coming to 
market next month through a 
placing which is expected to 
raise about £Uhn. Proceeds will 
be used to pay down estimated 
net debt of £ 6 hl 


Life Style was formed In 1987 
by Mr Ramesh Sachdev, the 
accountant and property dealer 
who is now chief executive, 
and his wife, Pratibha. 

Mr Sachdev’s family is 
expected to sell only a small 
part Of its 85 per . cent holding 
to raise some £2m. The two 
remaining shareholders - 
Eagle Star and Gresham Trust 
- are also, expected to retain 

ttfl h iilV nf Hirir hniMfagp 

The company operates in the 
north and north-west of 

En gland and file Mifllatek, but 


is thought to be keen to take 
advantage of lower property 
prices in London. 

it hn«t 14 hnmwi i aU of which 

are freehold, with S64 beds. 
Occupancy rates over the past 
two years have been 96 per 
cent 

in the year to June 30, Life 
Style reported pre-tax profits of 
£1.2m on safes of £&3m. Pretax 
profits for 1904, which wffi be 
forecast in the flotation pro- 
spectus, are exported to show a 
significant increase, the com- 
pany said. 


Seafield terminates I Newmarket 


sets date for 


T • a 11 ■ acts uaic 11 

Imari merger talks liquidation 


0? 


Seafield, the Dublin-based 
transport and distribution com- 
pany, yesterday announced 
that talfca with Imari concern- 
ing a possible merger had been 
broken dff- 

The board of Seafield came 
under fire, last mon th when a 
group of shareholders called 
far an extraordinary meeting 
to consider a change of leader- 
ship at the company. ■ 

The dissident shareholders 
last week wrote to other share- 
holders outlining their reasons 
for seeking to replace Mr Brian 
Chilver, chairman, and Mr 
Richard Hayes, a director. 

They have nominated Mr 
Robert Cosby for chairman, 
and Mr Tony Wilson, a former 
executive chairman of the 


The dissidents, who speak 
for 25 A per pent of the share 
rajftfail . catalogue the “dismal 
trading and acquisition record" 
under the present manage- 
ment. 

However, Seafield said that 
file company's problems had 
been caused by the purchase of 
Charterhall Properties when 
-Mr . Wilson was chairman. 
€harierhaU was sold last Octo- 
ber. 

Mr Chilver said the group 
would be writing to. a bereiygA 
ers this week. 

The extraordinary meeting 
has been convened for June 
10- , 

Last summer Waterglade 
International, the property 
group, withdrew an attempt to 
replace Seafield' s board. 


Proposals for winding up 
Newmarket Venture Capital 
will be put to file annual meet- 
ing in August. Holders of more 
than 41 per cent of the shares 
have Indicated their intention 
to vote In fav our. 

If agreed, directors expect 
an tefflal distribution of 36p 
per share wtthhi two .months 
of the ideqisian with further 
distrib ution s as the rest to the 
portfolio Is realised. They 
added that most of tts invest- 
ments should be realised 
within two years. 

The company has been pre- 
paring for Hquldafion over the 
past year. At December 31, 
investments made up 63 per 
cent of net assets against 
86 per cent 12 months earl- 
ier. 





COMPANY NEWS: UK 


Discount for US patients on SB ulcer drug 


add significant value.- Mr 
Leslau said one option would 
be to switch the office p r op erty 
back into retail or entertain- 
ment 

Burford paid for the 
Ladhroke portfolio through a 
share Issue, which brought its 
gearing bade down to about 35 
per cent, compared with its 
self-imposed celling of 300 per 
cent- It would therefore be 
comfortable funding up to 
£l50m in property purchases 
through debt. 

Mr Wallace claimed there 
had been considerable interest 
in the Trocadero tarn prospec- 
tive buyers in the US, east Asia 
and HE although £l00m 
appeared unachievable. “We 
have spokes. to 30 or 40 differ- 
ent interested parties", he said. 

It appears that Burford has 
several weeks in which to tie 
up the 


By Daniel Oram 

Smith Kline Beecham is to offer $20 
(£13.60) rebates to some US patients 
buying Tagamet, its once best-selling 
ulcer drug which loses patent protec- 
tion in the US today. 

Hie move is .the latest in a series of 
measures SB has taken in the past 10 
days to defend Tagamet from the 
onslaught of generic competition. 

The rebate is available to patients 
without health insurance, notably those 
cm file DS gover n ment run Medicare 
which provides health cover for the 
elderly. 

The fall price of a one-month course 
of Tagamet is $83. That compares with 
$93 for a month’s supply of Zantac, 


made by the UK’s Glaxo, and $86 for US 
company Merck’s Pepcid, said SB. 

SB’s discounted price is likely to he 
heavily undercut from tomorrow. Three 
companies have signalled their inten- 
tion to sell the generic drug; dmetidhie, 
as soon as the patent expires. They are 
Novopharm, the nanfuiian company. 
Mylan of the US, and Endo Laborato- 
ries, a partnership between Du Pont, 
the US chemicals giant, end Merck. 

SB has said that up to IQ generics 
companies may eventually join the 
fray. 

Novopharm has it experts the 
generic price to be 30 to SO per cent 
below that of the branded drug. 

Recent cases of other big selling 
drugs running out of patent protection 


suggest that an 80 per cent discount 
within 12 mftnHw is likely. 

As well as patient discounts, SB 
intends to maintain tight control of 
remaining intellectual property rights 
over Tagamet 

Novopharm and Mylan were last 
week the subject of law suits alleging 
infringement of patent and trademark 
laws. Tim cases revolved around the 
similar appearance of the generic ver- 
sions and branded Tagamet 

Novopharm quickly settled out of 
court to make its cimetidine tablets 
in a darker green than Tagamet 
tablets. 

SB also decided last week to launch 
its own generic version of Tagamet in 
competition with the three other suppli- 


ers. it will sell them to hospital chains 
and managed healthcare organisations 
that look after file healthcare obliga- 
tions of huge employers. 

It also engaged Lederie, part of Amer- 
ican Cyanamid. to sell the generic to 
pharmacies. SB plans eventually to sell 
Tagamet without a prescription over- 
the-counter. The OTC version has 
already been launched in the UK and 
the rnmpayiy w nd that it remained “in 
active discussions" with Washington’s 
Food and Drug Administration. 

“There will be more of these mea- 
sures as SB engages in this damage 
limitation exercise," said Mr Nigel 
Barnes, analyst at Hoare Govett. 
“SmithKhne knows that it is facing a 
tide of generics." 


TR Europe 
raises £38m 
via placing 

TR European Growth has 
raised £38m of new capital 
with a conversion share Issue. 
The trust, which invests in 
*maii«»r companies, was previ- 
ously capitalised at just under 
£63m. 

The bulk of the new money - 
£34L2xo - was raised from an 
institutional placing, while 
raor p came from an offer for 
subscription. The C-share offer 
had hwq S8t at a TnaTfnrmp 
£80m, but difficult market con- 
ditions during the offe r period 
meant that the target was 
unlikely to be achieved. 

The shares will converted 
<ntn new ord in a ry shares by 
August 31, or when 80 per cent 
of the new funds have been 
invested. 

F&C Enrotrust 
shows improvement 

Net asset value per share of 
Foreign & Colonial Eurotrust 
amounted to 24L2p at March 


81, compared with 2l0.4p at the 
September 30 year end and 
192Sp a year ago. 

As is always the case at the 
interim stage - because most 
European pay their 

annual divi dend in foo sum- 
mer months - net revenue for 
the six months showed a defi- 
cit, but deeper this time At 
£642JXX) (£371.000). 

Losses per share came out at 
1A7P (0.63p). 

Enterprise Computer 
appoints new auditor 

Enterprise Computer Holdings 
has appointed Stoy Hayward as 
auditors to replace KPMG Peat 
Marwick, which was asked to 
resign last week after a dispute 
over fees. 

Quarto expands 
in C alif o rnia 

Quarto Group, the USM-traded 
publishing and printing ser- 
vices company, is buying Front 
rinB Art Publishing, the Calif- 
ornia-based publisher of art 
prints and posters, for up to 
$9m (£6m). 

An initial payment of $7in 
will be satisfied by 55 3m cash 


NEWS DIGEST 


and a $L7m loan note. There is 
a farther performance-related 
payment erf up to 52m. 

For the 1998 year Front Line 
made profits of $L4m, exclu- 
ding owner remuneration, on 
turnover of ASm. Net assets at 
December 31 were 51.8m. 

This purchase follows the 
acquisition in 1993 of New 
York-based Scafa Tomabene 
Art Publishing. When this 
company was acquired $Sm of 
the £9 5m raised via a rights 
issue was earmarked for fur- 
ther purchases. 

Mr Mark Weinbaum, who 
founded the business in 1981, 
remains president and has 
agreed a three year contract 

Russian deal for 
Bala Resources 

Bula Resources (Holdings) has 
reached agreement with The 
Russian Corporation to acquire 
its 51 per cent stake in AB3-0- 
TYR, a joint stock company 
which holds oil producing 
licences in western Siberia 
with proven and probable 
reserves of more than 500m 
barrels. 

Consideration is $5.6m 
(£3.83m) and the issue of 
shares — representing 28 per 


cent of Buie’s enlarged share 
capital - to The Russian Cor- 
poration. 

St Modwen makes 
£2i4m disposals 

St Modwen Properties, through 
its investment subsidiaries, 
has disposed of three invest- 
ment properties in Rugeley, 
Staffordshire, Plymouth and 
Torquay. Consideration of 
£2£4m shows a surplus on 
November 1993 book value of 
about £440,000. 

Audax Properties 
falls to £273,000 

Audax Properties, a wholly 
owned subsidiary of Value and 
Income lYust, reported pre-tax 
profits down from £365,000 to 
£273,000 in the year to March 
31. Earnings per share on 
investing activities came to 
&93p(3J9p). 

Newman Tonks 
$6.8m acquisition 

Newman Tonks Group, the 
building products group, has 
acquired HartmaxmSanders, a 


maker of ar chitec tural timber 
columns based In Georgia for 
$L8m (£4.65m) cash. 

Hartmann reported 1993 
operating profits of 5900.000 cm 
sales of $5.1m. Net tangible 
assets were 51.5m. 

Chemring in New 
Zealand purchase 

Chemring Group has acquired 
Hutchwilco, a New Zealand 
supplier of lifejackets, buoy- 
ancy aids flags, from Har- 
grave Holdings for NZ$4m 
<£L5m). 

Hutchwilco made a pre-tax 
profit of NZ$413,000 in t he ye ar 
to April on turnover of NZJSm. 
Net assets were NZ$2m. 

Cape boys boards 
business for £3.2m 

Cape has bought as a going 
concern the Pyrok Cementa- 
tions Building Boards business 
from the receivers of Pyrok 
Group for £3^m cash. Unau- 
dited management accounts for 
the nine months to December 
31 indicate that Pyrok Group 
sold boards with a value of 
£L7m and incurred a pre-tax 
loss of £200,000. 


: 


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FINANCIAL TIMES TUESDAY MAY 17 1994 


COMPANY NEWS: UK 


Electronics (Getting hooked on fish and chips in Japan 


behind jump 
at Diploma 


Paul Abrahams looks at Harry 
Ramsden’s global expansion plans 


By David Blackwell 


A surge from its electronics 
division was behind a 42 per 
advance in interim profits 
at Diploma, the electronics, 
building components and spe- 
cial steels group. 

Pre-tax profits for the six 
months to end-March were 
£11. 5m, up from last time’s 
£8.1m which was struck after a 
£i.im provision for reorganisa- 
tion of a subsidiary. Operating 
profits were ahead 27 per cent 
at m&n (£85m). 

The electronics division, 
which accounted for 70 per 
cent of group turnover. 
Increased operating profits by 
38 per cent to £7.5m (£5.5m). 
Total turnover increased by 22 
per cent, from £74m to £90 Jm. 

Mr Christopher Thomas, 
chairman, said that trading 
conditions for most of the 
group’s divisions were more 
favourable than they had been 
for several years. He described 
the increase in the personal 
computer market as “the sig- 
nificant engine of growth” for 
Macro and Nortronic, the elec- 
tronic components distribution 
subsidiaries. 

The semi-conductor market 
was now at a good stage in its 
cycle, he said, with further 
growth likely to emerge from 
the increasing use of electronic 
gadgetry in cars. 

He stressed the group's com- 
mitment to providing top qual- 
ity service, and said it had won 
market share by continuing to 
invest through the recession. It 
now employed more than 20 
electronics service engineers, 
compared with six at the start 
of the recession. 


The building components 
division increased operating 
profits by 22 per cent, from 
£2.7m to £&3m, on turnover of 
£23m (19m). 

IG, the steel lintel maker, 
benefited from an increase in 
housing starts, recording a 20 
per cent rise in both volume 
and profit. 

Mr Thomas said he was opti- 
mistic that “goo dish condi- 
tions'’ would continue. 

The specialist steel division 
saw further decline in demand 
from the ofi industry, but this 
was offset by general engineer- 
ing demand and profits were 
ahead 20 per cent 

Earnings per share rose from 
10.7p to l^p: the interim divi- 
dend is increased from 3.5p to 

4p. 


• COMMENT 


Good conditions in the semi- 
conductor market helped 
Diploma to come in slightly 
ahead of expectations. There 
are firm fariinatfops that condi- 
tions in the b ufldfng compo- 
nents market are also improv- 
ing. The common factor 
linking the businesses is 
strong cash flow, and. the strat- 
egy seems to have worked well 
so far. However, turnover from 
electronics distribution is 
smaller than that of other 
groups which concentrate on 
the sector, so the group could 
face difficult qu estions as ven- 
dors look for fewer distributors 
and manufacturers seek to 
increase market share by 
squeezing smaller companies. 
Full-year profits are likely to 
be above £25m. giving a pro- 
spective multiple of about 18, 
which looks attractive. 


T ucked between the vir- 
tual reality games, 
roller hockey and super 
body clinic at Live UFO, a 12 
day outdoor extravaganza in 
Tokyo’s Yoyogi Park recently, 
was a British fish and chips 
shop. 

The incongruous temporary 
counter was the latest element 
in a strategy by Harry Rams- 
den's. the Guiseley, West York- 
shire, quoted fish and chips 
company, to bring this tradi- 
tional British dish to Asia. 

The shop, serving daily more 
than 500 portions of haddock 
and chips covered in tradi- 
tional salt and vinegar, was an 
experiment to see whether the 
Japanese would take to the 
product 

A similar stall In Hong Kong 
had led to a joint- venture 
there, and the opening two 
years ago of a highly success- 
ful restaurant 

Mr Richard Taylor, Harry 
Rams den’s finance director 
who spent much of last week 
in Tokyo scrubbing floors, 
interviewing Japanese custom- 
ers and chopping fish - rather 
slowly according to his 
Yorkshire-based staff - said he 
was pleased by the initial 
results. 

The haddock portions had to 
be reduced in size because 
demand had been higher than 
expected and there was a risk 
of running out of fish. 

“The question is whether 
once they had tried it they 


would come back again,” says 
Mr Taylor. 

The reaction was mixed. Mr 
Ka t suml Hidaka, a 29 year old 
television director, said, with 
studious understatement, that 
his portion was “not terrible". 
His wife said the fish was 
"greasy" but she might have it 
again. Ryu, their one year old 
son, spat his chips out 

Nevertheless, the product 
had generally gone down well, 
according to Ms Katie Garritt, 
who cooked the fish and chips 
over the 12 days and normally 
works at Harry Ramsden’s Gui- 
seley headquarters. “Some- 
times one member of the fam- 
ily would try it, and then an 
the others would buy por- 
tions," she raid 


M r Taylor said 
demand had been 
brisk enough to start 
looking for partners to set up a 
restaurant in Tokyo. The 
group was looking for someone 
who already has experience in 
the Japanese fast-food market, 
he explained. 

Harry Ramsden’s hopes to 
repeat the success of the Hong 
Kong branch which generates 
annual sales of £1.5m - the 
same turnover as the outlet In 
BlackpooL 

“We market the product as 
Britain’s fast-food, and it’s 
proved extremely successful,” 
says Mr Taylor. 

Initially, about half of the cli- 
entele in Hong Kong were 


BIT net assets show 18% increase 


Net asset value per share of 
the British Investment Trust 
showed a 17.7 per cent in- 
crease over the year to March 
31 1994, rising from 198p to 
233p. 

Ordinary shareholders’ funds 
grew from £617m to £727m. 

Net revenue for the year 
increased to £20.4m (£l4.5m), 


and after minorities of £3 26m 
(£l.llm) and preference divi- 
dend payments totalling 
£77,000 (same), attributable 
profits came out at £l7m 
(£i3.4m). 

Earnings per share emerged 
at 427p (4.48p) and a proposed 
final dividend of 2£5p raises 
the total to 425p (4L5p). 


ALLIED tkxt 'ILE C ompani es 
has paid a further profit-re- 
lated £l.66m for Coating Appli- 
cations (Textiles) satisfied by 
£811^45 in cash, loan notes and 
shares. 

ATT. A N GROUP has agreed to 
acquire 99.97 per cent of 
Research & Development, a 
value added distributor in the 
network computing market in 
France, for an initial 
FFrtim (£710,000). Further con- 
sideration is dependent on 
profits. 

BENNETT & FOUNTAIN: Rec- 
ommended cash offer from 
Marlowe has closed having 
received acceptances covering 
T72 per cent of the issued capi- 
tal. 


BETA GLOBAL Emerging 
Markets Investment Trust 
received subscriptions for 30m 
C shares at lOOp apiece, com- 
prising 29.52 shares under the 
placing and 482,135 shares 
under the open offer. All 
applications under the open 
offer have been met in 
ML 

BRITISH BlO-technology 
Group has received accep- 
tances to its rights issue in 
respect of 2JHm units (932 per 
cent). Each unit comprises four 
new ordinary shares and three 
warra nts. 

CHURCH & CO is makfng a 
H5p a share offer for the 
outstanding preference shares 
in its A Jones & Sons subsid- 


The announcement appears as a matter ot record only. These Securities have not been registered under the 
United States Securities Act of 1933 ana may not, as part of the distribution, be offered, sold or 
delivered, directly or indirectly, in the United States or to United States persons. 


March 1994 


<♦> 


¥50,000,000,000 


DAIWA INTERNATIONAL FINANCE (CAYMAN) LIMITED 


Step-down Exchangeable Subordinated Guaranteed Bonds 


Exchangeable for share of common stock of 
and guaranteed on a subordinated basis by 

The Daiwa Bank, Limited 


Salomon Brothers International Limited 


Nomura International 


Merrill Lynch International Limited 


FINANCIAL TIMES 


CAISSE AUTONOME DE 
REFINANCffiMENT 
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T. V. 19900995 


INDIA 


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MAY 2001 


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informed that tbe rate 

applicable for the niueth 
ptfood of interest has been 
fixed at 5.1675 %. 

The Coupon N° 9 will be 
payable at the price of 
USD 2 626.81 on 
November 15th, 1994 
. representing 183 days of 
interest covering the period , 
from May 16th, 1994 to j 
November 14th, 1994incluave. 


Pursuant to the terms and 
conditions of the Bonds, 


The Reference Agent 
and Principal Paying Agent 


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FINANCIAL TIMJES 


Luxembourg, 11th May 1994 
EUROPEAN INVESTMENT 
BANK 


NEWSLETTERS 


FT Guam Enerpna Ud. Nate ow Soataut SCI «HL 

hymenal Nnbn: VAT HmNOOni Nunbcr. GBT7I 5TTI 21 


For tha interest period February 15th. 
1094 to May 18th, 1094 the coupon 
amounts payable May ifltti, 1994 have 
been caicuiand as foBoure: US S7.«3 
par US $1,000 now. US S74.27 per 
US $10,000 note end US S 742.71 per 
US StOQhOQ note. For the interest 
period May 16th, 1994 u August 15th, 
1994 the rats ot totsmit vnfll be teas*. 
Libor we* 4.875%. 

Swt«* Oanic Corporation 
London 

Agent Ban* 


expatriates, but sow more than 
80 per cent are Chinese. Addi- 
tional branches are being 
opened In Singapore this Sep- 
tember and in Melbourne nn yf 
year. 

“Following the success of 
Hong Kong, we've had 
approaches from a number of 
countries across Asia and it’s 
easy to waste a lot of time fol- 
lowing them op. It’s a question 
of management resources. Bat 
Japan is our priority because 
of the potential size of the mar- 
ket” he says. 

Harry Ramsden’s believes it 
has a recipe for success in 
Asia. 

Mr Taylor Insists the product 
is of high quality. “We don’t 
compromise on fish. We use 
the best Norwegian haddock 
cooked at constant tempera- 
tures in 60 that is constantly 
changed. Finally, we have 
Harry Ramsden’s unique York- 
shire batter,” he explains. 

-We want Harry Ramsden's 
to become a global brand. In 
the short-term the greatest 
returns will be in the URL But 
it would be a mistake to satu- 
rate the UK and then, turn to 
the rest of the world. We’d 
probably come a cropper when 
we internationalised. We need 
experience now,” says Mr Tay- 
lor. 

The company has eight 
branches in the UK. with four 
more scheduled for opening 
thic year, as well as one in 
Dublin. 



Food for thought: John Barnes, chairman of Harry Ramsden's, enjoying a fish and chip snack 


In Japan, the company is 
looking for a joint- venture 
partner, its preferred route for 
expansion. Harry Ramsden’s 
keeps between 25 per cent and 
49 per cent of the joint-venture, 
with the remainder held by the 
local partner. 

“We could be greedy and 
keep n higher share, but you 
have to provide sufficient 
incentive to make the venture 
thrive. The partner is key. He, 


or she, provides knowledge of 
local tastes, areas and, most 
importantly, sites,” explains 
Mr Taylor. 

By adopting the joint-ven- 
ture route, Harry Ramsden’s 
would be following the exam- 
ple of Grand Metropolitan’s 
Barger King, which has 
teamed up with the Seflm Rail- 
way’s group, and Subway, the 
US sandwich makers, which 
forged links with Suntory’s 


first Kitchen. 

Each Harry Ramsden's res- 
taurant serves one dish to 
cater for local tastes. In Glas- 
gow, the dish is haggis; in 
Hong Kong, It is salad; and In 
Bristol, for some reason, they 
serve faggots and peas. 

Mr Taylor says he has not 
decided what would be appro- 
priate for Japanese palates. 
Some less greasy fish would 
probably help. 


NEWS IN BRIEF 


iary. The total cost will be 
£77,000. 

CONTROL TECHNIQUES has 
raised its stake in its Italian 
subsidiary, Control Techniques 
SpA, from 65 to 92 per cent at a 
cost Of £953,200. 

ERA GROUP: recent rights 
issue accepted in respect of 
23m shares (36.4 per cent of 
issue); issue was underwritten 
by Smith New Court Seoul- 

GUINNESS PEAT has received 
a 97.4 per cent take-up for 
its rights issue. The sale 
of Eagle, its Texan fund man- 
agement offshoot, for $3 -4m 
(£2 .27m) cash has been con- 
cluded. 

LIFE SCIENCES International 


has received valid elections tn 
respect of 3.82m ordinary 
shares (2.2 per cent) for the 
scrip dividend alternative to its 
final dividend. That will result 
in the issue of 73534 new ordi- 
nary shares to electing share- 
holders. 

MIDLAND ASSETS: the recent 
intermediaries offer of new 
ordinary shares was oversub- 
scribed with valid acceptances 
being received in respect of 
2.35m shares. Applications 
have been scaled (town on the 
basis of 7 shares for every 10 
applied for. 

MISTS has received accep- 
tances in respect of 5.66m ordi- 
nary shares (94.73 per cent) for 
rights issue. 


RELIANCE SECURITY Group 
has sold its intruder alarm 
installation and maintenance 
activities for Elm cash plus a 
stock related amount up to 
£75,000. 

ROLLS-ROYCE Power Engi- 
neering has lost its High Court 
appeal against the judgment of 
Ferris J, given on February 12 
and based on an interpretation 
of its Articles of Association. 
Accordingly, proposals put to 
preference holders for repay- 
ment of the preference shares 
will not proceed. 

ROXBORO GROUP has 
received acceptances In respect 
of 7.88m shares, or 90.5 per 
cent of the shares made avail- 
able under the clawback ele- 


ment of the recent open offer. 
SIMON ENGINEERING rights 
issue of 55J)m shares has been 
taken up in respect of 92 per 
cant of the offer. 
TOMORROWS LEISURE has 
sold its four north-east based 
snooker clubs for £375,000 to 
Powerjudge, a new company 
formed by Mr David Prinn and 
others. Also three Quasar 
dubs are to be managed and 
operated with immediate effect 
by Claverton Corporation. 
WYNDEHAM PRESS Group 
has received applications for 
3.48m shares (91.85 per cent) 
under the open offer in connec- 
tion with the acquisition of 
Westway Offset, B&P. and 
Unity Paper Tubes. 



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30 


FINANCIAL TIMES TUESDAY MAY 17 1994 


COMMODITIES AND AGRICULTURE 


Coffee futures 
break through 
$2,000 barrier 


By Alteon Maitland 

Coffee futures prices in London 
and New York continued their 
exponential rise yesterday, 
helped by signs there might be 
fresh Interest from investment 
funds and speculative buyers. 

The July robusta futures 
contract surged through 52,000 
a tonne to a new five-year 
high. It closed at $2,052, up $95 
on the day. although profit-tak- 
ing had trimmed it back from 
the peak of $2,065 reached after 
a strong opening In New York. 

The second position arablca 
contract in New York was up 
11.1 cents at 126.8 cents a 
pound in afternoon trading. 

Bullish sentiment was 
fuelled by the fortnightly US 
report on traders' commit- 
ments, published on Friday, 
which showed speculators and 


funds had bought less in the 
last two weeks than believed 
"it indicated there was more 
potential for the funds and 
specs to come in." said one 
trader. 

“We’re looking at an 
old-fashioned physical 
squeeze," said Mr Lawrence 
Eagles, analyst with GNl the 
London broker. "Roasters and 
traders haven’t needed to hold 
security stocks until now and 
suddenly they’ve found there 
isn't enough coffee around" 

Be said same 3m bags of cof- 
fee were available in New York 
warehouses but those holding 
on to the stocks were waiting 
for prices to go further. But he 
warned that the market 
reached “ridiculous" levels, 
“considering that the outcome 
of the 1994-95 season is still 
uncertain”. 


Chinese 
state gold 
purchases 
still lagging 

By Our Beijing Staff 

China’s nffirial gold purchase 
continued to falter in the first 
quarter in spite of increased 
output, according to the Gold 
Bureau of the Ministry of Met- 
allurgical Industry. 

The bureau reported that 
output in the three months to 
March grew by 17 per cent 
compared with last year, but 
state acquisitions remained at 
last year’s depressed levels, 
which were down 35 per emit 
on 1992. 

Gold producers are obliged to 
sen to fixe state, but in the past 
year or so have been funnel- 
ling gold into the blank market 
at prices well above the state 
purchase price. The state 
increased its acquisition price 
last September to Yn2,986 
(US$343) a troy ounce, about 10 
per cent below the world price. 


MARKET REPORT 

Corrections trim base metals gains 


The bull-run in base metals 
prices continued at the London 
Metal Exchange yesterday, 
although some necessary 
downward reactions were tak- 
ing place, dealers said. 

COPPER faltered near the 
$2 F 2Q0-a-tonne level for three 
months delivery, which has 
assumed psychological impor- 
tance, and, after peaking at a 
fresh 14-month high of $2,195. 
settl ed ba ck below $2,180. 

NICKEL trading was again 
hectic and volatile, with the 
three months price coming 
within a whisker of $6,600 a 
tonne in the morning, before 
an overdue technical correc- 
tion set In. From a high of 
$6,580. the price plunged to 
$6^350 before ending at $6,450. 
up $50 on balance. 

Although the threat of dis- 
ruption to Falconbridge sup- 
plies from Norway had been 
removed by the calling off of 
the dock workers’ strike, the 


nickel market was still ner- 
vous about a strike at Inco's 
Sudbury facilities, traders said 

TIN prices broke higher in 
after hours “kerb" trading fol- 
lowing the confirmation of 
bullish chart signals above 
$5,600 a tonne. With the mar- 
ket emerging as the latest ben- 
eficiary of speculative interest, 
the three months price ended 
at $5,725. up $145. 

ZINC extended its gains an 
the kerb, with the triggering of 
stop-loss buying orders stops 
running three months metal 
up to a new high of $1,011 a 
tonne, despite the absence con- 
structive fundamentals. 
Although Tnbift output of wtm* 
fell steeply in the first quarter 
of the year, according to latest 
International Lead and Zinc 
Study Group data, refined pro- 
duction is rising, and stocks 
are increasing. 

Three months ALUMINIUM 
hit a 22-month high of $1,360 a 


tonne, but proved finable to 
push up towards the $1,373 
chart objective, and dosed at 
$1,352. an $8 gain. 

London’s precious metals 
continued quiet in the after- 
noon after the US markets 
opened with little direction 
being offered except in SIL- 
VER, which ramie under pres- 
sure and closed 7 cents down 
at $5-3514 a troy ounce. 

The London Commodity 
Exchange COCOA market 
remained dull throughout the 
day. Baying in New York 
arrested the slide in the after- 
noon but trading remained 
technically-dominated. 

The July futures position 
opened 24 down at £953 a tonne 
before sinking to £94L But the 
steadier-than-expected New 
York opening lent support and 
some of the losses were 
recouped by late afternoon. 
July closed at £95L 
Compiled from Reuter 


Investment drought threatens platinum metals 


Ptatiaam 

coos Troy 02 



By Kenneth Gooding, 

Mining Correspondent 

Lack of capital for investment 
and even for maintenance is 

fhrpatpnfng tO hit production 

Of platinum group - 

essential in many industrial 
catalysts - in the two biggest 
producing countries, South 
Africa and Russia. 

According to Johnson Mait- 
hey, the biggest marketing 
gro up in t he business, as far as 
Smith African producers are 
concerned platinum pices are 
not so much of a cause foF con- 
cern as the collapse in the 
price of rhodium, mainly used 
in automotive anti-pollution 
catalysts. 

Car makers became very 
wary about being too depen- 
dent of supplies of rhodium 
after the price of the metal 
jumped to an unprecedented 
$7,000 a troy ounce in 1990, 
when the market was squeezed 

by a ftnmhtnaHnw of tao f hrng 
troubles at a new Rustenburg 
refinery in South Africa and a 
sharp increase in demand from 
the automotive industry 
because of ti g h taw to p interna- 
tional anti-pollution legisla- 
tion. 

By making nhangpg in tb^T 

use of rhodium and naming 
down stocks, car makers, par- 
ticularly the Japanese, have 
been instrumental in pushing 
the rhodium price below $600 
an ounce. 


In its latest annual market 
survey, Johnson Matthey sug- 
gests: “We do not foresee any 
significant deterioration in the 
[rhodium] {rice but neither are 
we confident that it wtH exceed 
$1000 before the end of 1994." 

JM points out that operating 
margins at the two biggest 
South African producers, 
Tmpaifl and Rustenburg, fell 
from 94 per cent in 1989 to 26 
per cent in the ftonnHal year 
to June. 1993. because of falling 
revenues and increasing costs. 

“All file [South African] min- 
ing companies have been 
forced to re-evaluate their 
spending plans; between 1990 
and 1993 several mining 
operations were mothhalled or 
closed, while a number of 
planned expansion projects 
have been shelved. The focus is 


now on containing costs and 

improving affipfonHag. 

“Continued cuts in capital 
expenditure could eventually 
threaten output if investment 
drops below the threshold nec- 
essary to maintain the mining 
infrastructure,” the survey 
paints out. 

Ther e also r emains the possi- 
bility that the $494m Northam 
mine j wmtmii^ by Gold Fields 
of South Africa, will be forced 
into closure, Johnson Matthey 
suggests. Not only has 
Northern, the world’s deepest 
platinum mine, been battling 
low prices but serious mining 
difficulties cut predicted out- 
put by half last year and it 
incurred substantial operating 
losses. 

Meanwhile, in Russia most 
platinum from Norilsk, 


one of the federation’s new 
joint stock companies. Mr 
Mfohael Steel JM’s market 
research director, says that 
Norilsk’s nickel production 
was reported to have dropped 
by 45 per cent last year and he 
believes the fell in platinum 
metals output was even 
greater. 

Norilsk’s plant, built in the 
1940s, .has suffered years of 
peglect and this resulted in at 
least one major accident - in 
in October MSS one of the fur- 
naces in the original nickel 
smelter split and molten metal 
was spilled, causing a fire that 
burned for more than eight 
bourn. 

There were also reports that 
there had been a separate inci- 
dent in which a roof at the 
plant collapsed. 

More evidence of the plant’s 
decay came early this year 
adieu a strong wind destroyed 
an missions stack and the 
debris fell on top of a pedes- 
trian gallery through which 
supply lines ran. 

“The funds for essential 
sutinienance, let alone for fur- 
ther development of the min- 
ing and processing facilities at 
Norilsk, ere unlikely to come 
from the hard-pressed Russian 
government. Future invest- 
ment is therefore largely 
dependent on the success of 
the limited privatisation 
scheme currently under way," 
says Johnson Matthey. There 


is little short-term prospect of 
substantial western invest- 
ment in the plant 

Despite the douds over the 
medium-term production out- 
look, South Africa’s previous 
expansion programmes, mainly 
to cope with expected 
increased use by the car indus- 
try. created a substantial plati- 
num supply surplus last yean 
one of 340.000 ounces compared 
with a surplus of 20,000 ounces 

in 1992. 

Johnson Matthey says that 
demand for, platinum rose, by 
6.3 per cent to 4.04m ounces, 
matching the record set in 

1991, while supply jumped by 
15 per cent to a record 438m 
ounces. 

Mr Steel said that the sur- 
plus was likely to be elimi- 
nated this year because the 
surge in South African sup- 
plies was over. 

Consequently, Johnson Matt- 
hey expects the average plati- 
num price this year to be 
above $400 a troy ounce, up 
from a 1993 average of $37446 
itself 6 per cent higher than in 

1992, “with a maximum of $430 
if no serious [political] unrest 
occurs in South Africa” 
Adv ancing demand and contin- 
ued speculative activity 
“should give soUd support at 
about $380". 

Platinum 1994: Free from John- 
son Matthey, 78 Hatton Garden, 
London EClN 8JP, UK. 


Nutmeg exporters in fresh effort to stabilise market 


By Canute Jamas 
in Kingston, Jamaica 

Nutmeg exporters in the two 
main producing countries have 
agreed on a plan to stabilise 
and then to increase world 
market prices for the spice, bat 
have steered clear of recreating 
the cartel that collapsed six 
years ago. 

The agreement follows dis- 
cussions between the Cfrenada 
Cooperative Nutmeg Associa- 
tion and 35 of the leading 
exporters in Indonesia, accord- 
ing to Grenadian officials. 
Indonesia produces about 75 
per cent of the world’s nutmeg, 


with the eastern Caribbean 
island having a 23 per cent 
share. 

“We must have some type of 
continuing dialogue with 
Indonesia because we feel that 
Grenada ram compete success- 
fully on the intomational mar- 
ket once we do not have Indon- 
esia dumping their nutmeg an 
the market at very low prices," 
said Mr diff Robertson, chair- 
man of the Grenadian associa- 
tion. The recreation of file car- 
tel, he said, would “not be in 
Grenada’s interest”. 

Industry officials said that, 
while not setting prices, the 
two producer groups would 


cooperate in monitoring the 
volume of nutmeg that was 
offered for sale cm the world 
market 

They were not expected to 
take the more radical step of 
destroying stocks and the 
anticipated improvement in 
prices would be gradual the 
offic ials added. 

The new agreement has 
come after two years of discus- 
sions following a slump In 
prices. The fall has affected 
Grenada more as the island's 
economy is more heavily 
dependent on the spice than 
Indonesia’s. 

Producers in the two coun- 


tries would try to keep supplies 
to the world market at about 
9,500 tontww a year, marginally 
less than current world 
demand and 2J500 tonnes less 
than their current rawnhinaH 
production, the industry 
sources said. 

When the cartel was estab- 
lished the Grenadian associa- 
tion and Aspin, the Tndnmpsfan 
producers’ group, agreed mini- 
mum prices for premium and 
lower grade nutmeg that were 
about four times hi g he r than 
the going price of $1,000. 

The cartel collapsed follow- 
ing Changes In fix Tnrirmarinn 

government’s economic policy. 


which saw extensive deregula- 
tion. Aspin was deprived of file 
power to set prices and control 
supplies to the market and, 
much to the dismay of the Gre- 
nadians, increased Indonesian 
shipments pushed prices back 
to precartel. levels. 

Indonesian producers had 
now agreed with the Grena- 
dians that an inc rease in the 
price- of nutmeg was needed, 
said Mr Robertson. “We agreed 
that the dialogue should be 
ongoing and we will meet 
again at the end of the year to 
discuss the progress of the 
market and see how best we 
can stabilise prices.” 


COMMODITIES PRICES 


BASE METALS 

LONDON METAL EXCHANGE 

(Prices tarn AmaJgamatad Metal Tracing) 


■ ALUMMUM. 9X7 PURITY If par tonne) 



Cash 

3 mtha 

CtOM 

1324-6 

1352-3 

Previous 

1325-6 

1352-5-35 

Ktfl/lciw 

1327 

1380/1347 

AM Official 

1 327-7 J 

135665 

Kerb ctose 


1352-3 

Open int 

347.988 


Tote! dafly turnover 

9X084 


■ ALUMNIUM ALLOY (Spar town) 


Ctose 

1320-30 

1330-40 

Previous 

1320-30 

1330-40 

Htgh/tow 


1340 

AM Official 

1330-5 

1335-40 

KbiId ctose 


1330-40 

Open bit 

3,461 


Total daBy turnover 

1,036 


■ LEAD » per tonne) 



Close 

466.5-7.5 

5045-6 

Prevtaua 

461S-X5 

4985-9 

High/taw 


510/498 

AM Official 

482J5-3J5 

501-15 

Kerb ctose 


504-5 

Open Ire. 

35244 


Total dafly turnover 

16,090 


■ MCKB. (S par lama) 


Ctose 

6270-80 

6360-00 

Previous 

6285-95 

6305-70 

MgMow 

6360/6350 

6695/8280 

AM Official 

6380-70 

6470-80 

Kerb ctose 


6400-10 

Open Ire 

58.321 


Total dafly ttmovar 

21,611 


■ TIN (S par tonne) 



Ctose 

S5BO-S 

5650-66 

Previous 

5500-10 

6500-70 

mg Mow 


5625/5560 

AM Official 

5575-60 

5040-5 

■Kerb dose 


5725-30 

Open Int 

1X635 


Total dally turnover 

1X455 


■ ZINC, apodal high grade (S par tonne} 

Ctose 

vao-i 

1003-4 

Previous 

85*5-7.5 

978-9 

HgMow 

876 

1010/980 

AM Official 

976-7 

909-1000 

Kerb dose 


1009-10 

Open ire 

102,416 


Total dafly femover 

39,005 


■ COPPER, grade A (Spur tome) 


Ctose 

2160-2 

21775-8 

Previous 

2188-90 

217X5-95 

Hghflow 

2200/2199 

2195/2168 

AM Official 

220005 

2184-5 

Kerb ctose 


217985 

Open ire 

187,014 


Total dally turnover 

11X671 


■ LME AM Official Eft rate: 1.5009 

LME Closing Eft rata lJ502fl 


Soot 1.5030 3 IffiftClXOlB 6 mtal.6017 g rath* 1.5029 

■ HIGH GRADE COPPER (COM EX) 


DWS 


Open 

Chut manga 

»0it tow 

tot Vd 

tty 10X65 +X10 

10110 10X50 

2,410 1JB13 

JBP 10X50 *020 

10X50 10X00 

1557 22 

■Jal 10X00 +020 1QX30 101,10 38.601 13239 

abb im.15 +xi5 

10X75 10X75 

470 15 

Sag 10030 +X10 

100-75 99J5 

8.142 1581 

Oct 99.70 +020 

- 

za 

Mai 

65.184 H/A 


PRECIOUS METALS 

■ LONDON BULLION MARKET 
(Price suppled by N M ftothschfld) 


OoW (Tray oz.) 
Ctose 
Operwg 
Marring tty 
Afternoon fa 
Day's High 
Day's Lour 
Previous dose 


S price E eqtn. 

380.00-380.40 
380-20-38060 

380.65 2S3JJ94 

379.30 252312 

38080-38150 
379.20-379.60 
330.10-330. 60 


Loco Ltfti Mean Sold Lending Rotes (Vs US$) 

1 month *un a norths 458 

2 months — 4.12 12 months 5.08 

3 months 


saw Rx 
Spot 

3 months 
6 months 
1 year 


pttoy oz. US eta aqu/v. 
358.45 539.25 

36390 545X0 

38X35 6524)5 

3792S 668.75 


QoMComa 
Krugerrand 
Maple Lear 
New Sovereign 


S price 2 aqwv. 
3864388 2SB-260 

390.00-38235 

89-92 59-62 


Precious Metals continued 

■ OOLDCOMEXflOOTrey ce.;t/1royca) 


GRAINS AND OIL SEEDS 

■ WHEAT LCE g per tent*) 


SOFTS 

■ COCOA LC£(e/tonnr> 


MEAT AND LIVESTOCK 

■ UVE CATTLE CME (4O300t»; 



Sea 

Price 

a *t*. 

ctaag* 

Ota' 

Otm 
bar tot 

Vtofl. 


. 

priK 


Mta 

Law 

r 

W 


8aU 
price < 

OWa 

MflX ' 

OPK 

La U U 


ta« Day's ^ . . Open 

price donga Hflh Low felt 

W 

tow 

3835 

+X3 

• 

- 

• 

ttr 

11X30 

aio 11X25 11X15 

183 

29 

tty 

918 

-13 

913 

914 106 33 

Job 

67575 +X22S 67.700 67500 25551 

9584 

Jan 

383.7 

+X2 

3845 

3795 71212 23.431 

Jm 

11X65 

040 

11X95 

11255 

720 

43 

M 

952 

-5 

955 

941 2X738 2426 

tag 

87575 +X17S 87500 68525 1X382 

7588 

Jal 

38X2 

+X3 

- 

• 

- 

tap 

98.75 

• 

9850 

9650 

519 

10 

tap 

973 

■0 

974 

801 14550 085 

Oct 

6X725 +X12S 6X900 88L450 12142 

3577 

tafl 

38X7 

+X3 

3675 

38X5 2X824 

2505 

tta 

9X70 

025 

98J5 

9X70 

1,638 

139 

itee 

983 

-5 

995 

962 22178 4,432 

Dk 

71525 +0200 71.100 7X550 8534 

1527 

Oct 

mo 

+X3 

39X3 

3885 MRS 

122 

Jan 

10155 

aw 

- 

- 

1^13 

• 

■ter 

1017 

-7 

1018 

1003 27,723 644 

m 

71525 +X175 72JMQ 71525 4587 

882 

Dk 

Total 

3935 

+X3 

3945 

389.7 14,627 1,180 
14X180 27,739 

Mar 

Total 

10X25 

040 

- 

" 

351 

4517 

231 

tty 

DU 

1032 

•8 

1033 

1019 10^00 213 
10X980 8567 

tar 

TaM 

7X150 +0525 7X250 72575 2262 375 

72486 22214 


■ PLATINUM NYMSX (50 Troy 024 S/tray <gj 


Jd 

4055 

+28 

4075 

38X5 1X218 

1739 

oct 

40X3 

+28 

41X0 

4015 X547 

780 

JM 

<105 

+25 

<093 

40X0 1570 

109 

Apr 

<125 

+25 

40X5 

40X0 1551 

51 

TOM 




2*586 

4588 

■ PALLADIUM NYMEX (1 00 Troy oz^ S/troy ot) 

Jaa 

13X35 

+085 

13X50 13550 2394 

201 

tap 

13X45 

+155 

13X90 

13X75 1530 

82 

Dk 

13X45 

+155 

13X50 

13X50 627 

1 

Mar 

13556 

+159 

- 

6 

- 

Tom 




4557 

284 

■ SLVBt QOMEX (100 Troy oz.; OanttAray ca.) 

■ay 

55X3 

+1X3 

56X0 

53X5 373 

7 

Jm 

557.1 

+162 

- 

4 

1 

Jd 

5Sa7 

+1X2 

6720 

53X0 82298 

1X956 

tap 

584.7 

+1X3 

57X0 

5415 8570 

■ 245 

Dec 

5723 

+1X3 

56X0 

54X0 11523 

395 

Jaa 

574.4 

+163 

- 

32 

• 


ToH 


113,579 K71B 


ENERGY 

■ CRUDE 08. NYMEX (42300 US | 


latoat Oaf's 
prfca (tangs nm 

JM 1303 -0.18 1820 

«M 17.54 -0.13 17.87 

Aag 17.31 -0.10 17.41 

Sap 17.18 -0-10 1726 

0d 17JB -oca 17.10 

Mat 17.05 -007 17.15 

Total 

■ CRUDE OIL !P£ (S/barref) 


Ira tot Vd 

1786 78J37 61,790 
17.481(0239 51.516 
1725 42,706 11 .458 
17.12 30837 7,739 
17.04 10887 0,774 
1735 1X624 2 357 
441,258152*46 



Latest 

Bay's 


Open 



Price 

drags 

MM 

Low M 

Pel 

Jaa 

1657 

-022 

1X40 

1X30 44,141 

21347 

Jd 

1X20 

005 

1X21 

1X08 64,438 27J<2 

Aag 

1X06 

ana 

1X06 

1X9* 1X919 

1880 

tap 

1X00 

015 

1X00 

1X89 11,747 

2239 

Oct 

1X68 

017 

1X88 

1X83 X<11 

2073 

HO* 

1553 

017 

1533 

1X53 4,809 

322 

Total 




1682» 57^85 

■ HEATOQ OX. NVKX (42500 US gdte: c/US gal&j 


latest 

Day's 


Opwi 



Price 

eftarnp 

Hpb 

Lew tot 

M 

Jm 

<755 

062 

4X20 

47.70 42707 1XB78 

Jd 

4X35 

044 

4X60 

4X00 32830 13,112 

tag 

4950 

039 

4X10 

4X70 14J6D 

1/52 

tap 

48.75 

054 

4X00 

4960 11.676 

1380 

Od 

6X70 

-0A4 

50X5 

5060 X819 

377 

Her 

51A5 

054 

51.65 

51.40 X308 

» 

TuM 




145,426 3XS04 

■ OASOtLIE (Marne) 




Salt 

Day's 


Opm 



price 

ctange 

Wgh 

Law tot 

Vd 

Jm 

15150 

•1.75 

15250 15X75 2X569 

5537 

Jd 

15250 

-1.75 

15X25 

15200 1X981 

l»5 

tag 

13175 

-125 

15175 

15325 7,388 

109 

tap 

15550 

-1JS 

l&SO 1SJ25 X394 

187 

Od 

15X00 

-1.50 

15X00 15X00 5527 

49 

Ho* 

10050 

-1J0 

13X75 

15X75 3£G0 

» 

TPM 




87,325 

WO 

■ NATURAL GAS MYMEX (1X000 nm Bu Sfomttx) 


latest 

tteyte 





jato 

dungs 


Law tot 

Vd 

Jon 

1.933 

+0010 

1.935 

ism 184162 

X234 

Jd 

1.990 

0002 

1.995 

1J75 1X435 

2584 

tag 

2030 +0.001 

2035 

2020 1X868 

1,562 

Sk 

2073 +0504 

2075 

2081 11.447 

1333 

Od 

2120 +0.005 

2125 

2113 9.184 

1,100 

Na» 

2220 +0.OG3 

2220 

2215 ia018 

562 

TeM 




121^22 2X280 


■ UNLEADED GASOLINE 
fflMEX (4X000 US gtt: C/US nttj 


Jd 

Aw 

Od 

Hot 

Total 


LUSH Day's 

n.-tfLi- ■!■■■ ,-ra in, il, 

Jam cnanp> 

51.00 


Low 


<** 

kit 




-039 5125 5080 34,722 16.732 

5135 -036 51.55 S1.2D 31389 11,172 

5129 -047 51.71 5125 14,159 2JX32 

5085 -050 51 te 5085 10193 1.413 

4925 -OS 5000 4930 0924 331 

4050 -aid 4050 4830 1439 21 

S7J616 31263 


■ WWAT C8T (5,000bu nfln; cerrtaftCto bushal) 

+5(0 320/0 315/2 406 70 

+6/0 326/6 321/0130350 27210 
332/0 +7/2 333/0 325/4 33,380 4570 

34174 +6/2 342/0 336X2 30130 7,855 

+8/0 346/0 340/4 3200 615 

+S/0 - - 250 

211340 40400 

■ MAIZE COT (5.000 bu mto; eonts/5® bu»M 
MW 


Hay 320/0 

Jd 326/4 


Ok 

Ita 345/D 

May 340/0 

Total 


266/4 +6/2 267/4 262/4 11,150 0585 
Jd ■ 267/2 +6/2 208/2 262/4671,035 70370 

8Sp 260/2 +7/0 261/4 253/4167,860 7,630 

Ok 254/2 +7/4 254/6 2043387/590 27X15 

Ha t 261/2 +6« 281/S 257/0 40300 1.060 

■ay 265/0 +6/4 285/0 282 A) 4,785 100 

TOM L314M110S 

■ BABAEV LOCOS par tonna» 


tear 

11X00 

+050 

110JJO 110330 

33 10 

ap 

97.25 

015 

- 

- 

152 

tear 

9X40 

025 

- 

- 

220 

JK 

10X10 

+036 

- 

- 

30 

Ha- 

ioim 

- 

- 

- 

10 

Hay 

10190 

- 

- 

- 

5 

TaM 





460 ID 

■ S0YAKAN8 C8T (5JBflflu mta cana/BOto boffiaQ 


■ S/barreQ 


“to 

6B4/D 

+14/4 

086/4 

6754) 1X270 

8X40 

Jd 

878/4 

+1341 

6824) 

669/0326,170 69,000 

AM 

672M 

+12(8 

675/4 

984/0 8X900 

X940 

tap 

648/4 

+13/2 

'652/4 

MOT 37270 

3,070 

Net 

B31/B 

+13/2 

638/4 

8238)221^20 38,400 

Jaa 

B37ffi 

+12/8 

64 W) 

631/D 21,490 

1J75 

TOM 




711JRB1B04K 

■ SOYABEAN OflL COT (W.CXWtac centerib) 

“to 


*062 

29.75 

2X89 2517 

845 

Jd 

29.60 

+0JB4 

2X90 

2X82 39.191 

7368 

tag 

2X30 

+OSS 

2X40 

2X55 12360 

1,300 

tap 

2X85 

♦067 

2&B5 

2X07 1QJOO 

372 

Od 

27JB 

+078 

2805 

27.15 7300 

389 

Dk 

27 JD 

+077 

I/M 

2X41 1X32S 

2705 

Total 




9X738 13,1711 

■ SOYABEAN MEAL CRT pOO torts; S/tanJ 


teay 

1073 

+1J 

18X1 

18X0 1J32B 

583 

Jd 

18X4 

+2.1 

laflJ 

107J) 3X578 

X806 

»»1 

187JJ 

+1.4 

18X4 

18X2 13JB38 

1,477 

SK 

18X2 

+1J 

18X4 

184J) XB12 

429 

Od 

182 2 

+21 

1BX5 

18X7 X283 

233 

Me 

181.1 

+22 

1825 

17X7 17289 

1,305 

TeM 




8X898 1X730 

■ POTATOES LCS (E/tonne) 



JM 

2825 

- 

- 

• 

. 

tat 

900 

- 

• 

- 

. 

Star 

10X0 

- 

- 

- 

. 

Apt 

1345 

-U 

137J 

13X5 565 

95 

tty 

14X0 

- 

- 

- 

- 

Jm 

1075 

- 

- 

- 

• 

TaM 




sa 

95 

■ FRBGHT (BtFFQO LCS (tlO/ndax point} 


tty 

1481 

-9 

1460 

1400 09 

22 

Jm 

1381 

+2 

1360 

1360 709 

11 

Jd 

1256 

•5 

1260 

1288 717 

4 

Od 

1389 

+9 

- 

- 342 

- 

Jm 

1375 

-10 

- 

- 205 

- 

Apr 

1386 

+4 

• 

66 

. 

TbM 

QOBB 

Prat 


2078 

37 

OR 

1605 

1800 





Tea 

There was good general demand, re ports the 
Tea Brokers' As so ci at ion- Bright Rquortng and 
brightd nudum sad Africans met strong com- 
petition and alter gainad pence. Rainer 
medums and poorest Africans ware gsraraly 
easier- Selected britfeer Ceytana were firm, but 
thinner; plainer sorts ante lower. Strang 
demand lor the larger quantity on offer. 
Brighter Caytenj end ambabrm were gensr- 
aly dearer bu ptaffi CeyWna were bragder and 
acmadmas easier. Mefawfe found ffttle support 
Prices: best220p/kg, good 155pflcg, flood 
medium 130p/kg, median 112p/kg, low 
mediun 78p/kg. The Hf^est pnoe r ea fcwl tma 
week was 25Qprie) ftx a Rwanda pf.l. 


■ COCOA CSCg (10 tannas; Morainal 


■ UVE HOGS CME (40.0001*: Centa/bs) 


Jd 

1280 

+0 

1300 

1257 3X83511^95 

Jm 

5X825 +0950 5X700 4X525 1X135 

2140 

tap 

1307 

+9 

1325 

1282 

1X958 3/60 

Af 

6X000 +XS2S 6X290 4X525 

X6B6 

133B 

Dk 

1344 

+14 

1354 

1310 

8,724 

815 

tafl 

4X800 +0300 4X850 4&2S0 

4,040 

704 

■ta- 

1379 

+14 

1388 

1355 

1X827 

140 

Oct 

44275 +0500 44375 <3325 

2634 

212 

tty 

1408 

+14 

1390 

1390 

4JB0 

24 

Bk 

44300 +OES *5300 43X50 

2815 

134 

Jd 

1430 

+14 

1405 

1405 

X795 

40 

FBb 

44X00 +X275 45X00 44.100 

535 

48 

TSM 





8X057 1XT7Z 

TOM 


31X81 

4^94 


■ COCOA ( 1 CCO) (SOR’a/toma) 


tty 13 

Ob* — 


.96320 


IQ Mr 

■ COFFEE LCEg/tonna) 


WK 


Raw day 

977m 

NA 


tty 

2075 

+73 

2110 

2060 

1,150 

138 

Jd 

2052 

+85 

2065 

1966 1X091 

3391 

Sap 

2030 

+109 

2030 

I960 14£88 2620 

Hot 

1999 

+191 

1997 

1936 

5334 

734 

Jaa 

1063 

+85 

1975 

1925 

6338 

229 

Ite 

1950 

+83 

1940 

1905 

777R 

109 

ToM 





4MB X9B 

■ COFFEE *C* CSCE (37300toK certs/Rjs) 


tty 

12X00 

+250 12X30 11X50 

SB 

44 

Jd 

12X05 

+235 

12X00 

11X50 3130714AS4 

tap 

11X15 

+830 

11X15 

11330 15.478 5/477 

OK 

11X90 

+830 

11X00 

11273 

X29B 2137 

Mm 

11535 

+630 

115J5 

11130 

3798 

409 

tty 

11X25 

+630 

11230 

11X50 

547 

206 

TOM 





91,10723,734 


■ COfffcE (ICO) (US centa/pound) 


“to 13 

Ctxnp. My — 
is average 


107.31 10X47 

axii ai.4i 

■ No7 PREMIUM RAW 8UQAH LCE (cent&'Tbs) 

Jd 1X08 -0.16 1X15 1X15 2JSK 3 

Oct 1X13 4U2 1X19 1X10 57B 100 

Jm 11.62 

Mar 1163 - 1166 1166 85 50 

TeM X2S2 IB 

■ WMTE SUGAR LCE (S/tanrw) 


Od 


33X99 

32060 

311.10 

30680 

30X40 

31X70 


+160 33X40 337-50 J 1,91 2 
+160 32060 31650 7622 381 

+160 31160 31000 
+XT0 30960 30760 
+260 30660 30690 
+X2D 


576 77 

1.444 66 

200 1 

Abj 31X70 +X2D - 215 

TaM 21683 1664 

■ SUQAR^Il'CSCeqigroCXbgcentatbs) 

Jte 11 -» -0-12 1263 1163 5268916683 
0d 1167 466 1169 1164 4163 6684 

Mr 1165 +062 11.70 1166 18601 2687 

May 1164 -0.02 1162 1164 2613 1S2 

Jd 1163 -001 1162 1161 1,362 40 

OH 1160 OOI - - 513 24 

Tats 118669 27646 

■ COTTON NYCE gOJMflta: cants/fca) 

Jd 7364 0(3 8060 7360 22634 2606 

Od 7X20 +045 7X50 7460 4607 289 

0k 7X78 *005 74.19 7367 19684 1615 

Mar 7468 003 7X06 7465 2^27 280 

tty 7X24 am 7560 7520 875 81 

JM 7565 006 7565 TWO 151 5 

ToH 49687 5667 

■ OftAMQE JUICE NYCE (15,000**; cnrrtt/Ea) 

tty 9000 +045 9168 9060 391 53 

JM 9X60 +0.15 94.75 9X60 14.145 1681 

tap 9X20 +0.10 B7J0 8X05 2670 208 

Bk 96.70 065 9BJE 96.70 1,261 37 

JM 9863 +O0S 10060 9860 2672 161 

Mar 10a?0 +015 10160 10 X 10 758 68 

TDM 21633 1,903 


VOLUME DATA 

Open Merest end Volume data shown tar 
contraete traded on COMEX. NYMEX C8T. 
NYCE CMC, CSCE and PE Crude OH as one 
day In arrests. 


INDICES 

M REUTERS (Base: 18/8/31^100) 


May 16 May 13 month ago your ago 
184X6 183X7 1811.1 1681.7 

B CRB Futures (Base: 4/9/5fc10fl) 


May 13 

227.38 


May 12 

227.22 


month ago 

22X47 


■ PORK BBimS CME (jftjjjtti oente/fca) 


Fad 


TaM 


45675 +0075 4X000 44600 
4X725 +0300 4X900 43890 
4X750 +0175 4X900 41650 
51 JKJQ +02SQ 51.700 49JQQ 
5X750 +41200 51250 40625 
5X100 +0700 5X100 51.400 


207 16 

5,781 1673 
1648 920 

238 23 

24 2 

13 . 1 

7613 2232 


LONDON TRADED OPTIONS 

9btaa price $ tanna — Gafla — ■ — Pots — 
■ AUMMSJM 


(98.7%) LME 

JU 

Oct 

Jd 

Od 

irvm 

76 

100 

22 

31 

IfWl 

46 

76 

43 

50 

1400 

26 

52 

72 

75 

■ COPPER 





(Qwte A) LME 

.M 

Od 

-Jd 

Od 

2100 

121 

124 

42 

7T 

2150 

82 

98 

82 

94 

99m 

67 

77 

87 

121 

■ COH-fcfc LCE 

Jut 

Sep 

Jd 

Sep 

1000 

262 

277 

11 

47 


219 

242 

17 

82 

1900 

160 

209 

34 

79 

■ COCOA LCE 

Jd 

Sep 

Jd 

Sep 

900 - 

61 

91 

9 

18 

926 - 

43 

74 

IB 

28 

850 

29 

69 

27 

36 

■ BRBtT CRUDE PE 

Jd 

Aug 

Jd 

Aug 

1500 

_ 

_ 

15 

32 

ISO 

65 

• 

- 

46 

1600 ... 

53 

64 

46 

67 


LONDON SPOT MARKETS 

■ CRUDE Ott. FOG (per barrel/ Jii) +cr 


Dubd 

314.73-4.60w 

-0245 

Brent Btend (dated) 

$16.1 &ai9 

-039 

Brent Band {Jd} 

S1X13ai4 

-023 

W.TJ. Dpm oaf) 

S17^7-73Bw 

-024 

■ OIL PRODUCTS NWE prompt defray OF (tonne) 

Premium G&saOne 

5181-133 


Gas Ofl 

5151-182 

-2.0 

Heavy Fuel aa 

$84-88 

-13 

Naphtha 

SI 56-157 

-as 

Jet Fuel 

5164-165 

-80 

PWdwtnAr^a Etanass 



■ OTHHI 



Goto (per [ray 

538020 

-0.15 

Sliver (pa- troy cs}£ 

S 3 & 3 QC 

- 7.00 

PteUnum (periray ox) 

S393.16 

-125 

Patadtan $er Ooy ox) 

SIS. 10 

-085 

Copper (US prod) 

10730c 

*4.00 

Lead (US prod.) 

3 S 30 C 

-1.13 

Thi (Kuala Lumpir) 

1421r 

+0.12 

Tto ftew Yoriq 

282^00 

+800 

One (US Prime W.) 

Una 


Cade (five wdghtft 

l2X48p 

+042* 

Sheep (Ive wdg«)fA 

149.7BP 

-9.13* 

Pigs (Bve weight) 

&4.19p 

♦4.74- 

Lon. day suga- (raw) 

$28850 

-330 

Lon. day augw (wte) 

$344^0 

+130 

Tate X Lyle expert 

£30430 

-430 

Barley (Eng. toad] 

Una 


Maize (US No3 Yalow) 

S13XS0 


Wham (US Dark North) 

2160.0k 


Rubber (Judy 

7l.75p 

-025 

Rubber (jj)f 

7Z30p 

-025 

RubberflU. RSS Nol Jon) 

25850m 

-130 

Coconut Of (Phq§ 

te 9 SQz 

+53 

Pfltm OO Qtatey)§ 

urr&i 


Copra (Phfl)§ 

$371.0 


Soyabeana (US) 

E1933y 


Cotton Outlook A Index 

8S.75C 

+X05 

Wooflope (64a Super) 

42Sp 

+3 


20X05 


E par tome uni— oB w nWa rated- 9 pe n cefcg . 0 
r magma. m iweihi errata, z JmULi. v in* Jd. x 
Apr/Say. V Undon PtiydcW. WCf H ofladan . 8 Buaon 
"Met don. 4 Sheep Xhe ralp» tatae^ * Cttaga en 
ra*. pnMSnl price* 


CROSSWORD 


No.8,455 Set by DINMUTZ 



i Going by air, the longer way 

into Scotland? (4.4) 

6 ....that Is the trouble with 
the airways (6) 

9 Van lines at Don Juan, for 
example? (4,4) 

10 Bank set free (6) 

12 Find out h ow to make money 
after fifty (5) 

18 Public beef consultant? (9) 

14 His appeal decisions are 
sometimes indnT . MnfcBH (0) 

18 fa Noel’s play, rook is next to 
king .... breather required! 


19 Sr 


.lifter's composition is quiet 
and tranquil (7) 

21 Temporary stagecraft (8) 

28 Seaweed in bottom corner 
&*) 

25 Such relief-work amounted to 
nothing (5) 

26 Sovereign remedy from Felix 
Irving (8) 

27 Associate is an outstanding 
sort, to admit endless adver- 
sity (2-6) 

28 Effects of nights out? (6) 

29 Like the relaxation classes 7 
(8) 

Solntion to Saturday's prize puzzle on Saturday May 28. 

Solution to yesterday's prize puzzle on Monday May 30. 


1 Bouse is small let's mow 

into hydros (6) 

2 Offenbach’s duettists of force! 
0) 

8 Racecourse rent advanced (5) 

4 Paint thinner one on pitch (7) 

6 Steady job but a bit of a fid 
die! (5,4) 

7 Its oriental dishes cannot be 
taken out (5) 

8 With fervour, eland, try to 
breakout — (9) 

11 in the same place is a 

wader* (4) 

15 Fashionable apartment in 
Gateshead is lifting the 
spirits (9) 

17 Ruler manufacturer of War- 
wick (46) 

18 Shortest of wild bets must 
admit ehannp (8) 

20 Records of solid fuel (4) 

21 Name one wild flower (7) 

22 Scorched Mil clear at the foot 
( 8 ) 

24 Justification for cue visiting 
Bali resort? (5) 

25 Noisy creatures take a 

hundred lines! (5) 


JOTTER PAD 








FINANCIAL TIMES TUESDAY MAY 17 1994 


31 


MARKET REPORT 


LONDON STOCK EXCHANGE 


IWWlllB ■ VUbrWfl | 

Traders stand by for news on US interest rates 

Teny Byland, . lacked riim»tinn « * ' - .w u . 


By Terry Byland, 

UK Stock Market Editor 

The London stock market joined 
with other European bourses in 
holding its breath yesterday as it 
waited for the US Federal Reserve 
Open Market Committee to meet 
today. UK analysts appeared to be 
expecting, indeed hoping for, the 
Fed to announce a decisive iwm»a ap 
in its key interest rates, perhaps as 
much as 50 basis points in both the 
Federal discount rate and Federal 
Funds rate. Such a move, while per- 
haps discomforting for markets in. 
the short run, would he regarded as 
the best way to restore stability to 
global bond markets, and thus set 
t he b ackground for a genuine 
advance in share prices. 

With little else but the FOMC 
meeting to focus on. US equities 


lacked direction as they made a 
start to the new trading account 
with a relatively lightly traded ses- 
sion. An attempt to move forward 
was thwarted when UK gnye rnmon* 
bonds proved unable to develop a 
lasting trend, and the FT-SE 100 
Index moved in a narrow range 
around its previous close. 

The final reading showed the 
FT-SE 100 at 3JJ5U3 for a net loss of 
3-6- Earlier, the index had been 14.4 
ahead, helped by the latest domestic 
producer price data, which was iu 
line with expectations and regarded 
as neutral on inflatig p pressures. 

Other hurdles on the domestic 
economy lie ahead this week, nota- 
bly tomorrow, when the market 
faces the latest retail price index, 
and data on unemployment, aver- 
age earnings and public sector bor- 
rowing. The concensus is for a 


Aocount PeuBng Dates 

fM Dates*: 
teas .. 

May 18 

JUI 8 

Optw DW9MH0MB 

m wra 

Jui 2 

Jui 18 

LM OateSE 

May 13 

Jui 3 

Jin 17 

ABHumomR 

May za 

Jui 13 

Jun 27 

*Haw Him dMUnpe may taka ptaee tram two 
hnMnssa toys sanwr. 


monthly rise of LS per cent in the 
retail price index. 

But these are overshadowed by 
the meeting of the Federal 
Reserve's Open Market Committee 
today, which was reflected by firm- 
ness in the US currency towards the 
dose of trading in London yester ; 
day. Statistics on US Industrial out- 
put and capacity utilisation 
appeared to leave unchanged the 
likelihood of a tightening in US 


credit policy. 

The UK market slightly underper- 
formed other European markets, 
reinforcing perceptions that the UK 
is seen as closer to the US in terms 
of the economic cycle, and therefore 
more likely to see domestic interest 
rates rise while France and Ger- 
many look for further reductions. 

Trading volume, as recorded by 
the Seaq electronic trading system, 
was about 18 per cent down from 
Friday's level, at 548.4m shares. Fri- 
day afternoon saw increased activ- 
ity when securities houses 
unwound positions as the trading 
account came to its end; 671.7m 
shares were traded in. that session 
for a retail worth of £l43bn. 

Second line issues played a sub- 
dued role, and the FT-SE Mid 2S0 
Index fell 143to 3,7064) yesterday. 
The FT-SE 100 stocks found some 


FT-SB-A AlUtwra Max 


1,675 


impetus from the stock Index 
futures market, a factor of no effect 
on the second-liners. 

Market analysts were taking a 
cautious view at the be ginning of a 
week in which so much will depend 
on developments across the Atlan- 
tic. Although nervous regarding US 
rate policy, most UK analysts 
believe that Mr Kenneth Clarke, the 
British chancellor of the exchequer, 
will be unwilling to raise domestic 
interest rates in the near term 
in what Qetawort Benson describes 
as "an environment of economic 
slowdown”. 

Mkko commented that UK con- 
sumers do not appear to have 
reacted sharply to the tax increases 
introduced this month, although it 
adds that consumer related compa- 
nies are "still finding thing s diffi- 
cult". 



Equity Sh***s Trrnfod 

Tumwat .toy vatom* (triton). &audnj: 

HmiiMlMIstoMdmwtinUinw 

1,000 


■ Kay tmticatora 

hKfloaa and ratios 

FT-SE 100 31116 -345 

FT-SE Mid 250 3706.9 -1L9 

FT-SE-A 350 1577.2 -2 A 

FT-SE-A AO-Sham 1568.74 -299 

FT-SE-A All-Share yWU 3.70 (3.70) 

Bart parfnnniiig isctort 

1 Tobacco- +1.5 

£ Tetecommunicatlons +1.0 

3 Rotates, Food +O .0 

A Health Cara — +0.6 

5 Extractive Inch +0.5 



FT OreSnary (ndax 2462.0 - 6.6 

FT-SE-A Non Fins p fa 20-26 ( 2020 ) 

FT-SE 100 Fut Jui 31064) -1Z0 

10 yr Gflt ylaW 8.12 (8.11) 

Long gftt/Bqutty yld ratio: SL2S (2.26) 

Worst porfomsJnfl s ec t ors 

1 Gas Distribution — - 

2 Breweries 


--5.6 


--1J 

_- 1.0 


3 01, Integrand 

4 Engineering, Vehicles 

5 Printing, Paper A Pckg -0.7 


l>illse 


marl, 


3SSWORD 



1 l ’- 1 


Market 


Gas tale 

The stock market was alarmed 
yesterday at a story In the 
weekend press that British Gas 
may be forced into cutting its 
dividend by the end of the 
year, because of the impact of 
regulatory pressures on its 
profits. Gas Is scheduled to 
report firaWjuarter results on 
Thursday. 

The shares were by for the 
worst performer in the FT-SE 


100 Index, falling 9% to 2Si l Ap 
ex-divid en d , and were the most 
heavily traded with more than 

1 8 m chang in g hnwriq 

Gas shares have moved 
erratically in recent weeks, 
plunging to 280p cm April 28 
following a profits warning, 
and racing up to more than 
3O0p last week as the market 
gave a positive reaction to the 
Department of Trade/Ofgas 
report cm competition and pric- 
ing in UK domestic gas supply. 

Many analysts were sceptical 
of the dividend threat story. 
"Gas declined to discuss the 
dividend when it made its prof- 
its warning in April, mid a div- 
idend cot seems most unlikely 
thia year,” wairt nnp Another 


said that Gas will pay main- 
tained dividends in the near 
term, although, its ability to do 
so post-1996 depends on prog- 
ress on costcutting. "There is 
a long term risk to Gas's divi- 
dend but not so in +h» short 
term," he added.' 

De La Rue steps in 

Market speculation turned to 
fact as De La Roe confirmed 
that it was the mystery preda- 
tor which had approached 
paper manufacturer Portals, 
the announcement speeding 
the two companies' shares in 
opposite directions. 

Portals continued its upward 
momentum, first seen a week 


EQUITY FUTURES AND OPTIONS TRADING 


Earty gains hi stock Index 
futures were reversed in 
technical trading as dealers 
awaited the outcome of 
today’s liS Federal Reserve 


Open Market Committee 
meeting, writes Joel Ktoazo. 

A firm start to traifing, after 
the June contract on the 
FT-SE 100 opened at 3,126, 


■ F1*-8E 100 fllPEX FUTURES (L1FFQ E25 par M bate palm 


(APT) 




Open 

Sett price 

Chong* 

High 

Low' 

Eat vot 

Open IdL 


jui 

3120.0 

31000 

-120 

3141J) 

31044) 

13670 

. 53478 

. > - 

Sep 

3147.0 

3122X1 

-120 

31S4JJ 

3137 J) 

1002 

2113 


Dec 

3108.0 

3133.0 

-120 

3158C 

31584) 

1 

201 


■ ft-sc imp 250 mpgx futures (Uffq eio per tu! m*h p <*« 


Jun 


3727.0 37150 


•ISO 37274) 37154 


147 


391 B 


■ FT- 8 E USD 2SO INDEX FUTURES fPMLX) £10 par frit Index potrct 

Jun - 371 SO - - 891 

M nfxn hwut flpm m» lor prevtau* day. t Batt «Bkm ami 

■ FT-SE 180 MDP( OPTIOH (UFFE) (*3113) EIO pafful Irate point 

2950 3000 3050 3100- 3150 .3200 3260 3800 

CP CPCPCPCPGPC-PGP 
Mar 163*2 1*2 iWi 2 84*2 6*2 26*2 19>z 7 ,5ft 1*2 103 V 153 h 203 

Jui TTIPj 18*2 130 26 94*2 48*2 06 61*2 43 58*2 H 121 12*j 161 0 208*2 

M IBBJjZflla 163 42 118 57*2 (10 78^2 88 % 105 4ft Uft 91^ 172% life 213 

Aug 2U 47 176 60 146 77*2 lift 0ft 66 12ft 0ft 153 6 ! 18ft 38 224% 

Diet * EftlAWt ''■•IIBS 1« NTHT* ' *. Bft St 
cad 7.3*5 PtoS4JJ79 

■ BJRO 6TVt£FT-9E1t» INDEX OtTOON (MITE) eiOper ftatotte point . . 


2S2S 2978 3025 3078 3125 

Hay 183*{ 1 134*2 1*2 86*2 3 42*2 12 14 32*2 
Jui 161 11 146 * 216 * 2111 * 230*2 If 46 

JU 200*222*2 - . 135*2 48 

Sap 241*2 48 172 77 

Decf 380*2 73 214 109*2 

Cab 020 Mi 98 * Uolarijftnp |neu ten PiMrimt Shown art tend on jmUmpk pdeta. 
t Long AM *8*7 w**. 

■ HIPO BTYI^Fr-SCirtl 250 WDCXOPT10e(OMC<l£10p<rfa«>ldaK pert 


3178 ' 3225 3278 

14 32*2 3 70*2 1 110 % 169 
a 72 33 111*a tf 137*2 16 176*2 
78 60 60*2 TSft 

118 117*2 71 172. 

156*2150*2 iiaan*a 


3700 ■ 3780 8800 3080 3000 

May 28 17 8 47 1*2 90 h 130 
Ota D Wi 0 (Malta price* M Kim am Hu K 43»n. 


SE Actuaries Share 


son 


4000 


4080 


encouraged further buying led 
by independent traders. The 
9.30am release of UK producer 
output prices data showed 
the figures to be in line with 
expectations, and a further 
bout of buying shortly altar 
the figures' release sent the 
contract to the day’s peak of 
3,141. 

Technical tracflng, as dealers 
focused on today’s FOMC 
meeting that is expected to 
result in an increase In 
interest rates, reversed earlier 
gains, leaving the contract to 
drift lower and to ignore a firm 
start to trading in New York 
in the afternoon. 

June fall to a low of 3,104 . 
before steadying to dose at 
3,106, a 7-poJnt discount to 
the underlying, cash market 
However,- > dealers reported an - 
improvement in June In 
after-hours' trading. Vohmw 
was 13,570 contracts. 

An active session In the 
traded options brought 
turnover of 31,767 tots. The 
FT-SE 100 option traded 
11,280 lots, although the Euro 
FT-SE option had a poor day 
with a mere 1,040 dealt British 
Gas was the busiest stock 
option with a total of 3,907 
contracts transacted. 


The UK Sene. 



Dm/* 

May 18 chgeW May 13 Mey 12 May 11 

*80 

aw. 

yiakm 

Earn. 

yleUM 

FYE 

ratio 

Xdact- 

Total 

nototn 

FT-SE 100 

31153 

-0.1 31122 31374 3130^ 

28601 

390 

042 

1068 4079 

115038 

FT-SE IM 230 

3706.9 

-24 3721 A 37424 374SL3 

31400 

032 

596 

21.87 4060 

1361.72 

FT-SE MHd 200 ox tow Tluato 

37120 

-04 3733.6 3756J 37525 

31752 

346 

599 

2045 

4140 

1362.00 

FT-SE-A 300 

1577 JZ 

-02 1580.0 1588J 15865 

14214 

3.77 

022 

19-34 

19.87 

1201.10 

FT-6E SmaBCap 

191920 

-02 192204 1927.61 1031CS 1S01JX 

299 

4.17 

2946 

19.16 

147297 


180a30 

-02 190024 190529 1908.75 181025 

004 

4^2 

27.01 

1995 

145843 

FT-SE-A ALL-SHARE 

1588.74 

-02 157143 158045 157005 1407.08 

070 

007 

1992 

19.48 

121599 

■ FT-SE ActuriM AH-Shww 










Day's 

Year 

Dtv. 

E»n 

WE 

Xd ref. 

Total 


May IB digart May 13 May 12 May 11 

ago 

ytakfit 

yMd% 

rate 

ytd 

Return 


10 MNHML EXnWCTXMtiq 271846 

12 Extracts* Industrial 30239S 

15 08, tntaQTMBdp) 266022 

18 04 Bffltaratkxi & Prodfll) 2021 .92 


-072738-44273078 2733.41 221060 3.42 442 27.75 37.88 100034 

+05 3904.75 390062 3904-25 3011.60 330 5.04 24.89 4038 107080 

-192688.18 267081287896 2183.10 3-48 4.75 28.18 40-43 107058 

-03 2027.01 209096 2047.27 194060 038 123 8Q00t 1082 115898 


20 OBT RMNUFSUTTURERSfZaa 204822 

21 BuMng 5 Ccnstructfonpl) 1241.97 

22 BtiUng Malta * MmcftapO) 1944-41 

23 Crientatept) 248088 

24 DMareMad IndusbWaflQ 207Z81 

28 Badnanic & Elect Ecpj(p<34) 205061 

28 Er*)lna*rtno(n) 101492 

27 Englnaaitna. VaMcteflfl 287029 

28 fttrUkiQ, Paper 8 Pdtg(27) 285066 

29 Twttaa 5 AppamftOT 17815* 


-04 2055-442074.12 2071 JB 1771 JBO 068 4-44 2S20 2497 102024 

1241^2 125039 1259.14 108090 3JJ0 4JJB 31^8 15.18 06039 

-01 194874 1964J90 1963.18 1703S0 3,88 3-88 33.13 2078 00082 

+02 Z482J7 248929 2485^3 2141 JO 070 4^8 ZT2B 2809 108091 

-03 2079^8 2100232094.171884^0 4^4 449 2013 30-48 1041 

-07 2069S0 2091 SS 2071 1845L50 367 829 1043 1290 98073 

-OJS 192018194*28 194072 1609.60 282 388 32.11 20.11 108209 

-OB 2991^5 242090 2428-26 172000 4.41 207 67^5 3242 113002 

-07 287188 287082 288891 220190 291 590 24.16 2046 110051 

-O* 17-98.68 18tl7.90 1815.71 182050 OB8 598 2001 2005 100*40 


» CONSUMER 00008(96) 

31 Bnwariai(T7) 

32 SpSrita, Wines & CUarapO) 

33 Food ManuSfcturara(23) 

34 Howaahokt Qooda(l3D 
38 Health C*rt(20) 

37 PSjameeeutlcabfSI) 

38 Tobacoofll. 


273228 

273393 2755.48 278193 277080- 

495 

794 

1548 

4449 

02694 

228040 

-1 9 2322.46 233594 233031 208490 

4.02 

792 

1691 

139S 

100490 

2071.83 

-0.1 2974.58 2985.70 305195 278390 

398 

052 

1794 

41.70 

88292 

230949 

-02 231395 237096 238798 230340 

4.12 

7.77 

1893 

42.76 

900.78 

289649 

-02 2702.75 273074 2712.78 220990 

026 

071 

1798 4074 

06073 

1734.12 

+09 172398 1720.18 1729.80 167490 

3.18 

647 

21.70 

1990 

00595 

270032 

2796LS9 280694280791 320790 

498 

794 

1498 

47.15 

87490 

377089 

+19 371037 360)90 385794 3T3340 

598 

998 

1294 10296 

638.70 


204029 +02 £03000 2O4&06 204072 176200 288 599 21.15 1340 987.78 

ggWLPQ -03 3005X17 3035.13 3054.17 258890 292 &35 2221 34.06 1028JS8 

223015 +03 2223J7 223058 224005 172070 021 4.14 2087 1042 1085.18 

aoaajOT +04 307Oai 309496 310098 2253.70 200 4.72 2591 34.85 108820 

1686.19 +09 184020 168130 1688.05 1888.10 394 050 1006 13.72 97047 

1787.13 -ai 1789.10 1786.42 1701JB 151080 258 080 2134 11.14 823^3 

165300 -dZ 1868.00 1880-42 165454 150220 233 7.01 1022 098 99241 

2437-23 +0.1 243SJ4 2448XJ7 243049 200090 348 4.15 2733 1014 94027 

1208-48 -at 1207.75 1214.63 1223^0 124PB0 4-4* 231 80007 S91 102098 

2241.19 -04 224078 2251-382220.77207020 

212032 +02 212438 213120 2006.68 1667^0 

1898.12 -5.6 2010^189104 1982171938^0 

199083 +1J1 W74S* 1075.87 1958^8 194060 

«w -Q1 170015 1718,79 166075 107030 


40 SEfMCES(2201 

41 Dta»fcutort(3i) 

42 Letaura 4 

43 Madtapg) 

4* Matas. Foodflh 
45 n aw fl ara. ©an «aV44) 

48 Support SenfceoW 

51 Olhar Sendees & BtaiwatlOt 

eo ununesps) 

82 BadriekyflT) 

84 OKI DteMttitlonp) 

80 TNacDcramvtaltavM 

68 WMertia 


447 

793 

15.78 

1493 

84298 

392 

11.80 

1040 

15.88 

B9998 

891 

* 

± 5343 

86745 

396 

697 

2012 

009 

naotm 

642 

1490 

799 

S4B 

m- is. 


88 N0WraUWaAL9tB31) 

70 nNANCMLSflOaf 

71 B*nfca(1CQ 

73 insunncaOQ 

74 Uto /taurancaffl 

75 Merchant eantafB) 

77 Other HnancW(Z4) 

re FrooertyOa. 


1WML14 -021702.47 1711.75 170058 1S34J4 089 S9B 2028 1926 1181^1. 


219047 

277286 

1304.91 

239291 

290028 

1888.78 

1817.10 


80 wwesnspiT Tpuararuas 2815.78 


-Ol 2192262200272207.88 193000 4.10 

-0.1 277SJ37 2805.17 280122 240090 3.90 

+03 180041 12B7JB1 1310L29 128000 AM 

-02 2397 4»5 2433.96 242058 2514.70 5.19 

-03 2918.14 2853.78 294006 250030 028 

-03187278 1875.18 1878JW 1424JSQ 086 

JW IBM J21 1820^0 1 61 0 Jfl 1 JfiS-10 277 
-04 +ranun 2830^6 283024 224BL80 21B 


7-48 

1ZT 

1095 

7^4 

1048 

049 

005 


89 FT-8C-A ALL-SHARE<8Stf 

■ Hourly movwmonte 

Open OOP 


1668.74 -02 1871^3 158046 167006 1407 170 


1^2 

107 


10.78 4134 
1033 5007 
1021 27.64 
1019 6038 
11.11 2028 
13-49 20.10 

3060 1039 
5082 25LS4 


KOJBB 

021^1 

881.78 

00041 

88059 

88078 

907.86 

930.74 


19-82 1045 1215^9 


FT-SE100 
FT-SE MU 250 
FT^e^aso 

fme at FT-SE WO H«h Warn \m» 4fltpm 

■ FT-Sfi Act iraries 350 lndi»««iy ***** 

Op^i OM 1080 11JW 12" ,M0 


1090 

1190 

1290 

1390 

1490 

1590 

16 L 10 

MsMtey LotaANr 

3128.0 

37169 

15853 

31244 

3715.7 

1691.4 

31249 
37159 
1681 9 

31199 

3714.0 

15703 

31199 

3711.1 

1579.1 

91189 

3700.1 

1577.7 

31134 

3708.1 

15762 

31339' 

37179 

1665.1 

31129 

37069 

15759 


14J0 ISflO 18.10 Cfcm Prewtaua Chwoo 


ago, with the shares pnding 
another busy session 40 ahead 
at 806p, making a net gain of 28 
per cent over the past week. In 
c o n t ra s t, De La Rue dropped 21 
to 857p on fears that the bank 
note printer may have to pay 
too hi gh a premium to secure 
Portals, and worries over how 
it would be fh+flnngrL a mix- 
ture of cash - the company has 
around - and paper was 
thought the most Kkely ave- 
nue. 

With Portals having a solid 
reputation in the City as a well 
run profitable company, many 
analysts felt that the premium 
that an agreed merger would 
require would be too high a 
price to pay, while a hostile bid 


TRADING VOLUME 


■ Major Stocks Ymtarctay 

vet Ctsdno owe 
Oddi mtoe domw 

ASM (knot s oco irr «fi* 

M*wyN«3ntft 
AMR Rebar 
AKMHMaMt 
AitfknVMar 


_ . Fontaf 
Anee. Brft Ponm 

BAThdaf 

BET 

acc 


BPH (Me. 

flit 

sr a wrt 

BIHf 

g»Wo (gcaWt 

SUt 


Boowt 


as 

oven mari 

Bud 

Bumeh CaMnXf 
Bum 

CabteAWfcwt 

Cadary Schwappaef 1 /X» 
CalorQrous 204 

CtndMf 1.000 

Carikm Cmnat 60S 

4.700 
675 
2.100 



1.100 

2200 38+ 

11000 28412 

170 307 -0 

81800 145V -A 
1200 188 
408. am 

8000 .65% 

2400 498. 


CoetaVMirt 
it Untarrf 


Comnt 
Ctookuon 
OcMMkkrt 

Sfru 

Obrons 
EeiMn B«t 
EtatieomSMb 
EngCMna 
Bnapita 
Baowml 
HO 


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ItandMKt 4400 

oust 1 JJOO 

onef iooo 

QKN , 405 

GUmuMri- 2 J 00 

HSBC(7Sfi8Mft " 1400 


Havant isjooo 

HaitaaCrauMI an 

H«ya 834 

Hteteai .713 

M 2.100 

x 1400 

hKtuapet 809 

Jolinaai MMlMy 140 

ag *8 

LairaWt 4JSB 

LandSecurtkat 710 

Uporte 343 

LepO&Qmalf 1,300 




A 


+8 

+1 

257 -4 

303 +5 

S 1270 -•» 

545 +8 

942 -7 

% IS 

203 +1 

_ 3T3 

8 *MRi'&*rtt ^ 

737 -a 

570 4 

3« -0 

, . 2J00 160 1 ! +11* 

SnMBeamrt ^ i.eoo w «a 

sraK!BMcn*nuK.t imo » +“ 

SnMatae. . B M. Ji 

tt 410 506 -2 

3«± 109 MB -6 

225 S» +1 

107 579 -8 

-0 906 

hrtt 2^ 

4JBOO 

342 




VXD 

344 

313 

3500 

703 

53 



*w 

327 


+£ 


374 

215 

187 

420 

483 


• 25=1 — i, e ,+795 liras «7&2 ii ma iirrj ii7M n77J 1172 J +&4 

Bk^tCtartn 117M 1”S i «74P 27777 2774.T 2774.7 27705 7T8S.7 2787a 27B7J! -03 

Ptanwcoudda 2782JS 2779.9 2 «e JW ^ 18903 189&8 18908 1 J 01 J 170£9 'If 

JSSi SSi 5SS SS? «™> «»■’ "® JMU - 1 -* 


. n» MUM. ue»oK»n*au»ffl» wtahleWm Un HnmM Tima 

mM ff^u y am Fr8EAo5ari»360«ndlh>Fr-964co»faelndii«(iy 

?SS5SSs»-^*-— 


W? 

TWnect 14 a 

IMeSMa. 1 J 00 

MarMwdnur 370 

ibawt 2JUD 

DaMVMCt 58* 

Tiwiearr 12 m 1122 

IMMat 2 J 0 D 243 

TtaUgor Houm 3,100 07b 

Union* 1,100 992 

U*W t ^ 1300 1022 

IMHdamnt 1.100 343 

UmH w p M W 06 640 

tafelomf ’ 788 as 

VtatMBfBQrt' 137 720 

MM c oanap 2400 585 

HUahtaMr 278 GOB 

wn rnwnt an n* 

W ta ee il t 1400 583 

wnani Hunt 1400 361 b 

vmCBmon 1430 Z» 

Wmtmf UNO 174 

WDkeUrt 728 309 

YbriahheBoct 207 567 

VartoNHWwr 140 801 

Zaaoet 1,100 719 

B***d«n udho vekenBlarBMiaawi m na(or 

mwS&WwUom 


-2 

-5 

44 

+b 

-13 

-it 

+1 

■4 

-1 

-3 

-7 

■A 

46 

+1 

-• 

-eb 

4* 

*o 

-7 

+5 


1 440BRIL TtaUi ef m mteB « 
am tra maiOM doan. t hdbiMi an FT-SE 
lOOMaceonadWra 


was deemed a non-starter. A 
bid price of £9 a share was 
being mooted late yesterday, a 
figure which would put Portals 
on a price/eamings ratio of 21 
an 1995 earnings forecasts, a 
hefty 70 per cent premium to 
the market Others also ques- 
tioned De La Rue’s timing, 
with the paper and printing 
market well off the bottom of a 
year ago. 

Full-year figures from brew- 
ing and retailing group Whit- 
bread met market forecasts, 
although the shares ran into 
profit-takers and slid 9 to 563p. 

- Drinks specialists blamed 
the fell, as well as weakness in 
some of the other stocks yes- 
terday, on the good run in the 
sector recently, as well as on 
the lack of srfniHlatmg news 
needed to maintain the 
momentum. Bass, which 
reports tomorrow, was one 
such casualty, retreating 17 to 
550p. Greenalls suffered a simi- 
lar fate, losing 9 at 440p. 

Speculation continued to sur- 
roung the Guhmess share price 
with suggestions that LVMH, 
its French partner, may use 
the options market to offload 
some of its Guinness shares 
ahead of the agm on Thursday. 
The French group has agreed 
to reduce its bolding in Guin- 
ness from 24 to 20 per cent by 
June next year. Guinness 
shares slid 6 to 490p. 

The overall weakness in the 
market took its toll of the 
banks sector, where most of 
the business involved heavy 
switching from. National West- 
minster into Barclays. The lat- 
ter ended a net 3 off at 537p on 
hefty turnover of 4.5m, while 


NEW HIGHS AND 
LOWS FOR 1994 

MEWHMH8(4Q- 

MNNS (q TiW BO*. BULDWl 8 CfOTRN 
fl) SpMu. BIDQ HKTUB 5 MCHT6 (8 
JoMKton. RmM. AMI K. ummauTORS 
ni Omu pm . UfflBMBWB HOLS n 
EUCTM4C 5 H4CT IW pQ PMWBHHB 
(2J ASW. ExcMbur. BCTfUCTMl 0400 (Q 
WU.TH CMS tl) BUM WL. HOU88HOU) 
00008 ( 1 J RfyeaTMBKTTRianO (4) 
MVESlNEMr OOMW46HI (9| WU (V CSy 
Of London PR, CM. ECKOIWIION 5 MOD R 

OTHn 8BW6 6 BUBM If) SBten M 

Ffvnu, MPntNCK»ninM4l>, 
POOO f+1 P«»1. RCTAiLBffl. OBtBJAL m 
AraUn Rood. SUPPORT HBM M WMOmmo, 
WIT. 8 «I». TEXULBB 4 APRMWL |l) 
ntxnuw, OUMFORTB. 

Hen lows tii7). 

3UtniMMItqMN.BMMBWn 
Onene JOng. HUM 5 CNBTRN (Q 
Bwtafiy, PinwtHQ. BLDfl MA714 5 MCKTS (7) 
CHHCMJ tfl «A. BHMNRI (A 
BKrtomp*.. Hete. MJECimc 4 B4CT 
BQOP |8 Qmotfnr. Jatam Bm, 
fHonamma m omb Bmn. eoa*. oat 
mmmbx, RUaA n vmmmo*. Exnucrm 
MM R) B*Hl CUM cm. WMtwn tM 
1*000 MAMie M CnnwiAat, LMmar 14V, 
HEM.1H CAM 98 Hamoa*. hoMcm 
HOUKHOLO 00008 f4> CMgMan Ma MfV. 
lb Crau«<e. am ia m . towmon*. 
H4SURAI4C8 17) About Uoytta, Angmdi 
Wit*. Brodnot*. HCQ LtoyiK llltMt PW 8 . 
SywseaCB Capkil, MffiSTKwr TRLtcn <N) 
MVESIUBn COMPANMB (7) LB 8 URE A 
HOIH3 « MwO, LIFE ASSURANCE fl ) 

Tim a apo pc. muL n am bmp, 

Mkmr. mCMirr BANKS 98 OIL 
EXPLORATION A Pnoo (S) Mnaicriafl, 8 M 2 M! 
Hst^ OfTMDR fWANCUL 08 amm SOWS 4 
BUSN 8 (I) QmN Mom Unto. 
PHARMACEUTICALS fl) PRINQ, RAP«4 
PACKS (H AH, JMM PcWBr, WNMgta M. 
PROPanV M RKCAUn, FDOO n BNhe 
Bhnl. M 4 W, Tmcs Cw*l*f Bpc O Bd 2001 

ncTMLns. anaM. m support saves 
nnanMAMBa6V.TEXnLB85APmuiB.fi) 
Ghtri TRANSPORT P) Mr London. EunuM 
UNCsAM B lieAltiWCAMAIllAMBCa. 

the former fell 14 to 449p on 
3.9m traded. The switching 
operation was said to have trig- 
gered additional straight sell- 
ing of NatWesL 
Abbey National was recom- 
mended by one of the hig inte- 
grated houses and initially 
edged up to 407p before slip- 


ping back to close marginally 
easier at 402p. 

Genera] Accident was the 
outstanding performer in com- 
posite insurances, the shares 
adding 9 at 568p. A switching 
operation oat of Prudential, 2 
off at 305p, and into Legal & 
General left the latter 5 stran- 
ger at 455p. 

National Power was the star 
performer in the utilities sec- 
tor, responding to recommen- 
dations both new and in the 
recent past from various brok- 
ing firms. SG Warburg Securi- 
ties issued a strong buy note 
on National Power and Power- 
Gen late last week while Leh- 
man Brothers, the US broker- 
age house, and James Capel, 
the leading UK agency broker, 
were said to have given the 
stock a big push yesterday. At 
the close National Power 
shares were 15 higher at 443p 
after good turnover of 2 . 6 m. 
PowerGen added 10 at 475p. 

The Scottish generators, on 
the other hand, were hit by 
profit-taking, Scottish Power 
losing 10 to 368p. 

Channel tunnel operator 
E uro tun nel remained under a 
cloud In spite of a company 
denial that it faced a deadline 
at midnight yesterday to 
secure further bank loans from 
Japanese bank creditors. 

The shares relinquished 12 to 
420p, on these financial con- 
cerns with sentiment further 
weakened by reports that the 
well-flagged rights issue would 
be announced today. However, 
several analysts discounted 
such a likelihood today. 

The company yesterday 
announced that the first fare- 


paying freight service through 
the tunnel will begin on Thurs- 
day, and forecast it will have 
50 per cent of cross channel car 
and coach service by 1996. 

News of the start of 
operations at Eurotunnel and 
optimism on traffic levels dam- 
aged sentiment in PAO, the 
ferry operator. The shares gave 
up 10 to 69(4), to trade of 1.9m. 

Shares In Rolls-Koyce 
lumped 6 to 188 p, in hefty trad- 
ing of 7.7m shares, with US 
investment bank Lehman 
Brothers said to have been 
among the day's big buyers. 

Profit-taking left British 
Aerospace 10 lighter at 4S3p. 
The company said the total of 
overseas owners of Its shares 
had exceeded 29.5 per cent, the 
permitted limit under its 
articles of association. Foreign 
owners that last acquired the 
stock will now be forced to sell 
the shares to reduce the total 
to the permitted figure. 

Buoyant metal prices contin- 
ued to boost international min- 
ing group BLTZ and the shares 
gained another 7 to 865p. 

Press speculation on the 
National Lottery helped Bank 
Organisation, which is in a 
consortium believed to be one 
of the front runners. The 
shares added 5 at 408p. 

NatWest Securities reiter- 
ated its positive stance on 
Boots, up 5 at 549p, and Store- 
house, ahead 2 at 2 l 9 p. 

MARKET REPORTERS! 

Stav* Thompson, 

Christopher Price, 

Joel Nbazo^ 

■ Other statistics, Page 25 


LONDON EQUITIES 


LIFFE EQUITY OPTIONS 


RISES AND PALLS YESTERDAY 


8mm 


Option 


Cab ■ 


■MS- 


Jot Oct Jan Jui -Oct Jan tysofl 


ASMHwna 540 SI 98 -10)4 17 - 

(“588 ) 58918)4 Si - 3535 SB - 

«W* 2U22K2SM 31 814 14 IBM 

fK 8 ) 280 10)4 ISM 31H 21 25 20)4 

ASM SO K 11 12 2 4 t 

f57) ffl 3» 5% 7 6 8 9 

Bit AhMi* 380 17)4 29H34H 21 28 33 
r382 ) 420 7 17 23 42 47 S1V4 

MIMbA 390 3BH 19)4 4714 12)4 22M2SM 
r404 ) 420 18 25)4 32)4 28 38 44 

BOM 500 54V, «1 88 7 13 19 

1*548 ) 550 19 31 38)4 28H 34 41 


CaBs Ms 

Alfl li*» FSB Aofl New fab 


380 X7V4 38)4 48)4 12)4 188 7M 
420 13 22)4 2841 27)4 34» 38 
MUiSM 140 12 18)4 20 7 11)4 13)4 

n«) 1 » 4 Wr 11 % 10)4 23 25 


f401) 


Ban 

500 

55 

« 

74H 

7 13H 

23H 

rs« 9 ) 

550 

fl 

3BM 

45H 

28M 34 

47M 

DHtoin* 

450 

a 

_ 

_ 

23 - 

_ 

T458 } 

475 

M 

- 

- 

37H - 

- 

Qtartate 

BOO 

40 

81 

80 

8 H 17 

24 

fS46) 

S5D 

18H 

S 

42 

31 SOM 

47H 

canllto 

BSD 

35H 

43 

52 

12 H 23 

27 

re») 

era 

11 H 

It 

a 

41 S2H 

55H 

o 

800 

50 

n 

IBM 

21 35 

48 

P8Z2) 

850 

M 

30 

84 

47 65 

72 

npuv 

55D 

32H 

46H! 

5TO 

22 32H 

» 

rseei 

600 

UH 

a; 

rat 

S3 61H 

68 

ItodSaor 

BO 

fl 

30 

48 

19 a 

32H 

P«70) 

TOO 

7' 

I7H! 

BH 

54H57HI 

B 2 U 

ten & s 

420 

25M 

M . 

rat 

im lot 

19H 

r«) 

400 

7H 

18H 

22 

34 47 

SI 

MOM 

420 

43. 

CH57H 

a IBM 

IBM 

P440 ) 

460 

191 

2 BH 

rat 

25H 36 

38 

Sdnttuy 

390 

17H 

am 

21 29 

34 

naaj 

420 

0H 

18 

n 

43H47H 

S3 

SM Trent 

700 

S 1 H 

82 80H 

9 16 

23 

(738) 

750 

fl : 

KH41H 

Z7 41H46H 

Stareteng 

200 

M 

a 

a 

4M 7U 

11 

pnoi 

220 

10 H 

17 21H 

13 10H ' 

ISM 

Ttete 

88 

13 



3Vi - 

_ 

roo) 

97 

7H 

— 

— 

7H - 

— 

IMtewr 

1000 

BM 72H8K 

ISM 28)5 

36 

nozo 

TOM 

a 48H01H 

45 53H 

61 

zaosea 

700 

41 M 

87 

17 33H41H 

(7171 

7B0 

1712H 

44 44H 81 88 H 

Option 


Af 

ter 

tab 

Aug No* 

W> 

Grind MM 

420 ■ 

rat 

54 

SB 

8 15H 

fl 

r«a> 

*80 

» 

31 0OH2BH33H4OH 

laHanka 

180 

fl 

27 27)4 

8 T2H 1ZH 

HOI) 

an 

BH 18H 17H 1BH 23M 23H 

UMBMcte 

330 

a 

39 49H 

12 T7H 

21 

P343 ) 

an 

13 MH 

aa 

a 34 

37 

OpBOD 


Jui i 

HP i 

»ac 

Jm Sap l 

te 

Ran* 

140 

BH 

18 

72. 

5H 12H 

17 

r*43) 

180 

2H 

0H19H19H26K2M 

Option 


Aog 1 

■tor 1 

Fto . 

Aug Nn 1 

ran 


Hunan 260 13 17H »V4 11 15H 10 
r2B3 ) 280 5 10 12)4 24 27H 31 

isnna 134 27 30 - 654 Bh - 

P53J 154 1217)4 - 13 18 - 

Unttadi 180 *1 26 29 6 12)414* 

HU) 200 Vh IE 1814 10 23)42514 

P 8 0 650 01)4 7WH 83 15 31M 37)4 

(*888 ) 700 31M 47)4 57)4 35 504 84 

Pfttagton 130 14)4 20)1 23 10H MJ4 18 

nB3J 200 6 11)4141423)5 27 30 

Pnitote 300 1025)4 81 TIV4 17)4 20H 

(“304 } 330 CM 12H 17H 30)4 35H 38 

mz 050 n 72 88 28 45 58 

rW5 ) 300 28 48)4 83)4 56 78 04 

Ftataid 480 * 85 71 7)4 17)4 22 

nSOO) 500 29 41V) 48)4 22)4 35 41 

teal Inn* 240 2B3BH42H 7H 14H15>4 
(-256 ) 280 18)4 28)4 33 17 24M 2SM 

Tam 220 1814 04 27 3 18H UK 

P227 ) 240 IM 18H 17 19)4 25 2m 

VOiWaM 500 47)4 83 70 17K26H33H 
(-328 ) 550 22 37 43 43H 5ZS4 00 

MM 354 23 31)4 - 12)4 19 - 

(*381 ) 384 0)4 17 - 30 3SH - 

Won M Pet jsn M Oct Jan 

BAA 950 50)4 71)4 83)4 21)4 33 42 

TO) ] 1000*4% 43 57 48)4 58 03 

ThnaaWt 400 29 30 38 13 2* 30 

f«81 ) 500 8)4 18 2DH4n4 46HG3M 

Won JM CM DBC Jog SSp tac 


Rritfah Funrta 







10 

73 

366 

08 



64 

175 

56 

09 

IB 

128 







Utflttes. 


12 

1 S 1 

RnancUa 




Ottara . . ... ... 

46 

44 

33 

Totate 

SB5 

685 

1088 


D«Si baart on «ioss oonpartM Imd on Bib Lonttai Btm 8an+». 


TRADITIONAL OPTIONS 

Rnt Deaifcigs May 3 

May 20 


Last DedaraHoM 
For Mtttomenr 


Aug ii 
Aug 22 


w Auto 800 Ptf, AmkMK, ST p/pd, D luofcwood Hodg* Prt, CW, Entsrarisa 
Camp, JseoiM M, MU- 8 WH, NHL Prt, 81^ P«, TuSow CM. PUK Amto«L 


LONDON RECENT ISSUES: EQUITIES 


Abbey MM 
r«i> 


C32 J 
Bmisp 
CS35 ) 
BJubCWb 
C291 ) 
MM am 
P284 1 
nans 
C202) 


300 18M 32 
420 3% 10 

30 4 5)4 

35 1)4 4 

GOO 4* n 
550 mi 27 
200 17)4 31 
300 7 21 

230 12 21 
300 4 1214 

200 OH IS 

220- ZM 1014 


38)4 7 IB 22)4 

2414 2454 35 38)4 
7 1H 3 4 

5 4 5M 7 
8844 04 IB 25 
38H 25 3014 40 
36 5 14 18M 
20 15 24)4 29 
S 7 12)4 10 
14 19 2Mh 31 
23 717M 20 

18 21 30 32)4 


flit Aw 400 02 77 ■ 2114 33 45 

r«2 ) 500 3B 58 7t» 40 57 35)4 

SAT Mb 420 43 S 53 9 20H 22 

r**U J 460 22 30 37 20)441)4 42» 

8 TR 330 37 44H B Dk 13 16 

CX7 ) 300 17 27 22)4 17 3 29H 

21 33 34H 13 17)4 23)4 
13 18 21H 31 35 40 
30 48 54)4. 7M 18 18 


H71) 

Loreto 

nwi 

MM Power 
f442 ) 
Scat PHUT 

r») 

Seen 

p21) 

Forts 

rzM) 

Tarmac . 

nee ) 

mom EM 

r*isw 

TS8 

r 2 is ) 
TorUw 
t“243) 


180 UMW428H 3)4 8)4 7)4 
180 4 11)4 10 13H 16H 17H 

130 12 10M23H 4 11 14 
140 8H 1014 10 BH 10 19H 
420 2SH 36)4 4BV4 3 10» 23 
400 OH 20 27H 32 41 48 


380 17M 
390 BH 
120 0 
130 2 

220 10 
240 7 

155 10M 
174 3 

1100 48H 
1150 28 
200 TOM 
220 7 


21 36 7)4 
10H *2)4 25 
11 12 4 

014 8 11 

28 30)4 3 

T7HWH 12 

- - 5)4 

- - 20)4 

74 M 19 

48HBM4 4SH 
27)4 11 2)4 
13 28)4 OH 


23 23 
40 44 
7 3 

13H 15 
9 VOt 
1 8)4 22)4 


Isaua Amt 
prioo paid 

P 

Mte 

«P 

1004 

Htfi Low Stock 

C7m 

prica 

P 

+/■ 

Nat 

dv. 

a f. o re 
aw. ytd 

WE 

net 

ms 

FP. 

194 

10 

0 Abtauat Scot VHta 

10 






- 

FP. 1913A Z\<h C14*i AaMrt Gold 

04*2 



w. 

w. 

_ 

— 

FP. 

29.7 

101 

00 Beta Gtotul Em C 

OB 

-1 

- 

_ 

_ 

_ 

110 

FP. 

aaa 

115 

110 DRS Date & Res 

111 

-2 

LN29 

1.1 

39 

289 

in 

FP. 

60.1 

171 

160GRT Bu» 

168 


W439 

33 

29 

139 

120 

FP. 

41.7 

120 

125 Go-Ahead 

125 


MN49 

1.8 

49 

109 

- 

FP. 

219 

483 

479 Govea GtoW Sn* 

482 






183 

FP. 

4,19 

198 

18Q HmDays 

182 


W4.7 

23. 

aa 

179 

- 

FP. 

- 

96 

04 M Biotech 

94 






■- 

FP. 

- 

50 

30 Do. Wterante 

50 


_ 




130 

FP. 

709 

138 

122 Kite 

128 

+3 VW04.T 

29 

aj 

149 

— 

FP. 

339 

15 

14 My Ktata Town 

I4*r 






80 

FP. 

28.1 

87 

87 Oxfbid Matecter 

88 

♦1 

. 

_ 

_ 

«, 

— 

FP. 

593 

n 

53 Secure BeBrement 

58 

+2 


_ 



108 

FP. 

124 

281 

108 Supemcepd VFt 

23* 


- 



_ 

100 

FP. 

439 

03 

01 TampMon Let Am 

03 



_ 

_ 

_ 

- 

FP. 

379 

50 

41 Da Wits 

*1 


- 



_ 

— 

FP. 

1419 

104 

100 Templeton Emp C 

101 




_ 


100 

FP. 

569102*9 

90 Uhdarv&hied Aete 

102*2 



_ 

_ 


150 

FP. 

419 

160 

154 Vynura 

160 

+1 

L444 

29 

39 

159 

RKMTS OFFERS 








Isaua 

Amount Latest 






prica 

paid Ftomm. 

1084 






_ P 

up 

date 

High Law fttoak 




P 




rBB 3 ) 

tattoo 


MO IK II 
280 3 Vh 

550 44 0BH 
BOO 10 30 
Jet Oat 


5BH 80 
85H07H 
0 12 
T7H21K 

23 7 10 ia 
14 21 29 31 
77 9 25)4 33)4 

53 31K5M 50 
JM Jut Od Jan 


0 

27 

270 

3 

00 

500 

5 

192 

2 

24 


Mtectn 300 
PM) 
CttwyScb 480 


r*»j 


600 M 23 33 28 35H 37ft 


Eaton Bac 50D57HB8H JB 13 2m 34 
1*904 } 300 27H 41 51 40H GS 9 

Stow 40O44HS4K B 0 15JS 17 

fAW} S00 13 30% 30 K 33 36* 

GEE 900 18 ZZH 25H 14 IS ZD) 

ra06) 330 4H 1014 13 36)4 38 40H 


.(■5501 

SKItaM 

(724) 

naxm 

P4B1J 

opden 


55Q0OH S3 
600 mt M 

TOO MH 83 
750 3BH 88)4 
487 *9 30 

500 Bffii 


•0 25 40 52 
3B 5578M82H 
M20H 40 61 
75 58H 75 B6H 
-13H 31 - 

43 23 37 41H 
Fhb 4qg Nw Rab 


NI 

M 

M 

M 

M 

Ml 

M 

M 

ra 

NI 

M 

Ni 

NI 


17* 

1 WB 

22/6 

5/7 

31* 

23/0 

317S 

15/8 

24/5 

BAB 


3pm 1pm 
94pm 20 pm 
*4pm 
5 * 2 pm 
51pm 
Bpm 
5pm 
30pm 

* 2 Pm 
Opm 
Itjan 
10 pm 


1*zpm 
7\pm 
50pm 
tPami 
16 pm 
83pm 
Itpm 
27pm 
*pm 
11 pm 
43pm 25pm 


Abbuat Scotland 
Ainoun 
t * ad Bado 
Babcock Ml 
Compan 

*C«PW 
Date Hecaic 
Derwent VSley 
Femmrtdga 
Hunters Armtey 
Uanark 
Unto 

W*am» HU0I 


Mtikgn 180 18 a Z7H S TS& 16 
HP) 200 P4 14K WlflH 2S27H 

* UwMM| ascurityprica Pra m tm xtiomi aa 
BMBd on cnaing oBw prfean. 

*•» i8 )»*■ oonwa wt si^oa CM i7joa 
Puteiwe* 


HNANCIAL TIMES EQUITY INDICES 

May 16 toy 13 May 12 May 11 May 10 Yr ago 


-3*7 


51pm 

S* 2 pm +*2 
5pm 

39pm -5 
*ipm 

6pm 

2 »pm 

10 pm 

32pm -0 


■HWi low 


FT GOLD MINES INDEX 



“ay 

13 

Kt* 

« 

Kf Mw Ww 

12 « *90 

Bmaa db 
yield % 

SmK 

M|8 Ua 

tau tom Mat (35) 

te tateiri uiite 

18KK 

-00 

1840.19 186294 108994 

Z12 

TKTM 162298 

■ NI pn NEE 

Mans 

251440 

-19 

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02 2165 l O 

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CURRENCIES AND MONEY 


F INANCIAL TIMES TUESDAY_MAY_17_1994_ 

MONEY MARKET FUNDS 


MARKETS REPORT 


POUND SPOT FORWARD AGAINST THE POUND 


Market waits on Fed 


The dollar traded steadily 
yesterday ahead of the impor- 
tant merting today of the Fed- 
eral Open Markets Committee 
which is expected to announce 
a further tightening of US 
monetary policy, writes Ph&p 
Gawith. 

An aggressive tightening, of 
GO basis points in the discount 
and federal funds rates, plus a 
statement that neutrality has 
been reached, is expected to 
support the dollar. Anything 
ipfn; . and there is a riangwr that 
the US currency will weaken 

^ gain. 

The dollar finished in Lon- 
don at DM1.674 against the 
D-Mark from DM1.6671, and 
Y10L580 against the yen from 
Y104.755. 

Trading was generally very 
quiet with most of the market 
preferring to direct its focus 
towards today’s events. 

Elsewhere, the Greek 
drachma was the focus of 
attention as the Bank of 
Greece lifted interest rates to 
protect the currency from spec- 
ulative pressures. 

The Bank of England’s 
exchange rate index finished at 
80.5 from 80.1 last Friday. 

■ US economic data released 
were in line with expectations 
and had little impact on the 
currency. April industrial pro- 
duction rose by 0.3 per cent, as 
expected, while capacity utilis- 
ation was 88.6 per cent, 
unchanged from Mar ch. 

Analysts are fairly evenly 
divided about whether the Fed 
will raise the federal funds 
rate, currently 3.7 per cent, by 
25 or SO basis points. The three 
tightenings so far this year, 
commencing on February 4, 
were all by 25 basis points. 

Many analysts contend that 
recent weakness in both cur- 
rency and bond markets, 
which have fed off each other, 
results from this gradual tight- 
ening process. This, it Is 
argued, unsettles markets 
because the continual spectre 
of a further monetary t ig h ten - 
ing acts as a disincentive for 
new investors to enter the mar- 
ket 

But the argument for a 
short, sharp shock, convincing 
the market that policy neutral- 
ity had been achieved, lost 
some of its force with the 
release of good inflation data. 


Drachma 

Against the DM (Drachma per DM} 

143 — r i 



Jan 1994 

Source; FT GcapMta 

■ Pound In Nnr T«t 


MW 16 

— LAN- 

-ftw. dose — 

£ 500J 

16025 

1.4980 

Iflrii 

16034 

1.4886 

3 ma 

16043 

1.4880 

1 yr 

16040 

1A880 


Mr Mark Austin, treasury 
strategist at Midland Global 
Maifaets notes tbat with this 
backdrop, **111610 would proba- 
bly be little surprise if the Fed 
continued its gradualist 
approach and raised the funds 
target by only 25 basis points 
to 4 per cent.” 

In a note to customers yes- 
terday, JP Morgan, the US 
investment bank, pointed out 
that there were also political 
and tactical reasons to follow 
this course. "An aggressive 
rate hike on the heels of a 
report suggesting stable to 
slightly declining consumer 
price inflation will surely draw 
attacks from Fed critics in 
Congress," the report notes. 

Whatever the Fed chooses to 
do, it is not yet clear that the 
wont is over for the dollar. 
Although the spectre of inter- 
vention remains, Mr Austin 
notes: "The reduction in specu- 
lative capital committed to 
markets following the collapse 
In bonds earlier this year has 
reduced one area of support for 
the dollar, and the longer term 
capital and current account 
flows are still negative.” 

■ The support for sterling is 
related to the death last week 
of Mr John Smith, the UK 
Labour Party leader. By draw- 
ing attention away from the 
troubles of the Conservative 
party and the prime minister, 
his death is seen as having 
contributed to greater political 
stability in the short term. 


This change in the political 
landscape has been supple- 
mented by the view that com- 
pared to Germany, interest 
rate differentials appear 
increasingly to be moving in 
. the UK’s favour. 

Sterling finished in London 
at DM2.5174, more than 1 % 
pfennigs above Friday's dose 
of DM15012. It was also higher 
against the US dollar, closing 
at IL5039 from $15001 

■ In Europe, attention focused 
on Greece where banks lifted 
interest rates sharply to pro- 
tect the drachma. The National 
Bank of Greece - the largest 
state bank. - raised short term 
deposit rates to 35-45 per cent, 
from 23 per cent last Friday. 
Other short-term rates were 
also raised. 

The currency came under 
speculative attack last week 

when the rnwiftimraramrant that 
the cou n try was lifting remain- 
ing flapitft] controls on July 1 
prompted a sell-off of the cur- 
rency, in anticipation of a 
likely devaluation as capital 
left thft country. 

The central bank's measures 
appeared to have achieved 
some success with traders 
repor tin g quite conditions and 
little pressure on the currency. 

Yesterday afternoon the 
drachma was being quoted at 
148.10/20 after being fried at 
Drl48, compared to the previ- 
ous fix Of Drl47.7D. 

Elsewhere the D-Mark's per- 
formance was mixed. It was 
lmrhflng ari at FFr3.429 against 
the French franc, but stronger, 
at L86L5 from LB57.2, against 
the Italian lira. 

B The Bank of En gland pro- 
vided the UK money ma rkets 
with £615m assistance after 
fo recasting a £60Qm shnrt ftge- 

The overnight rate moved in 
the 3 to 5 per cent range. 

In Germany call money 
eased to 5.40/50 per cent, from 
5.45/55 per cent on Friday, 
ahead of this week’s repo. The 
futures markets were "listless" 
in the words of one participant. 


Iter IS £ s 

Hwgay 156JJ18 - 151241 10770 - 10870 
tan 2S1SJD . anUS 174*00 ■ 175W» 
M 04470 - 0.4496 07370-02888 

Mod 338508 - 339408 22200 - 225700 
ftata Sian - 283034 187*00 - 188200 
UAL 5521B - *524! *8715 - *8785 


May 19 

CMg 

mk^pofrit 

Empe 



Austria 

(Sch} 

17.7041 

Beigiun 

Pfi) 

516227 

Denmark 

(DK4 

96514 

Hrirard 

FM) 

62013 

France 

(R4) 

*8315 

Germany 

(DM) 

25174 

Greece 

Pfl 

373630 

Intend 

W 

12270 

Italy 

w 

242006 

LUMBdltMira 

LFtl 

512227 

NattMrianda 

P) 

9.9M5 

Norway 

pKi) 

109085 

Portugal 

ED 

258.565 

Spain 

m 

20*5«7 

Sweden 

& Kr) 

11.7088 

Swttzariand 

(SR) 

2.1453 

UK 

« 

- 

ECU 

- 

12054 

SORT 

- 

0930746 


D*y*a Md One month TV** (worth* One yaar Bank of 
W hr HOI WPA Rato %PA Mb SPA Bag. Index 


+01162 082 
+03307 80S 
*00708 44 
■*00738 918 
400530 274 
*00162 164 
+2.143 417 
*00020 291 
+2*57 853 
403307 805 
+0019 251 
*00732 044 
+1.354 4 SB 
+1.613 480 
+00883 002 
+00084 440 


■120 17.7130 

■ S4S 51.8650 i 

■ 578 48578 

■ 107 &2120 

■ 356 5,6363 

■ 163 23238 

■ 643 373.750 1 

■ 279 1.0284 

■168 2421.72! 

■ 848 51.8860 ! 

■274 2-3290 

■ 125 109130 

■ 700 258.718 ! 

■ 833 208540 ! 

■ 170 11.7175 

465 2.1475 


03 17.57% 02 . 

0.1 51.492 OO 51327 03 

-09 9.7968 -06 9:814 -03 

-06 05863 -04 85526 03 

-04 £6013 OO 2.4822 08 


Money Market 
Trust Funds 


camnsca 

«aam.iMuwneu 


SSSETSS -iTT 


DMHtNBaftMaMPlChwrirAcc 

ID MON Coat MOOT Ipniw WT-DOUBl* 

HftDBM9MHQZZZ +3B Ut 4ui g» 

rzxMmooo its an] ub £ 

te ytawi . ■ ...1*7! toil ml £ 

B-6— WH b B aww hm aWjtaa 

■ SU—B.M WW ,IC«OU BR-tttMM 

EHMOfelMN MB BOH I - fcJfa 


ta) H ta W 


-06 1.0257 
-ZB 240069 
0.1 51-402 

02 24006 
06 108422 
-45 201.131 
-OO 208474 
-02 11.8823 
1JI 2.1304 


-05 1.0279 -03 
-ZB 244054 .in 
OO 51.327 OS 
0.1 2.7837 08 

-03 108333 OO 
-+5 

-ZB 210864 -00 
-IS 11.7513 -1 2 
1.2 00989 1 B 


+00078 Q46 - 061 1.3062 12969 12884 -OB 12986 -04 12SS3 02 


(Pan) 1.5008 *00018 002 - 010 1.5011 1.4933 

(Ol 234628 +4421 572-684 234720 2266.00 

CCS) 20687 *00002 678-685 00700 20588 


SSaSK'Sfc 3 : £ 82 

dwmvdimIui - 1 tnla-m 
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i SteEKeavEa iiw 

Ovate DTaU -I 4JB13-UB 

Sect N. BlFK riOmhal fitfadt _ 
SFMsnu.uttBCa'Bu an-oams 

Dm I us -l umIb+w 

Money Market 
Bank Accounts 


DUBita Ma am I 731*5 

en»MMaiMl too bod I t.t[~ 

fkMty Wana rjBariart A ccaal 
nm>»mmamiiiU4wmiwiiiN^ 
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EMH M W..... .... 8J» Mil Mol (b 

SS8£SS.-Is,5eI 31 S 

tMMBMtefltaM Mil mmym 
BMtTpMNlMlMB 

iHiUMm — I un uat &nl v 

mooaiBGmta— UB Ut US £» 

nuntoUN— U» mb uSI 5 

Ciawtassjjw— I Bn I «jz 5 


22687 

+00002 

679 - 685 

*0700 

24)568 

24)646 

Z* 

24)743 

-1.1 

24)961 

-12 

87.4 

*0003 

+00041 

916- 090 

ermem 

42640 

- 

- 

- 

re 

- 

- 

_ 

12039 

flea 

2.0724 

+LU03S 

035 - 042 

12050 

1X963 

1203 

07 

12023 

04 

12042 

OO 

6*7 

-00064 

718-736 

247760 

24)662 

2.0717 

04 

247701 

04 

24)992 

02 

w. 


Canada (CS) 

Mexico (NewPeeo) 
USA $ 


Hong Kong a-9CS) 112196 +00274 160 . 230 112246 11-5819 11X114 08 11.6078 04 11.8344 -Ol 

Indta (Rs) 47.1788 *0.1117 610 - 905 47.1970 409430 - - - 

Japan (V) 157273 *0.104 191 - 354 158.150 156580 16*858 32 158. OSS 3 3 152278 32 

MaNyela (MS) 32273 *02121 256-290 32295 32031 - - - 

New Zaaland (70) 22552 -02062 635 - 689 25873 22569 22645 02 2266 -4X4 22748 -0.4 

FhBpptoea CPssn) 40.7920 +02949 945-895 402904 402000 - - - 

Saudi Arabia (SflJ 52395 *02129 374 - 415 *8432 52117 - - - - 

Singapore (SS) 22320 *02007 307-333 22336 22165 - - - 

3 Africa (pore) (FQ 52090 *02398 066- 114 52124 *4555 - - - 

BAMcaJRnJ 69 72388 *02021 220-568 7.4810 72185 - - - 

South Korea (Woo] 121223 *227 197 - 289 121273 1206-42 - - - 

Taiwan (189 402107 +02883 938 - 278 402300 40.1000 - - - 

TheSmd (Bq 372347 +02583 183-510 372560 37.7820 - - - - 

180H rate tar May IS. aafafla mr s el ita ttw ftxnd Spot latla show arty tfw teat flare di ctate ptecea-F u irare ratea as not tb e c O y quoted 
tea — impart By arrant tatoaat mt taaraig ta rter , ca t aorad by Bra Bat el Englana. B— rea ra ga 1865 ■ T0CJ9+ Otar and Md nt as Bi 
aw Dotar Spot Mbtea dartrad ban 1W WM/REUTERS CLOSMQ SPOT RATES. Soma vMw oe ranted by Bw FT. 


aw cu war 


aaavanRmnK^ratr. 


BOaaadMn — UD 42)1 *71) fit 
moooteetaA>B— &» as* us » 
nsmbbaa— us mb uSI 5 

tBOOO te PMBP — 435 Bn I os I 5 

awsaBaar m+i * 

EteOMHHMM— . «2 B3B 4JM ay 

ciamootaun— . uo . u*{ ub| 5 

BBDOOBtUdB - 440 BIB 1 <51 Or 



ilMga Bank Ltd 
MfSaONNttcpi as 


BMM HUBBUB 

inwBkmte 

laolMHBWMBN* 


BH 431 MB 

W 431 l UD 


4JB BB4 Wl 

UB U3 in* 

uo 4itr Hm 

BOD 407 MB) 

Bis Bor v* 


£ oiwbihhmb. « wmi . , annam 

(80900+ lu BMl OJOl OB 

«s sSa aafessl s 

Ite* RWBMMtBMMnUd 

BS lnteMitteHimBHar ,an-ateuoo 
HICApBOOtH 14 9.U7SI Bill MB 


XX ntei Nu* ar+y Ow tnt 1 
NateBil by Bte am at Ena 
! GLOOMS SPOT RATES. 8 


dadoN ptecn. FanteM rate* ere net dwcoy quoted as the i 
Ban a a ara ga WPS ■ TOMM. Otar and Kd rat aate bate «i 
«Haa h ranted W B» F.T. 


DOLLAR SPOT FORWARD AGAINST THE DOLLAR 


May 16 

Ctoakig 

rrtd-potnS 

Change 
on day 

BMfeOar 

spread 

Day's arid 

Ngh low 

One month 
Rate 9tPA 

Three montha 
Bate MPA 

One year IP Maryan 
Rate MPA Index 

Europe 

Austria 

(Sch) 

11.7725 

+005 

700 - 750 

11.7950 11.7570 

11.7805 

-08 

11.781 

-02 

112808 

08 

10*1 

Beighmi 

(BR) 

3+4600 

+0.14 

400 - 800 

342130 342860 

34.485 

-09 

342 

-02 

34255 

02 

1042 

Denmark 

ffJKr) 

62503 

+00318 

480 - 535 

62604 62390 

rt WQfl 

-12 

*5883 

-1.1 

AMM 

-Ol 

1032 

rTfJwTO 

CFM) 

5-4535 

+00365 

485 - 585 

5.4600 5^330 

*455 

-03 

*4555 

-0.1 

*481 

-0.1 

782 

France 

(FR) 

5.7^6 

+00226 

382-410 

*7516 *7330 

6.7463 

-1+ 

*7616 

-02 

27Z74 

02 

10+0 

Germany 

(D) 

12740 

+00069 

737- 742 

1.8778 1.6710 

1.6755 

-1.0 

12757 

-04 

1.8817 

07 

10+8 

Oweoe 

(Or) 

248250 

+025 

700 - 400 

246600 246200 

251 2 

-1*1 

280.1 75 

-172 

28825 

-1*1 

69.7 

kriand 

W 

uw 

-00002 

634- S3 

1.4675 1.4571 

1.4629 

t2 

1.461 

09 

1.4588 

04 

_ 

tatiy 

w 

1509.24 

♦13.29 

880 - 998 

161120 160018 

181329 

-32 

1821.14 

-20 

184024 

-12 

7*0 

Luxembourg 

(L ft) 

34.4600 

+014 

400 - 800 

342130 342880 

34.466 

-09 

342 

-02 

34255 

02 

10+5 

Netherlands 

(H) 

12794 

+00083 

790 - 797 

12842 12785 

12806 

-07 

1.8809 

-03 

128SB 

07 

10+0 

Nonray 

(NKr) 

725S7 

+00319 

527 - 547 

72676 72439 

72577 

-0.7 

13512 

-02 

72337 

03 

9*2 

Partnjei 

(Ea) 

172200 

+02 

G5] - B50 

17*160 1 72-200 

173 285 

-72 

17*225 

-ai 

17*4 

-32 

9*0 

spam 

(Wa) 

138275 

+0286 

850-700 

13*720 13*230 

mi 

-3.7 

13*71 

-32 

141.45 

-22 

79.6 

Sweden 

(SKrt 

7.7858 

+00474 

620-895 

7.78S0 7.7356 

72038 

-22 

72288 

-2.1 

72908 

-12 

82.4 

Switzerland 

(Sft) 

1/42S5 

+00022 

2SO-270 

1.4308 1.4240 

1X262 

03 

1.4237 

0.8 

1.403 

12 

10*4 

UK 

a 

12039 

+00035 

035 - 042 

12050 1.4963 

1203 

0.7 

12023 

04 

12042 

OO 

8*7 

Ecu 

- 

1.1521 

-0.0043 

517 - 625 

1.1551 1.1487 

1.1507 

12 

1.1497 

08 

1.1537 

-Ol 


SORT 

- 

120660 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 



BIB IPO MB 
» U IN 

u ib a 

BOO 4U7 MB 
BIB 430 HN 

*70 boo *40 an 


MamtamlM 

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WutaiiMf Hi Prt wda Bill 
p«4HNi amat— nt n—ti*B a ma ua 
la m i iw M i W B W fl aT . m-wm 
HICA (QAOO+) 14 Bins I *»T Dtej 

f am*mn 

IHUBaOan-. I bjb u* uolv* 

EBDPOD* —I BID BN BlSI'liS 

Z2B00D+ | <00 B7I BOBlim 


Ecapsas ozra+ssm 

. US M4 uollte* 

.1 BID BOO B10I ten 

.a 400 3.71 <Ji i* 

.14JB BOO 4JB!Mn 


BaakWMaadH 

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BaakofScoSaad 

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200 UniBOMi ON 


PSBi 

BOO 2A2 
B70 2J1 

boo an 


rateBBSMBNi OMOBBte* 

B^a-8 is 

EOBOOO* — BOO 413 BOO ten 

TE38* B29 - - BBS tea* 


L a mnaaBtHiCateabT 0000*0100 

MB 4JU BOO 4PB m* 

urn *.n aao 4 j> ran 

lajni BOB 373 BOO M| 

NLBB9 B30 BM U9 H 

BOO 4.13 BOO * a* 


B30 240 534 Or 

aao U3 BBS Ite 

4J0 US *07 Ot 

440 300 400 Ite 

BSD 190 Bfl or 


Amoralna (Peso) 02079 
Brad (CrJ 156a 16 

Canada (CS) 12756 

Moedco (NawPaao) 32250 
USA CS) 

PaoncMddta Eart/AMca 
Auabata (AS) 12781 

Hong Kong (HKS) 7.7265 
Mb (FtaJ *12700 

Japan (V) 104280 

NWayata (M9 22115 

NoteZaamd (NZS) 1.7058 
Ph^plnag (Peso) 27.1250 
Saudi Andfe (SR) 3.7500 
SOigapore (SS) 12507 
S Africa (Cora) (R) 32633 

S Africa (Rn) (PI 42800 
South Kom (Won) 806.150 
Taiwan (T9 262050 

Thalsnd (BQ 2*2250 

1®R rate kr M* t* BUWkr apraw 
tea m tenpAad by cuiant Haraai naw 


-02011 978-979 02980 02978 - - 

+2*89 017 - 019 156020 158017 - - - 

-02031 753 - 758 12770 12728 12737 1.7 12807 -12 

-0205 200 - 300 32300 32200 3228 -0.4 32278 -03 


POOnlSLOanBarw „ OOMZBtel 

ZUUMBABB I BOD IJO ZJC ON 

CLsn-eejs \zzb ij» zzr or 

noooD-czLm an ao# an or 

mm* I BBS *01 I UOl Mr 

Braa«SUMr*Colid 
RiMmcateLijaianUnwnEca on-moos 

MM I <00 BOO I 4471 ON 

MDanMAk I 4M 100 I +07 1 ON 


12941 -12 
X33S2 -02 


776 - 785 12854 12774 12794 -1.1 1284 -1.7 

280-270 7.7275 7.7260 7.7295 -02 7.7355 -05 

675-725 312725 312650 31-4*5 -22 3127 -2.6 

650-810 105:200 104280 104265 22 103.905 22 

110 - 120 2212S 22075 22045 32 2299 32 

050 - 085 1.7129 1.7050 1.7071 -09 1.7116 -12 

000 - 500 272500 27.0000 - - 

485 - 505 3.7505 3.7485 3.7507 -02 3,753 -02 

502 - 512 12540 12490 12501 05 12486 03 

625 - 640 *6753 36520 32738 -52 37058 -42 

700 - 900 49700 42700 4214 -34 4274 -7.7 

100-200 606.400 806.000 809.15 -42 61265 -32 

000 - 100 262200 2*7700 262705 -22 2*971 -26 

200-300 2* 2500 252100 25205 -32 25.43 -33 

Aar Spot tatte aiiow only ttw tear tfrea daoimN pteeaa. Aerated ratea am n 
at L ECU ara qeptad ki US cunaney. UP. Uorgan no min al incOcoa May 13. £ 


12947 -12 882 

7.7802 -04 

10127 32 145.7 

22515 -12 
1.73® -12 


tew Bgrate —IWBli Bam .ttlESBOZOO 
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Am Bratton IHUMm 

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MamMNtet 470 BM +00 Mb 

MONOiBim +3B B3B +» Mb 

T~r~ • ' '• I'll 1- ! 420 Biol 4321 DO 

AomiamiotfertMSdcftmlmAu 

4aaAma»S+ BManaBQzn. 011-0*10302 

OUte — Bn *01 340 or 

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Cftnt Meant j *78 *31 BBS My 

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Tra»Ma<NUa I Ml -I +»1 Mb 


37845 -04 
12482 02 

37968 -37 


l my quoted te ttw marttet 
■a ntenoa IMA-iOO 


saim on -am 4soo 

*73 *81 182 H 

+00 *00 +07 Mb 

+23 ITS +33 H 

+50 131 +80 Mb 

130 1.13 131 UOl 

*00 130 *02 H 

— *85 130 *37 UN 


SSUSSiC.: 

iMtinnui n— ii nw 
OiMtti m ttoonoi- 
*4* £30000+ - 

mu £tooooo+ 


CROSS RATES AND DERIVATIVES 


EXCHANGE CROSS RATES 


Tte Ct^o partatw Bao fc 


May 16 


BFY 

□Kr 

FFr 

DM 

K 

L 

R 

NKr 

5* 

Pte 

SKr 

sft 

e 

CS 

s 

Y 

Ecu 

Helium 

(8B) 

10 

1*01 

1*66 

+857 

1282 

4670 

5453 

2126 

5012 

4024 

2220 

+139 

1330 

*993 

2302 

30*8 

2218 

Denmark 

PKr) 

5220 

10 

*763 

2256 

1243 

2467 

2889 

1128 

2632 

211.7 

1129 

2.177 

1315 

2.100 

1227 

16*7 

1225 

France 

P=Fr) 

6003 

1141 

10 

2216 

1.190 

2804 

*274 

1224 

3007 

2412 

1*57 

2486 

1.158 

2297 

1.742 

1822 

1212 

Ornnary 

(DM) 

2059 

*814 

3.429 

1 

0408 

9612 

1.123 

4236 

10*1 

6224 

+852 

0262 

0297 

nro9 

0568 

to an 

0218 

Ireland 

W 

5046 

9282 

*405 

2451 

1 

2386 

2752 

1082 

2528 

20*0 

1140 

2289 

0974 

2215 

1.484 

15*2 

‘1371 

Kriy _ 

W 

2.141 

0407 

0367 

0104 

0042 

100. 

0117 

0461 

1073 

8216 

0484 

0096 

0041 

nnw 

0062 

nray 

0054 

Mother tends 

(PJ 

1824 

*496 

3254 

0891 

0263 

8562 

1 

3261 

9126 

7*78 

4.144 

0759 

025* 

0732 

0232 

6*66 

0.482 

Norway 

(Wr) 

4720 

*029 

7212 

2307 

09*1 

2218 

2280 

10 

2373 

191.1 

1073 

1366 

0317 

1296 

1279 

14+2 

1.196 

- - —■ 

nUttiyN 

m 

1926 

*796 

»ay6 

0270 

0296 

9322 

1289 

4203 

100 

8022 

+511 

0826 

ft386 

0797 

0679 

an bo 

0503 

Spain 

(Pte) 

2+85 

+725 

4.140 

1207 

0493 

1161 

1266 

5233 

1242 

100. 

5216 

1.029 

0480 

0992 

0721 

7544 

0226 

Sweden 

(SKr) 

4426 

*412 

7271 

2149 

0877 

2067 

2413 

9217 

221.7 

17*1 

10 

1232 

0254 

1.787 

1364 

13+3 

1.114 

OwlUertand 

(SPri 

2+16 

4293 

+024 

1.173 

0479 

1128 

1217 

*086 

1212 

97.20 

5468 

1 

0468 

0365 

0701 

7323 

0606 

UK 


6122 - 

*851 

*632 

2217 

1.027 

2420 

2826 

1091 

2992 

2062 

11.71 

2.145 

1 

2289 

1204 

1572 

1205 

Canada 

(CS) 

2S05 

+761 

+172 

1217 

0496 

1170 

1266 

5273 

1262 

1008 

*680 

1-037 

0483 

1 

0727 

7*03 

0231 

US 

W 

3+45 

*550 

*739 

1274 

0683 

1609 

1.879 

7264 

1722 

1382 

7.786 

1426 

0265 

1278 

1 

1042 

0868 

Japrai 

m 

3294 

62.83 

5+88 

16.00 

hkx» 

15386 

17.97 

6928 

1660 

1825 

7+44 

1*8* 

6287 

1*15 

*561 

100* 

8396 

Ecu 


3*71 

7249 

6216 

1229 

0787 

1854 

2166 

8260 

1963 

1592 

8373 

1244 

0788 

1285 

1.152 

1206 

1 


ERAS EUROPEAN CURRENCY UNIT RATES 

May 16 &» con. Rats Cteanga % +7- from % spread Ov. 

rates agoini Ecu on day oan. rate v vreekest ind. 


0546282080 

-I -liter 

*330 I 531 1 UD 
*334 | UZ|s-llb 


UdfiodOsaWowsTnutUd 

raBwo* Nwb.au our 


JL Hmy Schrodor Man&Co Ud 

tap CteapWte. unwi TOMS 

GnacHhX. \ 1ZJ 144 

chUDOwtfaaaw. — I *« Z33 


Ns tend 0.806628 0787218 -000344 

Nsttnrtenda 319672 316876 +000019 

Bslghna 402123 3*7852 +0002 

Qonnaay 124964 1231® -0.00001 

Franca 623883 622484 -000111 

DmrasrK 72®79 765764 +020064 

Portugal 192254 19*167 +0.169 

Spain 154250 159680 +0277 


627 18 

4.79 

422 8 

4^40 

2-11 -11 

120 -11 

018 -22 

020 -24 


bw4Nmoo -<o On mw lam 

£50300+ US 334 I B3Z S-MOI 

E2UW-C4BBB8 *30 *38 [ +» B-M» 

£1 0300-04300 __ 400 *□□ i +04 1 8-Nil 

£03034 3300- BOO *23 I USlo-MOl 

*si I snls-mi 

naaoomjN is *++ I bn o-m 

tsSAw — — mb 133 1 zaoli-m 

£250300- _LT +25 1TB | 4J0]S-Ml 

W 4lOOO-Ote. m BOO ISS 1 BOZ B-MDi 

nn nnr no bn un *oo| *77|k-Mb 
£BOO-£BJSB 1*31 12B I 23216-MW 


in 1 

4JMI 

oa 

So Ltd 




On -IK BOBO 

74«l 

US 

MB 

2+5 1 

+54 1 

tea 

Cbeqm 

1 ACC 



07522241-1 


434 

Oa 


+58 

Oi 

lie 1 

+S2 



425 1TB i 4J0I3-WI 

BOO £2S ] Buls-MO 

17B *00 | *77|3-4Bb 

231 m I 23Zlo-MW 

mMBvan 


Wana w oa Mudbn of ban: tab mas te 
WteWN at IteraW BWteM Wbr Nates b« anilwbw d 
Bate m Ms b+finOMte tea nb wmt 
m aasoai of rararatea ■> Mwaw m tew am 
oaoa a jaw. XtsMM Ante Mi* tel Cn lift n ry 
■ teftfr bteaw N oamt te ba iru t 


NON BW MEMBSB 
Qraoea 264613 2®2M +0576 *10 -420 

My 179*19 186829 +6.13 362 -0.06 

UK 078*749 0768780 -0202775 -229 528 

Ecu coate raaaa aw by tea Eaopara Oamtewaft . tteianrfaa aw te flaaca n Aog iite ta ia abanoft. 
Pw ew i te u a dwngaa am lor Ecu; a poatlwB tfwnga rl a nn laa ■ water anancy. D Muft no ahems 8w 
rate baraswi tew apnaadr tea p ateanMpa«eteancaba tu awi nwrcaaf mwtraaal Ecu cate ratea 
far a cunaney. and tw aafrtea p a uteu a il pwewaaaa Ju i te tlnn ef ttw c w rancy te i iw l te i — Mm Oa 
Ecu owM ate 

(17/MQ SMrfne ted Oaten LJra atepandad from BK A^wanant cMatetad by tfw FhwmM Thw+ 
■ WmADMjPWA 89 C7> OPTIOIM E312SD (cants pw potwd 


i Honstfail Kionar. : 


; pw IDE Eacuda Us i 


■ MU 

iMCFimim 

Open 

S (1MM) Of 

Latest 

A 12*000 p 
Change 

•rDM 

Mgh 

Low 

E*. vol 

Open kit 

■ JAP* 

MNYHII 

Open 

vnratei 

Latest 

1MM) Yen 1: 

Change 

22 per Yei 
Hgh 

1100 

Low 

Est vol 

open tat 

Jtai 

05977 

05973 

-0001 1 

02977 

02958 

2*774 

11+785 

Jm 

0.9532 

03593 

+02054 

03605 

03525 

2036B 

57348 

Sep 

02971 

OS975 

-00017 

02975 

0.5968 

20* 

6.173 

Sep 

03800 

03966 

+00065 

09676 

03600 

641 

5361 

Dec 

- 

02991 

- 

- 

06991 

7 

218 

Dec 

03746 

03746 

+00064 

09760 

03746 

136 

982 


t(IMM)3Ff 125200 per SFr 


I PUnumS (BUM) E62600 par 2 


07005 

07016 

07019 

06982 

7.997 

38498 

Jun 

14976 

12016 

+03042 

12020 

14860 

S.885 

42489 

07033 

0.7040 

+03007 07042 

07030 

232 

947 

Sap 

15002 

15020 

+030*2 

13020 

13002 

199 

2470 

- 

0.7069 

* 

- 

24 

337 

Dee 

14860 

12000 

+00012 

12000 

1.4980 

1 

99 


Strike 

Price 

Jut 

- CALLS - 
Jki 

Aug 

Jut 

— PUTS — 
JJ 

Aug 

1425 

7.44 

720 

7.70 

. 

039 

038 

1450 

530 

538 

*71 

031 

036 

081 

1475 

2.78 

*35 

335 

037 

030 

122 

1200 

013 

130 

7 ■?! 

1.07 

138 

9fO 

1325 

030 

034 

127 

*69 

*35 

*86 

1250 

033 

039 

038 

+90 

538 

*78 


WORLD INTEREST RATES 


MONEY RATES 

May 16 Oust One Three St* Os 

ntqtn month mtfw mtha year 


tV ate*w«Wa mu. Cte. 3J10 Put* flJfri . Pray, day 1 * open fat. Ctea 48+833 Pte» 43+743 


INTEREST 


BeWuW 

51 

5H 

5* 

64 

5* 

7A0 

+80 

- 

week ego 


5V6 

5ft 

54 

6ft 

7.40 

4.76 

- 

Rmct 

5* 

5ft 

64 

6ft 

5ft 

520 

- 

*75 

week ago 

SS 

5ft 

sa 

5ft 

6ft 

*70 

- 

*75 

Qemraiy 

545 

530 

*03 

+96 

+98 

8.00 

4.50 

*47 

week ago 

524 

630 

5.15 

*08 

534 

620 

*00 

*47 

Ireland 

sa 

5% 

6 

84 

84 

- 

- 

*25 

week ago 

sa 

55% 

6 

84 

84 

- 

- 

*50 

Italy 

7% 

7a 

7ft 

7ft 

7ft 

ra 

730 

8.10 

week ago 

BB 

7fl 

76 

78 

8 

- 

7.50 

*10 

Netherlands 

538 

*12 

*06 

*02 

*00 

- 

635 

ae 

week ago 

532 

*12 

*13 

*11 

*11 

- 

63S 

- 

Switzerland 

4 

44 

4 

d 

4 

6.625 

*50 

- 

week ago 

44 

44 

4 

A 

4 

*625 

3.50 

- 

US 

3B 

44 

4fl 

5ft 

&U 

- 

*00 

— 

ereak ago 

4 

44 

4ft 

5ft 

Bft 

- 

*00 

— 

Japan 

2* 

2*k 

24 

24 

24 

- 

1.75 

— 

week ego 

2H 

2ft 

2ft 

2ft 

24 

- 

1.75 

- 


I WIWOilAWK WIIW6 QJFET 0041 in potna of 100H 

Sae price Change Hgh Low Eat vat Open in* 
9628 +021 95.10 9527 14608 191910 

9524 +0.01 8SL3S 9522 21720 108594 

9525 +002 9528 9523 17389 207701 

95.17 +004 M.19 9*15 11444 198955 

I KUBOUBA IjllJWra FUTURE! (LB?=^ LIQOOtn potnte of 10094 



Open 

Sett price 

Change 

Wgh 

LOW 

Jut 

9*08 

9*08 

+031 

9*10 

9*07 

Sep 

9535 

9*34 

+0.01 

9*36 

9*32 

Dec 

9*26 

8535 

+032 

9538 

9*23 

Mar 

9*16 

8*17 

+004 

95.19 

9*15 


Change 

High 

Low 

EsL vol 

Open tat 

-006 

9*44 

6226 

2266 

33732 

■006 

82.60 

9221 

2629 

49008 

-003 

9*44 

92-38 

1131 

50773 

-033 

6*30 

9234 

726 

12946 


iwmn— (UFFQSFflrepoNTte at 10014 


Sett price 

Change 

Mgh 

Law 

Eat vol 

Oprat kit 

9*10 

-a oa 

9*14 

9639 

6400 

21311 

9*17 

+031 

9*17 

9*15 

804 

12389 

9*06 

+002 

9*08 

9*06 

427 

5281 

9*98 

+002 

9*89 

9*99 

2 

768 


I Eculrn points of 1 0014 


■ S LB90R FT London 

bitertterifr Fbdng 4H 4te Si M 

week ego - 4H 4fi 64 5fl 

(IS Oaeer CO# - 421 462 *00 *01 

week ago - 421 466 429 5.60 

son Linked De - 3% 4 44 M 

week ago 3% 4 4R 4* 

ECU UnMd Oa ndd rates: 1 raft 33: 3 mtltt- Gfc 6 mtfw: 3i i war 
ratm ara olfarad ten far frlftn quoted Is tw market by Inr rafaronca 
day. Tha MrUa are. BaWani Trute, Bank te Tokyo, Beretem and Nolkr 
Md retea ara ohoaai tor rw d an— B r . Mvwy Halos, US 3 COa and SO 

EURO CURRENCY INTEREST RATES 

May 16 Sxirt 7 days One Three 






Open 

Sett price 

Change 

Hgh 

Low 

Eat w ol 

Open tat 

- 

” 

“ 

Jun 

8+5Z 

9450 

■031 

9452 

94 >9 

376 

10542 

“ 



Sep 

84.67 

9+66 

-OL01 

9+69 

9+04 

492 

12061 

- 

- 

- 

Dec 

9466 

9456 

+031 

9456 

9+65 

238 

7649 


- 

“ 

Mar 

9433 

9434 

4001 

9454 

9452 

171 

2976 


5J S UBOR Wamar* Mft) 
banka at Than eacn weriteg 
te Waan*te»r. 

R Unxad oapoate <04. 


9MM) Sim I 


notice month mon t h s months 


Bakun* franc 
Danish Krone 
D-Marit 
Dutch GuMar 
French Franc 
Portugueu Esc 
Spamsh Peseta 
Sterling 
Suriaa Franc 
Can. Dcfta- 
USDotar 
iodan Lire 
Yen 

Aston Sang 
Snort term ram t 


5*2 - 5Jb 5I 2 - 

7h - 6»2 - 

5J|-5l 2 «- 
■4-64 - 

«-5li 5H- 
10% - 10*2 11*2 • 
7*j - 

4%-4Jj 4fi- 
4^-41* 

6 , 1 - 

4 - 3^ 4% 

9 - 7*2 7* - 

2,1 ■ 2if 2A - 
3* - 33| 37g - 

re cal tor tne U8 Dol 


Sh 5,1- 
5h 5lt- 
Sft 5A- 
Si, 5*1 • 
5H 

-11 11 %. 
7.1 7*5 ■ 
SA- 

-4 4i- 

5A «■ 
-4 4 %- 
7U 7\- 
2/a 2A- 
3% 4,1- 

hr and Yea c 


-5A 5,1-54 

-5ls 54+-5»| 
-SA !Pt-5 
-5 6ft -4H 

• sh sa - 5,1 

- I1*s 1 1 *4 - iota 
■7 A 758-7,1 
-40 5A-5A 

• 3|} 4-3% 

- 6^4 - a»o 

- 4^» 44, -4% 

■ 7*4 7\- 7\ 

-2*0 2A-2A 
-4ft 

cthafx nredayr ni 


6lj-5% 
5*1* 51? 

6-4^ 

5 A - 412 
5h-5* 
1iA -11H, 
?ii - 7*2 
A-tPt 
4A-3U 
6*8 -ft 
Sft-BA 
Ti,- 7^| 
2,1 - 2V 
SA-!, 1 . 


One 
*» 
Sk- 5Jj 
5^, - 5*2 
5-4% 

aft • 4» 

5«a-5% 
10U-9% 
7,3 - Tii 
5»-5fi 
4ft -3iJ 
7A-7ft 
5ft -5^ 
7^-7H 

2.1 - 2 ft 

an -sa 



Open 

Latest 

Ctange 

High 

Loar 

Eat vet 

Open frit 

Jun 

9*00 

9*00 

. 

9*03 

9*00 

123532 

41*045 

Sep 

9+33 

9+32 

+*01 

9433 

9+31 

162.613 

43+602 

Dec 

9350 

9351 

+002 

9351 

8*79 

17*979 

415A27 


p us thimuiw rai. rotwa (aos) aim periooit 


Jut 

9*45 

9*45 

■mot 

B*45 

25,44 

3,106 

2*054 

Sep 

9450 

94.80 

+002 

0+80 

94.78 

703 

10891 

Doc 

9455 

9435 

-0.01 

9+35 

9+35 

331 

7,105 


LONDON MONEY RATES 

Mrer 18 Oven- 7 dsya One Three a* One 

right notice month montha mnrtha year 

bderbenk Stwftig 5-3 4^-4% 5ft-4ft Sft-Sft 5ft - 5ft 

StorangCO* - - 5-4S ^ - 5ft Sft-5ft 5ft-Sft 

Traaaury 3*a +11 - 4« 4§| - 4® 

Bmaso 4fi-43 4S-4S 5ft - 5ft 

Lwt aurnorty dtp*. 4ft - 4ft 4ft - 4ft 5ft • *1 J 5ft - 5ft 5ft - 5ft 5ft - 5ft 

Dtscourtf MarfQBC Deps 4ft - 4ft 4{J - 4fi 

UK dearing bank beee landtag rata 5ft par cent (com Febtusy * 19B4 

Up to 1 1-3 36 M 9-12 

nmwh month moratw mnrOie montha 

Certo of Ttoc dap. (2100000) 1ft 4 3ft 3ft 3ft 

Cara or Iter dap. indo- EKXUJOO la 1 ftne. Dreedta teMan tor earh ftpe. 

Are. tandw rate te dreount +8600pc. ECGO (faced raw SBo. Eapot France, teaks up day Hpte 89. 
*n+ Affead ra to parted May 26. 18M to An 2B. I8BI, Schamas 3 & U 65to» Htewerwa rate tor 
panodft* 1. 1904 to Apr Z8. IW. Sefwnw* W BY UBOpe- Manor House Bare Rate Sftpc ten, 


■ THH— MOtoTH aTPtLOta Ftmiwn gjFFQ £500 XXX) pomta of 100% 

Open Sett price Change Hgh Low EsL vol Open tnL 
Jtei 94.69 94.68 -0.01 94.72 9468 5473 74Z1B 

Sep 94.49 9M3 -0.04 94.49 84.43 12410 B9880 

Dec 94.04 9463 +001 94.05 9460 12920 128429 

Mer 9366 9363 +001 9369 9362 9286 S2548 

Traded on APT. M Opoi ta NO B Hereto praMouc day. 


■ SHORT STSBUMO OWTIOIMi (LtfT^ £500600 pgfcda of 1QQK 

Strike CALLS PUTS 

Pitas Jun Sep Dec Jun Sep 

9460 92Q *18 014 062 Q25 

9478 0.05 009 008 012 041 

9500 0.01 0.04 003 063 0.61 

Bte voL WbL Crib 3509 Bum 4300 Praitora ray's open tit, CBt 174929 Pwo 15*388 


NOTICE TO THE HOLDERS OF 
GAS ARGENTINO S.A. 

U.S.$1 30,000.000 

7.25 per cent. PARTICIPATING NOTES 
due 1997-1998 

Notice is hereby given that the Additional Interest 
Rate payable for the Annual interest Period ending 
December 7, 1994 is 0.5202% and the Annual 
Interest Amount for such period in relation to 
each Note of U.S$50,000 is UlS.$260.10. 
Therefore, the total interest amount payable 
against presentation of coupon N° 2 on 
December 7, 1994 will be U.S.$2,072.60. 

Bankers Trust Company Gas Argentino SJL 
London 

Dated May 5, 1994 


a* hr praitaua day 

KomoratuFFROMimpotiwoMooH 


SMee 

Price 

Jun 

- CALLS - 
Sep 

Dec 

Jun 

— PUTS - 
Sep 

Dec 

9500 

9626 

9560 

Oil 

033 

031 

nag 

019 

008 

037 

022 

012 

033 

020 

043 

004 

OTO 

024 

012 

022 

037 


BASE LENDING RATES 


■ TUMI MONTH P180R WTWW (MAT1F) Ports Interbank offered rata 


. CM* 6310 Pula 397* Previous day's open tau Crab 2S9688 Pub 17d* 34 
WISS FBAWC OPTTOIIS (LIFTQ SFr 1m potna oT 10046 



Open 

Sett price 

Chengs 

High 

Low 

Eat vol 

Open tat 

Jun 

9458 

8+58 

+0.01 

9459 

9+57 

7,748 

59580 

Sep 

9+08 

9456 

■ 

9+89 

S+8S 

10567 

41542 

Dec 

9+80 

9+82 

+0.01 

9452 

9+70 

+944 

36501 

Mar 

9+70 

9+72 

+002 

94.72 

9459 

1537 

32567 


Strike 

Price 

Jut 

- CALLS - 
Sep 

Dec 

Jun 

— PUTS 
Sep 

9600 

013 

025 

026 

003 

038 

BOSS 

003 

010 

014 

016 

018 

9850 

001 

004 

006 

041 

057 


m THHra — OWTH WBOPOUJW (UFFg* Sim pofcite of 10096 


. Can 0 PUB * Pieataus Oafs ifn Ctaa 486 PuB «0M 



Open 

Sea price 

Chratge 

High 

Low 

Eat wl 

Opera tat 

Jun 

95.00 

9533 

+007 

9*03 

9*00 

go 

5191 

Sap 

9+31 

9+35 

+0.11 

9+31 

9+31 

15 

2060 

Dec 

9*80 

9*84 

+009 

9355 

9070 

100 

1433 

Mar 

9*56 

93.63 

+0.10 

93.58 

9358 

5 

997 


Adait&CaimV — 925 

ASed Trust Bar* 665 

«S»a* 525 

•Henry AriBbachte 525 

BankofBarada 525 

Banco HbaoVtzcsy*. 525 

BenkotCypnra — 525 

Bark c< Ireland 525 

Bar* of MB 525 

BanftofScotend 52S 

Barcbys Bank 525 

Brit Bk dll* East — 52S 
•BRMn SHdey 5 On Ud 625 
CLBorkNedertend -. 525 

CtobOnkNA 525 

OydeadBtoBm .525 

The CtHperralw Bonk 325 

ComsaOo— 525 

Cradt Lyonnais 625 

Cyprus poplar Bank _62S 


Oman Laurie 525 

Exeter Bank Un*Bd_ 625 
ftmSal & Gai Bade ., 6 
•ftotwrt Herring 5 Co _ 525 

Gwbanlt. _S25 

•&*sneea Mahon 525 

Hat* Bank AC Zbrieti . 525 

•HambrasBank 625 

Hatorie & Gen few Bk. 625 

•HiSamnL _525 

CHtrare&Cb 523 

HOndsong&ShtmgW. 525 
Man Hodba Bonk 325 
•Leopold Josephs Sore 526 

Lloyd* Bark 525 

Mo^raf Baric Lta 525 

lASMBrii... 525 

•MomBarkfeg 6 

MriWrabimar 52S 

Brothers 525 


• Rodughe Guarantee 
Corporation Unfed Is no 

longer eutvstoedeE 

a breidng treritudan. 6 
Hoyri Bt <4 SooBend _ 525 
•Snrih 5 Wtonan Son . 525 
StontM CMtored _ 529 

TSB 525 

aOriMBkoM4«m_ 525 
Ur^ Trust Bank Pto_ 625 

Werian Trust — 625 

WhtoanvLddaar— 525 
YorfaMbBank 525 

• Members of British 
Merchant Banking A 
Securities Houses 
As e o da ten 

• bierfriariramon 


Financial iniorrnafron Service on Japanese Corporate Issuer* 

MIKUNFS 
CREDIT RATINGS 

on about 6.000 bond team and about 1.300 ahorMwm notes 
Cost: US$4,600 pw yaef 


To-.ilfcar* 1 Ca,Ui 

T'* fern 
n Please send further information 
Name 


Address 


i i£T/ 
: -d/ 

■:¥ 




FINANCIAL TIMES TUESDAY MAY 17 1994 






FT 







5.1 


64 

•mmm 

4.1 

_ 

ZB 

_ 

4£ 

. 

174 


11 

. 

ZB 

. . 

ijr 


18 


14 


ZB 

— 1 

2.1 



a a 

966 -4 

.180 -*01. 
063 —ID 1, 

XM +10 T. 
LIU +20% 
+1 

+90% 
+««. 
-ID 1. 
-661. 
-10 1. 
+2 
+2 
S 

"3 : 





17 


16 


13 



13 

__ 

Z 2 

__ 

62 


12 


02 


2J 

_ 

08 

- 

1J) 


1J 



ZB 

.. ; 

22 

— 




ISS 3 S 3 & 


30 +^ S3E0, BP, 
31 s * +VBZ 1 t31h 
HU 1*5 

an, +mzohow{ 

3 aS£ 

rf - 1 . s37 ar 

1W. +»*tl51. IBS, 



INDICES 




LUJ 


■i"‘ 1 1 r- 




Wrr 


Tl^Tai 

14*1 «*iiUI| M 

!g ARtt 

3 * 4 .&£ 

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40 


FINANCIAL TIMES TUESDAY MAY 17 1994 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 




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41 



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_ . 16% teto MO- 
226 i86toaaH 


50 50% 
18% 16% 
21% 216 



totetoE 176891 136 13% 13% 
WxUk 2X 2X8 34% 23% 24% 
AedMGP 27 219 1D% 19% TO6 
AtoPbOl 144127 16% IS 13% 
ADCTab S 1069 40% 39 4Q 
AttStoka - 19 431 14% 13% 14% 
AdtaSenr 018 21 73 366 856 956 
Metes* 020 357962 28% 24 2*6+6 
Aftneec 8 221 116 11% 11% -% 

WrUBk 6 30 5% 4% 5% +% 

AfrAftn 7 871 56 «% B% -% 

ftkliHn 3 no 15% 14% 15 +% 

020 205717 40% 39% 40 +% 
S 220 136 13% 13% 
a 1031 12%l2%«a +A 
W01Z7 839 11% 11 11% +% 

020 14 137 21% 21% 21% 
2*0a 224 58 57% 57% 

39 1203 Z7% 26% 27% 

088 16 251 Z46fi4% 34% 

17 41 ite% 8% 8% 

AIM On x oa 13 7 32 32 32+52 

Aten PI B W 106 10 10% 

UtCapB 150 12 9* 14% 136 13% 

AH OO 080 12 121 14% 136 14% 
AkateC 032 39 26 3% 53% 3% 
AftaSek 05B 7 303 li li li 
AtenCo 33 474B 35% 386 33% 

Ao Banter OA 8 398 a 21% 22 
AmCtyBu 14 BOO 15% 15% 156 
MoMag 21 X79 22% 22% 22% 
AnlMB 11 441 8% dB% 8% 
AnSflOn 052183 1766 5% 5% 5% 
AmBtan 321720 20 106 18% 
AmteM 050 16 2810 28% 27% Z?a 

21284 li Id Id 

220 7 120 486 47% 48% 
808377 20% 19 19% 
AmTrw 10 S3 13 12% 12% 

Angao W 16 6816 44% 44 44ft 

Anted! Cp am 2* 1519 18% 17% 17% 

4 291 96 9% 9% 
AnMoflfc 14 321 15% 146 14% 

048 14 27 17 166 17 

ISO 14 85 17% 17 17ft +ft 

Cp 20 1532 36% 346 35% +6 
AnftWAl 7 290 15% 14% 14% A 
Apogee 60x030 24 20 12% 12 12%+% 
AFPBb 9 237 7 B6 B% -% 

ApfUUti 2713077 43 40 406 -2% 
AppbC on 281 2238 30% 29% 29% -% 
AAteten 004 404298 16% 15 156 +% 
AitarDr 024 X 116 176 17% 17% 
Anteox 026 20 in 28 Z7% 27% 
Mgmtex X.XB T 404 ZT% 27% 27% 

Armor « 06(19 86 20% 186 196 
AnoUlBX 040 17 S3 20 19 20 


+6 

A 


A 

A 

A 

+ft 

-2 

A 

A 

A 

A 

A 

-ft 

A 

A 

-% 

A 

-ft 

A 

A 

A 


W lb 

Wok bite to l« IMW 

Damage 020 21 18 7 7 7 

Deteben 032*1 53 14% 14 14% A 

Deletes# 060 47 11 32 31% 32 

Nktenm an 11 10 21% 21% 21% A 

DteGanp assn 25% Z4% 24% A 

Demoam xoig is 54 15% 15% i&6 A 
Mgtr 30 9B4 &6 34% 35 A 

Cep Hr 100 7 TOO 029 28% 28% 

Denxi 020 4 BOO A A 8% 

oh Teen 15 117 19% lA to% 

mb 072 7 107 15% 14 14% +1% 

Dlgiur 1Z a 13% 13 13 A 

Itotocm 4 447 A dA a% A 

Be Sound 6 536 1% Ifi ifi -ft 

DiflStet 7 219 A A A 

OkoBCp Ifi 101 33% 32% 33% 
totems U2D930 IBS A A 9% A 

MPU 21271 4% A 4 
Dear Bn an 257012 25% 24% 2S% 
Dmhton sail 87 \ 3% TO TO 
QrtraEngy 13 2S5 A 8% 9% 
□man 12 740 11% 11% 11% 
OwjGO 02*192046 n 22% 22% A 
Dteoenpo OSB « 127 A 8* 4% -SS 
DSBmxr ISO 18 1370326 31 32 A 

Qutonx 042 111316 1 A TO l A 

Durn OSO 34 ■ 8u33% 32% 326 
CjMteSl 11 1773 1A 17% 17% 


- E- 

a 9 37 A A A 
EudCp 2 371 4% 4% A A 
fiWBMtit 3 SO 16 1% 16 A 
saw 0X8 21 4638 X A TO lA A 
64 IBB 7% A A -ft 
0 P«a°a 2 831 26 2ft 26 

10 312 10% 1A 10ft 

07555 72 85% 556 55% 

SacMrb 227538 lA 18 18% 

Bran toe 21 13 A A 76 

l Op 27 X442 a 86 A 

Eagyvnti si 67 t«% lA lA 
EfflkSn SB 65 It) 1% 16 
Enzenhc 21396 3 tB% 26 

EflUByte 01019 15 « A 4 

05713911677 *A 48% 4A +% 

Blto 7 8 <0 8 

»ail 77 26 17% • 17 17 

195822 13%dM% 14# -ft 

11 2 9 0% A A 

15 324 216 2A 20% +% 

I 0X0 20 681 lA 17 17% -1% 
ESKxpbw 20 100 12% 116 12% A 


ASX Grp 

topeeffte 


ASTitedi 


MSBtlr 

totefc 

Allows 


2 SIB A BA 
23 823 2864236 28 
252 153 236 226 226 
10 5B57 156 TO 15% 

14 40 BA 9 
032 192308 28%42A 24% -1% 
048 201040 53% 51% 51% -1 

12 200 A A A A 

amis 236 7% 7% 7% 


A 

A 

A 

A 

A 

A 

A 


DEI B 


-B- 

OOB2D 56 A 6 
9 50 TO A 
29 oft ft 


A A 
io A 
ft 


-X- Y- Z - 


97 % - 1 % 


. 23% IMaafXaatx 004 32 TO 42 

22 1 A Itatefnoe on 11 53 726 Ii 




A 

A 


12% UkDomfiqr 
. 16% UWDOtbnd 
4A 37% OkMUere 
33% totem 


10A 876 xm 3n 11 41 1093 06% B7% _ 

34% SOXtenM.125 4.12 75 3 54% 54% 54% 

50$ ntoaCOipx OM 12 20 222 47% 46% 48% -% 

1.10 57 11 41 20% 206 20% A 

019 04 17 1293 3A 35% 3U% -6 

135 A rB 5 A 

ISO KA b’^ M 22^ 22^ 

082115 139 A 7% A A 

On 3S 14 477 12% dll 6 12% A 

an 12 68 TO* 21% 21 21% -% 

554 


2$%2O%toteeE0 
40 33$1bkH 
02 5 Sprat 

13% 72teB 
2*6 20%2HDlM 
7% Aaebto 
lA 11$ZMX 

286 20% 2cm W 

13% 12%Z*bQfii*l 118 02 
xA AtotoTalx OM M 


ms 

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iwytotraiMbinEnwnMdMitoiiM 

ten e pat vmra Mtead eateteg b S mw * n W m 
tete Wjrrax toteito rad teteea *■ ten tx s* rae W«4 
WW ra*nrt* n* m Id MW *a m 


A STCBIBter OS 18 22 2X4 A 
M% 28% IGF AMEX ISO 11 10 31 32% 
A 8$TWCWfS 03* 02 307 A 

46% 3*6 TDK Qip A 047 IS 47 2 45% 


2% T%T!3U* 
296 21$ TJX* 


onion o 229 _ 

096 15 TO 2333 23% 226 2A -1% 



124 33 0 293 ST%<QB% 37% A 
032 US 4115 lA 1A 1A 
OSB 08 5 580 17% J J 
2.M 05 34 2875 3A 
ISO 2018X302 61% _ 

092 05 13 212 14% 14 
2 70 15' 

• UabRxxkx 092 20 14 i 

ilMtWv 186 00 XX 6 TO% 1* 

% AUTMML 0 71 6 024 

12% 96 tWarCrp 030 30 31 36 1 A U> 10 

2A176UMQP Om 5L2 10 527 18% 1B% lA -% 

» 24%Uaoral 000 3D 21 3240 27% 26% 27 A 

M 44%UMWQxp 090 Z1 11 1759 4A 4A 45% A 



■ to rt t*e total, to* >m at Mbd pi abto dMM 
•tebta. di+rara. ««•* prar b* etotom dttw * pd 
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teta ptal Hk jot, MW Wbb * na ate* Otoe * toe totena 
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AMEX COMPOSITE PRICES 


Marti Wi 

Btaarj OSB 131315 21% 20$ 21ft +A 
BkbnLDx 02* 3 3 14 14 14 

Btactee 15 -91 22% 21% 21% A 

BzbSontfi 044 11 1340 lA lA T0% +ft 
BatanCp On 9 50 17% 17% 1 A -% 

BetdoxtelxOBO 11 10 lA 1A 1B$ +£ 

BraHtoca 020 28 46 3A 33% 33% 

Bette Sep 052 16 516 34% 33% 34 A 

Basst FX 000 14 to 28 26% 25ft -ft 

BtetoP on 11 47 21% 2A 21% A 

BqtefdpX in 13 750D5A 5A 58% A 
BBSTRn U8 B 485 29 2A 2A 

BE Atop 20 215 A 7% A 

BodBOm 029 29 516 13 12% 13 

BtaSJPiy 14 510 X A <1X4 14% 
BeildqMR 044 14 46 38% 36 38 
BH4&P 01213 73 A dB6 A 
a he - 110 340 A 5 A 

«BB OTO 16 102 11% 11% 11% 

BMterw on 13 12 11% 11% 11% 
Hogan 38 1629 34 33% 33% 

'BteMt 171831 lA 9$ 10 

aocftbg 104 11 57 31% 31 31 

BUG Sated 165551 55 51 51% -A 

BotentaS 124 10 9061 33% 32$ 33% 
M>EntaXflZ7 18 192 206 20% 20% 
BoobOB 14 1401128% 27% 28% 
Bated 183848 11% 10 10ft 
aatenSk 076 5 88 31dZ9% 30 
Bratai le 523879 12% 11% 11% 

B>«J»WA 06B 18 281 47% 46 46% 

Bnm> on 23 S3 iA A iA 
BWSx 02* 162075 7% 07% 7% 
BSBBnqj OTO 8 4 25% 25% 25% 

OTSHpng 048 0 12 A A A 


A 

4 

A 

4 


4 

A 

A 

A 

A 


MW 

BuUartT 

BurBrnn 

BtabesaR 

Bdfertto 


263791 IA IA 19 
22 94 IA 13 13 
X 414 A A 8$ 
81 5 32% 31% 32% 

5 323 22%d21% 21$ 


c - 


A 

A 

A 

A 

A 


-r- 

MGrp 11 TO A A A A 
EarrCp 02414 14 A A A 

004 <7 10*2 9A 29% 30 A 
FM>M 132232 22% 21 6 22 A 
S 174 A A 3 
Rwrnrn im ia sm on »6 53 

FTty Off 0 910 3% <0% A A 

nggbA 02* 0 11B A A A A 

381103 26% 25% 26% +i r « 
FtMraa 129 121652 35% 35% 35% 
fin* to X OM 7 522 31% 31% 31% A 
WfcOtte OM 11 67 24% 23$ 24% A 
7HGD0C 060 22 378 2A 24 2A A 
RtSectrx UM 11 508 28$ 28% 28% +?i 
ht Tent 108 9 742 41% 41 41% A 
«tote 036 7 215 A fi$ Bit +ft 

052 10 B65 23% 23% 23% A 
15811 Z100 4A 4A 45% 

42 7 A A 7% A 

25 1405 20% 20% 2Dft -ft 

RaaU XS 80 A A A A 
ftnU 0S9 1423B6 A dA A A 

FoodLB 0096871505 0 A 5$ A 

108 10 22 3A 3A 3A 

14 77 lA 15 IA A 

FtodBane 030 31 429 33 32% 32% 

RtaarA 37 295 A A A +ft 
FiteRix 10*11 782 2A 20 28 -$ 
MEOm 1.12532 143u2S% 2A 2B% A 
F«FW an 7 329 1 A TO 15 -1% 
FtoKpW 110 10 1481127% 27% 27% A 
ftterHB 059 22 851 3A 3A 3A A 

06814 29 2B ZB 28 A 

Furor 021 TO 17 x Adi A 1 A 
fitetadWR 28 6 A 6 


- G - 

SB toe 9 138 A A A A 

BWS*v 007 21 322 M% 14 14 

o 36 A A A A 
Garnet lb 14 329 A A A A 

GW DO 018192 5 A A A 

fiWBtnd an IB 71 16% 16 19 A 

Gertytt 17 778 4ft A 4ft +ft 

51887 T3% 13% IA 
GentatCp 409 402001 25% 23$ 23$ -1% 
Gw* w ia no A A 3$ 

88 308 29% 2B%2677 

Bbma ann iso ibiAib$ A 

GUdhpL* 012 17 298 23% 22$ 23 A 
680MAX 080 18 7 16% 16% 10% 

GUiBbm 11 33 A A A A 
Goad Guys IS 191 11$ 11$ 11$ 

feukkPtnp 090 18 783 21% 20$ 20$ 
MdoaSte 33 23 A 1$ 2, A 

020 68 193 21% 20% 20% 
&wnAP 02* 10 95 17% 17% 17% 


A 

A 

A 


4 pm doss May 16 


r- r ’■ 




Ur. E loo* Up LavCbta 
433 23 lA 13 13 


Mr topi 
Mata 3 X 
Aptebd 11 71 
MntePo UM TO 3 
feMebeA 00*950 14 
MdM 005 21243 
toBqil 4 252 

MWMntt 51 15 
ASH km 072 1 134 
23 81 
51055 
0 


1 % 1 % 1 $ £ 

3% A A A 


AteeCMB 

MAMA 


12 111 lA 



BWQcmOSB 0 4 2tt 2» -ft 

Baotarttt on 15 4 2D$ 20% 20% A 

SSwTA 004 X 33 A A A , 
ferry RC 18 143 lA 18% ' 

BATM 029 12 3X4 7$ T 

BHta 7 8 2ft Z 

SMa Man *040155 *100 21$ 21$ 2 

BkHtadA 48 232 17 16$ 1 

BtoutaA OX 40 1»U37% 

BawVMay teBziX io 
Bomb* X 101 3ft 

Bitane OX 10 174 20$ 

BraacanA UM 13 IS 13% 





1 , 544 * 


teSmix on xa a 26 22$ 22$ A 

Carr kbre oa 21 Z 11$ «$ 11$ , 
cental a am eiesi sft 3 ^ +i 

* 8P 2A2A2A A 
212 495 A 4$. 46 A 
001 a 369 10 9$ 9$ 


Ctaingkn 


Chto 

OtolFd* 


09T 105 


Steak Ok. E 100e Up La* dam Cbng 

Cnrntao OX 22 20 1 

Ctapdroc 0 47 

CencdRiA 4 31 

CneeKTA 0G4SB 1D6 IA 

Crown C A 040 X 68 IB . 

Ctaran C8 040 14 16 lA 16 

Qtae OSS 90 18 21 

14 Z1X A 





Binds 10 380 

Dhtak 29 150 U 

DactmnuB 8 IX 

Dlplra 048 50 8 A A A 

EesbCD 040 16 6 18$ >A lA 

tepp 1.72W5 42 20$ 2D% 2D$ 

Echo Bey 0073584608 10$ 10% 10$ 
EcdEflA 0X10 45 12% 012 12% 
Efsfalb 6 X 8$ A 8$ 

Bn X3 891 3X% 31% 81* 

Bar Star 47 2084 4 3j 

tofipa 9 840 18 15* 



Feb tab 064 TO ZlOO 34% 

FtoaA 320 15 7u72% 71 

fPOfirt OX 13 ZlOO 10$ Ii 

Abell 052 71 9 29 _ 

FaratUl S 603 42$ 41 

Requency 2 I ftrB 

Gni 009 7 X 25 24$ X +6 

QBrtMAX <L72 13 238 21% 20$ 21 A 

GbMr QJO X 1S7 16 16% 15% 

GDMtad 2 140 % A % , 

31 20 A 8 8 A 

3ft A +3 


GPCdo 004 22 567 


HanOt 

HbWOX 


34 2982 6 c6$ 5$ A 

OX 14 SIX 33%d32% 32% A 


iCb 


Heko 


Ul Corns 


tartr 

JanBeB 


W Sb 

Dk E Tflte Hp La* Cbm I 

5 x A A A 

3 313 u3ft 3% 3$ 

015 44 3 10%dlA lA 

141229 10% 10% lA 

1 044 A « 

012 X 10 lA i A 1C 

4 512 5 A 4 

93 371 19% 18% It . 

am 17 1853 17% 17% 17% 

3 440 5 A 4$ 

19 2 13% 13% 13% 

X 4 4% 4% 4* 

X 334 IA 19 IS 
SB 251 nA A 

£ T% 
A A 

s g 

24 23$ 23$ 



34 135 10$ dA A 
024141 797 29% 29% ^ ^ 


OdteraA 


EbgrausG 040 931728 16$ lA 


tot HOP 
MU) 


ft Sb 

Mr. E tab Mp LapCbteGtasi 

On 51 TB 12% 12% 12% 

104 14 ZlOO 28$ 20% 28$ 

OX 19 399 71% 70% 71% A 


OX 19 16c 
PfrGmx 012 X 271 


PMC 


mure* 


SJWCerp 

StoUrW 

StalB 

TOW 


060 19 12 14$ 14% 14 ^ 
010 1 4X 1% d1% 1ft 
31 2 

3 177 
0 19 
2.10 10 3 


29 28% » 

AAA 
1%di% 1% 

36% 


16 X 18% 18? IA A 

OM 14 174 12% TO 12$ A 

„ » CT 3ii A A 

1st) Prod* 020 B TO 10 10 10 

TaUOta OX 57 552 X 38% 33% A 

Itanaedcs 65 149 15 14% 14% ~ 

TOtakOW X 847 30$ 30% 30% 

Toma on a ass ie 14 

TtertWiy 0 


TMon 


TirnrBrt 

TOnrBrfl 


Utoftta 

USCeU 


43 2% 2 
9 16 1ft 1 
161X46 A ‘ _ 
067 88 140 1Bct17% 1 

0071TB 663 18d17% T 

S* u2ft 2% 

23 02% A 



5 

onus 


18 56 A A A 
92 290 20$ 28% 26$ +5 

a me x$ x% a% -xj 

2704 Z76 27 X -3 

24 181 10% lA 10% 

060 24 313 26$ 28% " 


X.X21G 2X6 XA 
080 10 2S2 X 


4 61 


28% 
TO 13 
X 22% 

4ft A A 


emote 
Cerate 
Canted 
CbltaOn 003 23 
Ceraadax 080 20 
CaseyS 
Cdgane 


CTae 181 142 X%(BA 2A 

Qtafftad 10 277 A 8 A 

CadSdMpB 101 17 34 2A 29% 29% 

OtanOiBidXa 1711MU1A w$ 14% 
toerocp IX 243 7$ 7$ 7$ A 
Capne 22 72499 11$ 10% 11% -$ 
Calltaro ia 513 20% lA 19$ 

CwtaHo 1 306 1% 1ft 1% +ft 

1 61 A A A A 

0 158 1% dx% 1% 
000113 X 01% 81 81% A 

0 31 3 lfi% 2% -% 

012 X 144 46% 4A 46$ 

57 2A 28 X A 
10 a% 20% 21% *ii 
om 15 407 11%d10% IA A 
4 106 A d6 A ' 

8 334 IA 18$ IA 
CalCp 19 105 12% 11$ 12% 

CbtatTB 362 208 11 10$ 1Q$ 

Catonr 51772 12ft Tl$ 12 A 
OaMFH 112111017 31 3A 3A A 

CtelSpr X 2 11% 11$ 11$ A 
Bandar 8 8 A A A 

Batf* lx 090 7 288 19$ TO% 10% A 
Out® 000 1 3 3475 A dA A A 
Oweteon TO 47 uA 8ft A 
is 3 iAmA TA 

1 290 $ A % 

12 5 A 3% A 

Chta*Te 81130 A A A A 
CtoOiCp 842982 60% 88 66% -2 

Onto! m 12 270 52$ 52% 52$ A 
CMnCp OT7 X 459 31$ 31% 31$ 
Ctaualgc 3212725 34$ 30% 30$ -A 
OS Ted) IX 387 A A 3 A 
CSeoSji 1234880 24% dX 22% ' 
CtzBancp 1S8 16 16 29% 20% 28% 
CtaBlkr X 83 7% 7 7 

CBtato 43 4 12% 12% 12% 

QaBtoton 81096 5% ® S 


teneebto 


BndWtr 

cnckip 

SBNVStg 


0X980 % % % 

1 42* A d3 3% 
700 17 14 14 14 

8 IX 11% 10$ 10$ 
4 680 9% 8$ A 


- H - 
54 11 A 


hEve Ip I* Idbi I task 


-K- 

K Safes am TO S72 24$ 22% 23$ +1 

SbSflcCp 04* 5 42 A A A 

KBjdonCo OdO 14 BS2 X 22% 22$ A 

Ibtaya 5 472 5% <£% 5% A 

taflyS* 084 X 47 27 X 26$ +% 

KMc* 01111 9 A A 0$ 

Omfcte 084 13 X 24% 23$ 23$ A 

ftUwr 13 13 A 0 6% A 

XUrsr 48 2388 » 34% 34$ -$ 

Knawbdge &1068 lA dA A 

$04 1 383 iJ ft 036 

Kaneohe 1793217 U% 18% 19$ 
KPMS 81105 13% 1Z% 12$ 


- L- 

LaOdFon 0.12 481483 A 8% 8% A 
Lem Ibct) 314209 29% X 28$ -1% 
Itaetf* 060® 2891148% 45$ 48 

Lmcalec 090 18 185 18%0T7% 18 +% 

UndmkGph 40 M 31% 3A 31% A 
Unapda 11 87 A A A A 
irnncw B6 242 a 5$ 6 -ft 

UUcaS 131134 18 18 IA 

Lemon Pr on 16 742 X$ 22 22 A 

LCDS 23911037 17%dlA ’&$ A 
UUCP 01B 7 10 5 <S 5 A 

ten 14 495 12$ 11$ 11$ A 
Leged Cp 181080 28 ®% 2A -1% 
UfeMBc 078 13 993 27 26% 27 A 

Lib Tech an 14 143 IA 18 18% A 
Udta a 3 4 4 4 

Ufetatt 028 a 111 24$ 23% 24$ 

UlBr 95 381 11*111$ 113+1$ 

UmtaT 052 14 177 14$ 14$ 14$ A 
ttabtotir 14 45 32$ 32% 32$ +$ 
*T«C 02+ 38 3320 48 44$ 44% -1% 

LtodBoc 040 18 12 35$ 3S% 35$ A 
UmnGp 006 2B *56 22$ 22% S2% A 
UnaSar X 108 7% 7% 7ft -ft 
X 4510342 50$ 55$ 55$ -3% 

OXCp 2 52S 2% A 2% A 

LVMH 035 4 8 31% 31% 31% -% 


Mr. 5 lOfe ran Ue HH 
PatmBl 012 7 1825 19$ 18$ lA A 
Ppm** 11 833 7$ dS$ 7% A 
fleertidjg 12 5 A A A A 
OteteCM 082 TO X 17$ 17$ 17$ A 
Bad Food* 020 17 7X 23$ X H$ +$ 
Ouanom 5813336 lAtH2$ 12$ -$ 
fiWMv 18 79 IA 12$ 19 ■% 
OVCNaoto 213019 32 X$ 31ft +»- 


fflWftw 


Raymona 
Racoon 
WtoA 
netegatr 
HIP WHO 


-R- 

12 175 W%d13% 13$ -h 
81292 5 A A A 

8 473 A A A A 
u a i A iA i A A 
X 695)132$ 31$ 32% A 
17 3 18% 17$ 18% 

S 903 A d4 A A 
5 28 3% 3% 3% +ft 

15 X A A 8$ A 

2» 152087 44% 43% 43% +ft 
o 37 A A A 
on 10 10 34% 34% 34% 

1.40 X1814 89 88 69 +2% 

012 13 104 A A A A 
| RKAMk 058 « 325 16$ 1 A 18% A 

l* 044 9 378 48% *7% 41% +B 
tea Sir 02) 11 2095 15% 13$ 13$ -1 

RotaMM X 1345 20% 19 20$ +1 

Am am 59 359 19$ 19 19 A 

mine. OS 21 234 1 A 17$ 19% +ft 

RStoi 04012 0 X 20 20 

ipnFtey 13 m A A 7% 


- 8 - 

ISraaca 106 71681 54% 63$ 54% 
ISMbncniUO 12 10 17$ 1 A 17 A 
ScMnbdA OX 101018 23% 22% X$ A 


routers 

Rmte 

nrerFst 

IWM 

row 


- M - 

mq cm am zoisces Z3h 22% x% A 

VBCtae 17 SS4 20019% X +% 

A 


Sd* 

SdtaCg 

Samflrt 

SeeMd 

ffgW 

SB Cp 

State B 


MarcemCp 
baton Dr 
Mattel Cp 


MtemW 

Cp 


A 
. A 
Ad7$ 7$ A 

to A A +$ 

5 04% A A 
41 40$ 40$ 

2$ 2 A 

8$ A A 


-1 

A 

•% 


A 

A 

A 

A 

A 


17 584 20dlA 2D 
Ml 000 43 115 13$ TO% 13$ 

UB 14 15 32% X% 32% 

14 209 31$ 3A 31 

JfeBnaOPrftTO 11 345 16 17$ 17$ 

12 184 
37 IX 
121120 
9 4 

1 X 
19 234 

044 TO X lA 10$ 10$ 

OX 11 1294 21 20% 20$ 

9 30B 0% 0 8 

X1266 52% 50$ 60$ 

0 965 A 8 8 

R 044 12 7 1B$ 16 16 

McCanfc 048 171033 a% 21 21% +% 

McCewC 474827 51% 50% 51% +$ 
no 0 323 ft d% % 
be 016 16 TOD 13% 013 TO 
MatateaSxOto TO 332 22% 21% 21% 

024 6 63 A 5 A 

Cp OTO 45 ® 14% 10$ 13% 

004X2410 11% 11% 11% 
NbntaB 088 101026 19 18$ 18% 

MareayB OJO 7 838 27 26% 26$ 

X 10B 11 1528 29% X 29% 
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J 



42 


WORLD STOCK MARKETS 


FINANCIAL TIMES 


Tuesday May 17 1994 


AMERICA 


EUROPE 


Dow edges up Bourses tread warily ahead of FOMC meeting 
but investors 


stay cautious 


Wall Street 


Although US share prices 
edged higher yesterday morn- 
ing in the wake of firmer 
b onds , trading was subdued as 
the market awaited a likely 
interest rate increase from the 
Federal Reserve, writes Patrick 
Harverson in New York. 

By lpm, the Dow Jones 
Industrial Average was up 7.83 
at 3,667-SL The more broadly- 
based Standard & Poor's 500 
was also slightly firmer at the 
halfway mark, up 1.19 at 445-33, 
while the American Stock 
Exchange composite index was 
up 029 at 432.86 and the Nas- 
daq composite down 1.57 at 
715.35. Trading volume was 
131m shares, and declines mar- 
ginally outpaced rises by 995 to 
935. 

From the opening bell, the 
mood of the market was cau- 
tious, with traders and inves- 
tors reluctant to commit them- 
selves ahead of today’s 
meeting of the Fed’s policy- 
making open market commit- 
tee. Wall Street analysts expect 
the FOMC to sanction a rate 
increase, possibly one as large 
as a 50 basis points rise in the 
federal funds rate and a similar 
increase in the discount rate. 

If the Fed puts up rates, it 
will be the fourth monetary 
policy tightening in as many 
months, and like the previous 
three, it will be designed to 
slow the pace of economic 
growth and stave off any 
return of inflation. 

Trading was subdued yester- 
day, not just because of the 
expectation of a rate rise, but 
also because participants were 
unsure how the market will 
react if the Fed does act Nor 
mally, rate increases are bad 
for stocks, but because the 
move is already priced into the 
bond and equity markets, 
investors may be disappointed 
if the Fed decides not to act 
this week. Conversely, a rate 
increase could be greeted by a 
jump in share prices, primarily 
because it would please the 
bond market 

Yesterday, what little 
strength there was in share 
prices came courtesy of a 
firmer bond market where the 
yield on the benchmark 30-year 
bond edged lower to 7.443 per 
cent Analysts said bonds rose 
because the April industrial 
production figures - which 
showed a rise of 02 per cent - 
contained no nasty surprises. 

Among individual stocks. 
EDS Systems climbed $1% to 
534% in busy trading on the 


news that General Motors, the 
company's parent, plans to 
spin off GME in a tax-free reor- 
ganisation. The news left GM 
shares Up $% at $53%. 

Another stock higher on 
news of a divestiture was Mead 
Carp, which rose $1% to $44% 
after the company said it 
would sell its Mead Data Cen- 
tral unit so that it could focus 
in future on its core forest 
products business. 

Philip Morris, which bene- 
fited last week from specula- 
tion about a possible split of its 
food and tobacco businesses, 
ran into profittaking yester- 
day, falling $1% to $50%. 

UAL feU $1 to $118% on 
reports that the pilots union 
wants to renegotiate the pro- 
posed terms of the carriers’ 
buyout 

On the Nasdaq market Wei- 
tek plunged $2% to $4% after 
the company warned that it 
would report a loss in the sec- 
ond quarter. 


Europe saw some nervousness 
ahead of today's US meeting of 
the FOMC, which is expected 
to signal a further increase in 
US interest rates. 

Meanwhile, Lehman 
Brothers yesterday switched to 
an underweight position in 
Italy - previously overweight 
- in favour of the Netherlands. 

In explanation, Lehman's 
strategist Mr Joe Rooney, said 
the Italian market had dis- 
counted most of the economic 
and political changes. Italian 
equities have only traded at 
higher levels of valuation once 
in the past 36 years, and that 
was in 1986," he wrote. The 
market Is also vulnerable to a 
deterioration in the liquidity 
situation that has been so sup- 
portive over the past half 
year." 

He said that the Nether- 
lands, showed good value 
among European bourses, sup- 
ported by forecasts of good 
aamirifl w and dividend growth . 

FRANKFURT'S rise to record 
levels - the DAX index closing 
at a new record high during 
the official session - was 
masked by low turnover. 

The index finished up 1226 


at 2271.11. Turnover was a 
Slim DM72bn, 

One of the exceptions to the 
day's positive tone was Luft- 
hansa, which weakened 
DM520 to DM20120, as the air- 
line disappointed investors 
with news that shares issued 
in its rights issue would be 
priced at a 20 per cent discount 
to current prices. The group 
also forecast a return to profits 
in 1994. 

PARIS could find little to get 
excited about and the CAC-40 
index moved ahead just 0.70 to 
2,187.70 in thin turnover of 
FFrfhn. 

Baring Securities, noting 
that the CAC-40 has lost some 
10 per cent since the start of 
the year, suggested that in the 
short-term further weakness 
could he expected. 

“However, we take a more 
optimistic view for the medium 
term, on the basis of a stronger 
than expected economic recov- 
ery.. .As a result, a fall to the 
2250-2400 range will be a buy 
opportunity". 

MILAN was under pressure 
from a combination of profit- 
taking after last week’s firm 
performance, technical end of 


FT-SE Actuaries Share Indices 


May 16 
Hottiy cftanpM 


Opai 


THE EUROPEAN SERES 

iojo moo ixod iwo iajm tun one 


FT-SE brock 100 
FT-SE brock 200 


147476 147627 147157 147X16 147321 148908 146X33 W717S 
1*9084 149082 148X77 148X37 1487X3 148409 148431 148581 


Vts 13 Ubj 12 Ifcr 11 


Mg> 10 


ibfS 


FT-SE EuTOdc 100 

FT-SE Eootndc 200 
Bamn&svnQ; 


148843 146098 1488.12 14S50B 1437 JO 

148608 1478.48 147X49 1*71.39 1*5X0* 

10a ■ M7B9X an - 1«I A UMM«: t« - 1*8830 200 - 14HJ10 


month trading and political 
worries ahead of tomorrow's 
vote of confidence in the Sen- 
ate in which Mr Silvio Berlus- 
coni's administration does not 
have an overall majority. The 
Comit index foil 19.12 or 2.4 per 
cent to 789.73. 

Blue chips, the best perform- 
ers recently, lost same of their 
shine. Ferrnzzi, launching a 
t.i , 34 am capital increase today 
fell L124 to L2.135, and Cir, 
raising Ll,060bn, was L100 
lower at 12288. 

Montedison dropped L39 or 

2.6 per cent to LI.487: early in 
the day, the European Commis- 
sion expressed salons doubts 
about whether the plastics 
joint venture with Royal 
Dntth/Sbell rflwnld go 

Elat, the market bellwether. 


lost U38 to L7.039, with strong 
support seen at the L7.000 
level 

Italcementi lost L556 to 
LL5254 following the weekend 
a nnouncemen t of a net loss of 

L12Sbn in 1993. 

Alitalia was L40, or 32 per 
cent, lower at Ll.100 after 
the Transport Ministry's 

armniTwrarngnt that the fliriinB 

must find some LL500bn that 
it needs through a bond issue 
or an injection of private 
funds. 

ZORICH decided that recent 
losses had been overdone and 
the SMI index picked up 302 or 
LI per cent to 2,709.0. 

The recently weak Roche 
certificates rebounded SFrl85 
to SFr6,650, while NestlA was 
marked SFrlO ahead at 


SFrlrflS. UBS featured among 
a strong financial sector rising 
SFiSl to SFrU35. 

Sandoz's bearer share gained 
SFrlO to SFi730 following the 
5-fbr-l stock split, as the com- 
pany announced that it had 
reached agreement with the 
Scripps Research Institute of 
the US to exchange funding for 
research in return for the right 
to develop and market some of 
the institute's generally tended 
medical discoveries. 

BRUSSELS traded higher in 
moderate trade, benefiting 
from stronger bonds and hopes 
of further interest rate cuts. 
The Bel-20 index rose 425 to 
123720. 

Bekaert, the steel cord and 
wire maker, picked up BR825 
or 3 per cent to BFr28,475 on 
news that it had won a large 
contract to armour an offshore 
gas pipeline in Thailand. 

Union Mlniere rose BFr65 or 
22 per cent to BFr2,665 follow- 
ing the surge in zinc prices at 
the end of last week. 

STOCKHOLM continued 
M ghw amid further strong for- 
eign AoTT«mH for Ericsson and 
declining domestic interest 
rates. 


ASIA PACIFIC 


Canada 


Toronto stocks continued to 
rise at midday with gains in 
most sectors and strong base 
metal, conglomerate and for- 
estry product shares overpow- 
ering losses in communications 
and real estate. 

The TSE 300 composite index 
climbed 2623 to 4,201.68 in vol- 
ume of 352m shares valued at 
C$254.9m. Advancing issues 
outpaced declines 289 to 259. 

Rising sectors were led by 
the m pfais and miTipratR group, 
up 73.02 or 2.07 per cent, to 
3,601.12. Among base metal 
stocks, Inco rose C$% to 
C$34%, While Alcan Al uminum 
gained C$% to C$30%. 

The conglomerates sector 
rose 7321 or 122 per cent, to 
4,888.18. TransCanada Pipe- 
lines edged up C$% to C$17% 
after the company earlier 
awarded a C$22m pipeline con- 
tract 


Nikkei loses ground for first time in five sessions 


Tokyo 


SOUTH AFRICA 

Gold shares finished generally 
lower as they succumbed late 
in the day to a bullion price 
dip, and other shares tended to 
soften as an expected pick-op 
in foreign demand failed to 
materialise. The overall index 
aided 36 down at 5,497, indus- 
trials slipped 3 to 6.707 and 
golds were 39 lower at 1,856. 

De Beers dipped R1.50 to 
R10925, Anglos shed R225 to 
R232.75 and JCI lost R220 at 
R92.50. Financial shares 
reflected slower interest after 
recent gains, Firstbank reced- 
ing El to R113- 


The Nikkei 225 average lost 
ground for the first time in five 
trading days, writes Emiko 
Terazono in Tokyo. 

The index was down 8221 at 
20,188.44 after a day's high of 
2029728 and low of 20,17443. 
The Topix Index of all first sec- 
tion stocks lost 419 at 1,639.01. 

Overseas investors placed 
active buy orders as the yen 
foil against the dollar. Expecta- 
tions of higher interest rates 
supported the US currency, 
and it rose above the Y105 
level for the first time since 
April 11. Arbitrage buying also 
help ed shares in the morning. 

The Nikkei 300 shed 1.08 to 
299.67 and losers led gainers by 
485 to 489, with 200 issues 
unchanged. Volume fell to 
280m shares from 414m. Some 
short term investors were 
attracted to small companies. 
The second section rose 5.15 to 


a year-to-date high of 2230.06, 
while the over-the-counter 
market gained 622 at 125322. 

In London the ESE/NIkkel 50 
index put on 324 at 123826. 

Banks faced profit-taking. 
Bank of Tokyo retreated Y30 to 
Y 1,620 and Mitsubishi Bank 
declined Y40 to Y2.750. 

High-technology stocks were 
mired, with Hitachi, the day’s 
most active issue, unchanged 
at Y995 and Toshiba rising -Y4 
to Y795. NEC, however, lost 
Y10 to Y1.170 and Fujitsu also 
declined Y10, to YL040. 

Kureha’ Chemical Industry 
moved ahead Y18 to Y593 on 
reports of the high effective- 
ness of its cancer drug. Other 
drugs companies were also 
firmer, with Takada Chemical 
iV Y10 to Y1260 and Daiichi 
Pharmaceutical appreciating 
Y20 to Y1270. 

Real estate companies, which 
were higher last week, relin- 
quished some ground. Mitsui 
Fudosan receded Y20 to Y1230 


and Mitsubishi Estate dipped 
Y20to Y124Q. 

Individual investors contin- 
ued to dabble In speculative 
favourites, with Brother Indus- 
tries dimhing Y25 to Y719. 

In Osaka, the OSE average 
Slipped 2226 to 22,42448 as 
profit-taking by institutions 
eroded earlier gains. Volume 
was 212m shares. 


Roundup 


Pacific Rim markets were 
mixed, with many investors 
awaiting the outcome of 
today's meeting of the US Fed- 
eral Reserve Open Market 
Committee. 

HONG KONG continued to 
find favour with foreign inves- 
tors and the Hang Seng inder 
finished 118.69, or 12 pa cent, 
higher at 9,253.41, with Japa- 
nese funds leading the 
advance. Turnover, however, 
slipped to HK$4bn from last 
Friday's total of HK$5hn. 


Property issues led (he rise 
as newspaper reports of strong 
buyer interest in local housing 
developments eased concerns 
over government plans to cod 
property prices. Cheung Kong 
gained HKS120 at HK$3925, 
™ Properties added 75 cents 
at HK$49.75 and Henderson 
was up HK$1.75 at HK$4225. 

SYDNEY was led higher by 
strength m the resource sector, 
and the market closed at its 
hi ghpat level for more a 

month. 

The All Ordinaries index 
rose 40.9. or 2 per cent, to 
2JI02 in A$5432m turnover. 

A strong hanking sector also 
assisted sentiment ahead of 
results from NAB and Westpac 
later in the week. 

Among resource stocks, BHP 
leapt 68 cents to A$1826. GRA 
jumped 56 cents to A$1826, 
Western Mining climbed 38 
cents to A88.08 and MTM rose 8 
cents to AS32L 

SEOUL edged to a lower 


d og ? as rawiRnliriatinn in blue 
chips outweighed renewed 
interest in companies that are 
forecast to produce improved 
business performances. The 
composite stock index eased 
0.71 to 94127 in volume that 
dipped to 3Llm shares after 
last week's daily average of 
40m. 

KUALA. LUMPUR ended its 
quietest session this year 
broadly lower as investors 
adopted a wait-and-see attitude 
amid lack of fresh local factors. 

The composite index dosed 
6.71 down at 99724 in volume 
of 682m shares, against 992m 
an Friday. 

SIN GAP ORE was mixed in 
sluggish business, with trading 
volume down at one of the 
year's lowest levels, 74.49m 
shares, as investors Ignored a 
robust first-quarter gross 
domestic product growth of 11 
percent 

The Straits Times industrial 
index put an 429 at 2290.4L 


MARKETS IN PERSPECTIVE 


Brazil falls back 1.4% in 
early afternoon trading 


Brazil 


was flat at CrllO. 


Equities in S5o Paulo were 
down L4 per cent in listless 
early afternoon trade as inves- 
tors were mostly sidelined, 
with most of the deals concen- 
trated on day-trade and options 
operations, Reuter reports. 

The Bo vespa index of the 56 
most active shares was off 233 
at 15,626 at 1 pm. Volume came 
to Cr4149bn (5266m). 

Turnover was up modestly, 
but brokers said that most 
deals were concentrated on box 
operations, a combination of 
two call and two put options 
series which grants investors a 
fixed-income return. Telebras 
preferred retreated 12 per cent 
to Cr4525. Fetrobras preferred 


Mexico 


Stocks opened marginally 
higher, lifting the IPC index of 
37 leading shares 5.58, or 025 
per cent, to 2245.75. 

After an hour of trade, turn- 
over had reached 7.6m shares 
in 51 transactions. Advancing 
Issues topped declining shares 
by 6 to 3. 

Grupo Financiero Serfin LCP 
series led risers, appreciating 

1.06 per cent, followed by 
Grupo Carso Al shares, which 
gained 020 per cent Telmex L 
series rose 0.64 per cent. 

Declines were led by Coca- 
Cola Femsa L shares, which 
fell 476 per cent, while Femsa 
B stock slipped 029 per cent 


% etane* In loaf omnqr t 

«ci«ng* 

to US • T 


1 WMk 

ftWMfea 

i r— 

SMrtaf 

MM 

Statal 

1M 

amt* 

UK 

Austria 

-0.20 

-L92 

+2627 

-9.10 

-6.78 

-5.46 

Befgiun 

+0.33 

+2-53 

+22.43 

+1.40 

+583 

+821 

Denmark 

-0.87 

-0.17 

+2026 

-1.16 

+1.60 

+3.03 

Finland 

+303 

+2J&B 

+62-31 

+16.79 

+23.13 

+24.85 

Franca 

+1.09 

+0.60 

+19.84 

-2.75 

4X95 

+0.44 

Germany 

+0.62 

+2^9 

+3225 

-1.15 

+1.54 

+227 

Ireland — 

-1.03 

-3.69 

+15.74 

-406 

-1.67 

-029 

Italy 

+060 

+2-35 

+49.33 

+30.90 

+38.47 

+40.41 

Nethartands 

+0.47 

-2£5 

+23.60 

-125 

+0.47 

+128 

Norway 

+2-45 

-a 48 

+31.57 

+6.03 

+8.88 

+10.42 

Spain 

+3.75 

+4.13 

+2624 

-0.03 

+225 

+3.70 

Sweden 

+1-38 

+5.20 

+35.76 

+8.01 

+14.73 

+16.34 

Switzerland 

+1.04 

-6.02 

+2425 

-7.42 

-481 

-3.47 

UK 

+007 

-1.77 

+10.65 

-7.73 

-7.73 

-643 

EUROPE 

+0-62 

■OJBS 

+21-08 

-Z58 

-0.77 

4X83 

Australia 

+3.68 

+4X58 

+21-61 

-388 

+0.79 

♦221 

Hong Kong 

+6.33 

-4.74 

+30-16 

-23.48 

-2452 

-23.46 

Japan 

+1.89 

+0.64 

+3.19 

+13.33 

+1986 

+20.74 

Malaysia — 

+0.06 

-2.82 

+4820 

-21.75 

-20.34 

-1922 

New Zealand . — 

+3.36 

+0.48 

+32.77 

-4.65 

-1.90 

4X52 

Singapore 

+Ov41 

+226 

+3228 

-10.55 

-8.66 

-737 

Canada — 

-1.80 

-128 

+829 

-2^7 

-7.73 

-8.43 

USA .. .. _. 

-0.81 

-026 

+026 

-4.70 

-6.02 

-4.70 

Mexico 

-005 

+aie 

+38.75 

-14.18 

-21.07 

-11X95 

South Africa 

+4.82 

+1220 

+45.74 

+13J6 

-1.76 

-028 

WORLD INDEX 

+OJ85 

-ao7 

+8.19 

+4X03 

+1.14 

+287 


t Bwd on May ia» 1884. CoputflM, n» nntt 1 «bm UraJM, oafcfcnan, Sadia ft co. and 


With Europe’s political map being redrawn, some strate- 
gists have been trying to assess the implications for 
equity markets. Merrill Lynch, for example, notes that in 
the longer term, “governments, partly through choice 
and partly as a result of the increasing internationalism 
of economies in the 1980s, have left themselves little 
freedom of manoeuvre on economic policy”. Short term, 
however, says Merrill, Spain, the UK and Sweden are 
likely to be negatively affected by political developments. 


FT -ACTUARIES WORLD INDICES 


Jointly compiled by The Rnanctal Times Ltd., Goldman. Sachs & Co. and NatWsst Securities Ltd. in eanfcncdon with the InsJKute of Actuaries and the FaoJty of Actuaries 
NATIONAL AND 

FRIDAY MAY 13 1994 • 


REGIONAL MARKETS 


THURSDAY MAY 12 189* - 


-DOLLAR IBEX* 


Figures in parentheses 
snow number of fries 
of stock 

US 

Dolor 

India 

Day's 

Change 

% 

Pornd 

Storihg 

Index 

Yen 

Mm 

OM 

Index 

Local 

Currency 

Index 

Local 
% chg 
on day 

Grass 

ON. 

Yield 

US 

Doftar 

Index 

POuid 

Sierthg 

index 

Yen 

Index 

Locri 

Currency 52 week 52 week 
taex hdex High Low 

Year 

Austria (6?) 

17055 

1.9 

168.54 

112.94 

14782 

157.17 

10 

3.49 

187.41 

16533 

11039 

145.41 

154.66 

188.15 

13019 

13075 

Austria (17)- 

..... 174.88 

0.8 

172.81 

11080 

15186 

151J8 

03 

106 

17041 

171^*8 

11435 

15062 

16034 

195^1 

140.14 

142.10 

Bel0um |J2) — 

173.73 

02 

171.87 

11584 

160.57 

14704 

0.0 

3.71 

173A3 

171.48 

11436 

150,6* 

147.04 

17067 

141.96 

14088 

Canada (106) — 

127.06 

06 

125.B 

84.13 

11012 

12084 

02 

2.66 

12044 

125.02 

83-52 

109.82 

128.61 

14031 

121.46 

12756 


254.70 

on 

251.68 

168.65 

220.74 

225.82 

-02 

0« 

254.60 

261.75 

16819 

221.15 

22028 

275.79 

20758 

221.60 

Finland (22). — 

153.82 

u 

152.00 

101.86 

13381 

174.87 

1.1 

085 

15134 

150.14 

10031 

131.89 

17Z96 

15072 

8554 

9255 

Franco (98) 

1 76.74 

0.7 

174^5 

117.03 

153.18 

15050 

05 

2.84 

17532 

17335 

11S34 

152.45 

157.72 

18537 

149.60 

15455 

Germany (58).—. - 

144.41 

08 

142.70 

95.62 

125.16 

125. t8 

0.6 

1.85 

14336 

141.68 

94.64 

124.44 

124.44 

147.07 

W7£S 

112.18 

Hong Kong (56)— 

374.51 

3.0 

370.08 

24759 

324.58 

371j49 

10 

2X7 

36068 

35901 

24019 

31582 

38062 

506J>8 

271.42 

28758 

Ireland (14) ... — 

184.68 

09 

182.60 

12229 

160.06 

177.68 

0.6 

3.43 

183.11 

181.06 

12096 

159.08 

178.53 

20033 

15093 

184.12 

Italy (50) 

96.31 

0.0 

95.17 

63.77 

8347 

114.79 

-0.1 

183 

9032 

9524 

8333 

8066 

11A33 

97.78 

57.88 

09-22 

Japan (489).. _. __ 

1S7.12 

4X3 

15526 

104.04 

136.17 

104.04 

-oi 

0.78 

15738 

155.91 

104.10 

138,96 

104.16 

16581 

12454 

14255 

Malaysia ps) 

477.B4 

1.4 

472.19 

316.42 

414,15 

48024 

1.4 

1.40 

471.13 

465.85 

31122 

40923 

473.76 

821.83 

31251 

327.46 

Mexico (iq — 

_ 1P1126 

22 

1888.62 

1265.57 

165044 

695060 

2.7 

1.12 

1807.74 

1848,79 

1233.81 

182222 

877788 

2847.08 

1431.17 

146000 

Netherlands — 

—.202.85 

02 

20045 

13432 

175.81 

17023 

OO 

X24 

202.42 

200.15 

133.72 

17582 

173.16 

207.43 

18350 

16950 

NewZeatandb*) - 

67.56 

as 

66.78 

44.74 

5055 

61.48 

04 

oag 

87.04 

6829 

4429 

55.23 

aiso 

77^9 

4089 

47.40 

Norway (23] _ 

1tB25 

2.0 

196.00 

131^4 

171.91 

19443 

10 

1.71 

194.47 

19229 

128.46 

168.91 

191.08 

206.42 

15061 

15805 


24a 44 

12 

33041 

22543 

295.06 

243.77 

1.0 

1.65 

33884 

333.16 

ms 8 

292.67 

241,26 

37882 

24248 

247.68 

South Africa (58) - - 

266.14 

-aa 

26088 

17&23 

23063 

284.45 

1.8 

2.17 

287.00 

254,00 

176.37 

23181 

27882 

280.26 

17553 

18959 

Spain (42) 

1*450 

0.7 

142.78 

95.68 

12323 

15083 

0.7 

nas 

143.47 

141.86 

94.77 

124.82 

148.77 

155.79 

11653 

127.6Q 

Sweden (3Q 

228.48 

1.8 

225.76 

151^ 

men 

261.72 

1.8 

133 

22433 

22202 

14032 

185.03 

257.61 

23002 

163.66 

17021 

Switzerland (48| 

154.59 

2.0 

152.76 

10TJ6 

13398 

13050 

1.0 

1.78 

1513B 

14929 

10014 

131.67 

134.42 

17056 



United KJngdam (205) — 

191J38 

-05 

18059 

127.04 

18028 

189-59 

-08 

331 

1B238 

19073 

127.42 

16785 

19073 

21456 

17052 

17029 

USA (5194 ^ - 

16098 

02 

178. 84 

11884 

15085 

18098 

02 

235 

180.66 

17084 

119.34 

15092 

18008 

198.04 

17858 

17954 


EUROPE J724I. 
Nortflc (114),,^. 


Euro-PndUc 11474)., 


Europe Be. UK (S19)_^. 
Pacific Ex. Japan (361) . 
World Ex US (1657) . 
Wbrid Ex. UK a»n>.. 


Worid Ex. So. At pi 17) , 


170.64 

05 

168.62 

112.99 

147.88 

160.80 

OI 

2.88 

17012 

16021 

11258 

147.77 

16056 

17058 


144.K 

51507 

1.3 

21011 

142.81 

18091 

215.77 

1.1 

151 

21590 

21051 

14064 

184.93 

213.40 

22000 

155.82 

10027 

165.42 

05 

163.46 

109.54 

143.37 

11301 

02 

107 

165.40 

163.55 

10906 

14307 

11068 

16800 

134.79 

14801 

187.44 

0.1 

105.46 

110.B7 

145.12 

132.36 

05 

184 

18751 

1ffi53 

110.46 

14504 

132.12 

17078 

14108 

145.95 

177.63 

05 

175 63 

11702 

15305 

177X4 

02 

204 

17750 

17531 

117.12 

15* OQ 

17603 

192.73 

175.67 

176.19 

155.17 

OB 

15303 

102.76 

134.48 

14250 

00 

258 

15302 

152.19 

101.68 

133.69 

14105 

15707 

12207 

12506 

547.0S 

2.1 

244.17 

103.02 

21A15 

223.84 

2.0 

258 

245Q5 

23954 

1900 

21005 

21908 

29601 

182.38 

18803 

16858 

05 

16858 

111.43 

145.84 

135.48 

02 

1.85 

16000 

166.12 

11098 

14503 

138.15 

17201 

14204 

14604 

16951- 

05 

16751 

11255 

14*91 

145.97 

05 

2.05 

169.10 

16701 

111.71 

148.88 

148.54 

17508 

15302 

15409 

17052 

05 

166.80 

113.18 

148.13 

148.89 

02 

254 

17053 

168.71 

112.71 

14801 

148.60 

17806 

155.00 

156.47 

18150 

0.4 

179.05 

11906 

15704 

17854 

0.4 

586 

18049 

17040 

11003 

156.77 

17062 

19500 

IK. TO 

IK. 70 

171.40 

05 

169 AO 

11358 

1*8.63 

1*9.90 

Q5 

253 

17101 

16908 

113.10 

148.71 

149.58 

17807 

155.17 

15609 


fePingf. Ths Pfd ri Tta— Lsnaad. CkMiun, Sod* and Oa. and NaWoat 3aamw Lnoao. \3ar 

HM* Cows Hounds ® (taMOon Cop. (USA}. Lot** pica* m« umAth ta- n> naan. Belgian nmux doaad osm. 




The AfSrsvariden index rose 

9.6 to 1*5448 in healthy turn- 
over oC SKx225bn. 

Ericsson continued the rally 
which began in the middle of 
last week, sparked by analysts’ 
upgrades of company profit 
forecasts and recommenda- 
tions following the group’s 
first-quarter earnings report 
The B shares closed SKria 
higher at SKr378. 

MADRID was lifted by some 
good first quarter results and 
the General index rose 5.17 to 
33420 in the most active trad- 
ing seen in recent weeks, with 
volume of Pta&fibn. 

SeviUana put on Ptal7 to 
Pta704 after its announcement 
of a 17 per cent rise in first 
quarter profit while Telefonica 
added PU25 to Ptal.845 In 
response to its first quarter 
figures. 

Union Y Fenix feU Pta2i5 or 
1L3 per cent to Ptal290 as it 
resumed trading after Friday's 
suspension pending publica- 
tion of foe latest valuation of 
the insurer which is m erg in g 
with AGF Seguros. 


A 

it* 


if 1 ' 








kS 


lii* 


Written and edited by Mohael 
Mortal and John Pitt 


TAIPEI closed off the day's 
highs after active trade as food 
and construction stocks, which 
had lagged behind the market's 
recent rally, performed well. 
The weighted index was ahead 
22.76 at 6,11478, after touch- 
ing 6,15324. in turnover of 
T$7L8bn. 

Financials were the only los- 
ers, with Business Bank o f Tai- 
tung down T$350 to Tf&ELSQ. 

MANILA feU for the third 
consecutive session, although 
there was an improvement in 
the mining index, helped by 
strength in world copper 
prices. 

WELLINGTON was sup- 
ported by neighbouring mar- 
kets and the NZSE-40 capital 
index added 2026 at 2,12625 in 
turnover of NZ$43m. 

Strength in both Fletcher 
Challenge and Telecom were 
the features of the day: -.Tele- 
com closed 8 cents higher at 
NZ$4.99 and FCL 12 cents 
ahead at $322. 













r. v 


*5 


****•, - 




V 




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